What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-01-10 compared with 2024-01-16 · 219 added, 190 removed, 11 unchanged (97% of the section changed)

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

reviewing Management’s Discussion and Analysis of Financial Condition and Results of Operations, you should refer to our Consolidated

Financial Statements and the notes related thereto.

of Operations

Year ended October 31, 2023 compared with Fiscal Year ended October 31, 2022

fiscal year 2023, we recorded revenue of approximately $210,000 from one license agreement related to our encrypted audio/video conference

calling technology.

The license agreement provided for a one-time, non-recurring, lump sum payment in exchange for a non-exclusive retroactive

and future license, and covenant not to sue.

Pursuant to the terms of the agreement, we have no further obligations with respect to the

granted intellectual property rights, including no obligation to maintain or upgrade the technology, or provide future support or services.

Accordingly, the performance obligations from the license were satisfied and 100% of the revenue was recognized upon execution of the

license agreement.

We did not have any revenue in fiscal year 2022.

the past several years, our revenue, if any, was derived from technology licensing and the sale of patented technologies, including revenue

from the settlement of litigation.

As part of our legacy operations, the Company remains engaged in limited patent licensing activities

in the area of encrypted audio/video conference calling.

We do not expect these activities to be a significant part of the Company’s

ongoing operations, nor do we expect these activities to require material financial resources or attention of senior management.

have not generated any revenue to date from our therapeutics or vaccine programs.

In addition, while we pursue our therapeutics and vaccine

programs, we may also make investments in and form new companies to develop additional emerging technologies.

We do not expect to begin

generating revenue with respect to any of our current therapy or vaccine programs in the near term.

We hope to achieve a profitable outcome

by eventually licensing our technologies to large pharmaceutical companies that have the resources and infrastructure in place to manufacture,

market and sell our technologies as therapeutics or vaccines.

The eventual licensing of any of our technologies may take several years,

if it is to occur at all, and may depend on positive results from human clinical trials.

Royalties, Contingent Legal Fees, Litigation and Licensing Expenses Related to Patent Assertion

fiscal year 2023, inventor royalties, contingent legal fees, litigation and licensing expenses related to patent assertion activities

were approximately $161,000.

Inventor royalties and contingent legal fees are expensed in the period that the related revenues are recognized.

Litigation and licensing expenses related to patent assertion, other than contingent legal fees, are expensed in the period incurred.

did not have any inventor royalties, contingent legal fees, litigation and licensing expenses related to patent assertion activities

in fiscal year 2022.

and Development Expenses

and development expenses incurred in fiscal year 2023 associated with each of our development programs consisted of approximately $1,839,000

for CAR-T therapeutics, approximately $2,682,000 for cancer vaccines, and approximately $248,000 for anti-viral therapeutics.

and development expenses are related to the development of our cancer therapeutic and vaccine programs, and our anti-viral drug program,

and decreased by approximately $1,934,000 to approximately $4,769,000 in fiscal year 2023, from approximately $6,703,000 in fiscal year

The decrease in research and development expenses was primarily due to a decrease in employee stock option compensation expense

of approximately $1,386,000, a decrease in research and development expenses related to our COVID-19 development program of approximately

$485,000 as a result of the suspension of that program in March 2023, a decrease in license fees of approximately $225,000, a decrease

in consultant stock option expense of approximately $213,000, a decrease in research and development expenses related to our CAR-T development

program of approximately $156,000, and a decrease in research and development expenses related to our ovarian cancer vaccine development

program of approximately $130,000, offset by an increase in research and development expenses related to our breast cancer vaccine development

program of approximately $563,000 and an increase in employee compensation and related costs, other than stock option compensation expense,

of approximately $147,000.

and Administrative Expenses

and administrative expenses decreased by approximately $881,000 to approximately $6,291,000 in fiscal year 2023, from approximately $7,172,000

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

In reviewing Management’s

Discussion and Analysis of Financial Condition and Results of Operations, you should refer to our Consolidated Financial Statements and

the notes related thereto.

Results of Operations

Fiscal Year ended October 31, 2024 compared with

Fiscal Year ended October 31, 2023

We did not have any revenue in

fiscal year 2024.

In fiscal year 2023, we recorded revenue of approximately $210,000 from one license agreement related to our encrypted

audio/video conference calling technology.

The license agreement provided for a one-time, non-recurring, lump sum payment in exchange

for a non-exclusive retroactive and future license, and covenant not to sue.

Pursuant to the terms of the agreement, we have no further

obligations with respect to the granted intellectual property rights, including no obligation to maintain or upgrade the technology, or

provide future support or services.

Accordingly, the performance obligations from the license were satisfied and 100% of the revenue was

recognized upon execution of the license agreement.

Over the past several years, our

revenue, if any, was derived from technology licensing and the sale of patented technologies, including revenue from the settlement of

As part of our legacy operations, the Company remains engaged in limited patent licensing activities in the area of encrypted

audio/video conference calling.

We do not expect these activities to be a significant part of the Company’s ongoing operations,

nor do we expect these activities to require material financial resources or attention of senior management.

We have not generated any revenue

to date from our therapeutics or vaccine programs.

In addition, while we pursue our therapeutics and vaccine programs, we may also make

investments in and form new companies to develop additional emerging technologies.

We do not expect to begin generating revenue with respect

to any of our current therapy or vaccine programs in the near term.

We hope to achieve a profitable outcome by eventually licensing our

technologies to large pharmaceutical companies that have the resources and infrastructure in place to manufacture, market and sell our

technologies as therapeutics or vaccines.

The eventual licensing of any of our technologies may take several years, if it is to occur

at all, and may depend on positive results from human clinical trials.

Inventor Royalties, Contingent

Legal Fees, Litigation and Licensing Expenses Related to Patent Assertion

We did not have any inventor royalties,

contingent legal fees, litigation and licensing expenses related to patent assertion activities in fiscal year 2024.

In fiscal year 2023,

The decrease in general and administrative expenses was principally due to a decrease in employee stock option compensation

expense of approximately $309,000, a decrease in professional fees of approximately $239,000, a decrease in consultant warrant expense

of approximately $221,000, a decrease in employee compensation and related costs, other than stock option compensation expense, of approximately

$214,000, and a decrease in patent expenses of approximately $152,000, offset by an increase in director compensation expense, other

than stock option compensation expense, of approximately $121,000 and an increase in director stock option compensation expense of approximately

income increased to approximately $1,081,000 in fiscal year 2023 compared to approximately $104,000 in fiscal year 2022, due to an increase

in interest rates and the increased dollar amount held in short-term investments.

Loss Attributable to Noncontrolling Interest

net loss attributable to noncontrolling interest, representing Wistar’s ownership interest in Certainty’s net loss, decreased

by approximately $57,000 to approximately $119,000 in fiscal year 2023, from approximately $176,000 in fiscal year 2022, as Certainty’s

net loss decreased.

and Capital Resources

primary sources of liquidity are cash, cash equivalents and short-term investments.

on currently available information as of January 16, 2024, we believe that our existing cash, cash equivalents, short-term investments

and expected cash flows will be sufficient to fund our activities for at least the next twelve months.

We have implemented a business

model that conserves funds by collaborating with third parties to develop our technologies.

However, our projections of future cash needs

and cash flows may differ from actual results.

If current cash on hand, cash equivalents, short-term investments and cash that may be

generated from our business operations are insufficient to continue to operate our business, or if we elect to invest in or acquire a

company or companies or new technology or technologies that are synergistic with or complementary to our technologies, we may be required

to obtain more working capital.

Under our at-the-market equity program, which is currently effective and may remain available for us

to use in the future, as of October 31, 2023, we may sell up to $100 million of common stock.

We did not sell any shares under our at-the-market

equity program during the fiscal year ended October 31, 2023.

inventor royalties, contingent legal fees, litigation and licensing expenses related to patent assertion activities were approximately

Inventor royalties and contingent legal fees are expensed in the period that the related revenues are recognized.

and licensing expenses related to patent assertion, other than contingent legal fees, are expensed in the period incurred.

Research and Development

In fiscal year 2024, research and development expenses

were related to the development of our cancer therapeutics and vaccine programs and the expenses incurred consisted

of approximately $3,748,000 and $2,648,000 for cancer vaccines and CAR-T therapeutics, respectively.

In fiscal year 2023, research and development expenses were related to the development of our cancer therapeutics

and vaccines, as well as our anti-viral therapeutics program, and the expenses incurred consisted of approximately $2,682,000, $1,839,000

and $248,000 for cancer vaccines, CAR-T therapeutics and anti-viral therapeutics, respectively.

Research and development expenses

increased by approximately $1,627,000 to approximately $6,396,000 in fiscal year 2024, from approximately $4,769,000 in fiscal year 2023.

The increase in research and development expenses was primarily due to an increase in research and development expenses related to our

CAR-T development program of approximately $845,000, an increase in research and development expenses related to our breast cancer vaccine

development program of approximately $834,000, an increase in research and development expenses related to our new vaccine discover program

of approximately $113,000, an increase in clinical trial consulting services of approximately $101,000, offset by a decrease in research

and development expenses related to our ovarian cancer vaccine development program of approximately $170,000 and a decrease in consultant

stock option expense of approximately $137,000.

General and Administrative

General and administrative expenses

increased by approximately $1,144,000 to approximately $7,435,000 in fiscal year 2024, from approximately $6,291,000 in fiscal year 2023.

The increase in general and administrative expenses was principally due to an increase in investor and public relations firm expenses

of approximately $629,000, an increase in stock compensation for investor and public relations firm of approximately $145,000, an increase

in employee compensation and related costs, other than stock option compensation expense, of approximately $141,000 and an increase in

employee stock option compensation expense of approximately $111,000.

Interest Income

Interest income increased to approximately

$1,133,000 in fiscal year 2024 compared to approximately $1,081,000 in fiscal year 2023, due to an increase in interest rates and the

increased average dollar amount held in short-term investments.

Net Loss Attributable to

Noncontrolling Interest

The net loss attributable to noncontrolling

interest, representing Wistar’s ownership interest in Certainty’s net loss, increased by approximately $25,000 to approximately

$144,000 in fiscal year 2024, from approximately $119,000 in fiscal year 2023, as Certainty’s net loss increased.

Liquidity and Capital Resources

Our primary sources of liquidity

are cash, cash equivalents and short-term investments.

Based on currently available information

as of January 10, 2025, we believe that our existing cash, cash equivalents, short-term investments and expected cash flows will be sufficient

to fund our activities for at least the next twelve months.

We have implemented a business model that conserves funds by collaborating

with third parties to develop our technologies.

However, our projections of future cash needs and cash flows may differ from actual results.

If current cash on hand, cash equivalents, short-term investments and cash that may be generated from our business operations are insufficient

to continue to operate our business, or if we elect to invest in or acquire a company or companies or new technology or technologies that

are synergistic with or complementary to our technologies, we may be required to obtain more working capital.

During the year ended October

31, 2024, we raised approximately $2,955,000, net of expenses, through an at-the-market equity offering of 785,290 shares of common stock.

Under our at-the-market equity program, which is currently effective and may remain available for us to use in the future, as of October

31, 2024, we may sell up to $97 million of common stock.

We may seek to obtain working capital during our fiscal year 2025 or thereafter

4 unchanged sentences

for additional funding, the sale of additional equity securities or convertible debt will result in dilution to our stockholders.

can give no assurance that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future

operations, or that other sources of funding, such as sales of equity or debt, would be available or would be approved by our security

holders, if needed, on favorable terms or at all.

If we fail to obtain additional working capital as and when needed, such failure could

have a material adverse impact on our business, results of operations and financial condition.

Furthermore, such lack of funds may inhibit

our ability to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which would

significantly harm the business and development of operations.

give no assurance that we will generate sufficient cash flows in the future to satisfy our liquidity requirements or sustain future operations,

or that other sources of funding, such as sales of equity or debt, would be available or would be approved by our security holders, if

needed, on favorable terms or at all.

If we fail to obtain additional working capital as and when needed, such failure could have a material

adverse impact on our business, results of operations and financial condition.

Furthermore, such lack of funds may inhibit our ability

to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which could significantly

harm the business and development of operations.

the fiscal year ended October 31, 2024, cash used in operating activities was approximately $7,335,000.

Cash used in investing activities

was approximately $5,602,000, resulting from the purchase of short-term investments of approximately $44,411,000, which was offset by

the proceeds on maturities of short-term investments of approximately $38,809,000.

Cash provided by investing activities

was approximately $4,276,000, resulting from the proceeds on maturities of short-term investments of approximately $68,046,000, which

was offset by the purchase of short-term investments of approximately $63,770,000.

Cash provided by financing activities was approximately

$366,000, resulting from proceeds from the exercise of stock options of approximately $353,000 and proceeds from the sale of common stock

pursuant to an employee stock purchase plan of approximately $13,000.

As a result, our cash, cash equivalents, and short-term investments

at October 31, 2023 decreased approximately $5,843,000 to approximately $23,844,000 from approximately $29,687,000 at the end of fiscal

have expected future cash obligations related to the lease of our offices through 2026, estimated at approximately $202,000.

Sheet Arrangements

have no variable interest entities or other significant off-balance sheet obligation arrangements.

Accounting Policies

Company’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United

States of America.

In preparing these financial statements, we make assumptions, judgments and estimates that can have a significant

impact on amounts reported in our consolidated financial statements.

We base our assumptions, judgments and estimates on historical experience

and various other factors that we believe to be reasonable under the circumstances.

Actual results could differ materially from these

estimates under different assumptions or conditions.

On a regular basis, we evaluate our assumptions, judgments and estimates and make

changes accordingly.

believe that, of the significant accounting policies discussed in Note 2 to our Consolidated Financial Statements, the following accounting

policies require our most difficult, subjective, or complex judgments:

Compensation;

and Development Expense.

revenue has been derived solely from technology licensing and the sale of patented technologies.

Revenue is recognized upon transfer

of control of intellectual property rights and satisfaction of other contractual performance obligations to licensees in an amount that

reflects the consideration we expect to receive.

revenue recognition policy requires us to make certain judgments and estimates in connection with the accounting for revenue.

may include determining the existence of a contract and identifying each party’s rights and obligations to transfer goods and services,

identifying the performance obligations in the contract, determining the transaction price and allocating the transaction price to separate

performance obligations, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license

is distinct from other promised goods or services and evaluating whether a license transfers to a customer at a point in time or over

revenue arrangements provide for the payment, within 30 days of execution of the agreement, of contractually determined, one-time, paid-up

license fees in settlement of litigation and in consideration for the grant of certain intellectual property rights for patented technologies

owned or controlled by the Company.

$3,415,000, resulting from the sale of 785,290 shares of common stock in at at-the-market equity offering of approximately $2,955,000,

proceeds from the exercise of stock options of approximately $456,000 and proceeds from the sale of common stock pursuant to an employee

stock purchase plan of approximately $10,000, offset by the purchase of treasury stock of approximately $6,000.

As a result, our cash,

cash equivalents, and short-term investments at October 31, 2024 decreased approximately $3,920,000 to approximately $19,924,000 from

approximately $23,844,000 at the end of fiscal year 2023.

have expected future cash obligations related to the lease of our offices through 2029 , inclusive of extension periods , estimated at approximately $312,000.

Off-Balance Sheet Arrangements

We have no variable interest entities

or other significant off-balance sheet obligation arrangements.

Critical Accounting Policies

The Company’s consolidated

financial statements are prepared in conformity with accounting principles generally accepted in the United States of America.

these financial statements, we make assumptions, judgments and estimates that can have a significant impact on amounts reported in our

consolidated financial statements.

We base our assumptions, judgments and estimates on historical experience and various other factors

that we believe to be reasonable under the circumstances.

Actual results could differ materially from these estimates under different

assumptions or conditions.

On a regular basis, we evaluate our assumptions, judgments and estimates and make changes accordingly.

We believe that, of the significant

accounting policies discussed in Note 2 to our Consolidated Financial Statements, the following accounting policies require our most difficult,

subjective, or complex judgments:

Revenue Recognition;

Stock-Based Compensation;

Research and Development Expense.

Revenue Recognition

Our revenue has been derived solely

from technology licensing and the sale of patented technologies.

Revenue is recognized upon transfer of control of intellectual property

rights and satisfaction of other contractual performance obligations to licensees in an amount that reflects the consideration we expect

Our revenue recognition policy

requires us to make certain judgments and estimates in connection with the accounting for revenue.

Such areas may include determining

the existence of a contract and identifying each party’s rights and obligations to transfer goods and services, identifying the

performance obligations in the contract, determining the transaction price and allocating the transaction price to separate performance

obligations, estimating the timing of satisfaction of performance obligations, determining whether a promise to grant a license is distinct

from other promised goods or services and evaluating whether a license transfers to a customer at a point in time or over time.

Our revenue arrangements provide

for the payment, within 30 days of execution of the agreement, of contractually determined, one-time, paid-up license fees in settlement

of litigation and in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled

by the Company.

These arrangements typically include some combination of the following:

(i) the grant of a non-exclusive,

retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by the Company,

(ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation.

In such instances, the intellectual property rights granted have been perpetual in nature, extending until the expiration of the related

Pursuant to the terms of these agreements, we have no further obligations with respect to the granted intellectual property

rights, including no obligation to maintain or upgrade the technology, or provide future support or services.

Licensees obtained control

of the intellectual property rights they have acquired upon execution of the agreement.

Accordingly, the performance obligations from

these agreements were satisfied and 100% of the revenue was recognized upon the execution of the agreements.

compensation cost for service-based stock options granted to employees, directors and consultants is measured at the grant date, based

on the fair value of the award using the Black-Scholes pricing model, and is recognized as an expense on a straight-line basis over the

requisite service period (the vesting period of the stock option) which is one to four years.

For employee options vesting if the trading

price of the Company’s common stock exceeds certain price targets, we use a Monte Carlo Simulation in estimating the fair value

at grant date and recognize compensation cost over the implied service period.

For stock-based awards that vest upon the achievement

of a performance metric, the Company recognizes the estimated fair value of the award when achievement becomes probable.

stock awards granted to employees and directors that vest at date of grant, we recognize expense based on the grant date market price

of the underlying common stock.

For restricted stock awards vesting upon achievement of a price target of our common stock, we use a

Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation cost over the implied service period (median

time to vest).

Black-Scholes pricing model and the Monte Carlo Simulation we use to estimate fair value requires valuation assumptions of expected term,

expected volatility, risk-free interest rates and expected dividend yield.

The expected term of stock options represents the weighted

average period the stock options are expected to remain outstanding.

For employees, we use the simplified method, which is a weighted

average of the vesting term and contractual term, to determine expected term.

The simplified method was adopted since we do not believe

that historical experience is representative of future performance because of the impact of the changes in our operations and the change

in terms from historical options.

For consultants we use the contract term for expected term.

Under the Black-Scholes pricing model,

we estimated the expected volatility of our shares of common stock based upon the historical volatility of our share price over a period

of time equal to the expected term of the grants.

We estimated the risk-free interest rate based on the implied yield available on the

applicable grant date of a U.S.

Treasury note with a term equal to the expected term of the underlying grants.

We made the dividend yield

assumption based on our history of not paying dividends and our expectation not to pay dividends in the future.

will reconsider use of the Black-Scholes pricing model and the Monte Carlo Simulation if additional information becomes available in

the future that indicates another model would be more appropriate.

If factors change and we employ different assumptions in future periods,

the compensation expense that we record may differ significantly from what we have recorded in the current period.

(i) the grant of a non-exclusive, retroactive

and future license to manufacture and/or sell products covered by patented technologies owned or controlled by the Company, (ii) a covenant-not-to-sue,

(iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation.

In such instances, the intellectual

property rights granted have been perpetual in nature, extending until the expiration of the related patents.

Pursuant to the terms of

these agreements, we have no further obligations with respect to the granted intellectual property rights, including no obligation to

maintain or upgrade the technology, or provide future support or services.

Licensees obtained control of the intellectual property rights

they have acquired upon execution of the agreement.

Accordingly, the performance obligations from these agreements were satisfied and

100% of the revenue was recognized upon the execution of the agreements.

Stock-Based Compensation

The compensation cost for service-based

stock options granted to employees, directors and consultants is measured at the grant date, based on the fair value of the award using

the Black-Scholes pricing model, and is recognized as an expense on a straight-line basis over the requisite service period (the vesting

period of the stock option) which is one to four years.

For employee options vesting if the trading price of the Company’s common

stock exceeds certain price targets, we use a Monte Carlo Simulation in estimating the fair value at grant date and recognize compensation

cost over the implied service period.

For stock-based awards that vest upon the achievement of a performance metric, the Company recognizes

the estimated fair value of the award when achievement becomes probable.

For stock awards granted to employees

and directors that vest at date of grant, we recognize expense based on the grant date market price of the underlying common stock.

restricted stock awards vesting upon achievement of a price target of our common stock, we use a Monte Carlo Simulation in estimating

the fair value at grant date and recognize compensation cost over the implied service period (median time to vest).

The Black-Scholes pricing model

and the Monte Carlo Simulation we use to estimate fair value requires valuation assumptions of expected term, expected volatility, risk-free

interest rates and expected dividend yield.

The expected term of stock options represents the weighted average period the stock options

are expected to remain outstanding.

For employees, we use the simplified method, which is a weighted average of the vesting term and contractual

term, to determine expected term.

The simplified method was adopted since we do not believe that historical experience is representative

of future performance because of the impact of the changes in our operations and the change in terms from historical options.

For consultants

we use the contract term for expected term.

Under the Black-Scholes pricing model, we estimated the expected volatility of our shares

of common stock based upon the historical volatility of our share price over a period of time equal to the expected term of the grants.

We estimated the risk-free interest rate based on the implied yield available on the applicable grant date of a U.S.

Treasury note with

a term equal to the expected term of the underlying grants.

We made the dividend yield assumption based on our history of not paying dividends

and our expectation not to pay dividends in the future.

We will reconsider use of the

Black-Scholes pricing model and the Monte Carlo Simulation if additional information becomes available in the future that indicates another

model would be more appropriate.

If factors change and we employ different assumptions in future periods, the compensation expense that

we record may differ significantly from what we have recorded in the current period.

and Development Expense

recognize research and development expenses as incurred.

Advance payments for future research and development activities are deferred

and expensed as the services are performed.

We recognize our preclinical studies and clinical trial expenses based on the services performed

pursuant to contracts with research institutions, clinical research organizations (“CROs”), clinical manufacturing organizations

(“CMOs”), and other parties that conduct and manage various stages of research and development activities on our behalf.

Fees for such services are recognized based on management’s estimates after considering the activities and tasks completed by each

service provider in a given period, the time period over which services are expected to be performed, and the level of effort expended

in each reporting period.

each balance sheet date, management estimates prepaid and accrued research and development costs by discussing progress or stage of completion

of activities with internal personnel and external service providers, and comparing this information to payments made, invoices received,

and the agreed-upon contractual fee to be paid for such services in the applicable contract or statements of work.

addition, we allocate certain internal compensation costs to research and development expenses based on management’s estimates

of each employee’s time and effort expended.

of Recent Accounting Pronouncements

discuss the effect of recently issued pronouncements in Note 2 to the Consolidated Financial Statements.

Quantitative and Qualitative Disclosures About Market Risk.

required for a smaller reporting company.

Financial Statements and Supplementary Data.

accompanying “Index to Consolidated Financial Statements.”

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

research and development expenses as incurred.

Advance payments for future research and development activities are deferred and expensed

as the services are performed.

We recognize our preclinical studies and clinical trial expenses based on the services performed pursuant

to contracts with research institutions, clinical research organizations (“CROs”), clinical manufacturing organizations (“CMOs”),

and other parties that conduct and manage various stages of research and development activities on our behalf.

Fees for such services

are recognized based on management’s estimates after considering the activities and tasks completed by each service provider in

a given period, the time period over which services are expected to be performed, and the level of effort expended in each reporting period.

At each balance sheet date, management

estimates prepaid and accrued research and development costs by discussing progress or stage of completion of activities with internal

personnel and external service providers, and comparing this information to payments made, invoices received, and the agreed-upon contractual

fee to be paid for such services in the applicable contract or statements of work.

In addition, we allocate certain

internal compensation costs to research and development expenses based on management’s estimates of each employee’s time and

effort expended.

Effect of Recent Accounting Pronouncements

We discuss the potential expected impacts of recently

issued pronouncements in Note 2 to the Consolidated Financial Statements.

Quantitative and Qualitative Disclosures

About Market Risk

Not required for a smaller reporting

Financial Statements and Supplementary

See accompanying “Index

to Consolidated Financial Statements.”

Changes in and Disagreements With Accountants

on Accounting and Financial Disclosure

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

What changed 10-K

Item 7. Management’s Discussion and Analysis