ABEONA THERAPEUTICS INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Under the supervision and with the participation of management, including our principal executive and financial officers, we assessed our internal control over financial reporting as of December 31, 2021, based on criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our management’s assessment of the effectiveness of our internal control over financial reporting included testing and evaluating the design and operating effectiveness of our internal controls. In our management’s opinion, we have maintained effective internal control over financial reporting as of December 31, 2021, based on criteria established in the COSO 2013 framework. Because we are a non-accelerated filer and smaller reporting company, Whitley Penn LLP, our independent registered public accounting firm, is not required to attest to or issue a report on the effectiveness of our internal control over financial reporting. 76 Inherent Limitations of Internal Controls Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. 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, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, during the fourth quarter of 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 77 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and Executive Officers Our Certificate of Incorporation and Bylaws presently provide that our Board shall consist of three to 15 members, divided into three staggered classes as nearly equal in number as possible. The Board is currently comprised of nine directors. Our directors serve for a term of three years and until the respective election and qualification of their successors. Pursuant to our Bylaws, the Board selects our Chairman of the Board and our executive officers. Each of our executive officers is selected by the Board for a term of one year or until the executive officer’s successor is duly elected and qualified or until such executive officer’s resignation or removal. There is no family relationship among any of our directors or executive officers. Our current directors and executive officers are as follows: Name Age Title Michael Amoroso 44 Chairman of the Board Leila Alland, M.D. 59 Director Mark J. Alvino 54 Director Faith L. Charles 60 Director Paul Mann 46 Director Christine Silverstein 39 Director Todd Wider, M.D. 57 Director Donald A. Wuchterl 52 Director Vishwas Seshadri 46 President, Chief Executive Officer, Director Edward Carr 52 Chief Accounting Officer Brendan O’Malley 53 General Counsel Joseph Vazzano 38 Chief Financial Officer Michael Amoroso , 44, has been Chairman of the Board since October 15, 2021 and has been a director since March 19, 2021. Mr. Amoroso served as our President and Chief Executive Officer from March 19, 2021 to October 15, 2021. Mr. Amoroso joined Abeona on July 9, 2020 as Chief Commercial Officer and was promoted to Chief Operating Officer on November 1, 2020. Since October 15, 2021, Mr. Amoroso has served as President and Chief Executive Officer of Precision BioSciences, Inc., a clinical stage biotechnology company dedicated to improving life with its novel and proprietary ARCUS genome editing platform. From August 2018 to January 2020, he served as Senior Vice President and Head of Worldwide Commercial Operations for Cell Therapy at Kite, a Gilead Company, where he led all operations and functions charged with bringing the first wide-spread CAR-T cell therapy, YESCARTA®, to major world markets while also preparing the organization for its future cell therapy pipeline. Prior to his time at Kite, Mr. Amoroso served in senior level executive positions at Eisai Inc. from October 2017 to August 2018, Celgene Corporation (now a subsidiary of Bristol-Myers Squibb Company) from January 2011 to October 2017 and Aventis (now Sanofi) from 2001 to 2011. Mr. Amoroso has worked with companies in the small molecules, biologics, and cell and gene therapies space across large, medium, and small capitalization companies with his deepest areas of expertise in rare, oncology diseases. Mr. Amoroso earned his Executive M.B.A. in Management from the Stern School of Business, New York University, and his B.A. in Biological Sciences, summa cum laude, from Rider University. Mr. Amoroso’s qualifications to serve on our Board include his extensive experience in leading teams, both directly and indirectly, across clinical development, regulatory and medical affairs, corporate affairs, and commercial, both in the U.S. and globally, with direct operational experience in various pharmaceutical companies. Leila Alland, M.D. , 59, became a director on April 14, 2021 and currently serves as a member of the Nominating and Corporate Governance Committee and of the Compensation Committee. Dr. Alland, a pediatric hematologist-oncologist and accomplished physician-scientist, has been working in the biopharmaceutical industry since 2001 to bring novel therapies to patients. Since December 2019, Dr. Alland has served as Chief Medical Officer of PMV Pharmaceuticals, Inc., a Nasdaq-listed precision oncology company pioneering the discovery and development of small molecule, tumor-agnostic therapies targeting p53 mutants. From March 2018 to November 2019, Dr. Alland served as Chief Medical Officer of Affimed, a clinical-stage immuno-oncology company, and, from January 2016 to March 2018, Dr. Alland served as Chief Medical Officer of Tarveda Therapeutics, a clinical stage precision oncology company. Dr. Alland also held leadership positions at AstraZeneca, Bristol-Myers Squibb, Novartis, and Schering-Plough, where she worked on a broad range of oncology products from early to late stage development and contributed to multiple successful drug approvals. Dr. Alland obtained her medical degree from New York University School of Medicine, and her B.A. in Biology from the University of Pennsylvania. She completed her residency in Pediatrics at The Children’s Hospital of Philadelphia, and her fellowship in Pediatric Hematology/Oncology at The New York Hospital and Memorial Sloan-Kettering Cancer Center. From 1994 to 2000, Dr. Alland served as Assistant Professor of Pediatrics at Albert Einstein College of Medicine where she was awarded the James S. McDonnell Foundation Scholar Award and pursued basic cancer research while also caring for children with cancer and blood disorders. Since 2020, Dr. Alland has served as Director on the Board of Cytovia Therapeutics, an immune-oncology company developing engineered cellular and antibody therapies to treat cancer. Dr. Alland is a member of the Scientific Advisory Council of Columbia University’s Center for Radiological Research, and serves as a scientific reviewer for the Cancer Prevention and Research Institute of Texas. Dr. Alland’s qualifications to serve on our Board include her leadership skills and her vast medical and scientific experience serving companies in the biotech and pharmaceutical field. 78 Mark J. Alvino , 54, became a director on March 26, 2021 and currently serves as Chair of the Compensation Committee and as a member on the Audit Committee. Mr. Alvino had previously served as a member of our Board from March 2006 through April 15, 2020. Mr. Alvino is currently President of Hudson Square Capital LLC, since October 2014. From 2013 to October 2014, Mr. Alvino was leading the Life Sciences efforts of Bradley Woods & Co. Ltd. Mr. Alvino was Managing Director for Griffin Securities from 2007 to 2013. He previously worked at Feinstein Kean Healthcare, an Ogilvy Public Relations Worldwide Company, where he was Senior Vice President, responsible for managing both investor and corporate communications programs for many private and public companies and acted as senior counsel throughout the agency’s network of offices. Prior to working at FKH, Mr. Alvino served as Vice President of Investor Relations and managed the New York Office of Allen & Caron, Inc., an investor relations agency. His base of clients included medical devices, biotechnology, and e-healthcare companies. Mr. Alvino also spent several years working with Wall Street brokerages including Ladenburg, Thallman & Co. and Martin Simpson & Co. Mr. Alvino’s qualifications to serve on our Board include his leadership skills and his experience in the areas of financial management and business strategy in the biopharmaceutical field. Faith L. Charles , 60, became a director on March 26, 2021 and currently serves as Chair of the Nominating and Corporate Governance Committee and as a member of the Audit Committee. Ms. Charles has been a corporate transactions and securities partner at the law firm of Thompson Hine, LLP, since 2010. She leads Thompson Hine’s Life Sciences practice and co-heads the securities practice, advising public and emerging biotech and pharmaceutical companies in the U.S. and internationally. Ms. Charles negotiates complex private and public financing transactions, mergers and acquisitions, licensing transactions and strategic collaborations. She serves as outside counsel to a myriad of life sciences companies and is known in the industry as an astute business advisor, providing valuable insights into capital markets, corporate governance and strategic development. From 2018 until October 2021, Ms. Charles served on the Board of Directors and as a member of the Audit Committee and Chair of the Compensation Committee of Entera Bio, a publicly-traded biotechnology company. She also serves on the Board of Directors of several private life science companies. Ms. Charles founded the Women in Bio Metro New York chapter and chaired the chapter for five years. She currently serves on the national board of Women in Bio. Ms. Charles is also a member of the board of Red Door Community (formerly Gilda’s Club New York City.) She has been recognized as a Life Sciences Star by Euromoney’s LMG Life Sciences, has been named a BTI Client Service All-Star, and was named by Crain’s New York Business to the list of 2020 Notable Women in the Law. Ms. Charles holds a J.D degree from The George Washington University Law School and a B.A. in Psychology from Barnard College, Columbia University. Ms. Charles is a graduate of Women in Bio’s Boardroom Ready Program, an Executive Education Program taught by The George Washington University School of Business. Ms. Charles’ qualifications to serve on our Board include her leadership skills and her vast legal experience representing companies in the biotech and pharmaceutical field. 79 Paul Mann , 46, became a director in June 2020 and serves as Chair of the Audit Committee. Mr. Mann has over 20 years of experience in the financial and biotechnology industries. Mr. Mann is currently the Chairman and Chief Executive Officer of ASP Isotopes since September 2021 and the Chairman of Varian Biopharmaceuticals since June 2020. Prior to this, Mr. Mann was a consultant and analyst for DSAM Partners, a global hedge fund, from April 2020 to March 2022. Prior to DSAM partners, Mr. Mann served as Chief Financial Officer at PolarityTE, Inc., a biotechnology and regenerative biomaterials company, from June 2018 to March 2020. From August 2016 to June 2018, he served as the Healthcare Portfolio Manager for Highbridge Capital Management. From August 2013 to March 2016, Mr. Mann served as an analyst with Soros Fund Management. Prior to joining Soros Fund Management, Mr. Mann was an analyst and portfolio manager with Lodestone Natural Resources and UBS from September 2011 to March 2013. Prior to moving to the buy-side, Mr. Mann spent 11 years as a sell-side analyst at Morgan Stanley and Deutsche Bank. He started his career as a research scientist at Proctor and Gamble and he has an MA (Cantab) and an MEng in Chemical Engineering from Cambridge University. Mr. Mann is a CFA charter holder. Mr. Mann’s qualifications to serve on our Board include his extensive experience in the financial and biotechnology industries. Christine Silverstein , 39, became a director in March 2020. Since May 2021, Ms. Silverstein has served as Chief Financial Officer of Excision Biotherapeutics, Inc., a clinical-stage biotechnology company developing CRISPR-based therapies intended to cure viral infectious diseases. From July 2020 to January 2021, Ms. Silverstein served as Chief Financial Officer of Emendo Biotherapeutics, a next generation gene-editing company that was acquired in December 2020 by AnGes, Inc., a biopharmaceutical company focused on gene-based medicines. Ms. Silverstein previously operated in various senior executive corporate finance roles within Abeona Therapeutics, including Chief Financial Officer from January 2019 to March 2020, Senior Vice President, Finance & Strategy from May 2018 to December 2018 and Vice President, Finance & Investor Relations from April 2016 to May 2018. Prior to joining Abeona in 2016, from 2014 to 2016, she served as Head of Investor Relations at Relmada Therapeutics, Inc., a late-stage biotechnology company addressing diseases of the central nervous system. Ms. Silverstein previously served in senior executive roles within a biotechnology venture fund and various capital markets advisory firms. Ms. Silverstein began her career in the financial services as an investment advisor at Royal Alliance Associates before moving to the biotechnology industry. A member of CHIEF, Deloitte’s Chief Financial Officer Program, Women in Bio and the National Investor Relations Institute (“NIRI”), Ms. Silverstein holds a B.S. from the Peter Tobin College of Business at St. John’s University and earned various accreditations from FINRA. Ms. Silverstein’s qualifications to serve on our Board include her extensive corporate strategic planning, capital markets and capital raising expertise, business development, compliance and crisis management experience. Todd Wider, M.D., 57, became a director in May 2015 and currently serves as a member of the Compensation Committee. Dr. Wider is a surgeon and has served as consultant to numerous entities in the biotechnology space. He has served as the Chairman and CMO of Emendo Biotherapeutics since 2019. In addition, Dr. Wider served as a director of ARYA Sciences Acquisition Corp. I (Nasdaq: ARYA) from October 2018 to March 2020, ARYA Sciences Acquisition Corp. II (Nasdaq: ARYB) from June 2020 to November 2020, and ARYA Sciences Acquisition Corp. III (Nasdaq: ARYA) from August 2020 to June 2021. Dr. Wider holds an M.D. from Columbia College of Physicians and a B.A. from Princeton University. Dr. Wider’s qualifications to serve our Board include his biotechnology expertise as well as his experience as a surgeon. Donald A. Wuchterl , 52, became a director on April 14, 2021 and currently serves as member of the Nominating and Corporate Governance Committee. Since April 2021, Mr. Wuchterl has served as Senior Vice President and Chief Manufacturing Officer at T-knife Therapeutics, a next-generation T-cell receptor company developing innovative therapeutics for the benefit of solid tumor patients where he is responsible for all Chemistry, Manufacturing and Controls (“CMC”) functions. From 2016 to 2021, Mr. Wuchterl served as Senior Vice President, Technical Operations and Quality at Audentes Therapeutics (an Astellas Company), a gene therapy company focused on developing and commercializing innovative products for patients living with serious, life-threatening rare neuromuscular diseases. From 2012 to 2016, Mr. Wuchterl served as Senior Vice President and Chief Operating Officer at Cytovance Biologics, a leading biopharmaceutical contract manufacturing company. Prior to Cytovance, Mr. Wuchterl held positions of increasing responsibility with Dendreon, Shire HGT, Amgen, Biogen Idec and Roche. Mr. Wuchterl has a B.S. in Business Administration from Colorado Technical University and an M.B.A. from Fitchburg State University. Mr. Wuchterl’s qualifications to serve on Abeona’s board include his over 29 years of experience in the life sciences industries, with senior roles in operations and CMC across several different product types. He also brings significant experience building out and leading new cGMP organizations and facilities. 80 Vishwas Seshadri , 46, was appointed our President, Chief Executive Officer and a director on October 15, 2021. Dr. Seshadri joined Abeona on June 1, 2021 as Head of Research and Clinical Development. Prior to joining Abeona, from October 2010 to May 2021, Dr. Seshadri served in roles of increasing responsibility at Celgene (now part of Bristol-Myers Squibb) focused on research & development and commercialization for novel therapies in hematology and oncology, most recently as Executive Director & Worldwide Brand Leader for Breyanzi® (lisocabtagene maraleucel; liso-cel), a CD19-directed chimeric antigen receptor (CAR) T cell therapy for relapsed or refractory large B-cell lymphoma. While at Celgene, he led franchise level marketing and the project management office for CAR T commercialization and led teams supporting the successful global launch of Breyanzi. He also led development project teams for clinical development and regulatory submissions for REVLIMID (lenalidomide) in lymphoma, strategic go/no-go decisions for Avadomide and IMFINZI (durvalumab) while implementing program-wide efficiency measures, and managed post-marketing commitments for ISTODAX (romidepsin). In addition, Dr. Seshadri had held U.S. and global marketing lead roles for Abraxane in non-small cell lung cancer and pancreatic cancer. Previously, he was Head of Early-Stage Upstream Process Development for Biologics at Dr. Reddy’s Laboratories, where he led cell-line development, current Good Manufacturing Practices (cGMP) cell banking, characterization, and cell culture optimization for biosimilars. Dr. Seshadri completed his Ph.D. in Microbiology, Immunology & Molecular Biology and his post-doc in epigenetics at University of Arizona, and earned his M.B.A. in Finance and Healthcare from the Wharton School of the University of Pennsylvania. Dr. Seshadri’s qualifications to serve on our Board include his extensive experience across clinical development, regulatory and medical affairs, corporate affairs, and commercial, with direct operational experience in various pharmaceutical companies. Edward Carr , 52, served as our Chief Accounting Officer from January 7, 2019 to August 10, 2021 when he was promoted to Chief Financial Officer. Mr. Carr again became Chief Accounting Officer on March 14, 2022. Mr. Carr joined Abeona in 2018 as Vice President, Controller. He has more than 25 years of corporate public accounting experience to the Company. Previously, from October 2017 to November 2018, he served as Vice President and Assistant Controller at Coty Inc., a publicly-traded multinational manufacturing company, and, from April 2007 to March 2017, Mr. Carr served as Chief Accounting Officer at Foster Wheeler AG, a publicly-traded multinational engineering company. Mr. Carr has significant experience managing various accounting, financial reporting, internal controls, tax and treasury matters. Mr. Carr, who is a Certified Public Accountant, began his career at Ernst & Young LLP. He holds a B.S. and Master of Professional Accountancy from West Virginia University. Brendan O’Malley, J.D., Ph.D. , 53, became our General Counsel on September 20, 2021. Dr. O’Malley joined Abeona in 2019 as Chief IP Counsel, bringing significant technical and legal expertise to the Abeona team. Prior to joining Abeona, he was a partner at the prominent New York patent litigation firm Fitzpatrick Cella Harper & Scinto, where he started his career as a summer associate in 2006, and then at Venable LLP, which merged with Fitzpatrick in 2018. While at Fitzpatrick and Venable, Dr. O’Malley litigated a wide variety of biopharmaceutical patent cases in the United States District Courts, at the Federal Circuit, and before the U.S. Patent and Trademark Office, negotiated numerous settlement and license agreements, and provided many patent opinions in connection with M&A due diligence in the biotech space. While attending law school at Benjamin N. Cardozo School of Law, Dr. O’Malley served as a judicial intern to Judge William H. Pauley in the U.S. District Court for the Southern District of New York. Before law school, he earned a Ph.D. in Molecular Biology & Microbiology from Tufts University School of Medicine, where he studied the role of protein-protein interactions in hepatitis virus assembly, and a B.S. degree magna cum laude from the University of Massachusetts Dartmouth. Joseph Vazzano , 38, was appointed our Chief Financial Officer effective March 14, 2022. Before joining Abeona, Mr. Vazzano served as Chief Financial Officer of publicly-traded Avenue Therapeutics, Inc. (“Avenue”) from February 2019 to January 2022. Prior to that, he served as Avenue’s Vice President of Finance and Corporate Controller since August 2017. During his tenure at Avenue, Mr. Vazzano secured multiple equity financings for Avenue and served in a leadership role for signing a complex, two-stage acquisition of Avenue with future contingent value rights. Prior to joining Avenue, Mr. Vazzano served as Assistant Corporate Controller at publicly-traded Intercept Pharmaceuticals, Inc. from October 2016 to July 2017, where he helped grow the finance and accounting department during the company’s transition from a development-stage company to a fully integrated commercial organization. Mr. Vazzano has held various other financial roles at other publicly traded pharmaceutical companies such as Pernix Therapeutics, and NPS Pharmaceuticals. Mr. Vazzano, who is a Certified Public Accountant, began his career at KPMG LLP. Mr. Vazzano has a Bachelor of Science degree in Accounting from Lehigh University and is a Certified Public Accountant in the State of New Jersey. 81 Corporate Governance Matters Pursuant to the Delaware General Corporation Law and our Bylaws, our business, property and affairs are managed by or under the direction of our Board. Members of the Board are kept informed of our business through discussions with our senior management, including our Chief Executive Officer, by reviewing materials provided to them and by participating in meetings of the Board and its committees. The Board is currently comprised of nine directors. The Board meets during our fiscal year to review significant developments affecting us and to act on matters requiring Board approval. The Board has adopted a number of corporate governance documents, including charters for its Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, corporate governance guidelines, a code of business conduct and ethics for employees, executive officers and directors (including its principal executive officer and principal financial officer) and a whistleblower policy regarding the treatment of complaints on accounting, internal accounting controls and auditing matters. All of these documents are available on our website at www.abeonatherapeutics.com under the heading “Investor & Media-Corporate Governance-Governance Documents,” and a copy of any such document may be obtained, without charge, upon written request to the Company, c/o Investor Relations, 1330 Avenue of the Americas, 33rd Floor, New York, NY 10019. Stockholder Communications with the Board The Board has established a process for stockholders to send communications to it. Stockholders may send written communications to the Board or individual directors to Abeona Therapeutics Inc., Board of Directors, c/o Corporate Secretary, 1330 Avenue of the Americas, 33rd Floor, New York, NY 10019. Stockholders also may send communications via email to IR@abeonatherapeutics.com with the notation “Attention: Corporate Secretary” in the subject field. All communications will be reviewed by the Corporate Secretary of the Company, who will determine whether such communications are relevant and for a proper purpose and appropriate for Board review and, if applicable, submit such communications to the Board on a periodic basis. Director Independence We are listed on the Nasdaq Capital Market (“Nasdaq”) and are subject to the Nasdaq rules and regulations governing director independence. The Board has determined that each of Leila Alland, M.D., Mark J. Alvino, Faith L. Charles, Paul Mann, Todd Wider, M.D. and Donald A. Wuchterl are independent under applicable Nasdaq rules. Board Leadership Structure The Board has no set policy with respect to the separation of the roles of Chairman of the Board and principal executive officer. Michael Amoroso currently serves as our Chairman of the Board and Vishwas Seshadri as Chief Executive Officer (principal executive officer). Our Board currently does not have a lead independent director. Our Board leadership structure is commonly utilized by other public companies in the United States, and we believe that it is effective for us. We believe this leadership structure is appropriate for us given the size and scope of our business, the experience and active involvement of our independent directors and our corporate governance practices, which include regular communication with and interaction between and among the Chief Executive Officer, Chief Financial Officer, and General Counsel, and the independent directors. Of the current members of our Board, six are independent from management. Board of Director’s Role in Risk Oversight The Board is responsible for overseeing our management and operations, including overseeing our risk assessment and risk management functions. We believe that our directors provide effective oversight of risk management functions. We perform a risk review on a regular basis wherein the management team evaluates the risks we expect to face in the upcoming year and over a longer-term horizon. From this risk assessment, plans are developed to deal with the risks identified. The results of this risk assessment are provided to the Board for their consideration and review. In addition, members of our management periodically present to the Board the strategies, issues and plans for the areas of our business for which they are responsible. While the Board oversees risk management, our management is responsible for day-to-day risk management processes. Additionally, the Board requires that management raise exceptional issues to the Board. We believe this division of responsibilities is the most effective approach for addressing the risks we face and that the Board leadership structure supports this approach. 82 Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all of our employees (including executive officers) and directors. The Code is available on our website at www.abeonatherapeutics.com under the heading “Investors & Media—Corporate Governance—Governance—Governance Documents.” We intend to satisfy any disclosure requirements under applicable SEC or Nasdaq rules regarding any waiver of a provision of the Code applicable to any executive officer or director, by posting such information on such website. We shall provide to any person without charge, upon request, a copy of the Code. Any such request must be made in writing to Abeona Therapeutics Inc., c/o Investor Relations, 1330 Avenue of the Americas, 33 rd Floor, New York, NY 10019. Committees of the Board of Directors The Board established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each of the committees of the Board acts pursuant to a separate written charter adopted by the Board. The Audit Committee is currently comprised of Paul Mann (Chair), Mark J. Alvino and Faith L. Charles. The Board has determined that each of Messrs. Mann and Alvino qualify as an “audit committee financial expert,” under applicable SEC rules and regulations. The Audit Committee’s responsibilities and duties are, among other things, to engage the independent auditors, review the audit fees, supervise matters relating to audit functions and review and set internal policies and procedure regarding audits, accounting and other financial controls. The Board has determined that Messrs. Mann and Alvino and Ms. Charles are independent under applicable SEC and Nasdaq rules and regulations. The Audit Committee acts pursuant to a written charter, which is available on our website under “Investors & Media-Corporate Governance-Governance Documents.” The Compensation Committee is currently comprised of Mark J. Alvino (Chair), Leila Alland, M.D. and Todd Wider, M.D. All committee members are non-employee directors under applicable SEC rules and are “outside” directors under Internal Revenue Code Section 162(m). All committee members also are independent under applicable SEC and Nasdaq rules and regulations. The Compensation Committee acts pursuant to a written charter, which is available on our website under “Investors & Media-Corporate Governance-Governance Documents.” The Nominating and Corporate Governance Committee is currently comprised of Faith L. Charles (Chair), Leila Alland, M.D. and Donald A. Wuchterl. All committee members are independent under applicable SEC and Nasdaq rules and regulations. The Nominating and Corporate Governance Committee is responsible for, among other things, considering potential Board members, making recommendations to the full Board as to nominees for election to the Board, assessing the effectiveness of the Board and implementing our corporate governance guidelines. The Nominating and Corporate Governance Committee acts pursuant to a written charter, which is available on our website under “Investors & Media-Corporate Governance-Governance Documents.” 83 ITEM 11. EXECUTIVE COMPENSATION Director and Executive Compensation Governance Principles The Company has adopted certain governance principles related to director and executive compensation as follows: ● Annual equity awards made to non-employee directors shall be granted on a different date than annual equity awards to executive officers. Final deliberations or voting on the compensation of non-employee directors (including any changes to the annual compensation package) shall be made at a different Board (or committee) meeting than any deliberations or voting on the compensation of executive officers (including any changes to the annual compensation package). ● On an annual basis, the Compensation Committee selects and retains an independent consultant to compare the Company’s executive compensation levels, policies, practices and procedures to a set of peer companies selected by the Compensation Committee with input from the independent consultant. The independent consultant prepares and submits to the Compensation Committee a report summarizing this comparative study and its recommendations relating to executive compensation. The Company’s executive officers play no substantive role in the selection or dismissal of the independent consultant. ● On an annual basis, qualified experts in the field present recent developments and best practices concerning executive compensation to the Compensation Committee. ● On an annual basis, the proposed package for the non-employee director compensation must be recommended by the Compensation Committee to the Board following the receipt of a report from an independent consultant analyzing the non-employee director compensation package of the Company’s peer companies. Outside Compensation Consultants For 2021, the Compensation Committee engaged Radford Inc. (“Radford”) as an independent compensation consultant to provide certain services related to executive and non-employee director compensation. Radford assisted with the Compensation Committee’s review of the Company’s annual salary, bonus and equity compensation plans for executive officers and annual cash and equity compensation for non-employee directors. Radford does not provide any other services to the Company unless approved by the Compensation Committee, and no such services were provided in 2021. After considering the relevant factors, the Company determined that no conflicts of interest have been raised in connection with the services Radford performed for the Compensation Committee in 2021. Compensation of Directors Compensation for Board Service in 2021 : Each director who is not also an Abeona employee is entitled to receive an annual board fee and an annual committee fee for their service on each Board committee. These fees are paid in cash quarterly. In addition, we reimburse each director, whether an employee or not, for the expense of attending Board and committee meetings. There were no additional fees paid for service as a chairperson of a Board committee. During 2021, the annual board fee was $50,000 and the annual committee fee was $7,500 per committee served. In addition, incumbent non-employee directors were each granted equity awards valued at $115,000 for service on the Board in 2021 consisting of 50% in stock options and 50% in restricted stock. New non-employee directors were each granted equity awards valued at $230,000 consisting of 50% in stock options and 50% in restricted stock. All equity awards were granted on a different date than any equity awards to executive officers. 84 Director Compensation Table – 2021* The table below represents the compensation paid to our directors during the year ended December 31, 2021: Fees Earned or Paid Stock Option in Cash Awards Awards Total Name ($) ($) (1) ($) (2) ($) Leila Alland, M.D. (3) $ 46,403 $ 115,000 (4) $ 107,199 (5) $ 268,602 Mark J. Alvino (6) 49,833 115,000 (4) 107,199 (5) $ 272,032 Michael Amoroso (7) - - - $ - Faith L. Charles (6) 49,833 115,000 (4) 107,199 (5) $ 272,032 Paul Mann 59,375 57,499 (8) 53,600 (9) $ 170,474 Steven H. Rouhandeh (10) 39,583 57,499 (11) 53,600 (12) $ 150,682 Vishwas Seshadri (13) - - - $ - Christine Silverstein 50,000 57,499 (14) 53,600 (15) $ 161,099 Todd Wider, M.D. 59,375 57,499 (16) 53,600 (17) $ 170,474 Donald A. Wuchterl (3) 41,049 115,000 (4) 107,199 (5) $ 263,248 (1) Fair value of stock awards is calculated under ASC 718 as of the grant date using the closing stock price of our Common Stock. Our assumptions in determining fair value are described in Note 11 of Notes to Consolidated Financial Statements in Part II, Item 8. (2) Fair value of option awards is calculated under ASC 718 as of the grant date using the Black-Scholes option-pricing model. Employees are assumed to exercise their options. The determination of the fair value of share-based payment awards made on the date of grant is affected by our Common Stock price as well as assumptions regarding a number of complex and subjective variables. Our assumptions in determining fair value are described in Note 11 of Notes to Consolidated Financial Statements in Part II, Item 8. (3) Effective April 14, 2021, Dr. Alland and Mr. Wuchterl were appointed to the Board. (4) Represents the fair value of 77,181 shares of restricted stock granted on May 25, 2021. Dr. Alland, Mr. Alvino, Ms. Charles and Mr. Wuchterl held no restricted stock as of December 31, 2021. (5) Represents the fair value of options granted on May 25, 2021 to purchase 98,168 shares of our Common Stock. Dr. Alland, Mr. Alvino, Ms. Charles and Mr. Wuchterl each had options to purchase 98,168 shares of our Common Stock as of December 31, 2021. (6) Effective March 26, 2021, Mr. Alvino and Ms. Charles were appointed to the Board. (7) Mr. Amoroso served as our President and Chief Executive Officer from March 19, 2021 until his resignation on October 15, 2021. On October 15, 2021, Mr. Amoroso became Chairman of the Board. He did not receive any compensation for his Board service while serving as CEO, and declined renumeration for his services after he became a non-employee director. (8) Represents the fair value of 38,590 shares of restricted stock granted on May 25, 2021. Mr. Mann held no restricted stock as of December 31, 2021. (9) Represents the fair value of options granted on May 25, 2021 to purchase 49,084 shares of our Common Stock. Mr. Mann had options to purchase 49,084 shares of our Common Stock as of December 31, 2021. (10) On October 14, 2021, Mr. Rouhandeh resigned from the Board. (11) Represents the fair value of restricted stock granted on May 25, 2021 to purchase 38,590 shares of our Common Stock. (12) Represents the fair value of options granted on May 25, 2021 to purchase 49,084 shares of our Common Stock. (13) Dr. Seshadri did not receive compensation for his services as a director. (14) Represents the fair value of 38,590 shares of restricted stock granted on May 25, 2021. Ms. Silverstein held 60,000 shares of restricted stock as of December 31, 2021. (15) Represents the fair value of options granted on May 25, 2021 to purchase 49,084 shares of our Common Stock. Ms. Silverstein had options to purchase 512,834 shares of our Common Stock as of December 31, 2021. (16) Represents the fair value of 38,590 shares of restricted stock granted on May 25, 2021. Dr. Wider held no restricted stock as of December 31, 2021. (17) Represents the fair value of options granted on May 25, 2021 to purchase 49,084 shares of our Common Stock. Dr. Wider had options to purchase 49,084 shares of our Common Stock as of December 31, 2021. 85 Executive Compensation The following table sets forth the aggregate compensation paid to: (i) our principal executive officer at the end of fiscal year 2021, Vishwas Seshadri; (ii) an additional principal executive officer who was no longer serving in that capacity at the end of fiscal year 2021, Michael Amoroso; and (iii) our only other executive officers other than our principal executive officer who were serving as an executive officer at the end of fiscal year 2021, Edward Carr and Brendan O’Malley. Summary Compensation Table Name All and Option Stock Other Principal Salary Bonus Awards Awards Compensation Total Position Year ($) ($) ($) (1) ($) (2) ($) ($) Vishwas Seshadri (3) President and Chief Executive Officer 2021 $ 254,552 $ - (4) $ 744,570 (5) $ 558,500 (6) $ 8,853 (7) $ 1,566,475 Edward Carr (8) Chief Accounting Officer and 2021 $ 360,985 $ 146,204 (9) $ 634,210 (10) $ 416,880 (11) $ 11,600 (7) $ 1,569,879 Former Chief Financial Officer 2020 $ 300,000 $ 126,000 (12) $ 161,016 (13) $ 325,591 (14) $ 11,400 (7) $ 924,007 Brendan O’Malley (15) General Counsel 2021 $ 335,484 $ 120,281 (9) $ 430,284 (16) $ 281,560 (17) $ 11,600 (7) $ 1,179,209 Michael Amoroso (18) Former President and 2021 $ 450,477 $ - $ 1,589,910 (19) $ 1,013,000 (20) $ 11,600 (7) $ 3,064,987 Chief Executive Officer 2020 $ 219,071 $ 106,400 (12) $ 827,294 (21) $ 338,728 (22) $ 7,667 (7) $ 1,499,160 (1) Fair value of option awards is calculated under ASC 718 as of the grant date using the Black-Scholes option-pricing model and as of the repricing date using a Hull-White I lattice model. Employees are assumed to exercise their options. The determination of the fair value of share-based payment awards made on the date of grant is affected by our Common Stock price as well as assumptions regarding a number of complex and subjective variables. Our assumptions in determining fair value are described in Note 11 of Notes to Consolidated Financial Statements in Part II, Item 8. (2) Fair value of stock awards is calculated under ASC 718 as of the grant date using the closing stock price of our Common Stock. Our assumptions in determining fair value are described in Note 11 of Notes to Consolidated Financial Statements in Part II, Item 8. (3) Dr. Seshadri was promoted to President and Chief Executive Officer on October 15, 2021. Dr. Seshadri joined the Company on June 1, 2021 and served as SVP, Head of Research and Clinical Development prior to his appointment to President and Chief Executive Officer. (4) Dr. Seshadri declined to accept a bonus for performance in 2021. 86 (5) Represents the fair value of options granted on (i) June 1, 2021 to purchase 400,000 shares of our Common Stock and (ii) on October 15, 2021 to purchase 300,000 shares of our Common Stock. (6) Represents the fair value of restricted stock granted on (i) June 1, 2021 for 300,000 shares of our Common Stock and (ii) October 15, 2021 for 50,000 shares of our Common Stock. (7) Represents employer matching contributions to the Company’s 401(k) Defined Contribution Plan. (8) Mr. Carr was promoted to Chief Financial Officer on August 10, 2021. Mr. Carr joined Abeona in November 2018 as Controller and served as Chief Accounting Officer from January 2019 until his promotion to Chief Financial Officer. (9) Represents a bonus accrued for performance in 2021 and paid in February 2022. Bonus payments are pro-rated for the portion of the year employed at the Company. (10) Represents the fair value of options granted on (i) March 1, 2021 to purchase 100,000 shares of our Common Stock and (ii) August 10, 2021 to purchase 476,000 shares of our Common Stock. (11) Represents the fair value of restricted stock granted on (i) on March 1, 2021 for 50,000 shares of our Common Stock and (ii) on August 10, 2021 for 238,000 shares of our Common Stock. (12) Represents a bonus accrued for performance in 2020 and paid in January 2021. Bonus payments are pro-rated for the portion of the year employed at the Company. (13) Represents the fair value of options granted on (i) March 16, 2020 to purchase 51,081 shares of our Common Stock and (ii) May 20, 2020 to purchase 28,919 shares of our Common Stock as well as (iii) the incremental fair value of repriced options to purchase 125,000 shares of our Common Stock as noted above. (14) Represents the fair value of restricted stock granted (i) on May 20, 2020 for 40,000 shares of our Common Stock and (ii) on October 9, 2020 for 143,182 shares of our Common Stock. (15) Dr. O’Malley was promoted to General Counsel on September 20, 2021. Dr. O’Malley joined Abeona in May 2019 as Chief IP Counsel and served as Head of Legal & IP from April 2020 until his promotion to General Counsel. (16) Represents the fair value of options granted on (i) March 1, 2021 to purchase 100,000 shares of our Common Stock and (ii) September 20, 2021 to purchase 272,000 shares of our Common Stock. (17) Represents the fair value of restricted stock granted on (i) on March 1, 2021 for 50,000 shares of our Common Stock and (ii) on September 20, 2021 for 136,000 shares of our Common Stock. (18) Mr. Amoroso was promoted to President and Chief Executive Officer on March 19, 2021, and resigned on October 15, 2021. Mr. Amoroso joined the Company on July 9, 2020 and served as Chief Commercial Officer until October 31, 2020 when he was promoted to Chief Operating Officer, becoming the Company’s principal executive officer. (19) Represents the fair value of options granted on (i) March 1, 2021 to purchase 400,000 shares of our Common Stock and (ii) March 19, 2021 to purchase 500,000 shares of our Common Stock. (20) Represents the fair value of restricted stock granted on (i) on March 1, 2021 for 200,000 shares of our Common Stock and (ii) on March 19, 2021 for 250,000 shares of our Common Stock (21) Represents the fair value of options granted on (i) July 9, 2020 to purchase 250,000 shares of our Common Stock and (ii) on November 2, 2020 to purchase 100,000 shares of our Common Stock as well as (iii) the incremental fair value of repriced options to purchase 250,000 shares of our Common Stock as noted above. (22) Represents the fair value of restricted stock granted on October 9, 2020 for 245,455 shares of our Common Stock. 87 Outstanding Equity Awards at Fiscal Year-End The following table summarizes the aggregate number of option awards held by our named executive officers (“NEOs”) as of December 31, 2021. Option Awards Stock Awards Number of Number of Number of Market Value of Securities Securities Shares or Shares or Underlying Underlying Units Units of Unexercised Unexercised Option of Stock Stock Options Options Exercise Option That Have That Have Grant (#) (#) Price Expiration Not Vested Not Vested Name Date Exercisable Unexercisable ($) Date (#) (S)(1) 10/15/2021 - 300,000 (2) $ 0.91 10/15/2031 50,000 (3) $ 17,000 Vishwas Seshadri 6/1/2021 - - - - 100,000 (3) $ 34,000 6/1/2021 - 400,000 (2) $ 1.71 6/1/2031 200,000 (3) $ 68,000 8/10/2021 - 476,000 (4) 1.26 8/10/2031 238,000 (5) $ 80,920 3/1/2021 - 100,000 (4) $ 2.34 3/1/2031 50,000 (5) $ 17,000 Edward Carr 5/20/2020 12,657 16,262 (4) $ 1.15 3/16/2030 30,000 (5) $ 10,200 3/16/2020 22,356 28,725 (4) $ 1.15 3/16/2030 - $ - 4/9/2019 6,680 3,320 (4) $ 1.15 4/9/2029 - $ - 11/19/2018 27,000 8,000 (4) $ 1.15 11/19/2028 - $ - 9/20/2021 - 272,000 (6) 1.21 9/20/2031 136,000 (7) $ 46,240 3/1/2021 - 100,000 (6) $ 2.34 3/1/2031 50,000 (7) $ 17,000 Brendan O’Malley 5/20/2020 7,912 10,162 (6) $ 1.15 3/16/2030 18,750 (7) $ 6,375 3/16/2020 13,976 17,950 (6) $ 1.15 3/16/2030 - $ - 5/31/2019 35,524 19,476 (6) $ 1.15 5/31/2029 - $ - 3/19/2021 - 500,000 (8) 2.18 3/19/2031 250,000 (9) $ 85,000 3/1/2021 - 400,000 (8) $ 2.34 3/1/2031 200,000 (9) $ 68,000 Michael Amoroso 11/2/2020 27,084 72,916 (8) $ 1.07 11/2/2030 - $ - 7/9/2020 88,545 161,455 (8) $ 1.15 7/9/2030 - $ - (1) Calculated based on the closing share price on December 31, 2021 of $0.34. (2) Dr. Seshadri’s options to purchase shares of Common Stock will vest in the following periods: 300,000 options at $0.91 per share granted on October 15, 2021 will be fully vested in October 2025 and 400,000 options granted on June 1, 2021 at $1.71 per share will be fully vested in June 2025. (3) Dr. Seshadri’s restricted stock will vest in the following periods: 50,000 shares of restricted stock granted on October 15, 2021 will be fully vested in October 2025; 100,000 shares of restricted stock granted on June 1, 2021 will be fully vested in June 2022; and 200,000 shares of restricted stock granted on June 1, 2021 will be fully vested in June 2025. (4) Mr. Carr’s options to purchase shares of Common Stock will vest the following periods: 476,000 options granted on August 10, 2021 at $1.26 per share will be fully vested in August 2025; 100,000 options granted on March 1, 2021 at $2.34 per share will be fully vested in March 2025; 16,262 options granted on May 20, 2020 at $1.15 per share will be fully vested in March 2024; 28,725 options granted on March 16, 2020 at $1.15 per share will be fully vested in March 2024; 3,320 options granted on April 9, 2019 at $1.15 per share will be fully vested in April 2023; and 8,000 options granted on November 19, 2018 at $1.15 per share will be fully vested in November 2022. (5) Mr. Carr’s restricted stock will vest in the following periods: 238,000 shares of restricted stock granted on August 10, 2021 will be fully vested in August 2025; 50,000 shares of restricted stock granted on March 1, 2021 will be fully vested in March 2025; and 30,000 shares of restricted stock granted on May 20, 2020 will be fully vested in March 2024. (6) Dr. O’Malley’s options to purchase shares of Common Stock will vest the following periods: 272,000 options granted on September 20, 2021 at $1.21 per share will be fully vested in September 2025; 100,000 options granted on March 1, 2021 at $2.34 per share will be fully vested in March 2025; 10,162 options granted on May 20, 2020 at $1.15 per share will be fully vested in March 2024; 17,950 options granted on March 16, 2020 at $1.15 per share will be fully vested in March 2024; and 19,476 options granted on May 31, 2019 at $1.15 per share will be fully vested in May 2023. (7) Dr. O’Malley’s restricted stock will vest in the following periods: 136,000 shares of restricted stock granted on September 20, 2021 will be fully vested in September 2025; 50,000 shares of restricted stock granted on March 1, 2021 will be fully vested in March 2025; and 18,750 shares of restricted stock granted on May 20, 2020 will be fully vested in March 2024. (8) Mr. Amoroso’s options to purchase shares of Common Stock will vest the following periods: 500,000 options granted on March 19, 2021 at $2.18 per share will be fully vested in March 2025; 400,000 options granted on March 1, 2021 at $2.34 per share will be fully vested in March 2025; 72,916 options granted on November 2, 2020 at $1.07 per share will be fully vested in November 2024; and 161,455 options granted on July 9, 2020 at $1.15 per share will be fully vested in July 2024. (9) Mr. Amoroso’s restricted stock will vest in the following periods: 250,000 shares of restricted stock granted on March 19, 2021 will be fully vested in March 2025 and 200,000 shares of restricted stock granted on March 1, 2021 will be fully vested in March 2025. 88 Compensation Pursuant to Agreements and Plans Employment Agreements President and Chief Executive Officer Dr. Seshadri entered into an employment agreement with the Company when he joined as SVP, Head of Research & Clinical Development on June 1, 2021. In his role as SVP, Head of Research & Clinical Development, Dr. Seshadri received an annual base salary of $400,000 and was eligible for an annual discretionary bonus with a target of 40% of his annual base salary. On June 1, 2021, Dr. Seshadri was granted stock options to purchase 400,000 shares of the Company’s Common Stock pursuant to the Company’s 2015 Equity Incentive Plan, with 25% vesting on June 1, 2022 and the remaining 75% vesting in 36 equal monthly installments thereafter. On June 1, 2021, Dr. Seshadri was granted 300,000 restricted shares of Common Stock pursuant to the Company’s 2015 Equity Incentive Plan, with 150,000 shares vesting on June 1, 2022 and the remaining 150,000 shares vesting in three installments of 50,000 shares annually thereafter starting on June 1, 2023. On October 15, 2021, Dr. Seshadri was appointed President, Chief Executive Officer, and Director. In his new role as President and Chief Executive Officer, Dr. Seshadri receives an annual base salary of $500,000 and will be eligible for an annual discretionary bonus with a target of 50% of his annual base salary. In connection with his appointment to President and Chief Executive Officer, Dr. Seshadri was granted 50,000 shares of restricted stock and options to purchase 300,000 shares of common stock of the Company. The options vest 25% on the one-year anniversary of the grant date and the remaining 75% vesting in 36 equal monthly installments thereafter. The restricted stock will vest 25% on the one-year anniversary of the grant date and the remaining 75% vesting in equal annual installments over the following 36 months. Under the terms of his employment agreement dated October 6, 2021, Dr. Seshadri and the Company may each terminate Dr. Seshadri’s employment for any reason upon written notice to the other party. If Dr. Seshadri’s employment is terminated by the Company other than for Cause, or by Dr. Seshadri for Good Reason (as each term is defined in his employment agreement), Dr. Seshadri will be entitled to (i) a payment equal to the sum of his base salary plus his target annual bonus opportunity, (ii) payment equal to the cost of the premium for his health coverage under the Company’s health plan for him and his dependents for the twelve-month period following his termination date, (iii) a pro-rata bonus for the year of termination and (iv) accelerated vesting equivalent to 12 months of continued employment from the Termination Date (disregarding such termination for such purpose) with respect to all unvested equity and any other long-term incentive awards granted to Dr. Seshadri and then outstanding on the Termination Date. The Company’s obligations in the preceding sentence are conditioned upon, among other things, Dr. Seshadri’s execution and nonrevocation of a release of claims in favor of the Company and its affiliates. If Dr. Seshadri remains continuously employed through the date of a Change in Control (as that term is defined in his employment agreement), all outstanding equity compensation awards will become fully vested and exercisable immediately. 89 Chief Accounting Officer and Former Chief Financial Officer The Board appointed Mr. Carr as Chief Accounting Officer effective January 7, 2019. He was entitled to an annual base salary of $300,000, effective January 1, 2020 and a target annual bonus opportunity equal to 35% of his base salary. The amount of the annual bonus actually paid depended on the extent to which the performance goals are achieved or exceeded as determined by the Board. Mr. Carr is eligible to participate in all employee benefit plans that the Company may establish for similarly situated employees, if and to the extent he is eligible pursuant to the terms of such plans and Company policies, which may be modified by the Company at its discretion. Effective January 1, 2021, Mr. Carr’s annual base salary was increased to $336,000 and his annual discretionary bonus target was 35% of his annual base salary. On March 1, 2021, Mr. Carr was granted (i) stock options to purchase 100,000 shares of the Company’s Common Stock pursuant to the Company’s 2015 Equity Incentive Plan, with 25% vesting on March 1, 2022 and the remaining 75% vesting in 36 equal monthly installments thereafter and (ii) 50,000 restricted shares of Common Stock pursuant to the Company’s 2015 Equity Incentive Plan, with 25% vesting on each of March 1, 2022, March 1, 2023, March 1, 2024 and March 1, 2025. On August 10, 2021, Mr. Carr was appointed as Chief Financial Officer. In his new role, Mr. Carr received an annual base salary of $400,000 and was eligible for an annual discretionary bonus with a target of 40% of his annual base salary. In connection with his appointment to Chief Financial Officer, Mr. Carr was granted 238,000 shares of restricted stock and options to purchase 476,000 shares of common stock of the Company. The options vest 25% on the one-year anniversary of the grant date and the remaining 75% vesting in 36 equal monthly installments thereafter. The restricted stock will vest 25% on the one-year anniversary of the grant date and the remaining 75% vesting in equal annual installments over the following 36 months. On March 3, 2022, Mr. Carr notified the Company of his resignation effective March 31, 2022. On March 14, 2022, Mr. Carr ceased being the Chief Financial Officer and became the Chief Accounting Officer, a position he will hold through March 31, 2022. Under the terms of his employment agreement dated August 10, 2021, Mr. Carr and the Company may each terminate Mr. Carr’s employment for any reason upon written notice to the other party. If Mr. Carr’s employment is terminated by the Company other than for Cause, or by Mr. Carr for Good Reason (as each term is defined in his employment agreement), Mr. Carr will be entitled to (i) a payment equal to the sum of twelve months of his annual base salary plus twelve months of his annual target annual bonus opportunity and (ii) payment equal to the cost of the premium for his health coverage under the Company’s health plan for him and his dependents for the twelve-month period following his termination date. If Mr. Carr’s employment is terminated by the Company other than for Cause, or by Mr. Carr for Good Reason (as each term is defined in his employment agreement) within twelve months following a Change of Control, Mr. Carr will be entitled to (i) a payment equal to the sum of twelve months of his annual base salary plus twelve months of his annual target annual bonus opportunity and (ii) payment equal to the cost of the premium for his health coverage under the Company’s health plan for him and his dependents for the twelve-month period following his termination date. The Company’s obligations in the preceding sentence are conditioned upon, among other things, Mr. Carr’s execution and nonrevocation of a release of claims in favor of the Company and its affiliates. If Mr. Carr remains continuously employed through the date of a Change in Control (as that term is defined in his employment agreement), all outstanding equity compensation awards will become fully vested and exercisable immediately. General Counsel Dr. O’Malley joined Abeona in 2019 as Chief IP Counsel. He was entitled to an annual base salary of $321,000, effective January 1, 2021 and a target annual bonus opportunity equal to 35% of his base salary. The amount of the annual bonus actually paid depended on the extent to which the performance goals are achieved or exceeded as determined by the Board. Dr. O’Malley is eligible to participate in all employee benefit plans that the Company may establish for similarly situated employees, if and to the extent he is eligible pursuant to the terms of such plans and Company policies, which may be modified by the Company at its discretion. 90 On September 20, 2021, Dr. O’Malley was appointed SVP, General Counsel. In his new role, Dr. O’Malley receives an annual base salary of $372,000 and is eligible for an annual discretionary bonus with a target of 40% of his annual base salary. In connection with his appointment as SVP, General Counsel, Dr. O’Malley was granted 136,000 shares of restricted stock and options to purchase 272,000 shares of common stock of the Company. The options vest 25% on the one-year anniversary of the grant date and the remaining 75% vesting in 36 equal monthly installments thereafter. The restricted stock will vest 25% on the one-year anniversary of the grant date and the remaining 75% vesting in equal annual installments over the following 36 months Under the terms of his employment agreement dated September 16, 2021, Dr. O’Malley and the Company may each terminate Dr. O’Malley’s employment for any reason upon written notice to the other party. If Dr. O’Malley’s employment is terminated by the Company other than for Cause, or by Dr. O’Malley for Good Reason (as each term is defined in his employment agreement), Dr. O’Malley will be entitled to (i) a payment equal to the sum of twelve months of his annual base salary plus twelve months of his annual target annual bonus opportunity and (ii) payment equal to the cost of the premium for his health coverage under the Company’s health plan for him and his dependents for the twelve-month period following his termination date. If Dr. O’Malley’s employment is terminated by the Company other than for Cause, or by Dr. O’Malley for Good Reason (as each term is defined in his employment agreement) within twelve months following a Change of Control, Dr. O’Malley will be entitled to (i) a payment equal to the sum of twelve months of his annual base salary plus twelve months of his annual target annual bonus opportunity and (ii) payment equal to the cost of the premium for his health coverage under the Company’s health plan for him and his dependents for the twelve-month period following his termination date. The Company’s obligations in the preceding sentence are conditioned upon, among other things, Dr. O’Malley’s execution and nonrevocation of a release of claims in favor of the Company and its affiliates. If Dr. O’Malley remains continuously employed through the date of a Change in Control (as that term is defined in his employment agreement), all outstanding equity compensation awards will become fully vested and exercisable immediately. Former President and Chief Executive Officer Mr. Amoroso had entered into a letter agreement with the Company dated March 19, 2021 in connection with his appointment to President and Chief Executive Officer. Pursuant to such agreement, Mr. Amoroso received an annual base salary of $550,000 and will be eligible for an annual discretionary bonus with a target of 50% of his annual base salary. In connection with his appointment to President and Chief Executive Officer, Mr. Amoroso was granted 250,000 shares of restricted stock and options to purchase 500,000 shares of common stock of the Company. The options vest 25% on the one-year anniversary of the grant date and the remaining 75% vesting in 36 equal monthly installments thereafter. The restricted stock will vest 25% on the one-year anniversary of the grant date and the remaining 75% vesting in equal quarterly installments over the following 36 months. Pursuant to Mr. Amoroso’s agreement, Mr. Amoroso and the Company may each terminate Amoroso’s employment for any reason upon written notice to the other party. If Mr. Amoroso’s employment was terminated by the Company other than for Cause, or by Mr. Amoroso for Good Reason (as each term is defined in his employment agreement), Mr. Amoroso would have been entitled to (i) a payment equal to the sum of his base salary plus his target annual bonus opportunity, (ii) payment equal to the cost of the premium for his health coverage under the Company’s health plan for him and his dependents for the twelve-month period following his termination date, and (iii) accelerated vesting equivalent to 12 months of continued employment from the Termination Date (disregarding such termination for such purpose) with respect to all unvested equity and any other long-term incentive awards granted to him and then outstanding on the Termination Date. The Company’s obligations in the preceding sentence were conditioned upon, among other things, Mr. Amoroso’s execution and nonrevocation of a release of claims in favor of the Company and its affiliates. If Mr. Amoroso remained continuously employed through the date of a Change in Control (as that term is defined in the employment agreement), all outstanding equity compensation awards would become fully vested and exercisable immediately. Retirement Benefits The Company’s executives are provided usual and customary retirement benefits available to all employees, including the NEOs. These include thrift savings (401(k)), life insurance, accidental death and dismemberment insurance, medical/dental insurance, vision insurance, long-term disability insurance and a Company-sponsored pension plan. We provide matching contributions under our 401(k) to all employees, including the NEOs. COMPENSATION COMMITTEE DISCUSSION ON EXECUTIVE COMPENSATION The Compensation Committee operates under a written charter adopted by the Board and is responsible for making all compensation decisions for the Company’s directors and named executives including determining base salary and annual incentive compensation amounts and recommending stock option grants and other stock-based compensation under our equity incentive plans. The Compensation Committee charter can be found on our under “Investor & Media-Corporate Governance-Governance Documents.” 91 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Based solely upon information made available to us, the following table sets forth certain information with respect to the beneficial ownership of our Common Stock as of March 21, 2022 by (i) each person who is known by us to beneficially own more than five percent of any class of our Common Stock; (ii) each of our directors and nominees; (iii) each of our named executive officers; and (iv) all of our executive officers and directors as a group. The address of each holder listed below, except as otherwise indicated, is 1330 Avenue of the Americas, 33 rd Floor, New York, NY 10019. Amount and Nature of Beneficial Ownership Common Percent of Name and Address of Beneficial Owner Stock (1) Common Stock (2) Directors, Director Nominees, and Named Executive Officers: Leila Alland, M.D. (3) 175,349 * Mark J. Alvino (4) 180,349 * Michael Amoroso (5) 1,019,233 * Faith L. Charles (3) 175,349 * Paul Mann (6) 87,674 * Christine Silverstein (7) 536,452 * Todd Wider, M.D. (6) 87,674 * Donald A. Wuchterl (3) 175,349 * Vishwas Seshadri (8) 350,000 * Edward Carr (9) 511,065 * Brendan O’Malley (10) 302,275 * All Directors, Director Nominees, and Named Executive Officers as a group (consisting of 11 persons) 3,600,769 2.4 % 5% Beneficial Owners: Steven H. Rouhandeh (11) 14,052,364 9.5 % Adage Capital Partners, L.P. (12) 8,007,272 5.4 % * Less than 1% (1) Includes outstanding shares of Common Stock held plus all shares of Common Stock issuable upon exercise of options, warrants and other rights exercisable within 60 days after March 21, 2022. (2) Based upon 147,378,022 shares of Common Stock issued and outstanding as of March 21, 2022. (3) Dr. Alland, Ms. Charles and Mr. Wuchterl are each known to beneficially own an aggregate of 77,181 shares of our Common Stock and presently exercisable options for the purchase of 98,168 shares pursuant to the 2015 Equity Incentive Plan. (4) Mr. Alvino is known to beneficially own an aggregate of 82,181 shares of our Common Stock and presently exercisable options for the purchase of 98,168 shares pursuant to the 2015 Equity Incentive Plan. (5) Mr. Amoroso is known to beneficially own an aggregate of 604,637 shares of our Common Stock and presently exercisable options for the purchase of 414,596 shares of our Common Stock pursuant to the 2015 Equity Incentive Plan. (6) Mr. Mann and Dr. Wider are each known to beneficially own an aggregate of 38,590 shares of our Common Stock and presently exercisable options for the purchase of 49,084 shares pursuant to the 2015 Equity Incentive Plan. (7) Ms. Silverstein is known to beneficially own an aggregate of 118,590 shares of our Common Stock and presently exercisable options for the purchase of 417,862 shares of our Common Stock pursuant to the 2015 Equity Incentive Plan. (8) Dr. Seshadri is known to beneficially own an aggregate of 350,000 shares of our Common Stock. (9) Mr. Carr is known to beneficially own an aggregate of 400,169 shares of our Common Stock and presently exercisable options for the purchase of 110,896 shares of our Common Stock pursuant to the 2015 Equity Incentive Plan. (10) Dr. O’Malley is known to beneficially own an aggregate of 204,750 shares of our Common Stock and presently exercisable options for the purchase of 97,525 shares of our Common Stock pursuant to the 2015 Equity Incentive Plan. (11) Beneficial ownership for Mr. Rouhandeh includes (i) 503,590 shares held directly by Mr. Rouhandeh, (ii) presently exercisable options for the purchase of 1,024,114 shares pursuant to the 2015 Equity Incentive Plan, (iii) presently exercisable options for the purchase of 80,000 shares pursuant to the 2005 Equity Incentive Plan, (iv) 229 shares held by the Sophie C. Rouhandeh Trust, 229 shares held by the Chloe H. Rouhandeh Trust, and 714 shares held by the SHR Family Trust (collectively, the “Trusts”), and (v) 11,079,292 shares and 1,364,196 shares held by each of SCO Capital Partners LLC and Beach Capital LLC, respectively. Mr. Rouhandeh serves as trustee of each of the Trusts. He is also the Chief Investment Officer and managing member of SCO Capital Partners LLC and managing member of Beach Capital LLC. The address for each of Mr. Rouhandeh, SCO Capital Partners LLC and Beach Capital LLC is 1330 Avenue of the Americas, 33 rd Floor, New York, NY 10019. Mr. Rouhandeh disclaims his beneficial ownership of such shares except to the extent of his pecuniary interest therein. (12) Based on information set forth in a Schedule 13G/A filed with the SEC on February 10, 2022 by Adage Capital Partners, L.P. and related entities. Adage Capital Partners L.P.’s address is 200 Clarendon Street, 52 nd Floor, Boston, MA 02116. To our knowledge, except as noted above, no person or entity is the beneficial owner of more than 5% of the voting power of the Company’s Common Stock. 92 Securities Authorized for Issuance Under Equity Compensation Plans The information set forth under the caption “Equity Compensation Plan Information” in Item 5 of this Form 10-K is incorporated by reference herein. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Certain Relationships and Related Transactions On occasion we may engage in certain related party transactions. Pursuant to our Audit Committee charter, our policy is that all related party transactions are reviewed and approved by the Audit Committee. There were no related party transactions in 2021. Director Independence The information set forth under the caption “Director Independence” in Item 10 of this Form 10-K is incorporated by reference herein. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The following table presents fees for professional audit services rendered by Whitley Penn LLP for the audit of our annual financial statements for the years ended December 31, 2021 and 2020, and fees billed for other services rendered during the respective periods. Types of Fees 2021 2020 Audit Fees (1) $ 153,000 $ 171,000 Audit-Related Fees (2) $ 74,000 $ 33,000 Tax Fees (3) $ 0 $ 0 All Other Fees (4) $ 0 $ 0 (1) Audit fees for 2021 and 2020 were for professional services rendered for the audit of our financial statements for the fiscal year and reviews of our quarterly financial statements included in our Form 10-Q filings. (2) Audit-related fees are for services related to our registration statements on Forms S-3 and S-8 and other fees. (3) Tax fees are for professional services rendered for tax compliance, tax advice, and tax planning service. (4) All other fees are for services, other than those described above, rendered to us. All decisions regarding the selection of an independent registered public accounting firm and approval of accounting services and fees are made by our Audit Committee in accordance with the provisions of the Sarbanes-Oxley Act of 2002 and related SEC rules. The Audit Committee selected Whitley Penn LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022. Whitley Penn LLP has served as Abeona’s independent registered public accounting firm since September 2006. Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm The Audit Committee pre-approves all audit and non-audit services provided by the independent registered public accounting firm prior to the engagement with respect to such services. In 2021 and 2020, the Audit Committee approved all of the services listed under the preceding captions “Audit Fees” and “Audit-Related Fees.” 93 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES a. Financial Statements . The following financial statements are submitted as part of this report: Page Report of Independent Registered Public Accounting Firm (PCAOB ID 726 ) F-1 Consolidated Balance Sheets at December 31, 2021 and 2020 F-2 Consolidated Statements of Operations and Comprehensive Loss for 2021 and 2020 F-3 Consolidated Statements of Stockholders’ Equity for 2021 and 2020 F-4 Consolidated Statements of Cash Flows for 2021 and 2020 F-5 Notes to Consolidated Financial Statements F-6 b. Exhibits Exhibit Number Description of Document 3.1 Restated Certificate of Incorporation of Abeona Therapeutics Inc. (incorporated by reference to Exhibit 3.1 of our Form 10-Q for the quarter ended March 31, 2019) 3.2 Amended and Restated Bylaws of Abeona Therapeutics Inc. (incorporated by reference to Exhibit 3.1 of our Form 8-K filed on May 21, 2020) 4.1* 2015 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to our Form S-8 filed May 11, 2015) 4.2* 2015 Equity Incentive Plan Amendment (incorporated by reference to our Definitive Proxy Statement on Schedule 14A filed on April 4, 2016) 4.3 Description of Capital Stock of Abeona Therapeutics Inc. (incorporated by reference to Exhibit 4.4 of our Form 10-K for the year ended December 31, 2019) 10.1* 401(k) Plan (incorporated by reference to Exhibit 10.20 of our Form 10-K for the year ended December 31, 1999) 10.2* 2005 Equity Incentive Plan (incorporated by reference to Exhibit 1 of our Proxy Statement filed on April 18, 2005) 10.3 Director Designation Agreement dated November 15, 2007, between the Company and SCO Capital Partners LLC (incorporated by reference to Exhibit 10.26 of our Form S-1 filed on March 11, 2008) 10.4 Agreement and Plan of Merger, dated May 5, 2015, by and among the Company, PlasmaTech Merger Sub Inc., Abeona Therapeutics LLC and Paul A. Hawkins, in his capacity as Member Representative (incorporated by reference to Exhibit 10.1 to our Form 10-Q for the quarter ended June 30, 2015) 10.5 Form of Indemnification Agreement, between the Company and directors and officers of the Company (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on October 16, 2020) 10.6* Letter Agreement, dated October 6, 2021, between the Company and Vishwas Seshadri 10.7* Offer Letter, effective October 19, 2018, by and between the Company and Edward Carr (incorporated by reference to Exhibit 10.1 of Form 8-K filed on November 9, 2018) 10.8* Letter Agreement, dated September 12, 2019, amending Offer Letter between the Company and Edward Carr, dated November 8, 2018 (incorporated by reference to Exhibit 10.3 of our Form 10-Q for the quarter ended September 30, 2019) 10.9* Offer Letter, dated June 18, 2020, between the Company and Edward Carr (incorporated by reference to Exhibit 10.1 of our Form 8-K filed on June 23, 2020) 10.10* Letter Agreement, dated August 10, 2021, between the Company and Edward Carr (incorporated by reference to Exhibit 10.1 of our Form 10-Q for the quarter ended September 30, 2021) 10.11* Letter Agreement, dated September 16, 2021, between the Company and Brendan O’Malley 10.12 Open Market Sale Agreement, dated August 17, 2018, by and between the Company and Jefferies LLC (incorporated by reference to Exhibit 1.1 of Form 8-K filed on August 20, 2018) 10.13 Amendment No. 1 to Open Market Sale Agreement, dated November 19, 2021, amending the Open Market Agreement, by and between the Company and Jefferies LLC, dated August 17, 2018 (incorporated by reference to Exhibit 1.2 of Form 8-K filed on November 19, 2021) 10.14+ Settlement Agreement and Mutual Release, dated November 12, 2021, between the Company and REGENXBIO Inc. 21 Subsidiaries of the registrant 23.1 Consent of Whitley Penn LLP 31.1 Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Principal Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Principal Executive Officer Certification and Principal Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) * Management contract or compensatory plan required to be filed as an exhibit to this report pursuant to Item 15(a)(3) of Form 10-K. + Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K . ITEM 16. FORM 10-K SUMMARY None. 94 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ABEONA THERAPEUTICS INC. Date: March 31, 2022 By: /s/ Vishwas Seshadri Vishwas Seshadri President, Chief Executive Officer and Director Principal Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 31, 2022 By: /s/ Vishwas Seshadri Vishwas Seshadri President, Chief Executive Officer and Director Principal Executive Officer Date: March 31, 2022 By: /s/ Edward Carr Edward Carr Chief Accounting Officer Principal Financial and Accounting Officer Date: March 31, 2022 By: /s/ Leila Alland Leila Alland, Director Date: March 31, 2022 By: /s/ Mark J. Alvino Mark J. Alvino, Director Date: March 31, 2022 By: / s/ Michael Amoroso Michael Amoroso, Director Chairman of the Board Date: March 31, 2022 By: /s/ Faith L. Charles Faith L. Charles, Director Date: March 31, 2022 By: /s/ Paul Mann Paul Mann, Director Date: March 31, 2022 By: /s/ Christine Silverstein Christine Silverstein, Director Date: March 31, 2022 By: /s/ Todd Wider Todd Wider, Director Date: March 31, 2022 By: /s/ Donald A. Wuchterl Donald A. Wuchterl, Director 95 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Abeona Therapeutics Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Abeona Therapeutics Inc. and Subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ WHITLEY PENN LLP We have served as the Company’s auditor since 2006. Plano, Texas March 31, 2022 F- 1 Abeona Therapeutics Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, 2021 December 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 32,938,000 $ 12,596,000 Short-term investments 12,086,000 82,438,000 Accounts receivable 3,000,000 - Prepaid expenses, other current assets and restricted cash 7,377,000 2,708,000 Total current assets 55,401,000 97,742,000 Property and equipment, net 12,339,000 11,322,000 Right-of-use lease assets 9,403,000 7,032,000 Licensed technology, net 1,384,000 1,500,000 Goodwill - 32,466,000 Other assets and restricted cash 1,059,000 1,136,000 Total assets $ 79,586,000 $ 151,198,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 4,325,000 $ 4,695,000 Accrued expenses 5,585,000 3,410,000 Current portion of lease liability 1,818,000 1,713,000 Current portion of PPP loan payable - 330,000 Current portion of payable to licensor 4,599,000 31,515,000 Deferred revenue 296,000 296,000 Total current liabilities 16,623,000 41,959,000 PPP loan payable - 1,428,000 Payable to licensor 3,828,000 - Other long-term liabilities 200,000 - Long-term lease liabilities 7,560,000 5,260,000 Total liabilities 28,211,000 48,647,000 Commitments and contingencies - - Stockholders’ equity: Preferred stock - $ 0.01 par value; authorized 2,000,000 shares; no issued and outstanding shares at December 31, 2021 and 2020 - - Common stock - $ 0.01 par value; authorized 200,000,000 shares; issued and outstanding 147,205,422 at December 31, 2021; issued and outstanding 96,131,678 at December 31, 2020 1,472,000 961,000 Additional paid-in capital 705,570,000 672,304,000 Accumulated deficit ( 655,640,000 ) ( 570,704,000 ) Accumulated other comprehensive loss ( 27,000 ) ( 10,000 ) Total stockholders’ equity 51,375,000 102,551,000 Total liabilities and stockholders’ equity $ 79,586,000 $ 151,198,000 The accompanying notes are an integral part of these consolidated statements. F- 2 Abeona Therapeutics Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 2021 2020 For the years ended December 31, 2021 2020 Revenues: License and other revenues $ 3,000,000 $ 10,000,000 Total revenues 3,000,000 10,000,000 Expenses: Research and development 34,325,000 30,139,000 General and administrative 22,795,000 23,779,000 Depreciation and amortization 3,250,000 4,586,000 Goodwill impairment charge 32,466,000 - Licensed technology impairment charge - 32,916,000 Total expenses 92,836,000 91,420,000 Loss from operations ( 89,836,000 ) ( 81,420,000 ) Gain on settlement with licensor 6,743,000 - PPP loan payable forgiveness income 1,758,000 - Interest and miscellaneous income 69,000 1,301,000 Interest and other expense ( 3,670,000 ) ( 4,115,000 ) Net loss $ ( 84,936,000 ) $ ( 84,234,000 ) Basic and diluted loss per common share $ ( 0.86 ) $ ( 0.91 ) Weighted average number of common shares outstanding – basic and diluted 98,441,911 92,663,574 Other comprehensive income/(loss): Change in unrealized gains/(losses) related to available-for-sale debt securities 9,000 ( 10,000 ) Foreign currency translation adjustments ( 26,000 ) - Comprehensive loss $ ( 84,953,000 ) $ ( 84,244,000 ) The accompanying notes are an integral part of these consolidated statements. F- 3 Abeona Therapeutics Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Accumulated Additional Other Total Common Stock Paid-in Accumulated Comprehensive Stockholders’ Shares Amount Capital Deficit Loss Equity Balance, December 31, 2019 83,622,135 $ 836,000 $ 664,064,000 $ ( 486,470,000 ) $ - $ 178,430,000 Stock option-based compensation expense - - 5,853,000 - - 5,853,000 Restricted stock-based compensation expense - - 2,334,000 - - 2,334,000 Issuance of common stock in connection with the exercise of stock options 77,560 1,000 176,000 - - 177,000 Issuance of common stock in connection with restricted share awards, net of cancellations 3,414,928 34,000 ( 34,000 ) - - - Issuance of common stock in connection with the exercise of pre-funded warrants 9,017,055 90,000 ( 89,000 ) - - 1,000 Issuance of common stock for cash under open market sale agreement Issuance of common stock for cash under open market sale agreement, shares Issuance of common stock and stock purchase warrants in connection with public offering, net of offering costs Issuance of common stock and stock purchase warrants in connection with public offering, net of offering costs, shares Net loss - - - ( 84,234,000 ) - ( 84,234,000 ) Other comprehensive loss - - - - ( 10,000 ) ( 10,000 ) Balance, December 31, 2020 96,131,678 $ 961,000 $ 672,304,000 $ ( 570,704,000 ) $ ( 10,000 ) $ 102,551,000 Stock option-based compensation expense - - 5,250,000 - - 5,250,000 Restricted stock-based compensation expense - - 3,666,000 - - 3,666,000 Issuance of common stock in connection with the exercise of stock options 630,675 6,000 825,000 - - 831,000 Issuance of common stock in connection with restricted share awards, net of cancellations 2,071,275 21,000 ( 21,000 ) - - - Issuance of common stock for cash under open market sale agreement 3,671,794 37,000 8,014,000 - - 8,051,000 Issuance of common stock and stock purchase warrants in connection with public offering, net of offering costs 44,700,000 447,000 15,532,000 - - 15,979,000 Net loss - - - ( 84,936,000 ) - ( 84,936,000 ) Other comprehensive loss - - - - ( 17,000 ) ( 17,000 ) Balance, December 31, 2021 147,205,422 $ 1,472,000 $ 705,570,000 $ ( 655,640,000 ) $ ( 27,000 ) $ 51,375,000 The accompanying notes are an integral part of these consolidated statements. F- 4 Abeona Therapeutics Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS 2021 2020 For the years ended December 31, 2021 2020 Cash flows from operating activities: Net loss $ ( 84,936,000 ) $ ( 84,234,000 ) Adjustments to reconcile net loss to cash used in operating activities: Non-cash goodwill impairment charge 32,466,000 - Non-cash licensed technology impairment charge - 32,916,000 Non-cash gain on settlement with licensor ( 6,743,000 ) - Depreciation and amortization 3,250,000 4,586,000 Stock option-based compensation expense 5,250,000 5,853,000 Restricted stock-based compensation expense 3,666,000 2,334,000 Non-cash PPP loan payable forgiveness income ( 1,758,000 ) - Non-cash interest expense 67,000 600,000 Accretion and interest on short-term investments 122,000 ( 70,000 ) Amortization of right-of-use lease assets 1,214,000 1,015,000 Other - 347,000 Change in operating assets and liabilities: Accounts receivable ( 3,000,000 ) - Prepaid expenses, other current assets and restricted cash 331,000 424,000 Other assets and restricted cash ( 7,000 ) ( 127,000 ) Accounts payable, accrued expenses, lease liabilities and other liabilities 825,000 ( 2,178,000 ) Payable to licensor ( 16,412,000 ) 3,515,000 Net cash used in operating activities ( 65,665,000 ) ( 35,019,000 ) Cash flows from investing activities: Capital expenditures ( 4,151,000 ) ( 1,336,000 ) Purchases of short-term investments ( 20,163,000 ) ( 170,472,000 ) Proceeds from maturities of short-term investments 90,376,000 88,094,000 Net cash provided by/(used in) investing activities 66,062,000 ( 83,714,000 ) Cash flows from financing activities: Proceeds from loan payable - 1,758,000 Proceeds from issuance of common stock and warrants in public offering 17,433,000 1,000 Payment of offering costs in public offering ( 1,454,000 ) - Proceeds from open market sales of common stock 8,051,000 - Proceeds from exercise of stock options 831,000 177,000 Net cash provided by financing activities 24,861,000 1,936,000 Net increase/(decrease) in cash, cash equivalents and restricted cash 25,258,000 ( 116,797,000 ) Cash, cash equivalents and restricted cash at beginning of year 13,571,000 130,368,000 Cash, cash equivalents and restricted cash at end of year $ 38,829,000 $ 13,571,000 Supplemental cash flow information: Cash and cash equivalents $ 32,938,000 $ 12,596,000 Restricted cash 5,891,000 975,000 Total cash, cash equivalents and restricted cash $ 38,829,000 $ 13,571,000 Cash paid for interest $ - $ - Cash paid for taxes $ - $ - Additions to right-of-use lease assets obtained from new operating lease liabilities resulting from modification of original lease arrangement $ 3,585,000 $ - The accompanying notes are an integral part of these consolidated statements. F- 5 Abeona Therapeutics Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Abeona Therapeutics Inc. (together with our subsidiaries, “we,” “our,” “Abeona” or the “Company”), a Delaware corporation, is a clinical-stage biopharmaceutical company developing gene and cell therapies for life-threatening rare genetic diseases. Our lead clinical program is EB-101, an autologous, gene-corrected cell therapy for recessive dystrophic epidermolysis bullosa (“RDEB”), which is currently in the pivotal Phase 3 VIITAL™ clinical trial. Following a comprehensive portfolio review in early 2022, we have decided to focus our research and development resources on the VIITAL™ readout while actively pursuing a potential commercialization partner for EB-101 with the objective of reducing operating expenses and extending our cash runway. As part of this portfolio prioritization, we have intensified our pursuit of a strategic partnership to take over development activities for our adeno-associated virus (“AAV”)-based gene therapy ABO-102 for Sanfilippo syndrome type A (“MPS IIIA”) and we have discontinued development of our AAV-based gene therapy ABO-101 for Sanfilippo syndrome type B (“MPS IIIB”). We plan to continue development of AAV-based gene therapies designed to treat ophthalmic and other diseases and next-generation AAV-based gene therapies using the novel AIM™ capsid platform that we have exclusively licensed from the University of North Carolina at Chapel Hill (“UNC”), and internal AAV vector research programs. A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows: Principles of Consolidation The consolidated financial statements include the financial statements of Abeona Therapeutics Inc. and our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Uses and Sources of Liquidity The financial statements have been prepared on the going concern basis, which assumes the Company will have sufficient cash to pay its operating expenses, as and when they become payable, for a period of at least 12 months from the date the financial report was issued. As of December 31, 2021, we had cash, cash equivalents, restricted cash and short-term investments of $ 50.9 million and net assets of $ 51.4 million. For the year ended December 31, 2021, we had cash outflows from operations of $ 65.7 million. We have not generated significant product revenues and have not achieved profitable operations. There is no assurance that profitable operations will ever be achieved, and, if achieved, could be sustained on a continuing basis. In addition, development activities, clinical and nonclinical testing, and commercialization of our products will require significant additional financing. We are subject to a number of risks similar to other life science companies, including, but not limited to, risks related to the successful discovery and development of product candidates, obtaining the necessary regulatory approval to market our product candidates, raising additional capital to continue to fund our operations, development of competing drugs and therapies, protection of proprietary technology and market acceptance of our products. As a result of these and other risks and the related uncertainties, there can be no assurance of our future success. F- 6 Following a comprehensive portfolio review in early 2022, we have decided to focus our research and development resources on the EB-101 program with the objective of reducing operating expenses and extending our cash runway. As part of this portfolio prioritization, we have intensified our pursuit of a strategic partnership to take over development activities for our AAV-based gene therapy ABO-102 for MPS IIIA and we have discontinued development of our AAV-based gene therapy ABO-101 for MPS IIIB. Based upon these current operating plans, our ability to access additional financial resources and/or our financial flexibility to further reduce operating expenses if required, we believe that we have sufficient resources to fund operations through at least the next 12 months from the date of this report on Form 10-K. We will need to secure additional funding beyond the next 12 months to carry out all of our planned research and development activities. If we are unable to obtain additional financing or generate license or product revenue, the lack of liquidity and sufficient capital resources could have a material adverse effect on our future prospects. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amount of assets and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates and assumptions. Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. We maintain deposits primarily in financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”). We have not experienced any losses related to amounts in excess of FDIC limits. Short-term Investments Short-term investments consist of investments in U.S. government, U.S. agency and U.S. treasury securities. We determine the appropriate classification of the securities at the time they are acquired and evaluate the appropriateness of such classifications at each balance sheet date. We classify our short-term investments as available-for-sale pursuant to Accounting Standards Codification (“ASC”) 320, Investments – Debt and Equity Securities . Investments classified as current have maturities of less than one year. We review our short-term investments for other-than-temporary impairment whenever the fair value of a marketable security is less than the amortized cost and evidence indicates that a short-term investment’s carrying amount is not recoverable within a reasonable period of time. Property and Equipment Property and equipment are recorded at cost. Depreciation is provided using the straight-line method over estimated useful lives ranging from three to seven years for equipment and five to ten years for leasehold improvements. Expenditures for major renewals and betterments that extend the useful lives are capitalized. Expenditures for normal maintenance and repairs are expensed as incurred. The cost of assets sold or abandoned, and the related accumulated depreciation are eliminated from the accounts and any gains or losses are recognized in the accompanying consolidated statements of operations of the respective period. F- 7 Leases We account for leases in accordance with ASC 842, Leases . Right-of-use lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The measurement of lease liabilities is based on the present value of future lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The right-of-use asset is based on the measurement of the lease liability and includes any lease payments made prior to or on lease commencement and excludes lease incentives and initial direct costs incurred, as applicable. Rent expense for our operating leases is recognized on a straight-line basis over the lease term. We do not have any leases classified as finance leases. Our leases do not have significant rent escalation, holidays, concessions, material residual value guarantees, material restrictive covenants or contingent rent provisions. Our leases include both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs), which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases. Most leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion; therefore, the majority of renewals to extend the lease terms are not included in our right-of-use assets and lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal period in our lease term. Additional information and disclosures required under ASC 842 are included in Note 14. Licensed Technology We have entered into agreements to license the rights to certain technologies. We recorded the purchase price paid for the license, which represents fair value, on our consolidated balance sheet. We maintain licensed technology on our consolidated balance sheet until either the licensed technology agreement underlying it is completed or the asset becomes impaired. When we determine that an asset has become impaired or we abandon a project, we write down the carrying value of the related intangible asset to its fair value and take an impairment charge in the period in which the impairment occurs. Licensed technology is amortized over the life of the patent or the agreement and periodically reviewed for impairment. We test our intangible assets for impairment on an annual basis, or more frequently if indicators are present or changes in circumstance suggest that impairment may exist. Events that could result in an impairment, or trigger an interim impairment assessment, include the receipt of additional clinical or nonclinical data regarding our drug candidate or a potentially competitive drug candidate, changes in the clinical development program for a drug candidate or new information regarding potential sales for the drug. In connection with each annual impairment assessment and any interim impairment assessment, we compare the fair value of the asset as of the date of the assessment with the carrying value of the asset on our consolidated balance sheet. We considered the status of our discussions with REGENXBIO in March 2020 as a potential indicator of impairment in accordance with ASC 360-10-35-21. Our impairment test indicated that the carrying value of the license agreement exceeded its fair value and we recorded a $ 32.9 million non-cash impairment charge in 2020. We did not recognize any impairment charges to related licensed technology in 2021. Goodwill In accordance with ASC 350, Intangibles — Goodwill and Other, goodwill is tested annually for impairment and whenever changes in circumstances occur that would indicate impairment. Additional information and disclosures required under ASC 350 are included in Note 5. F- 8 Restricted Cash As of December 31, 2021 and 2020, restricted cash of $ 5.0 million and nil , respectively, is recorded within “Prepaid expenses, other current assets and restricted cash” and $ 0.9 million and $ 1.0 million, respectively, is recorded within “Other assets and restricted cash” in the accompanying consolidated balance sheets and are included as a component of cash, cash equivalents and restricted cash on our consolidated statements of cash flows. Restricted cash serves as collateral for the payable to licensor due in November 2022 as well as collateral for office space. Segments The Company operates in a single segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purpose of allocating resources. Revenue Recognition We account for contracts with customers in accordance with ASC 606, Revenue from Contracts with Customers . ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Additional information and disclosures required under ASC 606 are included in Note 10. Research and Development Expenses Research and development costs are expensed as incurred. Research and development expenses include, but are not limited to, payroll and personnel expense, lab supplies, preclinical and development cost, clinical trial expense, manufacturing, regulatory, and consulting. The cost of materials and equipment or facilities that are acquired for research and development activities and that have alternative future uses are capitalized when acquired. General and Administrative Expenses General and administrative expenses primarily consist of personnel, contract personnel, personnel-related expenses to support our administrative and operating activities, facility costs and professional expenses (i.e., legal expenses) and investor relations fees. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets to the extent their realization is in doubt. F- 9 We account for uncertain income tax positions in accordance with ASC 740, Income Taxes . Interest costs and penalties related to income taxes are classified as interest expense and general and administrative costs, respectively, in our consolidated financial statements. For 2021 and 2020, we did not recognize any uncertain tax positions, interest or penalty expense related to income taxes. It is not reasonably likely for the amounts of unrecognized tax benefits to significantly increase or decrease within the next 12 months. We file U.S. federal and state income tax returns as necessary. The federal return generally has a three-year statute of limitations and most states have a four-year statute of limitations; however, the taxing authorities are allowed to review the tax year in which the net operating loss was generated when the loss is utilized on a tax return. We currently do not have any open income tax audits. Loss Per Common Share We have presented basic and diluted loss per common share on the statement of operations and comprehensive loss. Basic and diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock. We do not include the potential impact of dilutive securities in diluted net loss per share, as the impact of these items is anti-dilutive. Potential dilutive securities result from outstanding restricted stock, stock options, and stock purchase warrants. We did not include the following potentially dilutive securities in the computation of diluted net loss per common share during the periods presented: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE For the years ended December 31, 2021 2020 Restricted stock 2,431,515 2,952,499 Stock options 7,934,851 5,685,539 Stock purchase warrants 44,700,000 - Total 55,066,366 8,638,038 Stock-Based Compensation We account for stock-based compensation expense in accordance with ASC 718, Stock Based Compensation . We measure the cost of the employee/director/consultant services received in exchange for an award of equity instruments based on the grant date fair value for the employees and directors and vesting date fair value for consultants of the award. We use the Black-Scholes option pricing model to determine the fair value of options on the grant date which includes assumptions for expected volatility, risk-free interest rate, dividend yield and estimated expected term. We use the closing price of our common stock as quoted on the Nasdaq to determine the fair value of restricted stock. We account for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise. The fair value of modifications to share-based awards are determined using Hull White I lattice model which includes assumptions for expected volatility, risk-free interest rate, dividend yield and performance period. If a share-based compensation award is modified after the grant date, incremental compensation expense, if any, is recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification. Incremental compensation expense for vested awards is recognized immediately. For unvested awards, the sum of the incremental compensation expense and the remaining unrecognized compensation expense for the original award on the modification date is recognized over the modified service period. F- 10 The following table summarizes stock option-based option compensation for 2021 and 2020, which was allocated as follows: SCHEDULE OF STOCK BASED COMPENSATION For the years ended December 31, 2021 2020 Research and development $ 1,915,000 $ 3,126,000 General and administrative 3,335,000 2,727,000 Stock option-based compensation expense included in operating expense 5,250,000 5,853,000 Total stock option-based compensation expense 5,250,000 5,853,000 Tax benefit - - Stock option-based compensation expense, net of tax $ 5,250,000 $ 5,853,000 The following table summarizes restricted stock-based compensation for 2021 and 2020, which was allocated as follows: SCHEDULE OF STOCK BASED COMPENSATION For the years ended December 31, 2021 2020 Research and development $ 1,384,000 $ 957,000 General and administrative 2,282,000 1,377,000 Restricted stock-based compensation expense included in operating expense 3,666,000 2,334,000 Total restricted stock-based compensation expense 3,666,000 2,334,000 Tax benefit - - Restricted stock-based compensation expense, net of tax $ 3,666,000 $ 2,334,000 Additional information and disclosures required under ASC 718 are included in Note 11. NOTE 2 – SHORT-TERM INVESTMENTS The following table summarizes the available-for-sale investments held as of December 31, 2021 and 2020. SCHEDULE OF AVAILABLE-FOR-SALE INVESTMENTS HELD Description December 31, 2021 December 31, 2020 U.S. government and agency securities and treasuries $ 12,086,000 $ 82,438,000 The amortized cost of the available-for-sale investments, which is adjusted for amortization of premiums and accretion of discounts to maturity, was $ 12,087,000 and $ 82,448,000 as of December 31, 2021 and 2020, respectively. There were no significant realized gains or losses recognized on the sale or maturity of available-for-sale investments during the years ended December 31, 2021 or 2020. F- 11 NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment consist of the following: SCHEDULE OF PROPERTY AND EQUIPMENT December 31, 2021 December 31, 2020 Laboratory equipment $ 9,081,000 $ 8,160,000 Furniture and office equipment 1,896,000 1,818,000 Leasehold improvements 8,603,000 8,602,000 Construction work-in-progress 3,219,000 71,000 22,799,000 18,651,000 Less: accumulated depreciation and amortization 10,460,000 7,329,000 Property and equipment, net $ 12,339,000 $ 11,322,000 Depreciation and amortization on property and equipment was $ 3.1 million and $ 3.2 million for 2021 and 2020, respectively. NOTE 4 – LICENSED TECHNOLOGY On November 4, 2018, we entered into a license agreement with REGENXBIO Inc. (“REGENXBIO”) to obtain rights to an exclusive worldwide license (subject to certain non-exclusive rights previously granted for MPS IIIA), with rights to sublicense, to REGENXBIO’s NAV AAV9 vector for gene therapies for treating MPS IIIA, MPS IIIB, CLN1 Disease and CLN3 Disease. Consideration for the rights granted under the original agreement included fees totaling $ 180 million and a running royalty on net sales, including: (i) an initial fee of $ 20 million, $ 10 million of which was due to REGENXBIO shortly after the effective date of the agreement, and $ 10 million of which was to be due on the first anniversary of the effective date of the agreement in November 2019, (ii) annual fees totaling up to $ 100 million, payable in $ 20 million annual installments beginning on the second anniversary of the effective date (the first of which was to remain payable if the agreement were terminated before the second anniversary in November 2020), (iii) sales milestone payments totaling $ 60 million, and (iv) royalties payable in the low double digits to low teens on net sales of products covered under the agreement. The license was being amortized over the life of the patent of eight years . On November 1, 2019, we entered into an amendment of the original license agreement. The amended agreement replaced the $ 10 million payment due on November 4, 2019 with a $ 3 million payment due on November 4, 2019 and an additional $ 8 million payment (which included $ 1 million of interest) that would have been due no later than April 1, 2020. That $ 8 million payment that had been scheduled to be paid by April 1, 2020 and the $ 20 million payment that had been due to be paid on November 4, 2020 were both recorded as payable to licensor on the consolidated balance sheet. The Company disputed that it was responsible for the $ 8 million and $ 20 million payments, and those payments were the subject of an arbitration between the Company and REGENXBIO as noted below. Prior to the April 1, 2020 deadline, we engaged REGENXBIO in discussions in an attempt to renegotiate the financial terms of the agreement, but we were unable to reach an agreement, and we did not make the $ 8 million payment due by April 1, 2020. On April 17, 2020, REGENXBIO sent us a written demand for the $ 8 million fee, payable within a 15-day cure period after receipt of the demand letter. The license terminated on May 2, 2020 , when the 15-day period expired. We considered the status of our discussions with REGENXBIO in March 2020 as a potential indicator of impairment in accordance with ASC 360-10-35-21. Our impairment test indicated that the carrying value of the license agreement exceeded its fair value and we recorded a $ 32.9 million non-cash impairment charge during the three months ended March 31, 2020. F- 12 On May 25, 2020, we filed an arbitration claim with the American Arbitration Association (“AAA”) alleging that REGENXBIO materially breached the license agreement prior to termination and seeking, among other things, a declaration that as a result of REGENXBIO’s material breach, we were not responsible for payments totaling $ 28 million (which would otherwise have been due in 2020) plus accrued interest. REGENXBIO disputed our arbitration claim and filed a counterclaim seeking payment of the $ 28 million plus interest, which REGENXBIO argued remained due. An arbitration hearing before a tribunal of three AAA arbitrators was held on March 8 and March 9, 2021. On July 13, 2021, the tribunal found in favor of REGENXBIO in connection with the parties’ arbitration claims and counterclaims. The tribunal awarded REGENXBIO $ 28.0 million plus interest. On August 9, 2021, we filed a second arbitration claim with the AAA asserting that a settlement had been reached before the tribunal’s award in the first arbitration was issued. On September 14, 2021, REGENXBIO filed its answer, a counterclaim seeking attorney fees and costs, and a request for permission to file a case dispositive motion. A preliminary hearing was held on November 1, 2021, during which the AAA tribunal set timetables for discovery and for REGENXBIO’s filing of its case dispositive motion. Those timetables were formalized in a procedural order issued by the tribunal on November 8, 2021. Under the schedule set by the tribunal, REGENXBIO’s opening brief in support of its case dispositive motion was filed on November 8, 2021, briefing was scheduled to be completed on December 29, 2021, and oral argument was scheduled for January 14, 2022. REGENXBIO had also filed suit in the New York State Supreme Court Commercial Division seeking enforcement of the original arbitration award, and we had requested that the Court stay that proceeding until the second arbitration was complete. Oral argument on our request for a stay was set for March 10, 2022. On November 12, 2021, we entered into a settlement agreement (“Settlement Agreement”) with REGENXBIO to resolve all current disputes between the parties including the aforementioned AAA arbitration and New York State Supreme Court action. In accordance with the Settlement Agreement, we agreed to pay REGENXBIO a total of $ 30 million, payable as follows: (1) $20 million that was paid in November 2021 after execution of the Settlement Agreement, (2) $5 million on the first anniversary of the effective date of the Settlement Agreement, and (3) $5 million upon the earlier of: (i) the third anniversary of the effective date of the Settlement Agreement or (ii) the closing of a Strategic Transaction, as defined in the Settlement Agreement. Under the Settlement Agreement’s terms, the prior license agreement between the parties is not reinstituted, and any future license agreement would need to be negotiated separately and require consideration in addition to the consideration set forth in the Settlement Agreement. As of December 31, 2021, we have recorded the payable to licensor in the balance sheet based on the present value of the remaining payments due to REGENXBIO under the Settlement Agreement. As of December 31, 2021, we have also recorded $ 5 million of restricted cash within prepaid expenses, other current assets and restricted cash in the balance sheet that serves as collateral for the payment owed to REGENXBIO on the first anniversary of the effective date of the Settlement Agreement. The accounting for the Settlement Agreement resulted in a $ 6.7 million gain on settlement with licensor in the statement of operations and comprehensive loss during the year ended December 31, 2021 and a $ 6.7 million non-cash gain on settlement with licensor in the statement of cash flows during the year ended December 31, 2021. On May 15, 2015, we acquired Abeona Therapeutics LLC, which had an exclusive license through Nationwide Children’s Hospital to the AB-101 and AB-102 patent portfolios for developing treatments for patients with Sanfilippo Syndrome Type A and Type B. The license is amortized over the life of the license of 20 years. Licensed technology consists of the following: SCHEDULE OF LICENSED TECHNOLOGY December 31, 2021 December 31, 2020 Licensed technology $ 2,156,000 $ 2,156,000 Less accumulated amortization 772,000 656,000 Licensed technology, net $ 1,384,000 $ 1,500,000 F- 13 The aggregate estimated amortization expense for intangible assets remaining as of December 31, 2021 is as follows: SCHEDULE OF AMORTIZATION EXPENSE FOR INTANGIBLE ASSETS 2022 $ 116,000 2023 116,000 2024 117,000 2025 117,000 2026 117,000 Thereafter 801,000 Total $ 1,384,000 Amortization on licensed technology was $ 116,000 and $ 1.4 million for the years ended December 31, 2021 and 2020, respectively. NOTE 5 – GOODWILL As of December 31, 2021 and 2020, goodwill of nil and $ 32.5 million, respectively, was recorded on the Company’s consolidated balance sheet. The changes in the carrying amount of goodwill are as follows: SCHEDULE OF GOODWILL For the years ended December 31, 2021 2020 Goodwill at the beginning of the year $ 32,466,000 $ 32,466,000 Goodwill impairment charge ( 32,466,000 ) - Goodwill at the end of the year $ - $ 32,466,000 We completed our annual goodwill impairment test as of year-end 2021 and determined that the carrying value of our net assets exceeded fair value using our market capitalization as a proxy for fair value. In accordance with ASC 350, we recognized an impairment loss for the excess of the carrying value over the fair value but limited to the total amount of goodwill recorded on our consolidated balance sheet. As a result, we recorded a goodwill impairment charge of $ 32.5 million for the year ended December 31, 2021. We completed our annual goodwill impairment test as of year-end 2020 and determined that the fair value of our net assets exceeded the carrying value. As a result, the Company did not recognize any impairment charges related to goodwill for the year ended December 31, 2020. NOTE 6 – LOAN PAYABLE On May 2, 2020, we received loan proceeds in the amount of approximately $ 1.8 million (the “PPP Loan”) under the Paycheck Protection Program (“PPP”). The PPP was established under the Coronavirus Aid, Relief and Economic Security Act, as amended (“CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). Under the terms of the CARES Act, PPP loan recipients can apply for loan forgiveness. The loan forgiveness for all or a portion of PPP loans was determined, subject to limitations, based on the use of loan proceeds over the 24 weeks after the loan proceeds are disbursed. In July 2021, we received notice from the SBA that our PPP loan was forgiven. The extinguishment of the PPP loan payable was recorded as PPP loan payable forgiveness income in the statement of operations and comprehensive loss and as non-cash PPP loan payable forgiveness income in the statement of cash flows during the year ended December 31, 2021. F- 14 NOTE 7 – ACCRUED EXPENSES Accrued expenses as of December 31, 2021 and 2020 consisted of the following: Schedule of Accrued expenses December 31, 2021 December 31, 2020 Accrued employee compensation $ 1,794,000 $ 1,982,000 Accrued contracted services and other 3,091,000 1,428,000 Accrued sublicense fee owed to licensor 700,000 - Accrued expenses $ 5,585,000 $ 3,410,000 NOTE 8 - FAIR VALUE MEASUREMENTS We calculate the fair value of our assets and liabilities that qualify as financial instruments and include additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of prepaid expenses and other current assets, other assets, accounts payable, accrued expenses, loan payable and deferred revenue approximate their carrying amounts due to the relatively short maturity of these instruments. U.S. GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. This guidance establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 – Quoted prices in active markets for identical assets or liabilities. ● Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar valuation techniques that use significant unobservable inputs. The guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We have segregated all financial assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. Financial assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2021 and 2020 are summarized below: SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES MEASURED ON RECURRING AND NON-RECURRING BASIS Description December 31, 2021 Level 1 Level 2 Level 3 Total Gains/(Losses) Recurring Assets: Short-term investments $ 12,086,000 $ - $ 12,086,000 $ - $ - Non-recurring Assets: Licensed technology, net $ 1,384,000 $ - $ - $ 1,384,000 $ - Goodwill - - - - ( 32,466,000 ) Description December 31, 2020 Level 1 Level 2 Level 3 Total Gains/(Losses) Recurring Assets: Short-term investments $ 82,438,000 $ - $ 82,438,000 $ - $ - Non-recurring Assets: Licensed technology, net $ 1,500,000 $ - $ - $ 1,500,000 $ ( 32,916,000 ) Goodwill 32,466,000 - - 32,466,000 - F- 15 NOTE 9 – STOCKHOLDERS’ EQUITY 2021 Public Offering of Common Stock and Stock Purchase Warrants On December 21, 2021, we closed an underwritten public offering of 44,700,000 shares of common stock at a public offering price of $ 0.39 per share and stock purchase warrants to purchase 44,700,000 shares of common stock at an exercise price of $ 0.39 . The net proceeds to the Company were approximately $ 16.0 million, after deducting $ 1.5 million of underwriting discounts and commissions and estimated offering expenses payable by the Company. As of December 31, 2021, there were 44,700,000 stock purchase warrants outstanding. The stock purchase warrants expire on December 21, 2026. During such time as each warrant is outstanding, the holder of the warrant is entitled to participate in any dividends or other distribution of assets to holders of shares of common stock. 2019 Public Offering of Common Stock and “Pre-Funded” Warrants On December 24, 2019, we closed an underwritten public offering of 32,382,945 shares of common stock at a public offering price of $ 2.50 per share. In addition, as part of the offering, we sold “pre-funded” warrants to purchase up to an aggregate of 9,017,055 shares of common stock at a purchase price of $ 2.4999 per pre-funded warrant, which equals the public offering price per share of the common stock less the $ 0.0001 per share exercise price of each pre-funded warrant. The gross proceeds to the Company were approximately $ 103.5 million, before deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company. In October 2020, all of the 9,017,055 “pre-funded” warrants were exercised and converted into 9,017,055 shares of common stock. We received a negligible amount of cash from the exercise of these pre-funded warrants during 2020. NOTE 10 – REVENUE FROM CONTRACTS WITH CUSTOMERS Sublicense and Inventory Purchase Agreements Relating to CLN1 Disease: In August 2020, we entered into sublicense and inventory purchase agreements with Taysha Gene Therapies (“Taysha”) relating to a potential gene therapy for CLN1 disease. Under the sublicense agreement, Taysha received worldwide exclusive rights to intellectual property and know-how relating to the research, development, and manufacture of the potential gene therapy, which we had referred to as ABO-202. Under the inventory purchase agreement, we sold to Taysha certain inventory and other items related to ABO-202. We assessed these contracts at contract inception and determined that, under ASC 606, the two contracts would be combined and accounted for as a single contract, with a single performance obligation. We assessed the nature of the promised license to determine whether the license has significant stand-alone functionality and evaluated whether such functionality can be retained without ongoing activities by us and determined that the license has significant stand-alone functionality. Furthermore, we have no ongoing activities associated with the license to support or maintain the license’s utility. Based on this, we determined that the pattern of transfer of control of the license to Taysha was at a point in time. F- 16 The transaction price of the contract includes (i) $ 7.0 million of fixed consideration, (ii) up to $ 26.0 million of variable consideration in the form of event-based milestone payments, (iii) up to $ 30.0 million of variable consideration in the form of sales-based milestone payments, and (iv) other royalty-based payments based on net sales. The event-based milestone payments are based on certain development and regulatory events occurring. At inception, we evaluated whether the milestone conditions had been achieved and if it was probable that a significant revenue reversal would not occur before recognizing the associated revenue and determined that these milestone payments were not within our control or the licensee’s control, such as regulatory approvals, and were not considered probable of being achieved until those approvals were received. Accordingly, at inception, we fully constrained the $ 26.0 million of event-based milestone payments until such time that it is probable that significant revenue reversal would not occur. The sales-based milestone payments and other royalty-based payments are based on a level of sales for which the license is deemed to be the predominant item to which the royalties relate. We will recognize revenue for these payments at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, we have not recognized any sales-based or royalty revenue resulting from this licensing arrangement. Under this arrangement, we recognized $ 7.0 million of revenue during the year ended December 31, 2020, which amount related solely to fixed consideration. During the year ended December 31, 2021, Taysha achieved an event-based milestone payment and, accordingly, we recognized $ 3.0 million of revenue. As of December 31, 2021, we have a contract asset for $ 3.0 million consisting of our accounts receivable balance of $ 3.0 million but do no t have any contract liabilities as a result of this transaction. We collected the $ 3.0 million of cash in January 2022 in full satisfaction of the contract asset. Sublicense Agreement Relating to Rett Syndrome: In October 2020, we entered into a sublicense agreement with Taysha for a gene therapy for Rett syndrome and MECP2 gene constructs and regulation of their expression. The agreement grants Taysha worldwide exclusive rights to intellectual property developed by scientists at the University of North Carolina at Chapel Hill, the University of Edinburgh and us, and our know-how relating to the research, development, and manufacture of the gene therapy for Rett syndrome and MECP2 gene constructs and regulation of their expression. We assessed the nature of the promised license to determine whether the license has significant stand-alone functionality and evaluated whether such functionality can be retained without ongoing activities by us and determined that the license has significant stand-alone functionality. Furthermore, we have no ongoing activities associated with the license to support or maintain the license’s utility. Based on this, we determined that the pattern of transfer of control of the license to Taysha was at a point in time. The transaction price of the contract includes (i) $ 3.0 million of fixed consideration, (ii) up to $ 26.5 million of variable consideration in the form of event-based milestone payments, (iii) up to $ 30.0 million of variable consideration in the form of sales-based milestone payments, and (iv) other royalty-based payments based on net sales. The event-based milestone payments are based on certain development and regulatory events occurring. We evaluated whether the milestone conditions have been achieved and if it is probable that a significant revenue reversal would not occur before recognizing the associated revenue. We determined that these milestone payments are not within our control or the licensee’s control, such as regulatory approvals, and are not considered probable of being achieved until those approvals are received. Accordingly, we have fully constrained the $26.5 million of event-based milestone payments until such time that it is probable that significant revenue reversal would not occur. The sales-based milestone payments and other royalty-based payments are based on a level of sales for which the license is deemed to be the predominant item to which the royalties relate. We will recognize revenue for these payments at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. We received the $ 3.0 million of fixed consideration during the year ended December 31, 2020. To date, we have not recognized any sales-based or royalty revenue resulting from this licensing arrangement. Under this arrangement, we recognized $ 3.0 million of revenue during the year ended December 31, 2020, which amount related solely to fixed consideration. We did not recognize any related revenue during the year ended December 31, 2021. As of December 31, 2021, we do no t have any contract assets or contract liabilities as a result of this transaction. F- 17 NOTE 11 – STOCK-BASED COMPENSATION We have two stock-based compensation plans as follows: (1) Abeona Therapeutics Inc. 2015 Equity Incentive Plan, which was approved by stockholders on May 7, 2015 and last amended on May 20, 2020 and (2) Abeona Therapeutics Inc. 2005 Equity Incentive Plan, which no further grants can be made under this plan. Stock Option Repricing: On November 10, 2020, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) unanimously approved the repricing of all stock options outstanding under the Abeona Therapeutics Inc. 2015 Equity Incentive Plan held by current employees of the Company that had an exercise price per share between $ 1.16 and $ 17.30 (the “Eligible Stock Options”). As a result of the repricing, the exercise price of the Eligible Stock Options was set to $ 1.15 per share, equal to the closing sale price of the Company’s common stock on November 10, 2020. Stock options held by members of the Board were not included in the repricing. Except for the modified exercise price, all other terms and conditions of each of the Eligible Stock Options remain in full force and effect. The fair value of the Eligible Stock Options was determined using the Hull White I lattice model. There were 79 grantees of Eligible Stock Options and the incremental compensation cost resulting from the modification was $ 0.6 million. On November 17, 2020, the Compensation Committee unanimously approved the repricing of all stock options outstanding under the Abeona Therapeutics Inc. 2015 Equity Incentive Plan and the Abeona Therapeutics Inc. 2005 Equity Incentive Plan held by the four current members of the Board that had an exercise price per share between $ 1.29 and $ 18.50 (the “Eligible Director Stock Options”). As a result of the repricing, the exercise price of the Eligible Director Stock Options was set to $ 1.28 per share, equal to the closing sale price of the Company’s common stock on November 17, 2020. Except for the modified exercise price, all other terms and conditions of each of the Eligible Stock Options remain in full force and effect. The fair value of the Eligible Director Stock Options was determined using the Hull White I lattice model. There were four grantees of Eligible Director Stock Options and the incremental compensation cost resulting from the modification was $ 0.5 million. 2015 Equity Incentive Plan Under our 2015 Equity Incentive Plan, as amended, up to 18,000,000 shares of our authorized but unissued common stock are reserved for issuance to employees, consultants, or to non-employee members of the Board or to any member of the board of directors (or similar governing authority) of any affiliate of the Company. As of December 31, 2021, we had 1,388,108 shares available for future issuance under our 2015 Equity Incentive Plan. The maximum contractual term of awards is 10 years. Stock Options: We estimate the fair value of each option award on the date of grant using the Black-Scholes option valuation model. We then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions: ● Expected volatility – we estimate the volatility of our share price at the date of grant using a “look-back” period which coincides with the expected term, defined below. We believe using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility. ● Expected term – we estimate the expected term using the “simplified” method, as outlined in Staff Accounting Bulletin No. 107, “Share-Based Payment.” ● Risk-free interest rate – we estimate the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant. ● Dividends – we use an expected dividend yield of zero because we have not declared or paid a cash dividend, nor do we have any plans to declare a dividend. F- 18 We used the following weighted-average assumptions to estimate the grant date fair value of the stock options granted for the years indicated: SCHEDULE OF WEIGHTED-AVERAGE ASSUMPTIONS TO ESTIMATE THE FAIR VALUE OF THE OPTIONS GRANTED For the years ended December 31, 2021 2020 Expected volatility 96 % 110 % Expected term 6.0 years 6.2 years Risk-free interest rate 1.01 % 0.30 % Expected dividend yield 0.00 % 0.00 % We account for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise. Summarized stock option information for the 2015 Equity Incentive Plan is as follows: SCHEDULE OF OPTIONS ACTIVITY Options Weighted- average exercise price Outstanding options at January 1, 2020 5,795,395 $ 7.96 Granted, fair value of $ 1.88 per share 2,645,146 $ 2.26 Exercised ( 77,560 ) 2.28 Expired/forfeited ( 2,802,242 ) 6.52 Outstanding options at December 31, 2020 5,560,739 $ 2.21 Granted, fair value of $ 1.36 per share 4,877,308 $ 1.75 Exercised ( 630,675 ) 1.32 Expired/forfeited ( 1,952,521 ) 4.07 Outstanding options at December 31, 2021 7,854,851 $ 1.54 Non-vested options at December 31, 2020 2,507,203 $ 1.29 Non-vested options at December 31, 2021 4,720,304 $ 1.64 The intrinsic value related to the outstanding options under this plan was $ 0 and $ 1.7 million, as of December 31, 2021 and 2020, respectively. The intrinsic value related to the exercisable options under this plan was $ 0 and $ 0.7 million as of December 31, 2021 and 2020, respectively. The total intrinsic value of the options exercised was $ 0.6 million and $ 0 during the years ended December 31, 2021 and 2020, respectively. Further information regarding options outstanding under the 2015 Equity Incentive Plan as of December 31, 2021 is summarized below: SCHEDULE OF OPTIONS OUTSTANDING AND EXERCISABLE Weighted-average Weighted-average Range of exercise prices Number of options outstanding Remaining life in years Exercise price Number of options exercisable Remaining life in years Exercise price $ 0.34 $ 0.91 494,000 9.8 $ 0.84 - - $ - 1.02 1.88 5,576,851 7.0 1.30 3,069,547 5.2 1.27 2.18 2.34 1,719,000 9.2 2.29 - - - 6.59 7.34 65,000 3.7 7.28 65,000 3.7 7.28 7,854,851 3,134,547 As of December 31, 2021, the total compensation cost related to non-vested options not recognized is $ 6.6 million. The expected weighted average period over which the total compensation costs related to non-vested options will be recognized is 2.8 years. F- 19 Restricted Common Stock : Summarized stock option information for the 2015 Equity Incentive Plan is as follows: SCHEDULE OF RESTRICTED COMMON STOCK ACTIVITY Restricted common stock awards Weighted- average grant date fair value Outstanding awards at January 1, 2020 354,625 $ 3.14 Granted 5,290,312 $ 1.75 Vested ( 817,054 ) 2.26 Forfeited ( 1,875,384 ) 1.75 Outstanding awards at December 31, 2020 2,952,499 $ 1.78 Granted 2,890,668 $ 1.72 Vested ( 2,592,259 ) 1.55 Forfeited ( 819,393 ) 2.02 Outstanding awards at December 31, 2021 2,431,515 $ 1.86 The fair market value of the restricted common stock awards vested was $ 3.6 million and $ 1.3 million during the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, the total compensation cost related to restricted common stock not recognized is $ 3.6 million. The expected weighted average period over which the total compensation costs related to restricted common stock will be recognized is 3.0 years. 2005 Equity Incentive Plan Under the 2005 Equity Incentive Plan, as amended, shares of our authorized but unissued common stock were reserved for issuance to employees, consultants, or to non-employee members of the Board or to any member of the board of directors (or similar governing authority) of any affiliate of the Company. As of January 20, 2015, no additional shares were available for grant under the 2005 Equity Incentive Plan. A total of 80,000 options were outstanding and exercisable under this plan as of December 31, 2021. Summarized information for the 2005 Equity Incentive Plan is as follows: SCHEDULE OF OPTIONS ACTIVITY Options Weighted- average exercise price Outstanding options at January 1, 2020 260,000 $ 12.94 Expired/forfeited ( 135,200 ) 6.80 Outstanding options at December 31, 2020 124,800 $ 8.55 Expired/forfeited ( 44,800 ) 21.53 Outstanding options at December 31, 2021 80,000 $ 1.28 The intrinsic value related to the outstanding or exercisable options under this plan was $ 0 as of December 31, 2021 and 2020. F- 20 Further information regarding options outstanding under the 2005 Equity Incentive Plan as of December 31, 2021 is summarized below: SCHEDULE OF OPTIONS OUTSTANDING AND EXERCISABLE Weighted-average Weighted-average Range of exercise prices Number of options outstanding Remaining life in years Exercise price Number of options exercisable Remaining life in years Exercise price $ 1.28 $ 1.28 80,000 1.8 $ 1.28 80,000 1.8 $ 1.28 80,000 80,000 NOTE 12 – 401(k) PLAN We have a tax-qualified employee savings and retirement plan (the “401(k) Plan”) covering all our employees in the United States. Pursuant to the 401(k) Plan, employees may elect to reduce their current compensation by up to the statutorily prescribed annual limit ($ 19,500 in 2021 and 2020 for employees who are under age 50 and $ 26,000 in 2021 and 2020 for employees who are age 50 and older) and to have the amount of such reduction contributed to the 401(k) Plan. The 401(k) Plan is intended to qualify under Section 401 of the Internal Revenue Code so that contributions by employees or by us to the 401(k) Plan, and income earned on 401(k) Plan contributions, are not taxable to employees until withdrawn from the 401(k) Plan, and so that contributions by us, if any, will be deductible by us when made. At the direction of each participant, we invest the assets of the 401(k) Plan in any of over 50 investment options. Company contributions under the 401(k) Plan were $ 0.4 million and $ 0.3 million for the years ended December 31, 2021 and 2020, respectively. NOTE 13 - INCOME TAXES Income tax expense differs from the statutory amounts for each of the following years: SCHEDULE OF INCOME TAX EXPENSE 2021 2020 For the years ended December 31, 2021 2020 Income taxes at U.S. statutory rate $ ( 17,836,000 ) $ ( 17,689,000 ) Current year reserve 12,539,000 12,020,000 Expenses not deductible 5,297,000 5,669,000 Total tax expense $ - $ - Deferred taxes are provided for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. The temporary differences that give rise to deferred tax assets and liabilities were as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES December 31, 2021 December 31, 2020 Deferred tax assets (liabilities): Net operating loss carryforwards $ 71,001,000 $ 61,062,000 General business credit carryforwards 4,741,000 4,398,000 State credits 2,780,000 2,857,000 Property, equipment and goodwill 200,000 8,000 Stock options 10,537,000 9,551,000 Deferred revenue 62,000 62,000 Intangible assets 367,000 312,000 Other 16,000 70,000 Gross deferred tax assets 89,704,000 78,320,000 Valuation allowance ( 89,704,000 ) ( 78,320,000 ) Net deferred taxes $ - $ - F- 21 As of December 31, 2021, we had approximately $ 338.1 million of net operating loss carryforwards and approximately $ 4.7 million of general business credit carryforwards. These carryforwards expire as follows: SUMMARY OF NET OPERATING LOSS AND GENERAL BUSINESS CREDIT CARRYFORWARDS Net operating loss carryforwards General business credit carryforwards 2022 $ 8,230,000 $ 431,000 2023 5,434,000 362,000 2024 8,711,000 287,000 2025 2,370,000 182,000 2026 7,160,000 72,000 Thereafter 90,416,000 3,407,000 $ 122,321,000 $ 4,741,000 As of December 31, 2021, we had approximately $ 215.8 million of net operating loss carryforwards that do not expire and can be carried forward indefinitely. Such net operating loss carryforwards can only be used to offset 80 % of taxable income in any given tax year. In addition, our net operating loss carryforwards may be subject to limitation due to ownership changes. We acquired MacroChem Corporation on March 25, 2009 and Somanta Pharmaceuticals, Inc. on January 4, 2008. Both of these corporations were loss-making entities at the time of acquisition. As a result, the net operating losses related to those acquisitions may be subject to annual limitations. NOTE 14 – COMMITMENTS AND CONTINGENCIES Operating Leases We lease space under operating leases for manufacturing and laboratory facilities and administrative offices in Cleveland, Ohio, as well as administrative offices in New York, New York. We also lease certain office equipment under operating leases, which have a non-cancelable lease term of less than one year and, therefore, we have elected the practical expedient to exclude these short-term leases from our right-of-use assets and lease liabilities. Components of lease cost under ASC 842 for the years ended December 31, 2021 and 2020 are as follows: SCHEDULE OF COMPONENTS OF LEASE COST 2021 2020 For the years ended December 31, 2021 2020 Operating lease cost $ 1,761,000 $ 1,736,000 Variable lease cost $ 445,000 $ 337,000 Short-term lease cost $ 183,000 $ 61,000 The following table presents information about the amount and timing of cash flows arising from operating leases under ASC 842 as of December 31, 2021: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES Maturity of lease liabilities: 2022 $ 1,818,000 2023 1,834,000 2024 1,879,000 2025 1,896,000 2026 871,000 Thereafter 3,663,000 Total undiscounted operating lease payments 11,961,000 Less: imputed interest 2,583,000 Present value of operating lease liabilities $ 9,378,000 Balance sheet classification: Current portion of lease liability $ 1,818,000 Long-term lease liability 7,560,000 Total operating lease liabilities $ 9,378,000 Other information: Weighted-average remaining lease term for operating leases 86 months Weighted-average discount rate for operating leases 7.4 % F- 22