BioRestorative Therapies, Inc. 10-Q

Item 1. Financial Statements BIORESTORATIVE THERAPIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2024 2023 (unaudited) (As Restated) Assets Current Assets: Cash and cash equivalents $ 1,157,080 $ 884,377 Investments held in marketable securities 15,261,220 10,181,618 Accounts receivable 35,000 19,300 Prepaid expenses and other current assets 316,963 305,231 Total Current Assets 16,770,263 11,390,526 Property and equipment, net 365,025 356,055 Right-of-use assets 115,385 151,447 Intangible assets, net 691,255 713,692 Deferred offering costs 9,538 - Total Assets $ 17,951,466 $ 12,611,720 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 230,902 $ 189,389 Accrued expenses and other current liabilities 338,343 711,686 Lease liability 123,536 162,317 Derivative liabilities 2,755,358 1,543,953 Total Current Liabilities 3,448,139 2,607,345 Total Liabilities 3,448,139 2,607,345 Commitments and contingencies - - Stockholders’ Equity: Preferred stock, $ 0.01 par value; 20,000,000 shares authorized; Series B Convertible Preferred Stock; 1,543,158 shares designated, 1,398,158 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 13,982 13,982 Preferred Stock, value 13,982 13,982 Common stock, $ 0.0001 par value; 75,000,000 shares authorized; 6,769,919 and 4,706,917 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 677 471 Additional paid-in capital 163,411,257 156,689,256 Accumulated deficit ( 148,922,589 ) ( 146,699,334 ) Total Stockholders’ Equity 14,503,327 10,004,375 Total Liabilities and Stockholders’ Equity $ 17,951,466 $ 12,611,720 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 BIORESTORATIVE THERAPIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) For the Three Months Ended March 31 2024 2023 (As Restated) Revenues $ 35,000 $ 31,300 Operating Expenses: Research and development 1,058,131 1,231,745 General and administrative 3,086,121 4,578,653 Total Operating Expenses 4,144,252 5,810,398 Loss From Operations ( 4,109,252 ) ( 5,779,098 ) Other (Income) Expense: Interest income ( 162,597 ) ( 18,216 ) Other income ( 149,021 ) ( 76,660 ) Gain on exchange of warrants ( 1,711,698 ) - Change in fair value of derivative liabilities 137,319 1,488,350 Total Other (Income) Expense ( 1,885,997 ) 1,393,474 Net Loss $ ( 2,223,255 ) $ ( 7,172,572 ) Net Loss Per Share - Basic and Diluted $ ( 0.33 ) $ ( 1.93 ) Weighted Average Common Shares Outstanding - Basic and Diluted 6,671,382 3,717,472 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 BIORESTORATIVE THERAPIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited) For the Three Months Ended March 31, 2024 Series B Convertible Additional Preferred Stock Common Stock Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance - January 1, 2024 (as restated) 1,398,158 $ 13,982 4,706,917 $ 471 $ 156,689,256 $ ( 146,699,334 ) $ 10,004,375 Common stock issued in connection with warrant exchange [1] - - 2,000,000 200 4,742,043 - 4,742,243 Return and cancellation of shares in lieu of payroll tax withholding - - ( 34,825 ) ( 4 ) ( 48,406 ) - ( 48,410 ) Stock-based compensation: Restricted share units - - 97,827 10 985,028 - 985,038 Options - - - - 1,043,336 - 1,043,336 Net loss - - - - - ( 2,223,255 ) ( 2,223,255 ) Balance - March 31, 2024 1,398,158 $ 13,982 6,769,919 $ 677 $ 163,411,257 $ ( 148,922,589 ) $ 14,503,327 For the Three Months Ended March 31, 2023 Series B Convertible Additional Preferred Stock Common Stock Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance - January 1, 2023 (as restated) 1,518,158 $ 15,182 3,677,775 $ 369 $ 146,556,418 $ ( 136,281,630 ) $ 10,290,339 Balance 1,518,158 $ 15,182 3,677,775 $ 369 $ 146,556,418 $ ( 136,281,630 ) $ 10,290,339 Return and cancellation of shares in lieu of payroll tax withholding - - ( 10,058 ) ( 1 ) ( 39,307 ) - ( 39,308 ) Stock-based compensation: Restricted share units - - 99,898 10 1,188,057 - 1,188,067 Options - - - - 2,190,428 - 2,190,428 Net loss (as restated) - - - - - ( 7,172,572 ) ( 7,172,572 ) Balance - March 31, 2023 (as restated) 1,518,158 $ 15,182 3,767,615 $ 378 $ 149,895,596 $ ( 143,454,202 ) $ 6,456,954 Balance 1,518,158 $ 15,182 3,767,615 $ 378 $ 149,895,596 $ ( 143,454,202 ) $ 6,456,954 [1] Represents the aggregate fair value of 3,351,580 shares of common stock, which includes 2,000,000 that have been issued and 1,351,580 shares held in abeyance. See Note 4 - Stockholders’ Equity - Warrant Exercise and Issuance and Note 6 - Fair Value Measurement for additional details. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 BIORESTORATIVE THERAPIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) For the Three Months Ended March 31, 2024 2023 (As Restated) Cash Flows From Operating Activities: Net loss $ ( 2,223,255 ) $ ( 7,172,572 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 42,713 39,351 Dividend and interest income ( 151,596 ) ( 63,940 ) Stock-based compensation 2,028,374 3,378,495 Non-cash lease expense 36,062 29,011 Gain on exchange of warrants ( 1,711,698 ) - Change in fair value of derivative liabilities 137,319 1,488,350 Changes in operating assets and liabilities: Accounts receivable ( 15,700 ) - Prepaid expenses and other current assets ( 60,142 ) ( 69,281 ) Accounts payable 41,513 ( 78,316 ) Accrued expenses and other current liabilities ( 402,589 ) 102,913 Lease liability ( 38,781 ) ( 33,288 ) Net Cash Used In Operating Activities ( 2,317,780 ) ( 2,379,277 ) Cash Flows From Investing Activities: Sale of marketable securities 5,800,000 4,066,501 Purchase of marketable securities ( 10,728,006 ) ( 1,467,310 ) Purchases of equipment - ( 60,022 ) Net Cash (Used In) Provided By Investing Activities ( 4,928,006 ) 2,539,169 Cash Flows From Financing Activities: Proceeds from exchange and issuance of warrants, net [1] 7,528,027 - Deferred offering costs ( 9,538 ) - Net Cash Provided By Financing Activities 7,518,489 - Net Increase In Cash and Cash Equivalents 272,703 159,892 Cash and Cash Equivalents - Beginning of the Period 884,377 1,676,577 Cash and Cash Equivalents - End of the Period $ 1,157,080 $ 1,836,469 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - Non-cash investing and financing activities: Accrued purchases of equipment $ 29,246 $ - Return and cancellation of shares in lieu of payroll tax withholding $ 48,410 $ 39,308 [1] Includes gross proceeds of $ 8,123,391 , less issuance costs of $ 595,364 . The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 BIORESTORATIVE THERAPIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 – BUSINESS ORGANIZATION, NATURE OF OPERATIONS, BASIS OF PRESENTATION AND LIQUIDITY Corporate History BioRestorative Therapies, Inc. has one wholly-owned subsidiary, Stem Pearls, LLC (“Stem Pearls”). BioRestorative Therapies, Inc. and its subsidiary are referred to collectively as “BRT” or the “Company”. On December 23, 2022, the Company reincorporated from Delaware to Nevada by filing Articles of Incorporation with the state of Nevada. The reincorporation was structured as a statutory merger. Business Operations BRT develops therapeutic products and medical therapies using cell and tissue protocols, primarily involving adult stem cells. BRT’s website is at www.biorestorative.com. The information contained in the website or connected thereto is not intended to be incorporated by reference into this Quarterly Report. BRT is currently developing a Disc/Spine Program referred to as “brtxDISC”. Its lead cell therapy candidate, BRTX-100 , is a product formulated from autologous (or a person’s own) cultured mesenchymal stem cells collected from the patient’s bone marrow. The product is intended to be used for the non-surgical treatment of painful lumbosacral disc disorders or as a complimentary therapeutic to a surgical procedure. BRT is also engaging in research efforts with respect to a platform technology utilizing brown adipose (fat) for therapeutic purposes to treat type 2 diabetes, obesity and other metabolic disorders and has labeled this initiative its ThermoStem Program. In addition, in continuation of BRT’s mission of developing and commercializing cell-based biologics, it is seeking to develop a biologics-based cosmetic products business. Pursuant to such business, BRT would formulate, manufacture and sell products designed for cosmetic and aesthetic uses. Further, BRT has licensed a patented curved needle device that is a needle system designed to deliver cells and/or other therapeutic products or material to the spine and discs or other potential sites. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. The December 31, 2023 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by U.S. GAAP. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) that are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2024 and for the three months then ended. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the operating results for the full year ending December 31, 2024 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2023 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on June 11, 2024 as part of the Company’s Amendment No. 1 to the Annual Report on Form 10-K/A (the “Form 10-K/A”), which includes the restatement of the Company’s consolidated financial statements, including periods that are included in this Quarterly Report on Form 10-Q. Refer to Note 2 – Summary of Significant Accounting Policies – Restatement of Previously Issued Consolidated Financial Statements and Note 3 – Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements in the Form 10-K/A for additional information Liquidity For the three months ended March 31, 2024, the Company had a net loss of $ 2.2 million, negative cash flows from operations of $ 2.3 million and working capital of $ 13.3 million. The Company’s operating activities consume the majority of its cash resources. The Company anticipates that it will continue to incur net losses and negative cash flows from operations as it executes its development plans for 2024 and beyond, as well as other potential strategic and business development initiatives. The Company has previously funded, and plans to continue funding, these losses primarily through current cash on hand, investments in marketable securities and additional infusions of cash from equity and debt financing. During the three months ended March 31, 2024, the Company raised net proceeds of approximately $ 7.5 million in connection with a warrant exercise program which is further discussed in Note 4 – Stockholders’ Equity. 7 Based on cash on hand and investments as of the date these unaudited condensed consolidated financial statements were issued, which includes $ 7.5 million of net proceeds from the warrant exercise program, the Company believes it has sufficient cash to fund operations for at least 12 months after the issuance date of these unaudited condensed consolidated financial statements. However, the Company’s current funds will not be sufficient to enable the Company to fully complete its development activities or attain profitable operations. If the Company is unable to obtain such needed additional financing on a timely basis, the Company may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Since Amendment No. 1 to the Annual Report on Form 10-K/A for the year ended December 31, 2023, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note. Reclassifications Certain prior period statements of operations, changes in stockholders’ equity and cash flows amounts have been reclassified to conform to the Company’s fiscal 2024 presentation. These reclassifications have no impact on the Company’s previously reported net loss. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution. The Company maintains deposits in its accounts that hold cash and cash equivalents in excess of the Federal Depository Insurance Corporation (“FDIC”) coverage of $ 250,000 per banking institution. The Company had deposits in excess of FDIC coverage of $ 830,125 and $ 604,226 as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024, the Company has not experienced losses on this account. The royalties related to the Company’s sublicense comprised all of the Company’s revenue during the three months ended March 31, 2024 and 2023. Fair Value of Financial Instruments Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured using inputs in one of the following three categories: Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment. Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities. Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. 8 The Company considers cash and cash equivalents, investments held in marketable securities, accounts receivable, accounts payable and derivative liabilities to meet the definition of financial instruments. As of March 31, 2024 and December 31, 2023, the carrying amount of cash and cash equivalents, investments held in marketable securities, accounts receivable, and accounts payable approximate their fair value due to the relatively short period of time between their origination and their expected realization or payment. The warrants classified as derivative liabilities are measured at fair value (see Note 6 – Fair Value Measurement for additional details). Net Loss per Common Share Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. All outstanding options and warrants are considered potential common stock. The Company has 1,351,580 shares held in abeyance included in basic loss per share given that they are issuable for no additional consideration (see Note 4 – Stockholders’ Equity for additional details). The dilutive effect, if any, of stock options and warrants are calculated using the treasury stock method. All outstanding convertible preferred stock is considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common stock equivalents is anti-dilutive with respect to losses, options, warrants, restricted stock units (“RSUs”) and convertible preferred stock have been excluded from the Company’s computation of diluted net loss per common share for the three months ended March 31, 2024 and 2023. The following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss position even though the exercise or conversion price could be less than the average market price of the common shares: SCHEDULE OF WEIGHTED AVERAGE DILUTIVE COMMON SHARES 2024 2023 For the Three Months Ended March 31, 2024 2023 Stock options 3,401,608 1,493,656 Warrants 3,952,840 4,791,075 Unvested RSUs - 97,827 Convertible Preferred Stock 1,398,158 1,518,158 Total 8,752,606 7,900,716 9 Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segments Disclosures (Topic 280), which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant (“ASU 2023-07”) segment expenses on both an annual and interim basis. The guidance becomes effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07. In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” (“ASU 2023-09”). The amendments in ASU 2023-09 are designed to enhance the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this update on its condensed consolidated financial statements and related disclosures. NOTE 3 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of: SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES March 31, December 31, 2024 2023 Accrued bonuses $ 143,594 $ 638,000 Accrued general and administrative expenses 194,749 73,686 Total accrued expenses and other current liabilities $ 338,343 $ 711,686 NOTE 4 - STOCKHOLDERS’ EQUITY Warrant Exercise and Issuance On February 6, 2024, the Company entered into agreements with certain holders of its existing warrants exercisable for an aggregate of 3,351,580 shares of its Common Stock (collectively, the “Existing Warrants”), to exercise their warrants at a reduced exercise price of $ 2.33 per share, in exchange for the issuance of new warrants (the “New Warrants”) as described below (the “Warrant Exercise and Issuance”). The aggregate gross proceeds from the exercise of the Existing Warrants and the payment of the New Warrants, as described below, was approximately $ 8.1 million, before deducting cash issuance costs in the amount of $ 595,364 . The reduction of the exercise price of the Existing Warrants and the issuance of the New Warrants was structured as an at-market transaction under Nasdaq rules. Of the 3,351,580 shares of Common Stock issuable upon the exercise of the Existing Warrants, through March 31, 2024, the Company had issued an aggregate of 2,000,000 shares of Common Stock. The remaining 1,351,580 shares of Common Stock, which are issuable to Auctus, are being held in abeyance due to Auctus’ maximum beneficial ownership limitation (the “Abeyance Shares”). Such Abeyance Shares have been fully paid for and are issuable upon notice from Auctus to the Company. In consideration for the immediate exercise of the Existing Warrants for cash and the payment of $ 0.125 per share underlying the New Warrants, the exercising holders received the New Warrants to purchase shares of Common Stock in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The New Warrants will be exercisable for a period of five years into an aggregate of 2,513,686 shares of Common Stock at an exercise price of $ 2.43 per share. The securities offered in the private placement have not been registered under the Securities Act or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. As part of the transaction, the Company agreed to file a resale registration statement with the SEC to register the resale of the shares of Common Stock underlying the New Warrants issued in the private placement. Such resale registration statement was filed and was declared effective by the SEC on April 18, 2024. In connection with the transaction described above, the Company entered into a financial advisory services agreement, dated February 5, 2024, with Roth Capital Partners, LLC (“Roth”), pursuant to which the Company paid Roth a cash fee of approximately $ 528,000 for its services, in addition to reimbursement for certain expense. During the three months ended March 31, 2024, the Company incurred an aggregate of $ 595,364 of cash issuance costs related to the Warrant Exercise and Issuance. 10 Prior to the Warrant Exercise and Issuance, the Existing Warrants were classified as derivative liabilities. Additionally, the Company analyzed the form of the New Warrants and determined that they should be classified as derivative liabilities in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity. Under the New Warrants, the Company does not control the occurrence of events, such as a tender offer or exchange, that may trigger cash settlement of the New Warrants and not result in a change of control of the Company. As a result, such New Warrants do not meet the criteria for equity treatment. Additionally, certain New Warrants contain adjustments to the settlement amount based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under ASC 815-40 and, accordingly, such New Warrants are not considered indexed to the Company’s own stock and are not eligible for an exception from derivative accounting. See Note 6 – Fair Value Measurement for details regarding the valuation of the Existing Warrants and the New Warrants. The Company determined the Warrant Exercise and Issuance to be an exchange of (a) Existing Warrants with a fair value of $ 1,115,334 and cash consideration of $ 8,123,392 (consisting of $ 7,809,181 paid to exercise the Existing Warrants and $ 314,211 paid for the New Warrants) for (b) 3,351,580 shares of common stock with a fair value of $ 4,742,244 , New Warrants with a fair value of $ 2,189,420 and cash issuance costs of $ 595,364 . Accordingly, the Company estimated the fair value of each of the components and, as a result, recorded a gain on exchange of warrants of $ 1,711,698 during the three months ended March 31, 2024. Warrants See Note 6 – Fair Value Measurement for details regarding the Company’s estimated fair value of the New Warrants. A summary of the Company’s warrant activity and related information follows: SCHEDULE OF WARRANT ACTIVITY Weighted Weighted Average Average Remaining Number of Exercise Life Warrants Price In Years Outstanding, January 1, 2024 4,791,019 $ 10.57 Granted 2,513,686 2.43 Exercised ( 3,351,580 ) 2.33 Expired ( 285 ) 3,211 Outstanding, March 31, 2024 3,952,840 $ 4.10 4.1 Exercisable, March 31, 2024 3,952,840 $ 4.10 4.1 As of March 31, 2024, the warrants exercisable and outstanding had an intrinsic value of $ 0 and a weighted average remaining life of approximately 4.1 years. Stock Options On February 13, 2024, the Company granted options to purchase an aggregate 1,934,716 shares of the Company’s Common Stock at an exercise price of $ 1.45 per share to employees, the Company’s board of directors and a member of the Company’s Scientific Advisory Board. The options had an aggregate grant date fair value of $ 2,140,000 and vest as follows: (i) options to purchase an aggregate 513,663 shares of common stock vest monthly over one year, and (ii) options to purchase an aggregate of 1,421,053 shares of common stock vest to the extent of 50 % immediately with the remainder vesting quarterly over two years commencing one year from the date of grant. The Company will recognize the grant date fair value of the options proportionate to the vesting period. 11 In applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions: SCHEDULE OF STOCK OPTION GRANTED ASSUMPTIONS For the Three Months Ended March 31, 2024 2023 Risk free interest rate 4.14 – 4.30 % 4.22 % Expected term (years) 2.77 – 5.27 3.5 Expected volatility 101 - 102 % 175 % Expected dividends 0.00 % 0.00 % Options granted during the three months ended March 31, 2024 and 2023 had a weighted average grant date fair value per share of $ 1.11 and $ 2.77 per share, respectively. A summary of the stock option activity during the three months ended March 31, 2024 is presented below: SCHEDULE OF STOCK OPTION ACTIVITY Weighted Weighted Average Average Remaining Number of Exercise Life Intrinsic Options Price In Years Value Outstanding, January 1, 2024 1,466,892 $ 4.11 Granted 1,934,716 1.45 Exercised - - Forfeited - - Outstanding, March 31, 2024 3,401,608 $ 2.60 8.3 $ - Exercisable, March 31, 2024 2,028,811 $ 3.22 7.9 $ - Restricted Stock Units Pursuant to the Company’s 2021 Stock Incentive Plan (the “2021 Plan”), the Company may grant RSUs to employees, consultants or non-employee directors (“Eligible Individuals”). The number, terms and conditions of the RSUs that are granted to Eligible Individuals are determined on an individual basis by the 2021 Plan administrator. On the distribution date, the Company shall issue to the Eligible Individual one unrestricted, fully transferable share of the Company’s common stock (or the fair market value of one such share in cash) for each vested and nonforfeitable RSU. 12 A summary of the Company’s unvested RSUs as of March 31, 2024 is as follows: SCHEDULE OF UNVESTED RESTRICTED STOCK UNITS Number of Shares Non-vested at January 1, 2024 97,827 Granted - Vested ( 97,827 ) Forfeited - Non-vested at March 31, 2024 - Stock-Based Compensation Expense The following table presents information related to stock-based compensation expense: SCHEDULE OF STOCK OPTION EXPENSE For the Three Months Ended Unrecognized at Weighted Average Remaining March 31, March 31, Amortization Period 2024 2023 2024 (Years) General and administrative $ 2,028,374 $ 3,378,495 $ 1,668,697 2.04 Total $ 2,028,374 $ 3,378,495 $ 1,668,697 2.04 The following table presents stock-based compensation by award type: SCHEDULE OF STOCK COMPENSATION BY AWARD TYPE For the Three Months Ended March 31, 2024 2023 Options $ 1,043,336 $ 2,190,428 RSUs 985,038 1,188,067 Total $ 2,028,374 $ 3,378,495 Note 5 - LEASES The Company is a party to a lease for 6,800 square feet of space located in Melville, New York (the “Melville Lease”) with respect to its corporate and laboratory operations. The Melville Lease was scheduled to expire in March 2020 (subject to extension at the option of the Company for a period of five years) and provided for an annual base rental during the initial term ranging between $ 132,600 and $ 149,260 . In June 2019, the Company exercised its option to extend the Melville Lease and entered into a lease amendment with the lessor whereby the five-year extension term commenced on January 1, 2020 with annual base rent ranging between $ 153,748 and $ 173,060 . When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at August 1, 2019. The weighted average incremental borrowing rate applied was 12 %. 13 The following table presents net lease cost and other supplemental lease information: SCHEDULE OF NET LEASE COST AND OTHER SUPPLEMENTAL LEASE INFORMATION 2024 2023 For the Three Months Ended March 31, 2024 2023 Lease Costs Operating lease cost (cost resulting from lease payments) $ 43,265 $ 42,007 Net lease costs $ 43,265 $ 42,007 Operating lease - operating cash flows (fixed payments) $ 43,265 $ 42,007 Operating lease - operating cash flows (liability reduction) $ 38,781 $ 33,288 Non-current leases - right of use assets $ 115,385 $ 212,749 Current liabilities - operating lease liabilities $ 123,536 $ 144,821 Non-current liabilities - operating lease liabilities $ - $ 123,536 Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases as of March 31, 2024: SCHEDULE OF FUTURE MINIMUM PAYMENTS UNDER NON-CANCELABLE LEASES FOR OPERATING LEASES Fiscal Year Operating Leases 2024 $ 129,795 Total future minimum lease payments 129,795 Amount representing interest ( 6,259 ) Present value of net future minimum lease payments $ 123,536 Note 6 – FAIR VALUE MEASUREMENT On February 8, 2024, in connection with the Warrant Exercise and Issuance , the Company estimated the aggregate fair value of the Existing Warrants (see Note 4 – Stockholders’ Equity for details) to be $ 1,115,334 using the Black-Scholes option pricing model (Level 3 inputs) and, accordingly, recognized a loss on the change in fair value of derivative liabilities of $ 12,999 during the three months ended March 31, 2024. The following table shows the detail of the valuation assumptions used: SCHEDULE OF FAIR VALUE VALUATION ASSUMPTIONS February 8, 2024 Risk free interest rate 4.20 - 4.28 % Expected term (years) 2.75 - 2.76 Expected volatility 102 % Expected dividends 0.00 % On February 8, 2024, the Company estimated the aggregate issuance date fair value of the derivative liability related to the New Warrants (see Note 4 – Stockholders’ Equity for details) as $ 2,189,420 using the Black-Scholes option pricing model (Level 3 inputs). The following table shows the detail of the valuation assumptions used: February 8, 2024 Risk free interest rate 4.12 % Expected term (years) 5.00 Expected volatility 101 % Expected dividends 0.00 % On March 31, 2024, the Company estimated the aggregate fair value of warrants that are accounted for as derivative liabilities to be $ 2,755,358 using the Black-Scholes option price model (Level 3 inputs) and, accordingly, recognized a loss on the change in fair value of these derivative liabilities of $ 124,320 during the three months ended March 31, 2024. The following table shows the detail of the valuation assumptions used: March 31, 2024 Risk free interest rate 4.21 - 4.22 % Expected term (years) 2.61 - 4.86 Expected volatility 101 % Expected dividends 0.00 % The following table sets forth a summary of the changes in the fair value of Level 3 liabilities that are measured at fair value on a recurring basis during the three months ended March 31, 2024: SCHEDULE OF FAIR VALUE MEASURED ON RECURRING BASIS Balance, January 1, 2024 (as restated) $ 1,543,953 Issuance of warrants 2,189,420 Exercise of warrants ( 1,115,334 ) Change in fair value of derivative liability 137,319 Balance, March 31, 2024 $ 2,755,358 Assets and liabilities measured at fair value on a recurring basis are as follows: SCHEDULE OF FAIR VALUE RECURRING BASIS Fair value measurements at reporting date using: Quoted prices in active markets for identical liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Fair Value Assets: Marketable securities as of March 31, 2024 $ 15,261,220 $ - $ - $ 15,261,220 Marketable securities as of December 31, 2023 $ 10,181,618 $ - $ - $ 10,181,618 Liabilities: Derivative liabilities as of March 31, 2024 $ - $ - $ 2,755,358 $ 2,755,358 Derivative liabilities as of December 31, 2023 (as restated) $ - $ - $ 1,543,953 $ 1,543,953 14