Allarity Therapeutics, Inc. 10-Q

Item 1. Financial Statements . ALLARITY THERAPEUTICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands, except for share and per share data) June 30, December 31, 2024 2023 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 19,233 $ 166 Other current assets 131 209 Prepaid expenses 366 781 Tax credit receivable 1,579 815 Total current assets 21,309 1,971 Non-current assets: Property, plant and equipment, net 17 20 Intangible assets 9,557 9,871 Total assets $ 30,883 $ 11,862 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 7,753 $ 8,416 Accrued liabilities 1,465 1,309 Warrant derivative liability 16 3,083 Income taxes payable 57 59 Convertible promissory notes and accrued interest, net of debt discount 1,325 1,300 Total current liabilities 10,616 14,167 Non-current liabilities: Deferred tax 432 446 Total liabilities 11,048 14,613 Commitments and contingencies (Note 15) Stockholders’ (deficit) equity Series A Preferred stock $ 0.0001 par value ( 20,000 shares designated) shares issued and outstanding at June 30, 2024 and December 31, 2023 were 0 and 1,417 , respectively — 1,742 Common stock, $ 0.0001 par value ( 750,000,000 shares authorized, at June 30, 2024 and December 31, 2023); shares issued and outstanding at June 30, 2024 and December 31, 2023 were 35,039,196 and 294,347 , respectively 3 — Additional paid-in capital 120,285 90,369 Accumulated other comprehensive loss ( 530 ) ( 411 ) Accumulated deficit ( 99,923 ) ( 94,451 ) Total stockholders’ equity (deficit) 19,835 ( 2,751 ) Total liabilities and stockholders’ equity $ 30,883 $ 11,862 See accompanying notes to condensed consolidated financial statements. 1 ALLARITY THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (U.S. dollars in thousands, except for share and per share data) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Operating expenses: Research and development $ 1,058 $ 1,105 $ 3,228 $ 2,532 General and administrative 2,313 3,051 4,383 5,292 Total operating expenses 3,371 4,156 7,611 7,824 Loss from operations ( 3,371 ) ( 4,156 ) ( 7,611 ) ( 7,824 ) Other income (expenses) Interest income 53 3 53 7 Interest expense ( 426 ) ( 142 ) ( 528 ) ( 234 ) Foreign exchange (losses) gains ( 128 ) ( 26 ) ( 52 ) 69 Change in fair value of derivative and warrant liabilities 2,243 1,941 2,662 2,250 Net other income 1,742 1,776 2,135 2,092 Net loss before tax benefit ( 1,629 ) ( 2,380 ) ( 5,476 ) ( 5,732 ) Income tax benefit — — 4 — Net loss ( 1,629 ) ( 2,380 ) ( 5,472 ) ( 5,732 ) Deemed dividend on Series A Convertible Preferred Stock ( 71 ) ( 7,287 ) ( 299 ) ( 7,287 ) Gain on extinguishment of Series A Convertible Preferred Stock 31 — 222 — Deemed dividend of 5 % on Series C Preferred Stock — ( 119 ) — ( 123 ) Net loss attributable to common stockholders $ ( 1,669 ) $ ( 9,786 ) $ ( 5,549 ) $ ( 13,142 ) Basic and diluted net loss per common stock $ ( 0.11 ) $ ( 525.53 ) $ ( 0.73 ) $ ( 1,336.40 ) Weighted-average number of common stock outstanding, basic and diluted 14,979,095 18,621 7,641,826 9,834 Other comprehensive loss, net of tax: Net loss $ ( 1,629 ) $ ( 2,380 ) $ ( 5,472 ) $ ( 5,732 ) Change in cumulative translation adjustment ( 144 ) ( 29 ) ( 119 ) 55 Total comprehensive loss attributable to common stockholders $ ( 1,773 ) $ ( 2,409 ) $ ( 5,591 ) $ ( 5,677 ) See accompanying notes to condensed consolidated financial statements. 2 ALLARITY THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE STOCKHOLDERS’ EQUITY (DEFICIT) For the three and six months ended June 30, 2024 and 2023 (Unaudited) (U.S. dollars in thousands, except for share data) Series A Preferred Stock Series B Preferred Stock Series C Convertible Preferred Stock Series A Preferred Stock Common Stock Additional Paid in Accumulated Other Comprehensive Accumulated Total Stockholders’ Equity Number Value Number Value Number Value Number Value Number Value Capital Loss Deficit (Deficit) Balance, December 31, 2022 13,586 $ 2,001 190,786 $ 2 — $ — — — 568 $ — $ 83,158 $ ( 721 ) $ ( 82,550 ) $ ( 113 ) Issuance of Series C Convertible Preferred Stock, net — — — — 50,000 1,160 — — — — — — — — Deemed dividend of 5 % and accretion of Series C Convertible Preferred Stock to redemption value — — — — — 167 — — — — ( 167 ) — — ( 167 ) Round up of common shares issued as a result of 1-for-35 and 1-for-40 reverse stock splits — — — — — — — — 15 — — — — — Conversion of Preferred Stock into common stock, net ( 3,838 ) ( 565 ) — — — — 902 — 565 — — 565 Redemption of Series B Preferred Stock ( 190,786 ) ( 2 ) — — — — 2 — — 2 Stock based compensation (recoveries) — — — — — — — — — — ( 121 ) — — ( 121 ) Currency translation adjustment — — — — — — — — — — — 84 — 84 Loss for the period — — — — — — — — — — — — ( 3,352 ) ( 3,352 ) Balance, March 31, 2023 9,748 $ 1,436 — $ — 50,000 $ 1,327 — $ — 1,485 $ — $ 83,437 $ ( 637 ) $ ( 85,902 ) $ ( 3,102 ) 3 Series A Preferred Stock Series C Convertible Preferred Stock Series A Preferred Stock Common Stock Additional Paid in Accumulated Other Comprehensive Accumulated Total Stockholders’ Equity Number Value Number Value Number Value Number Value Capital Loss Deficit (Deficit) Issuance of common stock, net, April 2023 Financing — — — — — — 12,500 — 6,815 — — 6,815 Round up of common shares issued as a result of 1-for-40 reverse stock split — — — — — — 33 — — — — — Fair value of April Warrants allocated to liabilities, net of financing costs — — — — — — — — ( 3,772 ) — — ( 3,772 ) Conversion of Series A Preferred Stock into common stock ( 5,509 ) ( 812 ) — — ( 2,705 ) ( 2,522 ) 11,210 — 3,334 — — 812 Deemed dividends on Series C Preferred Stock — — — 119 — — — — ( 119 ) — — ( 119 ) Elimination of Series A redemption rights ( 4,239 ) ( 624 ) 4,239 3,952 — — ( 3,328 ) — — 624 Issuance of Series A Preferred Stock as repayment of debt — — — — 486 453 — — — — — 453 Redemption of Series A Preferred Stock for cancellation of debt — — — — ( 1,550 ) ( 1,445 ) — — ( 207 ) — — ( 1,652 ) Exchange of Series C Preferred stock for Series A Preferred stock — — ( 50,000 ) ( 1,446 ) 5,577 5,199 — — ( 3,752 ) — — 1,447 Stock based compensation — — — — — — — — 180 — — 180 Currency translation adjustment — — — — — — — — — ( 29 ) — ( 29 ) Loss for the period — — — — — — — — — — ( 2,380 ) ( 2,380 ) Balance, June 30, 2023 — $ — — $ — 6,047 $ 5,637 25,228 $ — $ 82,588 $ ( 666 ) $ ( 88,282 ) $ ( 723 ) See accompanying notes to condensed consolidated financial statements. 4 Series A Convertible Preferred Stock Common Stock Additional Paid in Accumulated Other Comprehensive Accumulated Total Stockholders’ Equity Number Value, net Number Value Capital Loss Deficit (Deficit) Balance, December 31, 2023 1,417 $ 1,742 294,390 $ — $ 90,369 $ ( 411 ) $ ( 94,451 ) $ ( 2,751 ) Conversion of preferred stock into common stock, net ( 202 ) ( 269 ) 27,092 — 269 — — — Extinguishment of preferred stock — ( 191 ) — 191 — — — Deemed dividend on preferred stock — 228 — ( 228 ) — — — Shares issued for compensation — — 14,500 — 90 — — 90 Sale of common shares, net — — 6,792 — 40 — — 40 Stock based compensation (recoveries) — — — — ( 32 ) — — ( 32 ) Currency translation adjustment — — — — — 25 25 Loss for the period — — — — — — ( 3,843 ) ( 3,843 ) Balance, March 31, 2024 1,215 $ 1,510 342,774 $ — $ 90,699 $ ( 386 ) $ ( 98,294 ) $ ( 6,471 ) Conversion of preferred stock into common stock, net ( 1,215 ) ( 1,550 ) 452,131 — 1,550 — — — Extinguishment of preferred stock — ( 31 ) — — 31 — — — Deemed dividend on preferred stock — 71 — — ( 71 ) — — — Cashless exercise of 3i Exchange Warrants — — 2,359,650 — 405 — — 405 Sale of common shares, net — — 31,884,641 3 27,649 — — 27,652 Stock based compensation (recoveries) — — — — 22 — — 22 Currency translation adjustment — — — — — ( 144 ) — ( 144 ) Loss for the period — — — — — — ( 1,629 ) ( 1,629 ) Balance, June 30, 2024 — $ — 35,039,196 $ 3 $ 120,285 $ ( 530 ) $ ( 99,923 ) $ 19,835 See accompanying notes to condensed consolidated financial statements. 5 ALLARITY THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (U.S. dollars in thousands) Six months ended June 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss for the period $ ( 5,472 ) $ ( 5,732 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3 19 Stock-based compensation (recoveries) ( 10 ) 59 Unrealized foreign exchange (gains) losses 23 ( 59 ) Non-cash financing cost — 376 Non-cash interest 116 200 Change in fair value of warrant and derivative liabilities ( 2,662 ) ( 2,250 ) Deferred income taxes ( 14 ) — Changes in operating assets and liabilities: Other current assets 78 ( 26 ) Tax credit receivable ( 764 ) ( 762 ) Prepaid expenses 415 371 Accounts payable ( 573 ) 1,838 Accrued liabilities 159 282 Income taxes payable ( 2 ) ( 5 ) Operating lease liability — ( 8 ) Net cash used in operating activities ( 8,703 ) ( 5,697 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from ATM sales of common stock, net of issuance costs 27,689 — Net proceeds from sale of common stock and pre-funded warrant issuance — 6,815 Proceeds from Series C Convertible Preferred Stock issuance, net of costs — 1,160 Redemption of Series B Preferred Stock — ( 2 ) Proceeds from 3i promissory notes 1,340 1,050 Repayment of 3i debt and promissory notes ( 1,340 ) ( 3,348 ) Redemption of Series A Preferred Stock — ( 1,652 ) Net cash provided by financing activities 27,689 4,023 Net increase (decrease) in cash 18,986 ( 1,674 ) Effect of exchange rate changes on cash 81 65 Cash and cash equivalents, beginning of period 166 2,029 Cash and cash equivalents, end of period $ 19,233 $ 420 Supplemental information Cash paid for income taxes — 6 Cash paid for interest 408 79 Supplemental disclosure of non-cash investing and financing activities: Conversion of Series A Redeemable Preferred Stock 1,819 3,334 Deemed dividend on Series A Preferred Stock ( 299 ) ( 207 ) Gain on extinguishment of Series A Preferred Stock 222 — Stock issued in conjunction with consulting agreement 90 — Issuance of 2,359,650 common shares on conversion of 3,632,366 3i Exchange Warrants 405 — Issuance of 5,577 Series A Preferred Stock in exchange for Series C Preferred Stock — 5,199 Issuance of Series A Preferred Stock to extinguish $ 350 3i Promissory Note — 453 Deemed dividend on elimination of Series A redemption rights — ( 3,328 ) Deemed dividend on exchange of Series C Preferred Stock for Series A Preferred Stock — ( 3,752 ) Deemed dividend on Series C Convertible Preferred Stock, and accretion of Series C Preferred Stock to redemption value — ( 123 ) See accompanying notes to condensed consolidated financial statements. 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended June 30, 2024 and June 30, 2023 (UNAUDITED) (U.S. dollars in thousands, except for share and per share data and where otherwise noted) 1. Organization, Principal Activities and Basis of Presentation Allarity Therapeutics, Inc. and Subsidiaries (the “Company”) is a clinical stage pharmaceutical company that develops drugs for the personalized treatment of cancer using drug specific companion diagnostics generated by its proprietary drug response predictor technology, DRP ® . Additionally, the Company, through its Danish subsidiary, Allarity Denmark (previously Oncology Venture ApS), specializes in the research and development of anti-cancer drugs. The Company’s principal operations are located at Venlighedsvej 1, 2970 Horsholm, Denmark. The Company’s business address in the Unites States is located at 24 School Street, 2 nd Floor, Boston, MA 02108. (a) Reverse Stock Split On April 9, 2024, the Company effected a 1-for-20 reverse stock split of the shares of its Common Stock (the “Reverse Stock Split”). All historical share and per share amounts reflected throughout the Financial Statements (as defined below in 1(b)) and these notes to the financial statements have been adjusted to reflect the Reverse Stock Split. See Note 9 (a). (b) Liquidity The accompanying unaudited condensed interim consolidated financial statements (the “Financial Statements”) have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Pursuant to the requirements of Accounting Standard Codification (ASC) 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying unaudited interim condensed consolidated financial statements were issued. As a biopharmaceutical organization, the Company has devoted substantially all of its resources since inception to research and development activities for its Drug Response Predictor “DRP” in conjunction with product candidates, business planning, raising capital, establishing its intellectual property portfolio, acquiring or discovering product candidates, and providing general and administrative support for these operations. As a result, the Company has incurred significant operating losses and negative cash flows from operations since its inception and anticipates such losses and negative cash flows will continue for the foreseeable future. Since inception the Company has funded its operations primarily from sales of its stock. The Company has incurred significant losses and has an accumulated deficit of $ 99.9 million as of June 30, 2024. 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 unaudited interim condensed consolidated financial statements, the Company expects that its existing cash and cash equivalents of $ 19.2 million as of June 30, 2024, 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 condensed consolidated financial statements. 7 While the Company believes its capital resources are sufficient to fund the Company’s on-going operations for the next 12 months from the issuance date of these unaudited condensed consolidated financial statements, the Company’s liquidity could be materially affected over this period by: (1) its ability to raise additional capital through equity offerings, debt financings, or other non-dilutive third-party funding; (2) costs associated with new or existing strategic alliances, or licensing and collaboration arrangements; (3) negative regulatory events or unanticipated costs related to the DRP; (4) any other unanticipated material negative events or costs. One or more of these events or costs could materially affect the Company’s liquidity. If the Company is unable to meet its obligations when they become due, the Company may have to delay expenditures, reduce the scope of its research and development programs, or make significant changes to its operating plan. The accompanying unaudited interim condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. (c) Basis of Presentation The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as established by the Financial Accounting Standards Board (the “FASB”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The unaudited interim condensed consolidated financial statements contain all normal and recurring adjustments necessary to state fairly the consolidated balance sheet, results of operations and comprehensive loss, statements of changes in redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows of the Company for the interim periods presented. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the current fiscal year ending December 31, 2024. The financial data presented herein do not include all disclosures required by U.S. GAAP and should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the fiscal years ended December 31, 2023 and 2022, thereto included in the Company’s Annual Report on Form 10-K, as amended (the “Form 10-K”) initially filed with the SEC on March 8, 2024. The preparation of unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates and assumptions. (d) Risks and Uncertainties The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel and collaboration partners, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations, and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval prior to commercialization. Even if the Company’s research and development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. 8 2. Summary of Significant Accounting Policies There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, that are of significance, or potential significance, to the Company. (a) Organization and Principles of Consolidation The financial statements include the accounts of the Company and its wholly owned subsidiaries: Name Country of Incorporation Allarity Acquisition Subsidiary Inc. United States Allarity Therapeutics Europe ApS (formerly Oncology Venture Product Development ApS)* Denmark Allarity Therapeutics Denmark ApS (formerly OV-SPV2 ApS)* Denmark MPI Inc.* (1) United States * Wholly-owned subsidiary of Allarity Acquisition Subsidiary, Inc. (1) In the process of being dissolved because inactive. All intercompany transactions and balances, including unrealized profits from intercompany sales, have been eliminated upon consolidation. (b) Foreign currency and currency translation The functional currency is the currency of the primary economic environment in which an entity’s operations are conducted. The Company and its subsidiaries operate mainly in Denmark and the United States. The functional currencies of the Company’s subsidiaries are their local currency. The Company’s reporting currency is the U.S. dollar. The Company translates the assets and liabilities of its Denmark subsidiaries into the U.S. dollar at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at the average exchange rate in effect during each monthly period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the condensed consolidated statements of changes in stockholders’ equity (deficit) as a component of accumulated other comprehensive loss. Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured into the functional currency at rates of exchange prevailing at the balance sheet dates. Non-monetary assets and liabilities denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing at the date of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net loss for the respective periods. Adjustments that arise from exchange rate translations are included in other comprehensive loss in the condensed consolidated statements of operations and comprehensive loss as incurred. Adjustments that arise from exchange rate translations are included in other comprehensive loss in the consolidated statements of operations and comprehensive loss as incurred. During the three months ended June 30, 2024 and 2023, the Company recorded accumulated foreign currency translation losses of ($ 144 ) and ($ 29 ), respectively. During the six months ended June 30, 2024 and 2023, the Company recorded accumulated foreign currency translation gains / (losses) of ($ 119 ) and $ 55 , respectively. 9 (c) Concentrations of credit risk and of significant suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents in financial institutions in amounts that could exceed government-insured limits. The Company does not believe it is subject to additional credit risks beyond those normally associated with commercial banking relationships. The Company has not experienced losses on its cash and cash equivalents accounts and management believes, based upon the quality of the financial institutions, that the credit risk regarding these deposits is not significant. The Company is dependent on third-party manufacturers to supply products for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply its requirements for supplies and raw materials related to these programs. These programs could be adversely affected by a significant interruption in these manufacturing services or the availability of raw materials. (d) Cash and cash equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains deposits primarily in financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”). The Company has not experienced any losses related to amounts in excess of FDIC limits. (e) Accumulated other comprehensive loss Accumulated other comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with shareholders. The Company records unrealized gains and losses related to foreign currency translation and instrument specific credit risk as components of other accumulated comprehensive loss in the condensed consolidated statements of operations and comprehensive loss. During the three and six months ended June 30, 2024, and 2023, the Company’s other comprehensive gain was comprised of currency translation adjustments. (g) Reclassification During the six months ended June 30, 2023, we have reclassified financing costs of $ 9 from other income and expenses to general and administrative expenses with no net impact upon our operating results or cash flows for either the current or prior periods. (h) Recently Issued Accounting Pronouncements Changes to U.S. GAAP are established by the FASB in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. All ASUs issued through the date of the Financial Statements were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s condensed consolidated financial position and results of operations. 3. Intangible assets During the six months ended June 30, 2024, because no impairment indicators were identified no impairment analysis was performed at June 30, 2024. The Company’s IPR&D assets have been classified as indefinite-lived intangible assets. The Company’s individual material development project in progress, Stenoparib, is recorded at $ 9,557 and $ 9,871 on June 30, 2024, and December 31, 2023, respectively. 10 4. Accrued liabilities The Company’s accrued liabilities are comprised of the following: June 30, 2024 December 31, 2023 Development cost liability $ 214 $ 114 Accrued interest on milestone liabilities 192 101 Accrued audit and legal 660 425 Payroll accruals 298 398 Accrued consulting fees — 150 Other 101 121 $ 1,465 $ 1,309 5. Convertible promissory note due to Novartis On January 26, 2024, we received a termination notice from Novartis Pharma AG, a company organized under the laws of Switzerland (“Novartis”) due to a material breach of that certain license agreement dated April 6, 2018, as amended to date (the “License Agreement”). Accordingly, under the terms of the License Agreement, the Company ceased all development and commercialization activities with respect to all licensed products, all rights and licenses granted by Novartis to the Company reverted to Novartis; and all liabilities due to Novartis became immediately due and payable inclusive of interest which is continuing to accrue at 5 % per annum. As of June 30, 2024, the liability is recorded as a current liability on the Company’s condensed unaudited consolidated balance sheets as follows: $ 3,600 in accounts payable, $ 1,325 convertible promissory notes and accrued interest, net of debt discount, and $ 192 in accrued liabilities. 6. Convertible senior promissory notes due to 3i, LP (3i”) (a) 3i Convertible Senior Promissory Notes (2024) (collectively the “2024 Notes”) During the three months ended March 31, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”), as amended, with 3i, pursuant to which three senior convertible promissory notes were issued as follows: i. On January 18, 2024, in an aggregate principal amount of $ 440 due on January 18, 2025, and with a set conversion price of $ 8.95 per share, for an aggregate purchase price of $ 400 , representing an approximate 10 % original issue discount (the “First Note”). ii. On February 13, 2024, in an aggregate principal amount of $ 440 due on February 13, 2025, and with a set conversion price of $ 8.10 per share, for an aggregate purchase price of $ 400 , representing an approximately 10 % original issue discount (the “Second Note”). iii. On March 14, 2024, in an aggregate principal amount of $ 660 due on March 14, 2025, and with a set conversion price of $ 7.00 per share, for an aggregate purchase price of $ 600 , representing an approximately 10 % original issue discount (the “Third Note”). The Company agreed to use the net proceeds from the sale of the 2024 Notes, among other things, for accounts payable and for working capital purposes. Unless the transaction documents state otherwise, the Company may not prepay any portion of the principal amount of the 2024 Notes without 3i’s prior written consent. 11 The Company agreed to pay interest to 3i on the aggregate unconverted and then outstanding principal amount of the 2024 Notes at the rate of 8 % per annum with interest payments commencing one month after the initial receipt of net proceeds. The interest on each of the 2024 Notes is payable in cash or, at the 3i’s option, in shares of our Common Stock, at 90 % of the lowest VWAP during the previous ten trading days that is immediately prior to the interest payment dates. Under the terms of the 2024 Notes, 3i has the exclusive right to choose whether to receive interest payments in cash or as shares of our Common Stock. Redemption Subject to the provisions of the 2024 Notes, if, at any time while the 2024 Notes are outstanding, the Company engages in one or more subsequent financings, 3i may require us to first use up to 100 % of the gross proceeds of such financing to redeem all or a portion of the 2024 Notes at 105 %. However, if the Company were to raise capital in the ATM Offering, 3i may request up to 20 % of the proceeds to redeem the Series A Convertible Preferred Stock (the “Series A Preferred Stock”) at the stated value. The 2024 Notes and accrued interest were redeemed in full and cancelled on May 6, 2024. (b) 3i Convertible Secured Promissory Notes (2023) On November 22, 2022, the Company entered into a Secured Note Purchase Agreement (“Purchase Agreement”) with 3i, whereby the Company authorized the sale and issuance of three Secured Promissory Notes (each a “Note” and collectively, the “Notes”). Effective November 28, 2022, the Company issued: (1) a Note in the principal amount of $ 1,667 as payment of $ 1,667 due to 3i in Alternative Conversion Floor Amounts (as defined in the Notes) that began to accrue on July 14, 2022; and (2) a Note in the principal amount of $ 350 in exchange for cash. Effective December 30, 2022, the Company issued an additional Note in the principal amount of $ 650 in exchange for cash. Each Note matured on January 1, 2024 , carried an interest rate of 5 % per annum, and was secured by all of the Company’s assets pursuant to a security agreement (the “Security Agreement”). In addition, the Holder may exchange the Notes for the Company’s shares of Common Stock at an exchange price equal to the lowest price per share of the equity security sold to other purchasers, rounded down to the nearest whole share, if the Company concludes a future equity financing prior to the maturity date or other repayment of such promissory note. Lastly, each Note and interest earned thereon may be redeemed by the Company at its option at any time or the holder may demand redemption if a) the Company obtains gross proceeds of at least $ 5 million in a financing in an amount of up to 35 % of the gross proceeds of the financing or b) there is an Event of Default (as defined in the Note agreement). Discounts to the principal amounts are included in the carrying value of the Notes and amortized to interest expense over the contractual term of the underlying debt. The Company recorded a $ 34 debt discount upon issuance of the Notes related to legal fees paid that were capitalized as debt issuance costs. For the six months ended June 30, 2023, interest expense totaled $ 43 , comprised of $ 33 for contractual interest and $ 10 for the amortization of the debt discount. The 3i Convertible Secured Promissory Notes were paid in full and cancelled on April 21, 2023. 12 7. Preferred Stock A. Series A Convertible Preferred Stock and Common Stock Purchase Warrants (a) Amendments to Series A Convertible Preferred Stock i. Determination of Conversion Price Adjustments for Series A Preferred Stock On December 9, 2022, the Company and 3i entered into a letter agreement (the “2022 Letter Agreement”) which provided that pursuant to Section 8(g) of the Company’s Certificate of Designations for the Series A Preferred Stock (the “COD”), the Company and 3i agreed that the Conversion Price (as defined in the COD) was modified to mean the lower of: (i) the Closing Sale Price (as defined in the COD) on the trading date immediately preceding the Conversion Date (as defined in the COD) and (ii) the average Closing Sale Price (as defined in the COD) of the common stock for the five trading days immediately preceding the Conversion Date (as defined in the COD), for the Trading Days (as defined in the COD) through and inclusive of January 19, 2023. Any conversion which occurs shall be voluntary at the election of 3i, which shall evidence its election as to the Series A Preferred Stock being converted in writing on a conversion notice setting forth the then Minimum Price (as defined in the COD). Management determined that the adjustment made to the Conversion Price is not a modification of the COD which allows for adjustments to the Conversion Price (as defined in the COD) at any time by the Company and the other terms of the COD remained unchanged. On January 23, 2023, the Company and 3i amended the 2022 Letter Agreement, to provide that the modification of the term Series A Preferred Stock Conversion Price (the “Series A Preferred Stock Conversion Price”) to mean the lower of: (i) the Closing Sale Price (as defined in the COD) on the trading date immediately preceding the Conversion Date (as defined in the COD and (ii) the average Closing Sale Price (as defined in the COD) of the Company’s shares of Common Stock for the five trading days immediately preceding the Conversion Date (as defined in the COD), for the Trading Days (as defined in the COD) will be in effect until terminated by the Company and 3i. ii. Modification to Conversion Price of Series A Preferred Stock and 3i Exchange Warrants On January 14, 2024, pursuant to the terms of the First Note, the Company modified the conversion price of the 3i Exchange Warrants from $ 20.00 to $ 8.95 , thereby increasing the number of Exchange Warrants outstanding from 220,361 at December 31, 2023 to 492,317 outstanding at January 14, 2024. Also on January 14, 2024, the conversion price of the outstanding 1,417 shares of Series A Preferred Stock was revised from $ 20.00 to $ 8.95 . The Company filed the Fifth Certificate of Amendment to Amended and Restated COD (the “Fifth Amendment”) with the Secretary of State of the State of Delaware to reflect the new conversion price of the Series A Preferred Stock of $ 8.95 . As of January 14, 2024, the Company used the Black-Scholes option pricing model to determine the fair value of the 1,417 Series A Preferred Stock outstanding at $ 1,970 versus their carrying value of $ 1,742 . Accordingly, the Company has recorded a deemed dividend of $ 228 as at January 14, 2024. At a stated value of $ 1,080 for each share of Series A Preferred Stock, the revised price of $ 8.95 per share results in the 1,417 shares being convertible into 170,952 shares of Common Stock as of January 14, 2024. On February 13, 2024, pursuant to the terms of the Second Note, the Company modified the conversion price of the 3i Exchange Warrants from $ 8.95 to $ 8.10 and thereby increased the number of Exchange Warrants outstanding from 492,317 on January 18, 2024, to 544,101 on February 13, 2024. The Company filed the Sixth Certificate of Amendment to Amended and Restated COD (the “Sixth Amendment”) with the Secretary of State of the State of Delaware to reflect the new conversion price of the Series A Preferred Stock of $ 8.10 . As of February 14, 2024, the Company used the Black-Scholes option pricing model to determine the fair value of the then 1,296 Series A Preferred Stock outstanding and concluded there was a gain on extinguishment of $ 122 . At a stated value of $ 1,080 for each share of Series A Preferred Stock, the revised price of $ 8.10 per share results in the 1,296 shares being convertible into 493,573 shares of Common Stock. 13 On March 14, 2024, pursuant to the terms of the Third Note, the Company modified the conversion price of the 3i Exchange Warrants from $ 8.10 to $ 7.00 and thereby increased the number of Exchange Warrants outstanding from 544,101 on February 13, 2024, to 829,423 on March 14, 2024. The Company filed the Seventh Certificate of Amendment to Amended and Restated COD (the “Seventh Amendment”) with the Secretary of State of the State of Delaware to reflect the new conversion price of the Series A Preferred Stock of $ 7.00 . As of March 14, 2024, the Company used the Black-Scholes option pricing model to determine the fair value of the then 1,296 Series A Preferred Stock outstanding and concluded there was a gain on extinguishment of $ 69 . At a stated value of $ 1,080 for each share of Series A Preferred Stock, the revised price of $ 7.00 per share results in the 1,215 shares being convertible into 535,286 shares of Common Stock. During the period April 1, 2024, through May 2, 2024, the Company amended the conversion prices of the Series A Convertible Preferred Stock, the Exchange Warrants and the 2024 Notes to equal the current last sale price of its shares of Common Stock of $ 1.15 as of May 1, 2024. (b) Accounting i. Series A Preferred Stock As a result of fair value adjustments during the six-month period ended June 30, 2024, the Company recognized a deemed dividend of $ 299 and an extinguishment gain of $ 222 on our outstanding Series A Preferred Stock. Inputs used in the Black-Scholes valuation models utilized to fair value the modifications to the Series A Preferred Stock during the six-month period ended June 30, 2024, are as follows: January 14 – March 14, 2024 April 5 – May 2, 2024 Initial exercise price $ 20.00 - $ 8.10 $ 7.00 - $ 1.15 Stock price on valuation date $ 8.95 - $ 7.10 $ 4.52 - $ 1.23 Risk-free rate 5.10 % - 4.82 % 5.47 % - 5.49 % Term (in years) 0.25 – 0.08 0.08 – 0.01 Rounded annual volatility 145 % - 130 % 110 % iii. 3i Exchange Warrants The 3i Exchange Warrants were identified as a freestanding financial instrument and meet the criteria for derivative liability classification, initially measured at fair value. Subsequent changes in fair value are recognized through earnings for as long as the contracts continue to be classified as a liability. The measurement of fair value is determined utilizing an appropriate valuation model considering all relevant assumptions current at the date of issuance and at each reporting period (i.e., share price, exercise price, term, volatility, risk-free rate and expected dividend rate). (c) Series A Preferred Stock and 3i Exchange Warrant Conversions i. Six month period ended June 30, 2024 During the six-month period ended June 30, 2024: (a) 3i exercised its option to convert 1,417 shares of Series A Preferred Stock for 479,223 shares of common stock at the fair value of $ 1,819 . As of June 30, 2024, there were no issued and outstanding shares of Series A Preferred Stock; and (b) 3i exercised its option to convert 3,632,366 3i Exchange Warrants for 2,359,650 shares of common stock valued at $ 405 . As of June 30, 2024, there were no issued and outstanding 3i Exchange Warrants. 14 i. Six month period ended June 30, 2023 During the six-month period ended June 30, 2023, 3i exercised its option to convert 12,052 shares of Series A Preferred stock for 202,002 shares of common stock valued at $ 3,899 . As of June 30, 2023, there were 6,047 issued and outstanding shares of Series A Preferred Stock. The accounting for the Series A Preferred Stock and Warrants is illustrated in the tables below: Consolidated Balance Sheets Consolidated Statement of Operations & Comprehensive Loss Warrant Derivative liability Series A Preferred Stock Common Stock Additional paid-in capital Fair value adjustment to derivative and warrant liabilities Balances, December 31, 2023 $ 3,083 $ 1,742 $ — $ ( 7,208 ) $ — Conversion of 202 Series A Preferred Stock, net — ( 269 ) — 269 — Extinguishment of Series A Preferred Stock ( 191 ) 191 Deemed dividend on January 14, 2024, modification — 228 — ( 228 ) — Fair value adjustment ( 419 ) — — — 419 Balances, March 31, 2024 2,664 1,510 — ( 6,976 ) 419 Conversion of 1,215 Series A Preferred Stock, net — ( 1,550 ) — 1,550 — Extinguishment of Series A Preferred Stock — ( 31 ) — 31 — Deemed dividend on modification of Series A Preferred Stock — 71 — ( 71 ) — Cashless exercise of 3i Exchange Warrants ( 405 ) — — 405 — Fair value adjustment ( 2,243 ) — — — 2,243 Balances, June 30, 2024 $ 16 $ — $ — $ ( 5,061 ) $ 2,662 Consolidated Balance Sheets Consolidated Statement of Operations & Comprehensive Loss Warrant liability Series A Convertible Preferred Stock – Mezzanine Equity Series A Preferred Stock Additional paid-in capital Fair value adjustment to derivative and warrant liabilities Balances, December 31, 2022 $ 374 $ 2,001 $ — $ ( 3,756 ) $ — Conversion of 3,838 Series A Preferred Stock, net — ( 565 ) — 575 — Fair value adjustment ( 309 ) — — — 309 Balances, March 31, 2023 65 1,436 — ( 3,181 ) 309 Conversion of 8,214 Series A Preferred Stock — ( 812 ) ( 2,522 ) 3,334 — Elimination of redemption rights on Series A Preferred stock; deemed dividend of $ 3,328 — ( 624 ) 3,952 ( 3,328 ) — Redemption of 1,550 Series A Preferred Stock — — ( 1,445 ) — — Issuance of 486 Series A Preferred stock as repayment of $ 350 debt; $ 103 charged to interest expense — — 453 — — Exchange of 50,000 Series C Preferred Stock for 5,577 Series A Preferred Stock; deemed dividend of $ 3,959 — — 5,199 ( 3,959 ) — Fair value adjustment 1,078 — — — ( 1,078 ) Balances, June 30, 2023 $ 1,143 $ — $ 5,637 $ ( 7,134 ) $ ( 769 ) 15 B. Series C Convertible Preferred Stock On February 28, 2023, the Company entered into a Securities Purchase Agreement (the “2023 SPA”) with 3i for the purchase and sale of 50,000 shares of Series C Convertible Redeemable Preferred Stock (“Series C Preferred Stock”) at a purchase price of $ 24.00 per share, for a subscription receivable in the aggregate amount equal to the total purchase price of $ 1.2 million (the “Series C Offering”). The 50,000 shares of Series C Preferred Stock (the “Shares”) are convertible into shares of the Company’s Common Stock, subject to the terms of the Series C Certificate of Designation (“Series C COD”). The Company evaluated the terms of the Series C Preferred Stock as required pursuant to ASC 570, 480, 815 and ASU 2020-06, and concluded the Series C Preferred Stock will be recorded at fair value of $ 1,200 , net of share issuance costs of $ 40 , and accreted to redemption value of $ 1,485 on April 21, 2023, using the effective interest method. The Company will also accrue dividends of 5 %. The roll forward of the Series C Preferred Stock as of June 30, 2023, is as follows: June 30, 2023 Series C Preferred Stock, cash received $ 1,200 Less debt discount, opening ( 40 ) Plus, 5 % dividend and accretion 286 1,446 Exchange of Series C Preferred stock for Series A Preferred stock ( 1,446 ) Series C Preferred Stock – net, ending balance $ — 8. Derivative Liabilities (a) Continuity of Common Share Purchase Warrant and 3i Warrant Derivative Liabilities The Common Share Purchase Warrants, comprised of the April 2023, July 2023 and September 2023 Inducement Warrants, and 3i Exchange Warrant derivative liabilities are measured at fair value at each reporting period and the reconciliation of changes in fair value for the year ended December 31, 2023, and for the six-month period ended June 30, 2024, is presented in the following tables: Common Share Purchase Warrants 3i Exchange Warrants Balance as of January 1, 2023 $ — $ 374 Issuance date fair value of April, July & September 2023 Common share purchase warrants 15,161 — Modifications to fair value upon exercise 592 — Change in fair value adjustment of derivative and warrant liabilities ( 11,911 ) 1,477 Amount transferred to Equity ( 1,579 ) ( 1,031 ) Balance as of December 31, 2023 $ 2,263 $ 820 Fair value per Common warrant / 3i Warrant / issuable at December 31, 2023 $ 8.82 $ 3.80 16 Common Share Purchase Warrants 3i Exchange Warrants Balance as of January 1, 2024 $ 2,263 $ 820 Change in fair value adjustment of derivative and warrant liabilities ( 2,247 ) ( 415 ) Cashless conversion of 3i Exchange Warrants — ( 405 ) Balance as of June 30, 2024 $ 16 $ — Fair value per Common warrant issuable at June 30, 2024 $ 0.06 $ — (b) Common Share Purchase Warrants – Valuation Inputs On June 30, 2024, the Company used the Black-Scholes Merton model to estimate the fair value of the Common Share Purchase Warrants derivative liability at $ 16 , using the following inputs: April 2023 Warrants July 2023 Warrants September 2023 Inducement Warrants Initial exercise price $ 20.00 $ 20.00 $ 20.00 Stock price on valuation date $ 0.21 0.221 0.21 Risk-free rate 4.42 % 4.42 % 4.42 % Term (in years) 4.03 4.03 4.73 Rounded annual volatility 124 % 124 % 124 % (c) 3i Exchange Warrants – Valuation Inputs On June 30, 2023, the Company utilized the reset strike options Type 2 model by Espen Garder Haug and Black-Scholes Merton models to estimate the fair value of the 3i Warrants to be approximately $ 1,143 and $ 374 , respectively. The 3i Warrants were valued at June 30, 2023, using the following inputs: June 30, 2023 Initial exercise price $ 30.00 Stock price on valuation date $ 6.60 Risk-free rate 5.02 % Expected life of the Warrant to convert (years) 1.48 Rounded annual volatility 187 % Timing of liquidity event Q3 - 2023 Expected probability of event 10 % 17 9. Stockholders’ Equity (a) Amendment to Certificate of Incorporation – Reverse Share Split On April 4, 2024, the Company filed a Fifth Certificate of Amendment to the Certificate of Incorporation with the Delaware Secretary of State to effect a 1-for-20 share consolidation of our shares of Common Stock effective as of April 9, 2024 (“Share Consolidation”). No fractional shares were issued in connection with the Share Consolidation. If, as a result of the Share Consolidation, a stockholder would otherwise have been entitled to a fractional share, each fractional share was rounded up to the next whole number. The Share Consolidation resulted in a reduction of our outstanding shares of Common Stock as of March 31, 2024, from 6,854,604 to 342,774 . The par value of our authorized stock remained unchanged at $ 0.0001 . As of the date of the unaudited interim condensed consolidated financial statements all references to our Common Stock have been retrospectively adjusted to reflect the one for 20 shares, unless otherwise noted. The Company is authorized to issue 750,500,000 shares, consisting of (i) 750,000,000 shares of Common Stock, par value $ 0.0001 per share, and (ii) 500,000 shares of Preferred Stock, par value of $ 0.0001 per share. (b) Share issuances i. Three month period ended June 30, 2024 During the three month period ended June 30, 2024: (a) On March 19, 2024, the Company entered into an open market sale agreement (as amended, the “ATM Agreement”) with Ascendiant Capital (“Ascendiant”) pursuant to which, the Company may sell from time to time, through Ascendiant, shares of its common stock for an aggregate sales price of up to $ 30.0 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. During the three month period ended June 30, 2024, the Company issued and sold 31,884,641 shares of Common Stock resulting in gross proceeds of $ 27,652 , net of fees of $ 855 , pursuant to the terms of its ATM Agreement; (b) 3i exercised its option to convert 1,215 shares of Series A Preferred Stock for 27,092 shares of Common Stock at the fair value of $ 1,510 . As of June 30, 2024, there were no shares of Series A Preferred Stock issued and outstanding; and (c) 3i converted 200,000 Exchange Warrants on a cashless basis for 84,712 shares of Common Stock at $ 2.30 per share on April 12, 2024, and 3,432,366 Exchange Warrants at $ 1.15 per share for 2,274,938 shares of Common Stock on May 2, 2024. As June 30, 2024, there are no outstanding Exchange Warrants. ii. Three month period ended June 30, 2023 During the three months ended June 30, 2023, the Company issued: (a) 11,210 shares of common stock valued at $ 3,334 upon the conversion of 8,214 shares of Series A Preferred stock; and (b) 3,587 shares of our Common Stock and 3,587 common stock purchase warrants, each exercisable for one share of Common Stock, at a combined public offering price of $ 600.00 , and 8,913 pre-funded warrants, each exercisable for one share of Common Stock, and 8,913 common stock purchase warrants, each exercisable for one share of common stock only (the common stock purchase warrants sold in the public offing hereinafter referred to as the “April 2023 Common Warrants”) at a combined public offering price of $ 600.00 less the $ 0.001 for the pre-funded warrants, for aggregate gross proceeds of approximately $ 7.5 million, before deducting placement agents fees and offering expenses payable by the Company, or the April Offering. The Common Stock, pre-funded warrant and April 2023 Common Warrants were sold pursuant to a securities purchase agreement with the purchaser signatory thereto or pursuant to the prospectus which was part of an effective registration statement on Form S-1 filed with the SEC. The Common Stock, pre-funded warrants and April 2023 Common Warrants are immediately separable and were issued separately in the offering. As of June 30, 2023, all pre-funded warrants from the April Offering have been exercised in exchange for 12,500 common shares. 18 iii. Six month period ended June 30, 2024 During the six months ended June 30, 2024: (a) 3i exercised its option to convert 1,417 shares of Series A Preferred Stock for 479,223 shares of Common Stock at the fair value of $ 1,819 . As of June 30, 2024 there are no remaining Series A Preferred Stock issued and outstanding. (b) The Company issued 14,500 shares of Common Stock valued at $ 90 to James G. Cullem (the Company’s former CEO) in exchange for consulting services; and (c) the Company issued and sold 31,891,433 shares of Common Stock resulting in gross proceeds of $ 27,692 , net of $ 857 in fees pursuant to the terms of its ATM Agreement. iv. Six month period ended June 30, 2023 During the six months ended June 30, 2023, the Company issued 241,893 shares of common stock valued at $ 3,899 upon the conversion of 12,052 shares of Series A Preferred Stock; and 250,000 shares of Common Stock as a result of its April Public Offering of 71,734 shares of our Common Stock and the exercise of 178,267 pre-funded warrants. 10. Stock-based payment plan and stock-based payments Amended and Restated 2021 Equity Incentive Plan (the “Plan”) During the six months ended June 30, 2024, pursuant to approval by the Company’s Board of Directors, the Company has amended and restated the Plan as follows: i. Number of shares available: increased the number of shares reserved and available for grant and issuance pursuant to the Plan to 108,416 Shares, plus an amount derived by the difference between 15 % of the Company’s issued and outstanding shares of Common Stock issued in the Company’s Recapitalization Share Exchange covered by the Company’s registration statement on Form S-4 (SEC File No. 333-258968) and 108,416 Shares. ii. Automatic Share Reserve Increase: The number of Shares available for grant and issuance under the Plan will be increased on January 1 st of each of 2022 through 2031, by the lesser of (a) 5 % of the number of shares of all classes of the Company’s common stock issued and outstanding on each December 31 immediately prior to the date of increase or (b) such number of Shares determined by the Board. 19 Stock-based payments During the three months ended June 30, 2024, total stock-based payment expenses recorded in the condensed consolidated statement of operations and comprehensive loss were $ 22 , of which $ 14 and $ 8 are recognized as general and administrative and research and development recoveries, respectively. During the three months ended June 30, 2023, total stock-based payment expenses recorded in the condensed consolidated statement of operations and comprehensive loss were $ 180 , of which $ 59 and $ 121 are recognized as general and administrative and research and development recoveries, respectively. During the six months ended June 30, 2024, total stock-based (recoveries) recognized in the condensed consolidated statement of operations and comprehensive loss were ($ 10 ), of which ($ 7 ) and ($ 3 ) are recognized as staffing expenses in general and administrative and research and development expenses, respectively. During the six months ended June 30, 2023, total stock-based expenses recognized in the condensed consolidated statement of operations and comprehensive loss were $ 59 of which $ 20 and $ 39 are recognized as staffing expenses in general and administrative and research and development expenses, respectively. Total compensation cost for non-vested warrants as at June 30, 2024, is $ 14 and is expected to be realized through the end of September 30, 2025. During the six-month periods ended June 30, 2024 and 2023, no options were granted. A summary of stock option activity under the Company’s stock option plans during the six-month period ended June 30, 2024, is presented below: Options Outstanding Number of Shares Weighted Average Exercise Price Share Weighted Average Life (in years) Outstanding December 31, 2023 19 $ 157,520 3.16 Cancelled or expired ( 8 ) 186,504 — Outstanding as of June 30, 2024 11 $ 104,354 2.59 Options exercisable at June 30, 2024 11 $ 27,524 2.55 11. License and Development Agreements (a) License Agreement with Novartis for Dovitinib On January 26, 2024, the Company received a termination notice from Novartis due to a material breach of the License Agreement. Accordingly, under the terms of the License Agreement, the Company ceased all development and commercialization activities with respect to all licensed products, all rights and licenses granted by Novartis to the Company reverted to Novartis; and all liabilities due to Novartis became immediately due and payable inclusive of interest which is continuing to accrue at 5 % per annum. As of June 30, 2024, the liability is recorded as a current liability on the Company’s condensed unaudited consolidated balance sheets as follows: $ 3,600 in accounts payable, $ 1,325 convertible promissory notes and accrued interest, net of debt discount, and $ 192 in accrued liabilities. 20 (b) License Agreement with Eisai Inc. for Stenoparib The Company holds the exclusive worldwide rights to all preventative, therapeutic and/or diagnostic uses related to cancer in humans and by amendment to the agreement on December 11, 2020, viral infections in humans (including, but not limited to, coronaviruses) for Stenoparib from Eisai, Inc. (“Eisai”) pursuant to a license agreement (the “Eisai License Agreement”). Pursuant to the Eisai License Agreement, the Company is solely responsible for the development of Stenoparib during the term of the Eisai License Agreement. Eisai License Agreement also provides for a joint development committee consisting of six members, three appointed by us and three appointed by Eisai. One of the Company’s members of the joint development committee is designated chair of the committee and has the power to break any deadlock in decisions by the committee that must be made by a majority vote with each representative having one vote. The purpose of the committee is to implement and oversee development activities for Stenoparib pursuant to the clinical development plan, serving as a forum for exchanging data, information and development strategy. Effective July 12, 2022, the Company’s July 6, 2017 Exclusive License Agreement with Eisai Inc. (the “Third Amendment”), the terms of the original exclusive license were further amended in order to (1) further postpone the due date of the extension payment and extend the deadline for the Company’s successful completion of its first Phase 1b or Phase 2 clinical trial for Stenoparib beyond December 31, 2022; and (2) amend terms related to Eisai’s right of termination of development. On May 26, 2023, the Company and Eisai entered into a fourth amendment to the Exclusive License Agreement with an effective date of May 16, 2023, to postpone the extension payment, restructure the payment schedule and extend the deadline to complete enrollment in a further Phase 1b or Phase 2 Clinical Trial for the Stenoparib. The Company agreed to pay Eisai in periodic payments as follows: (i) $ 100 , which has been paid; (ii) $ 50 within 10 days of execution of the fourth amendment, which has been paid; (iii) $ 100 upon completion of a capital raise, which has been paid; and (iv) $ 850 on or before March 1, 2024. On February 26, 2024, in exchange for an additional $ 150 , paid as of May 1, 2024, the Company and Eisai entered into a fifth amendment to the Exclusive License Agreement to postpone the payment of $ 850 by no later than September 1, 2024. The Company is currently in negotiations with Eisai to further amend the terms of its Exclusive License. Development Milestone Payments The Company has agreed to make milestone payments to Eisai in connection with the development of Stenoparib by the Company or its affiliates, or by a third-party program acquirer that assumes control of the Stenoparib development program from the Company corresponding to: (i) successful completion of a Phase 2 clinical trial; (ii) upon dosing of the first patient in the first Phase 3 clinical trial; (iii) upon submission of the first NDA with the FDA; (iv) submission of an MAA to the EMA; (v) submission of an NDA to the MHLW in Japan; (vi) upon receipt of authorization by the FDA to market and sell a licensed product; (vii) upon receipt of approval of an MAA by the EMA for a licensed product; and (viii) upon receipt of approval by the MHLW in Japan for a licensed product. If all milestones have been achieved, the Company may be obligated to pay Eisai up to a maximum of $ 94 million. In addition, the Company has agreed to pay Eisai a one-time sales milestone payment in the amount of $ 50 million the first time the Company’s annual sales of licensed product is $ 1 billion or more. Royalty Payments In addition to the milestone payments described above, the Company has agreed to pay Eisai royalties based on annual incremental sales of product derived from Stenoparib in an amount between 5 % and 10 % of annual sales of between $ 0 and $ 100 million, between 6 % and 10 % of annual sales between $ 100 million and $ 250 million, between 7 % and 11 % of annual sales between $ 250 million and $ 500 million, and between 11 % and 15 % of annual sales in excess of $ 500 million. The Company is obligated to pay royalties under the agreement on a country-by-country and product-by-product basis for a period that commences with the first commercial sale of a product until the later of (i) the expiration of the last to expire valid claim of any licensed patent covering such licensed product in such country; or, (ii) the expiration of regulatory-based exclusivity for such licensed product in such country or (iii) the 15 year anniversary of the date of first commercial sale of such licensed product in such country. However, the agreement may be terminated sooner without cause by the Company upon 120 days prior written notice, or upon written notice of a material breach of the agreement by Eisai that is not cured within 90 days (30 days for a payment default). Eisai also has the right to terminate the agreement upon written notice of a material breach of the agreement by the Company that is not cured within 90 days (30 days for a payment default) or if the Company files for bankruptcy. As of the date of this filing, the Company is currently renegotiating the terms of its Exclusive License with Eisai. 21 Option to Reacquire Rights to Stenoparib For the period commencing with enrollment of the first five patients in a Phase 2 clinical trial pursuant to the clinical development plan and ending 90 days following successful completion of such Phase 2 clinical trial, Eisai has the option to reacquire our licensed rights to develop Stenoparib for a purchase price equal to the fair market value of our rights, giving effect to the stage of development of Stenoparib that we have completed under the agreement. The Company commenced a Phase 2 clinical trial April 15, 2019, and as of the date of the Financial Statements, Eisai has not indicated an intention to exercise its repurchase option. 12. Related party During the six month periods June 30, 2024 and 2023, a director of the Company was paid $ 192 and $ 77 respectively, in fees as a consultant. Effective June 1, 2024, the Company executed a Chief Executive Officer Management Services Agreement with the Consultant in consideration for $ 525 per year and $ 100 as a signing bonus, which was paid in June 2024. 13. Loss per share of common stock Basic loss per share is derived by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, of the potential exercise or conversion of securities, such as warrants and stock options, which would result in the issuance of incremental shares of common stock unless such effect is anti-dilutive. In calculating the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remained the same for both calculations because when a net loss exists, dilutive shares are not included in the calculation. Potentially dilutive securities outstanding, as determined by the latest applicable conversion price, that have been excluded from diluted loss per share due to being anti-dilutive include the following: Three- and six-months ended June 30, June 30, 2024 2023 Warrants and stock options 256,678 28,275 Series A Convertible Preferred stock — 40,817 256,678 69,092 14. Financial Instruments The following tables present information about the Company’s financial instruments measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values: Fair Value Measurements as of June 30, 2024, Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ ( 16 ) $ ( 16 ) $ — $ — $ ( 16 ) $ ( 16 ) Fair Value Measurements as of December 31, 2023, Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ ( 2,263 ) $ ( 2,263 ) Derivative warrant liability — — ( 820 ) ( 820 ) $ — $ — $ ( 3,083 ) $ ( 3,083 ) 22 Methods used to estimate the fair values of our financial instruments, not disclosed elsewhere in the Financial Statements, are as follows: When available, the Company’s marketable securities are valued using quoted prices for identical instruments in active markets. If the Company is unable to value its marketable securities using quoted prices for identical instruments in active markets, the Company values its investments using broker reports that utilize quoted market prices for comparable instruments. The Company has no financial assets or liabilities measured using Level 2 inputs. Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. The Company recognizes its derivative liabilities as Level 3 and values its derivatives using the methods described in Note 8. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using terms in the notes that are subject to volatility and market price of the underlying shares of Common Stock. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the date the actual event or change in circumstances that caused the transfer occurs. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. There were no transfers between Level 1 or Level 2 during the six-month periods ended June 30, 2024 and 2023. 15. Commitments and Contingencies (a) SEC Investigation On July 19, 2024, the Company received a “Wells Notice” from the Staff of the SEC relating to the Company’s previously disclosed SEC investigation. The Wells Notice relates to the Company’s disclosures regarding meetings with the United States Food and Drug Administration (the “FDA”) regarding the Company’s NDA for Dovitinib or Dovitinib-DRP, which was submitted to the FDA in 2021. The Company understands that all conduct relating to the SEC Wells Notice occurred during or prior to fiscal year 2022. The Company also understands that three of its former officers received Wells Notices from the SEC relating to the same conduct. A Wells Notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law. The Wells Notice informed the Company that the SEC Staff has made a preliminary determination to recommend that the SEC file an enforcement action against the Company that would allege certain violations of the federal securities laws. The Company is continuing to cooperate with the SEC and maintains that its actions were appropriate, and intends to pursue the Wells Notice process, including submitting a formal response to the SEC. (b) Nasdaq Delisting Notifications On June 18, 2024, the Company received a letter from the Nasdaq Listing Qualifications Staff (the “Staff”) of Nasdaq indicating that the Company has not complied with the Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”) which is the requirement that for 30 consecutive business days the bid price for the Company’s common stock close above the $ 1 per share minimum bid price requirement for continued inclusion on the Nasdaq Capital Market. On July 30, 2024, the Company attended a hearing before a Nasdaq Hearings Panel and presented its plan for regaining compliance with the Bid Price Rule. Nasdaq has advised the Company to expect to receive a ruling within two weeks of July 30, 2024. 16. Subsequent Events For the Financial Statements, and for the six months then ended, the Company evaluated subsequent events through the date on which the Financial Statements were issued. All subsequent events not disclosed elsewhere in this Quarterly Report are disclosed below. (a) ATM Offering – Sales During the period July 1, 2024 through August 5, 2024, the Company has sold 7,340,312 shares of its Common Stock for net proceeds of $ 1,404 . 23