Bio Green Med Solution, Inc. 10-Q

Item 1. Financial Statements CYCLACEL PHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS (In $000s, except share, per share, and liquidation preference amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, ​ 2020 2021 ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 33,406 ​ $ 40,219 Prepaid expenses and other current assets ​ 2,063 ​ 3,156 Total current assets ​ 35,469 ​ 43,375 Property and equipment, net ​ 106 ​ 71 Right-of-use lease asset ​ ​ 1,227 ​ ​ 44 Non-current deposits ​ ​ — ​ ​ 1,509 Total assets ​ $ 36,802 ​ $ 44,999 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 514 ​ $ 1,515 Accrued and other current liabilities ​ 1,972 ​ 2,076 Total current liabilities ​ 2,486 ​ 3,591 Lease liability ​ ​ 1,057 ​ ​ 44 Total liabilities ​ 3,543 ​ 3,635 Stockholders’ equity: ​ ​ Preferred stock, $ 0.001 par value; 5,000,000 shares authorized at December 31, 2020 and September 30, 2021; ​ ​ 6 % Convertible Exchangeable preferred stock; 335,273 shares issued and outstanding at December 31, 2020 and September 30, 2021. Aggregate preference in liquidation of  $ 4,006,512 as of December 31, 2020 and September 30, 2021. ​ — ​ — Series A convertible preferred stock, $ 0.001 par value; 264 shares issued and outstanding at December 31, 2020 and September 30, 2021. ​ — ​ — Series B convertible preferred stock, $ 0.001 par value; 237,745 shares issued and outstanding at December 31, 2020 and September 30, 2021. ​ — ​ — Common stock, $ 0.001 par value; 100,000,000 shares authorized at December 31, 2020 and September 30, 2021; 6,246,896 and 9,797,735 shares issued and outstanding at December 31, 2020 and September 30, 2021. ​ 6 ​ 10 Additional paid-in capital ​ 400,071 ​ 421,771 Accumulated other comprehensive loss ​ ( 746 ) ​ ( 753 ) Accumulated deficit ​ ( 366,072 ) ​ ( 379,664 ) Total stockholders’ equity ​ 33,259 ​ 41,364 Total liabilities and stockholders’ equity ​ $ 36,802 ​ $ 44,999 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 3 Table of Contents CYCLACEL PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In $000s, except share and per share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2020 2021 2020 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues ​ $ — ​ $ — ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ Research and development ​ 1,075 ​ 4,217 ​ 3,344 ​ 10,884 ​ General and administrative ​ 1,497 ​ 1,781 ​ 4,124 ​ 5,520 ​ Total operating expenses ​ 2,572 ​ 5,998 ​ 7,468 ​ 16,404 ​ Operating loss ​ ( 2,572 ) ​ ( 5,998 ) ​ ( 7,468 ) ​ ( 16,404 ) ​ Other income (expense): ​ ​ ​ ​ ​ Foreign exchange gains (losses) ​ ( 25 ) ​ 9 ​ 42 ​ 5 ​ Interest income ​ 4 ​ 4 ​ 36 ​ 12 ​ Other income, net ​ 56 ​ — ​ 891 ​ 144 ​ Total other income, net ​ 35 ​ 13 ​ 969 ​ 161 ​ Loss before taxes ​ ( 2,537 ) ​ ( 5,985 ) ​ ( 6,499 ) ​ ( 16,243 ) ​ Income tax benefit ​ 281 ​ 998 ​ 858 ​ 2,650 ​ Net loss ​ ( 2,256 ) ​ ( 4,987 ) ​ ( 5,641 ) ​ ( 13,593 ) ​ Dividend on convertible exchangeable preferred shares ​ ( 50 ) ​ ( 50 ) ​ ( 151 ) ​ ( 151 ) ​ Net loss applicable to common shareholders ​ $ ( 2,306 ) ​ $ ( 5,037 ) ​ $ ( 5,792 ) ​ $ ( 13,744 ) ​ Basic and diluted earnings per common share: ​ ​ ​ ​ ​ Net loss per share – basic and diluted ​ $ ( 0.47 ) ​ $ ( 0.54 ) ​ $ ( 1.81 ) ​ $ ( 1.60 ) ​ Weighted average common shares outstanding ​ 4,863,984 ​ 9,368,056 ​ 3,197,508 ​ 8,575,379 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 4 Table of Contents CYCLACEL PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In $000s) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2020 2021 2020 2021 ​ Net loss ​ $ ( 2,256 ) ​ $ ( 4,987 ) ​ $ ( 5,641 ) ​ $ ( 13,593 ) ​ Translation adjustment ​ ( 8,066 ) ​ 5,348 ​ 3,704 ​ 2,896 ​ Unrealized foreign exchange gain (loss) on intercompany loans ​ 8,119 ​ ( 5,443 ) ​ ( 3,765 ) ​ ( 2,903 ) ​ Comprehensive loss ​ $ ( 2,203 ) ​ $ ( 5,082 ) ​ $ ( 5,702 ) ​ $ ( 13,600 ) ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 5 Table of Contents ​ CYCLACEL PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In $000s, except share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional Other ​ ​ ​ Total ​ Preferred Stock Common Stock Paid-in Comprehensive Accumulated Stockholders’ ​ Shares Amount Shares Amount Capital Loss Deficit Equity Balances at December 31, 2019 ​ 335,537 ​ $ — 859,998 ​ $ 1 ​ $ 370,142 ​ $ ( 819 ) ​ $ ( 357,627 ) ​ $ 11,697 Stock-based compensation — ​ — — ​ — ​ 90 ​ — ​ — ​ 90 Preferred stock dividends — ​ — — ​ — ​ ( 50 ) ​ — ​ — ​ ( 50 ) Unrealized foreign exchange on intercompany loans — ​ — — ​ — ​ — ​ ( 11,187 ) ​ — ​ ( 11,187 ) Translation adjustment — ​ — — ​ — ​ — ​ 11,060 ​ — ​ 11,060 Loss for the period — ​ — — ​ — ​ — ​ — ​ ( 1,220 ) ​ ( 1,220 ) Balances at March 31, 2020 335,537 ​ $ — 859,998 ​ $ 1 ​ $ 370,182 ​ $ ( 946 ) ​ $ ( 358,847 ) ​ $ 10,390 Issue of common stock, pre-funded warrants and warrants on equity financing, net of expenses — ​ — 4,003,986 ​ 4 ​ 18,302 ​ — ​ — ​ 18,306 Stock-based compensation — ​ — — ​ — ​ 86 ​ — ​ — ​ 86 Preferred stock dividends — ​ — — ​ — ​ ( 50 ) ​ — ​ — ​ ( 50 ) Unrealized foreign exchange on intercompany loans — ​ — — ​ — ​ — ​ ( 697 ) ​ — ​ ( 697 ) Translation adjustment — ​ — — ​ — ​ — ​ 709 ​ — ​ 709 Loss for the period — ​ — — ​ — ​ — ​ — ​ ( 2,166 ) ​ ( 2,166 ) Balances at June 30, 2020 335,537 ​ $ — 4,863,984 ​ $ 5 ​ $ 388,520 ​ $ ( 934 ) ​ $ ( 361,013 ) ​ $ 26,578 Stock-based compensation — ​ — — ​ — ​ 113 ​ — ​ — ​ 113 Preferred stock dividends — ​ — — ​ — ​ ( 50 ) ​ — ​ — ​ ( 50 ) Unrealized foreign exchange on intercompany loans — ​ — — ​ — ​ — ​ 8,119 ​ — ​ 8,119 Translation adjustment — ​ — — ​ — ​ — ​ ( 8,066 ) ​ — ​ ( 8,066 ) Loss for the period — ​ — — ​ — ​ — ​ — ​ ( 2,256 ) ​ ( 2,256 ) Balances at September 30, 2020 335,537 ​ $ — 4,863,984 ​ $ 5 ​ $ 388,583 ​ $ ( 881 ) ​ $ ( 363,269 ) ​ $ 24,438 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at December 31, 2020 573,282 ​ $ — 6,246,896 ​ $ 6 ​ $ 400,071 ​ $ ( 746 ) ​ $ ( 366,072 ) ​ $ 33,259 Issuance of common stock in underwritten offering, net of issuance costs ​ — ​ — 2,078,214 ​ 2 ​ 13,499 ​ — ​ — ​ 13,501 Warrant Exercises ​ — ​ — 909,000 ​ 1 ​ 4,544 ​ — ​ — ​ 4,545 Stock-based compensation — ​ — — ​ — ​ 255 ​ — ​ — ​ 255 Preferred stock dividends — ​ — — ​ — ​ ( 50 ) ​ — ​ — ​ ( 50 ) Unrealized foreign exchange on intercompany loans — ​ — — ​ — ​ — ​ 1,599 ​ — ​ 1,599 Translation adjustment — ​ — — ​ — ​ — ​ ( 1,583 ) ​ — ​ ( 1,583 ) Loss for the period — ​ — — ​ — ​ — ​ — ​ ( 3,478 ) ​ ( 3,478 ) Balances at March 31, 2021 573,282 ​ $ — 9,234,110 ​ $ 9 ​ $ 418,319 ​ $ ( 730 ) ​ $ ( 369,550 ) ​ $ 48,048 Stock-based compensation — ​ — — ​ — ​ 279 ​ — ​ — ​ 279 Preferred stock dividends — ​ — — ​ — ​ ( 50 ) ​ — ​ — ​ ( 50 ) Unrealized foreign exchange on intercompany loans — ​ — — ​ — ​ — ​ 941 ​ — ​ 941 Translation adjustment — ​ — — ​ — ​ — ​ ( 869 ) ​ — ​ ( 869 ) Loss for the period — ​ — — ​ — ​ — ​ — ​ ( 5,127 ) ​ ( 5,127 ) Balances at June 30, 2021 573,282 ​ $ — 9,234,110 ​ $ 9 ​ $ 418,548 ​ $ ( 658 ) ​ $ ( 374,677 ) ​ $ 43,222 Issue of common stock on At Market issuance sales agreement, net of expenses ​ — ​ — 563,625 ​ 1 ​ 2,954 ​ — ​ — ​ 2,955 Stock-based compensation — ​ — — ​ — ​ 319 ​ — ​ — ​ 319 Preferred stock dividends — ​ — — ​ — ​ ( 50 ) ​ — ​ — ​ ( 50 ) Unrealized foreign exchange on intercompany loans — ​ — — ​ — ​ — ​ ( 5,443 ) ​ — ​ ( 5,443 ) Translation adjustment — ​ — — ​ — ​ — ​ 5,348 ​ — ​ 5,348 Loss for the period — ​ — — ​ — ​ — ​ — ​ ( 4,987 ) ​ ( 4,987 ) Balances at September 30, 2021 573,282 ​ $ — 9,797,735 ​ $ 10 ​ $ 421,771 ​ $ ( 753 ) ​ $ ( 379,664 ) ​ $ 41,364 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 6 Table of Contents CYCLACEL PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In $000s) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2020 2021 Operating activities: ​ ​ ​ ​ Net loss ​ $ ( 5,641 ) ​ $ ( 13,593 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Depreciation ​ ​ 16 ​ ​ 36 Stock-based compensation ​ ​ 289 ​ ​ 853 Changes in lease liability ​ ​ ( 81 ) ​ ​ 173 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Prepaid expenses and other assets ​ ​ ( 711 ) ​ ​ ( 2,655 ) Accounts payable and other current liabilities ​ ​ ( 654 ) ​ ​ 1,195 Net cash used in operating activities ​ ​ ( 6,782 ) ​ ​ ( 13,991 ) Investing activities: ​ ​ ​ ​ Purchase of property, plant and equipment ​ ​ ( 54 ) ​ ​ ( 25 ) Net cash used in investing activities ​ ​ ( 54 ) ​ ​ ( 25 ) Financing activities: ​ ​ ​ ​ Proceeds from issuing common stock and warrant exercises, net of issuance costs ​ ​ 18,307 ​ ​ 21,001 Payment of preferred stock dividend ​ ​ ( 151 ) ​ ​ ( 151 ) Net cash provided by financing activities ​ ​ 18,156 ​ ​ 20,850 ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ ​ ( 75 ) ​ ​ ( 21 ) Net increase in cash and cash equivalents ​ ​ 11,245 ​ ​ 6,813 Cash and cash equivalents, beginning of period ​ ​ 11,885 ​ ​ 33,406 Cash and cash equivalents, end of period ​ $ 23,130 ​ $ 40,219 Supplemental cash flow information: ​ ​ ​ ​ Cash received during the period for: ​ ​ ​ ​ Interest ​ ​ 36 ​ ​ 13 Taxes ​ ​ — ​ ​ 1,352 ​ ​ ​ ​ ​ ​ ​ Non cash financing activities: ​ ​ ​ ​ Accrual of preferred stock dividends ​ ​ 50 ​ ​ 50 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 7 Table of Contents CYCLACEL PHARMACEUTICALS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Company Overview Nature of Operations Cyclacel Pharmaceuticals, Inc. (“Cyclacel” or the “Company”) is a clinical-stage biopharmaceutical company developing innovative cancer medicines based on cell cycle, transcriptional regulation and mitosis biology. The Company uses insights in cancer biology to develop investigational medicines addressing the growing problem of resistance. Cancer cells learn to evade anticancer therapeutics and become resistant to available therapies. The Company aims to suppress mechanisms of resistance and reactivate the body’s own cell death mechanisms to destroy cancer cells. ​ Through September 30, 2021, substantially all efforts of the Company to date have been devoted to performing research and development, conducting clinical trials, developing and acquiring intellectual property, raising capital and recruiting and training personnel. ​ 2. Summary of Significant Accounting Policies Basis of Presentation The consolidated balance sheet as of September 30, 2021, the consolidated statements of operations, comprehensive loss, and stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and the consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020, and all related disclosures contained in the accompanying notes, are unaudited. The consolidated balance sheet as of December 31, 2020 is derived from the audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2021. The consolidated financial statements are presented on the basis of accounting principles that are generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements. In the opinion of management, all adjustments, which include only normal recurring adjustments necessary to present fairly the consolidated balance sheet as of September 30, 2021, and the results of operations and, comprehensive loss for the three and nine months ended September 30, 2021, and cash flows for the nine months ended September 30, 2021, have been made. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other reporting period. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2020 that are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021. Reverse Stock Split On April 14, 2020 the Company completed a one -for-twenty reverse stock split, which reduced the number of shares of the Company’s common stock that were issued and outstanding immediately prior to the effectiveness of the reverse stock split. The number of shares of the Company’s authorized common stock was not affected by the reverse stock split and the par value of Cyclacel’s common stock remained unchanged at $ 0.001 per share. The reverse stock split reduced the number of shares of the Company’s common stock that were outstanding at April 14, 2020 from 17,199,974 to 859,998 , after the cancellation of 14 fractional shares. All amounts related to number of shares and per share amounts have been retroactively restated in these consolidated financial statements. 8 Table of Contents Going Concern Management considers that there are no conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern for a period of at least one year from the date the financial statements are issued. The Company expects that its cash of approximately $ 40.2 million as of September 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements to early 2023. This evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued, including: a. The Company’s current financial condition, including its sources of liquidity; b. The Company’s conditional and unconditional obligations due or anticipated within one year; c. The funds necessary to maintain the Company’s operations considering its current financial condition, obligations, and other expected cash flows; and d. Other conditions and events, when considered in conjunction with the above, that may adversely affect the Company’s ability to meet its obligations. The future viability of the Company beyond the beginning of 2023 is dependent on its ability to raise additional capital to finance its operations. The Company does not currently have sufficient funds to complete development and commercialization of any of its drug candidates. Additional funding may not be available to the Company on favorable terms, or at all. If the Company is not able to secure additional funding when needed, it may have to delay, reduce the scope of or eliminate one or more of its clinical trials or research and development programs or make changes to its operating plan. In addition, it may have to partner one or more of its product candidate programs at an earlier stage of development, which would lower the economic value of those programs to the Company. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. It has now spread globally, including the United States and United Kingdom, where the Company has its operations. The World Health Organization has declared the coronavirus outbreak a pandemic. The extent to which the coronavirus impacts the Company’s financial condition and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the ultimate duration of the pandemic, the emergence of new geographic hotspots, the emergence of subsequent outbreaks, travel restrictions, quarantines, social distancing and business closure requirements in the United States, the United Kingdom and other countries, and the effectiveness of actions taken globally to contain and treat the disease . Management continues to evaluate the impact of the COVID-19 pandemic on its current operations and future plans and takes appropriate measures to address any such impact, but there can be no assurance that these efforts will be successful and that the pandemic will not have negative effect on the Company’s financial position and results of operations, but it could materially affect the ability of the Company to raise future capital or to conduct clinical studies on a timely basis. ​ Accounting standards adopted in the period On January 1, 2020, the Company adopted the guidance issued in ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” As permitted by the ASU, the Company will apply the new guidance on a prospective basis to any new cloud computing arrangements. ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements to be deferred over the non-cancellable term of the cloud computing arrangements plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is controlled by the cloud service provider. There has been no impact of this pronouncement on the Company’s consolidated financial statements and disclosures. 9 Table of Contents The FASB has 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”. This standard simplifies the accounting for convertible instruments, such as convertible debt or convertible preferred stock, by eliminating two potential methods in accounting for the embedded conversion feature. The standard also removes certain conditions previously used to evaluate whether a freestanding financial instrument, or certain types of embedded features, are considered to be settled in the issuer’s own equity. Finally, ASU 2020-06 requires that an entity use the if-converted method in calculating the effects of convertible instruments on diluted earnings per share, with one limited exception. As a smaller reporting company, the amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those years. Early adoption is permitted, but no earlier than for fiscal years beginning after December 15, 2020. The Company does not currently have any contracts affected by this guidance, but has nonetheless elected to adopt ASU 2020-06 as of January 1, 2021. There was no impact of early adoption of this pronouncement on the Company’s consolidated financial statements and disclosures. Recently Issued Accounting Pronouncements The Financial Accounting Standards Board (“FASB”) has issued ASU 2020-04, “Reference Rate Reform (Topic 848)”. This standard provides optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform initiatives that would replace interbank offered rates, including the London Interbank Offered Rate (LIBOR). For example, modifications of lease contracts within the scope of ASC 842 solely for changes in reference rates would be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The Company does not currently have any contracts affected by this guidance. Fair Value of Financial Instruments Financial instruments consist of cash equivalents, accounts payable and accrued liabilities. The carrying amounts of cash equivalents, accounts payable and accrued liabilities approximate their respective fair values due to the nature of the accounts, notably their short maturities. Comprehensive Income (Loss) All components of comprehensive income (loss), including net income (loss), are reported in the financial statements in the period in which they are recognized. Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Net income (loss) and other comprehensive income (loss), including foreign currency translation adjustments, are reported, net of any related tax effect, to arrive at comprehensive income (loss). No taxes were recorded on items of other comprehensive income (loss). There were no reclassifications out of other comprehensive income (loss) during the nine months ended September 30, 2020 and 2021. Revenue recognition The Company recognizes revenue using the five step-model provided in ASC 606, Revenue from Contracts with Customers (“ASC 606”): (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation. 10 Table of Contents The transaction price could include both fixed payments and an estimate of variable consideration, including milestone payments. The Company determines the variable consideration to be included in the transaction price by estimating the most likely amount that will be received and then applies a constraint to reduce the consideration to the amount which is probable of being received. When applying the constraint, the Company considers: ● Whether achievement of a development milestone is highly susceptible to factors outside the entity’s influence, such as milestones involving the judgment or actions of third parties, including regulatory bodies; ● Whether the uncertainty about the achievement of the milestone is not expected to be resolved for a long period of time; ● Whether the Company can reasonably predict that a milestone will be achieved based on previous experience; and ● The complexity and inherent uncertainty underlying the achievement of the milestone. The transaction price is allocated to each performance obligation based on the relative selling price of each performance obligation. The best estimate of the selling price is determined after considering all reasonably available information, including market data and conditions, entity-specific factors such as the cost structure of the deliverable and internal profit and pricing objectives. The revenue allocated to each performance obligation is recognized as or when the Company satisfies the performance obligation. The Company recognizes a contract asset, when the value of satisfied (or part satisfied) performance obligations is in excess of the payment due to the Company, and deferred revenue when the amount of unconditional consideration is in excess of the value of satisfied (or part satisfied) performance obligations. Once a right to receive consideration is unconditional, that amount is presented as a receivable. Grant revenue received from organizations that are not the Company’s customers, such as charitable foundations or government agencies, is presented as a reduction against the related research and development expenses. Leases The Company accounts for lease contracts in accordance with ASC 842. As of September 30, 2021, the Company’s one outstanding lease is classified as an operating lease. The Company recognizes an asset for the right to use an underlying leased asset for the lease term and records lease liabilities based on the present value of the Company’s obligation to make lease payments under the lease. As the Company’s leases do not indicate an implicit rate, the Company uses a best estimate of its incremental borrowing rate to discount the future lease payments. The Company estimates its incremental borrowing rate based on observable information about risk-free interest rates that are the same tenure as the lease term, adjusted for various factors, including the effects of assumed collateral, the nature of how the loan is repaid (e.g., amortizing versus bullet), and the Company’s credit risk. The Company evaluates options included in its lease agreements to extend or terminate the lease. The Company will reflect the effects of exercising those options in the lease term when it is reasonably certain that the Company will exercise that option. In assessing whether it is reasonably certain that the Company will exercise an option, the Company considers factors such as: ● The lease payments due in any optional period; ● Penalties for failure to exercise (or not exercise) the option; ● Market factors, such as the availability of similar assets and current rental rates for such assets; ● The nature of the underlying leased asset and its importance to the Company’s operations; and ● The remaining useful lives of any related leasehold improvements. 11 Table of Contents Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease payments, if any, are recognized in the period when the obligation to make those payments is incurred. Lease incentives received prior to lease commencement are recorded as a reduction in the right-of-use asset. Fixed lease incentives received after lease commencement reduce both the lease liability and the right-of-use asset. The Company has elected an accounting policy to account for the lease and non-lease components as a single lease component. ​ 3. Revenue Revenue recognized in the three and nine months ended September 30, 2020 and 2021 was $ 0 . 4. Net Loss per Common Share The Company calculates net loss per common share in accordance with ASC 260 “Earnings Per Share” (“ASC 260”). Basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. The following potentially dilutive securities have not been included in the computation of diluted net loss per share for the three months ended September 30, 2020 and 2021, as the result would be anti-dilutive: ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2020 2021 Stock options 154,594 720,788 6 % convertible exchangeable preferred stock 85 85 Series A preferred stock 6,600 6,600 Series B preferred stock — 1,188,725 Common stock warrants 4,370,525 3,234,379 Total shares excluded from calculation 4,531,804 5,150,577 ​ ​ 5. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in $000s): ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, ​ 2020 2021 Research and development tax credit receivable ​ $ 1,313 ​ $ 2,514 Prepayments and VAT receivable ​ ​ 684 ​ 530 Other current assets ​ 66 ​ ​ 112 ​ ​ $ 2,063 ​ $ 3,156 ​ ​ 6. Accrued and Other Liabilities Accrued and other current liabilities consisted of the following (in $000s): ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, ​ 2020 2021 Accrued research and development ​ $ 781 ​ $ 1,651 Accrued legal and professional fees ​ 325 ​ 300 Other current liabilities ​ 866 ​ 125 ​ ​ $ 1,972 ​ $ 2,076 ​ ​ 12 Table of Contents Other current liabilities as at 31 December 2020 include accrued compensation and the current portion of the lease liability for the Company’s facility in Dundee, Scotland. This lease was assigned on May 4, 2021 (see note 7). ​ ​ 7. Leases The Company currently has one lease, relating to its facility in Berkeley Heights, New Jersey. On May 4, 2021, the Company assigned the operating lease relating to its facility in Dundee, Scotland to the University of Dundee, Scotland for a reverse premium of approximately $ 400,000 , of which 50 % was payable on assignment. The remaining 50 % is due on May 4, 2022 and is recorded as a payable for the period ended September 30, 2021. The Company has no further obligations, liabilities or commitments in relation to this facility. As of and for the nine months ended September 30, 2021: The Company recognized operating lease expenses of $ 159,898 . Cash payments made during the nine months ended September 30, 2021 totaled $ 166,376 and were presented as cash outflows from operating activities. The remaining lease term as of September 30, 2021 is approximately 1.1 years for the Berkeley Heights facility. The discount rate used by the Company in determining the lease liability was 12 %. Remaining lease payments under the lease are (in $000’s): ​ ​ ​ ​ 2021 $ 15 2022 ​ ​ 36 2023 ​ ​ — 2024 ​ ​ — 2025 ​ ​ — Thereafter ​ ​ — ​ $ 51 ​ ​ ​ 8. Stock Based Compensation ASC 718 requires compensation expense associated with share-based awards to be recognized over the requisite service period, which for the Company is the period between the grant date and the date the award vests or becomes exercisable. Most of the awards granted by the Company (and still outstanding) vest ratably over one to four years . The Company recognizes all share-based awards under the straight-line attribution method, assuming that all granted awards will vest. Forfeitures are recognized in the periods when they occur. Stock based compensation has been reported within expense line items on the consolidated statement of operations for the three and nine months ended September 30, 2020 and 2021 as shown in the following table (in $000s): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ September 30, September 30, ​ 2020 2021 2020 2021 ​ General and administrative ​ $ 85 ​ $ 223 ​ $ 192 ​ $ 587 ​ Research and development ​ ​ 28 ​ $ 96 ​ $ 97 ​ $ 266 ​ Stock-based compensation costs before income taxes ​ $ 113 ​ $ 319 ​ $ 289 ​ $ 853 ​ ​ 2018 Plan In May 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”), under which Cyclacel may make equity incentive grants to its officers, employees, directors and consultants. The 2018 Plan replaces the 2015 Equity Incentive Plan (the “2015 Plan”). ​ The 2018 Plan allows for various types of award grants, including stock options and restricted stock units. 13 Table of Contents ​ As of September 30, 2021, the Company has reserved 891,015 shares of the Company’s common stock under the 2018 Plan for future issuances, including shares that were available under the 2015 Plan and carried forward to the 2018 Plan. Stock option awards granted under the Company’s equity incentive plans have a maximum life of 10 years and generally vest over a one to four-year period from the date of grant. ​ 2020 Inducement Equity Incentive Plan ​ In October 2020, the Inducement Equity Incentive Plan (the “Inducement Plan”) became effective. Under the Inducement Plan, Cyclacel may make equity incentive grants to new senior level Employees (persons to whom the Company may issue securities without stockholder approval). The Inducement Plan allows for the issuance of up to 200,000 shares of the Company’s common stock or the equivalent of such number. As of September 30, 2021, 120,000 shares under the Inducement Plan have been issued, leaving a remaining reserve of 80,000 shares. ​ Option Grants and Exercises ​ There were 154,653 options granted during the nine months ended September 30, 2021. These options had a grant date fair value ranging between $ 3.44 -$ 6.14 per option. There were 56,400 options granted during the nine months ended September 30, 2020. These options had a grant date fair value ranging between $ 2.48 -$ 3.95 per option. The fair value of the stock options granted is calculated using the Black-Scholes option-pricing model as prescribed by ASC 718 using the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended ​ Nine months ended ​ September 30, 2020 September 30, 2021 Expected term (years) 5  –  6 5  –  6 Risk free interest rate 0.270 % –  0.425 % ​ 0.420 % –  1.000 % Volatility 100 % –  114 % ​ 96  –  102 % Expected dividend yield over expected term 0.00 % ​ 0.00 % ​ ​ There were no stock options exercised during each of the nine months ended September 30, 2020 and 2021, respectively. The Company does not expect to be able to benefit from the deduction for stock option exercises that may occur because the company has tax loss carryforwards from prior periods that would be expected to offset any potential taxable income. ​ Outstanding Options A summary of the share option activity and related information is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted Average ​ ​ ​ Number of Average Remaining Aggregate ​ ​ Options Exercise Contractual ​ Intrinsic ​ ​ Outstanding ​ Price Per Share Term (Years) ​ Value ($000) Options outstanding at December 31, 2020 602,683 ​ $ 11.01 9.39 ​ $ 1,861 Granted 154,653 ​ $ 6.29 — ​ — Exercised — ​ ​ — — ​ — Cancelled/forfeited ( 36,548 ) ​ $ 11.03 — ​ — Options outstanding at September 30, 2021 720,788 ​ $ 10.00 8.47 ​ $ 547 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unvested at September 30, 2021 503,910 ​ $ 4.72 9.25 ​ $ 444 Vested and exercisable at September 30, 2021 216,878 ​ $ 22.25 6.65 ​ $ 104 ​ 14 Table of Contents The Company issued 14,000 restricted stock units to employees during the year ended December 31, 2019. The Company issued 3,938 additional restricted stock units to employees during the year ended December 31, 2020, of which 1,491 units have been forfeited. The vesting of the remaining 16,447 outstanding restricted stock units is dependent upon certain clinical performance criteria being met. The Company determined that the satisfaction of the clinical conditions was not probable at September 30, 2021 and, as a result, recorded no compensation expense related to restricted stock units for the quarter ended September 30, 2021. The Company issued 18,992 restricted stock units to its directors during the nine months ended September 30, 2021. These restricted stock units will vest over a period of one or three years . Each restricted stock unit was valued at $ 6.69 based on their fair value at the date of grant, which is equivalent to the market price of a share of the Company’s common stock. Summarized information for restricted stock units as of September 30, 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ Weighted ​ ​ Average ​ Average ​ ​ Restricted Grant Date ​ Remaining ​ ​ Stock Units ​ Value Per Share ​ Term Restricted Stock Units outstanding at September 30, 2021 35,439 ​ $ 8.82 ​ 9.01 years ​ ​ ​ ​ ​ ​ ​ ​ Unvested at September 30, 2021 35,439 ​ $ 8.82 ​ 9.01 years Vested and exercisable at September 30, 2021 — ​ $ — ​ 9.01 years ​ ​ ​ ​ ​ 9. Stockholders Equity August 2021 Controlled Equity Offering Sales Agreement On August 12, 2021, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. ("Cantor"), pursuant to which it may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to $ 50.0 million through Cantor as the sales agent. Cantor may sell the Company’s common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act. ​ Subject to the terms and conditions of the Sales Agreement, Cantor will use commercially reasonable efforts consistent with its normal trading and sales practices to sell shares of the Company’s common stock from time to time, based upon the Company's instructions, including any price, time or size limits specified by the Company. The Company has provided Cantor with customary indemnification rights, and Cantor will be entitled to a commission at a fixed rate equal to 3.0 % of the gross proceeds per share sold. The Company has no obligation to sell any of the shares and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement. The Sales Agreement will terminate upon the sale of all of the shares under the Sales Agreement unless terminated earlier by either party as permitted under the Sales Agreement. ​ During the three and nine months ended September 30, 2021, the Company sold 563,625 shares under the Sales Agreement for net proceeds of approximately $ 3.0 million. An additional 170,800 shares have been sold subsequent to September 30, 2021 for net proceeds of approximately $ 0.9 million. ​ March 2021 Equity Financing On March 12, 2021, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Oppenheimer & Co. Inc., as representative of the underwriters identified therein (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell 1,807,143 shares of common stock, $ 0.001 par value per share, at a public offering price of $ 7.00 per share (the “Offering”) along with a 30-day overallotment option to purchase up to an additional 271,071 shares of common stock at the public offering price, less underwriting discounts and commissions. ​ 15 Table of Contents The closing of the offering occurred on March 16, 2021, and the net proceeds to the Company (including exercise of the over-allotment option) were approximately $ 13.5 million, after deducting placement agent fees and other offering expenses payable by the Company. December 2020 Equity Financing On December 18, 2020 , the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Acorn Bioventures, LP (the “Purchaser”), pursuant to which the Company agreed to offer, issue and sell to the Purchaser, (i) in a registered direct offering, (a) an aggregate of 485,912 shares (the “Common Shares”) of common stock, par value $ 0.001 per share (“Common Stock”), and (b) an aggregate of 237,745 shares of Series B Convertible Preferred Stock (the “Preferred Shares,” and collectively with the Common Shares, the “Shares”), par value $ 0.001 per share (“Series B Preferred Stock”), and (ii) in a concurrent private placement, warrants (the “Warrants”) to purchase up to an aggregate of 669,854 shares (the “Warrant Shares”) of Common Stock. The combined purchase price for each Share, together with one Warrant to purchase 0.4 shares of Common Stock, is $ 4.18 . Each Warrant shall be exercisable beginning on the 12-month anniversary of the date of issuance for a period of five years after the date of issuance, at an exercise price of $ 4.13 per Warrant Share. The exercise price of the Warrants will be subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Warrants. The Warrants may be exercised on a “cashless” basis. Each share of Series B Convertible Preferred Stock will convert into five shares of Common Stock. The conversion feature within the Series B Convertible Preferred Stock was determined to be beneficial as of the offering date. A beneficial conversion feature is defined as a nondetachable conversion feature that is "in-the-money" at issuance. The Company calculated the value of the beneficial conversion feature based on its intrinsic value, which is the difference between the “effective conversion price” (after allocating the proceeds of the offering between the Series B Convertible Preferred Stock, the Warrants and Common Stock issued) and the market price of the Company's common shares, multiplied by the number of shares into which the Series B Convertible Preferred Stock is convertible. The effective conversion price of $ 3.18 per share is different from the $ 4.18 per share contractual conversion price. As the series B Preferred Stock contained no stated redemption date and the conversion feature could be exercised at any time, the discount associated with the beneficial conversion feature was immediately charged against additional paid-in-capital and treated as a deemed dividend for both financial reporting and earnings per share purposes. The common stock, Warrants and Series B Preferred Stock are freestanding financial instruments. The Warrants are classified within equity (as a component of additional paid-in capital) in the consolidated balance sheet and are not remeasured on a recurring basis. The Series B Preferred Stock is classified within permanent equity in the consolidated balance sheet. The closing of the offering occurred on December 22, 2020 and the net proceeds to the Company were approximately $ 6.9 million, after deducting offering expenses payable by the Company. As of September 30, 2021, 237,745 shares of the Series B Preferred Stock remained issued and outstanding . April 2020 Equity Financing On April 21, 2020, the Company entered into a co-placement agency agreement with Roth Capital Partners, LLC, Ladenburg Thalmann & Co. Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC (the “Co-Placement Agents”) and a securities purchase agreement with certain purchasers for the purchase and sale of (i) 1,910,000 shares of common stock, (ii) pre-funded warrants to purchase up to 2,090,000 shares of common stock at an exercise price of $ 0.001 per share, and (iii) accompanying common stock warrants to purchase up to 4,000,000 shares of common stock at an exercise price of $ 5.00 per share. The shares of common stock and accompanying common stock warrants were sold at a combined public offering price of $ 5.00 per share and common stock warrant. Each common stock warrant sold with the shares of common stock represents the right to purchase one share of common stock at an exercise price of $ 5.00 per share. The common stock warrants are exercisable immediately and expire five years from the date of issuance. 16 Table of Contents The pre-funded warrants and accompanying common stock warrants were sold at a combined public offering price of $ 4.999 per pre-funded warrant and common stock warrant. The pre-funded warrants were sold to purchasers whose purchase of shares of common stock in the public offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99 % (or, at the election of the purchaser, 9.99 %) of the Company’s outstanding common stock immediately following the consummation of the public offering, in lieu of shares of common stock. Each pre-funded warrant represents the right to purchase one share of the Company’s common stock at an exercise price of $ 0.001 per share. The pre-funded warrants are exercisable immediately and may be exercised at any time until the pre-funded warrants are exercised in full. The shares of common stock and pre-funded warrants, and accompanying common stock warrants, were issued separately and are immediately separable upon issuance. ​ The closing of the offering occurred on April 24, 2020, and the net proceeds to the Company were approximately $ 18.3 million, after deducting placement agent fees and other offering expenses payable by the Company. ​ Subsequent to the closing of the offering, all of the pre-funded warrants issued in connection therewith were converted into 2,090,000 shares of common stock. ​ Warrants December 2020 Warrants As of September 30, 2021, warrants to purchase 669,854 shares of common stock remained outstanding. Each warrant shall be exercisable beginning on the 12-month anniversary of the date of issuance for a period of five years after the date of issuance, at an exercise price of $ 4.13 per Warrant Share. The exercise price of the Warrants will be subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the warrants. The warrants may be exercised on a “cashless” basis. There were no exercises of these warrants during the three and nine months ended September 30, 2021. April 2020 Warrants As of September 30, 2021, 2,190,000 warrants issued in connection with the April 2020 equity financing remained outstanding, each with an exercise price of $ 5.00 . All such warrants were issued in connection with the April 2020 co-placement agency agreement. The common warrants are immediately exercisable and will expire on the fifth anniversary of the original issuance date. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s common stock. The common warrants were issued separately from the common stock and were eligible for transfer immediately after issuance. A common warrant to purchase one share of common stock was issued for every share of common stock purchased in this offering. The common warrants are exercisable, at the option of each holder, in whole or in part, by delivering to the Company a duly executed exercise notice accompanied by payment in full for the number of shares of the Company’s common stock purchased upon such exercise (except in the case of a cashless exercise). A holder (together with its affiliates) may not exercise any portion of the common warrant to the extent that the holder would own more than 4.99 % of the outstanding common stock immediately after exercise, except that upon at least 61 days prior notice from the holder to the Company, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s common warrants up to 9.99 % of the number of shares of the Company’s common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the common warrants. No fractional shares of common stock will be issued in connection with the exercise of a common warrant. In lieu of fractional shares, the Company will round down to the next whole share. A total of 909,000 warrants were exercised during the nine months ended September 30, 2021. 17 Table of Contents July 2017 Warrants As of September 30, 2021, 374,525 warrants issued in connection with the July 2017 underwritten public offering remained outstanding, each with an exercise price of $ 40.00 . All such warrants were issued in connection with the July 2017 underwritten public offering and are immediately exercisable. The warrants expire in 2024. Subject to limited exceptions, a holder of warrants will not have the right to exercise any portion of its warrants if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of common stock in excess of 4.99 % (or, at the election of the purchaser, 9.99 %) of the shares of our Common Stock then outstanding after giving effect to such exercise. The exercise price and the number of shares issuable upon exercise of the warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock. The warrant holders must pay the exercise price in cash upon exercise of the warrants, unless such warrant holders are utilizing the cashless exercise provision of the warrants. On the expiration date, unexercised warrants will automatically be exercised via the “cashless” exercise provision. Prior to the exercise of any warrants to purchase common stock, holders of the warrants will not have any of the rights of holders of the common stock purchasable upon exercise, including the right to vote, except as set forth therein. There were no exercises of these warrants during the three and nine months ended September 30, 2021. Series A Preferred Stock 8,872 shares of the Company’s Series A Preferred Stock were issued in the July 2017 underwritten public offering. During the year ended December 31, 2017, 8,608 shares of the Series A Preferred Stock were converted into 215,200 shares of common stock. As of September 30, 2021, 264 shares of the Series A Preferred Stock remained issued and outstanding which are convertible into 6,600 shares of common stock. Each share of Series A Preferred Stock is convertible at any time at the option of the holder thereof, into a number of shares of common stock determined by dividing $ 1,000 by the initial conversion price of $ 40.00 per share, subject to a 4.99 % blocker provision, or, upon election by a holder prior to the issuance of shares of Series A Preferred Stock, 9.99 %, and is subject to adjustment for stock splits, stock dividends, distributions, subdivisions and combinations. The 264 shares of Series A Preferred Stock issued and outstanding at September 30, 2021, are convertible into 6,600 shares of common stock. In the event of a liquidation, the holders of shares of the Series A Preferred Stock shall be permitted to participate on an as-converted-to-common-stock basis in any distribution of assets of the Company. The Company shall not pay any dividends on shares of common stock (other than dividends in the form of common stock) unless and until such time as dividends on each share of Series A Preferred Stock are paid on an as-converted basis. There is no restriction on the Company’s ability to repurchase shares of Series A Preferred Stock while there is any arrearage in the payment of dividends on such shares, and there are no sinking fund provisions applicable to the Series A Preferred Stock. Subject to certain conditions, at any time following the issuance of the Series A Preferred Stock, the Company has the right to cause each holder of the Series A Preferred Stock to convert all or part of such holder’s Series A Preferred Stock in the event that (i) the volume weighted average price of our common stock for 30 consecutive trading days (the “Measurement Period”) exceeds 300 % of the initial conversion price of the Series A Preferred Stock (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and similar transactions), (ii) the daily trading volume on each Trading Day during such Measurement Period exceeds $ 500,000 per trading day and (iii) the holder is not in possession of any information that constitutes or might constitute, material non-public information which was provided by the Company. The right to cause each holder of the Series A Preferred Stock to convert all or part of such holder’s Series A Preferred Stock shall be exercised ratably among the holders of the then outstanding preferred stock. 18 Table of Contents The Series A Preferred Stock has no maturity date, will carry the same dividend rights as the common stock, and with certain exceptions, contains no voting rights. In the event of any liquidation or dissolution of the Company, the Series A Preferred Stock ranks senior to the common stock in the distribution of assets, to the extent legally available for distribution. 6 % Convertible Exchangeable Preferred Stock As of September 30, 2021, there were 335,273 shares of the Company’s 6 % Convertible Exchangeable Preferred Stock (the “ 6 % Preferred Stock”) issued and outstanding at an issue price of $ 10.00 per share. Dividends on the 6 % Preferred Stock are cumulative from the date of original issuance at the annual rate of 6 % of the liquidation preference of the 6 % Preferred Stock, payable quarterly on the first day of February, May, August and November, commencing February 1, 2005. Any dividends must be declared by the Company’s board of directors and must come from funds that are legally available for dividend payments. The 6 % Preferred Stock has a liquidation preference of $ 10.00 per share, plus accrued and unpaid dividends. As of September 30, 2021, accrued and unpaid dividends amounted to $ 50,291 . The Company may automatically convert the 6% Preferred Stock into common stock if the per share closing price of the Company’s common stock has exceeded $59,220, which is 150% of the conversion price of the 6% Preferred Stock, for at least 20 trading days during any 30 day trading period, ending within five trading days prior to notice of automatic conversion. The 6 % Preferred Stock has no maturity date and no voting rights prior to conversion into common stock, except under limited circumstances. The Company may, at its option, redeem the 6 % Preferred Stock in whole or in part, out of funds legally available at the redemption price of $ 10.00 per share. The 6 % Preferred Stock is exchangeable, in whole but not in part, at the option of the Company on any dividend payment date beginning on November 1, 2005 (the “Exchange Date”) for the Company’s 6 % Convertible Subordinated Debentures (the “Debentures”) at the rate of $ 10.00 principal amount of Debentures for each share of 6 % Preferred Stock. The Debentures, if issued, will mature 25 years after the Exchange Date and have substantially similar terms to those of the 6 % Preferred Stock. No such exchanges have taken place to date. 10. Subsequent Events Dividends on 6% Preferred Stock ​ On September 8, 2021 , the board of directors declared a quarterly cash dividend in the amount of $ 0.15 per share on the Company’s Preferred Stock. The cash dividend was paid on November 1, 2021 to the holders of record of the 6 % Preferred Stock as of the close of business on October 15, 2021 . ​ 19 Table of Contents