What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-20 compared with 2024-03-18 · 718 added, 596 removed, 959 unchanged (58% of the section changed)

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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.

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.

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, 2024, 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

Our management’s assessment of the effectiveness of our internal control over financial reporting included testing and

evaluating the design and operating effectiveness of our internal controls.

In our management’s opinion, we have maintained effective

internal control over financial reporting as of December 31, 2024, based on criteria established in the COSO 2013 framework.

we are a non-accelerated filer and smaller reporting company, Deloitte & Touche LLP, our independent registered public accounting

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OTHER INFORMATION

the fiscal quarter ended December 31, 2024, the following officers, as defined in Rule 16a-1(f) under the Exchange Act, as amended, adopted

a “Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408, as follows:

November 23, 2024 , Don Wuchterl , a member of the Company’s board of directors, adopted

a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate

of up to 40,176 shares of our common stock.

The duration of the trading arrangement is until

February 24, 2026, or earlier if all transactions under the trading arrangement are completed.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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following financial statements are submitted as part of this report:

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

Report of Independent Registered Public Accounting Firm (PCAOB 0 34 )

Consolidated Balance Sheets at December 31, 2024 and 2023

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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).

(incorporated by reference to Exhibit 3.1 of our Form 8-K filed on July 9, 2024).

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)

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 of our Form 8-K filed on May 3, 2024)

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

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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

Underwriting Agreement, dated May 3, 2024 (incorporated by reference to Exhibit 1.1 of our Form 8-K filed on May 3, 2024)

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)

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Consent of Deloitte & Touche LLP

Consent of Whitley Penn LLP

Principal Executive Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

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March 20, 2025

Eric Crombez, MD

Crombez, MD, Director

March 20, 2025

Christine Silverstein

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Wuchterl, Director

March 20, 2025

Zeiher, MD, FCCP, FACP

Zeiher, MD, FCCP, FACP, Director

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

the stockholders 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

have audited the accompanying consolidated balance sheets of Abeona Therapeutics Inc (the “Company”) as of December 31,

2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each

of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as 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.

and Subsidiaries

on the Financial Statements

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

and Subsidiaries (the “Company”) as

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 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.

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

financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of

the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United

States of America.

These financial statements are the responsibility of the Company’s management.

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.

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

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

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

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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 audit

As part of our audits,

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

on the effectiveness of the entity’s internal control over financial reporting.

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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

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

or fraud, and performing procedures that respond to those risks.

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the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

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.

Audit Matters

audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

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

WHITLEY PENN LLP

We believe that our audits provide

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.

and Security Agreement and Common Stock Warrants — Refer to Notes 9 and 10 to the financial statements

Audit Matter Description

As more fully described in Notes 9 and 10 to the financial statements, on January 8, 2024, the Company entered into a Loan and Security

Agreement, as supplemented by a Supplement, with Avenue Venture Opportunities Fund, L.P.

and Avenue Venture Opportunities Fund II, L.P.

The Loan Agreement provides for senior secured term loans in an aggregate principal amount up to $50 million.

Pursuant 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

at any time while the Loans are outstanding, subject to certain terms and conditions, including ownership limitations.

On January 8, 2024,

in connection with entering into the Loan and Security Agreement, the Company issued to each of Avenue and Avenue II warrants to purchase

up to $480,000 and $1,920,000 worth of shares, respectively, of Company common stock.

identified the assessment of the accounting for the Loan and Security Agreement and related Common Stock 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 existence of embedded derivative liabilities and classification of the Common Stock Warrants related to the

Loan and Security Agreement.

Auditing these conclusions required a high

degree of auditor judgment and an increased extent of effort.

the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to accounting for the Loan and Security Agreement and Common Stock Warrants included the following, among

We obtained and read the agreements associated with the Loan and Security Agreements, including the related Common Stock Warrant agreement,

and tested the accuracy and completeness of the significant terms identified by management for purposes identifying embedded derivative

liabilities and classification of the common stock warrants.

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

warrants, we evaluated the Company’s conclusions regarding the accounting treatment applied to the Loan and Security Agreement and

Common Stock Warrants, including the identification and recognition of embedded derivatives, initial classification of embedded derivatives

as a liability, and classification of Common Stock Warrants as a liability.

We also evaluated the Company’s subsequent reclassification

of the derivative liability associated with the Conversion Right to equity on September 30, 2024 as it was considered indexed to the Company’s

Evaluated the completeness and accuracy of the disclosures related to the Loan and Security Agreement and Common Stock Warrants.

Deloitte & Touche LLP

have served as the Company’s auditor since 2023.

THERAPEUTICS INC.

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Accrued expenses

Current portion of long-term debt

Current portion of operating lease liability

Current portion of payable to licensor

Current portion payable to licensor

Other current liabilities

Total current liabilities

Payable to licensor

Long-term operating lease liabilities

Long-term debt

Warrant liabilities

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authorized 2,000,000 shares;

No shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

No shares issued and outstanding as of December 31, 2024 and 2023, respectively

Common stock - $ 0.01 par value;

authorized 200,000,000 shares;

26,523,878 and 17,719,720 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

45,644,091 and 26,523,878 shares issued and outstanding as of December 31, 2024 and 2023, respectively

Additional paid-in capital

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General and administrative

Impairment of licensed technology

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

Impairment of construction-in-progress

Gain on operating lease right-of-use assets

Total expenses

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Interest expense

Change in fair value of warrant liabilities

Deemed dividends related to Series A and Series B Convertible Redeemable Preferred Stock

Net loss attributable to Common Shareholders

Change in fair value of warrant and derivative liabilities

Basic and diluted loss per common share

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Other comprehensive income (loss):

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

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

Foreign currency translation adjustments

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thousands, except share amounts)

Convertible Redeemable

Preferred Stock

Accumulated Other

Comprehensive

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

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

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

Issuance of Series A and Series B Convertible Redeemable Preferred Stock

Deemed dividends related to Series A and Series B Convertible Redeemable Preferred Stock

Redemption of Series A and Series B Convertible Redeemable Preferred Stock

( 1,000,006 )

Reverse stock split adjustment

Other comprehensive loss

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

Other comprehensive income

Balance at December 31, 2023

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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

Issuance of common stock in connection with public offering, net of offering costs

Issuance of common stock upon exercise of pre-funded warrants, net of shares settled

Reclassification of derivative liability

Other comprehensive income

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Statements of Cash Flows

For the years ended December 31,

For the year ended December 31,

Cash flows from operating activities:

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Stock-based compensation expense

Change in fair value of warrant liabilities

Non-cash impairment of licensed technology

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

Non-cash impairment of construction-in-progress

Change in fair value of warrant and derivative liabilities

Gain on operating lease right-of-use assets

Accretion and interest on short-term investments

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Non-cash interest

Loss on disposal of property and equipment

Gain on lease termination

(Gain) loss on disposal of property and equipment

Change in operating assets and liabilities:

Accounts receivable

Other receivables

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Proceeds from maturities of short-term investments

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

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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

Redemption of Series A and Series B Convertible Redeemable Preferred Stock

Payments related to net settlement of restricted share awards

Proceeds from sales of common stock, net of issuance costs

Proceeds from issuance of long-term debt

Payment of debt issuance costs

Net cash provided by financing activities

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

Cash, cash equivalents and restricted cash at beginning of year

Cash, cash equivalents and restricted cash at end of year

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Supplemental cash flow information:

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Supplemental non-cash flow information:

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

Right-of-use asset obtained in exchange for new operating lease liabilities

Derivative and warrant additions associated with loan and security agreement

Reclassification of derivative liability to equity

Changes in accrued property and equipment

Cash paid for interest

Cash paid for taxes

accompanying notes are an integral part of these consolidated statements.

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The Company’s lead

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

clinical program is for pz-cel, an autologous, cell-based gene 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, 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

Stock Split were combined and converted into one share of New Common Stock without any change in the par value per share.

No fractional

shares were issued in connection with the Reverse Stock Split.

Stockholders who would otherwise be entitled to a fraction of one share

of New Common Stock as a result of the Reverse Stock Split instead received an amount in cash equal to such fraction multiplied by the

closing sale price of Common Stock on the Nasdaq Capital Market on July 1, 2022, as adjusted for the Reverse Stock Split.

Proportionate

adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock

options, restricted stock and warrants outstanding at July 1, 2022, which resulted in a proportional decrease in the number of shares

of the Company’s common stock reserved for issuance upon exercise or vesting of such stock options, restricted stock and warrants,

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

gene therapies designed to treat ophthalmic diseases with high unmet need using novel AIM™ capsids that the Company has exclusively

licensed from the University of North Carolina at Chapel Hill and developed internally through its AAV vector research programs.

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

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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 has incurred

recurring losses since its inception, including net losses of $ 63.7 million and $ 54.2 million for the years ended December 31, 2024 and

2023, respectively.

As of December 31, 2024, the Company had an accumulated deficit of $ 813.3 million.

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 $ 98.1 million as of December 31, 2024, in addition to the $ 4.8 million in net proceeds from the Company’s subsequent

sale of common stock under the ATM Agreement, 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

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of this uncertainty.

of Significant Accounting Policies

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows:

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

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

and Cash Equivalents

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investments consist of investments in U.S.

government, U.S.

agency and U.S.

treasury securities.

The Company determines the appropriate

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”)

320, Investments – Debt and Equity Securities .

Investments classified as current have maturities of less than one year.

The Company reviews its short-term investments for other-than-temporary impairment whenever the fair value of a marketable security is

less than the amortized cost and evidence indicates that a short-term investment’s carrying amount is not recoverable within a

reasonable period of time.

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.

treasury securities, U.S.

federal agency securities and certificates of deposit.

determines the appropriate classification of the securities at the time they are acquired and evaluates the appropriateness of such classifications

at each balance sheet date.

The Company classifies its short-term investments as available-for-sale pursuant to Accounting Standards

Codification (“ASC”) 320, Investments – Debt and Equity Securities .

Investments classified as current have maturities

of less than one year.

The Company reviews its short-term investments for other-than-temporary impairment whenever the fair value of

a marketable security is less than the amortized cost and evidence indicates that a short-term investment’s carrying amount is

not recoverable within a reasonable period of time.

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, 2024 and 2023, the Company had ERC receivables of $ 1.6

million and $ 2.1 million, 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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and recognizes an impairment charge in the period in which the impairment occurs.

The Company has fully written off the licensed technology

as of December 31, 2024 and December 31, 2023.

of Long-Lived Assets

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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.

The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s

operations on a consolidated basis for the purpose of allocating resources.

treasury, U.S.

federal agencies and certificates of deposits, are highly rated, and have a history of zero credit

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, 2024, the Company did not

recognize a credit loss allowance for its investments or accounts receivable.

Company determines and presents operating segments based on the information that is internally provided to the Company’s chief

operating decision maker (“CODM”), its Chief Executive Officer, in accordance with ASC 280, Segment Reporting .

Company has determined that it operates in a single business segment, which is a clinical-stage biopharmaceutical company developing

cell and gene therapies for life-threatening diseases.

Refer to Note 16 – Segment Information for further information related to

the Company’s segment.

Company accounts for contracts with customers in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).

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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;

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.

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

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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.

This assessment

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

For collaboration

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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, professional expenses (i.e., legal expenses), investor relations fees and commercial

administrative and operating activities, facility costs, professional expenses (i.e., legal, audit, advisory expenses) and commercial

readiness costs.

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is $ 0.0001 or less per share (Note 10).

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.

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, conversion features of loan agreements, 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

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For the year ended December 31,

Stock options

Restricted stock

Shares of common stock issuable upon exercise of stock options

Shares of common stock underlying restricted stock

Shares of common stock issuable upon exercise of conversion feature of loan agreement

Shares of common stock issuable upon exercise of warrants

January 2024 as part of the Loan and Security Agreement, see Note 9, the Company issued warrants to purchase $ 2,400,000 worth of shares

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

net bona fide round of equity financing before September 30, 2024 (the “2024 Loan Agreement Warrants”).

In connection with

the underwritten common stock offering consummated on May 7, 2024, pursuant to the terms of the 2024 Loan Agreement Warrants, the exercise

price was reduced to $ 4.07 per share and the shares issuable was calculated at 589,681 shares.

On September 30, 2024, per the terms of

the 2024 Loan Agreement Warrants, the exercise price and the number of shares became set at $ 4.07 per share and 589,681 shares, respectively.

The Company included these shares for the year ended December 31, 2024 as shares of common stock issuable upon exercise of warrants in

the table above and no shares for the year ended December 31, 2023.

Company accounts for stock-based compensation expense in accordance with ASC 718, Stock Based Compensation .

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107, “Share-Based Payment.”

Company accounts for the fair value of the conversion right embedded within the Loan and Security Agreement in accordance with the guidance

in ASC 815, which requires the Company to bifurcate and separately account for the conversion feature as an embedded derivative contained

in the Company’s Loan and Security Agreement.

Accordingly, the Company accounts for the conversion feature as a derivative liability

in the consolidated balance sheet.

Derivatives are measured at their fair value on the balance sheet.

In determining the appropriate

fair value, the Company uses a Monte Carlo simulation model, which incorporated assumptions and estimates to value the derivatives.

derivative liability is remeasured at each reporting period with the change in fair value recorded to change in fair value of warrant

and derivative liabilities in the consolidated statement of operations until the derivative is exercised, expired, reclassified, or otherwise

At September 30, 2024, the conversion feature no longer met the criteria of a derivative liability, and the derivative liability

was reclassified to equity.

May 7, 2024, the Company issued pre-funded warrants to purchase 6,142,656 shares of common stock, with an exercise price of $ 4.0699 per

share (“2024 Pre-Funded Warrants”).

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.

On June 24, 2024 and December 2, 2024, 700,000 and 1,228,511 , respectively of the

2024 Pre-Funded Warrants were exercised, leaving 4,214,125 of 2024 Pre-Funded Warrants outstanding as of December 31, 2024

January 8, 2024, the Company issued warrants to purchase up to $ 2,400,000 worth of shares of the Company’s common stock.

8, 2024, the January Warrants did not include an explicit share limit and the number of shares issuable under the warrant agreements

were variable based on the exercise price and therefore the warrants were liability classified based on a Black-Scholes valuation in

accordance with ASC 815 and were recorded at the closing date fair value of $ 0.2 million which was based on a Black-Scholes option pricing

The warrants are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes

in the fair value between reporting periods recorded in the consolidated statements of operations and comprehensive loss.

30, 2024, per the terms of the 2024 Loan Agreement Warrants, the exercise price and the number of shares became set at $ 4.07 per share

and 589,681 shares, respectively.

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 (“2023 Pre-Funded Warrants”.

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.

On May 9, 2024, 300,000 of the 2023 Pre-Funded Warrants were exercised, leaving

2,619,140 2023 Pre-Funded Warrants outstanding as of December 31, 2024.

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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On December 17, 2021, the Company issued warrants to purchase 1,788,000 shares of common

stock, with an exercise price of $ 9.75 (post-split) per share, subject to customary adjustments thereunder.

The warrants issued in 2022

and 2021 were determined to be freestanding instruments as they are legally detachable and separately exercisable from each other and

from the common stock issued.

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.

The warrants are revalued on each subsequent balance sheet date until such instruments

are exercised or expire, with any changes in the fair value between reporting periods recorded in the consolidated statements of operations

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.

stock, with an exercise price of $ 9.75 per share, subject to customary adjustments thereunder.

The warrants issued in 2022 and 2021 were

determined to be freestanding instruments as they are legally detachable and separately exercisable from each other and from the common

stock issued.

The 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.

The warrants are revalued on each subsequent balance sheet date until

such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded in the consolidated statements

of operations and comprehensive loss.

Adopted Accounting Pronouncements

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.

November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07,

“Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ” (“ASU 2023-07”).

requires additional disclosures for segment reporting, including disclosure of the title and position of the Chief Operating Decision

Maker and requires a public entity that has a single reportable segment to provide all the disclosures required by the amendments in

ASU 2023-07, and all existing segment disclosures in Topic 280.

ASU 2023-07 is effective for fiscal periods beginning after December

15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-07 effective for its

Annual Report on Form 10-K for the year ended December 31, 2024 and subsequent interim periods.

Since ASU 2023-07 addresses only disclosures,

the adoption of ASU 2023-07 did not have a significant impact on the Company’s consolidated financial statements.

Issued Accounting Pronouncements

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

(Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The amendments in ASU 2024-03 address investor requests for more

detailed expense information and require additional disaggregated disclosures in the notes to financial statements for certain categories

of expenses that are included on the face of the income statement.

This guidance is effective for fiscal years beginning after December

15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently

evaluating this guidance to determine the impact it may have on its consolidated financial statements.

December 2023, the FASB issued ASU 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.

ASU 2023-09 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 requirements of this ASU are disclosure related and will not have an impact

on the Company’s financial condition, results of operations, or cash flows.

The Company is currently evaluating the impact of adopting

this ASU on its income tax disclosures.

3 – SHORT-TERM INVESTMENTS

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

OF AVAILABLE FOR SALE SHORT-TERM INVESTMENTS

SCHEDULE OF AVAILABLE FOR SALE SHORT-TERM INVESTMENTS

December 31, 2024

Amortized Cost

Unrealized Gain

Unrealized Loss

Gross Unrealized Gain

Gross Unrealized Loss

Available-for-sale, short-term investments:

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federal agency securities

Certificates of deposit

Total available-for-sale, short-term investments

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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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SCHEDULE OF PROPERTY AND EQUIPMENT

Useful lives (years)

lives (years)

As of December 31,

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and amortization on property and equipment was $ 2.0 million and $ 2.3 million for the years ended December 31, 2024 and 2023, 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

it was discontinuing development of ABO-101.

As a result, the Company determined the construction-in-progress that was dedicated to the

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 $ 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 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):

SCHEDULE OF LICENSED TECHNOLOGY

As of December 31,

Licensed technology

Less accumulated amortization

Less impairment charge

Total licensed technology, net

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

The Company incurred a gain on disposal of equipment of $ 2,000 and a loss on disposal of $ 47,000 during the years ended December 31,

2024 and 2023, respectively, which is reflected in other income in the consolidated statements of operations and comprehensive loss.

5 – FAIR VALUE MEASUREMENTS

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

The estimated fair value of the Loan Agreement as of December 31, 2024, was $ 24.7 million.

Both observable and unobservable inputs were

used to determine the fair value of long-term debt, which was classified within the Level 3 category.

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):

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

Fair Value at December 31, 2023

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

Fair Value at

Recurring Assets

Cash equivalents

Money market fund

Money market funds

Money market deposit account

Short-term investments

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federal agency securities

Certificates of deposit

Total assets measured at fair value

Payable to licensor

Warrant liabilities

Total liabilities measured at fair value

Fair Value at December 31, 2022

Fair Value at

Recurring Assets

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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

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.

of December 31, 2024 and 2023, the Company had the following outstanding warrants:

SCHEDULE OF OUTSTANDING WARRANT LIABILITIES

As of December 31,

Warrants issued as part of the 2021 public offering, expiration date December 2026 , exercise price of $ 9.75 per share

Warrants issued as part of the 2022 Private Placement Offering, expiration date November 2027 , exercise price $ 4.75 per share

Warrants issued as part of the 2024 Loan Agreement, expiration date January 2029 , exercise price $ 4.07 per share

Outstanding warrant liabilities

common stock warrants related to the 2021 Public Offering and the 2022 Private Placement are not indexed to the Company’s own stock

and therefore have been classified as liabilities at their estimated fair value.

The common stock warrants issued in connection with

the Loan Agreement issuance were determined to be liability classified under ASC 815 as the common stock warrants were not considered

indexed to the Company’s stock.

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.

January 2024, as part of the Loan and Security Agreement, see Note 9, the Company issued warrants to purchase $ 2,400,000 worth of shares

of the Company’s stock which have an exercise price 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 (the “2024 Loan Agreement Warrants”).

In connection with

the underwritten common stock offering consummated on May 7, 2024, pursuant to the terms of the 2024 Loan Agreement Warrants, the exercise

price was reduced to $ 4.07 per share and the shares issuable was calculated at 589,681 shares.

On September 30, 2024, per the terms of

the 2023 Loan Agreement Warrants, the exercise price and the number of shares became set at $ 4.07 per share and 589,681 shares, respectively.

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

OF ACTIVITY OF WARRANT LIABILITIES

SCHEDULE 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

Fair value of warrants issued in connection with the Loan Agreement

Loss recognized in earnings from change in fair value

Ending warrant liabilities

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

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

following table outlines the key inputs for the Black-Scholes option-pricing model:

SCHEDULE OF ESTIMATE FAIR VALUE OF WARRANTS

As of December 31,

Common share price

$ 1.72 – $ 2.18

Expected term (years)

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Expected dividend yield (%)

Conversion Right embedded within the Loan Agreement (see Note 9 below) required bifurcation as certain adjustments to the conversion

price were not indexed to the Company’s own stock and therefore the Conversion Right was recorded as a derivative liability.

derivative liability is remeasured at each reporting period with the change in fair value recorded to changes in fair value of warrants

and derivative liabilities in the condensed consolidated statement of operations until the derivative is exercised, expired, reclassified,

or otherwise settled.

September 30, 2024, pursuant to the Loan Agreement, the conversion price was fixed at $ 4.88 and is considered indexed to the Company’s

At September 30, 2024, the Conversion Right no longer met the criteria of a derivative liability, and the derivative liability

was reclassified to equity.

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

SCHEDULE OF ACTIVITY OF DERIVATIVE LIABILITIES

As of December 31,

Beginning derivative liabilities

Fair value of derivatives issued in connection with Loan Agreement

Loss recognized in earnings from change in fair value

Reclassification of derivative liability in connection with the Loan Agreement

Ending derivative liabilities

6 – SETTLEMENT LIABILITY

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(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.

or (ii) the closing of a Strategic Transaction, as defined in the Settlement Agreement (paid in November 2024).

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 %.

The Company paid all amounts due in November

2024 and therefore there were no amounts outstanding as of December 31, 2024.

The present value of the amount due as of December 31,

2023 was $ 4.6 million.

7 – ACCRUED EXPENSES

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

2024, the Company signed a lease for 16,566 square feet of office space at 6700 Euclid Avenue, Cleveland, Ohio.

Pursuant to the lease

agreement, the lease term commences on January 1, 2025 with an initial term through December 30, 2030.

Annual lease payments during the

term of the lease are approximately $ 0.3 million.

The total lease payments over the duration of the lease term are approximately $ 1.5

The additional space at the 6700 Euclid Avenue facility will allow the Company to convert office space at the 6555 Carnegie

Avenue facility into additional manufacturing space to increase pz-cel manufacturing capacity.

As the lease does not commence and the

Company does not have access to the leased space until January 1, 2025, the impact of this lease agreement is not reflected in the consolidated

financial statements of the Company as of December 31, 2024.

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

2 unchanged sentences

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.

ended December 31, 2023, and is included in 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

2 unchanged sentences

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

development of ABO-101.

As a result, the Company determined the portion of the lease that was dedicated to the future facility for the

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 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

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

Because the future sublease income under the executed sublease agreement

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

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.

2022 and 2023, the Company entered into two sublease agreements with unrelated third parties to occupy the Company’s administrative

offices in New York, New York.

The Company expects to receive $ 0.5 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):

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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):

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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measure the present value of the Company’s operating lease liabilities was 7.0 % as of December 31, 2024.

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.

Company received $ 0.6 million and $ 0.5 million during the years ended December 31, 2024 and 2023, respectively, of sublease income which

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

Future cash receipts from the Company’s

3 unchanged sentences

Total future cash receipts

A and B Convertible Redeemable Preferred Stock

May 2, 2022, the Company consummated an offering with certain institutional investors for the private placement of 1,000,006 shares of

the Company’s Series A Convertible Redeemable Preferred Stock (the “Series A Preferred Stock”) and 250,005 shares of

the Company’s Series B Convertible Redeemable Preferred Stock (the “Series B Preferred Stock” and together with the

Series A Preferred Stock, the “Preferred Stock”).

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

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.

In connection

with this offering, the Company had net proceeds of $ 22.5 million and recognized a deemed dividend of $ 3.8 million.

In connection with

this transaction, the Company placed $ 26.3 million into an escrow account for any future redemption which consisted of the gross proceeds

of $ 25.0 million and the redemption value of $ 1.3 million.

Preferred Stock was convertible, at the option of the holders and, in certain circumstances, by the Company, into shares of common stock

at a conversion price of $ 11.25 per share.

The holders of the Series A Preferred Stock and Series B Preferred Stock had the right to

require the Company to redeem their shares of preferred stock for cash at 105% of the stated value of such shares commencing after the

earlier of the receipt of stockholder approval of an amendment to the Company’s Restated Certificate of Incorporation to effect

a reverse stock split and 60 days after the closing of the issuances of the Series A Preferred Stock and Series B Preferred Stock and

until 90 days after such closing.

The Company had the option to redeem the Series A Preferred Stock for cash at 105% of the stated value

commencing after the 90th day following the closing of the issuance of the Series A Preferred Stock, subject to the holders’ rights

to convert the shares prior to such redemption .

As a result, the Preferred Stock was recorded separately from stockholders’ equity

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 $ 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

their right to cause the Company to redeem all such shares for $ 26.3 million, which represented a price equal to 105% of the stated value.

The redemption of these shares was paid out of the escrow account noted above.

following table provides a summary of the Company’s debt, net of debt issuance costs and discounts (in thousands):

OF DEBT AND NET OF DEBT ISSUANCE COSTS

As of December 31,

Loan Agreement Principal

Accreted final payment fee

Unamortized debt issuance costs and discounts

Total long-term debt

current maturities

Long-term debt, net of current maturities

and Security Agreement

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

dated as of January 8, 2024 (collectively, the “Loan 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”).

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

As of December 31, 2024, the Tranche 2 is no longer available as the Company did not meet the Tranche 2 criteria.

loan principal is repayable in equal monthly installments beginning on May 1, 2025.

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 %.

The stated interest rate and effective interest rate as of December 31, 2024 was 13.50 % and 22.09 %,

respectively.

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.

The Conversion Right required bifurcation as certain adjustments to the conversion price were not indexed

to the Company’s own stock and therefore the Conversion Right was recorded as a derivative liability.

On January 8, 2024, the Conversion

Right was recorded at the closing date fair value of $ 0.8 million which was based on a Monte Carlo simulation model.

The derivative liability

is remeasured at each reporting period with the change in fair value recorded to change in fair value of warrants and derivative liabilities

in the condensed consolidated statement of operations until the derivative is exercised, expired, reclassified, or otherwise settled.

On September 30, 2024, pursuant to the Loan Agreement, the conversion price was fixed at $ 4.88 and is considered indexed to the Company’s

At September 30, 2024, the Conversion Right no longer met the criteria of a derivative liability and the derivative liability

of $ 1.1 million was reclassified to equity.

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 “Warrant Holders”) warrants to purchase up to $ 480,000 and $ 1,920,000 of Company common stock, respectively which is

more fully described in Note 10 below.

future payment obligations of the principal are as follows (in thousands):

OF FUTURE PAYMENT OBLIGATIONS

Total principal

aggregate number of authorized shares of the Company’s preferred stock is 2,000,000 shares with a par value of one cent ($ 0.01 ).

There is no preferred stock outstanding as of December 31, 2024 and 2023.

Stock and Warrants

July 1, 2022, the Company’s stock underwent a 25:1 Reverse Stock Split .

The number of authorized shares of common stock immediately

after the Reverse Stock Split remained at 200,000,000 shares.

December 21, 2021, the Company closed an underwritten public offering of 1,788,000 post-split shares of common stock at a public offering

price of $ 9.75 post-split per share and stock purchase warrants to purchase 1,788,000 post-split shares of common stock at an exercise

price of $ 9.75 post-split.

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 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 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.

December 21, 2021, the Company closed an underwritten public offering of 1,788,000 shares of common stock at a public offering price

of $ 9.75 per share and stock purchase warrants to purchase 1,788,000 shares of common stock at an exercise price of $ 9.75 .

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 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, 2024, there were 1,788,000 stock purchase warrants outstanding related to this public offering.

These stock purchase

warrants expire on December 21, 2026 .

During such time as each warrant is outstanding, the holder of the warrant is entitled to participate

in any dividends or other distribution of assets to holders of shares of common stock.

There was no warrant activity during the year

ended December 31, 2024 and 2023, other than the change in fair value of the warrants.

May 7, 2024, the Company sold 12,285,056 shares of its common stock and, in lieu of common stock, pre-funded warrants to purchase 6,142,656

shares of its common stock (the “2024 Pre-Funded Warrants”), for an aggregate purchase price of $ 75.0 million gross, or $ 70.2

million net of related costs.

The offering price for each share of common stock was $ 4.07 , and the offering price for the 2024 Pre-Funded

Warrants was $ 4.0699 , which represents the per share offering price for the Company’s common stock less a $ 0.0001 per share exercise

price for each 2024 Pre-Funded Warrant.

The 2024 Pre-Funded Warrants are immediately exercisable at a nominal exercise price of $ 0.0001

per share and may be exercised at any time until the pre-funded warrants are exercised in full.

On June 24, 2024, 700,000 of the 2024

Pre-Funded Warrants were exercised and on December 2, 2024 1,228,531 of the 2024 Pre-Funded Warrants were exercised, leaving 4,214,125

2024 Pre-Funded Warrants outstanding as of December 31, 2024.

The 2024 Pre-Funded 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 2024 Pre-Funded warrants were recorded at their relative fair value at issuance

in the stockholders’ equity section of the consolidated balance sheet and the 2024 Pre-Funded Warrants are considered outstanding

shares in the basic and diluted earnings per share calculation for year ended December 31, 2024 given their nominal exercise price.

Market Sale Agreement

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 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.

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 $ 75.0 million.

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.

Company sold 2,825,954 and 3,659,882 shares of its common stock under the ATM Agreement during the years ended December 31, 2024 and

2023, respectively, resulting in net proceeds of $ 15.5 million and $ 14.4 million during the years ended December 31, 2024 and 2023, respectively.

Subsequent to December 31, 2024 and through March 1, 2025, the Company sold 915,925 shares of its common stock under the ATM Agreement resulting

in $ 4.8 million in net proceeds.

Placement Offering

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distribution of assets to 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

There was no warrant activity during the year ended December 31, 2024 and

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

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 .

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.

On May 9, 2024, 300,000 of the 2023 Pre-Funded Warrants were exercised, leaving 2,619,140 2023 Pre-Funded Warrants outstanding

as of December 31, 2024.

The 2023 Pre-Funded Warrants are classified as equity in accordance with ASC 815, Derivatives and Hedging ,

given the 2023 Pre-Funded Warrants are indexed to the Company’s own shares of common stock and meet the requirements to be classified

The 2023 Pre-Funded Warrants were recorded at their relative fair value at issuance in the stockholders’ equity section

of the consolidated balance sheet and the 2023 Pre-Funded Warrants are considered outstanding shares in the basic and diluted earnings

per share calculation for the year ended December 31, 2024 given their nominal exercise price.

Stock Warrants related to the Loan and Security Agreement

January 8, 2024, in connection with entering into the Loan and Security Agreement, the Company issued to each of Avenue and Avenue 2

(collectively, the “Warrant Holders”) warrants to purchase up to $ 480,000 and $ 1,920,000 worth of shares, respectively, of

Company common stock (collectively, the “January Warrants”).

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

Date”) and upon issuance, had 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 connection with the underwritten common stock offering

consummated on May 7, 2024, and pursuant to the term of the January Warrants, the exercise price of the January Warrants was reduced

to $ 4.07 per share for 589,681 shares.

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 Warrant Holders would be entitled to receive the shares of common stock

underlying the January Warrants without payment of the exercise price.

On January 8, 2024, the January Warrants did not include an explicit

share limit and the number of shares issuable under the warrant agreements were variable based on the exercise price and therefore the

January Warrants were liability classified based on a Black-Scholes valuation in accordance with ASC 815 and were recorded at the closing

date fair value of $ 0.2 million which was based on a Black-Scholes option pricing model.

On September 30, 2024, per the terms of the

January Warrants, the exercise price and the number of shares issuable became set at $ 4.07 per share and 589,681 shares, respectively.

Warrant Holders may exercise the January 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 Warrant Holders may also exercise the January Warrants

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

Warrants are subject to anti-dilution adjustments for stock dividends, stock splits, and reverse stock splits.

11 – STOCK-BASED COMPENSATION

8 unchanged sentences

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.

On April 24, 2024,

stockholders approved an amendment to the 2023 Incentive Plan to increase the shares authorized for issuance from 1,700,000 shares to

3,200,000 shares.

On December 20, 2024, stockholders approved an additional increase in the shares authorized for issuance under the

2023 Incentive Plan from 3,200,000 shares to 8,400,000 shares.

As of December 31, 2024, there were 5,251,251 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

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.

As of December 31, 2024, there were 584,700

shares available to be granted under the Inducement Plan.

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

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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-pricing model utilizing

the following assumptions:

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

For the year ended December 31,

Expected volatility (%)

95.1 % - 96.0 %

Expected term (years)

6.07 - 6.08 years

Risk-free interest rate (%)

1.7 % - 3.3 %

Expected dividend yield (%)

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

Company did not grant any stock options in the year ended December 31, 2024 and 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 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):

following table summarizes stock option activity during the year ended December 31, 2024 and 2023.

OF STOCK OPTION ACTIVITY

19 unchanged sentences

Exercise Prices

Number of Options

following table summarizes restricted stock award activity:

7 unchanged sentences

Cancelled/forfeited

( 1,009,298 )

Outstanding at December 31, 2024

4 unchanged sentences

12 – LICENSE/SUPPLIER AGREEMENTS

Agreement Relating to Recessive Dystrophic Epidermolysis Bullosa (RDEB)

2016, the Company entered into two licensing agreements between the Company and The Board of Trustees of Leland Stanford Junior University

(“Stanford”) to develop EB-101 (LZRSE-Col7A1 Engineered Autologous Epidermal Sheets (LEAES)) and EB-201 (AAV DJ COL7A1) and

to license the invention “Gene Therapy for Recessive Dystrophic EB using Genetically Corrected Autologous Keratinocytes”.

Under the terms of the licensing agreements, the Company paid an upfront of licensing fees in cash and is subject to annual license maintenance

In addition, the Company is subject to the achievement of certain milestones, regulatory approval milestone payments, and royalty

payments in the low single digits on annual net sales of the licensed product.

As of December 31, 2024, the Company is subject to remaining

milestone payments totaling approximately $ 0.2 million which is due upon FDA approval of pz-cel.

Agreement Relating to Novel AAV Capsids (“AIM™ capsids”)

2016, the Company licensed an international patent family from The University of North Carolina at Chapel Hill (“UNC”) covering

novel AAV capsids (“AIM™ capsids”) that may potentially be used to deliver a wide variety of therapeutic transgenes

to human cells to treat genetic diseases.

Under the terms of the licensing agreements, the Company paid an upfront licensing fees in

cash and is subject to on-going patent expenses incurred in relation to the patents licensed under this agreement and annual license

maintenance fees.

In addition, the Company is subject to the achievement of certain milestones, regulatory approval milestone payments,

and royalty payments in the low single digits on annual net sales of the licensed product.

As of December 31, 2024, no milestone or royalty

payments under this agreement have been made.

Agreement Relating to CLN1 Disease

2016, the Company licensed from UNC rights to two patent families directed to treating CLN1 disease (also known as infantile Batten disease).

Under the terms of the licensing agreements, the Company paid an upfront of licensing fees in cash and is subject to on-going patent

expenses incurred in relation to the patents licensed under this agreement and annual license maintenance fees.

In addition, the Company

is subject to the achievement of certain milestones, regulatory approval milestone payments, and royalty payments in the low single digits

on annual net sales of the licensed product.

As of December 31, 2024, no milestone or royalty payments under this agreement have been

The Company subsequently sublicensed the license to Taysha Gene Therapies (“Taysha”), see detail of the sublicense

agreement below.

As part of the agreement with UNC, the Company is obligated to pay to UNC a percentage of any sublicense revenue that

the Company receives under the agreement.

The Company recognizes any payments under this agreement as royalties in the consolidated statement

of operations and comprehensive income.

Agreement Relating to Rett Syndrome

2019, the Company licensed rights to one patent family from UNC and two patent families from The University Court of the University of

Edinburgh (“U.

Edinburgh”) and The University Court of the University of Glasgow (“U.

Glasgow”) relating to gene

therapy for the treatment of Rett Syndrome.

Under the terms of the licensing agreements, the Company paid an upfront of licensing fees

in cash and is subject to on-going patent expenses incurred in relation to the patents licensed under this agreement and annual license

maintenance fees.

In addition, the Company is subject to the achievement of certain milestones, regulatory approval milestone payments,

and royalty payments in the low single digits on annual net sales of the licensed product.

As of December 31, 2024, no milestone or royalty

payments under this agreement have been made.

The Company subsequently sublicensed the license to Taysha, see detail of the sublicense

agreement below.

As part of the agreement with UNC, the Company is obligated to pay to UNC and U.

Edinburgh a percentage of any sublicense

revenue that the Company receives under the agreement.

The Company recognizes any payments under this agreement as royalties in the consolidated

statement of operations and comprehensive income.

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.

August 2020, the Company entered into sublicense and inventory purchase agreements with 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.

inventory purchase agreement, the Company sold to Taysha certain inventory and other items related to ABO-202.

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.

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.

payments, and (iv) high single-digit royalty-based payments based on net sales.

The Company is obligated to pay a portion of milestone

payments and royalties on net sales received from Taysha to the UNC..

The event-based milestone payments are based on certain development

16 unchanged sentences

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.

The Company has no contract assets or liabilities as of December 31, 2024 and 2023 as a result of this

Agreement Relating to Rett Syndrome

2 unchanged sentences

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.

grants Taysha worldwide exclusive rights to intellectual property developed by scientists at UNC, U.

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

5 unchanged sentences

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.

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) high single-digit royalty-based payments

based on net sales.

The Company is obligated to pay a portion of milestone payments and royalties on net sales received from Taysha

to the UNC and U.

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.

million in event-based milestone payments until such time that it is probable that a significant cumulative revenue reversal would

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 nil and $ 3.5 million in revenue during the years ended December 31, 2024 and 2023.

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

As of December

31, 2024 and 2023, the Company does not have any contract assets or contract liabilities as a result of this transaction.

License Agreement

23 unchanged sentences

13 – 401(k) PLAN

Company has a tax-qualified employee savings and retirement plan (the “401(k) Plan”) covering all the Company’s employees

in the United States.

Pursuant to the 401(k) Plan, employees may elect to reduce their current compensation by up to the statutorily

prescribed annual limit ($ 22,500 in 2023 and $ 20,500 in 2022 for employees who are under age 50 and $ 30,000 in 2023 and $ 27,000 in 2022

for employees who are age 50 and older) and to have the amount of such reduction contributed to the 401(k) Plan.

The 401(k) Plan is intended

to qualify under Section 401 of the Internal Revenue Code so that contributions by employees or by us to the 401(k) Plan, and income

earned on 401(k) Plan contributions, are not taxable to employees until withdrawn from the 401(k) Plan, and so that contributions by

us, if any, will be deductible by us when made.

At the direction of each participant, the Company invests the assets of the 401(k) Plan

in any of over 50 investment options.

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

2023 and 2022.

Company has a tax-qualified employee savings and retirement plan (the “401(k) Plan”) covering all the Company’s

employees in the United States.

Pursuant to the 401(k) Plan, employees may elect to reduce their current compensation by up to the

statutorily prescribed annual limit ($ 23,000

in 2024 and $ 22,500

in 2023 for employees who are under age 50 and $ 30,500

in 2024 and $ 30,000 in 2023 for employees who are age 50 and older) and to have the amount of such reduction contributed to the

The 401(k) Plan is intended to qualify under Section 401 of the Internal Revenue Code so that contributions by

employees or by us to the 401(k) Plan, and income earned on 401(k) Plan contributions, are not taxable to employees until withdrawn

from the 401(k) Plan, and so that contributions by us, if any, will be deductible by us when made.

At the direction of each

participant, the Company invests the assets of the 401(k) Plan in any of over 50

investment options.

Company contributions under the 401(k) Plan were $ 0.5

million and $ 0.3

million for the years ended December 31, 2024 and 2023.

14 – INCOME TAXES

6 unchanged sentences

Research and development credit

Deferred true ups

Valuation allowance

1 unchanged sentence

Expired tax losses and credits

Expenses not deductible

Permanent differences

Total tax expense

9 unchanged sentences

Property, equipment and goodwill

Stock options

Stock based compensation

Intangible assets

3 unchanged sentences

Net deferred taxes

of December 31, 2024, the Company identified adjustments related primarily to the recognition of deferred tax assets for stock-based

compensation.

As a result, the Company has written off $ 8.0 million of deferred tax assets in the current period, with a corresponding

adjustment to the valuation allowance.

There was no impact to total tax expense in the prior periods or current period.

operating Loss and Other Carryforwards

5 unchanged sentences

Net operating

carryforwards

loss carryforwards

business credit

49 unchanged sentences

there was no litigation against the Company.

16 – SEGMENT INFORMATION

segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the Chief Operating Decision Maker (“CODM”), or decision making group, in deciding how to allocate resources in assessing performance.

The Company is a

clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases and has one reportable segment.

The Company’s CODM is the chief executive officer.

accounting policies of the clinical-stage biopharmaceutical segment are the same as those described in the summary of significant accounting

The CODM assesses performance for the clinical-stage biopharmaceutical segment based on net loss, which is reported on the

consolidated statements of operations and comprehensive loss as consolidated net loss.

The measure of segment assets is reported on the

consolidated balance sheet as total consolidated assets.

Expenditures for additions to long-lived assets, which include purchases of

property and equipment, are included in total consolidated assets reviewed by the chief operating decision maker and are reported on

the consolidated statements of cash flows.

date, the Company has not generated any product revenue.

The Company expects to continue to incur significant expenses and operating

losses while it seeks regulatory approval for pz-cel.

such, the CODM uses cash forecast models in deciding how to invest into the clinical-stage biopharmaceutical segment.

Such cash forecast

models are reviewed to make decisions about allocating resources and assessing the entity-wide operating results and performance.

loss is used to monitor budget versus actual results.

Monitoring budgeted versus actual results is used to make decisions about allocating

resources, assessing the performance of the segment and in establishing management’s compensation, along with cash forecast models.

table below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2024, and 2023:

OF SIGNIFICANT EXPENSE CATEGORIES

For the year ended December 31,

License and other revenues

Research and development costs

Salaries & related costs

Non-cash stock-based compensation

Other research and development costs (a)

Total research and development costs

General and administrative costs

Salaries & related costs

Non-cash stock-based compensation

Pre-commercial preparation costs

Other general and administrative costs (b)

Total general and administrative costs

Other segment items (c)

research and development expenses include, but are not limited to lab supplies, preclinical and development costs, clinical trial

costs, manufacturing and manufacturing facility costs, costs associated with regulatory approvals, depreciation on lab supplies and

manufacturing facilities, and consultant-related expenses.

general and administrative expenses primarily consist of office facility costs, public reporting company related costs, professional

fees (e.g., legal expenses) and other general operating expenses not otherwise included in research and development expenses.

segment items includes royalties, interest income, interest expense, change in fair value of warrant and derivative liabilities and

other income.

17 – 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 %.