What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-10 · 99 added, 182 removed, 285 unchanged (50% of the section changed)

3 unchanged sentences

(In $000s, except share, per share, and liquidation preference amounts)

September 30,

Current assets:

13 unchanged sentences

Redeemable common stock, $ 0.001 par value;

0 and 3,117,100 shares issued and outstanding at December 31, 2021 and September 30, 2022 (Note 10)

3,117,100 shares issued and outstanding at March 31, 2023 and December 31, 2022 (Note 10)

Stockholders’ equity:

Preferred stock, $ 0.001 par value;

5,000,000 shares authorized at December 31, 2021 and September 30, 2022;

5,000,000 shares authorized at March 31, 2023 and December 31, 2022;

6 % Convertible Exchangeable preferred stock;

335,273 shares issued and outstanding at December 31, 2021 and September 30, 2022.

Aggregate preference in liquidation of $ 4,006,512 as of December 31, 2021 and September 30, 2022.

335,273 shares issued and outstanding at March 31, 2023 and December 31, 2022.

Aggregate preference in liquidation of $ 4,006,512 as of March 31, 2023 and December 31, 2022.

Series A convertible preferred stock, $ 0.001 par value;

264 shares issued and outstanding at December 31, 2021 and September 30, 2022.

264 shares issued and outstanding at March 31, 2023 and December 31, 2022.

Series B convertible preferred stock, $ 0.001 par value;

237,745 shares issued and outstanding at December 31, 2021 and September 30, 2022.

237,745 shares issued and outstanding at March 31, 2023 and December 31, 2022.

Common stock, $ 0.001 par value;

100,000,000 shares authorized at December 31, 2021 and September 30, 2022;

9,993,135 and 12,539,189 shares issued and outstanding at December 31, 2021 and September 30, 2022 respectively.

100,000,000 shares authorized at March 31, 2023 and December 31, 2022;

12,539,189 shares issued and outstanding at March 31, 2023 and December 31, 2022

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating expenses:

19 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Translation adjustment

9 unchanged sentences

Balances at December 31, 2021

Issue of common stock and associated warrants on underwritten offering, net of expenses

Warrant Exercises

Stock-based compensation

4 unchanged sentences

Balances at March 31, 2022

Stock-based compensation

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at June 30, 2021

Issue of common stock on At Market Issuance sales agreement, net of expenses

Stock-based compensation

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at September 30, 2021

Balances at December 31, 2022

5 unchanged sentences

Balances at March 31, 2023

Issue of common stock on At Market issuance sales agreement, net of expenses

Stock-based compensation

Stock-based awards

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at June 30, 2022

Issue of common stock on At Market issuance sales agreement, net of expenses

Reclassification of redeemable common stock

( 3,117,100 )

Stock-based compensation

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at September 30, 2022

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

10 unchanged sentences

Financing activities:

Proceeds, net of issuance costs, from issuing common stock and warrants

Payment of preferred stock dividend

6 unchanged sentences

Cash received during the period for:

Research & Development Tax Credits

Cash paid during the period for:

Non cash financing activities:

7 unchanged sentences

(“Cyclacel” or the “Company”) is a clinical-stage biopharmaceutical company developing innovative cancer medicines based on cell cycle, transcriptional regulation and mitosis control biology.

Cyclacel is a pioneer in the field of cancer cell cycle biology with a vision to improve patient healthcare by translating insights in cancer biology into medicines that can overcome resistance and ultimately increase a patient’s overall survival rate.

Through September 30, 2022, 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.

Cyclacel is a pioneer company in the field of cancer cell cycle biology with a vision to improve patient healthcare by translating insights in cancer biology into medicines that can overcome resistance and ultimately increase a patient’s overall survival.

Through March 31, 2023, 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.

Summary of Significant Accounting Policies

Basis of Presentation

The consolidated balance sheet as of September 30, 2022, the consolidated statements of operations, comprehensive loss, and stockholders’ equity for the three and nine months ended September 30, 2022 and 2021 and the consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021, and all related disclosures contained in the accompanying notes, are unaudited.

The consolidated balance sheet as of March 31, 2023, the consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the three months ended March 31, 2023 and 2022, and all related disclosures contained in the accompanying notes, are unaudited.

The consolidated balance sheet as of December 31, 2022 is derived from the audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2023.

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 GAAP 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, 2022, and the results of operations and, comprehensive loss for the three and nine months ended September 30, 2022, and cash flows for the nine months ended September 30, 2022, have been made.

The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other reporting period.

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 March 31, 2023, and the results of operations, comprehensive loss, and cash flows for the three months ended March 31, 2023 and 2022, have been made.

The interim results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 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, 2022 that are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2023.

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 $ 23.7 million as of September 30, 2022 will be sufficient to fund its operating expenses and capital expenditure requirements to the end of 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:

The Company’s current financial condition, including its sources of liquidity;

The Company’s conditional and unconditional obligations due or anticipated within one year;

The funds necessary to maintain the Company’s operations considering its current financial condition, obligations, and other expected cash flows;

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 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.

Pursuant to the requirements of Accounting Standard Codification (ASC) 205-40, Presentation of Financial Statements-Going Concern , management is required at each reporting period to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued.

When substantial doubt exists under this methodology, management evaluates whether the mitigating effects of its plans sufficiently alleviate the substantial doubt about the Company’s ability to continue as a going concern.

The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern for one year after the date that these financial statements are issued.

In performing its analysis, management excluded certain elements of its operating plan that cannot be considered probable.

Under ASC 205-40, the future receipts of potential funding from future equity or debt issuances or by entering into partnership agreements cannot be considered probable at this time because these plans are not entirely

within the Company’s control nor have they been approved by the Board of Directors as of the date of these consolidated financial statements.

Based on the Company’s current operating plan, it is anticipated that cash and cash equivalents of $ 11.4 million as of March 31, 2023, together with the $4.7 million research and development tax credits received in April 2023 will allow it to meet liquidity requirements through the end of 2023.

The Company’s history of losses, negative cash flows from operations, potential rescission rights, liquidity resources currently on hand, and its dependence on the ability to obtain additional financing to fund its operations after the current resources are exhausted, about which there can be no certainty, have resulted in the assessment that there is substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the issuance date of these financial statements.

While the Company has plans in place to mitigate this risk, which primarily consist of raising additional capital through a combination of public or private equity or debt financings or by entering into partnership agreements for further development of our drug candidates, there is no guarantee that it will be successful in these mitigation efforts.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business.

Accounting Standards Adopted in the Period

In November 2021 , the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

In November 2021 , the Financial Accounting Standards Board (“FASB”) issued ASU No.

2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance .

This ASU requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958-605 or based on International Accounting Standard No.

ASU 2021-10 which became effective for us on January 1, 2022.

The Company has evaluated the effect that this guidance has on its Consolidated Financial Statements and has determined it does not have a material impact.

This Accounting Standards Update (“ASU”) requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958-605 or based on International Accounting Standard No.

ASU 2021-10 became effective for us on January 1, 2022.

The Company has evaluated the effect that this guidance has on its Consolidated Financial Statements and determined it does not have a material impact.

In May 2021, the 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 Entity’s Own Equity (Subtopic 815-40) .

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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.

Following the issuance of ASU 2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848”, the relief remains effective for all entities as of March 12, 2020 through December 31, 2024.

The Company does not currently have any contracts affected by this guidance.

6 unchanged sentences

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

There were no reclassifications out of other comprehensive income (loss) during the nine months ended September 30, 2021 and 2022.

No taxes were recorded on items of other comprehensive income (loss).

There were no reclassifications out of other comprehensive income (loss) during the three months ended March 31, 2023 and 2022.

Revenue Recognition

18 unchanged sentences

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.

Moreover, other inflows that are not a result of the Company’s ongoing and central operations are presented as other income, net.

The Company accounts for lease contracts in accordance with ASC 842.

As of September 30, 2022, the Company’s only outstanding facilities lease is classified as an operating lease.

As of March 31, 2023, the Company’s outstanding leases are classified as operating leases.

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.

Company’s lease does not specify an implicit rate, the Company uses a best estimate of its incremental borrowing rate to discount the future lease payments.

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 agreement to extend or terminate the lease.

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.

10 unchanged sentences

The Company has elected an accounting policy to account for the lease and non-lease components as a single lease component .

Revenue recognized in the three and nine months ended September 30, 2021 and 2022 was $ 0 .

There was no revenue recognized in the three months ended March 31, 2023 and 2022.

The Company has no contract assets or liabilities in any period presented.

Net Loss per Common Share

1 unchanged sentence

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, 2021 and 2022, as the result would be anti-dilutive:

September 30,

The following potentially dilutive securities have not been included in the computation of diluted net loss per share for the three months ended March 31, 2023 and 2022, as the result would be anti-dilutive:

Stock options

7 unchanged sentences

Prepaid expenses and other current assets consisted of the following (in $000s):

September 30,

Research and development tax credit receivable

2 unchanged sentences

Non-Current Assets

As of September 30, 2022, the Company had non-current assets of $ 2.9 million, which is comprised of clinical trial deposits held by a contract research organization in relation to the Company’s Phase 1/2 clinical trials.

As of March 31, 2023, the Company had non-current assets of $ 2.9 million, which comprised of clinical trial deposits held by a contract research organization in relation to the Company’s Phase 1/2 clinical trials.

Accrued and Other Liabilities

Accrued and other current liabilities consisted of the following (in $000s):

September 30,

Accrued research and development

2 unchanged sentences

Other current liabilities for the year ended December 31, 2022 were largely attributed to accrued payroll costs.

The Company currently has one lease, relating to its facility in Berkeley Heights, New Jersey.

On April 4, 2022 the Company extended this lease by three years , expiring July 31, 2025.

On May 4, 2021, the Company assigned an operating lease relating to its U.K.

facility to the University of Dundee, Scotland, incurring lease assignment costs of approximately $ 400,000 , of which 50 % was paid on assignment and the remaining 50 % was paid on May 4, 2022.

The Company has no further obligations, liabilities or commitments in relation to this facility.

As of and for the nine months ended September 30, 2022 and 2021:

The Company recognized operating lease expenses of $ 46,699 and $ 159,898 in the nine month periods ending September 30, 2022 and 2021 respectively.

Cash payments made during the nine months ended September 30, 2022 and 2021 totaled $ 46,489 and $ 166,376 respectively and were presented within cash outflows from operating activities.

The remaining lease term as of September 30, 2022 is approximately 2.8 years for the Berkeley Heights facility.

The Company currently has an operating lease relating to its facilities in Berkeley Heights, New Jersey.

For the three months ended March 31, 2023 and 2022, the Company recognized operating lease expenses of $ 17,949 and $ 14,686 , respectively, including $1,945 in 2023 relating to a short term lease for offices in Dundee, Scotland.

Cash payments made during the three months ended March 31, 2023 and 2022 totaled $ 17,634 and $ 15,435 , respectively, and were presented within cash outflows from operating activities.

The remaining lease term as of March 31, 2023 is approximately 2.3 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):

Remaining lease payments for both facilities are as follows (in $000s):

Stock Based Compensation

3 unchanged sentences

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, 2021 and 2022 as shown in the following table (in $000s):

Stock based compensation has been reported within expense line items on the consolidated statement of operations for the three months ended March 31, 2023 and 2022 as shown in the following table (in $000s):

Three Months Ended

Nine Months Ended

September 30,

General and administrative

2 unchanged sentences

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 replaced the 2015 Equity Incentive Plan (the “2015 Plan”).

On April 28, 2023, the Board of Directors adopted a resolution approving, subject to approval by the Company’s stockholders, an amendment of the 2018 Equity Incentive Plan to increase the number of shares of Common Stock available for grant under the 2018 Plan by adding an additional 900,000 shares.

The 2018 Plan allows for various types of award grants, including stock options and restricted stock units.

On June 14, 2022, the Company’s stockholders approved an amendment to the 2018 Plan to increase the number of shares of common stock available for grant under the 2018 Plan by 500,000 shares.

As of September 30, 2022, the Company has reserved 384,896 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.

As of March 31, 2023, the Company has reserved 142,158 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.

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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, 2022, 120,000 shares under the Inducement Plan have been issued, leaving a remaining reserve of 80,000 shares.

As of March 31, 2023, 120,000 shares under the Inducement Plan have been issued, leaving a remaining reserve of 80,000 shares.

Option Grants and Exercises

There were 522,337 options granted during the nine months ended September 30, 2022.

There were 11,000 options granted during the three months ended March 31, 2023.

These options had a grant date fair value ranging between $ 0.50 - $ 0.73 per option.

There were 154,653 options granted during the nine months ended September 30, 2021.

There were 265,000 options granted during the three months ended March 31, 2022.

These options had a grant date fair value ranging between $ 2.62 - $ 2.90 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

September 30, 2022

September 30, 2021

Three months ended

March 31, 2023

March 31, 2022

Expected term (years)

3 unchanged sentences

Expected dividend yield over expected term

There were no stock options exercised during each of the nine months ended September 30, 2021 and 2022, respectively.

There were no stock options exercised during each of the three months ended March 31, 2022 and 2023, 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.

In the second quarter of 2022, the Company amended the terms of 11,952 options and 2,374 restricted stock units issued to a former director.

Specifically, the Company accelerated the vesting of 4,748 options and 2,374 restricted stock units that otherwise would have been forfeited upon the director’s retirement from service.

In addition, the Company extended the time by which the director may exercise all vested awards from 90 days to two years .

The Company recorded an additional $ 3,500 of compensation cost in the second quarter of 2022 as a result of these modifications.

Outstanding Options

3 unchanged sentences

Cancelled/forfeited

Options outstanding at September 30, 2022

Unvested at September 30, 2022

Vested and exercisable at September 30, 2022

Options outstanding at March 31, 2023

Unvested at March 31, 2023

Vested and exercisable at March 31, 2023

Restricted Stock Units

The Company issued 118,665 restricted stock units during the nine months ended September 30, 2022.

The Company issued 257,000 restricted stock units during the three months ended March 31, 2023.

These restricted stock units shall vest on the third anniversary of their date of grant, or earlier if certain defined clinical trial related performance targets are met.

A three-year vesting assumption was applied to these restricted stock units as satisfaction of the performance conditions is not probable at this time.

Each restricted stock unit was valued at $ 0.90 based on their fair value at the date of grant, which was equivalent to the market price of a share of the Company’s common stock on the date of grant.

The Company issued 118,665 restricted stock units during the year ended December 31, 2022.

These restricted stock units will vest over a period of one year for grants to directors and three years for grants to employees.

Each restricted stock unit was valued at $ 1.11 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.

The Company issued an additional 18,992 restricted stock units to employees during the year ended December 31, 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, 2022 is as follows:

Summarized information for restricted stock units as of March 31, 2023 is as follows:

Value Per Share

Restricted Stock Units outstanding at December 31, 2021

Restricted Stock Units outstanding at September 30, 2022

Unvested at September 30, 2022

Vested and exercisable at September 30, 2022

Restricted Stock Units outstanding at March 31, 2023

Unvested at March 31, 2023

Vested and exercisable at March 31, 2023

Stockholders Equity

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The sale of these shares may be subject to potential rescission rights by certain shareholders.

As of September 30, 2022, there have been no claims or demands to exercise such rights.

As of March 31, 2023, there have been no claims or demands to exercise such rights.

As a result of these potential rescission rights, the Company reclassified 3,117,100 shares, with an aggregate purchase price of $ 4,494,496 of its common stock as outside stockholders’ equity.

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Since the start of the agreement on August 12, 2021, a total of 3,281,067 shares, for gross proceeds of approximately $ 7.6 million, had been sold pursuant to the Sales Agreement.

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.

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"

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, 2022, 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.

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.

December 2020 Warrants

As of September 30, 2022, warrants to purchase 669,854 shares of common stock remained outstanding.

As of March 31, 2023, warrants to purchase 669,854 shares of common stock issued pursuant to a securities purchase agreement in a December 2020 financing transaction 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.

1 unchanged sentence

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, 2022 or September 30, 2021.

There were no exercises of these warrants during the three months ended March 31, 2023 or March 31, 2022.

April 2020 Warrants

As of September 30, 2022, 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.

As of March 31, 2023, 2,190,000 warrants issued pursuant to a securities purchase agreement in connection with an April 2020 equity financing remained outstanding, each with an exercise price of $ 5.00 .

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 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.

4 unchanged sentences

In lieu of fractional shares, the Company will round down to the next whole share.

There were no warrants exercised during the three and nine months ended September 30, 2022, and a total of 909,000 warrants exercised during the three and nine months ended September 30, 2021.

There were no warrants exercised during the three months ended March 31, 2023 or March 31, 2022.

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 .

As of March 31, 2023, 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.

5 unchanged sentences

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, 2022 or September 30, 2021.

There were no exercises of these warrants during the three months ended March 31, 2023 or March 31, 2022.

Series B Preferred Stock

237,745 shares of the Company’s Series B Preferred Stock were issued in a December 2020 Securities Purchase Agreement.

Each share of Series B Preferred Stock shall initially be convertible into five shares of Common Stock, subject to adjustment in accordance with the Certificate of Designation.

As of March 31, 2023, 237,745 shares of the Series B Preferred Stock remained issued and outstanding.

Holders of Series B Preferred Stock are entitled to receive dividends on shares of Series B Preferred Stock equal, on an as-if-converted-to-common-stock basis, and in the same form as dividends actually paid on shares of the Company’s common stock.

Except as otherwise required by law, the Series B Preferred Stock does not have voting rights.

However, as long as any shares of Series B Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series B Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock, (b) alter or amend the Certificate of Designation, (c) amend its certificate of incorporation or other charter documents in any manner that

adversely affects any rights of the holders of Series B Preferred Stock, (d) increase the number of authorized shares of Series B Preferred Stock, (e) pay certain dividends or (f) enter into any agreement with respect to any of the foregoing.

The Series B Preferred Stock does not have a preference upon any liquidation, dissolution or winding-up of the Company.

The Series B Preferred Stock may be converted into shares of common stock if and solely to the extent that such conversion would not result in the holder beneficially owning in excess of 9.99 % of then-outstanding common stock or aggregate voting power of the Company and any portion in excess of such limitation will remain outstanding as Series B Preferred Stock.

Series A Preferred Stock

1 unchanged sentence

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, 2022, 264 shares of the Series A Preferred Stock remained issued and outstanding .

As of March 31, 2023, 264 shares of the Series A Preferred Stock remained issued and outstanding .

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, 2022 are convertible into 6,600 shares of common stock.

The 264 shares of Series A Preferred Stock issued and outstanding at March 31, 2023 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.

1 unchanged sentence

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.

2 unchanged sentences

6 % Convertible Exchangeable Preferred Stock

As of September 30, 2022, 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.

As of March 31, 2023, 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.

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, 2022, accrued and unpaid dividends amounted to $ 50,291 .

As of March 31, 2023, 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.

6 unchanged sentences

Dividends on 6% Preferred Stock

On September 7, 2022 , 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, 2022 to the holders of record of the 6 % Preferred Stock as of the close of business on October 14, 2022 .

On March 8, 2023 , the board of directors declared a quarterly cash dividend in the amount of $ 0.15 per share on the Company’s 6 % Preferred Stock.

The cash dividend was paid on May 1, 2023 to the holders of record of the 6 % Preferred Stock as of the close of business on April 21, 2023 .

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-Q

Item 1. Financial Statements