What changed in this filing

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Item 1. Financial Statements

2023-11-29 compared with 2023-08-10 · 275 added, 79 removed, 327 unchanged (52% of the section changed)

3 unchanged sentences

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

September 30,

Current assets:

11 unchanged sentences

Lease liability

Total liabilities

Redeemable common stock, $ 0.001 par value;

3,117,100 shares issued and outstanding at June 30, 2023 and December 31, 2022 (Note 10)

0 shares issued and outstanding at September 30, 2023 and 3,117,100 shares issued and outstanding at December 31, 2022 (Note 11)

Stockholders’ equity:

Preferred stock, $ 0.001 par value;

5,000,000 shares authorized at June 30, 2023 and December 31, 2022;

5,000,000 shares authorized at September 30, 2023 and December 31, 2022;

6 % Convertible Exchangeable preferred stock;

335,273 shares issued and outstanding at June 30, 2023 and December 31, 2022.

Aggregate preference in liquidation of $ 4,006,512 as of June 30, 2023 and December 31, 2022.

335,273 shares issued and outstanding at September 30, 2023 and December 31, 2022.

Aggregate preference in liquidation of $ 4,006,512 as of September 30, 2023 and December 31, 2022

Series A convertible preferred stock, $ 0.001 par value;

264 shares issued and outstanding at June 30, 2023 and December 31, 2022.

264 shares issued and outstanding at September 30, 2023 and December 31, 2022

Series B convertible preferred stock, $ 0.001 par value;

237,745 shares issued and outstanding at June 30, 2023 and December 31, 2022.

237,745 shares issued and outstanding at September 30, 2023 and December 31, 2022

Common stock, $ 0.001 par value;

100,000,000 shares authorized at June 30, 2023 and December 31, 2022;

12,642,822 shares issued and outstanding at June 30, 2023 and 12,539,189 shares issued and outstanding at December 31, 2022

100,000,000 shares authorized at September 30, 2023 and December 31, 2022;

12,642,822 shares issued and outstanding at September 30, 2023 and 9,422,089 shares issued and outstanding at December 31, 2022

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Clinical trial supply

14 unchanged sentences

Basic and diluted earnings per common share:

Net loss per share – basic and diluted

Weighted average common shares outstanding

Net loss per share – basic and diluted (common shareholders)

Net loss per share – basic and diluted (redeemable common shareholders)

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

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Translation adjustment

16 unchanged sentences

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

Accretion on redeemable common stock

Stock-based compensation

4 unchanged sentences

Balances at June 30, 2022

Reclassification of redeemable common stock

( 1,130,000 )

Accretion on redeemable common stock

Stock-based compensation

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at September 30, 2022

Balances at December 31, 2022

4 unchanged sentences

Loss for the period

Balances at March 31, 2023

Balances at March 31, 2023 (restated)

Reclassification of redeemable common stock

Stock-based compensation

3 unchanged sentences

Loss for the period

Balances at June 30, 2023

Balances at June 30, 2023 (restated)

Reclassification of redeemable common stock

Stock-based compensation

Preferred stock dividends

Unrealized foreign exchange on intercompany loans

Translation adjustment

Loss for the period

Balances at September 30, 2023

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

14 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

6 unchanged sentences

Accrual of preferred stock dividends

Accretion on redeemable common stock

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

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Restatement of Prior Financial Information .

As previously summarized in our Current Report on Form 8-K filed with the SEC on November 15, 2023, during recent contract renegotiations with a contract counterparty related to the Company’s 065-102 study and the related return to the Company of the original contract deposit of $1.0 million and the subsequent preparation of the Company’s financial statements for the period ended September 30, 2023, the Company identified an error in the accounting treatment of contract deposit-related invoices during the period September 2021 to November 2021.

Vendor invoices totaling $549,295 related to contractually required deposits received during September 2021 and November 2021 were incorrectly expensed to the income statement instead of being capitalized on the balance sheet as non-current deposits.

The amounts were contractually required to remain on deposit until the end of the related contract.

This resulted in an overstatement of operating loss of $293,845 for the quarter ended September 30, 2021 and $255,450 for the quarter ended December 31, 2021 and a corresponding understatement of non-current deposits in the same periods.

In addition, the Company’s UK research and development tax credits were consequentially overstated by $64,000 for the quarter ended September 30, 2021 and $55,000 for the quarter ended December 31, 2021.

On August 12, 2022, we became aware that our shelf registration statement on Form S-3 had expired on June 21, 2022.

Prior to becoming aware of the expiration, but following the expiration, we sold an aggregate of 1,987,100 shares of our common stock at market prices for aggregate proceeds of approximately $2,721,187.

The sale of these shares were subject to potential rescission rights by certain stockholders.

As a result of these rescission rights, we classified 3,117,100 shares (including 1,130,000 previously issued and outstanding shares sold for which the Company did not receive proceeds and which were reclassified to temporary equity as of September 30, 2022), with an aggregate redemption value of $4,494,496 of our common stock as stock outside stockholders equity.

In connection with the third quarter financial statement close process, the Company determined that it should have recorded 798,200 shares subject to potential rescission rights as temporary equity as of June 30, 2022 and these should have been reclassified out of temporary equity as of June 30, 2023 upon expiration of the rescission rights.

The Company had recorded reclassification of these 798,200 shares sold in the second quarter of 2022, which had a redemption value of $1,105,507 to temporary equity as of September 30, 2022.

Moreover, the Company has determined that it did not properly account for the $135,000 of aggregate fees paid in connection with the sale of those shares as a dividend to those stockholders.

The $135,000 of fees should be accounted for as accretion to the maximum redemption amount of the shares subject to potential rescission in the computation of loss per share as of June 30, 2022 and September 30, 2022 and the year ended December 31, 2022, as well as of March 31, 2023 and June 30, 2023, as is required by ASC 480-10-S99-3A(20).

The effect of the error corrections affecting the unaudited consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023

are as follows (in thousands, except per share amounts):

March 31, 2023

CONSOLIDATED BALANCE SHEETS

As previously reported

Non-current deposits

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accrued and other current liabilities

Total current liabilities

Total liabilities

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Three Months Ended March 31,

CONSOLIDATED STATEMENTS OF INCOME

As previously reported

Net loss applicable to common shareholders

Basic and diluted earnings per common share:

Net Loss per share - basic and diluted (common shareholders)

Net Loss per share - basic and diluted (redeemable common shareholders)

March 31, 2023

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

As previously reported

Accumulated Deficit (Balances at December 31, 2022)

Accumulated Deficit (Balances at March 31, 2023)

Total Stockholders' Equity (Balances at March 31, 2023)

June 30, 2023

As previously

CONSOLIDATED BALANCE SHEETS

Non-current deposits

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accrued and other current liabilities

Total current liabilities

Total liabilities

Temporary equity

Additional Paid-In Capital

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Three Months Ended June 30,

Six Months Ended June 30,

CONSOLIDATED STATEMENTS OF INCOME

As previously reported

Net loss applicable to common shareholders

Basic and diluted earnings per common share:

Net Loss per share - basic and diluted (common shareholders)

Net Loss per share - basic and diluted (redeemable common shareholders)

June 30, 2023

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

As previously reported

Accumulated Deficit (Balances at December 31, 2022)

Accumulated Deficit (Balances at March 31, 2023)

Total Stockholders' Equity (Balances at March 31, 2023)

Common Stock - Issue of common stock on At Market, net of expenses

Common Stock (Balances at June 30, 2023)

Additional Paid-In Capital - Issue of common stock on At Market, net of expenses

Additional Paid-In Capital (Balances at June 30, 2023)

Accumulated Deficit (Balances at June 30, 2023)

Total Stockholders' Equity (Balances at June 30, 2023)

Common Stock No.

Shares (Reclassification of redeemable common stock)

Common Stock No.

Shares (Balance at June 30, 2023)

The correction of the errors did not change the reported net loss in 2023 or the 2022 comparative periods.

Company Overview

3 unchanged sentences

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 June 30, 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.

Through September 30, 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 June 30, 2023, the consolidated statements of operations, comprehensive loss, and stockholders’ equity for the three and six months ended June 30, 2023 and 2022 and the consolidated statements of cash flows for the six months ended June 30, 2023 and 2022, and all related disclosures contained in the accompanying notes, are unaudited.

The consolidated balance sheet as of September 30, 2023, the consolidated statements of operations, comprehensive loss, and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022 and the consolidated statements of cash flows for the nine months ended September 30, 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 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 June 30, 2023, and the results of operations and, comprehensive loss for the three and six months ended June 30, 2023, and cash flows for the six months ended June 30, 2023, have been made.

The interim results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other reporting period.

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, 2023, and the results of operations and, comprehensive loss for the three and nine months ended September 30, 2023, and cash flows for the nine months ended September 30, 2023, have been made.

The interim results for the three and nine months ended September 30, 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.

4 unchanged sentences

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.

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 $ 10.2 million as of June 30, 2023, will allow it to meet liquidity requirements through the end of 2023.

However, the current operating plan includes discretionary expenditures, which if not incurred could extend liquidity requirements into the second quarter of 2024.

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.

Based on the Company’s current operating plan, it is anticipated that cash and cash equivalents of $ 5.9 million as of September 30, 2023, will allow it to meet liquidity requirements through the end of 2023.

However, the current operating plan includes discretionary expenditures, which if not incurred and taken together with the anticipated receipt of research & development tax credits of approximately $ 3.1 million in the first quarter of 2024 could extend liquidity requirements into the second quarter of 2024.

The Company’s history of losses, negative cash flows from operations, 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.

26 unchanged sentences

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

There were no reclassifications out of other comprehensive income (loss) during the six months ended June 30, 2022 and 2023.

There were no reclassifications out of other comprehensive income (loss) during the nine months ended September 30, 2023 and 2022.

Revenue Recognition

13 unchanged sentences

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 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.

The Company recognizes a contract asset, when the value of satisfied (or partially 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 partially satisfied) performance obligations.

Once a right to receive consideration is unconditional, that amount is presented as a receivable.

1 unchanged sentence

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

As of June 30, 2023, the Company’s outstanding leases are classified as operating leases.

As of September 30, 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.

14 unchanged sentences

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

The Company recognized $ 373,000 of revenue for the three and six months ended June 30, 2023.

This related to recovery of clinical manufacturing costs associated with an investigator sponsored study managed by Cedar-Sinai Medical Center.

The Company recognized $ 16,000 of revenue for the three months ended September 30, 2023, and $ 389,000 of revenue for the nine months ended September 30, 2023.

This revenue relates to recovery of clinical manufacturing costs associated with an investigator sponsored study managed by Cedars-Sinai Medical Center.

There were no revenues recognized for the comparative periods in 2022.

2 unchanged sentences

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 June 30, 2023 and 2022, as the result would be anti-dilutive:

During 2022 and 2023, the Company calculated loss per share using the two-class method.

The two-class method is an allocation formula that determines loss per share for each share of common stock and redeemable common stock (see note 11) , a participating security, according to dividends declared and participation rights in undistributed earnings.

Three Months Ended

March 31, 2023

As restated (see Note 1)

Dividend on convertible exchangeable preferred shares

Net loss attributable to common shareholders

Deemed dividend on accretion of redeemable common stock

Remaining undistributed loss

Three Months Ended March 31, 2023

Common Shareholders

Redeemable Common Shareholders

Allocation of undistributed loss

Deemed dividend on accretion of redeemable common stock

Net loss attributable to common shareholders

Weighted-average number of common shares used in loss per share – basic and diluted

Loss per share - basic and diluted

Distributed earnings

Undistributed loss

Net loss per share

Three And Six Months Ended June 30, 2023

As restated (see Note 1)

Dividend on convertible exchangeable preferred shares

Net loss attributable to common shareholders

Deemed dividend on accretion of redeemable common stock

Remaining undistributed loss

Three Months Ended June 30, 2023

Six Months Ended June 30, 2023

Common Shareholders

Redeemable Common Shareholders

Common Shareholders

Redeemable Common Shareholders

Allocation of undistributed loss

Deemed dividend on accretion of redeemable common stock

Net loss attributable to common shareholders

Weighted-average number of common shares used in loss per share – basic and diluted

Loss per share - basic and diluted

Distributed earnings

Undistributed loss

Net loss per share

Three And Nine Months Ended September 30, 2023

Dividend on convertible exchangeable preferred shares

Net loss attributable to common shareholders

Deemed dividend on accretion of redeemable common stock

Remaining undistributed loss

Three Months Ended September 30, 2023

Nine Months Ended September 30, 2023

Common Shareholders

Redeemable Common Shareholders

Common Shareholders

Redeemable Common Shareholders

Allocation of undistributed loss

Deemed dividend on accretion of redeemable common stock

Net loss attributable to common shareholders

Weighted-average number of common shares used in loss per share – basic and diluted

Loss per share - basic and diluted

Distributed earnings

Undistributed loss

Net loss per share

Three And Nine Months Ended September 30, 2022

Dividend on convertible exchangeable preferred shares

Net loss attributable to common shareholders

Deemed dividend on accretion of redeemable common stock

Remaining undistributed loss

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Common Shareholders

Redeemable Common Shareholders

Common Shareholders

Redeemable Common Shareholders

Allocation of undistributed loss

Deemed dividend on accretion of redeemable common stock

Net loss attributable to common shareholders

Weighted-average number of common shares used in loss per share – basic and diluted

Loss per share - basic and diluted

Distributed earnings

Undistributed loss

Net loss per share

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, 2023 and 2022, as the result would be anti-dilutive:

September 30,

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

1 unchanged sentence

Other current assets

Other current assets as of June 30, 2023 include reclassification of approximately $ 1.5 million of clinical trial deposits previously recognized as long term but now expected to be consumed within one year as of June 30, 2023.

Other current assets as of September 30, 2023 include reclassification of approximately $ 1.6 million of clinical trial deposits previously recognized as long term but now expected to be consumed within one year as of September 30, 2023.

Non-Current Assets

As of June 30, 2023, the Company had non-current assets of $ 1.0 million, which is primarily comprised of clinical trial deposits held by a contract research organization in relation to the Company’s Phase 1/2 clinical trials.

As of September 30, 2023, the Company had non-current assets of $ 1.3 million, which is primarily 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

3 unchanged sentences

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

For the six months ended June 30, 2023 and 2022, the Company recognized operating lease expenses of $ 36,949 and $ 30,470 respectively, including $ 4,896 in 2023 relating to a short term lease for offices in Dundee, Scotland.

Cash payments made during the six months ended June 30, 2023 and 2022 totaled $ 36,318 and $ 30,870 , respectively, and were presented within cash outflows from operating activities.

The remaining lease term as of June 30,

2023 is approximately 2.1 years for the Berkeley Heights facility.

For the nine months ended September 30, 2023 and 2022, the Company recognized operating lease expenses of $ 55,982 and $ 46,699 respectively, including $ 7,902 in 2023 relating to a short term lease for offices in Dundee, Scotland.

Cash payments made during the nine months ended September 30, 2023 and 2022 totaled $ 55,245 and $ 46,489 , respectively, and were presented within cash outflows from operating activities.

The remaining lease term as of September 30, 2023 is approximately 1.8 years for the Berkeley Heights facility.

The discount rate used by the Company in determining the lease liability was 12 %.

4 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 six months ended June 30, 2023 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 and nine months ended September 30, 2023 and 2022 as shown in the following table (in $000s):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

General and administrative

4 unchanged sentences

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

On June 13, 2023, the Company’s stockholders approved an amendment of the 2018 Plan to increase the number of shares of Common Stock available for issuance under the 2018 Plan by 900,000 shares.

As of June 30, 2023, the Company has reserved 323,326 shares of the Company’s common stock under the 2018 Plan for future issuances.

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.

On June 13, 2023, 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 an additional 900,000 shares.

As of September 30, 2023, the Company has reserved 336,984 shares of the Company’s common stock under the 2018 Plan for future issuances.

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.

3 unchanged sentences

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 June 30, 2023, 120,000 shares under the Inducement Plan have been issued, leaving 80,000 shares in reserve.

As of September 30, 2023, 120,000 shares under the Inducement Plan have been issued, leaving 80,000 shares in reserve.

Option Grants and Exercises

There were 650,128 options granted during the six months ended June 30, 2023.

There were 650,128 options granted during the nine months ended September 30, 2023.

These options had a grant date fair value ranging between $ 0.42 -$ 0.73 per option.

There were 517,337 options granted during the six months ended June 30, 2022.

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

These options had a grant date fair value ranging between $ 0.83 -$ 2.90 per option.

Of the options granted during the six months ended June 30, 2023, 384,500 shall vest on the third anniversary of their date of grant, or earlier if either of the certain performance conditions are met relating to enrollment goals for various clinical studies.

Of the options granted during the nine months ended September 30, 2023, 384,500 shall vest on the third anniversary of their date of grant, or earlier if either of the certain performance conditions are met relating to enrollment goals for various clinical studies.

For purposes of the below calculations, the Company has assumed that these awards will vest after three years as satisfaction of the performance conditions is not probable at this time.

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:

Six months ended

June 30, 2023

June 30, 2022

Nine months ended

September 30, 2023

September 30, 2022

Expected term (years)

3 unchanged sentences

Expected dividend yield over expected term

There were no stock options exercised during each of the six months ended June 30, 2023 and 2022, respectively.

There were no stock options exercised during each of the nine months ended September 30, 2023 and 2022, 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.

4 unchanged sentences

Cancelled/forfeited

Options outstanding at June 30, 2023

Unvested at June 30, 2023

Vested and exercisable at June 30, 2023

Options outstanding at September 30, 2023

Unvested at September 30, 2023

Vested and exercisable at September 30, 2023

Restricted Stock Units

The Company issued 384,314 restricted stock units during the six months ended June 30, 2023.

The Company issued 384,314 restricted stock units during the nine months ended September 30, 2023.

The 127,314 restricted stock units issued in June 2023 vest on the first anniversary of the date of grant.

6 unchanged sentences

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.

Summarized information for restricted stock units as of June 30, 2023 is as follows:

Summarized information for restricted stock units as of September 30, 2023 is as follows:

Value Per Share

Restricted Stock Units outstanding at June 30, 2023

Unvested at June 30, 2023

Vested and exercisable at June 30, 2023

Restricted Stock Units outstanding at September 30, 2023

Unvested at September 30, 2023

Vested and exercisable at September 30, 2023

Stockholders Equity

6 unchanged sentences

There was no sale of shares after August 12, 2022.

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

As of June 30, 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.

The reclassification of these shares shall remain for a period of one year from the applicable transaction date.

The sale of these shares may have been subject to potential rescission rights by certain stockholders.

As a result of these potential rescission rights, the Company reclassified 3,117,100 shares (including 1,130,000 shares sold for which the Company did not receive any proceeds) with an aggregate redemption value of $ 4,494,496 , of its common stock as outside stockholders’ equity.

These shares have been treated as issued and outstanding for financial reporting purposes.

The reclassification period for these shares has now lapsed and the shares have been reclassified back to permanent equity.

As of September 30, 2023, there have been no claims or demands to exercise such rights.

On August 15, 2022, due to expiry of the Registration Statement, the Sales Agreement was mutually terminated.

1 unchanged sentence

December 2020 Warrants

As of June 30, 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.

As of September 30, 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 six months ended June 30, 2023 or June 30, 2022.

There were no exercises of these warrants during the nine months ended September 30, 2023 or September 30, 2022.

April 2020 Warrants

As of June 30, 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 .

As of September 30, 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.

6 unchanged sentences

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

There were no exercises of these warrants during the six months ended June 30, 2023 or June 30, 2022.

There were no exercises of these warrants during the nine months ended September 30, 2023 or September 30, 2022.

July 2017 Warrants

As of June 30, 2023, 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 September 30, 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 six months ended June 30, 2023 or June 30, 2022.

There were no exercises of these warrants during the nine months ended September 30, 2023 or September 30, 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 June 30, 2023, 237,745 shares of the Series B Preferred Stock remained issued and outstanding.

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 September 30, 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.

6 unchanged sentences

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 June 30, 2023, 264 shares of the Series A Preferred Stock remained issued and outstanding .

As of September 30, 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 June 30, 2023 are convertible into 6,600 shares of common stock.

The 264 shares of Series A Preferred Stock issued and outstanding at September 30, 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.

4 unchanged sentences

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.

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 June 30, 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.

As of September 30, 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.

1 unchanged sentence

The 6 % Preferred Stock has a liquidation preference of $ 10.00 per share, plus accrued and unpaid dividends.

As of June 30, 2023, accrued and unpaid dividends amounted to $ 50,291 .

As of September 30, 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 June 13, 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 August 1, 2023 to the holders of record of the 6 % Preferred Stock as of the close of business on July 21, 2023 .

On September 6, 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 November 1, 2023 to the holders of record of the 6 % Preferred Stock as of the close of business on October 20, 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