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Item 8. Financial Statements and Supplementary Data

2023-03-31 compared with 2022-03-25 · 509 added, 454 removed, 185 unchanged (84% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Stockholders and Board of Directors of

Pharmaceuticals, Inc.

on the Financial Statements

We have audited the accompanying

consolidated balance sheets of Actinium Pharmaceuticals, Inc.

(the “Company”) as of December 31, 2021 and 2020, the

related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the

period ended December 31, 2021 and the related notes (collectively referred to as the “financial statements”).

opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,

2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021

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

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

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

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

(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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

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

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

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

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

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

Actinium Pharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Actinium Pharmaceuticals, Inc.

(the “Company”) as of December 31, 2022 and 2021, the related consolidated

statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December

31, 2022 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its

operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles

generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

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

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

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

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

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

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

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

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

communicated to the audit committee and that:

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

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

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

We determined that there are no critical audit matters.

have served as the Company’s auditor since 2012 .

/s/ Marcum llp

We have served as the Company’s auditor since 2012 .

Houston, Texas

March 31, 2023

Pharmaceuticals, Inc.

Actinium Pharmaceuticals, Inc.

Consolidated Balance Sheets

(amounts in thousands, except share and per share data)

(amounts in thousands, except share and per share

Current Assets:

5 unchanged sentences

Property and equipment, net of accumulated depreciation of $ 487 and $ 335

Restricted cash – long term

Operating lease right-of-use assets

Finance leases right-of-use assets

Security deposit

Restricted cash

Liabilities and Stockholders’ Equity

1 unchanged sentence

Accounts payable and accrued expenses

Other liability

Other revenue deferred – current liability

Operating leases current liability

1 unchanged sentence

Total Current Liabilities

Long-term license revenue deferred

Long-term operating lease obligations

6 unchanged sentences

Common stock, $ 0.001 par value;

1,000,000,000 and 600,000,000 shares authorized;

1,000,000,000 shares authorized;

25,674,823 and 22,143,974 shares issued and outstanding

3 unchanged sentences

Total Liabilities and Stockholders’ Equity

accompanying notes to the consolidated financial statements.

Pharmaceuticals, Inc.

See accompanying notes to the consolidated financial

Actinium Pharmaceuticals, Inc.

Consolidated Statements of Operations

(amounts in thousands, except share and per share

For the Year ended

(amounts in thousands, except share and per share data)

Other Revenue

8 unchanged sentences

Total other income

Deemed dividend for warrant down-round protection provision

Net loss applicable to common stockholders

Net loss per common share - basic and diluted

Weighted average common shares outstanding - basic and diluted

accompanying notes to the consolidated financial statements.

Pharmaceuticals, Inc.

See accompanying notes to the consolidated financial

Actinium Pharmaceuticals, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

6 unchanged sentences

Stock-based compensation

Sale of common stock and warrants, net of offering costs

Issuance of common stock from exercise of pre-funded warrants

Issuance of common stock from exercise of warrants

Deemed dividend for warrant down-round protection provision

Sale of common stock, net of offering costs

Issuance of common stock from exercise of stock options

Balance, December 31, 2021

2 unchanged sentences

Sale of common stock, net of offering costs

Issuance of common stock from exercise of stock options

Balance, December 31, 2022

$ ( 288,765 )

accompanying notes to the consolidated financial statements.

Pharmaceuticals, Inc.

See accompanying notes to the consolidated financial

Actinium Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

For the Year ended

(amounts in thousands)

For the Year ended

Cash Flows from Operating Activities:

4 unchanged sentences

Prepaid expenses and other current assets

Increase (decrease) in:

Accounts payable and accrued expenses

Other liability

Other revenue deferred – current liability

Long-term license revenue deferred

Operating lease liabilities

Net Cash Used In Operating Activities

Cash Flows from Investing Activities:

Net Cash Provided By/Used In Operating Activities

Cash Flows Used in Investing Activities:

Purchase of property and equipment

1 unchanged sentence

Cash Flows from Financing Activities:

Payments on note payable

Payments on finance leases

Proceeds from sales of shares of common stock and warrants, net of offering costs

Proceeds from sales of shares of common stock, net of offering costs

Proceeds from the exercise of stock options

Proceeds from the exercise of warrants

Net Cash Provided By Financing Activities

6 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Deemed dividend for warrant down-round protection provision

accompanying notes to the consolidated financial statements.

Pharmaceuticals, Inc.

Right-of-use assets obtained in exchange for lease liabilities

Equipment obtained in exchange for security deposit

See accompanying notes to the consolidated financial

Actinium Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements

1 - Description of Business and Summary of Significant Accounting Policies

of Business - Actinium Pharmaceuticals, Inc.

(the “Company”, “Actinium”,

or “We”) is a clinical-stage, biopharmaceutical company focused on developing and potentially commercializing targeted radiotherapies

for patients with unmet needs.

The Company applies its proprietary technology platform consisting of over 170 patients, know-how and clinical

experience in approximately 600 patients to develop novel therapies for blood cancer and solid tumor indications.

Its clinical and preclinical

development programs utilize multiple isotopes including Actinium-225, Iodine-131 and Lutetium-177 directed at multiple validated cancer

targets including CD45, CD33, CD38, CD47, HER2 and HER3 for targeted conditioning prior to cell and gene therapies including bone marrow

transplant and cancer therapeutics as single agents or in combination with other therapeutic modalities.

of Consolidation - The consolidated financial statements include the Company’s accounts and those of the Company’s wholly

owned subsidiaries.

Note 1 - Description of Business and Summary

of Significant Accounting Policies

Nature of Business - Actinium

Pharmaceuticals, Inc.

is a biopharmaceutical company developing targeted radiotherapies to deliver cancer-killing radiation with cellular

level precision to treat patients with high unmet medical needs.

Principles of Consolidation

- The consolidated financial statements include the Company’s accounts and those of the Company’s wholly owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated.

of Estimates in Financial Statement Presentation - The preparation of these consolidated financial statements in conformity with

accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses

during the reporting period.

Use of Estimates in Financial

Statement Presentation - The preparation of these consolidated financial statements in conformity with accounting principles generally

accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period.

Actual results could differ from those estimates.

of COVID–19 Pandemic on Financial Statements - The global health crisis caused by the novel coronavirus (“COVID-19”)

pandemic and its resurgences has and may continue to negatively impact global economic activity, which, despite progress in vaccination

efforts, remains uncertain and cannot be predicted with confidence.

In addition, the Omicron variant of COVID-19, which appears to be

the most transmissible variant to date, has spread globally.

The full impact of the Omicron variant, or any subsequent variants, cannot

be predicted at this time, and could depend on numerous factors, including vaccination rates among the population, the effectiveness

of COVID-19 vaccines against the Omicron variant and subsequent variants and the response by governmental bodies and regulators.

countries around the world have continued to impose quarantines and restrictions on travel and mass gatherings to slow the spread of

Accordingly, the Company’s ability to continue to operate its business may also be limited.

Such events may result in

a period of business, supply and drug product manufacturing disruption, and in reduced operations, any of which could materially affect

the Company’s business, financial condition and results of operations.

In response to COVID-19, the Company implemented remote

working and thus far, has not experienced a significant disruption or delay in its operations as it relates to the clinical development

or drug production of our drug candidates.

A continuation or worsening of the levels of market disruption and volatility seen in

the recent past could have an adverse effect on the Company’s ability to access capital, which could in the future negatively affect

the Company’s liquidity.

In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect

the Company’s business and the value of the Company’s common stock.

Additionally,

COVID-19 may result in delays in receiving approvals from local and foreign regulatory authorities, delays in necessary interactions

with IRB’s or Institutional Review Boards, local and foreign regulators, ethics committees and other important agencies and contractors

due to limitations in employee resources or forced furlough of government employees.

date, COVID-19 has not had a financial impact on the Company.

The Company continues to monitor the impacts of COVID-19 on the global

economy and on its business operations.

However, at this time, it is difficult to predict how long the potential operational impacts

of COVID-19 will last or to what degree further disruption might impact the Company’s operations and financial results.

and Cash Equivalents and Restricted Cash- The Company considers all highly liquid accounts with original maturities of three months or less to be

cash equivalents.

Balances held by the Company are typically in excess of Federal Deposit Insurance Corporation insured

is a summary of cash, cash equivalents and restricted cash at December 31, 2021 and December 31, 2020:

Cash and Cash Equivalents

and Restricted Cash- The Company considers all highly liquid accounts with original maturities of three months or less to be cash

Balances held by the Company are typically in excess of Federal Deposit Insurance Corporation insured limits.

Following is a summary of

cash, cash equivalents and restricted cash at December 31, 2022 and December 31, 2021:

(in thousands)

3 unchanged sentences

Cash, cash equivalents and restricted cash

Current restricted cash of

$ 392 thousand at December 31, 2021 relates to a certificate of deposit held as collateral for a letter of credit issued in connection

with the Company’s lease for corporate office space.

This restricted cash was classified as long-term restricted cash at December

Current restricted cash of $ 48 thousand at December 31, 2020 related to a credit card account.

and Equipment - Machinery and equipment are recorded at cost and depreciated on a straight-line basis over estimated useful lives

of three to five years.

Furniture and fixtures are recorded at cost and depreciated on a straight-line basis over estimated useful lives

of seven years.

When assets are retired, the cost and related accumulated depreciation are removed from the accounts, and any related

gain or loss is reflected in operations.

Restricted cash relates to

certificates of deposit held as collateral for letters of credit issued in connection with the Company’s leases of corporate office

Property and Equipment

- Machinery and equipment are recorded at cost and depreciated on a straight-line basis over estimated useful lives of three to five

Furniture and fixtures are recorded at cost and depreciated on a straight-line basis over estimated useful lives of seven years.

When assets are retired, the cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is

reflected in operations.

Repairs and maintenance expenditures are charged to operations.

Capitalized lease assets are

recorded at the lesser of the present value of minimum lease payments or fair value and amortized over the estimated useful life of the

related property or term of the lease.

– The Company has operating and finance leases for corporate office space, office equipment and furniture located at the corporate

office space.

Leases with an initial term of 12 months or less are not recorded on the balance sheet;

lease expense for these leases

is recognized on a straight-line basis over the lease term.

Value of Financial Instruments - Fair value is defined as the price that would be received to sell an asset, or paid to transfer

a liability, in an orderly transaction between market participants.

A fair value hierarchy has been established for valuation inputs

that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable

Recognition - The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue From

Contracts With Customers (“ASC 606”).

Under ASC 606, an entity recognizes revenue when its customer obtains control of

promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods

To determine revenue recognition for arrangements within the scope of ASC 606, the entity performs the following five steps:

(i) identify the contract(s) with a customer;

Capitalized lease assets are recorded at the

lesser of the present value of minimum lease payments or fair value and amortized over the estimated useful life of the related property

or term of the lease.

Company has operating and finance leases for corporate office space and office equipment located at the corporate office space.

with an initial term of 12 months or less are not recorded on the balance sheet;

lease expense for these leases is recognized on a straight-line

basis over the lease term.

The Company entered into a lease for corporate office space effective June 1, 2022 and paid a security deposit

to the landlord.

A certificate of deposit was provided as collateral for a letter of credit issued with this office space during 2022

and at that time, the security deposit was returned to the Company.

Fair Value Measurement

- Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction

between market participants.

A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted

prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

Revenue Recognition -

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue From Contracts With Customers

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services,

in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.

revenue recognition for arrangements within the scope of ASC 606, the entity performs the following five steps:

(i) identify the contract(s)

with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction

price, including variable consideration, if any;

(iii) determine the transaction price, including variable

consideration, if any;

(iv) allocate the transaction price to the performance obligations in the contract;

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

The Company only applies the five-step model to contracts

when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers

to the customer.

contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses whether the promised goods

or services promised within each contract are distinct and, therefore, represent a separate performance obligation.

Goods and services

that are determined not to be distinct are combined with other promised goods and services until a distinct bundle is identified.

determining whether goods or services are distinct, the Company evaluates certain criteria, including whether (i) the customer can

benefit from the good or service either on its own or together with other resources that are readily available to the customer (capable

of being distinct) and (ii) the good or service is separately identifiable from other goods or services in the contract (distinct

in the context of the contract).

Company then determines the transaction price, which is the amount of consideration it expects to be entitled from a customer in exchange

for the promised goods or services for each performance obligation and recognizes the associated revenue as each performance obligation

is satisfied.

The Company’s estimate of the transaction price for each contract includes all variable consideration to which it

expects to be entitled.

Variable consideration includes payments in the form of collaboration milestone payments.

If an arrangement includes

collaboration milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates

the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue

reversal would not occur, the associated milestone value is included in the transaction price.

606 requires the Company to allocate the arrangement consideration on a relative standalone selling price basis for each performance

obligation after determining the transaction price of the contract and identifying the performance obligations to which that amount should

be allocated.

The relative standalone selling price is defined in the revenue standard as the price at which an entity would sell a promised

good or service separately to a customer.

The Company then recognizes as revenue the amount of the transaction price that is allocated

to the respective performance obligation as each performance obligation is satisfied, either at a point in time or over time, and if

over time, recognition is based on the use of an output or input method.

Collaborative Arrangements - The Company follows the accounting

guidance for collaboration agreements with third parties, which requires that certain transactions between the Company and collaborators

be recorded in its consolidated statements of operations on either a gross basis or net basis, depending on the characteristics of the

collaborative relationship, and requires enhanced disclosure of collaborative relationships.

The Company evaluates its collaboration agreements

for proper classification in its consolidated statements of operations based on the nature of the underlying activity.

When the Company

has concluded that it has a customer relationship with one of its collaborators, the Company follows the guidance of ASC 606 .

Revenue – The Company has a grant from a government-sponsored entity for research and development related activities

that provide for payments for reimbursed costs, which includes overhead and general and administrative costs as well as an administrative

The Company recognizes revenue from grants as it performs services under this arrangement.

Associated expenses are recognized when

incurred as research and development expense.

and (v) recognize revenue as

the entity satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the

entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

At contract inception, once

the contract is determined to be within the scope of ASC 606, the Company assesses whether the promised goods or services promised within

each contract are distinct and, therefore, represent a separate performance obligation.

Goods and services that are determined not

to be distinct are combined with other promised goods and services until a distinct bundle is identified.

In determining whether goods

or services are distinct, the Company evaluates certain criteria, including whether (i) the customer can benefit from the good or

service either on its own or together with other resources that are readily available to the customer (capable of being distinct) and

(ii) the good or service is separately identifiable from other goods or services in the contract (distinct in the context of the

The Company then determines

the transaction price, which is the amount of consideration it expects to be entitled from a customer in exchange for the promised goods

or services for each performance obligation and recognizes the associated revenue as each performance obligation is satisfied.

The Company’s

estimate of the transaction price for each contract includes all variable consideration to which it expects to be entitled.

Variable consideration

includes payments in the form of collaboration milestone payments.

If an arrangement includes collaboration milestone payments, the Company

evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price

using the most likely amount method.

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

is included in the transaction price.

ASC 606 requires the Company

to allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining

the transaction price of the contract and identifying the performance obligations to which that amount should be allocated.

standalone selling price is defined in the revenue standard as the price at which an entity would sell a promised good or service separately

to a customer.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance

obligation as each performance obligation is satisfied, either at a point in time or over time, and if over time, recognition is based

on the use of an output or input method.

Collaborative Arrangements

- The Company follows the accounting guidance for collaboration agreements with third parties, which requires that certain transactions

between the Company and collaborators be recorded in its consolidated statements of operations on either a gross basis or net basis, depending

on the characteristics of the collaborative relationship, and requires enhanced disclosure of collaborative relationships.

evaluates its collaboration agreements for proper classification in its consolidated statements of operations based on the nature of the

underlying activity.

When the Company has concluded that it has a customer relationship with one of its collaborators, the Company follows

the guidance of ASC 606 .

Grant Revenue –

The Company had a grant from a government-sponsored entity for research and development related activities that provided for payments

for reimbursed costs, which included overhead and general and administrative costs as well as an administrative fee.

The Company recognized

revenue from grants as it performed services under this arrangement.

Associated expenses were recognized when incurred as research and

development expense.

Revenue and related expenses are presented gross in the consolidated statements of operations.

and Development Costs - Research and development costs are expensed as incurred.

These costs include the costs of manufacturing drug

product, the costs of clinical trials, costs of employees and associated overhead, and depreciation and amortization costs related to

facilities and equipment.

Research and development reimbursements are recorded by the Company as a reduction of research and development

Payments - The Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing

The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee

is required to provide service in exchange for the award.

License Revenue –

The Company entered into a product licensing agreement whereby the Company allowed a third party to commercialize a certain product

in specified territories using the Company’s trademarks.

The terms of this arrangement includes payment to the Company for a combination

of one or more of the following:

upfront license fees;

development, regulatory and sales-based milestone payments;

and royalties on net

sales of licensed products.

The Company uses its judgment to determine whether milestones or other variable consideration should be included

in the transaction price.

Upfront license fees :

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

in the arrangement, the Company will recognize revenue from upfront license fees allocated to the license when the license is transferred

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

For licenses that are bundled with other promises, the Company

determines whether the combined performance obligation is satisfied over time or at a point in time.

Development, regulatory

or commercial milestone payments :

At the inception of each arrangement that includes payments based on the achievement of certain

development, regulatory and sales-based or commercial events, the Company evaluates whether the milestones are considered probable of

being achieved and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable

that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

Milestone payments

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

being achieved until regulatory approval is received.

At the end of each subsequent reporting period, the Company will re-evaluate the

probability of achieving such development and regulatory milestones and any related constraint, and if necessary, adjust the Company’s

estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis and recorded as part of license

revenue during the period of adjustment.

Sales-based milestone payments

and royalties :

For arrangements that include sales-based royalties, including milestone payments based on the volume of sales, the

Company will determine whether the license is deemed to be the predominant item to which the royalties or sales-based milestones relate

and if such is the case, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance

obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Upfront payments and fees

may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements or

when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur or when the uncertainty

associated with any variable consideration is subsequently resolved.

Amounts payable to the Company are recorded as accounts receivable

when the Company’s right to consideration is unconditional.

Research and Development

Costs - Research and development costs are expensed as incurred.

These costs include the costs of manufacturing drug product, the

costs of clinical trials, costs of employees and associated overhead, and depreciation and amortization costs related to facilities and

Research and development reimbursements are recorded by the Company as a reduction of research and development costs.

Share-Based Payments -

The Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model.

fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required

to provide service in exchange for the award.

The Company accounts for forfeitures of stock options as they occur.

Taxes - The Company accounts for income taxes in accordance with FASB ASC 740 Income Taxes, which requires the asset and liability

method to calculate deferred taxes.

Deferred taxes are recognized based on the differences between the financial reporting and income

tax bases of assets and liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to

The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred

tax asset will be fully realized.

ASC 740 prescribes guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions.

Tax positions

must meet a “more-likely-than-not” recognition threshold to be recognized.

There were no tax positions for which it is considered

reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next year.

The Company recognizes interest related to unrecognized tax benefits in interest expense and penalties in operating expenses

Loss Per Common Share - Basic loss per common share is computed by dividing the net loss available to common stockholders by the

weighted average number of common shares outstanding during the reporting period.

For periods of net loss, diluted loss per share is

calculated similarly to basic loss per share because the impact of all potential dilutive common shares is anti-dilutive.

issued pre-funded warrants in April 2020 and June 2020 that were considered outstanding shares for the purposes of calculating net loss

per common share throughout 2020.

As of December 31, 2020, all of the pre-funded warrants had been exercised.

the years ended December 31, 2021 and 2020, the Company’s potentially dilutive shares, which include outstanding common stock options

and warrants have not been included in the computation of diluted net loss per share as the result would have been anti-dilutive.

Income Taxes - The

Company accounts for income taxes in accordance with ASC 740 Income Taxes , which requires the asset and liability method to calculate

deferred taxes.

Deferred taxes are recognized based on the differences between the financial reporting and income tax bases of assets

and liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be

fully realized.

ASC 740 prescribes guidance

for the financial statement recognition, measurement and disclosure of uncertain tax positions.

Tax positions must meet a “more-likely-than-not”

recognition threshold to be recognized.

There were no tax positions for which it is considered reasonably possible that the total amounts

of unrecognized tax benefits will significantly increase or decrease within the next year.

The Company recognizes interest related to

unrecognized tax benefits in interest expense and penalties in operating expenses

Net Loss Per Common Share

- Basic loss per common share is computed by dividing the net loss available to common stockholders by the weighted average number of

common shares outstanding during the reporting period.

For periods of net loss, diluted loss per share is calculated similarly to basic

loss per share because the impact of all potential dilutive common shares is anti-dilutive.

For the years ended December 31, 2022 and 2021,

the Company’s potentially dilutive shares, which include outstanding common stock options, restricted stock units and warrants,

have not been included in the computation of diluted net loss per share as the result would have been anti-dilutive.

(in thousands)

Events - The Company’s management reviewed all material events through the date the consolidated financial statements were

issued for subsequent event disclosure consideration.

Standards Recently Adopted - In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic

470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments

and Contracts in an Entity’s Own Equity , which, among other things, provides guidance on how to account for contracts on an

entity’s own equity.

This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and

Specifically, the ASU eliminated the need for the Company to assess whether a contract on the entity’s own equity (1) permits

settlement in unregistered shares, (2) whether counterparty rights rank higher than shareholder’s rights, and (3) whether collateral

In addition, the ASU requires incremental disclosure related to contracts on the entity’s own equity and clarifies

the treatment of certain financial instruments accounted for under this ASU on earnings per share.

This ASU may be applied on a full

retrospective of modified retrospective basis.

This ASU is effective January 1, 2022 and interim periods presented, although early adoption

of this ASU was permitted effective January 1, 2021.

The Company early adopted this standard effective January 1, 2021 and the standard

did not have a significant impact on the Company’s financial statements.

Standards Recently Issued– In May 2021, FASB issued ASU 2021-04, Earnings Per Share (topic 260), Debt — Modifications

and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts

in an Entity’s Own Equity (Subtopic 815-40) – Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding

Equity-Classified Written Call Options , which provides guidance of a modification or an exchange of a freestanding equity-classified

written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related

earnings per share (EPS) effects, if any, or (2) an expense and, if so, the manner and pattern of recognition.

The amendments in this

ASU are effective January 1, 2022, including interim periods.

Early adoption is permitted.

The Company will apply the amendments prospectively

to modifications or exchanges occurring on or after January 1, 2022.

The Company will evaluate the impact of ASU 2017-09 on any future

changes to the terms and conditions of its warrants.

October 2021, FASB issued ASU 2021-08, Business Combinations (Topic 805), Account for Contract Assets and Contract Liabilities from

Contracts with Customers , which provides guidance on accounting for contract assets and contract liabilities acquired in a business

combination in accordance with ASC 606.

To achieve this, an acquirer may assess how the acquiree applied ASC 606 to determine what to

record for the acquired revenue contracts.

Generally, this should result in an acquirer recognizing and measuring the acquired contract

assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements.

amendments of ASU 2021-08 are effective January 1, 2023, including interim periods.

Early adoption is permitted, including adoption in

an interim period.

The Company will evaluate the impact of ASU 2021-08 on any future business combinations the Company may enter in the

November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance ,

which provides guidance on disclosure requirements to entities other than not-for-profit entities about transaction with a government

that are accounted for by applying a grant or contribution accounting model by analogy.

ASU 2021-10 requires an entity to make annual

disclosures related to (1) the nature of the transactions and the related accounting policy used to account for the government transactions,

(2) quantification and disclosure of amounts related to the government transactions included in balance sheet and income statement financial

statement line items, and (3) significant terms and conditions of the government transactions, including commitments and contingencies.

Stock Options

Restricted Stock Units

Subsequent Events -

The Company’s management reviewed all material events through the date the consolidated financial statements were issued for subsequent

event disclosure consideration.

Recently Adopted Accounting

Pronouncements – In May 2021, FASB issued ASU 2021-04, Earnings Per Share (topic 260), Debt — Modifications and Extinguishments

(Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts in an Entity’s

Own Equity (Subtopic 815-40) – Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified

Written Call Options , which provides guidance of a modification or an exchange of a freestanding equity-classified written call option

that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related earnings per share

(EPS) effects, if any, or (2) an expense and, if so, the manner and pattern of recognition.

The amendments in this ASU are effective January

1, 2022, including interim periods.

The Company adopted this standard effective January 1, 2022 and the standard did not have a material

effect on the Company’s financial statements.

In November 2021, the FASB

issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance , which provides

guidance on disclosure requirements to entities other than not-for-profit entities about transaction with a government that are accounted

for by applying a grant or contribution accounting model by analogy.

ASU 2021-10 requires an entity to make annual disclosures related

to (1) the nature of the transactions and the related accounting policy used to account for the government transactions, (2) quantification

and disclosure of amounts related to the government transactions included in balance sheet and income statement financial statement line

items, and (3) significant terms and conditions of the government transactions, including commitments and contingencies.

The amendments

of ASU 2021-10 are effective January 1, 2022, including interim periods.

The Company adopted this standard effective January 1, 2022,

and the standard did not have a material impact on the Company’s financial statements.

Recently Issued Accounting

Pronouncements – In October 2021, FASB issued ASU 2021-08, Business Combinations (Topic 805), Account for Contract Assets

and Contract Liabilities from Contracts with Customers , which provides guidance on accounting for contract assets and contract liabilities

acquired in a business combination in accordance with ASC 606.

To achieve this, an acquirer may assess how the acquiree applied ASC 606

to determine what to record for the acquired revenue contracts.

Generally, this should result in an acquirer recognizing and measuring

the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial

The amendments of ASU 2021-08 are effective January 1, 2023, including interim periods.

The adoption of ASU 2021-10 is not expected to

have a significant impact on the Company’s financial statements.

2 - Prepaid Expenses and Other Current Assets

expenses and other current assets consisted of the following at December 31, 2021 and 2020:

Early adoption is permitted, including

adoption in an interim period.

The Company will evaluate the impact of ASU 2021-08 on any future business combinations the Company may

enter in the future.

Note 2 - Prepaid Expenses and Other Current

Prepaid expenses and other

current assets consisted of the following at December 31, 2022 and 2021:

Prepaid insurance

2 unchanged sentences

Total prepaid expenses and other current assets

3 - Property and Equipment

and equipment consisted of the following at December 31, 2021 and 2020:

Note 3 - Property and Equipment

Property and equipment consisted

of the following at December 31, 2022 and 2021:

(in thousands)

3 unchanged sentences

Property and equipment, net

expense consisted of the following for the years ended December 31, 2021 and 2020, respectively:

Depreciation expense consisted

of the following for the years ended December 31, 2022 and 2021, respectively:

(in thousands)

2 unchanged sentences

Total Depreciation expense

Company determines if an arrangement is a lease at inception.

This determination generally depends on whether the arrangement conveys

to the Company the right to control the use of a fixed asset for a period of time in exchange for consideration.

Control of an underlying

asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic

benefits from using the underlying asset.

The Company has lease agreements which include lease and non-lease components, which the Company

has elected to account for as a single lease component for all classes of underlying assets.

Lease expense for variable lease components

are recognized when the obligation is probable.

The Company made an accounting policy election to exclude from balance sheet reporting

those leases with initial terms of 12 months or less.

assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily

determined, its incremental borrowing rate.

As an implicit interest rate was not readily determinable in the Company’s leases,

the incremental borrowing rate was used based on the information available at commencement date in determining the present value of lease

lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered

by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option

to extend (or not to terminate) the lease controlled by the lessor.

Options for lease renewals have been excluded from the lease term

(and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.

December 31, 2021, the Company has an operating lease for corporate office space and two finance leases for office equipment and furniture

located in the corporate office space.

In addition, the Company has auxiliary corporate office space that it rents on a month-to-month

this rental is accounted for as an operating lease with the same term as the Company’s main office in the same building.

components of lease expense are as follows:

Note 4 - Leases

The Company determines

if an arrangement is a lease at inception.

This determination generally depends on whether the arrangement conveys to the Company the

right to control the use of a fixed asset for a period of time in exchange for consideration.

Control of an underlying asset is conveyed

to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using

the underlying asset.

The Company has lease agreements which include lease and non-lease components, which the Company has elected to

account for as a single lease component for all classes of underlying assets.

Lease expense for variable lease components are recognized

when the obligation is probable.

The Company made an accounting policy election to exclude from balance sheet reporting those leases with

initial terms of 12 months or less.

Right-of-use assets and liabilities

are recognized at commencement date based on the present value of lease payments over the lease term.

ASC 842 requires a lessee to discount

its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental

borrowing rate.

As an implicit interest rate was not readily determinable in the Company’s leases, the incremental borrowing rate

was used based on the information available at commencement date in determining the present value of lease payments.

The lease term for all of

the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option

to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate)

the lease controlled by the lessor.

Options for lease renewals have been excluded from the lease term (and lease liability) for the majority

of the Company’s leases as the reasonably certain threshold is not met.

The Company entered into a lease

for corporate office space, effective June 1, 2022.

The lease has a term of 5 years 2 months , with an expiration date on July 30, 2027

and current annual rent of $ 0.6 million.

The Company is also responsible for certain other costs, such as insurance, utilities and maintenance.

At December 31, 2022, for capitalization purposes under ASC842, the Company has this operating lease and a finance lease for office equipment.

At December 31, 2021, for

capitalization purposes under ASC842, the Company had an operating lease for corporate office space that expired in 2022 and finance leases

for office equipment and furniture located in the corporate office space.

In addition, the Company has auxiliary corporate office space

that it rents on a month-to-month basis;

this rental was accounted for as an operating lease with the same term as the Company’s

office space.

The components of lease expense are as follows:

(in thousands)

4 unchanged sentences

Total finance lease cost

cash flow information related to leases are as follows:

Supplemental cash flow information related to leases

are as follows:

(in thousands)

8 unchanged sentences

Finance Leases

average remaining lease terms are as follows at December 31, 2021:

Weighted average remaining lease terms are as follows

at December 31, 2022:

Weighted average remaining lease term:

17 unchanged sentences

Note 5 - Other revenue

The Company has a grant from a government-sponsored entity for research and development related activities that provide for payments for

reimbursed costs, which includes overhead and general and administrative costs as well as an administrative fee.

The Company recognizes

revenue from grants as it performs services under this arrangement.

Associated expenses are recognized when incurred as research and development

Revenue of $ 0.2 million was recognized during year ended December 31, 2021.

The Company determined that certain collaborations with a third-party

are within the scope of ASC 606.

The collaboration agreement is made up of multiple modules related to various research activities.

Company identified a single performance obligation to provide research services within each module for which the Company receives monetary

consideration.

The third-party can choose to proceed with each module or can terminate the agreement at any time.

The Company recognizes

revenue for each module on a straight-line basis over the expected module period.

Revenue for succeeding modules is not recognized until

all contingencies are resolved, inclusive of the third-party’s ability to terminate the module.

The consideration is recognized

to revenue over each module and revenue recognized during the year ended December 31, 2021 was $ 0.9 million.

Other liability consists

of $ 1.0 million of deferred other revenue that is expected to be recognized during 2022.

6 - Commitments and Contingencies

June 15, 2012, the Company entered into a license and sponsored research agreement with Fred Hutchinson Cancer Research Center (“FHCRC”)

to build upon previous and ongoing clinical trials with apamistamab (licensed antibody).

FHCRC has completed both a Phase 1 and Phase

2 clinical trial with apamistamab.

The Company has been granted exclusive rights to the antibody and related master cell bank developed

A milestone payment of $ 1 million will be due to FHCRC upon FDA approval of the first drug utilizing the licensed antibody.

Upon commercial sale of the drug, royalty payments of 2% of net sales will be due to FHCRC.

April 24, 2020, the Company issued and sold 4.3 million shares of common stock and 2.8 million pre-funded warrants to purchase shares

of common stock.

The price to the public in this offering for each share of common stock was $ 4.50 and for each pre-funded warrant was

Each pre-funded warrant had an exercise price of $ 0.003 per share and was exercisable immediately upon issuance.

Gross proceeds

from this offering were $ 31.6 million, before deducting underwriting discounts and commissions and other offering expenses payable by

Net proceeds from this offering were $ 29.1 million.

the year ended December 31, 2020, holders of all of the 2.8 million pre-funded April 2020 warrants exercised their warrants at $ 0.003

per share and received 2.8 million shares of common stock.

June 19, 2020, the Company issued and sold 1.9 million shares of common stock and 0.7 million pre-funded warrants to purchase shares

of common stock.

The price to the public in this offering for each share of common stock was $ 9.75 and for each pre-funded warrant was

Each pre-funded warrant had an exercise price of $ 0.003 per share and was exercisable immediately upon issuance.

Gross proceeds

from this offering were $ 25.0 million, before deducting underwriting discounts and commissions and other offering expenses payable by

Net proceeds from this offering were $ 23.0 million.

the year ended December 31, 2020, holders of all of the 0.7 million pre-funded June 2020 warrants exercised their warrants at $ 0.003

per share and received 0.7 million shares of common stock.

August 2020, the Company entered into the Capital on Demand™ Sales Agreement with JonesTrading Institutional Services LLC (“JonesTrading”),

pursuant to which the Company may sell, from time to time, through or to JonesTrading, up to an aggregate of $200 million of its common

Shares of common stock are offered pursuant to the Company’s shelf registration statement on Form S-3 filed with the SEC

on August 7, 2020.

As of December 31, 2020, the Company had sold 2.1 million shares of common stock, resulting in gross proceeds of $ 22.6

The Company determined that

certain collaborations with a third party are within the scope of ASC 606.

The collaboration agreement is made up of multiple modules

related to various research activities.

The Company identified a single performance obligation to provide research services within each

module for which the Company receives monetary consideration.

The third party can choose to proceed with each module or can terminate

the agreement at any time.

The Company recognizes revenue for each module on a straight-line basis over the expected module period.

for succeeding modules is not recognized until all contingencies are resolved, inclusive of the third party’s ability to terminate

The consideration is recognized to revenue over each module and revenue of $ 0.9 million was recognized during each of the

years ended December 31, 2022 and December 31, 2021.

The Company had a grant from

a government-sponsored entity for research and development related activities that provide for payments for reimbursed costs, which included

overhead and general and administrative costs as well as an administrative fee.

The Company recognized revenue from grants as it performed

services under this arrangement.

Associated expenses are recognized when incurred as research and development expense.

Other revenue recognized

from this grant during the years ended December 31, 2022 and 2021 was $ 0.1 million and $ 0.2 million, respectively.

On April 7, 2022, the Company

entered into a license and supply agreement (the “License Agreement”) with Immedica Pharma AB (“Immedica”), pursuant

to which Immedica licensed the exclusive product rights for commercialization of Iomab-B (I-131 apamistamab) in the European Economic

Area, Middle East and North Africa (EUMENA) including Algeria, Andorra, Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon,

Libya, Monaco, Morocco, Oman, Palestine, Qatar, San Marino, Saudi Arabia, Switzerland, Syria, Tunisia, Turkey, the United Arab Emirates,

the United Kingdom, the Vatican City and Yemen.

Upon signing, the Company was entitled to an upfront payment of $ 35 million from Immedica,

which was received in May 2022.

Under the terms of the License Agreement, the Company is eligible to receive regulatory and commercial

milestone payments and is entitled to receive royalties in the mid-20 percent range on net sales of the product in certain countries that

may result from the License Agreement.

The Company will continue to be responsible for certain clinical development activities and the

manufacturing of Iomab-B and will retain commercialization rights in the U.S.

and rest of the world.

The Company’s contract

liabilities are recorded within Other revenue deferred – current liability or Long-term license revenue deferred in its condensed

consolidated balance sheets, depending on the short-term or long-term nature of the payments to be recognized.

The Company’s contract

liabilities primarily consist of advanced payments from licensees.

There was no Other revenue deferred – current liability at December

31, 2022 and $ 1.0 million at December 31, 2021.

Long-term license revenue deferred was $ 35.0 million at December 31, 2022;

Long-term license revenue deferred at December 31, 2021.

This deferred revenue will be recognized upon European Union regulatory approval

Note 6 - Commitments and Contingencies

On June 15, 2012, the Company

entered into a license and sponsored research agreement with Fred Hutchinson Cancer Research Center (“FHCRC”) to build upon

previous and ongoing clinical trials with apamistamab (licensed antibody).

FHCRC has completed both a Phase 1 and Phase 2 clinical trial

with apamistamab.

The Company has been granted exclusive rights to the antibody and related master cell bank developed by FHCRC.

payment of $ 1 million will be due to FHCRC upon FDA approval of the first drug utilizing the licensed antibody.

Upon commercial sale

of the drug, royalty payments of 2% of net sales will be due to FHCRC.

Note 7 - Equity

In August 2020, the Company entered

into the Capital on Demand™ Sales Agreement with JonesTrading Institutional Services LLC, or JonesTrading, pursuant to which the

Company may sell, from time to time, through or to JonesTrading, up to an aggregate of $ 200 million of its common stock.

Shares of common

stock are offered pursuant to a shelf registration statement on Form S-3 filed with the SEC on August 7, 2020.

For the year ended December

31, 2022, the Company sold 3.5 million shares of common stock, resulting in gross proceeds of $ 23.9 million and net proceeds of $ 23.2

For the year ended December 31, 2021, the Company sold 4.6 million shares of common stock, resulting in gross proceeds of $ 36.5

million and net proceeds of $ 35.3 million.

For the year ended December 31, 2021, the Company sold 4.6 million shares of common stock,

resulting in gross proceeds of $ 36.5 million and net proceeds of $ 35.3 million.

On June 28, 2022, the Company

entered into an Amendment and Restated Capital on Demand™ Sales Agreement (the “A&R Sales Agreement”) with JonesTrading

Riley Securities, Inc.

Riley Securities”).

The A&R Sales Agreement modifies the original Capital on Demand™

Sales Agreement to include B.

Riley Securities as an additional sales agent thereunder.

2019 Amended and Restated Stock Plan

December 2019, the Company’s 2019 Stock Plan was established.

The expiration date of the plan is October 18, 2029 and the total

number of shares of the Company’s common stock available for grant to employees, directors and consultants of the Company was 333,333

At the Company’s Annual Meeting of Stockholders held on November 18, 2020, its stockholders authorized an increase in the

number of shares authorized under the plan, resulting in the number of shares authorized in the plan to be 3,083,333 shares.

At the Company’s

Annual Meeting of Stockholders held on November 9, 2021, its stockholders authorized an increase in the number of shares authorized under

the plan, resulting in the number of shares authorized in the plan to be 5,833,333 shares.

In December 2019, the Company’s

2019 Stock Plan was established.

The expiration date of the plan is October 18, 2029 and the total number of shares of the Company’s

common stock available for grant to employees, directors and consultants of the Company was 333,333 shares.

After a number of amendments

approved by stockholders, the number of shares authorized under the plan was 5,833,333 shares.

At the Company’s Annual Meeting of

Stockholders held on December 30, 2022, its stockholders authorized an increase in the number of shares authorized under the plan, resulting

in the number of shares authorized in the plan to be 9,333,333 shares.

2013 Amended and Restated Stock Plan

September 2013, the Company’s 2013 Stock Plan was established.

The expiration date of the plan is September 9, 2023 and at the

time of approval, the total number of shares of the Company’s common stock available for grant to employees, directors and consultants

of the Company under the plan was 91,666 shares.

After a number of amendments approved by stockholders, the number of shares authorized

under the plan is 758,333 shares.

In September 2013, the Company’s

2013 Stock Plan was established.

The expiration date of the plan is September 9, 2023 and at the time of approval, the total number of

shares of the Company’s common stock available for grant to employees, directors and consultants of the Company under the plan was

91,666 shares.

After a number of amendments approved by stockholders, the number of shares authorized under the plan is 758,333 shares.

2013 Equity Incentive Plan

September 2013, the Company’s 2013 Equity Incentive Plan was established.

The expiration date of the plan is September 9, 2023

and the total number of shares of the Company’s common stock available for grant to employees, directors and consultants of the

Company under the plan was 15,000 shares.

In December 2013, the shareholders of the Company approved the plan and increased the number

of shares authorized under the plan to 33,333 shares.

is a summary of stock option activity for the years ended December 31, 2021 and 2020:

In September 2013, the Company’s

2013 Equity Incentive Plan was established.

The expiration date of the plan is September 9, 2023 and the total number of shares of the

Company’s common stock available for grant to employees, directors and consultants of the Company under the plan was 15,000 shares.

In December 2013, the shareholders of the Company approved the plan and increased the number of shares authorized under the plan to 33,333

Stock Options

Following is a summary of

stock option activity for the years ended December 31, 2022 and 2021:

(in thousands, except for per-share amount)

Value at December 31, 2021

Outstanding, January 1, 2021

2 unchanged sentences

Exercisable, December 31, 2022

2021, the Company granted its employees and members of the Board of Directors options to purchase 881 thousand shares of common stock

with an exercise price ranging from $ 6.02 to $ 9.25 per share, a term of 10 years, and a vesting period from 4 to 4.2 years.

options have an aggregated fair value of $ 3.9 million that was calculated using the Black-Scholes option-pricing model.

Variables used

in the Black-Scholes option-pricing model include:

(1) discount rate range from 0.65% to 1.28% (2) expected life of 6 years, (3) expected

volatility range from 79.8% to 85.1%, and (4) zero expected dividends.

2020, the Company granted its employees and members of the Board of Directors options to purchase 458 thousand shares of common stock

with an exercise price ranging from $ 6.63 to $ 12.41 per share, a term of 10 years, and a vesting period from 4 to 4.2 years.

options have an aggregated fair value of $ 3.2 million that was calculated using the Black-Scholes option-pricing model.

Variables used

in the Black-Scholes option-pricing model include:

(1) discount rate range from 0.34% to 0.56% (2) expected life of 6 years, (3) expected

volatility range from 83.6% to 85.5%, and (4) zero expected dividends.

the years ended December 31, 2021 and 2020, options to purchase 333 thousand and 23 thousand common shares were cancelled, respectively,

upon the termination of employment.

During 2022, the Company granted

its employees and members of the Board of Directors options to purchase 2.1 million shares of common stock with an exercise price ranging

from $ 4.96 to $ 13.54 per share, a term of 10 years, and a vesting period from 4 to 4.2 years.

The options have an aggregated fair

value of $ 7.7 million that was calculated using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing

model include:

(1) discount rate range from 1.5 % to 4.3 % (2) expected life of 6 years, (3) expected volatility range from 78.8 % to 81.1 %,

and (4) zero expected dividends.

During 2021, the Company granted

its employees and members of the Board of Directors options to purchase 881 thousand shares of common stock with an exercise price ranging

from $ 6.02 to $ 9.25 per share, a term of 10 years, and a vesting period from 4 to 4.2 years.

The options have an aggregated fair value

of $ 3.9 million that was calculated using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing model

(1) discount rate range from 0.65 % to 1.28 % (2) expected life of 6 years, (3) expected volatility range from 79.8 % to 85.1 %,

and (4) zero expected dividends.

During the years ended December

31, 2022 and 2021, options to purchase 60 thousand and 333 thousand common shares were cancelled, respectively, upon the termination of

During 2021, 1 thousand options were exercised for shares of common stock.

There were no exercises

of options during 2020.

fair values of all options issued and outstanding are being amortized over their respective vesting periods.

The unrecognized compensation

expense at December 31, 2021 was $ 4.9 million related to unvested options, which is expected to be expensed over a weighted average of

During 2021 and 2020, the Company recorded total option expense of $ 1.5 million and $ 1.2 million, respectively.

part of the April 2020 offering and the June 2020 offering, the Company issued pre-funded warrants.

Each pre-funded warrant had an exercise

price of $ 0.003 per share and was exercisable immediately upon issuance.

The pre-funded warrants did not have an expiration date.

2020 all the pre-funded warrants were exercised for shares of common stock.

is a summary of warrant activities for the years ended December 31, 2021 and 2020:

There were no exercises of options during 2022.

The fair values of all options

issued and outstanding are being amortized over their respective vesting periods.

The unrecognized compensation expense at December 31,

2022 was $ 10.0 million related to unvested options, which is expected to be expensed over a weighted average of 3.3 years.

and 2021, the Company recorded total option expense of $ 2.5 million and $ 1.5 million, respectively.

Restricted Stock Units

The Company issued 325 thousand

restricted stock units (“RSUs”) to employees during 2022:

(in thousands, except for per-share amount)

Grant date Fair Value

Per Share ($)

Outstanding, January 1, 2022

Outstanding, December 31, 2022

The RSUs vest at the earliest

of a change of control event, the termination of the recipient’s continuous service status for any reason other than by the Company

for cause and the third anniversary of the date of the grant.

The fair value of the RSUs, $ 1.9 million, was determined based on the stock

prices on the dates of the grants and is being recognized over three years .

The unrecognized compensation expense at December 31, 2022

of $ 1.7 million is expected to be expensed over 2.4 years.

During 2022, the Company recorded compensation expense related to RSUs of $ 0.2

Following is a summary of

warrant activities for the years ended December 31, 2022 and 2021:

(in thousands, except for per-share amounts)

3 unchanged sentences

Exercisable, December 31, 2022

Company has an outstanding warrant to purchase 1,907 shares of common stock, issued on March 14, 2017 to Sandesh Seth, the Company’s

Chairman and Chief Executive Officer.

The warrant included down-round protection up until it was amended on August 11, 2020.

with down-round protection, a deemed dividend is recorded for the change in fair value of the warrants when the down-round provision

is triggered.

As a result of the April 2020 offering and June 2020 offering, the exercise price of the warrant was reset from $ 26.40

per share to $ 15.62 per share.

The down-round protection provision in the above warrants created a deemed dividend to common stockholders

of $ 1 thousand in the year ended December 31, 2020 which is reflected in the accompanying consolidated statement of operations and consolidated

statement of changes in stockholders’ equity.

On August 11, 2020, the Company and Mr.

Seth agreed to amend the warrant to remove

the anti-dilution provision that had been in the warrant.

Accordingly, pursuant to the amendment, as of August 11, 2020, the exercise

price of the warrant will no longer be subject to a proportional adjustment if and when the Company issues any shares of its common stock

for a consideration less than the exercise price of the warrant.

All other terms of the warrant remained the same.

the years ended December 31, 2021 and 2020, the Company recorded stock-based compensation expense related to warrants of $ 16 thousand

and $ 13 thousand, respectively.

8 - Income Taxes

income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial

reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and

liabilities at December 31, 2021 and 2020 are as follows:

On August 2, 2022, warrants

to purchase an aggregate of 0.6 million shares of common stock expired.

These warrants were issued on August 2, 2017, when the Company

completed an underwritten offering of 0.7 million shares of common stock and warrants to purchase 0.6 million shares of common stock at

a price of $ 22.50 per share and related warrant.

The warrants were exercisable for a period of 5 years at an exercise price of $ 31.50

During the years ended December

31, 2022 and 2021, the Company recorded stock-based compensation expense related to warrants of $ 6 thousand and $ 16 thousand, respectively.

Note 8 - Income Taxes

Deferred income taxes reflect

the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and

the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities at December

31, 2022 and 2021 are as follows:

(in thousands)

3 unchanged sentences

Research and development/orphan drug credits

Capitalized research and development expenses

valuation allowance

3 unchanged sentences

management determined that it is not more-likely-than not that those assets will be realized.

For federal income tax purposes, the Company has $ 163.0 million

of unused net operating losses (“NOLs”) at December 31, 2021 available for carry forward to future years.

NOLs of $120.8 million

generated prior to 2018 will begin to expire if unused in 2022.

NOLs generated in 2018 and later years of $42.2 million have an indefinite

life, but will be limited to 80% of their value if used in a tax year ending after January 1, 2022.

For federal income tax purposes,

the Company has $ 178.6 million of unused net operating losses (“NOLs”) at December 31, 2022 available for carry forward to

future years.

NOLs of $118.4 million generated prior to 2018 will begin to expire if unused in 2023.

NOLs generated in 2018 and later

years of $60.2 million have an indefinite life, but will be limited to 80% of their value if used in a tax year ending after January 1,

For state income tax purposes,

the Company has $ 271.1 million of unused NOLs at December 31, 2022 available for carry forward to future years.

These NOLs will begin to

expire in 2034 if unused.

Company has federal research and development tax credits of $ 2.9 million at December 31, 2021 which will begin to expire in 2034 if unused

and orphan drug credits of $ 11.6 million which will begin to expire in 2028 if unused.

and state tax laws impose limitations on the utilization of net operating losses and credit carryforwards in the event of an ownership

change for tax purposes, as defined in Section 382 of the Internal Revenue Code.

Accordingly, the Company’s ability to utilize

these carryforwards may be limited as a result of an ownership change which may have already happened or may happen in the future.

an ownership change could result in a limitation in the use of the net operating losses in future years and possibly a reduction of the

net operating losses available.

These NOLs will begin

to expire in 2034 if unused.

The Company has federal research

and development tax credits of $ 3.4 million at December 31, 2022 which will begin to expire in 2034 if unused and orphan drug credits

of $ 13.8 million which will begin to expire in 2028 if unused.

Federal and state tax laws

impose limitations on the utilization of net operating losses and credit carryforwards in the event of an ownership change for tax purposes,

as defined in Section 382 of the Internal Revenue Code.

Accordingly, the Company’s ability to utilize these carryforwards may be

limited as a result of an ownership change which may have already happened or may happen in the future.

Such an ownership change could

result in a limitation in the use of the net operating losses in future years and possibly a reduction of the net operating losses available.

difference between the income tax provision and the amount that would result if the U.S.

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Provision for income tax

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE.

Note 9 - Subsequent Event

Since December 31, 2022, the

Company has sold 0.1 million shares of common stock under its A&R Sales Agreement, resulting in net proceeds of $ 0.8 million.

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 8. Financial Statements and Supplementary Data