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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to

Commission File Number: 001-39619

Kiromic BioPharma, Inc.

(Exact name of registrant as specified in its charter)

Delaware

    

46-4762913

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

7707 Fannin Street, Suite 200, Houston, TX

    

77054

(Address of Principal Executive Offices)

Zip Code

(832) 968-4888

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

    

Trading symbol

    

Name of Exchange on which registered

Common Shares, par value $0.001 per share

KRBP

The OTCQB Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

    Yes      No  

Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large-accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  

Accelerated Filer  

Non-accelerated Filer  

Smaller Reporting Company  

Emerging Growth Company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of May 8, 2024, there were 1,288,235 shares of the registrant’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

   

   

Item 1.

Financial Statements

5

Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023

5

Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (Unaudited)

6

Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2024 and 2023 (Unaudited)

7

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (Unaudited)

9

Notes to Condensed Consolidated Financial Statements

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

36

Item 4.

Controls and Procedures

36

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 6.

Exhibits

37

Signatures

37

2

Table of Contents

Cautionary Note on Forward-Looking Statements

Various statements made in this Quarterly Report on Form 10-Q are forward-looking and involve risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements give our current expectations or forecasts of future events and are not statements of historical or current facts. These statements include, among others, statements about:

Our goals and strategies.
Our future business development, financial condition and results of operations.
Our expected timing of human clinical trials and other related milestones.
Expected changes in our revenue, costs or expenditures.
Our ability to obtain financing in amounts sufficient to fund our operations and continue as a going concern and avoid seeking protection under Chapters 7 or 11 of the United States Bankruptcy Code.
Difficulties or delays in the product development process, including the results of preclinical studies or clinical trials.
Difficulties or delays in the regulatory approval process.
Manufacturing, sales, marketing and distribution of any of our products that may be successfully developed and approved for commercialization.
Growth of and competition trends in our industry.
Our expectations regarding demand for, and market acceptance of, our products.
Our expectations regarding our relationships with investors, institutional funding partners and other parties we collaborate with.
Fluctuations in general economic and business conditions in the markets in which we operate; including those fluctuations caused by COVID-19.
Our ability to raise capital when needed.
Relevant government policies and regulations relating to our industry.
The outcome of any pending or threatened litigation.

Forward-looking statements also include statements other than statements of current or historical fact, including, without limitation, all statements  related to any expectations of revenues, expenses, cash flows, earnings or losses from operations, cash required to maintain current and planned operations, capital or other financial items; any statements of the plans, strategies and objectives of management for future operations; any plans or expectations with respect to product research, development and commercialization, including regulatory approvals; any other statements of expectations, plans, intentions or beliefs; and any statements of assumptions underlying any of the foregoing. We often, although not always, identify forward-looking statements by using words or phrases such as “may," "could," "will," "should," "would," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential," "project" or "continue".

3

Table of Contents

The following are some of the factors that could cause actual results to differ materially from the anticipated results or other expectations expressed, anticipated or implied in our forward-looking statements:

The effectiveness and timeliness of our preclinical studies and clinical trials, and the usefulness of the data.
Our expectations regarding the timing and clinical development of our product candidates.
Our ability to achieve profitable operations and access to needed capital.
Fluctuations in our operating results.
The success of current and future license and collaboration agreements.
Our dependence on contract research organizations, vendors and investigators.
Effects of competition and other developments affecting development of products.
Market acceptance of our products.
Protection of intellectual property and avoiding intellectual property infringement.
Product liability.
Other factors described in our filings with the SEC.

We cannot guarantee that the results and other expectations expressed, anticipated or implied in any forward-looking statement will be realized. The risks set forth under Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and subsequent quarterly reports on Form 10-Q describe major risks to our business, and you should read and interpret any forward-looking statements together with these risks. A variety of factors, including these risks, could cause our actual results and other expectations to differ materially from the anticipated results or other expectations expressed, anticipated or implied in our forward-looking statements. Should known or unknown risks materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected in the forward-looking statements. You should bear this in mind as you consider any forward-looking statements.

Our forward-looking statements speak only as of the dates on which they are made. We do not undertake any obligation to publicly update or revise our forward-looking statements even if experience or future changes makes it clear that any projected results expressed or implied in such statements will not be realized, except as may be required by law.

4

Table of Contents

PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

KIROMIC BIOPHARMA, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share amounts)

    

March 31, 

    

December 31, 

2024

2023

 

 

Assets:

Current Assets:

 

  

 

  

Cash and cash equivalents

$

3,676

$

3,204

Prepaid expenses and other current assets

 

1,892

 

1,226

Total current assets

 

5,568

 

4,430

Property and equipment, net

 

5,650

 

6,175

Operating lease right-of-use asset, net

1,389

1,543

Other assets

 

21

 

21

Total Assets

$

12,628

$

12,169

Liabilities and Stockholders’ Deficit:

 

  

 

  

Current Liabilities:

 

  

 

  

Senior secured convertible promissory notes

$

12,000

$

14,000

Accounts payable

2,000

2,136

Accrued expenses and other current liabilities

 

1,251

 

1,673

Interest payable

 

3,008

 

1,938

Note payable

 

192

 

Operating lease liability - short term

642

631

Total current liabilities

 

19,093

 

20,378

Operating lease liability - long term

747

912

Total Liabilities

 

19,840

 

21,290

Commitments and contingencies (Note 8)

 

  

 

  

Stockholders’ Deficit:

 

  

 

  

Preferred Stock, $0.0001 par value: 60,000,000 shares authorized, 22,000 and 14,000 issued and outstanding, with a liquidation preference of $25,095 and $16,206, as of March 31, 2024 and December 31, 2023, respectively

 

 

Common stock, $0.001 par value: 300,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 1,288,235 and 1,258,460 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

1

 

1

Additional paid-in capital

 

121,832

 

113,775

Accumulated deficit

 

(129,045)

 

(122,897)

Total Stockholders’ Deficit

 

(7,212)

 

(9,121)

Total Liabilities and Stockholders’ Deficit

$

12,628

$

12,169

See accompanying notes to the condensed consolidated financial statements

5

Table of Contents

KIROMIC BIOPHARMA, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)

Three Months Ended

March 31, 

2024

    

2023

Operating expenses:

  

 

  

Research and development

$

3,022

$

2,075

General and administrative

 

2,091

 

2,702

Total operating expenses

 

5,113

 

4,777

Loss from operations

 

(5,113)

 

(4,777)

Other expense:

 

  

 

  

Interest expense

(1,071)

(444)

Debt issuance amortization

 

 

(79)

Other income

36

Total other expense

 

(1,035)

 

(523)

Net loss

$

(6,148)

$

(5,300)

Net loss per preferred share, basic and diluted

$

(405.61)

$

Net loss per common share, basic and diluted

$

(1.00)

$

(6.17)

Weighted average preferred shares outstanding, basic and diluted

14,352

Weighted average common shares outstanding, basic and diluted

 

1,304,548

 

872,818

See accompanying notes to the condensed consolidated financial statements

6

Table of Contents

KIROMIC BIOPHARMA, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(Unaudited)

(In thousands, except share amounts)

Preferred Stock

Common Stock

Number of

Number of

Additional

Accumulated

 

Shares

    

Amount

Shares

    

Amount

    

Paid-In Capital

    

Deficit

Total

Balance at December 31, 2023

14,000

$

1,258,460

$

1

$

113,775

$

(122,897)

$

(9,121)

Common stock discount amortization

86

86

Warrants underlying common stock issuance

(86)

(86)

Released restricted stock units

29,775

Issuance of convertible preferred stock

8,000

8,000

8,000

Stock compensation expense

57

57

Net loss

(6,148)

(6,148)

Balance at March 31, 2024

22,000

$

1,288,235

$

1

$

121,832

$

(129,045)

$

(7,212)

See accompanying notes to the condensed consolidated financial statements

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KIROMIC BIOPHARMA, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(Unaudited)

(In thousands, except share amounts)

Common Stock

Number of

Additional

Accumulated

 

Shares

    

Amount

    

Paid-In Capital

    

Deficit

Total

Balance at December 31, 2022

648,384

$

1

$

96,172

$

(101,948)

$

(5,775)

Common stock discount amortization

 

 

85

 

 

85

Warrants underlying common stock issuance

 

 

(85)

 

 

(85)

Released restricted stock units

1,773

 

 

 

 

Conversion of subordinated convertible notes into shares of common stock

329,086

 

 

2,914

 

 

2,914

Stock compensation expense

 

 

21

 

 

21

Net loss

 

 

 

(5,300)

 

(5,300)

Balance at March 31, 2023

979,243

$

1

$

99,107

$

(107,248)

$

(8,140)

See accompanying notes to the condensed consolidated financial statements

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KIROMIC BIOPHARMA, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Three Months Ended

March 31, 

    

2024

    

2023

Cash flows from operating activities:

 

  

 

  

Net loss

$

(6,148)

$

(5,300)

Adjustments to reconcile net loss to net cash used for operating activities:

 

  

 

  

Depreciation

 

557

 

556

Operating lease non-cash expense

154

132

Stock compensation expense

 

57

 

21

Amortization of debt issuance costs

 

 

79

Changes in operating assets and liabilities:

 

  

 

  

Prepaid expenses and other current assets

 

(666)

 

(419)

Accounts payable

 

(147)

 

844

Interest payable

1,070

431

Accrued expenses and other current liabilities

 

(422)

 

(327)

Operating lease liability

 

(154)

 

(144)

Net cash used for operating activities

 

(5,699)

 

(4,128)

Cash flows from investing activities:

 

  

 

  

Purchases of property and equipment

 

(21)

 

Net cash used for investing activities

 

(21)

 

Cash flows from financing activities:

 

  

 

  

Proceeds from senior secured convertible note payable

 

6,000

 

6,000

Borrowings from note payable

400

Repayments of note payable

 

(208)

 

(163)

Debt issuance costs

(300)

Net cash provided by financing activities

 

6,192

 

5,537

Net change in cash and cash equivalents

 

472

 

1,409

Cash and cash equivalents:

 

 

  

Beginning of period

 

3,204

 

645

End of period

$

3,676

$

2,054

Supplemental disclosures of cash flow information:

 

  

 

  

Cash paid for interest on note payable

$

5

$

13

Non-cash investing and financing activities:

Exchange of 25% senior convertible promissory notes into preferred stock

$

8,000

$

Conversion of subordinated convertible promissory notes into common stock

$

$

(2,914)

Property and equipment in accounts payable

$

11

$

See accompanying notes to the condensed consolidated financial statements

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KIROMIC BIOPHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.

ORGANIZATION

Nature of Business

Kiromic BioPharma, Inc. and subsidiaries (the "Company" or “We”) are a clinical stage, fully integrated biotherapeutics company formed under the Texas Business Organizations Code in December 2012. We maintain offices in Houston, Texas. We have not generated any revenue to date.

We are an allogeneic Gamma Delta T-cell therapy company featuring novel, proprietary end-to-end bioinformatic, AI targeting and manufacturing technologies to address solid tumors. Our end-to-end approach consists of target discovery and validation, product development, and on-site current good manufacturing practices (“cGMP”) which we believe will allow us to leverage a new framework for the next generation of cell therapies.

From a development standpoint, we utilize innovative non-engineered and engineered Gamma Delta T cell (GDT) technologies and are developing proprietary, virus-free cell engineering methods to develop novel therapies for solid tumors that we believe will be effective and cost-efficient. Deltacel™️ (Deltacel) is our first allogeneic, off-the-shelf GDT cell-based product currently in a Phase 1 clinical trial. Our Procel™️ and Isocel™️ product candidates consist of allogeneic, engineered, off-the-shelf CAR-GDT cells, and they are currently in the preclinical development stage. Our Procel product candidate consists of engineered GDTs that target PD-L1. Our Isocel product candidate consists of engineered GDTs that target Mesothelin Isoform 2 (“Iso-Meso”). Our Deltacel™️ product candidate consists of non-engineered GDTs which we expand, enrich, and activate ex-vivo through a proprietary process, and it is intended to treat solid tumors regardless of the specific tumor antigen expression. Procel™️ consists of engineered GDTs targeting PD-L1 positive tumors, while Isocel™️ consists of engineered GDTs targeting solid tumors expressing a tumor-specific variant (Isoform) of Mesothelin (“Iso-Meso”).

We have a total of five clinical programs to study our key product candidates:

1)Deltacel-01: This phase 1 clinical trial is active, and it is intended to evaluate Deltacel in combination with low-dose targeted radiation for patients with stage 4 non-small cell lung cancer (NSCLC).
2)Isocel combination: This phase 1 clinical trial is expected to evaluate Isocel in combination with low-dose radiation for patients with Mesothelin Isoform 2 positive solid malignancies.
3)Alexis-ISO-1: This phase 1 clinical trial is expected to evaluate Isocel in patients with Mesothelin Isoform 2 positive solid malignancies.
4)Procel combination: This phase 1 clinical trial is expected to evaluate Procel in combination with low-dose radiation for patients with PD-L1 positive solid malignancies.
5)Alexis-PRO-1: This phase 1 clinical trial is expected to evaluate Procel in patients with PD-L1 positive solid malignancies.

Depending on pre-clinical evidence, we might submit 1 IND for Isocel and 1 for Procel, for a total of 2 new INDs in 2025, to study our product candidates either with or without low-dose radiation.

Going Concern— These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred significant losses and negative cash flows from operations since inception and expects to incur additional losses until such time that it can generate significant revenue from the commercialization of its product candidates. The Company had negative cash flow from operations of $5.7 million for the three months ended March 31, 2024, and an accumulated deficit of $129 million as of March 31, 2024. To date, the Company has relied on equity and debt financing to fund its operations. The Company’s product candidates are still in the early stages of development, and

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substantial additional financing will be needed by the Company to fund its operations and ongoing research and development efforts prior to the commercialization, if any, of its product candidates. The Company does not have sufficient cash on hand or available liquidity to meet its obligations through the twelve months following the date the condensed consolidated financial statements are issued. This condition raises substantial doubt about the Company’s ability to continue as a going concern.

Given its projected operating requirements and its existing cash and cash equivalents, management’s plans include evaluating different strategies to obtain the required funding of future operations. These plans may include, but are not limited to, additional funding from current or new investors. However, there can be no assurance that the Company will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs or on favorable terms. Therefore, the plans cannot be deemed probable of being implemented. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. In the event the Company is unable to secure financing sufficient to allow it to meet its obligations as they become due, the Company may need to file a voluntary petition for relief under the United States Bankruptcy Code in order to implement a restructuring plan or liquidation.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information (Accounting Standards Codification ("ASC") 270, Interim Reporting) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a full presentation of financial position, results of operations, and cash flows in conformity with GAAP. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2023. The results of operations for the period ended March 31, 2024, are not necessarily indicative of the operating results that may be expected for a full year. The consolidated balance sheet as of December 31, 2023, contains financial information taken from the audited Company consolidated financial statements as of that date.

All intercompany balances were eliminated upon consolidation.

Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include determination of the fair value of common stock and related stock-based compensation, warrants to purchase common stock underlying shares of Series B Preferred Stock and public offering common stock, and estimating services incurred by third-party service providers used to recognize research and development expense.

Concentrations of Credit Risk and Other Uncertainties—Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents. Substantially all of the Company’s cash and cash equivalents were deposited in accounts at a small number of national financial institutions. Account balances may at times exceed federally-insured limits. The Company has not incurred losses related to these cash and cash equivalents deposited at financial institutions and management believes that the Company is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash is held.

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The Company is subject to certain risks and uncertainties from changes in any of the following areas that the Company believes could have a material adverse effect on future financial position or results of operations: the ability to obtain regulatory approval and market acceptance of, and reimbursement for, the Company’s product candidates; the performance of third-party clinical research organizations and manufacturers; protection of the intellectual property; litigation or claims against the Company based on intellectual property, patent, product, regulatory or other factors; the Company’s ability to attract and retain employees necessary to support commercial success; and changes in the industry or customer requirements including the emergence of competitive products with new capabilities.

Property and Equipment—Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets ranging from 1 to 8 years. Major replacements and improvements are capitalized as leasehold improvements, while general repairs and maintenance are expensed as incurred. Estimated useful lives of leasehold improvements are the shorter of the remaining lease term or the estimated useful economic life of the specific asset.

Internal Use Software Development Costs—The Company capitalizes certain costs incurred to develop internal use software. All costs incurred that relate to planning and post-implementation phases of development are expensed as incurred. Costs incurred in the development and implementation phases are capitalized and amortized over the estimated life of the software, generally five years. The Company capitalized software development costs of approximately $23 thousand and $0 for the three months ended March 31, 2024 and 2023, respectively, which are recorded in Property and equipment, net on the accompanying condensed consolidated balance sheets.

Impairment of Long-Lived Assets—The Company reviews its long-lived assets, including property and equipment, for impairment indicators. If indicators are noted, the Company compares the carrying amount of the asset to its estimated undiscounted cash flows. If the carrying amount exceeds its estimated undiscounted cash flows, an impairment loss is recognized to adjust the long-lived asset to fair value. There have been no impairment losses on the Company’s long-lived assets since inception.

Comprehensive Loss—Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. For all periods presented, there was no difference between net loss and comprehensive loss.

Income Taxes—The Company files federal and state income tax returns, utilizing the accrual basis of accounting. Income taxes are provided for the tax effects of transactions reported in the condensed consolidated financial statements and consist of taxes currently due and deferred taxes. Certain transactions of the Company may be subject to accounting methods for income tax purposes, which differ from the accounting methods used in preparing these condensed consolidated financial statements in accordance with GAAP. Accordingly, the net income or loss of the Company reported for income tax purposes may differ from the balances reported for those same items in the accompanying condensed consolidated financial statements.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which such temporary differences are expected to be recovered or settled. The Company records valuation allowances to reduce deferred income tax assets to the amount that is more likely than not to be realized.

The Company records uncertain tax positions in accordance with Accounting Standard Codification (“ASC 740”), Income Taxes, on the basis of a two-step process in which (1) the Company determines whether it is more-likely-than-not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying condensed consolidated statements of operations. No such interest or penalties were recognized during the three months ended March 31, 2024 or 2023.

Research and Development Expense—The Company expenses research and development costs as incurred. Research and development expenses include personnel and personnel-related costs, costs associated with the Company’s pre-clinical development activities including costs of outside consultants and contractors, the submission and maintenance of

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regulatory filings, equipment and supplies used in developing products prior to market approval and an allocation of certain overhead costs such as facility and related expenses.

The Company accrues and expenses costs of services provided by contract research organizations in connection with preclinical studies and contract manufacturing organizations engaged to manufacture clinical trial material, costs of licensing technology, and costs of services provided by research organizations and service providers. Upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred if the technology is not expected to have any alternative future uses other than the specific research and development project for which it was intended. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed rather than when the payment is made.

Nonvested Stock Options and Restricted Stock UnitsPursuant to the Companys 2017 Stock Incentive Plan (the 2017 Plan) and the Omnibus 2021 Equity Incentive Plan (the 2021 Plan), the Company has the ability to issue a variety of share-based payments and incentives to board members, employees, and non-employees through grants of nonvested stock options, restricted stock units (RSUs) and restricted stock awards (RSAs).

The vesting conditions for stock options, RSUs and RSAs include annual and monthly vesting. Annual vesting conditions are for four years. Monthly vesting conditions range from 10 to 48 months. When nonvested options are vested, they become exercisable over a 10-year period from grant date.

The vesting conditions for RSUs include cliff vesting conditions. Certain RSUs vest with a range of 6 to 12 months following the expiration of employee lock-up agreements. Certain RSUs vest based on the later of achievement of key milestones or the expiration of employee lock-up agreements. When nonvested RSUs are vested, they are released to the grantee within sixty days.

Stock-Based Compensation—The Company records stock compensation expense related to the 2017 Equity Incentive Plan (the “2017 Plan”) and the Omnibus 2021 Equity Incentive Plan (the “2021 Plan”) in accordance with ASC 718, Compensation—Stock Compensation. The Company measures and recognizes stock compensation expense for all stock-based awards, including stock options, based on estimated fair values recognized using cliff vesting or the straight-line method over the requisite service period. The fair value of stock options is estimated on the grant date using the Black-Scholes option-valuation model (the “Black-Scholes model”). The calculation of stock-based compensation expense requires that the Company make assumptions and judgments about the variables used in the Black-Scholes model, including the fair value of the Company’s common stock, expected term, expected volatility of the underlying common stock, and risk-free interest rate. Forfeitures are accounted for when they occur.

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The Company estimates the grant date fair value of stock options using the Black-Scholes model and the assumptions used to value such stock options are determined as follows:

Expected Term. The expected term represents the period that the Company’s stock options are expected to be outstanding. Due to limitations on the sale or transfer of the Company’s common stock under the lock-up agreements and market standoff components of the stock option agreements, the Company does not believe its historical exercise pattern is indicative of the pattern it will experience after restricted periods expire. The Company uses the simplified method to calculate the expected term, which is the average of the contractual term and vesting period.

Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes model on the implied yield available on U.S. Treasury zero-coupon issues with a term equivalent to that of the expected term of the stock options for each stock option group.

Volatility. The Company determines the price volatility based on the historical volatilities of industry peers as it has limited trading history for its common stock price. The Company intends to continue to consistently apply this process using the same or a similar peer group of public companies, until a sufficient amount of historical information regarding the volatility of its own common stock price becomes available, or unless circumstances change such that the identified peer companies are no longer similar, in which case other suitable peer companies whose common stock prices are publicly available would be utilized in the calculation.

Dividend Yield. The expected dividend assumption is based on the Company’s current expectations about its anticipated dividend policy. To date, the Company has not declared any dividends and, therefore, the Company has used an expected dividend yield of zero.

Common Stock Valuations. The closing price listed on the OTCQB Capital Market or previously the NASDAQ Capital Market for the Company’s common stock on the date of the grant is used as the common stock valuation.

Segment Data—The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

Recently Issued Accounting Pronouncements—From time to time, Accounting Standards Updates (“ASU”) are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date.

Accounting Standards Not Yet Adopted

Segments. In November 2023, the FASB issued ASU No. 2023-07, “Improvements to Reportable Segment Disclosures (Topic 280)”. ASU 2023-07 modifies reportable segment disclosure requirements, primarily through enhanced disclosures about segment expenses categorized as significant or regularly provided to the Chief Operating Decision Maker (CODM). In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. This ASU is effective for annual periods beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted. The Company currently operates as one reportable segment and does not believe there will be a material impact on the related disclosures in the consolidated financial statements.

Income Taxes. In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures (Topic 740)”. ASU 2023-09 requires enhanced disclosures on income taxes paid, adds disaggregation of continuing operations before income taxes between foreign and domestic earnings and defines specific categories for the reconciliation of jurisdictional tax rate to effective tax rate. This ASU is effective for fiscal years beginning after December 15, 2024, and can be applied on a prospective basis. The Company is currently evaluating the impact this new standard will have on the related disclosures in the consolidated financial statements.

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3.NET LOSS PER COMMON STOCK SHARE

Basic and diluted net loss per common share is determined by dividing net loss less deemed dividends by the weighted-average common shares outstanding during the period. For all periods presented the common shares underlying the stock options, RSUs and warrants have been excluded from the calculation because their effect would be anti-dilutive. Therefore, the weighted-average common shares outstanding used to calculate both basic and diluted loss per common shares are the same. The following table illustrates the computation of basic and diluted loss per share:

Three Months Ended

March 31, 

(In thousands)

    

2024

    

2023

Net loss

$

(6,148)

$

(5,300)

Less: Initial Public Offering Common Stock discount amortization

(25)

(25)

Less: Public Offering Common Stock discount amortization

(61)

(60)

Less: Undeclared dividends attributable to preferred stock

(889)

Net loss attributable to common shareholders

$

(7,123)

$

(5,385)

Three Months Ended

Three Months Ended

    

March 31, 2024

March 31, 2023

(In thousands, except share and per share amounts)

Common Stock

    

Preferred Stock

    

Common Stock

    

Preferred Stock

Net loss per share, basic and diluted

Allocation of undistributed net loss

$

(1,302)

$

(5,821)

$

(5,385)

$

Weighted average shares outstanding, basic and diluted

1,304,548

14,352

872,818

Basic and diluted net loss per share

$

(1.00)

$

(405.61)

$

(6.17)

$

For the three months ended March 31, 2024, there were 114,009 restricted stock units and 15,416 warrants that were excluded from the computations of diluted weighted-average shares of common stock because they were anti-dilutive.

During the three months ended March 31, 2024, the Company entered into an Exchange Agreement whereby outstanding promissory notes totaling $8,000,000 were exchanged for 8,000 shares of Series D Convertible Voting Preferred Stock (the “Series D Stock”). See Note 10- Stockholder’s Equity for details about conversion price. The Series D Stock accrues an annual 25% dividend, whether or not declared, which if unpaid is added to the aggregate liquidation preference. During the three months ended March 31, 2024 and 2023, the preferred shareholders earned $889 thousand and none, respectively, of preferred dividends. The dividends were not accrued on the condensed consolidated balance sheet as of March 31, 2024, as these dividends were not declared.

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4.

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following:

(In thousands)

March 31, 2024

    

December 31, 2023

Equipment

$

3,135

$

3,126

Leasehold improvements

 

7,372

 

7,372

Office furniture, fixtures, and equipment

 

137

 

137

Software

 

360

 

360

Construction in progress

 

124

 

101

 

11,128

 

11,097

Less: Accumulated depreciation

 

(5,478)

 

(4,921)

Total

$

5,650

$

6,175

Depreciation expense was $557 thousand and $556 thousand for the three months ended March 31, 2024 and 2023, respectively. Depreciation expense is allocated between research and development and general and administrative operating expenses on the condensed consolidated statements of operations.

5.ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following as of:

(In thousands)

    

March 31, 2024

    

December 31, 2023

Accrued litigation

$

$

448

Accrued compensation

946

 

865

Accrued consulting and outside services

 

305

 

361

Total

$

1,251

$

1,673

6.NOTE PAYABLE

In January 2024, the Company entered into a financing arrangement for its Director and Officer Insurance policy. The total amount financed was approximately $400 thousand with an annual interest rate of 4.93%, to be paid over a period of eleven months. As of March 31, 2024, the remaining payable balance on the financed amount was $192,000.

7.SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

The Company began issuing senior secured convertible promissory notes (each a “CPN” and together the “Notes”) payable to a private accredited investor (the “Investor”) during 2022.

Through March 31, 2024, the Company has issued to the Investor thirteen notes totaling $34 million, of which $6 million were issued during the three months  ended March 31, 2024. The notes are each 25% Senior Secured Convertible Promissory Notes with largely consistent terms including a stated interest rate of 25% per year, a stated conversion price subject to a beneficial ownership limitation and share cap representing a certain percentage of the outstanding shares of Common Stock at the time of conversion, and a one-year maturity. As of March 31, 2024, there were five outstanding notes. Two outstanding notes with a value of $2,400,000, were each issued with a conversion price of $6.50. Two outstanding notes with a value of $2,400,000 were each issued with a conversion price of $5.00. One outstanding note with a value of $2,400,000 was issued with a conversion price of $2.50.

The stated interest rates for these notes increase to 27% per annum or the highest rate then allowed under applicable law (whichever is lower) upon the occurrence of an event of default, including the failure by the Company to make payment of principal or interest due under the related note on the respective maturity date, and any commencement by the Company of a case under any applicable bankruptcy or insolvency law.

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In April 2023, July 2023 and March 2024, the Company executed an exchange agreement to convert $8,000,000, $6,000,000 and $8,000,000 of the senior secured promissory notes principal into shares of preferred stock, respectively. See Note 10—  Stockholder’s Equity for further discussion.

Senior secured convertible promissory notes consisted of the following:

(In thousands)

    

March 31, 2024

    

December 31, 2023

Senior secured convertible promissory note, maturing June 26, 2024

2,400

 

2,400

Senior secured convertible promissory note, maturing July 25, 2024

 

2,400

 

2,400

Senior secured convertible promissory note, maturing August 25, 2024

2,400

 

2,400

Senior secured convertible promissory note, maturing September 27, 2024

2,400

2,400

Senior secured convertible promissory note, maturing November 2, 2024

2,400

2,400

Senior secured convertible promissory note, maturing December 12, 2024

2,000

Total senior secured convertible promissory notes

$

12,000

$

14,000

8.COMMITMENTS AND CONTINGENCIES

License Agreements—The Company has entered into a number of licensing arrangements for various intellectual property and licensed patent rights for technologies being developed for commercial sale. As part of these arrangements, the Company is subject to contingent milestone payments in accordance with agreed-upon development objectives, as well as future royalty payments on product sales of the underlying assets. As of March 31, 2024, and December 31, 2023, the Company has not incurred any milestone or royalty liabilities related to these license agreements.

Legal Proceedings

Jason Terrel Claim

On March 22, 2021, Jason Terrell (“Terrell”), a former consultant and director of the Company, commenced an action against us in the Court of Chancery of the State of Delaware, C.A. No. 2021-0248-MTZ (the “Action”). In the Action, Terrell seeks a declaratory judgment that we are obligated to issue him (i) options to purchase 16,667 shares of our common stock at a price of $15.00 per share pursuant to an alleged 2014 consulting agreement, and (ii) options to purchase an additional 16,667 shares of common stock at a price of $5.10 per share pursuant to an alleged January 2017 non-employee director options agreement. In his complaint, Terrell also claimed that, pursuant to our operative certificate of incorporation, he is entitled to indemnification from us for attorneys’ fees and costs he incurs in connection with the Action because the Action arises in connection with his position as a former director.

We dispute Terrell’s claims and allegations in the Action and intend to vigorously defend against them. On May 21, 2021, the Company filed a motion to dismiss Terrell’s claims in the actions with prejudice, arguing that (i) Terrell’s options-related claims fail because his 2014 and January 2017 agreements were explicitly superseded by a later options agreement, under which Terrell relinquished his prior options; and (ii) Terrell is not entitled to indemnification because the Action relates to contracts between the Company and Terrell in his personal capacity, and not in connection with any activities or duties of Terrell in his official capacity as former director. In response to the motion filed on June 2021, Terrell withdrew his claim for indemnification, but opposed the portion seeking dismissal of his declaratory judgment claim. The motion was fully briefed with the filing of the Company’s reply brief on July 7, 2021.

Oral argument was held before the Vice Chancellor on October 20, 2021. During oral argument, the Vice Chancellor invited the parties to submit supplemental letter briefs on the question of whether the Court of Chancery even had the authority to adjudicate the Action in light of the delegation of authority in Terrell’s most recent stock option agreement with the Company (the “SOA”) to the Company’s Compensation Committee to resolve all disputes regarding the interpretation of the SOA. The parties submitted simultaneous supplemental letters briefs on this issue on November 15, 2021. On January 20, 2022, the Vice Chancellor issued her decision on our motion to dismiss, ruling that the Action is stayed until the Compensation Committee itself resolves whether it has sole authority to resolve the parties’ contract interpretation dispute.

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Subsequently, the parties agreed upon a process for coordinating submissions and/or presentations to the Compensation Committee. The parties made their respective written submissions to the Compensation Committee on March 31, 2022,  and on July 21, 2022, the Compensation Committee determined that (i) the Compensation Committee has sole authority under the SOA to resolve the parties’ contract interpretation dispute, and (ii) Terrell’s most recent options agreement superseded and nullified any option rights Terrell may have had under his prior agreements. On August 2, 2022, the Vice Chancellor issued an order dismissing the Action for lack of subject matter jurisdiction.

On August 23, 2022, Terrell filed a notice of appeal of the Vice Chancellor’s order of dismissal to the Delaware Supreme Court.

Oral argument on Terrell’s appeal was held before the Delaware Supreme Court on February 8, 2023. On May 4, 2023, the Delaware Supreme Court issued a written opinion (the “Opinion”) reversing the Vice Chancellor’s order of dismissal and remanding to Chancery Court for further proceedings consistent with the Opinion.  In its Opinion, the Delaware Supreme Court affirmed several of the Chancery Court’s legal determinations on the motion to dismiss, but concluded that Chancery Court itself should independently review the Compensation Committee’s determinations under Delaware law.

The Delaware Supreme Court also rejected Terrell’s argument that the waiver clause in the third options agreement (which, according to the Company, superseded and extinguished unexercised options under the prior options agreements) was unconscionable.

Pursuant to a stipulated scheduling order, the parties submitted supplemental letter briefs to the Chancery Court in mid-August 2023, addressing the impact of the Opinion on the Company’s motion to dismiss. Thereafter, the Chancery Court notified the parties that it had received the supplemental letter briefs and would take the matter under advisement without holding oral argument.

On January 31, 2024, the Chancery Court issued a letter opinion that dismissed Terrell’s claims based on the contract-interpretation grounds the Company originally advanced back in 2021, as well as the Delaware Supreme Court’s determination that the third options agreement was not unconscionable. On March 11, 2024, the Chancery Court entered a stipulated form of Final Order and Judgment, dismissing Terrell’s claims consistent with the Chancery Court’s January 31, 2024 letter opinion.  Terrell thereafter commenced an appeal of the dismissal to the Delaware Supreme Court.  Under the briefing schedule ordered by the Delaware Supreme Court, Terrell’s opening appellate brief is due on or before May 9, 2024, and the Company’s answering brief is due 30 days after the date of service of Terrell’s opening brief. On appeal, the Company intends to vigorously argue that the Chancery Court’s dismissal should be affirmed.

Karp and Podmore Class Actions

On August 5, 2022, Ronald H. Karp, filed a class action complaint in the United States District Court for the Southern District of New York (the “Karp Class Action”) in connection with a public offering by the Company that closed on or about July 2, 2021, and asserting claims against the Company and certain current and former officers and directors of the Company for alleged violations of Sections 11, 12, and 15 of the Securities Act of 1933 in connection with the purchase of common stock through the Company’s public offering that closed on July 2, 2021 and Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 promulgated thereunder in connection with the certain statements and acts made by the defendants between June 25, 2021 and August 13, 2021. On October 3, 2022, Joseph Podmore filed a class action complaint in the United States District Court for the Southern District of New York (the “Podmore Class Action”) raising similar claims.

The Karp Class Action and the Podmore Class Action were consolidated and are collectively referred to as the “Class Action”. Please refer to the Settlement of the Class Action described more fully below.

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Settlement in Principle of the Class Action

On August 7, 2023, we entered into a term sheet with the plaintiffs in the Class Action, to settle in principle (and globally resolve) the Class Action. We subsequently reached agreement with the plaintiffs in the Class Action on all settlement materials and terms including with respect to payment of up to $2,300,000 and, on September 29, 2023, counsel for plaintiffs submitted the proposed settlement materials to the Court for approval. Of this amount, insurance covered $570,000, resulting in a net settlement of $1,730,000 owed by the Company. As of March 31, 2024, we have paid the totality of the settlement to the plaintiffs, of which $448,000 was payable as of December 31, 2023.

The Company regularly assesses all contingencies and believes, based on information presently known, the Company is not involved in any other matters that would have a material effect on the Company’s financial position, results of operations and cash flows. 

9.LEASES

The Company leases real estate for office and warehouse space under non-cancelable operating leases, with a total rentable space of 149,000 square feet. The Company intends to use the full lease term under the existing lease agreement which is currently set to expire on April 30, 2026.  As of March 31, 2024, the Company is not able to determine if any renewal options will be exercised.

There are no variable payments associated with the lease agreements, as the rent payments are predetermined on a fixed schedule.

The following table indicates the balance sheet line items that include the right-of-use assets and lease liabilities for our operating lease:

(In thousands)

    

March 31, 2024

December 31, 2023

Operating lease

Operating lease

Right-of-Use Asset

Operating lease, net

$

1,389

$

1,543

Total right-of use asset, net

$

1,389

$

1,543

Lease Liabilities

Operating lease - short term

$

(642)

$

(631)

Operating lease - long term

(747)

(912)

Total lease liabilities

$

(1,389)

$

(1,543)

For the three months ended March 31, 2024, the components of lease expense were as follows:

    

Three Months Ended

(In thousands)

March 31, 2024

March 31, 2023

Operating lease cost allocated to research and development expense

$

113

$

90

Operating lease cost allocated to general and administrative expense

66

90

Total lease expense

$

179

$

180

Weighted-average remaining lease term

2.09

3.09

Weighted-average discount rate

7.12

%

7.12

%

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As of March 31, 2024, the maturities of the Company’s operating lease liabilities were as follows:

Maturity of Lease Liabilities (In thousands)

Operating lease

2024 (remaining)

$

538

2025

725

2026

243

Total lease payments

1,506

Less: imputed interest

(117)

Present value of lease payments

$

1,389

10.STOCKHOLDERS’ EQUITY

Stock— As of March 31, 2024, and December 31, 2023, the Company was authorized to issue 60,000,000 shares of preferred stock (24,000,000 shares designated as Series A-1 Preferred Stock and 16,500,000 shares designated as Series B Preferred stock) and 300,000,000 shares of common stock. Additionally, as of March 31, 2024, the Company authorized the issuance of 14,000 shares of Series C Convertible Voting Preferred Stock (the “Series C Stock”) and 8,000 shares of Series D Convertible Preferred Stock (the “Series D Stock” and together with the Series C Stock, the “Preferred Shares”). The Company issued 8,000 shares of Series C Stock on April 2, 2023, 6,000 shares of Series C Stock on July 18, 2023, and 8,000 shares of Series D Stock on March 28, 2024 as part of the three Exchange agreements discussed below, of which 14,000 shares of Series C Stock and 8,000 shares of Series D Stock remain outstanding as of March 31, 2024.

The Preferred Shares are convertible into shares of the Company’s common stock, par value $0.001 per share. The Preferred Shares are voting stock and holders are entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock basis as determined by dividing the Liquidation Preference with respect to such shares of Preferred Shares by their conversion price. Holders of Common Stock are entitled to one vote for each share of Common Stock held on all matters submitted to a vote of stockholders. Accordingly, holders of Preferred Shares are entitled to one vote for each whole share of Common Stock into which their Preferred Shares are convertible on all matters submitted to a vote of stockholders.

Cumulative Rights of Series C and D Stock Shareholders The Preferred Shares accumulate undeclared dividends at an annual rate of 25%. Unpaid dividends and undeclared dividends are added to the aggregated Liquidation Preference, which also includes the face value of the Preferred Shares outstanding. In the event of any liquidation of the Company, holders of Preferred Shares then outstanding shall be entitled to be paid the Liquidation Preference out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of any other shares of capital. As of March 31, 2024 and December 31, 2023, the outstanding Liquidation Preference of the Series C Stock  and Series D Stock is $25,094,500 and $16,205,500, respectively.

Participating Rights of Series C and D Stock Shareholders In the event the Company declares a dividend, and all cumulative dividends have been distributed, the Series C Stock participates in any remaining declared dividends to be paid equal to (on an as-if-converted-to-common-stock basis) and in the same form as dividends paid on shares of Common Stock.

Exchange Agreements

On April 2, 2023, the Company entered into an Exchange Agreement with the holder of promissory notes to exchange an aggregate principal amount of $8 million of the Company’s 25% Senior Secured Convertible Promissory Notes for 8,000 shares of Series C Stock. The $8 million Senior Secured Convertible Promissory Notes is the aggregate of four promissory notes that were issued in the previous months, for $2 million each.

On July 18, 2023, the Company entered into an Exchange Agreement (the “July 18 Exchange Agreement”) with the holder of promissory notes of the Company (the “Holder”) pursuant to which the Holder agreed to exchange aggregate principal amount of $6 million of the Company’s 25% Senior Secured Convertible Promissory Notes (the “July 18 Exchange Notes”) for 6,000 shares of Series C Stock. The $6 million Senior Secured Convertible Promissory Notes is the aggregate of three promissory notes that were issued in the previous months, for $2 million each.

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On March 28, 2024, the Company entered into an Exchange Agreement with the holder of promissory notes to exchange an aggregate principal amount of $8 million of the Company’s 25% Senior Secured Convertible Promissory Notes for 8,000 shares of Series D Stock. The $8 million Senior Secured Convertible Promissory Notes is the aggregate of four promissory notes that were issued in the previous months, for $2 million each.

Warrants—Holders of warrants (the “Warrants”) grant the holder the right to purchase a specified number of shares of the Company at a specified price with an expiration date of five years.  Holders of the Warrants may purchase 2,083 shares of common stock at an exercise price of $450.00 per share with an expiration date of October 14, 2025, or an additional 13,333 shares of common stock at an exercise price of $187.50 per share with an expiration date of July 1, 2026. All of the Warrants were outstanding as of March 31, 2024 and December 31, 2023.

Standby Equity Purchase Agreement Financing

On October 13, 2022, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (the “Investor”). Pursuant to the SEPA, the Company has the right to sell to the Investor up to $8,000,000 (the “Commitment Amount”) of its shares of common stock, par value $0.001 per share (“Common Stock”), at the Company’s request any time during the commitment period commencing on October 13, 2022 and terminating on the earliest of (i) the first day of the month following the 24-month anniversary of the SEPA or (ii) the date on which the Investor has paid for shares of Common Stock equal to the Commitment Amount.

On May 24, 2023, we exercised the Commitment increase under the SEPA and issued to YA II PN, Ltd. 97,000 shares of common stock at a purchase price of $3.89, for an advance amount of $377,000.

On June 2, 2023, we exercised an additional Commitment increase under the SEPA and issued to YA II PN, Ltd. 100,000 shares of common stock at a purchase price of $2.82, for an advance amount of $282,100.

11.STOCK-BASED COMPENSATION

2017 Stock Incentive Plan—Restricted Stock Units

The following table summarizes the activity for all RSUs outstanding under the 2017 Plan at March 31, 2024 and March 31, 2023:

2024

2023

    

    

Weighted Average

    

    

Weighted Average

Grant Date

Grant Date

Fair Value

Fair Value

Shares

Per Share

Shares

Per Share

Nonvested RSUs at beginning of period

 

605

$

285.36

 

650

$

259.50

Granted

 

 

 

 

Vested

 

 

255.85

 

(35)

 

252.60

Cancelled and forfeited

 

(30)

 

260.10

 

 

Nonvested RSUs at March 31

 

575

$

285.36

 

615

$

258.88

Total stock compensation expense recognized from stock-based compensation awards classified as restricted stock units were recognized in the condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023, as follows:

March 31, 

(In thousands)

2024

    

2023

Research and development

$

5

$

General and administrative

 

8

 

Total

$

13

$

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2017 Stock Incentive Plan— Stock Options

The following table summarizes the activity for all stock options outstanding at March 31, 2024 under the 2017 Plan:

2024

2023

    

    

Weighted

    

    

Weighted

Average

Average

Exercise

Exercise

Shares

Price

Shares

Price

Options outstanding at beginning of period

 

5,853

$

285.36

 

11,286

$

254.40

Granted

 

 

 

 

Exercised

 

 

 

 

Cancelled and forfeited

 

 

 

(5,185)

 

215.35

Balance at March 31

 

5,853

$

285.36

 

6,101

$

287.58

Options exercisable at March 31:

 

5,853

$

285.36

 

6,083

$

286.20

In addition, the weighted average remaining contractual life for the options is 3.68 years and 3.93 years as of March 31, 2024, and December 31, 2023, respectively. The options have no intrinsic value as of March 31, 2024, or December 31, 2023, respectively.

There were no stock compensation expenses recognized from stock-based compensation awards classified as stock options in the condensed consolidated statements of operations for the three months ended March 31, 2024, and 2023.

As of March 31, 2024, there was no unrecognized stock compensation expense related to unvested stock options.

2021 Stock Incentive Plan—Restricted Stock Units

The following table summarizes the activity for all RSUs outstanding as of March 31, 2024 and 2023 under the 2021 Plan:

2024

2023

    

    

Weighted Average

    

    

Weighted Average

Grant Date

Grant Date

Fair Value

Fair Value

Shares

Per Share

Shares

Per Share

Nonvested RSUs at beginning of period

89,206

$

1.56

 

684

$

133.20

Granted

54,000

 

2.34

 

 

Vested

(29,775)

 

4.95

 

 

Cancelled and forfeited

 

 

(667)

 

126.60

Nonvested RSUs at March 31

113,431

$

1.76

 

17

$

126.60

Total stock compensation expense recognized from stock-based compensation awards classified as restricted stock units were recognized in the condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023, as follows:

March 31, 

(In thousands)

2024

    

2023

Research and development

$

11

$

8

General and administrative

 

33

 

13

Total

$

44

$

21

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The vested outstanding restricted stock units that have not been released to grantees as of March 31, 2024, were included in calculation of weighted average common shares outstanding, basic and diluted (See Note 3, Net Loss Per Common Share). The Company plans to release these shares to the grantees in the near future. Since there is a possibility that any portion of those shares could be sold as part of the release, the shares will be released in compliance with the Company’s insider trading policy when there is an open trading window and grantees are not in possession of any material non-public information.

As of March 31, 2024, there was $344,700 unrecognized stock compensation expense related to unvested restricted stock units.

2021 Stock Incentive Plan — Stock Options

The following table summarizes the activity for all stock options outstanding at March 31, 2024 under the 2021 Plan:

2024

2023

    

    

Weighted

    

    

Weighted

Average

Average

Exercise

Exercise

Shares

Price

Shares

Price

Options outstanding at beginning of period

 

12,240

$

12.90

 

21,420

$

12.90

Granted

 

 

 

 

Exercised

 

 

 

 

Cancelled and forfeited

 

 

 

(9,180)

 

Balance at December 31

 

12,240

$

12.90

 

12,240

$

12.90

Options exercisable at March 31:

 

12,240

$

12.90

 

12,240

$

12.90

In addition, the stock options had weighted average rema