BioRestorative Therapies, Inc. 10-Q

Item 1. Financial Statements BIORESTORATIVE THERAPIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2024 2023 (unaudited) (As Restated) Assets Current Assets: Cash and cash equivalents $ 2,252,247 $ 884,377 Investments held in marketable securities 12,428,218 10,181,618 Accounts receivable 27,400 19,300 Prepaid expenses and other current assets 295,861 305,231 Total Current Assets 15,003,726 11,390,526 Property and equipment, net 345,807 356,055 Right-of-use assets 78,146 151,447 Intangible assets, net 668,818 713,692 Deferred offering costs 22,381 - Total Assets $ 16,118,878 $ 12,611,720 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 215,920 $ 189,389 Accrued expenses and other current liabilities 447,622 711,686 Deferred revenue 80,700 - Lease liability 83,580 162,317 Derivative liabilities 4,491,969 1,543,953 Total Current Liabilities 5,319,791 2,607,345 Total Liabilities 5,319,791 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 June 30, 2024 and December 31, 2023 13,982 13,982 Common stock, $ 0.0001 par value; 75,000,000 shares authorized; 6,919,919 and 4,706,917 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 692 471 Additional paid-in capital 163,735,564 156,689,256 Accumulated deficit ( 152,951,151 ) ( 146,699,334 ) Total Stockholders’ Equity 10,799,087 10,004,375 Total Liabilities and Stockholders’ Equity $ 16,118,878 $ 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) 2024 2023 2024 2023 For the Three Months Ended For the Six Months Ended June 30 June 30 2024 2023 2024 2023 (As Restated) (As Restated) Revenues $ 89,100 $ 64,500 $ 124,100 $ 95,800 Cost of goods sold 6,490 - 6,490 - Gross profit 82,610 64,500 117,610 95,800 Operating Expenses: Research and development 1,292,182 902,891 2,350,313 2,134,636 General and administrative 1,259,235 2,278,160 4,345,356 6,856,813 Total Operating Expenses 2,551,417 3,181,051 6,695,669 8,991,449 Loss From Operations ( 2,468,807 ) ( 3,116,551 ) ( 6,578,059 ) ( 8,895,649 ) Other (Income) Expense: Interest income ( 175,945 ) ( 96,187 ) ( 338,542 ) ( 114,403 ) Other income ( 911 ) ( 39,812 ) ( 149,932 ) ( 116,472 ) Gain on exchange of warrants - - ( 1,711,698 ) - Change in fair value of derivative liabilities 1,736,611 2,728,847 1,873,930 4,217,197 Total Other Expense (Income) 1,559,755 2,592,848 ( 326,242 ) 3,986,322 Net Loss $ ( 4,028,562 ) $ ( 5,709,399 ) $ ( 6,251,817 ) $ ( 12,881,971 ) Net Loss Per Share - Basic and Diluted $ ( 0.50 ) $ ( 1.47 ) $ ( 0.84 ) $ ( 3.39 ) Weighted Average Common Shares Outstanding - Basic and Diluted 8,121,499 3,886,309 7,400,446 3,803,323 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) Shares Amount Shares Amount Capital Deficit Total For the Six Months Ended June 30, 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 Common stock issued in connection with abeyance shares - - 150,000 15 ( 15 ) - - Stock-based compensation: Options - - - - 324,322 - 324,322 Net loss - - - - - ( 4,028,562 ) ( 4,028,562 ) Balance - June 30, 2024 1,398,158 $ 13,982 6,919,919 $ 692 $ 163,735,564 $ ( 152,951,151 ) $ 10,799,087 For the Six Months Ended June 30, 2023 Series B Convertible Additional Preferred Stock Common Stock Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total (As Restated) (As Restated) (As Restated) Balance - January 1, 2023 (as restated) 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 1,188,060 - 1,188,070 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 $ 149,895,599 $ ( 143,454,202 ) $ 6,456,957 Balance value 1,518,158 $ 15,182 3,767,615 $ 378 $ 149,895,599 $ ( 143,454,202 ) $ 6,456,957 Stock-based compensation: Restricted share units - - 1,442 - 1,164,134 - 1,164,134 Options - - - - 321,534 - 321,534 Issuance of common stock - - 93,551 9 411,701 - 411,710 Conversion of Series B preferred to common stock ( 120,000 ) ( 1,200 ) 120,000 12 1,188 - - Net loss (as restated) - - - - - ( 5,709,399 ) ( 5,709,399 ) Balance - June 30, 2023 (as restated) 1,398,158 $ 13,982 3,982,608 $ 399 $ 151,794,156 $ ( 149,163,601 ) $ 2,644,936 Balance value 1,398,158 $ 13,982 3,982,608 $ 399 $ 151,794,156 $ ( 149,163,601 ) $ 2,644,936 [1] Represents the aggregate fair value of 3,351,580 shares of common stock, which includes 2,150,000 that have been issued and 1,201,580 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) 2024 2023 For the Six Months Ended June 30, 2024 2023 (As Restated) Cash Flows From Operating Activities: Net loss $ ( 6,251,817 ) $ ( 12,881,971 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 90,418 80,877 Dividend and interest income ( 327,065 ) ( 206,158 ) Stock-based compensation 2,352,696 4,864,166 Non-cash lease expense 73,301 58,022 Gain on exchange of warrants ( 1,711,698 ) - Change in fair value of derivative liabilities 1,873,930 4,217,197 Changes in operating assets and liabilities: Accounts receivable ( 8,100 ) ( 9,000 ) Prepaid expenses and other current assets ( 39,040 ) ( 79,778 ) Accounts payable 26,531 105,146 Accrued expenses and other current liabilities ( 264,064 ) 256,253 Deferred revenue 80,700 - Lease liability ( 78,737 ) ( 67,585 ) Net Cash Used In Operating Activities ( 4,182,945 ) ( 3,662,831 ) Cash Flows From Investing Activities: Sale of marketable securities 10,865,000 10,982,932 Purchase of marketable securities ( 12,784,535 ) ( 7,535,662 ) Purchases of equipment ( 35,296 ) ( 89,071 ) Net Cash (Used In) Provided By Investing Activities ( 1,954,831 ) 3,358,199 Cash Flows From Financing Activities: Net proceeds from issuance of common stock in at-the-market offering - 411,701 Proceeds from exchange and issuance of warrants, net [1] 7,528,027 - Deferred offering costs ( 22,381 ) - Net Cash Provided By Financing Activities 7,505,646 411,701 Net Increase In Cash and Cash Equivalents 1,367,870 107,069 Cash and Cash Equivalents - Beginning of the Period 884,377 1,676,577 Cash and Cash Equivalents - End of the Period $ 2,252,247 $ 1,783,646 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - Non-cash investing and financing activities: Issuance of common stock held in abeyance $ 15 $ - 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 June 30, 2024 and for the three and six months then ended. The results of operations for the three and six months ended June 30, 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. 7 Liquidity For the six months ended June 30, 2024, the Company had a net loss of $ 6.3 million, negative cash flows from operations of $ 4.2 million and working capital of $ 9.7 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 six months ended June 30, 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. 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 See Amendment No. 1 to the Annual Report on Form 10-K/A for the year ended December 31, 2023, for a complete listing of the Company’s significant accounting policies. 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. 8 Cash and Cash Equivalents 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 $ 1,964,341 and $ 604,226 as of June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024, the Company has not experienced losses on this account. Customer and Revenue Concentrations All of the Company’s contract service revenue is derived from one customer. Additionally, all of the Company’s product sales revenue is derived from one customer. Accounts Receivable Accounts receivable are carried at their contractual amounts, less an estimate for credit losses. As of June 30, 2024 and 2023, no allowances for credit losses were determined to be necessary. Management estimates the allowance for credit losses based on existing economic conditions, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for credit losses only after all collection attempts have been exhausted. Deferred Revenue As of June 30, 2024 and December 31, 2023, the Company had $ 80,700 and $ 0 of deferred revenue, respectively, from contracts with customers. The contract liabilities included in deferred revenue represent payments received from customers for which the Company had not yet satisfied its performance obligation under the contract. The Company expects to satisfy the remaining performance obligations and recognize the revenue related to its deferred revenue balance within the next twelve months. During the six months ended June 30, 2024, no revenues were recognized for performance obligations satisfied in previous periods. Derivative Financial Instruments The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. 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. 9 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. 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 June 30, 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). Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company recognizes revenue primarily from the following different types of contracts: ● Product sales - Revenue is recognized at the point in time the customer obtains control of the goods and the Company satisfies its performance obligation. ● Royalty revenue - Revenue is recognized as a usage-based royalty from customers’ usage of intellectual property pursuant to a license agreement at the point in time in which the underlying sale occurs. The Company recognizes bill-and-hold revenue from its sale of cosmetic vials warehoused at a Company location for a specified period of time in accordance with directions received from the Company’s customer. Even though the vials are held at a Company location, a sale is recognized at the point in time when the customer obtains control of the product. Control is transferred to the customer in a bill-and-hold arrangement when: (i) customer acceptance specifications have been met, (ii) legal title has transferred, (iii) the customer has a present obligation to pay for the product and (iv) the risks and rewards of ownership have transferred to the customer. Additionally, all the following bill-and-hold criteria have to be met in order for control to be transferred to the customer: ● the reason for the bill-and-hold arrangement is substantive ● the customer has requested the product be warehoused ● the product has been identified as separately belonging to the customer ● the product is currently ready for physical transfer to the customer ● the Company does not have the ability to use the product or direct it to another customer. 10 The following table summarizes the Company’s revenue recognized in its unaudited condensed consolidated statements of operations: SCHEDULE OF REVENUE RECOGNIZED 2024 2023 2024 2023 For the Three Months Ended For the Six Months Ended June 30, June 30, 2024 2023 2024 2023 Product revenue $ 69,300 $ - $ 69,300 $ - Royalty revenue 19,800 64,500 54,800 95,800 Revenues $ 89,100 $ 64,500 $ 124,100 $ 95,800 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 1,201,580 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 and six months ended June 30, 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 For the Three and Six Months Ended June 30, 2024 2023 Stock options 3,401,608 1,466,890 Warrants 3,952,511 4,791,072 Unvested RSUs - 97,827 Convertible Preferred Stock 1,398,158 1,398,158 8,752,277 7,753,947 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. 11 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 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 June 30, December 31, 2024 2023 Accrued bonuses $ 389,500 $ 638,000 Accrued general and administrative expenses 58,122 73,686 Total accrued expenses and other current liabilities $ 447,622 $ 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 June 30, 2024, the Company had issued an aggregate of 2,150,000 shares of Common Stock. The remaining 1,201,580 shares of Common Stock, which are issuable to Auctus Fund, LLC (“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. 12 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 has paid Roth a cash fee of approximately $ 528,000 for its services, in addition to reimbursement for certain expense. During the six months ended June 30, 2024, the Company incurred an aggregate of $ 595,364 of cash issuance costs related to the Warrant Exercise and Issuance. 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 New Warrants. The Company determined the Warrant Exercise and Issuance to be an exchange by investors of Existing Warrants with an aggregate fair value of $ 1,115,334 along with aggregate 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 an aggregate of 3,351,580 shares of common stock with an aggregate fair value of $ 4,742,244 , New Warrants with an aggregate fair value of $ 2,189,420 and aggregate cash issuance costs of $ 595,364 and, accordingly, the Company recorded a gain on extinguishment of $ 1,711,698 during the six months ended June 30, 2024. Warrants See Note 6 – Fair Value of Financial Instruments for details regarding the valuation 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 ( 614 ) 3,136.85 Outstanding, June 30, 2024 3,952,511 $ 3.85 3.8 Exercisable, June 30, 2024 3,952,511 $ 3.85 3.8 13 As of June 30, 2024, the warrants exercisable and outstanding had an intrinsic value of $ 0 . 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. 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 Six Months Ended June 30, 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 six months ended June 30, 2024 and 2023 had a weighted average grant date fair value per share of $ 1.11 and $ 2.77 per share, respectively. There were no stock options granted during the three months ended June 30, 2024 and 2023. A summary of the stock option activity during the six months ended June 30, 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, June 30, 2024 3,401,608 $ 2.60 8.0 $ - Exercisable, June 30, 2024 2,189,947 $ 3.12 7.6 $ - Restricted Stock Units (“RSUs”) 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. 14 A summary of the Company’s unvested RSUs as of June 30, 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 June 30, 2024 - Stock-Based Compensation Expense The following table presents information related to stock-based compensation expense: SCHEDULE OF STOCK OPTION EXPENSE Weighted Average For the Three Months Ended June 30, For the Six Months Ended June 30, Unrecognized at June 30, Remaining Amortization Period 2024 2023 2024 2023 2024 (Years) General and administrative $ 324,322 $ 1,485,668 $ 2,352,696 $ 4,864,166 $ 1,344,375 1.86 Total $ 324,322 $ 1,485,668 $ 2,352,696 $ 4,864,166 $ 1,344,375 1.86 The following table presents stock-based compensation by award type: SCHEDULE OF STOCK COMPENSATION BY AWARD TYPE For the Three Months Ended For the Six Months Ended June 30, June 30, 2024 2023 2024 2023 Options $ 324,322 $ 321,534 $ 1,367,658 $ 2,511,962 RSUs - 1,164,134 985,038 2,352,204 Total $ 324,322 $ 1,485,668 $ 2,352,696 $ 4,864,166 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 %. 15 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 Six Months Ended June 30, 2024 2023 Lease Costs Operating lease cost (cost resulting from lease payments) $ 86,530 $ 84,014 Net lease costs $ 86,530 $ 84,014 Operating lease - operating cash flows (fixed payments) $ 86,530 $ 84,014 Operating lease - operating cash flows (liability reduction) $ 78,737 $ 67,585 Non-current leases - right of use assets $ 78,146 $ 183,738 Current liabilities - operating lease liabilities $ 83,580 $ 150,480 Non-current liabilities - operating lease liabilities $ - $ 83,580 Future minimum payments under non-cancellable leases for operating leases for the remaining terms of the leases as of June 30, 2024: SCHEDULE OF FUTURE MINIMUM PAYMENTS UNDER NON-CANCELABLE LEASES FOR OPERATING LEASES Fiscal Year Operating Leases 2024 $ 86,530 Total future minimum lease payments 86,530 Amount representing interest ( 2,950 ) Present value of net future minimum lease payments $ 83,580 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). 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). 16 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 June 30, 2024, the Company estimated the aggregate fair value of warrants that are accounted for as derivative liabilities to be $ 4,491,969 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 $ 1,873,930 during the six months ended June 30, 2024. The following table shows the detail of the valuation assumptions used: June 30, 2024 Risk free interest rate 4.37 - 4.62 % Expected term (years) 2.36 - 4.61 Expected volatility 103 % - 106 % 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 six months ended June 30, 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 1,873,930 Balance, June 30, 2024 $ 4,491,969 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 June 30, 2024 $ 12,428,218 $ - $ - $ 12,428,218 Marketable securities as of December 31, 2023 $ 10,181,618 $ - $ - $ 10,181,618 Liabilities: Marketable securities as of June 30, 2024 $ - $ - $ 4,491,969 $ 4,491,969 Derivative liabilities as of December 31, 2023 (as restated) $ - $ - $ 1,543,953 $ 1,543,953 17