What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-18 compared with 2023-03-29 · 813 added, 575 removed, 742 unchanged (65% of the section changed)

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for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

to the maintenance of records that in reasonable detail accurately and fairly reflect the

transactions and dispositions of our assets;

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;

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, 2022, 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

to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

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;

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, 2023, 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

In our management’s opinion, we have maintained effective internal control over financial reporting as of December 31,

2023, based on criteria established in the COSO 2013 framework.

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.

we are a non-accelerated filer and smaller reporting company, Deloitte & Touche 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.

Limitations of Internal Controls

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The information required by this Item is incorporated herein by reference from the information

to be contained in our 2023 Proxy Statement to be filed with the SEC within 120 days after December 31, 2022 in connection with the solicitation

of proxies for our 2023 Annual Meeting of Stockholders (the “2023 Proxy Statement”).

to be contained in our 2024 Proxy Statement to be filed with the SEC within 120 days after December 31, 2023, in connection with the

solicitation of proxies for our 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”).

We have adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all of our employees (including

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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.

Abeona Therapeutics Inc., c/o Investor Relations, 6555 Carnegie Ave, 4th Floor, Cleveland, OH 44103.

corporate governance guidelines and the charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance

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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.

Relations, 6555 Carnegie Ave, 4th Floor, Cleveland, OH 44103.

EXECUTIVE COMPENSATION

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following financial statements are submitted as part of this report:

Report of Independent Registered Public Accounting Firm (PCAOB ID 726 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 726 and 034 )

Consolidated Balance Sheets at December 31, 2023 and 2022

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Amended and Restated Bylaws of Abeona Therapeutics Inc.

(incorporated by reference to Exhibit 3.3 of our Form 10-K filed on March 29, 2023).

Form of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of our Form 8-K filed on May 2, 2022).

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(incorporated by reference to Exhibit 4.4 of our Form 10-K for the year ended December 31, 2019)

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 of our Form 8-K filed on July 3, 2023)

Warrant to Purchase Common Stock, by and between Abeona Therapeutics, Inc.

and Avenue Venture Opportunities Fund, L.P., dated as of January 8, 2024 (incorporated by reference to Exhibit 4.1 of our Form 8-K filed on January 8, 2024)

Warrant to Purchase Common Stock, by and between Abeona Therapeutics, Inc.

and Avenue Venture Opportunities Fund II, L.P., dated as of January 8, 2024 (incorporated by reference to Exhibit 4.2 of our Form 8-K filed on January 8, 2024)

401(k) Plan (incorporated by reference to Exhibit 10.20 of our Form 10-K for the year ended December 31, 1999)

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and Ultragenyx Pharmaceutical Inc., dated May 16, 2022 (incorporated by reference to Exhibit 10.3 of our Form 10-Q for the quarter ended June 30, 2022)

Retention Bonus Letter, dated June 15, 2023, to Vishwas Seschadri, Ph.D.

(incorporated by reference to Exhibit 10.5 of our Form 10-Q for the quarter ended June 30, 2023)

Retention Bonus Letter, dated June 15, 2023, to Joseph Vazzano, Ph.D.

(incorporated by reference to Exhibit 10.5 of our Form 10-Q for the quarter ended June 30, 2023)

Retention Bonus Letter, dated June 15, 2023, to Brendan O’Malley, Ph.D.

(incorporated by reference to Exhibit 10.5 of our Form 10-Q for the quarter ended June 30, 2023)

Securities Purchase Agreement, dated July 3, 2023 (incorporated by reference to Exhibit 10.1 of our Form 8-K filed on July 3, 2023)

Loan and Security Agreement, by and among Abeona Therapeutics, Inc., MacroChem Corporation, Abeona Therapeutics LLC, Avenue Venture Opportunities Fund, L.P., as Agent, and Avenue Venture Opportunities Fund II, L.P., dated as of January 8, 2024 (incorporated by reference to Exhibit 10.1 of our Form 8-K filed on January 8, 2024

Supplement to the Loan and Security Agreement, by and among Abeona Therapeutics, Inc., MacroChem Corporation, Abeona Therapeutics LLC, Avenue Venture Opportunities Fund, L.P., as Agent, and Avenue Venture Opportunities Fund II, L.P., dated as of January 8, 2024 (incorporated by reference to Exhibit 10.2 of our Form 8-K filed on January 8, 2024)

Code of Business Conduct and Ethics

Letter from Whitley Penn addressed to the United States Securities and Exchange Commission, dated October 17, 2023 (incorporated by reference to Exhibit 16.1 of our Form 8-K filed on October 18, 2023)

Policy on Insider Trading and Confidentiality

Subsidiaries of the registrant

Consent of Deloitte & Touche LLP

Consent of Whitley Penn LLP

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Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Policy Relating to Recovery of Erroneously Awarded Compensation

XBRL Instance Document

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March 18, 2024

Mann, Director

March 29, 2023

Christine Silverstein

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March 18, 2024

Wider, Director

March 29, 2023

Wuchterl, Director

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

of Directors and Stockholders

To the shareholders and the Board of Directors of Abeona Therapeutics Inc

on the Financial Statements

We have audited the accompanying consolidated balance sheet of Abeona Therapeutics

Inc (the “Company”) as of December 31, 2023, the related consolidated statements of operations and comprehensive loss, statement

of stockholders’ equity and statement of cash flows for the year ended December 31, 2023, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31,

2023, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

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 audit 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 audit, 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 Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit 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 audit provides a reasonable basis for our opinion.

The critical audit matter communicated

below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated

to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved

our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our

opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate

opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Direct Placement Offering — Refer to Note 9 to the

financial statements

Critical Audit Matter Description

As more fully described in Note 9 to the

financial statements, On July 6, 2023, the Company sold 3,284,407 shares of its common stock, and in lieu of shares of common stock, pre-funded

warrants exercisable for 2,919,140 shares of common stock (the “2023 Pre-Funded Warrants”), to a group of existing institutional

investors for an aggregate purchase price of $25.0 million gross, or $23.0 million net of related costs.

The offering price for each share

of common stock was $4.03, and the offering price for the 2023 Pre-Funded Warrants was $4.0299, which represents the per share offering

price for the Company’s common stock less a $0.0001 per share exercise price for each such 2023 Pre-Funded Warrant.

The 2023 Pre-Funded

Warrants are immediately exercisable at a nominal exercise price of $0.0001 per share and may be exercised at any time.

The prefunded warrants are classified as equity in accordance with ASC 815, Derivatives and Hedging, given the prefunded

warrants are indexed to the Company’s own shares of common stock and meet the requirements to be classified in equity.

We identified the assessment of the initial

accounting for the Direct Placement Offering, specifically the accounting for the 2023 Pre-Funded Warrants as a critical audit matter

because of the complexity in applying the accounting framework and the significant judgments made by management in the determination of

the classification of the 2023 Pre-Funded Warrants.

Auditing these conclusions involved especially subjective judgment and audit effort.

How the Critical Audit Matter Was Addressed in the Audit

audit procedures related to accounting for the 2023 Pre-Funded Warrants included the following, among others:

We obtained and read the agreements associated with the Direct Placement Offering, including the related 2023 Pre

Funded Warrant agreements, and tested the accuracy and completeness of the significant terms identified by management for purposes determining

the classification and earnings per share treatment.

With the assistance of professionals in our firm having expertise in the accounting treatment for equity instruments,

including warrants, we evaluated the Company’s conclusions regarding the accounting treatment applied to the 2023 Pre-Funded Warrants,

including the classification of warrants as equity and the treatment of shares associated with the 2023 Pre-Funded Warrants within weighted

average number of shares of common stock outstanding.

Deloitte & Touche LLP

We have served as the Company’s

auditor since 2023.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders

Therapeutics Inc.

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on the Financial Statements

have audited the accompanying consolidated balance sheets of Abeona Therapeutics Inc.

have audited the accompanying consolidated balance sheet of Abeona Therapeutics Inc.

and Subsidiaries (the “Company”) as

of December 31, 2022 and 2021, 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, 2022 and 2021, 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.

of December 31, 2022 and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash

flows for the year 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, 2022, 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.

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.

statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

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laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

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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

As part of our audit

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

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Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

audit 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.

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the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

Our audit 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.

We believe that our audit

provides a reasonable basis for our opinion.

Audit Matters

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We determined that there are no critical audit matters.

We served as the Company’s auditor from 2006 to 2023.

WHITLEY PENN LLP

have served as the Company’s auditor since 2006.

THERAPEUTICS INC.

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thousands, except share and per share amounts)

December 31, 2023

December 31, 2022

Current assets:

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Restricted cash

Accounts receivable

Other receivables

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Property and equipment, net

Right-of-use lease assets

Licensed technology, net

Operating lease right-of-use assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accrued expenses

Current portion of lease liability

Current portion of operating lease liability

Current portion of payable to licensor

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Payable to licensor

Long-term lease liabilities

Long-term operating lease liabilities

Warrant liabilities

Other long-term liabilities

Total liabilities

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General and administrative

Impairment of goodwill

Impairment of licensed technology

Impairment of right-of-use lease assets

Loss/(gain) on operating lease right-of-use assets

Impairment of construction-in-progress

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Loss from operations

Gain on settlement with licensor

PPP loan payable forgiveness income

Interest income

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Basic and diluted loss per common share

Weighted average number of common shares outstanding – basic and

Weighted average number of common shares outstanding – basic and diluted

Other comprehensive income (loss):

Change in unrealized gains

(losses) related to available-for-sale debt securities

Change in unrealized gains (losses) related to available-for-sale debt securities

Foreign currency translation adjustments

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Stock-based compensation expense

Issuance of common stock in connection with the exercise of stock options

Issuance of common stock in connection with restricted share awards, net of cancellations

Issuance of common stock and stock purchase warrants in connection with public offering, net of offering costs and warrant liability

Issuance of common stock, net of offering costs under open market sale agreement (ATM)

Other comprehensive income

Balance at December 31, 2021

$ ( 655,640 )

Beginning balance

$ ( 655,640 )

Stock-based compensation expense

Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement

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$ ( 695,336 )

Ending Balance

$ ( 695,336 )

Stock-based compensation expense

Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement

Issuance of common stock, net of offering costs under open market sale agreement (ATM)

Issuance of common stock, net of offering costs under direct placement offering

Other comprehensive income

Balance at December 31, 2023

$ ( 749,524 )

accompanying notes are an integral part of these consolidated statements.

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Stock-based compensation expense

Non-cash gain on settlement with licensor

Non-cash PPP loan payable forgiveness income

Non-cash impairment of goodwill

Change in fair value of warrant liabilities

Non-cash impairment of licensed technology

Non-cash impairment of right-of-use lease assets

Non-cash loss/(gain) on operating lease right-of-use assets

Non-cash impairment of construction-in-progress

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Prepaid expenses and other current assets

Accounts payable, accrued expenses and lease liabilities

Deferred revenue

Accounts payable and accrued expenses

Lease liabilities

Change in payable to licensor

Other current liabilities

Net cash used in operating activities

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Proceeds from maturities of short-term investments

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from ATM sales of common stock, net of issuance costs

Proceeds from issuance of common stock and warrants in public offering, net of issuance costs

Proceeds from issuance of common stock and warrants in private offering, net of issuance costs

Proceeds from exercise of stock options and net settlement of restricted share awards

Proceeds from sales of common stock under direct placement offering, net of issuance costs

Proceeds from sales of common stock and warrants in private offering, net of issuance costs

Proceeds from net settlement of restricted share awards

Payment of debt issuance cost

Proceeds from issuance of Series A and Series B Convertible Redeemable Preferred Stock, net of issuance costs

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Net cash provided by financing activities

Net (decrease)increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of year

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Supplemental non-cash flow information:

Additions (deletions) to right-of-use lease assets obtained from new operating lease liabilities resulting from modification of original lease arrangement

Deletions to operating lease liabilities obtained from new operating lease liabilities resulting from modification of original lease arrangement

Additions (deletions) to right-of-use lease assets in exchange for new or modifications to operating lease liabilities

Deletions to operating lease liabilities obtained from new operating lease

liabilities resulting from modification of original lease arrangement

accompanying notes are an integral part of these consolidated statements.

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Therapeutics Inc.

(together with the Company’s subsidiaries, “Abeona” or the “Company”), a Delaware

corporation, is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases.

Company’s lead clinical program is EB-101, an autologous, engineered cell therapy currently in development for recessive

dystrophic epidermolysis bullosa (“RDEB”).

The Company’s development portfolio also features AAV-based gene

therapies designed to treat high unmet medical need ophthalmic diseases using the novel AIM™ capsid platform that the Company

has exclusively licensed from the University of North Carolina at Chapel Hill, and internal AAV vector research programs.

(together with the Company’s subsidiaries, “Abeona” or the “Company”), a Delaware corporation,

is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases.

The Company’s lead

clinical program is for pz-cel, an autologous, engineered cell therapy currently in development for recessive dystrophic epidermolysis

bullosa (“RDEB”).

The Company’s development portfolio also features adeno-associated virus (“AAV”)-based

gene therapies designed to treat highly unmet, medically needed ophthalmic diseases using the novel AIM™ capsid platform that the

Company has exclusively licensed from the University of North Carolina at Chapel Hill, and internal AAV vector research programs.

June 30, 2022, the Company filed a Certificate of Amendment to the Company’s Restated Certificate of Incorporation with the Secretary

of State of the State of Delaware (the “Certificate of Amendment”), to effectuate a reverse stock split of the Company’s

outstanding common stock, par value $ 0.01 per share (“Common Stock”), at an exchange ratio of 25-to-1 (the “Reverse

Stock Split”).

The Reverse Stock Split was effective on July 1, 2022.

The number of authorized shares of Common Stock immediately

after the Reverse Stock Split (“New Common Stock”) remains at 200,000,000 shares.

All share and per share information has

been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.

outstanding common stock, par value $ 0.01 per share, at an exchange ratio of 25-to-1 (the “Reverse Stock Split”).

Stock Split was effective on July 1, 2022.

The number of authorized shares of common stock immediately after the Reverse Stock Split

(“New Common Stock”) remains at 200,000,000 shares.

All share and per share information has been retroactively adjusted to

give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.

a result of the Reverse Stock Split, every 25 shares of common stock outstanding immediately prior to the effectiveness of the Reverse

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and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants.

In addition, the number of shares reserved for issuance under the Company’s 2015 Equity Incentive Plan were reduced proportionately.

and Sources of Liquidity

consolidated 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

of December 31, 2022, the Company had cash, cash equivalents, restricted cash and short-term investments of $ 52.5 million.

ended December 31, 2022, the Company had cash outflows from operations of $ 43.5 million.

The Company has not generated significant revenues

and has 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 the Company’s product candidates will require significant additional financing.

Company is 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 the Company’s

product candidates, raising additional capital to continue to fund the Company’s operations, development of competing drugs and

therapies and protection of proprietary technology.

As a result of these and other risks and the related uncertainties, there can be

no assurance of the Company’s future success.

Company believes that its current cash and cash equivalents, restricted cash and short-term investments are sufficient resources to fund

operations through at least the next 12 months from the date of this report on Form 10-K.

The Company may need to secure additional funding

to carry out all of its planned research and development activities.

If the Company is 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 its future

accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern , the Company has evaluated whether

there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue

as a going concern within one year after the date the accompanying consolidated financial statements were issued.

a biopharmaceutical organization, the Company has devoted substantially all of its resources since inception to research and development

activities for pz-cel and other product candidates, business planning, raising capital, establishing its intellectual property portfolio,

acquiring or discovering product candidates, and providing general and administrative support for these operations.

As a result, the

Company has incurred significant operating losses and negative cash flows from operations since its inception and anticipates such losses

and negative cash flows will continue for the foreseeable future.

its inception, the Company has funded its operations primarily with proceeds from sales of shares of its stock.

The Company has

incurred recurring losses since its inception, including net losses contributable to Common Shareholders of $ 54.2

million and $ 43.5

million for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, the Company had an accumulated

deficit of $ 749.5

To date, the Company has not generated any significant revenues and expects to continue to generate operating losses for

the foreseeable future.

As of the issuance date of these consolidated financial statements, the Company expects that its existing

cash, cash equivalents, restricted cash and short-term investments of $ 52.6

million as of December 31, 2023 in addition to the $ 20

million received in January 2024 as part of a credit facility with Avenue Venture Opportunities Fund, L.P.

(see Footnote 15) and the $ 5.3 million in net proceeds from the Company’s common stock sales subsequent to December 31, 2023, will

be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from the issuance

date of these consolidated financial statements.

the Company believes its capital resources are sufficient to fund the Company’s on-going operations for the next 12 months from

the issuance date of these consolidated financial statements, the Company’s liquidity could be materially affected over this period

(1) its ability to raise additional capital through equity offerings, debt financings, or other non-dilutive third-party funding;

(2) costs associated with new or existing strategic alliances, or licensing and collaboration arrangements;

(3) negative regulatory events

or unanticipated costs related to pz-cel;

(4) any other unanticipated material negative events or costs.

One or more of these events

or costs could materially affect the Company’s liquidity.

If the Company is unable to meet its obligations when they become due,

the Company may have to delay expenditures, reduce the scope of its research and development programs, or make significant changes to

its operating plan.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

of Significant Accounting Policies

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and expenses during the reported period.

Actual results could differ from these estimates and assumptions.

Reclassifications

comparative figures have been reclassified to conform to the current year presentation.

The Company reclassified depreciation and amortization

costs of $ 3.2

million and $ 0.1

million to research and development and general

and administrative expenses, respectively, on the consolidated statements of operations and comprehensive loss during the year ended

December 31, 2021.

The Company also reclassified certain rent expenses of $ 1.2

million from general and administrative to research

and development expenses on the consolidated statements of operations and comprehensive loss during the year ended December 31, 2021,

respectively.

Additionally, the Company also reclassified $ 5.0

million of restricted cash from prepaid expenses,

other current assets and restricted cash and $ 0.9

million of restricted cash from other assets

and restricted cash to restricted cash on the consolidated balance sheets as of December 31, 2021.

2022, the Company identified errors in the accounting for certain common stock warrants that were issued in 2021.

The common stock warrants

were not indexed to the Company’s own stock and therefore should have been classified as liabilities at their estimated fair value

instead of additional paid-in capital.

Although the errors were immaterial to prior periods, the 2021 financial statements are restated

below in accordance with Staff Accounting Bulletin No.

108, “Considering the Effects of Prior Year Misstatements when Quantifying

Misstatements in Current Year Financial Statements”, due to the significance of the out-of-period correction to the 2021 period.

There was no impact to the Company’s consolidated statements of operations and comprehensive loss.

The Company evaluated the materiality of these errors on both a quantitative and qualitative basis under the guidance of ASC 250, “Accounting

Changes and Errors Corrections,” and determined that it did not have a material impact on previously issued financial statements.

reconciliation of the effects of the restatement to amounts in the previously reported consolidated financial statements for the year

ended December 31, 2021 are as follows (in thousands):

SCHEDULE OF EFFECTS OF THE RESTATEMENT TO AMOUNTS IN THE PREVIOUSLY REPORTED CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2021

Balance Sheet

stockholders’ equity

of December 31, 2021

Statement of Stockholders’ Equity

paid-in capital, December 31, 2021

stockholders’ equity, December 31, 2021

The Company’s significant estimates include, but are not limited to, fair value of warrant

liabilities, the incremental borrowing rate related to the Company’s operating leases and stock-based compensation.

uncertainty inherent in such estimates, actual results could differ from these estimates and assumptions.

and Cash Equivalents

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The Company has not experienced any losses related to amounts in excess of FDIC limits.

cash serves as collateral for office space.

cash serves as collateral for leased office space.

investments consist of investments in U.S.

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The Company determines the appropriate

classification of the securities at the time they are acquired and evaluate the appropriateness of such classifications at each balance

classification of the securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance

The Company classifies its short-term investments as available-for-sale pursuant to Accounting Standards Codification (“ASC”)

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reasonable period of time.

receivables include employee retention credits (“ERC”), sublease rent receivables and other miscellaneous receivables that are expected to be collected within the next twelve months.

As of December 31, 2023 and December 31, 2022, the Company had ERC receivables of $ 2.1

million and nil ,

respectively which was recorded in other receivables and as a component of other income in the consolidated statements of operations and comprehensive loss.

and Equipment

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Depreciation is provided using the straight-line method over estimated useful lives ranging from

three to seven years.

three to five years.

Leasehold improvements are amortized over the shorter of the asset’s useful life or the life of the lease

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or the agreement.

The Company maintain licensed technology on its consolidated balance sheet until either the licensed technology agreement

The Company maintains licensed technology on its consolidated balance sheet until either the licensed technology agreement

underlying it is completed or the asset becomes impaired.

When the Company determine that an asset has become impaired, as discussed

When the Company determines that an asset has become impaired, as discussed

below, or the Company abandons a project, the Company writes down the carrying value of the related intangible asset to its fair value

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assets consist of property and equipment, licensed technology, and right-of-use assets.

tests its long-lived assets for impairment when events and circumstances indicate that the carrying value of an asset or group of

assets may not be fully recoverable.

If indicators are present or changes in circumstance suggest that impairment may exist, the

Company assesses the recoverability of the affected long-lived assets or group of assets by determining whether the carrying value

of such assets or group of assets can be recovered through undiscounted future operating cash flows.

If the carrying amount is not

recoverable, the Company measures the amount of any impairment by comparing the carrying value of the asset or group of assets to

its fair value.

represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired.

Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level or more frequently if events or

changes in circumstances indicate that the asset might be impaired.

Impairment loss, if any, is recognized based on a comparison of the

fair value of the asset to its carrying value, without consideration of any recoverability.

The Company tests goodwill for impairment

annually during the fourth quarter and whenever indicators of impairment exist by first assessing qualitative factors to determine whether

it is more likely than not that the fair value is less than its carrying amount.

If the Company concludes it is more likely than not

that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test is performed.

If the Company

concludes that goodwill is impaired, it will record an impairment charge in its consolidated statement of operations and comprehensive

The Company tests its long-lived assets for impairment

when events and circumstances indicate that the carrying value of an asset or group of assets may not be fully recoverable.

If indicators

are present or changes in circumstance suggest that impairment may exist, the Company assesses the recoverability of the affected long-lived

assets or group of assets by determining whether the carrying value of such assets or group of assets can be recovered through undiscounted

future operating cash flows.

If the carrying amount is not recoverable, the Company measures the amount of any impairment by comparing

the carrying value of the asset or group of assets to its fair value.

Company reviews its available-for-sale investments for credit losses on a collective basis by major security type and in line with the

Company’s investment policy.

As of December 31, 2023, the Company’s available-for-sale investments were in securities that

are issued by the U.S.

treasury and U.S.

federal agencies, are highly rated, and have a history of zero credit losses.

The Company reviews

the credit quality of its accounts receivables by monitoring the aging of its accounts receivable, the history of write offs for uncollectible

accounts, and the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts,

and other relevant factors.

The Company’s accounts receivable are with customers that do not have a history of uncollectibility

nor a history of significantly aged accounts receivables.

As of December 31, 2023, the Company did not recognize a credit loss allowance

for its investments or accounts receivable.

Company operates in a single segment.

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and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled

to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within

the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance

obligations and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the

transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Company enters into licensing agreements that are within the scope of ASC 606, under which it may exclusively license rights to research,

develop, manufacture and commercialize its product candidates to third parties.

The terms of these arrangements typically include payment

to the Company of one or more of the following:

non-refundable, upfront license fees;

reimbursement of certain costs;

customer option

exercise fees;

development, regulatory and commercial milestone payments;

and royalties on net sales of licensed products.

As part of the accounting

for these arrangements, the Company must use significant judgment to determine:

(a) the number of performance obligations based on the

determination under step (ii) above;

(b) the transaction price under step (iii) above;

and (c) the stand-alone selling price for each

performance obligation identified in the contract for the allocation of transaction price in step (iv) above.

The Company uses judgment

to determine whether milestones or other variable consideration, except for royalties, should be included in the transaction price as

described further below.

The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis,

for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

Amounts received prior

to revenue recognition are recorded as deferred revenue.

the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified

in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred

to the customer and the customer is able to use and benefit from the license.

In assessing whether a performance obligation is distinct

from the other performance obligations, the Company considers factors such as the research, development, manufacturing and commercialization

capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace.

In addition, the

Company considers whether the collaboration partner can benefit from a performance obligation for its intended purpose without the receipt

of the remaining performance obligation, whether the value of the performance obligation is dependent on the unsatisfied performance

obligation, whether there are other vendors that could provide the remaining performance obligation, and whether it is separately identifiable

from the remaining performance obligation.

For licenses that are combined with other performance obligation, the Company utilizes judgment

to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over

time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue.

evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

The measure of progress, and thereby periods over which revenue should be recognized, are subject to estimates by management and may

change over the course of the research and development and licensing agreement.

Such a change could have a material impact on the amount

of revenue the Company records in future periods.

the inception of each arrangement that includes research or development milestone payments, the Company evaluates whether the milestones

are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount

If it is probable that a significant cumulative revenue reversal would not occur, the associated milestone value is included

in the transaction price.

An output method is generally used to measure progress toward complete satisfaction of a milestone.

payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of

being achieved until those approvals are received.

The Company evaluates factors such as the scientific, clinical, regulatory, commercial,

and other risks that must be overcome to achieve the particular milestone in making this assessment.

There is considerable judgment involved

in determining whether it is probable that a significant cumulative revenue reversal would not occur.

At the end of each subsequent reporting

period, the Company re-evaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its

estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue

and earnings in the period of adjustment.

Collaborative

Company analyzes its collaboration arrangements to assess whether such arrangements involve joint operating activities performed by parties

that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success

of such activities and therefore within the scope of ASC 808, Collaborative Arrangements (ASC 808).

This assessment is performed

throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement.

For collaboration

arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration

are deemed to be within the scope of ASC 808 and which elements of the collaboration are more reflective of a vendor-customer relationship

and therefore within the scope of ASC 606.

For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an

appropriate recognition method is determined and applied consistently, generally by analogy to ASC 606.

Amounts that are owed to collaboration

partners are recognized as an offset to collaboration revenue as such amounts are incurred by the collaboration partner.

For those elements

of the arrangement that are accounted for pursuant to ASC 606, the Company applies the five-step model described above under ASC 606.

and Development Expenses

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and administrative expenses primarily consist of personnel, contract personnel, personnel-related expenses to support the Company’s

administrative and operating activities, facility costs and professional expenses (i.e., legal expenses) and investor relations fees.

administrative and operating activities, facility costs, professional expenses (i.e., legal expenses), investor relations fees and commercial

readiness costs.

taxes are accounted for under the asset and liability method.

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to income taxes are classified as interest expense and general and administrative costs, respectively, in the consolidated financial

For 2022 and 2021, the Company did not recognize any uncertain tax positions, interest or penalty expense related to income

It is not reasonably likely for the amounts of unrecognized tax benefits to significantly increase or decrease within the next

For the years ended December 31, 2023 and 2022, the Company 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.

The Company files 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.

The Company currently does not have any

open income tax audits.

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.

The Company currently

does not have any open income tax audits.

Loss Per Share

and diluted net loss per share is computed by dividing net loss attributable to common shareholders by the weighted-average number of

shares of common stock.

The Company does 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.

following table sets forth the potential securities that could potentially dilute basic income/(loss) per share in the future that were

not included in the computation of diluted net loss per share because to do so would have been anti-dilutive for the periods presented:

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

shares of common stock outstanding during the period.

The weighted average number of shares of common stock includes the weighted average

effect of outstanding pre-funded warrants for the purchase of shares of common stock for which the remaining unfunded exercise price

is $ 0.0001 or less per share (Note 9).

The Company does 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.

following table sets forth the potential securities that could potentially dilute basic loss per share in the future that were not included

in the computation of diluted net loss per share because to do so would have been anti-dilutive for the periods presented:

OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

For the year ended December 31,

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of compensation costs in subsequent periods as the forfeitures arise.

The Company estimates the expected term using the “simplified”

method, as outlined in SEC Staff Accounting Bulletin No.

107, “Share-Based Payment.”

November 3, 2022, the Company issued warrants to purchase 7,609,879 shares of common stock, with an exercise price of $ 4.75 per share,

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from the common stock issued.

common stock warrants are accounted for as liabilities on the consolidated balance sheets at their estimated fair value because they

common stock warrants are accounted for as liabilities in the consolidated balance sheets at their estimated fair value because they

are not indexed to the Company’s own stock.

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and comprehensive loss.

On July 6, 2023,

the Company issued pre-funded warrants to purchase 2,919,140 shares of common stock, with an exercise price of $ 4.0299 per share.

The prefunded warrants are classified as equity in accordance with ASC 815, Derivatives and Hedging , given the prefunded warrants

are indexed to the Company’s own shares of common stock and meet the requirements to be classified in equity.

The prefunded warrants

were recorded at their relative fair value at issuance in the stockholders’ equity section of the consolidated balance sheet and

the prefunded warrants are considered outstanding shares in the basic earnings per share calculation given their nominal exercise price.

Adopted Accounting Pronouncements

August 2020, the FASB issued ASU No.

2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity” (“ASU 2020-06”), which simplifies the accounting for convertible instruments by eliminating

the requirement to separately account for embedded conversion features as an equity component in certain circumstances.

A convertible

debt instrument will be reported as a single liability instrument with no separate accounting for an embedded conversion feature unless

separate accounting is required for an embedded conversion feature as a derivative or under the substantial premium model.

The ASU simplifies

the diluted earnings per share calculation by requiring that an entity use the if-converted method and that the effect of potential share

settlement be included in diluted earnings per share calculations.

Further, the ASU requires enhanced disclosures about convertible instruments.

The Company adopted ASU 2020-06 as of January 1, 2022, and there was no material impact on the consolidated financial statements upon

June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2016-13 (Topic 326), Financial Instruments—Credit

Measurement of Credit Losses on Financial Instruments , which replaces the existing incurred loss impairment model with

an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to

be collected.

The new guidance was effective for the Company on January 1, 2023, and the adoption did not have a material impact on the

Company’s consolidated financial statements.

Issued Accounting Pronouncements

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

is intended to enhance the transparency and decision usefulness of income tax information through improvements to income tax disclosures

primarily related to the rate reconciliation and income taxes paid information.

The standard is effective for annual reporting periods

beginning after December 15, 2024, with early adoption permitted.

The Company is currently assessing the impact that the adoption will

have on its consolidated financial statements.

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which

expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s

expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit

or loss information in assessing segment performance and allocating resources.

The standard is effective for annual reporting periods

beginning after December 15, 2023, and interim periods within years beginning after December 15, 2024, with early adoption permitted.

The Company is currently assessing the impact that the adoption will have on its consolidated financial statements.

2 – SHORT-TERM INVESTMENTS

following table provides a summary of the short-term investments (in thousands):

SCHEDULE OF AVAILABLE FOR SALE SHORT-TERM INVESTMENTS

OF AVAILABLE FOR SALE SHORT-TERM INVESTMENTS

December 31, 2023

Amortized Cost

Gross Unrealized Gain

Gross Unrealized Loss

Unrealized Gain

Unrealized Loss

Available-for-sale, short-term investments:

treasury and federal agency securities

treasury securities

federal agency securities

Total available-for-sale, short-term investments

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Available-for-sale, short-term investments:

treasury securities

treasury and federal agency securities

Total available-for-sale, short-term investments

of December 31, 2023, the available-for-sale securities classified as short-term investments mature in one year or less.

Unrealized losses

on available-for-sale securities as of December 31, 2022 were not significant and were primarily due to changes in interest rates, including

market credit spreads, and not due to increased credit risks associated with specific securities.

None of the short-term investments

have been in a continuous unrealized loss position for more than 12 months.

Accordingly, no other-than-temporary impairment was recorded

for the year ended December 31, 2022.

carries its available-for-sale securities at fair value in the consolidated balance sheets.

Unrealized losses on available-for-sale securities

as of December 31, 2023, were not significant and were primarily due to changes in interest rates, including market credit spreads, and

not due to increased credit risks associated with specific securities.

None of the short-term investments have been in a continuous unrealized

loss position for more than 12 months.

Accordingly, no other-than-temporary impairment was recorded for the year ended December 31, 2023.

were no significant realized gains or losses recognized on the sale or maturity of available-for-sale investments during the years ended

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SCHEDULE OF PROPERTY AND EQUIPMENT

Useful lives (years)

As of December 31,

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Total property and equipment, net

and amortization on property and equipment was $ 3.1 million and $ 3.3 million for 2022 and 2021, respectively.

During the year ended December

31, 2022, the Company incurred a loss on disposal of equipment of $ 0.1 million which is reflected in other income (expense) in the consolidated

statements of operations and comprehensive loss.

and amortization on property and equipment was $ 2.3 million and $ 3.1 million for the years ended December 31, 2023 and 2022, respectively.

The Company incurred a loss on disposal of equipment of $ 47,000 and $ 0.1 million during the years ended December 31, 2023 and 2022, respectively,

which is reflected in other income in the consolidated statements of operations and comprehensive loss.

March 31, 2022, the Company announced that it was pursuing a strategic partner to take over development activities of ABO-102 and that

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ABO-101 and ABO-102 programs had no future value, and thus recorded an impairment charge of $ 1.8 million for the year ended December

31, 2022, which was net of a cash refund from the builder of approximately $ 1.5 million.

31, 2022, which was net of a cash refund from the builder of $ 1.5 million.

4 – LICENSED TECHNOLOGY

May 15, 2015, the Company 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.

is amortized over the life of the license of 20 years .

On March 31, 2022, the Company announced that it was pursuing a strategic partner

to take over development activities of ABO-102 and that it was discontinuing development of ABO-101.

As a result, the Company determined

the remaining value of the licensed technology had no future value and thus recorded an impairment charge of $ 1.4 million for the year

ended December 31, 2022.

to the AB-101 and AB-102 patent portfolios for developing treatments for patients with Sanfilippo Syndrome Type B and Sanfilippo Syndrome

Type A, respectively.

The license was being amortized to expense over the life of the license of 20 years .

On March 31, 2022, the Company

announced that it was pursuing a strategic partner to take over development activities of ABO-102 and that it was discontinuing development

As a result of this shift in priorities, the Company determined the remaining value of the licensed technology had no future

value and thus recorded an impairment charge of $ 1.4 million for the year ended December 31, 2022.

There is no remaining net value of

licensed technology as of December 31, 2023 and December 31, 2022.

following table provides a summary of licensed technology (in thousands):

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Total licensed technology, net

expense on licensed technology was approximately $ 29,000 and $ 116,000 for the years ended December 31, 2022 and 2021, respectively.

following table provides a summary of the changes in the carrying amount of goodwill (in thousands):

SCHEDULE OF GOODWILL

As of December 31,

Goodwill at the beginning of the year

Less impairment charge

Goodwill at the end of the year

there was no recorded goodwill as of December 31, 2022, the Company did not perform its annual goodwill impairment test for 2022.

Company completed its annual goodwill impairment test as of year-end 2021 and determined that the carrying value of its net assets exceeded

fair value using its market capitalization as a proxy for fair value.

In accordance with ASC 350, the Company 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 its consolidated

balance sheet.

As a result, the Company recorded a goodwill impairment charge of $ 32.5 million for the year ended December 31, 2021.

expense on licensed technology was nil and approximately $ 29,000 for the years ended December 31, 2023 and 2022, respectively.

5 – FAIR VALUE MEASUREMENTS

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information in the notes to the consolidated financial statements when the fair value is different than the carrying value of these financial

The estimated fair value of accounts receivable, prepaid expenses and other current assets, other assets, accounts payable,

accrued expenses, payables to licensor and deferred revenue approximate their carrying amounts due to the relatively short maturity of

these instruments.

The estimated fair value of other receivables, prepaid expenses and other current assets, other assets, accounts payable,

accrued expenses, and payables to licensor approximate their carrying amounts due to the relatively short maturity of these instruments.

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

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following table provides a summary of financial assets measured at fair value on a recurring and non-recurring basis (in thousands):

SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES MEASURED ON RECURRING AND NON-RECURRING BASIS

OF FAIR VALUE, ASSETS AND LIABILITIES MEASURED ON RECURRING AND NON-RECURRING BASIS

Fair Value at December 31, 2023

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Short-term investments

treasury and federal agency securities

treasury securities

federal agency securities

Total assets measured at fair value

Payable to licensor

Warrant liabilities

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treasury and federal agency securities

Total recurring assets

Non-recurring Assets

Licensed technology, net

Total assets measured at fair value

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Total liabilities measured at fair value

of December 31, 2023 and 2022, the Company had outstanding warrant liabilities related to the 2022 private placement that allow the holders

to purchase 7,609,879 shares of common stock at an exercise price of $ 4.75 per share.

The expiration date for these warrant liabilities

is November 2027.

As of December 31, 2023 and 2022, the Company had outstanding warrant liabilities related to the 2021 public offering

that allow the holders to purchase 1,788,000 shares of common stock at an exercise price of $ 9.75 per share.

The expiration date for

these warrant liabilities is December 2026.

The common stock warrants are not indexed to the Company’s own stock and therefore

have been classified as liabilities at their estimated fair value.

Changes in the estimated fair value of the warrant liabilities is

recorded as changes in fair value of warrant liabilities in the consolidated statement of operations and comprehensive loss.

following table provides a summary of the activity on the warrant liabilities (in thousands):

OF ACTIVITY OF WARRANT LIABILITIES

As of December 31,

Beginning warrant liabilities

Fair value of warrants issued in connection with private offering

Loss (gain) recognized in earnings from change in fair value

Ending warrant liabilities

warrant liabilities are valued using significant inputs not observable in the market.

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The Company assessed these assumptions and estimates at the end of each reporting period.

Assumptions used to estimate the fair value

of the warrants in the Black-Scholes option-pricing model are as follows:

used to estimate the fair value of the warrants in the Black-Scholes option-pricing model are as follows:

OF ESTIMATE FAIR VALUE OF WARRANTS

of December 31,

As of December 31,

Common share price

$ 1.72 – $ 2.18

Expected term (years)

Risk-free interest rate (%)

3.84 % – 3.92 %

3.91 % – 4.01 %

Volatility (%)

of December 31, 2022, the Company had outstanding warrant liabilities related to the 2022 private placement that allow the holders to

purchase 7,609,879 shares of common stock at a weighted average exercise price of $ 4.75 per share.

The expiration date for these warrant

liabilities is November 2027.

As of December 31, 2022 and 2021, the Company had outstanding warrant liabilities related to the 2021 public

offering that allow the holders to purchase 1,788,000 shares of common stock at a weighted average exercise price of $ 9.75 per share.

The expiration date for these warrant liabilities is December 2026.

following table provides a summary of the activity on the warrant liabilities (in thousands):

OF ACTIVITY OF WARRANT LIABILITIES

As of December 31,

Beginning warrant liabilities

Fair value of warrants issued in connection with public offering

Fair value of warrants issued in connection with private offering

Gain recognized in earnings from change in fair value

Ending warrant liabilities

7 – LOAN PAYABLE

May 2, 2020, the Company 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, the Company

received notice from the SBA that its 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 statements

of cash flows during the year ended December 31, 2021.

102.40 % – 107.55 %

Expected dividend yield (%)

6 – SETTLEMENT LIABILITY

November 4, 2018, the Company 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.

was being amortized over the life of the patent of eight years .

On November 1, 2019, the Company 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,

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

to the April 1, 2020 deadline, the Company engaged REGENXBIO in discussions in an attempt to renegotiate the financial terms of the agreement,

but the Company was unable to reach an agreement, and did not make the $ 8 million payment due by April 1, 2020.

On April 17, 2020, REGENXBIO

sent the Company a written demand for the $ 8 million fee, payable within a 15-day cure period after receipt of the demand letter.

license terminated on May 2, 2020 , when the 15-day period expired.

November 12, 2021, the Company entered into a settlement agreement (“Settlement Agreement”) with REGENXBIO to resolve all

existing disputes between the parties.

In accordance with the Settlement Agreement, the Company agreed to pay REGENXBIO a total of $ 30.0

million, payable as follows:

(1) $20.0 million paid in November 2021 after execution of the Settlement Agreement, (2) $5.0 million on

the first anniversary of the effective date of the Settlement Agreement, and (3) $5.0 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

The accounting for the Settlement Agreement resulted in a $ 6.7 million gain on settlement with licensor in the statements

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 statements of cash flows during the year ended December 31, 2021.

of December 31, 2022 and 2021, the Company recorded the payables due to REGENXBIO in the consolidated balance sheets based on the present

value of the remaining payments due to REGENXBIO under the Settlement Agreement using an interest rate of 9.6 %.

The current portion of

the payable due in November 2022 was nil and $ 4.6 million as of December 31, 2022 and 2021, respectively and the long-term portion due

in November 2024 was $ 4.2 million and $ 3.8 million as of December 31, 2022 and 2021, respectively.

As of December 31, 2021, the Company

recorded $ 5.0 million of restricted cash in the consolidated balance sheet that served as collateral for the payment made to REGENXBIO

in November 2022.

November 12, 2021, the Company entered into a settlement agreement (“Settlement Agreement”) with the Company’s prior

licensor REGENXBIO Inc.

(“REGENXBIO”) to resolve all existing disputes between the parties.

In accordance with the Settlement

Agreement, the Company agreed to pay REGENXBIO a total of $ 30.0 million, payable as follows:

(1) $20.0 million paid in November 2021

after execution of the Settlement Agreement, (2) $5.0 million on the first anniversary of the effective date of the Settlement Agreement

(paid in November 2022), and (3) $5.0 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 .

of December 31, 2023 and 2022, the Company recorded the payable due to REGENXBIO in the consolidated balance sheet based on the present

value of the remaining payments due to REGENXBIO under the Settlement Agreement using an effective interest rate of 9.6 %.

value of the amount due in November 2024 was $ 4.6 million and $ 4.2 million as of December 31, 2023 and 2022, respectively.

7 – ACCRUED EXPENSES

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Accrued contracted services and other

Accrued sublicense fee owed to licensor

Total accrued expenses

Company leases space under operating leases for manufacturing and laboratory facilities in Cleveland, Ohio, as well as administrative

offices in New York, New York.

The Company also leases certain office equipment under operating leases, which have a non-cancelable lease

term of less than one year and, therefore, the Company has elected the practical expedient to exclude these short-term leases from the

Company’s right-of-use assets and lease liabilities.

Company leases space under operating leases for administrative, manufacturing and laboratory facilities in Cleveland, Ohio.

also leases office space in New York, New York, that the Company sublets.

The Company also leases certain office equipment under operating

leases, which have a non-cancelable lease term of less than one year and the Company has elected the practical expedient to exclude these

short-term leases from the Company’s right-of-use assets and lease liabilities.

2023, the Company terminated one of its operating leases for office space.

The termination resulted in a gain of $ 1.1 million representing

the difference between the carry value of the right-of-use assets and the related lease liabilities.

This gain was recorded in the year

ended December 31, 2023, and is included in loss/(gain) on operating lease right-of-use assets in the consolidated statement of operations

and comprehensive loss.

2023, the Company modified one of its operating leases for office space to add up to 14,032 square feet to the Company’s existing

facility in Cleveland, Ohio.

The lease modification resulted in the recognition of $ 0.4 million of additional right-of-use assets and

related lease liabilities in the Company’s consolidated balance sheet during the year ended December 31, 2023.

2022, the Company announced a strategic partner to take over development activities of ABO-102 and that the Company was discontinuing

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ABO-101 and ABO-102 programs, had no future value and thus, the Company recorded an impairment charge of $ 1.6 million for the year ended

December 31, 2022.

December 31, 2022 and is included in loss/(gain) on operating lease right-of-use assets in the consolidated statement of operations and

comprehensive loss.

November 2022, the Company entered into a sublease agreement with an unrelated third party to occupy approximately 5,700 square feet

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is less than the amount the Company pays its landlord, the Company recorded an impairment charge of $ 0.9 million for the year ended December

The Company expects to receive approximately $ 1.1 million in future sublease income through September 2025.

following table provides a summary of the components of lease costs and rent (in thousands):

In April of 2023, the Company entered into a sublease agreement with an unrelated third party to occupy approximately 4,670

square feet of the Company’s administrative offices in New York, New York.

The Company expects to receive $ 1.1 million in future

sublease income through September 2025 from the two subleases noted above.

following table provides a summary of the Company’s operating lease liabilities (in thousands):

SUMMARY OF OPERATING LEASE LIABILITIES

As of December 31,

Current operating lease liability

Non-current operating lease liability

Total operating lease liability

costs and rent are reflected in general and administrative expenses and research and development expenses in the consolidated statements

of operations and comprehensive loss, as determined by the underlying activities.

The following table provides a summary of the components

of lease costs and rent (in thousands):

SCHEDULE OF COMPONENTS OF LEASE COST

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Total operating lease costs

minimum lease payments and obligations, which do not include short-term leases, of the Company’s operating lease liabilities as

of December 31, 2022 were as follows (in thousands):

paid for amounts included in the measurement of operating lease liabilities was $ 1.2 million and $ 1.8 million for the years ended December

31, 2023 and 2022, respectively.

minimum lease payments and obligations, which do not include short-term leases, related to the Company’s operating lease liabilities

as of December 31, 2023 were as follows (in thousands):

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

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measure the present value of the Company’s operating lease liabilities was 7.4 % as of December 31, 2023.

cash receipts from the Company’s sublease agreements as of December 31, 2022 are as follows (in thousands):

Company received $ 0.5 million and $ 0.1 million during the year ended December 31, 2023 and 2022, respectively, of sublease income which

is recorded in other income on the consolidated statement of operations and comprehensive loss.

Future cash receipts from the Company’s

sublease agreements as of December 31, 2023 are as follows (in thousands):

SCHEDULE OF FUTURE CASH RECEIPTS FROM OPERATING SUBLEASE

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The shares, which have since been redeemed in accordance with their terms

described below and are thus no longer outstanding as of December 31, 2022, had an aggregated stated value of $ 25.0 million.

described below and were thus no longer outstanding as of December 31, 2022, had an aggregated stated value of $ 25.0 million.

of the Preferred Stock had a purchase price of $ 19.00 , representing an original issue discount of 5 % of the stated value.

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because it was redeemable upon the occurrence of redemption events that were considered not solely withing the Company’s control.

As such, during the year ended December 31, 2022, the Company recognized approximately $ 3.8 million in deemed dividends related to the

Preferred Stock in the consolidated statements of operations and comprehensive loss and the consolidated statements of changes in stockholders’

As such, during the year ended December 31, 2022, the Company recognized $ 3.8 million in deemed dividends related to the Preferred Stock

in the consolidated statements of operations and comprehensive loss and the consolidated statements of changes in stockholders’

June 17, 2022, the holders of all 1,000,006 shares of Series A Preferred Stock and 250,005 shares of Series B Preferred Stock exercised

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price of $ 9.75 post-split.

The net proceeds to the Company were approximately $ 16.0 million, after deducting $ 1.5 million of underwriting

discounts and commissions and offering expenses payable by the Company.

The net proceeds were allocated to the warrant liability as noted

below with the remainder of $ 7.0 million recorded in common stock and additional paid-in capital.

In the event of certain fundamental

transactions involving the Company, the holders of the stock purchase warrants may require the Company to make a payment based on a Black-Scholes

The net proceeds to the Company were $ 16.0 million, after deducting $ 1.5 million of underwriting discounts

and commissions and offering expenses payable by the Company.

The net proceeds were allocated to the warrant liability as noted below

with the remainder of $ 7.0 million recorded in common stock and additional paid-in capital.

In the event of certain fundamental transactions

involving the Company, the holders of the stock purchase warrants may require the Company to make a payment based on a Black-Scholes

valuation, using specific inputs that are not considered indexed to the Company’s stock in accordance with ASC 815, Derivatives

and Hedging (“ASC 815”).

Therefore, the Company accounted for the stock purchase warrants as liabilities and were recorded

at the closing date fair value of $ 9.0 million which was based on a Black-Scholes option pricing model.

The remainder of the proceeds

were allocated to common stock issued and recorded as a component of equity.

of December 31, 2022, there were 1,788,000 post-split stock purchase warrants issued in connection with the public offering outstanding.

and Hed ging (“ASC 815”).

Therefore, the Company accounted for the stock purchase warrants as liabilities, which were

recorded at the closing date fair value of $ 9.0 million which was based on a Black-Scholes option pricing model.

The remainder of the

proceeds were allocated to common stock issued and recorded as a component of equity.

of December 31, 2023, there were 1,788,000 post-split stock purchase warrants outstanding.

These stock purchase warrants expire on December

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.

There was no warrant

activity during the year ended December 31, 2022.

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 along with the holders of shares of common stock.

There was no warrant activity during the year ended December

31, 2023, other than the change in fair value of the warrants.

Market Sale Agreement

August 17, 2018, the Company entered into an open market sale agreement with Jefferies LLC (as amended, the “ATM Agreement”)

pursuant to which, the Company may sell from time to time, through Jefferies LLC, shares of its common stock for an aggregate sales price

of up to $ 150.0 million.

August 17, 2018, the Company entered into an open market sale agreement (as amended, the “ATM Agreement”) with Jefferies

LLC (“Jefferies”) pursuant to which, the Company may sell from time to time, through Jefferies, shares of its common

stock for an aggregate sales price of up to $ 150.0

Any sales of shares pursuant to this agreement are made under the Company’s effective “shelf”

registration statement on Form S-3 that is on file with and has been declared effective by the SEC.

The Company is currently subject

to General Instruction I.B.6 of Form S-3, as a result of which the amount of funds the Company can raise through primary public offerings

of securities in any 12-month period using its registration statement on Form S-3 is limited to one-third of the aggregate market value

of the voting and non-voting common equity held by non-affiliates.

The Company remains subject to this one-third limitation until such

time as its public float exceeds $75 million.

The Company sold 3,479,016 and 146,872 post-split shares during the years ended December

31, 2022 and 2021, respectively, of its common stock under the ATM Agreement and received $ 12.8 million and $ 8.1 million of net proceeds

during the years ended December 31, 2022 and 2021, respectively.

Placement Offerings

The Company sold 3,659,882

and 3,479,016

shares of its common stock under the ATM Agreement during the years ended December 31, 2023 and 2022, respectively, resulting in net

proceeds of $ 14.4

million and $ 12.8

million during the years ended December 31, 2023 and 2022, respectively.

Subsequent to December 31, 2023 and through March 1, 2024, the Company sold 724,659 shares of its common stock under

the ATM Agreement resulting in $ 5.3 million in net proceeds.

Placement Offering

November 3, 2022, the Company sold 7,065,946 shares of its common stock, and in lieu of shares of common stock, pre-funded warrants exercisable

for 543,933 shares of common stock, and accompanying warrants to purchase 7,609,879 shares of its common stock to a group of new and

existing institutional investors in a private placement.

for 543,933 shares of common stock and accompanying warrants to purchase 7,609,879 shares of its common stock to a group of new and existing

institutional investors in a private placement.

The offering price for each share of common stock and accompanying warrant was $ 4.60 ,

$ 4.60 , and the offering price for each pre-funded warrant and accompanying warrant was $ 4.59 , which equaled the offering price per share

of the common stock and accompanying warrant, less the $ 0.01 per share exercise price of each pre-funded warrant.

and the offering price for each pre-funded warrant and accompanying warrant was $ 4.59 , which equaled the offering price per share of

the common stock and accompanying warrant, less the $ 0.01 per share exercise price of each pre-funded warrant.

Each accompanying warrant

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and $ 0.1 million recorded in additional paid-in capital and common stock, respectively.

In the event of certain fundamental transactions

involving the Company, the holders of the stock purchase warrants may require the Company to make a payment based on a Black-Scholes

valuation, using specific inputs that are not considered indexed to the Company’s stock in accordance with ASC 815.

the Company accounted for the stock purchase warrants as liabilities and were recorded at the closing date fair value of $ 22.0 million

which was based on a Black-Scholes option pricing model.

The remainder of the proceeds were allocated to common stock issued and recorded

as a component of equity.

the event of certain fundamental transactions involving the Company, the holders of the stock purchase warrants may require the Company

to make a payment based on a Black-Scholes valuation, using specific inputs that are not considered indexed to the Company’s stock

in accordance with ASC 815.

Therefore, the Company is accounting for the stock purchase warrants as liabilities.

On November 3, 2022,

the stock purchase warrants were recorded at the closing date fair value of $ 22.0 million which was based on a Black-Scholes option pricing

The remainder of the proceeds were allocated to common stock issued and recorded as a component of equity.

of December 31, 2023, there were 7,609,879 warrants outstanding related to this private placement offering.

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distribution of assets to holders of shares of common stock.

12 – LICENSE/SUPPLIER AGREEMENTS

and Inventory Purchase Agreements Relating to CLN1 Disease

August 2020, the Company 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 the Company

had referred to as ABO-202.

Under the inventory purchase agreement, the Company sold to Taysha certain inventory and other items related

The Company 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.

The Company 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 the Company and determined that the license has significant stand-alone functionality.

Furthermore, the

Company has no ongoing activities associated with the license to support or maintain the license’s utility.

Based on this, the

Company determined that the pattern of transfer of control of the license to Taysha was at a point in time.

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, the Company 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 the Company’s 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, the Company 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.

The Company 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

To date, the Company has not recognized any sales-based or royalty revenue resulting from this licensing arrangement.

this arrangement, the Company recognized nil and $ 3.0 million in revenue during the year ended December 31, 2022 and 2021, respectively

based on event-based-milestone payments.

The Company has no contract assets as of December 31, 2022 and $ 3.0 million as of December 31,

Contract assets are included in accounts receivable on the consolidated balance sheets.

As of December 31, 2022 and 2021, the Company

does not have any contract liabilities as a result of this transaction.

Agreement Relating to Rett Syndrome:

October 2020, the Company 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 the Company, and the Company’s know-how relating

to the research, development, and manufacture of the gene therapy for Rett syndrome and MECP2 gene constructs and regulation of their

Company 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 the Company and determined that the license has significant

stand-alone functionality.

Furthermore, the Company has no ongoing activities associated with the license to support or maintain the

license’s utility.

Based on this, the Company determined that the pattern of transfer of control of the license to Taysha was at

a point in time.

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.

The Company 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.

The Company determined that these milestone

payments are not within the Company’s control or the licensee’s control, such as regulatory approvals, and are not considered

probable of being achieved until those approvals are received.

Accordingly, the Company has 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.

The Company 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.

the Company has not recognized any sales-based or royalty revenue resulting from this licensing arrangement.

this arrangement, the Company recognized $ 1.0 million and nil in revenue during the year ended December 31, 2022 and 2021, respectively

based on event-based-milestone payments.

As of December 31, 2022 and 2021, the Company does not have any contract assets or contract

liabilities as a result of this transaction.

License Agreement

May 16, 2022, the Company and Ultragenyx Pharmaceutical Inc.

(“Ultragenyx”) entered into an exclusive license agreement (the

“License Agreement”) for AAV gene therapy ABO-102 for the treatment of Sanfilippo syndrome type A (MPS IIIA).

Under the License

Agreement, Ultragenyx assumed responsibility for the ABO-102 program from the Company, with the exclusive right to develop, manufacture,

and commercialize ABO-102 worldwide.

Also pursuant to the License Agreement, following regulatory approval, the Company is eligible to

receive tiered royalties from mid-single-digit up to 10% on net sales and up to $ 30.0 million in commercial milestone payments.

forms of consideration comprise the transaction price to which the Company expects to be entitled in exchange for transferring the related

intellectual property and certain, contractually-specified transition services to Ultragenyx.

The sales-based royalty and milestone payments

are subject to the royalty recognition constraint.

As such, these fees are not recognized as revenue until the later of:

(a) the occurrence

of the subsequent sale, and (b) the performance obligation to which they relate has been satisfied.

Additionally,

pursuant to the License Agreement, Ultragenyx will reimburse the Company for certain development and transition costs actually incurred

by the Company.

These costs are passed through to Ultragenyx without mark-up.

The Company has determined that these costs are not incurred

for the purpose of satisfying any performance obligation under the License Agreement.

Accordingly, the reimbursement of these costs is

recognized as a reduction of research and development costs.

As of December 31, 2022 and 2021, the Company does not have any contract

assets or contract liabilities as a result of this transaction.

There was no warrant activity during the year ended December 31, 2023, other than the change in fair value of the

Placement Offering

July 6, 2023, the Company sold 3,284,407 shares of its common stock, and

in lieu of shares of common stock, pre-funded warrants exercisable for 2,919,140 shares of common stock (the

“2023 Pre-Funded Warrants”) , to a group of existing institutional investors for an aggregate purchase price of $ 25.0

million gross, or $ 23.0 million net of related costs.

The offering price for each share of common stock was $ 4.03 , and the offering price

for the 2023 Pre-Funded Warrants was $ 4.0299 ,

which represents the per share offering price for the Company’s common stock less a $ 0.0001

per share exercise price for each such 2023 Pre-Funded Warrant .

The 2023 Pre-Funded Warrants

are immediately exercisable at a nominal exercise price of $ 0.0001 per share, may be exercised at any time and do not have an expiration

None of the 2023 Pre-Funded Warrants have been exercised as of December 31 , 2023.

The prefunded warrants are classified as equity in accordance with ASC 815, Derivatives and Hedging , given the prefunded

warrants are indexed to the Company’s own shares of common stock and meet the requirements to be classified in equity.

The prefunded

warrants were recorded at their relative fair value at issuance in the stockholders’ equity section of the consolidated balance

sheet and the prefunded warrants are considered outstanding shares in the basic earnings per share calculation for the year ended December

31, 2023 given their nominal exercise price.

10 – STOCK-BASED COMPENSATION

Company has two stock-based compensation plans:

(1) Abeona Therapeutics Inc.

Company previously granted stock options under its 2005 Equity Incentive Plan (the “2005 Incentive Plan”), under which no

further grants can be made.

In addition, prior to May 17, 2023, the Company had previously granted stock options and stock awards under

the Abeona Therapeutics Inc.

2015 Equity Incentive Plan (the “2015 Incentive Plan”).

which was approved by stockholders on May 7, 2015, and last amended on August 31, 2022 and (2) Abeona Therapeutics Inc.

2005 Equity Incentive

Plan (the “2005 Incentive Plan”), under which no further grants can be made.

the Company’s 2015 Equity Incentive Plan, as amended, up to 1,440,000 shares of its 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, 2022, the Company had 109,544 shares available for future issuance

under the 2015 Equity Incentive Plan.

The maximum contractual term of awards is 10 years.

the 2005 Equity Incentive Plan, as amended, shares of the Company’s 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

As of May 17, 2023, no further grants

can be made under the 2015 Incentive Plan.

The Company now grants stock options and stock awards under the Abeona Therapeutics Inc.

Equity Incentive Plan (the “2023 Incentive Plan”) which was approved by stockholders on May 17, 2023.

As of December 31,

2023, there were 156,591 shares available to be granted under the 2023 Incentive Plan.

In addition, in 2023, the Company’s board

of directors approved various restricted stock awards granted to certain new hires as inducement grants.

On October 10, 2023, the Company’s

board of directors approved the Abeona Therapeutics Inc.

2023 Employment Inducement Equity Incentive Plan (the “Inducement Plan”).

As of December 31, 2023, there were 859,400 shares available to be granted under the Inducement Plan.

following table summarizes stock-based compensation (in thousands):

SCHEDULE OF STOCK BASED COMPENSATION

OF STOCK BASED COMPENSATION

For the year ended December 31,

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Total stock-based compensation expense

Company estimates the fair value of each option award on the date of grant using the Black-Scholes option valuation model.

Company estimates the fair value of each option award on the date of grant using the Black-Scholes option-pricing model.

then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over

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there any plans to declare a dividend.

Company estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-valuation model utilizing

Company estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-pricing model utilizing

the following assumptions:

SCHEDULE OF WEIGHTED-AVERAGE ASSUMPTIONS TO ESTIMATE THE FAIR VALUE OF THE OPTIONS GRANTED

OF WEIGHTED-AVERAGE ASSUMPTIONS TO ESTIMATE THE FAIR VALUE OF THE OPTIONS GRANTED

For the year ended December 31,

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95.1 % - 96.0 %

91.6 % - 99.8 %

Expected term

6.07 - 6.08 years

Expected term (years)

6.07 - 6.08 years

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1.7 % - 3.3 %

0.8 % - 1.4 %

Expected dividend yield (%)

the Company did not grant any stock options in the year ended December 31, 2023.

Company accounts for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures

following table summarizes stock option information for the 2015 Equity Incentive Plan:

SCHEDULE OF STOCK OPTIONS ACTIVITY

Number of Options

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (years)

Aggregate Intrinsic Value

following table summarizes stock option activity for the 2015 Incentive Plan and the 2005 Incentive Plan during (there were no stock

options granted under the 2023 Incentive Plan or the Inducement Plan during the year ended December 31, 2023):

OF STOCK OPTION ACTIVITY

Exercise Price

Intrinsic Value

(in thousands)

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common stock.

As of December 31, 2022, the total compensation cost related to non-vested option awards not yet recognized was approximately

$ 2.8 million with a weighted average remaining vesting period of 2.1 years.

information regarding options outstanding under the 2015 Equity Incentive Plan as of December 31, 2022 is summarized below:

As of December 31, 2023, the total compensation cost related to non-vested option awards not yet recognized was $ 1.4 million

with a weighted average remaining vesting period of 1.3 years.

of December 31, 2023, there are no options outstanding under the 2005 Incentive Plan.

Further information regarding options outstanding

under the 2015 Incentive Plan as of December 31, 2023 is summarized below:

SCHEDULE OF OPTIONS OUTSTANDING AND EXERCISABLE

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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

following table summarizes stock option information for the 2005 Incentive Plan:

SCHEDULE OF STOCK OPTIONS ACTIVITY

Exercise Prices

Number of Options

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (years)

Aggregate Intrinsic Value

(in thousands)

Outstanding at December 31, 2020

Cancelled/forfeited

Outstanding at December 31, 2021

Cancelled/forfeited

Outstanding at December 31, 2022

information regarding options outstanding under the 2005 Equity Incentive Plan as of December 31, 2022 is summarized below:

OF OPTIONS OUTSTANDING AND EXERCISABLE

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

following table summarizes restricted stock award activity:

SCHEDULE OF RESTRICTED STOCK AWARD ACTIVITY

Number of Awards

Weighted Average Grant Date Fair Value Per Unit

Weighted Average

Grant Date Fair

Value Per Unit

Outstanding at December 31, 2021

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Outstanding at December 31, 2023

of December 31, 2022, there was approximately $ 3.7 million of total unrecognized compensation expense related to unvested restricted

stock awards, which is expected to be recognized over a weighted average vesting period of 2.9 years.

The total fair value of restricted

stock awards that vested was $ 1.3 million and $ 3.6 million during the years ended December 31, 2022 and 2021, respectively.

of December 31, 2023, there was $ 7.9 million of total unrecognized compensation expense related to unvested restricted stock awards,

which is expected to be recognized over a weighted average vesting period of 2.3 years.

The total fair value of restricted stock awards

that vested was $ 1.5 million and $ 1.3 million during the years ended December 31, 2023 and 2022, respectively.

11 – LICENSE/SUPPLIER AGREEMENTS

and Inventory Purchase Agreements Relating to CLN1 Disease

August 2020, the Company 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 the Company

had referred to as ABO-202.

Under the inventory purchase agreement, the Company sold to Taysha certain inventory and other items related

The Company 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 the Company and determined that the license has

significant stand-alone functionality.

Furthermore, the Company has no ongoing activities associated with the license to support or maintain

the license’s utility.

Based on this, the Company determined that the pattern of transfer of control of the license to Taysha was

at a point in time.

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, the Company evaluated whether the milestone conditions had been achieved and if it was

probable that a significant cumulative revenue reversal would not occur before recognizing the associated revenue and determined that

these milestone payments were not within the Company’s 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, the Company fully constrained

the $ 26.0 million of event-based milestone payments until such time that it is probable that significant cumulative 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.

The Company 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, the Company has not recognized any sales-based or royalty revenue resulting from this

licensing arrangement.

this arrangement, the Company has no t recognized any revenue during the years ended December 31, 2023 and 2022, respectively based on

event-based-milestone payments.

The Company has no contract assets as of December 31, 2023 and 2022.

As of December 31, 2023 and 2022,

the Company does not have any contract liabilities as a result of this transaction.

Agreement Relating to Rett Syndrome:

October 2020, the Company entered into a sublicense agreement with Taysha for a gene therapy

for Rett syndrome, including intellectual property related to 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 the Company, and the Company’s 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.

Company 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 the Company and determined that the license has significant

stand-alone functionality.

Furthermore, the Company has no ongoing activities associated with the license to support or maintain the

license’s utility.

Based on this, the Company determined that the pattern of transfer of control of the license to Taysha was at

a point in time.

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.

The Company evaluated whether the milestone conditions have been achieved and if it is probable that

a significant cumulative revenue reversal would not occur before recognizing the associated revenue.

The Company determined that these

milestone payments are not within the Company’s control or the licensee’s control, such as regulatory approvals, and are

not considered probable of being achieved until those approvals are received.

Accordingly, the Company has fully constrained the $ 26.5

million in event-based milestone payments until such time that it is probable that a significant cumulative revenue reversal would not

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.

The Company 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, the Company has not recognized any sales-based or royalty revenue resulting from this licensing arrangement.

this arrangement, the Company recognized $ 3.5 million and $ 1.0 million in revenue during the years ended December 31, 2023 and 2022.

The revenue recognized was related to clinical milestones achieved by our sublicensor as per the sublicense agreement noted above.

of December 31, 2023 and 2022, the Company does not have any contract assets or contract liabilities as a result of this transaction.

License Agreement

May 16, 2022, the Company and Ultragenyx Pharmaceutical Inc.

(“Ultragenyx”) entered into an exclusive license agreement (the

“License Agreement”) for AAV gene therapy, ABO-102, for the treatment of Sanfilippo syndrome type A (MPS IIIA).

License Agreement, Ultragenyx assumed responsibility for the ABO-102 program from the Company, with the exclusive right to develop, manufacture,

and commercialize ABO-102 worldwide.

Also pursuant to the License Agreement, following regulatory approval, the Company is eligible to

receive tiered royalties from mid-single-digit up to 10% on net sales and up to $ 30.0 million in commercial milestone payments.

forms of consideration comprise the transaction price to which the Company expects to be entitled in exchange for transferring the related

intellectual property and certain, contractually-specified, transition services to Ultragenyx.

The sales-based royalty and milestone

payments are subject to the royalty recognition constraint.

As such, these fees are not recognized as revenue until the later of:

the occurrence of the subsequent sale, and (b) the performance obligation to which they relate has been satisfied.

Additionally,

pursuant to the License Agreement, Ultragenyx will reimburse the Company for certain development and transition costs actually incurred

by the Company.

These costs are passed through to Ultragenyx without mark-up.

The Company has determined that these costs are not incurred

for the purpose of satisfying any performance obligation under the License Agreement.

Accordingly, the reimbursement of these costs is

recognized as a reduction of research and development costs.

As of December 31, 2023 and 2022, the Company does not have any contract

assets or contract liabilities as a result of this transaction.

12 – 401(k) PLAN

10 unchanged sentences

in any of over 50 investment options.

Company contributions under the 401(k) Plan were $ 0.3 million and $ 0.4 million for the years ended

December 31, 2022 and 2021, respectively.

Company contributions under the 401(k) Plan were $ 0.3 million for the years ended December 31,

2023 and 2022.

13 – INCOME TAXES

4 unchanged sentences

statutory rate

Current year reserve

State tax, net of federal benefit

Research and development credit

Valuation allowance

Change in fair value of warrant liabilities

Expired tax losses and credits

Expenses not deductible

11 unchanged sentences

Stock options

Deferred revenue

Intangible assets

Capitalized research and development

Gross deferred tax assets

1 unchanged sentence

Net deferred taxes

of December 31, 2022, the Company had approximately $ 359.0 million of net operating loss carryforwards and approximately $ 4.5 million

of general business credit carryforwards.

operating Loss and Other Carryforwards

of December 31, 2023, the Company had $ 373.9 million of U.S.

federal net operating loss carryforwards and $ 4.7 million of general business

credit carryforwards.

These carryforwards expire as follows (in thousands):

OF NET OPERATING LOSS AND GENERAL BUSINESS CREDIT CARRYFORWARDS

Net operating

carryforwards

1 unchanged sentence

carryforwards

incurred post 2017 do not expire and can only be used to offset 80 % of taxable income in any tax year.

As of December 31, 2022, the Company

had approximately $ 245.0 million of net operating loss carryforwards that do not expire and can be carried forward indefinitely.

net operating loss carryforwards can only be used to offset 80 % of taxable income in any given tax year.

In addition, the Company’s

net operating loss carryforwards may be subject to limitation due to ownership changes.

December 22, 2017, the “Tax Cuts and Jobs Act” was signed into law.

The tax reform has the following effects on the Company:

(1) permanently reduces the maximum corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017,

(2) allows temporary 100% expensing for certain business assets and property placed in service after September 27, 2018 and before January

1, 2023, (3) disallows NOL carrybacks but allows for the indefinite carryforward of those NOLs which applies to losses arising in tax

years beginning after December 31, 2018 and, (4) limits NOL deductions for each year equal to the lesser of the available carryover or

80% of a taxpayer’s pre-NOL deduction taxable income.

This applies to losses arising in tax years ending on or after December 31,

As of December 31, 2023 and 2022, the Company has concluded that it is more likely than not that the Company will not realize the

benefit of its deferred tax assets due to its history of losses.

Accordingly, the net deferred tax assets have been fully reserved.

accordance with Section 382 of the Internal Revenue Code of 1986, as amended, a change in equity ownership of greater than 50% within

a three-year period results in an annual limitation on the Company’s ability to utilize its NOL carryforwards created during the

tax periods prior to the change in ownership.

The Company has not completed an ownership change analysis pursuant to Section 382.

the Company has incurred cumulative net operating losses since inception, all tax years remain open to examination by U.S.

state income tax authorities.

of December 31, 2023, the Company had $ 265.2 million of U.S.

federal 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.

Company also has $ 3.6 million of state net operating loss carryforwards in varying amounts depending on the different state tax laws.

Company acquired MacroChem Corporation on March 25, 2009, and Somanta Pharmaceuticals, Inc.

4 unchanged sentences

to annual limitations.

The Company has not performed a study to determine whether or not there is such a limitation.

December 31, 2023 and 2022, the Company maintained a full valuation allowance on its deferred tax assets based on a history of cumulative

The Company will not record income tax benefits in the financial statements until it is determined that it is more likely than

not that the Company will generate sufficient taxable income to realize the deferred income tax assets.

In 2023, the valuation allowance

increased by approximately $ 8.7 million.

In 2022, the valuation allowance increased by approximately $ 9.5 million.

December 31, 2023 and 2022, the Company had no reserves for unrecognized tax benefits.

Company and its subsidiaries are subject to taxation in the United States.

The Company is subject to U.S.

federal and state examinations

for 2020 and forward, and 2019 and forward, respectively.

However, net operating losses are subject to audit in any tax year in which

those losses are utilized, notwithstanding the year of origin.

14 – COMMITMENTS AND CONTINGENCIES

5 unchanged sentences

there was no litigation against the Company.

15 – SUBSEQUENT EVENTS

and Security Agreement

January 8, 2024 (the “Closing Date”), the Company entered into a Loan and Security Agreement (the “Agreement”)

with Avenue Venture Opportunities Fund, L.P., a Delaware limited partnership, as administrative agent and collateral agent (“Avenue”

and the “Agent”) and Avenue Venture Opportunities Fund II, L.P.

, a Delaware limited partnership (“Avenue 2”

and, together with Avenue, the “Lenders”).

Also on January 8, 2024, the Company entered into a Supplement to the Agreement

(collectively with the Agreement, the “Loan Agreement”) with the Agent and the Lenders.

The Loan Agreement provides for senior

secured term loans (the “Loans”) in an aggregate principal amount up to $ 50 million, with (i) a committed tranche of $ 20

million advanced on the Closing Date (“Tranche 1”), (ii) a committed tranche of up to $ 10 million which may be advanced upon

the request of the Company between June 30, 2024 and September 30, 2024, subject to the Company obtaining FDA approval of pz-cel in recessive

dystrophic epidermolysis bullosa, with the issuance of a Priority Review Voucher (“Tranche 2”), and (iii) a discretionary

tranche of up to $ 20 million which may be advanced between March 31, 2025 and March 31, 2026 (the “Discretionary Tranche”)

provided at the discretion of the Lenders.

The Loans are due and payable on July 1, 2027 (the “Maturity Date”).

of the Loans are to be used for general corporate purposes.

Loan principal is repayable in equal monthly installments beginning on April 8, 2025, with the possibility of deferring principal payments

an additional nine to fifteen months contingent upon (i) the Company obtaining FDA approval of pz-cel in recessive dystrophic epidermolysis

bullosa, with the issuance of a Priority Review Voucher and (ii) the Company raising $ 90 million of cumulative equity and/or non-dilutive

capital subsequent to the Closing Date.

The Loans bear interest at a rate per annum (subject to increase during an event of default)

equal to the greater of (i) the prime rate, as published by the Wall Street Journal from time to time, plus 5.00 % and (ii) 13.50 %.

Company may, subject to certain parameters, voluntarily prepay the Loans, in whole, at any time.

If prepayment occurs on or before the

one-year anniversary of the Closing Date, the Company is required to pay a prepayment fee equal to 3.00% of the principal amount of the

Loans prepaid;

if prepayment occurs after the one-year anniversary of the Closing Date and on or before the two-year anniversary of the

Closing Date, the Company is required to pay a fee equal to 2.00% of the principal amount of the Loans; if prepayment occurs after

the two-year anniversary of the Closing Date, the Company is required to pay a fee equal to 1.00% of the principal amount of the Loans.

A final payment fee of 5.00% of the principal amount of the funded Tranche 1, Tranche 2 Loans and Discretionary Tranche Loans is also

due upon the Maturity Date or any earlier date of prepayment.

Company’s obligations under the Loan Agreement are secured by a pledge of substantially all of the Company’s assets.

to the Loan Agreement, the Company is subject to a financial covenant requiring the Company to maintain at all times $ 5 million in unrestricted

The Loan Agreement also contains affirmative and negative covenants customary for financings of this type that, among other things,

limit the ability of the Company and its subsidiaries to (i) incur additional debt, guarantees or liens; (ii) pay dividends;

(iii) enter into certain change of control transactions; (iv) sell, transfer, lease, license, or otherwise dispose of certain assets;

(v) make certain investments or loans; and (vi) engage in certain transactions with related persons, in each case, subject to certain

The Loan Agreement also includes events of default customary for financings of this type, in certain cases subject to customary

periods to cure, following which the Agent may accelerate all amounts outstanding under the Loans.

to the Supplement to the Loan and Security Agreement, Avenue also has the right to convert up to $ 3 million of the outstanding principal

of the Loans into shares of Company common stock (the “Conversion Right”) at a price per share equal to 120 % of the exercise

price of the Warrants (further discussed below) at any time while the Loans are outstanding, subject to certain terms and conditions,

including ownership limitations.

addition, subject to applicable law and specified provisions set forth in the Supplement to the Loan and Security Agreement and solely

to the extent permitted under applicable stock exchange rules without requiring stockholder approval, the Lenders may participate in

certain equity financing transactions of the Company in an aggregate amount of up to $ 1 million on the same terms, conditions and pricing

offered by the Company to other investors participating in such financing transactions (such right, the “Participation Right”).

The Participation Right automatically terminates upon the earliest of (i) July 1, 2027, (ii) such time that the Lenders have purchased

$1 million of the Company’s equity securities in the aggregate pursuant to the Participation Right, and (iii) the repayment in

full of all of the obligations under the Loan Agreement.

the Closing Date and pursuant to the funding of Tranche 1 of the Loan Agreement, the Company issued to each of Avenue and Avenue 2 (collectively,

the “Warrantholders”) warrants to purchase up to $ 480,000 and $ 1,920,000 worth of shares, respectively, of Company common

stock (each, a “Warrant” and collectively, the “Warrants”).

The Warrants expire on January 8, 2029 (the “Expiration

Date”) and have an exercise price per share equal to the lesser of (i) $ 4.75 and (ii) the price per share of the Company’s

next bona fide round of equity financing before September 30, 2024 in which the Company sells or issues shares of its common stock, excluding

certain excluded issuances as defined in the Supplement.

In addition, upon a change of control where the per share price of the Company

common stock is less than or equal to two times that of the exercise price, the Warrantholders would be entitled to receive the shares

of common stock underlying the Warrant without payment of the exercise price.

Warrantholders may exercise the Warrants at any time, or from time to time up to and including the Expiration Date, by making a cash

payment equal to the exercise price multiplied by the quantity of shares.

The Warrantholders may also exercise the Warrants on a cashless

basis by receiving a net number of shares calculated pursuant to the formula set forth in the Warrants.

The Warrants are subject to anti-dilution

adjustments for stock dividends, stock splits, and reverse stock splits.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures