What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-23 compared with 2022-03-23 · 540 added, 423 removed, 407 unchanged (70% of the section changed)

15 unchanged sentences

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the PCAOB and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

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reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

Audit Matters

audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required

to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements

and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there were no critical audit matters.

have served as the Company’s auditor since 2017.

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Financial Statements

and cash equivalents

transaction costs

tax receivable

December 31, 2022

December 31, 2021

Current Assets:

and equipment, net

lease right-of-use assets

and Stockholders’ Equity:

lease liabilities

Cash and cash equivalents

Deferred transaction costs

Payroll tax receivable

Prepaid assets

Total current assets

Property and equipment, net

Operating lease right-of-use assets

$ 175,697,097

Liabilities and Stockholders’ Equity:

Current Liabilities:

lease liabilities

payable, non-current

Stockholders’

Preferred stock,

$ 0.001 par value:

2,500,000 shares authorized;

0 shares issued and outstanding as of December 31, 2021 and December 31, 2020

Common stock, $ 0.001

Accounts payable

Finance lease liabilities

Operating lease liabilities

Accrued expenses

Total current liabilities

Finance lease liabilities

Operating lease liabilities

Note payable, non-current

Total Liabilities

Commitments and Contingencies (Note 10)

Stockholders’ Equity:

Preferred stock, $ 0.001 par value:

2,500,000 shares authorized;

1,120,873 and 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021

31, 2020, respectively

paid-in capital

Common stock, $ 0.001 par value:

65,000,000 and 25,000,000 shares authorized;

21,667,250 and 14,918,887 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

Accumulated deficit

( 96,296,887 )

( 55,926,847 )

Stockholders’ Equity

Liabilities and Stockholders’ Equity

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

$ 175,697,097

accompanying notes to the financial statements

of Operations

Ended December 31,

and development

and administrative

Years Ended December 31,

Operating expenses:

from operations

Research and development

General and administrative

Total operating expenses

Loss from operations

( 39,391,091 )

( 28,355,915 )

income (expense)

Other income (expense)

Interest expense

( 2,106,111 )

on sale of fixed assets

income (expense), net

( 1,262,350 )

loss before income taxes

Interest income

Loss on sale of fixed assets

Other income (expense), net

( 1,249,351 )

Net loss before income taxes

( 40,370,040 )

( 29,605,266 )

Income tax benefits

$ ( 40,370,040 )

loss per share, basic and diluted

average common shares outstanding, basic and diluted

$ ( 29,605,266 )

Net loss per share, basic and diluted

Weighted average common shares outstanding, basic and diluted

accompanying notes to the financial statements

of Changes in Stockholders’ Equity

at December 31, 2019

Preferred Stock

Additional Paid-In

Balance at December 31, 2020

$ ( 26,321,581 )

stock purchases

Stock-based compensation

Employee stock purchases

Exercise of common stock warrants

Exercise of common stock warrants, shares

Exercise of common

stock options, net of shares withheld for exercise price

Exercise of common

stock options, net of shares withheld for exercise price, shares

of common stock upon closing of follow-on offerings, net of underwriting discounts and offering costs

of common stock upon closing of follow-on offerings, net of underwriting discounts and offering costs, shares

of common stock in an at-the-market (“ATM”) offering

costs associated with ATM offering

of common stock warrants, note payable

of common stock, licensing agreement

of common stock, licensing agreement, shares

Exercise of common stock options, net of shares withheld for exercise price

Issuance of common stock upon closing of follow-on offerings, net of underwriting discounts and offering costs

Issuance of common stock in an at-the-market (“ATM”) offering

Issuance costs associated with ATM offering

Issuance of common stock warrants, note payable

Issuance of common stock, licensing agreement

( 29,605,266 )

at December 31, 2020

Balance at December 31, 2021

( 55,926,847 )

stock purchases

Exercise of common

stock warrants

Exercise of common

stock options, net of shares withheld for exercise price

of common stock upon closing of follow-on offerings, net of underwriting discounts and offering costs

of common stock in an at-the-market (“ATM”) offering

costs associated with ATM offering

of common stock warrants, note payable

of common stock, licensing agreement

( 55,926,847 )

Stock-based compensation

Employee stock purchases

Exercise of common stock options, net of shares withheld for exercise price

Issuance of common and preferred stock upon closing of private placement offering

Issuance costs associated with private placement offering

( 4,316,534 )

at December 31, 2021

( 4,316,534 )

Issuance of common stock in an ATM offering

Issuance costs associated with an ATM offering

( 40,370,040 )

accompanying notes to the financial statements

( 40,370,040 )

Balance at December 31, 2022

$ 230,045,566

$ ( 96,296,887 )

$ 133,771,467

$ 230,045,566

$ ( 96,296,887 )

$ 133,771,467

See accompanying notes to the financial statements

of Cash Flows

Ended December 31,

flows from operating activities:

Years Ended December 31,

Cash flows from operating activities:

$ ( 40,370,040 )

$ ( 29,605,266 )

to reconcile net loss to net cash used for operations:

of common stock, licensing agreement

of debt issuance costs and discount

on sale of fixed assets

in operating assets and liabilities:

tax receivable

assets and deposits

operating lease, net

cash used for operating activities

Adjustments to reconcile net loss to net cash used for operations:

Stock-based compensation

Issuance of common stock, licensing agreement

Amortization of debt issuance costs and discount

Non-cash operating lease, net

Loss on sale of fixed assets

Change in accrued interest income

Changes in operating assets and liabilities:

Payroll tax receivable

Prepaid assets and deposits

( 5,621,480 )

Accounts payable

Accrued expenses

Net cash used for operating activities

( 36,008,171 )

flows from investing activities:

of property and equipment

from sale of property and equipment

cash used for investing activities

flows from financing activities:

from exercise of common stock warrants

from exercise of employee stock options

from employee stock purchases

from follow-on offering, net of underwriting discounts and offering costs

from note payable, net of debt issuance costs and discount of $ 652,061

proceeds from an ATM offering

for secondary registration statement costs

for finance leases

cash provided by financing activities

change in cash and cash equivalents

( 20,311,940 )

and cash equivalents:

disclosure of cash flow information:

disclosures of non-cash investing and financing activities:

statement costs included in accounts payable

and equipment included in accounts payable

of common stock warrants and final fee recognized as discount to note payable

Cash flows from investing activities:

Purchases of investments

( 143,873,026 )

Purchases of property and equipment

Proceeds from sale of property and equipment

Net cash used for investing activities

( 144,031,794 )

Cash flows from financing activities:

Proceeds from exercise of common stock warrants

Proceeds from exercise of employee stock options

Proceeds from employee stock purchases

Proceeds from follow-on offering, net of underwriting discounts and offering costs

Proceeds from an ATM offering, net of commission fees and offering costs

Proceeds from note payable, net of debt issuance and discount costs

Proceeds from a private placement offering, net of discounts and offering costs

Payments for finance leases

Net cash provided by financing activities

Net change in cash and cash equivalents

( 59,714,824 )

Cash and cash equivalents:

Beginning of period

End of period

Supplemental disclosure of cash flow information:

Interest paid

Supplemental disclosures of non-cash investing and financing activities:

Deferred financing costs and offering and registration statement costs included in accounts payable

Issuance of common stock warrants and final fee recognized as discount to note payable

accompanying notes to the financial statements

TO FINANCIAL STATEMENTS

Inc., a Delaware corporation (the “Company”), is a clinical-stage biotechnology company seeking to extend the lives of cancer

patients by pursuing an integrated therapeutic and companion diagnostic strategy.

The company’s therapeutic efforts are focused

on in-licensing and developing molecularly targeted therapies that address the same cancer driver its companion diagnostics can identify.

Its CELsignia companion diagnostic platform is uniquely able to analyze live patient tumor cells to identify new groups of cancer patients

likely to benefit from already approved targeted therapies.

Inc., a Delaware corporation (the “Company”), is a clinical-stage biotechnology company focused on development of targeted

therapies for multiple solid tumor indications.

The Company’s lead therapeutic candidate is gedatolisib, a potent pan-PI3K and

mTOR inhibitor.

Its mechanism of action and pharmacokinetic properties are highly differentiated from other currently approved and investigational

therapies that target PI3K or mTOR alone or together.

A Phase 3 clinical trial, VIKTORIA-1, evaluating gedatolisib in combination with

fulvestrant with or without palbociclib in patients with HR+/HER2- advanced breast cancer is currently enrolling patients.

Its CELsignia

companion diagnostic platform is uniquely able to analyze live patient tumor cells to identify new groups of cancer patients likely to

benefit from already approved targeted therapies.

The Company was co-founded in 2012 by Brian F.

Sullivan and Dr.

Laing and is based in Minnesota.

is based in Minnesota.

The Company has not generated any revenues to date.

July 1, 2021, the Company completed a follow-on offering whereby it sold 2,250,000 shares of common stock at a public offering price

of $ 25.00 per share.

The aggregate gross proceeds from the sale of shares in the follow-on offering was approximately $ 56.3 million before

deducting underwriting discounts of approximately $ 3.4 million and offering expenses of approximately $ 0.1 million.

February 26, 2021, the Company completed a follow-on offering whereby it sold 1,971,100 shares of common stock (including 257,100 shares

of common stock in connection with the full exercise of the underwriters’ option to purchase additional shares) at a public offering

price of $ 14.00 per share.

The aggregate gross proceeds from the sale of shares in the follow-on offering, including the sale of shares

pursuant to the full exercise of the underwriters’ option to purchase additional shares, was approximately $ 27.6 million before

deducting underwriting discounts of approximately $ 1.6 million and offering expenses of approximately $ 0.2 million.

Placement Offering

December 9, 2022, the Company completed the closing (funding) of its private placement offering with certain institutional and other

accredited investors for the sale of Company common stock, preferred stock that may be convertible into common stock and warrants

exercisable for common stock for $ 100

million in the aggregate, before deducting placement agent fees and other offering expenses of $ 4.3

The closing followed dosage of the first patient in Celcuity’s Phase 3 clinical trial, VIKTORIA-1.

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

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At December 31, 2022 and December 31, 2021, the Company had $ 24,571,557

and $ 11,378,685 , respectively, in money market funds that are considered cash equivalents and not insured

and $ 84,286,381 , respectively, in business checking accounts and money market funds that are considered cash equivalents and not insured

by the Federal Deposit Insurance Corporation.

Company maintains its investments in U.S.

governmental agency securities and U.S.

treasury bills and has classified them as held-to-maturity

at the time of purchase.

Held-to-maturity purchases are those securities in which the Company has the ability and intent to hold until

Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums and discounts.

Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security using a straight-line method.

The difference between the carrying value, which is based on cost, and the aggregate fair value of the held-to-maturity securities, was

immaterial as of December 31, 2022.

At December 31, 2022 and December 31, 2021, the Company had $ 144,015,954 and $ 0 , respectively, of

short-term investments.

and Equipment

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of Estimated Useful Lives of Property and Equipment

and Equipment

Asset Description

Furniture and Equipment

Leasehold Improvements

assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying

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Transaction Costs

transaction costs primarily consist of legal fees and SEC filing fees related to the Company’s Registration Statement on Form S-3

filed on November 17, 2021 and declared effective by the SEC on November 26, 2021.

The deferred transaction costs were capitalized as

incurred and will be offset against the proceeds from future securities offered by the Company for a period up to three years.

transaction costs will be reviewed periodically to assess the probability that future securities will be offered.

In the event that no

future offering will occur, any deferred transaction costs will be expensed.

Total costs incurred were $ 22,144 and $ 0 for years ended

December 31, 2021 and 2020, respectively.

transaction costs for the year ended December 31, 2022, primarily consist of legal fees that were capitalized as incurred and will be

offset against the proceeds from future ATM offerings.

The deferred transaction costs will be reviewed periodically to assess the probability

that future securities will be offered.

In the event that no future offering will occur, any deferred transaction costs will be expensed.

Total costs incurred, but not accounted for as a reduction in equity, were $ 33,195 and $ 22,144 as of December 31, 2022 and 2021, respectively.

Comprehensive

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commercial success of its initial drug product, gedatolisib, the clinical and commercial success of its diagnostic tests, ability to

obtain regulatory approval of its diagnostic tests, the need for substantial additional financing to achieve its goals, uncertainty of

broad adoption of its approved products, if any, by physicians and consumers, and significant competition.

obtain regulatory approval for gedatolisib and its diagnostic tests, the need for substantial additional financing to achieve its goals,

uncertainty of broad adoption of its approved products, if any, by physicians and consumers, and significant competition.

Value of Financial Instruments

46 unchanged sentences

2022 and $ 25,758,006 , for the year ended December 31, 2021.

Company records prepaid assets or accrued expenses for prepaid or estimated clinical trial costs conducted by third-party service providers,

which includes the conduct of preclinical studies and clinical trials.

These costs can be a significant component of the Company’s

research and development expenses.

The Company accrues for these costs based on factors such as estimates of the work completed and in

accordance with service agreements with its third-party service providers.

The Company makes significant judgments and estimates in determining

the accrued liabilities balance in each reporting period.

As actual costs become known, the Company adjusts its prepaid assets or accrued

The Company has not experienced any material differences between accrued costs and actual costs incurred.

However, the status

and timing of actual services performed, number of patients enrolled, and the rate of patient enrollments may vary from the Company’s

estimates, resulting in an adjustment to expense in future periods.

Changes in these estimates that result in material changes to the

Company’s prepaid assets or accrued expenses could materially affect the Company’s results of operations.

Company records prepaid assets or accrued expenses for prepaid or estimated clinical trial costs conducted by third-party service

providers, which includes the conduct of preclinical studies and clinical trials.

These costs can be a significant component of the

Company’s research and development expenses.

The Company primarily relies on a compilation of progress reports from

third-party service providers, including the respective invoicing, to record actual expenses, along with determining changes to

prepaid assets and accrued liabilities.

To date, the Company believes utilization of third-party reports most accurately reflects

expenses incurred.

As the current VIKTORIA-1 Phase 3 trial ramps up site activation and patient enrollment, the Company’s

estimated expenses in future periods and actual services performed may vary from these estimates, and these estimates may become

more significant.

Changes in these estimates that result in material changes to the Company’s prepaid assets or accrued

expenses could materially affect the Company’s results of operations.

Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

of New or Revised Accounting Standards

to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), a company constituting an “emerging growth company”

is, among other things, entitled to rely upon certain reduced reporting requirements.

The Company is an emerging growth company but has

irrevocably elected not to take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or

revised accounting standards.

As a result, the Company will comply with new or revised accounting standards on the relevant dates on

which adoption of such standards is required for public companies that are not emerging growth companies.

Adopted Accounting Pronouncements

December 2019, the FASB issued ASU No.

2019-12 “Income Taxes:

Simplifying the Accounting for Income Taxes” intended to simplify

the accounting for income taxes by eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology

for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside cost basis differences.

The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies

the accounting for transactions that result in a step-up in the tax basis of goodwill.

The standard is effective for annual periods beginning

after December 15, 2020 and interim periods within, with early adoption permitted.

Adoption of the standard requires certain changes

to be made prospectively, with some changes to be made retrospectively.

The Company adopted this standard on January 1, 2021 and it did

not have a significant impact on the Company’s consolidated financial statements and related disclosures.

August 2020, the FASB issued ASU No.

2020-06, Debt -– Debt with Conversion and other Options (Subtopic 470-20) and Derivatives

and Hedging -– Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in

an Entity’s Own Equity (““ASU 2020-06”“), which simplifies accounting for convertible instruments by removing

major separation models required under current U.S.

ASU 2020-06 removes certain settlement conditions that are required for equity

contracts to qualify for derivative scope exceptions and also simplifies the diluted earnings per share calculation in certain areas.

The standard is effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the

SEC, for fiscal years and interim periods within those fiscal years beginning after December 15, 2021.

For all other entities, the standard

will be effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted, but no earlier than fiscal years beginning

after December 15, 2020, and adoption must be as of the beginning of the Company’s annual fiscal year.

The Company’s early

adoption of this accounting standard on April 8, 2021, in conjunction with the closing of a loan agreement, did not have an impact on

the Company’s financial statements and related disclosures.

on the Company’s cash and cash equivalents on hand at December 31, 2021 of $ 84,286,381 , the Company believes that its cash will

be sufficient to fund the Company’s current operating plan through at least the next 12 months from the issuance date of this Annual

May 2021, the FASB issued Accounting Standards Update (ASU) No.

2021-04, Issuer’s Accounting for Certain Modifications or

Exchanges of Freestanding Equity-Classified Written Call Options, which provides guidance on how an issuer should account for

modifications made to equity-classified written call options.

The guidance in the ASU requires the issuer to treat the modification

of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original

warrant for a new warrant.

The issuer should measure the effect of a modification as the difference between the fair value of the

modified warrant and the fair value of that warrant immediately before modification.

The standard is effective for all entities for

all fiscal years beginning after December 15, 2021.

The Company adopted this accounting standard effective January 1, 2022, and

based on the standard, determined that the Representative’s Warrant amendment was equity-classified, treated as a deemed

dividend within Additional Paid-in Capital, and the estimated incremental fair value of the modification for the

Representative’s Warrant at the date of amendment was $ 271,988 .

on the Company’s cash and cash equivalents and short-term investments on hand at December 31, 2022 of $ 24,571,557 and $ 144,015,954 ,

respectively, the Company believes that its cash and short-term investments will be sufficient to fund the Company’s current operating

plan through at least the next 12 months from the issuance date of this Annual Report.

Net Loss Per Common Share

1 unchanged sentence

common shares outstanding during the period.

For all periods presented, the common shares underlying the options and warrants have been

excluded from the calculation because their effect would be anti-dilutive.

Therefore, the weighted-average shares outstanding used to

calculate both basic and diluted loss per common share are the same.

the years ended December 31, 2021 and 2020, potentially dilutive securities excluded from the computations of diluted weighted-average

shares outstanding were options to purchase 1,315,321 and 849,949 shares of common stock, respectively, warrants to purchase 377,652

and 353,585 shares of common stock, respectively, and 2,964 and 15,686 shares of restricted common stock, respectively.

For all periods presented, the common shares underlying the preferred stock, options, and

warrants have been excluded from the calculation because their effect would be anti-dilutive.

Therefore, the weighted-average shares

outstanding used to calculate both basic and diluted loss per common share are the same.

the years ended December 31, 2022 and 2021, potentially dilutive securities excluded from the computations of diluted

weighted-average shares outstanding were preferred stock on an as-if-converted to common stock basis of 11,208,730 and zero shares

of common stock, respectively, options to purchase 1,976,586

and 1,315,321

shares of common stock, respectively, warrants to purchase 7,266,102

shares of common stock, respectively, and 3,273

shares of restricted common stock, respectively.

accordance with ASU 2021-04, for purposes of calculating basic and diluted net loss per share for the year ended December 31, 2022, the

reported net loss was increased by approximately $ 272,000 related to the deemed dividend resulting from the amendment to the warrant

agreement as further discussed in Note 11.

This adjustment increased the basic and diluted net loss per share by $ 0.02 for the year ending

December 31, 2022.

following table summarizes the Company’s held-to-maturity investment securities at amortized cost as of December 31, 2022:

of Investments

Amortized Cost, as Adjusted

Gross Unrealized Holding Gains

Gross Unrealized Holding Losses

Estimated Fair Value

December 31, 2022

Amortized Cost, as Adjusted

Gross Unrealized Holding Gains

Gross Unrealized Holding Losses

Estimated Fair Value

Governmental Agency Securities

Treasury Notes

$ 144,015,954

$ 144,087,110

Company had no investments as of December 31, 2021.

fair value of the Company’s held-to-maturity debt securities are determined based upon inputs, other than the quoted

prices in active markets, that are observable either directly or indirectly and are classified as level 2 fair value instruments.

Payroll Tax Receivable

payroll tax receivable was initially recorded in 2019.

It is the result of the Company’s utilization of research and development

tax credits as authorized by the Path Act.

payroll tax receivable is the result of the Company’s utilization of research and development tax credits as authorized by the

The balance at December 31, 2022 was $ 203,665 and December 31, 2021 was $ 298,764 .

2 unchanged sentences

of Prepaid Assets

& officers’ insurance

research & development

Directors & officers’ insurance

Prepaid research & development

Clinical trial

Property and Equipment

1 unchanged sentence

of Property and Equipment

and equipment

and equipment, Gross

Leasehold improvements

Furniture and equipment

Property and equipment, Gross

Accumulated depreciation

5 unchanged sentences

of Accrued Expenses

Stock Purchase Plan

Accrued compensation

Employee Stock Purchase Plan

Clinical trial costs

and Finance Leases

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(“ROU”) asset and lease liability pertaining to this amendment.

The second amendment also includes the option to extend the

term for one additional year.

The option to extend is at the Company’s discretion and because the Company has not determined if

the option to extend will be exercised, the extended lease term is not included in the ROU assets and lease liabilities.

regularly evaluates the renewal options and when it is reasonably certain of exercise, the Company will include the renewal period in

its lease term.

In July 2022, the Company signed the third amendment to extend

this lease through April 30, 2024.

This amendment provides for monthly rent, real estate taxes and operating expenses.

The Company recorded

an incremental $ 195,437 in the operating right-of-use (“ROU”) asset and lease liability pertaining to this amendment.

May 2018, the Company entered into a non-cancelable finance lease agreement for office equipment with a five-year term.

6 unchanged sentences

of Supplemental Balance Sheet Information Related to Leases

lease liability

Operating Lease

Right-of-use assets

Operating lease liability

short term portion

and equipment

Long term portion

Finance Lease

Furniture and equipment

Accumulated depreciation

book value of property and equipment under finance lease

lease liability

Net book value of property and equipment under finance lease

Finance lease liability

short term portion

Long term portion

analysis under lease agreements consisted of the following as of December 31, 2022:

Schedule of Maturity Analysis Under Lease Agreements

minimum lease payments

Operating Leases

Finance Leases

Total minimum lease payments

Present value discount

amount representing services

value of net minimum lease payments

Less amount representing services

Present value of net minimum lease payments

Weighted Average

Remaining Lease Term

Discount Rate

Operating lease

Finance lease

costs for the years ended December 31:

Schedule of Lease Costs

of Lease Costs

Operating lease cost

Finance lease cost:

Variable lease cost

Total lease cost

cash flow information related to leases for the years ended December 31:

Schedule of Supplemental Cash Flow Information Related to Leases

paid for amounts included in operating and finance leases:

cash outflow from operating leases

cash outflow from finance leases

of Supplemental Cash Flow Information Related to Leases

Cash paid for amounts included in operating and finance leases:

Operating cash outflow from operating leases

Operating cash outflow from finance leases

Financing cash outflow from finance leases

Total cash paid for amounts

included in operating and finance leases

Research Studies

Company enters into contracts in the normal course of business for clinical trials, preclinical studies, manufacturing and other services

and products for operating purposes.

The Company currently has five Phase 2 clinical trial agreements in place to evaluate targeted

therapies selected with one of our CELsignia tests.

The Company also has a license agreement in place with Pfizer to research, develop,

manufacture and commercialize gedatolisib.

In conjunction with the license agreement, the Company continued a Phase 1b study –

B2151009 related to gedatolisib.

These patients subsequently transitioned to an Expanded Access study – CELC-G-001.

Company enters into contracts in the normal course of business to conduct research and development programs internally and through third

parties that include, among others, arrangements with vendors, consultants, CMO’s, and CRO’s.

The Company currently has four

Phase 2 clinical trial agreements in place to evaluate targeted therapies selected with one of our CELsignia tests.

Timing of milestone

payments related to the Phase 2 clinical trials are uncertain and the contracts generally provide for termination following a

certain period after notice, therefore the Company believes that non-cancelable obligations under the agreements are not material.

related to the Phase 1b study and the Expanded Access study are generally based on time and material.

payments related to the Phase 2 clinical trials are uncertain and the contracts generally provide for termination following a certain

period after notice, therefore the Company believes that non-cancelable obligations under the agreements are not material.

also has a license agreement in place with Pfizer to research, develop, manufacture and commercialize gedatolisib.

In conjunction with

the license agreement, the Company continued a Phase 1b study – B2151009 related to gedatolisib.

These patients subsequently transitioned

to an Expanded Access study – CELC-G-001.

Contracts related to the Phase 1B study and the Expanded Access study, are generally

based on time and material.

In addition, contracts related to the Company’s Phase 3 clinical study (VIKTORIA-1) are generally cancelable

with reasonable notice within 120 days and the Company’s obligations under these contracts are primarily based on services performed

through termination dates plus certain cancelation charges, if any, as defined in each of the respective agreements.

In addition, these

agreements may, from time to time, be subjected to amendments as a result of any change orders executed by the parties.

As of December

31, 2022, the Company had only one material non-cancelable contractual commitment with respect to these arrangements, which totaled approximately

$ 2.3 million.

Stockholders’ Equity

September 15, 2017, in connection with its IPO, Celcuity LLC filed a certificate of conversion, whereby Celcuity LLC effected a corporate

conversion from a Minnesota limited liability company to a Delaware corporation and changed its name to Celcuity Inc.

Pursuant to the

conversion, units of membership interest in the limited liability company were converted into shares of common stock of the corporation

at a conversion ratio of 40 units for one share of common stock .

The Company had 257,604,208 units issued and outstanding as of September

After giving effect to the corporate conversion, the number of common shares outstanding as of such date was 6,440,139 .

a result of the corporate conversion, accumulated deficit was reduced to zero on the date of the corporate conversion, and the corresponding

amount was credited to additional paid-in capital.

The corporate conversion was approved by members holding a majority of the outstanding

units of Celcuity LLC, and in connection with such conversion, the Company filed a certificate of incorporation and adopted bylaws.

Company determined that the corporate conversion is equivalent to a change in the Company’s capital structure.

September 22, 2017, the Company completed its IPO whereby it sold 2,760,000 shares of common stock at a public offering price of $ 9.50

The aggregate net proceeds received by the Company from the IPO were approximately $ 23.3 million, net of underwriting commissions

of approximately $ 1.8 million and offering expenses of approximately $ 1.1 million.

Upon the closing of the IPO, 10,082,050 shares of

common stock were outstanding, which included 881,911 shares of common stock issued as a result of the conversion of the Company’s

convertible notes.

Shares of the Company’s common stock began trading on September 20, 2017 on The Nasdaq Capital Market under

the symbol “CELC”.

May 11, 2018, the Company filed an amendment to its certificate of incorporation with the Secretary of State of the State of Delaware

to decrease the number of authorized shares of its common stock and preferred stock.

Pursuant to the Company’s amended certificate

of incorporation, the Company is authorized to issue up to 25,000,000 shares of common stock, $ 0.001 par value per share and 2,500,000

shares of preferred stock, $ 0.001 par value per share.

June 5, 2020, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with B.

Riley FBR, Inc.

(the “Agent”).

Pursuant to the ATM Agreement, the Company was able to offer and sell from time to time, at its option, shares

of common stock having an aggregate offering price of up to $ 10,000,000 , par value $ 0.001 per share (the “Placement Shares”),

through the Agent.

Placement Shares were registered under the Securities Act of 1933, as amended, pursuant to the Registration Statement on Form S-3 (File

333-227466), which was originally filed with the SEC on September 21, 2018 and declared effective by the SEC on October 4, 2018,

the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed on June 5, 2020.

the Company’s common stock, if any, under this prospectus supplement were able to be made by any method deemed to be an “at

the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

to the ATM Agreement, the company sold 3,082 shares of common stock at an average selling price of $ 12.64 per share in the year ended

December 31, 2021 and 17,725 shares of common stock at an average selling price of $ 10.31 per share in the year ended December 31, 2020.

February 23, 2021, in conjunction with the Company’s follow-on offering, the ATM Agreement was terminated.

February 26, 2021, the Company completed a follow-on offering whereby it sold 1,971,100 shares of common stock (including 257,100 shares

December 31, 2021, the Company’s authorized capital stock consisted of 25,000,000 shares of $ .001 par value common stock, of which

14,918,887 shares were outstanding, and 2,500,000 shares of $ .001 par value preferred stock, of which 0 were outstanding.

authorized number of shares of common stock was increased to 30,000,000 shares on May 12, 2022 and to 65,000,000 shares on September

On May 16, 2022, the Company designated 1,850,000 shares of the authorized preferred stock as Series A Convertible Preferred

Stock (“Series A Preferred Stock”).

The Series A Preferred Stock is non-voting, and each share is convertible at the option

of the holder, subject to certain limitations, into 10 shares of common stock.

Holders of Series A Preferred Stock are entitled to receive

dividends, on an as-if-converted-to-common stock basis, when, as and if, and in the same form as, dividends are actually paid on the

common stock.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or in the event of

a Deemed Liquidation Event (as defined in the Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible

Preferred Stock), the holders of Series A Preferred Stock are entitled to be paid from assets of the Company available for distribution

to its stockholders, before any payment is made to the holders of common stock by reason of their ownership thereof, an amount per share

equal to the greater of (i) the original issue price ($ 5.75 on an as-converted-to-common stock basis), plus all accrued and unpaid dividends

and (ii) the amount that the holder would have been entitled to receive at such time if the Series A Preferred Stock were converted into

common stock.

The Company may not, without the consent of holders of a majority of the outstanding shares of Series A Preferred Stock,

amend its charter in a manner that adversely affects the powers, preferences or rights of the Series A Preferred Stock or issue or obligate

itself to issue shares of any additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock

with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company and the payment of dividends.

December 31, 2022, the Company’s authorized capital stock consisted of 65,000,000 shares of common stock, of which 21,667,250 shares

were outstanding, and 2,500,000 shares of preferred stock, including 1,850,000 shares designated as Series A Preferred Stock, of which

1,120,873 shares were outstanding.

As of December 31, 2022, no dividends have been declared on the Company’s capital stock.

and Issuance of Stock

December 9, 2022, the Company issued 6,182,574 shares of common stock, 1,120,873 shares of Series A Preferred Stock and warrants exercisable

for 6,956,450 shares of common stock to certain institutional and other accredited investors pursuant to a securities purchase agreement

entered into on May 15, 2022.

Pursuant to the securities purchase agreement, the closing (funding) of the private placement occurred

following dosage of the first patient in the Company’s Phase 3 study, VIKTORIA-1.

Investors purchased shares of common stock and

Series A Preferred Stock at a price of $ 5.75 per share (on an as converted to common stock basis), with forty percent ( 40 %) warrant coverage

(on an as converted to common stock basis) and customary resale registration rights.

The private placement generated gross proceeds of

approximately $ 100 million before deducting placement agent fees and other offering expenses of $ 4.3 million.

February 4, 2022, the Company entered into an Open Market Sale Agreement SM with Jefferies LLC, as agent (“Jefferies”),

pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of common stock having an aggregate offering

price of up to $ 50,000,000 .

The Company will pay Jefferies a commission equal to 3.0 % of the aggregate gross proceeds from each sale

of such shares.

On October 12, 2022, pursuant to the above agreement, the Company sold 500,000 shares of common stock in a single transaction

at a price of $ 10.35 per share, generating gross proceeds of $ 5.2 million before deducting commissions and other offering expenses of

$ 0.4 million.

February 26, 2021, the Company completed a follow-on offering in which it sold 1,971,100 shares of common stock (including 257,100 shares

of common stock in connection with the full exercise of the underwriters’ option to purchase additional shares) at a public offering

price of $ 14.00 per share.

The aggregate gross proceeds from the sale of shares in the follow-on offering, including the sale of shares

pursuant to the full exercise of the underwriters’ option to purchase additional shares, was approximately $ 27.6 million before

deducting underwriting discounts of approximately $ 1.6 million and offering expenses of approximately $ 0.2 million.

The offering generated gross proceeds of approximately $ 27.6 million before deducting underwriting discounts

and other offering expenses of approximately $ 1.8 million.

April 8, 2021, in conjunction with entering into a license agreement with Pfizer to research, develop, manufacture and commercialize

gedatolisib, the Company issued to Pfizer $ 5.0 million of shares of the Company’s common stock pursuant to an Equity Grant Agreement.

The number of shares issued totaled 349,406 at a price of $ 14.31 .

July 1, 2021, the Company completed a follow-on offering whereby it sold 2,250,000 shares of common stock at a public offering price

gedatolisib, the Company issued to Pfizer 349,406 shares of the Company’s common stock at a price of $ 14.31 per share, for an aggregate

price of $ 5.0 million.

July 1, 2021, the Company completed a follow-on offering in which it sold 2,250,000 shares of common stock at a public offering price

of $ 25.00 per share.

The offering generated approximately $ 56.3 million before deducting underwriting discounts of approximately $ 3.4

million and offering expenses of approximately $ 0.1 million.

December 31, 2021 and 2020, the Company had 14,918,887 and 10,299,822 shares of common stock outstanding, respectively.

connection with the 2016 private placement offering of units, the Company issued ten-year warrants to the placement agent of the private

The warrants allow the placement agent to purchase up to 55,249 shares of common stock at $ 7.56 per share.

The warrants were

immediately exercisable and expire on January 14, 2026 and May 2, 2026 .

These warrants are equity classified and the $ 330,607 fair value

of the warrants is reflected as additional paid-in capital.

connection with the private placement offering of convertible notes, the Company issued ten-year warrants to the placement agent to purchase

48,615 shares of common stock at a price of $ 8.42 per share.

The warrants were immediately exercisable and expire on April 28, 2027 and

May 17, 2027 .

These warrants are equity classified and the $ 286,999 fair value of the warrants is reflected as additional paid-in-capital.

addition, the Company granted the purchasers of the convertible notes the right to receive a seven-year warrant to purchase 131,675 shares

of common stock at an exercise price equal to the conversion price of the convertible notes.

With the completion of the IPO on September

22, 2017, these warrants were issued.

These warrants were immediately exercisable and expire on September 22, 2024 .

These warrants are

equity classified and the $ 776,717 fair value of the warrants is reflected as additional paid-in-capital.

connection with the IPO, the Company issued a five-year warrant to the underwriter.

The warrant allows the underwriter to purchase up

to 138,000 shares of common stock at $ 10.45 per share.

This warrant was immediately exercisable and expires on September 19, 2022 .

warrant is equity classified and the $ 784,111 fair value of the warrant is reflected as additional paid-in-capital.

connection with entering into a loan and security agreement with Innovatus Life Sciences Lending Fund I, LP, the Company issued a warrant

to Innovatus to purchase 26,042 shares of the Company’s common stock at an exercise price of $ 14.40 per share.

This warrant is

equity classified and the $ 289,839 fair value of the warrant was reflected as additional debt discount.

The offering generated gross proceeds of approximately $ 56.3 million before deducting underwriting discounts and

other offering expenses of approximately $ 3.5 million.

At December 31, 2022:

Expiration Date

# of Warrants Outstanding

Exercise Price

private placement offering - issued to placement agent

purchasers of convertible notes

IPO - issued to underwriter

debt financing - issued to lender

securities purchase agreement - issued to institutional and other accredited investors

Total Warrants Outstanding

December 9, 2022, in connection with entering into a securities purchase agreement on May 15, 2022, the Company issued warrants to certain

institutional and other accredited investors to purchase 6,956,450 shares of the Company’s common stock at a price of $ 8.05 .

warrants may be exercised at any time or from time to time on or after the date of issuance and on or before the earlier of (i) 5:00 p.m.

(New York City time) on December 9, 2027 or (ii) seventy-five (75) days after the Company publicly announces (x) whether the progression-free

survival (PFS) of gedatolisib in combination with palbociclib and fulvestrant (Arm A) to fulvestrant (Arm C) in the Phase 3 study met

its primary endpoint target, (y) whether the PFS of gedatolisib in combination with fulvestrant (Arm B) to fulvestrant (Arm C) in the

Phase 3 study met its primary endpoint target, and (z) the associated hazard ratios and median PFS values for each of Arm A, Arm B, and

The warrants are equity classified and the $ 21.8 million of fair value allocated to the warrants is reflected as Additional Paid-in

September 13, 2022, the Company entered into a First Amendment to Representative’s Warrant (the “Warrant Amendment”)

with Craig-Hallum Capital Group LLC (“Craig-Hallum”), amending the terms of that certain Representative’s Warrant,

dated September 22, 2017 (the “Representative’s Warrant”) issued by the Company to Craig-Hallum in connection with

the Company’s initial public offering.

Under the terms of the Warrant Amendment, (i) the number of shares of the Company’s

common stock issuable upon exercise of the Representative’s Warrant was reduced from 138,000 shares to 70,000 shares, and (ii)

the exercise period of the Representative’s Warrant was extended three years to September 19, 2025 .

There were no other material

amendments or modifications to the Representative’s Warrant.

The estimated incremental fair value of the Representative’s

Warrant at the date of amendment was $ 271,988 .

As the Company has an accumulated deficit balance in Retained Earnings, the incremental

impact will be recorded as a deemed dividend, classified within Additional Paid-in Capital.

April 8, 2021, in connection with entering into a loan and security agreement with Innovatus Life Sciences Lending Fund I, LP, the Company

issued a warrant to Innovatus to purchase 26,042 shares of the Company’s common stock at an exercise price of $ 14.40 per share.

This warrant is equity classified and the $ 289,839 fair value of the warrant was reflected as additional debt discount.

December 31, 2022 and 2021, the Company had warrants to purchase 7,266,102 and 377,652 shares of common stock outstanding, at a weighted

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the amount of the increase in any particular year.

At the Annual Meeting held on May 12, 2021, the stockholders approved a one-time,

500,000 increase to the number of shares reserved for issuance under the 2017 Plan.

The 2017 Plan provides for options, restricted stock

awards, stock appreciation rights, restricted stock units, performance awards and stock bonuses.

The exercise price of each option granted

under the 2017 Plan is not less than 100% of the fair market value of one share on the date of grant.

The maximum permitted term of options

granted under the 2017 Plan is ten years.

The 2017 Plan is generally administered by the compensation committee of the Company’s

board, which has the authority to interpret the 2017 Plan, grant awards and make all other determinations necessary for the administration

of the 2017 Plan.

At the Annual Meeting held on May 12, 2021 and May 12, 2022, the stockholders approved

a one-time, 500,000 increase each year for a total of 1,000,000 increase, to the number of shares reserved for issuance under the 2017

The 2017 Plan provides for options, restricted stock awards, stock appreciation rights, restricted stock units, performance awards

and stock bonuses.

The exercise price of each option granted under the 2017 Plan is not less than 100% of the fair market value of one

share on the date of grant.

The maximum permitted term of options granted under the 2017 Plan is ten years.

The 2017 Plan is generally

administered by the compensation committee of the Company’s board, which has the authority to interpret the 2017 Plan, grant awards

and make all other determinations necessary for the administration of the 2017 Plan.

following table summarizes the activity for all stock options outstanding for the years ended December 31:

Schedule of Stock Options Activity

Average Exercise Price

outstanding at beginning of year

at December 31:

exercisable at December 31:

Average Grant Date Fair Value for options granted during the period:

Weighted Average Exercise Price

Options outstanding at beginning of year

Balance at December 31:

Options exercisable at December 31:

Weighted Average Grant Date Fair Value for options granted during the period:

following table summarizes additional information about stock options outstanding and exercisable at December 31, 2022:

Sechdule of Stock Options Outstanding

Average Remaining Contractual Life

Average Exercise Price

Intrinsic Value

Average Exercise Price

Intrinsic Value

Schedule of Stock Options Outstanding and Exercisable

Options Outstanding

Options Exercisable

Options Outstanding

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Aggregate Intrinsic Value

Options Exercisable

Weighted Average Exercise Price

Aggregate Intrinsic Value

Company recognized stock-based compensation expense for stock options of $ 4,415,415 and $ 2,448,742 for the years ended December 31, 2022

and 2021, respectively.

In December 2021, the Company modified the exercise price on 311,000 stock option awards to $ 13.44 , the closing

market price on the Nasdaq Capital Market on December 15, 2021.

No director or officer awards were modified.

The effect on stock-based

compensation was $ 53,000 for the year ended December 31, 2021.

The effect on stock-based compensation over the remaining service period

will be approximately $ 344,000 .

In May 2020, the Company modified the exercise price on 203,750 stock option awards to $ 5.10 , the closing

market price on the Nasdaq Capital Market on May 14, 2020.

In May 2022, the Company modified the exercise price on 776,324 stock option awards to $ 5.50 , the closing market

price on the Nasdaq Capital Market on May 17,2022.

The effect of this modification on stock-based compensation was $ 517,000 for the year

ended December 31, 2022.

The effect of this modification on stock-based compensation over the remaining service period will be approximately

In December 2021, the Company modified the exercise price on 311,000 stock option awards to $ 13.44 , the closing market price

on the Nasdaq Capital Market on December 15, 2021.

No director or officer awards were modified.

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remaining service period will be approximately $ 173,000 .

In May 2020, the Company modified the exercise price on 203,750 stock option

awards to $ 5.10 , the closing market price on the Nasdaq Capital Market on May 14, 2020.

No director or officer awards were modified.

The effect on stock-based compensation was $ 38,000 and $ 46,000 for the years ended December 31, 2022 and 2021, respectively.

on stock-based compensation over the remaining service period will be approximately $ 20,000 .

Black-Scholes option-pricing model was used to estimate the fair value of equity-based awards with the following weighted-average assumptions

for the years ended December 31:

Schedule of Fair Value Of Equity-based Awards Assumptions

interest rate

dividend yield

Schedule of Assumptions for Fair Value of Equity-based Awards

Risk-free interest rate

1.68 % - 4.22 %

0.63 % - 1.39 %

Expected volatility

76.2 % - 79.6 %

76.6 % - 76.9 %

Expected life (years)

Expected dividend yield

inputs for the Black-Scholes valuation model require management’s significant assumptions.

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Schedule of Unrecognized Compensation Cost

estimated compensation cost to be recognized

Total estimated compensation cost to be recognized

Employee Stock Purchase Plan

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Schedule of Stock-based Compensation Expense

compensation expense in operating expenses:

and development

and administrative

Stock-based compensation expense in operating expenses:

Research and development

General and administrative

April 8, 2021, the Company entered into a loan and security agreement (the “Loan Agreement”) with Innovatus Life Sciences

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Lender agreed to loan up to $ 25 million in three tranches consisting of (i) a $ 15.0 million non-contingent term A loan that was funded

on April 8, 2021, (ii) a $ 5 million term B loan to be funded upon request of the Company no later than March 31, 2022, and (iii) a $ 5

million term C loan to be funded upon request of the Company no later than March 31, 2023 (collectively the “Term Loans”).

Funding of the term B and C loan is subject to the Company’s ability to achieve certain milestones.

The Innovatus Loan Agreement

is secured by a lien covering substantially all assets of the Company.

on April 8, 2021, (ii) a $ 5 million term B loan with a deadline of March 31, 2022 and (iii) a $ 5 million term C loan to be funded upon

request, subject to our ability to achieve certain milestones, no later than March 31, 2023 (collectively the “Term Loans”).

Loan Agreement also contains certain events of default, warranties and covenants of the Company.

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the fair value of the warrant using the Black-Scholes model.

The Company is also required to maintain a minimum cash balance in agreement

with the term loans’ default terms.

Company is entitled to make interest-only payments for thirty-six months, or up to forty-eight months if certain conditions are met.

The Term Loans will mature on the fifth anniversary of the initial funding date and will bear interest at a rate equal to sum of (a)

the greater of (i) Prime Rate (as defined in the Loan Agreement) or (ii) 3.25%, plus (b) 5.70% .

The effective interest rate is 11.36 %.

In connection with the funding of the first tranche of the Term Loans, a

final fee of approximately $ 0.7 million was recorded as additional principal as a debt discount, and a facility fee of approximately

$ 0.1 million was recorded as additional debt discount.

The Company is also required to maintain a minimum cash balance in agreement with

the term loans’ default terms.

August 9, 2022, the Company amended the Loan Agreement.

Under the amended Loan Agreement, Innovatus, as Lender, has agreed to loan up

to $ 75 million, a $ 50 million increase from the original Loan Amount, in five tranches consisting of:

(i) a $ 15 million term A loan that

was funded on April 8, 2021 upon entering into the original Loan Agreement, (ii) a $ 20 million term B loan to be funded upon request

of the Company no later than December 31, 2022, with such funding conditioned upon the closing of the Company’s $ 100 million private

placement announced on May 16, 2022, (iii) a $ 10 million term C loan to be funded upon request of the Company no later than April 1,

2024, (iv) a $ 20 million term D loan to be funded upon request of the Company no later than November 1, 2024, and (v) a $ 10 million term

E loan to be funded upon request of the Company no later than February 28, 2025.

As of December 31, 2022, term loans totaling $ 35 million

are outstanding under the Loan Agreement, including the initial Term A loan of $ 15 million which was funded on April 8, 2021, and a $ 20

million Term B loan which was funded on December 22, 2022 following the closing of the $ 100 million private placement described above.

Funding of the term C, D, and E loans are conditioned upon satisfaction of certain clinical trial milestones and certain financial covenants

determined on a pro forma as-funded basis.

In connection with the original and amended Loan Agreement and the funding of the first and

second tranche of the Term Loans, the Company incurred debt issuance costs of approximately $ 1.1 million.

The debt issuance costs and

the debt discount are amortized to interest expense using the effective interest method over the life of the Term Loans.

value of the debt approximates fair value as of December 31, 2022.

the amended Loan Agreement, Innovatus has the right, at its election and until August 9, 2025, the third anniversary of the loan amendment

date, to convert into Common Stock up to (1) 20% of the outstanding principal amount of term A loan, and (ii) an additional 7% of the

amount by which the aggregate principal amount of the funded term B, C, D, and E loans exceed $35 million, provided that the aggregate

outstanding principal amount of all term loans is at least $35 million, which such conversion based upon a price per share equal to $10.00.

No additional warrants are required to be issued under the funding of term B, C, D, and E.

Company is entitled to make interest-only payments for forty-eight months, or up to sixty months from the original Loan Agreement date

if certain conditions are met.

The Term Loans will mature on April 8, 2027, the sixth anniversary of the initial funding date, and will

bear interest at a rate equal to the sum of (a) the greater of (i) Prime Rate (as defined in the amended Loan Agreement) or (ii) 3.25%,

Additionally, the Company elected to make 4.95% of the interest rate as payable in-kind, which shall accrue as principal monthly.

Company is obligated to pay the Lenders (i) a non-refundable facility fee in the amount of 1.00 % of each term loan that is funded (the

“Facility Fee”), and (ii) a final fee equal to 4.50 % of the aggregate amount of the term loans funded (the “Final Fee”).

In connection with the funding of the first tranche of the Term Loans, a final fee of approximately $ 0.7 million was recorded as additional

principal and as a debt discount, and a facility fee of approximately $ 0.1 million was recorded as additional debt discount.

has the option to prepay the loan at any time following the first anniversary of the loan closing, with tiered prepayment fees ranging

from 0 – 2% based on when the prepayment would occur .

also has the right, at its election, after June 1, 2021 and until the third anniversary of the Loan Agreement, to convert up to 20 % of

the outstanding principal amount of all Terms Loans made under the Loan Agreement into shares of the Company’s common stock at

a price per share equal to the volume weighted average closing price of the Company’s stock for the 5-trading day period ending

on the last trading day immediately preceding the execution of the Loan Agreement (the “Conversion Right”).

connection with the Loan Agreement and the funding of the first tranche of the Term Loans, the Company incurred debt issuance costs of

approximately $ 0.5 million.

The debt issuance costs, and the debt discount are amortized to interest expense using the effective interest

method over the life of the Term Loans.

The carrying value of the debt approximates fair value as of December 31, 2021.

debt consisted of the following at December 31:

The Amended Loan Agreement includes certain other fees, such as a final fee of 4.5% of the funded loan amounts not converted into equity

by the lender, which apply if prepayment, an event of default, or change of control occurs prior to August 9, 2025, the third anniversary

of the Amendment date.

Subject to certain other conditions, no final fee will be payable after August 9, 2025.

The Company has the option

to prepay the loan at any time following the first anniversary of the amended loan agreement date, with tiered prepayment fees ranging

from 0 to 1% based on when the prepayment occurs.

Upon a change in control or event of default, mandatory prepayment will be required,

and if such an event occurs prior to the first anniversary of the Amendment date, an additional prepayment fee of 3.0 % applies.

amended Loan Agreement remains secured by all assets of the Company.

Proceeds will be used for working capital purposes and to fund the

Company’s general business requirements.

The amended Loan Agreement contains customary representations and warranties and covenants,

subject to customary carve outs, and includes financial covenants related to or based upon liquidity, trailing twelve months revenue

and the funded loan amounts.

debt consisted of the following at December 31, 2022 and 2021:

Schedule of Long-term Debt

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unamortized debt discount

long-term debt

principal payments, including the final fee, are as follows:

Schedule of Future Principal Payments

Ending December 31,

Total long-term debt

principal payments are as follows:

Schedule of Long Term Debt Future Principal Payments

Years Ending December 31,

License Agreement

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Schedule of Effective Income Tax Rate Reconciliation

benefit at statutory federal rate

Tax benefit at statutory federal rate

$ ( 8,478,000 )

$ ( 6,217,000 )

income tax benefit, net of federal tax effect

in valuation allowance on deferred tax assets

and Development Credits

permanent items

State income tax benefit, net of federal tax effect

Change in valuation allowance on deferred tax assets

Research & Development Credits

( 1,347,000 )

Other permanent items

Income tax benefits

December 22, 2017 H.R.

1, commonly referred to as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted.

Among the significant

changes to the U.S.

Internal Revenue Code, the Tax Act lowered the U.S.

federal corporate income tax rate (“Federal Tax Rate”)

from 35% to 21% effective January 1, 2018.

The Act also made changes related to the use and limitation of net operating loss carryforwards

generated in tax years beginning after December 31, 2017.

For years beginning after December 31, 2017 net operating losses have an indefinite

carryforward and the utilization of losses is limited to 80% of taxable income each year.

response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law

on March 27, 2020.

The CARES Act lifts certain deduction limitations originally imposed by the Tax Act.

Corporate taxpayers may carryback

net operating losses originating during 2018 through 2020 for up to five years, which was not previously allowed under the Tax Act.

CARES Act also eliminates the 80% of taxable income limitation allowing corporate entities to fully utilize net operating loss carryforwards

to offset taxable income in 2018, 2019 and 2020.

The enactment of the CARES Act did not result in any material impact to the Company’s

income tax provision.

As part of Tax

Act, for tax years beginning on or after January 1, 2022, Congress requires taxpayers to capitalize research and experimental expenditures

that qualify as section 174 costs and recover them over 5 years for domestic expenditures, and 15 years for expenditures attributed for

foreign research .

Inflation Reduction Act of 2022 (the “IRA”) was signed into law on August 16, 2022.

Among other things, the IRA contained

three key changes for corporations—a corporate minimum tax, a one percent excise tax on certain stock buybacks and certain clean

energy incentives and initiatives.

The enactment of the IRA did not result in any material impact to the Company’s income tax provision.

August 9, 2022, President Biden signed the CHIPS and Science Act of 2022 into law, which provides certain financial incentives with the

intention of increasing American semi-conductor research, development and production and promoting domestic scientific and technological

The enactment of the CHIPS did not result in any material impact to the Company’s income tax provision.

income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting

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Schedule of Deferred Tax Assets and Liabilities

tax assets (liabilities):

and equipment

operating losses and tax credits

Deferred tax assets (liabilities):

Accrued expenses

Share-based compensation

Property and equipment

Right-of-use assets

Lease liability

IRC 174 Expenditures

Start-up expenditures

Net operating losses and tax credits

Valuation allowance

( 22,591,000 )

( 13,048,000 )

deferred tax assets (liabilities)

December 31, 2021, the Company had federal and state net operating loss carryforwards of approximately

$ 16.8 million and $ 0.3 million, respectively.

The federal and state net operating loss carryforwards for 2017 will begin to expire in

the year ending December 31, 2037.

Net deferred tax assets

December 31, 2022, the Company had federal and state net operating loss carryforwards of approximately $ 19.3 million and $ 0.5 million,

respectively.

The federal and state net operating loss carryforwards for 2017 will begin to expire in the year ending December 31, 2037.

The federal net operating loss carryforwards starting in 2018 have no expiration.

These deferred tax

assets were subject to a full valuation allowance as of December 31, 2021 and December 31, 2020.

These deferred tax assets were subject to a full valuation

allowance as of December 31, 2022 and December 31, 2021.

December 31, 2022, the Company had federal and state research and development tax credit carryforwards resulting in deferred tax assets

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Subsequent Event

February of 2022, we entered into an Open Market Sale Agreement SM with Jefferies LLC, as agent (“Jefferies”),

pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate offering

price of up to $ 50,000,000 .

We will pay Jefferies a commission equal to 3.0 % of the aggregate gross proceeds from each sale of such shares.

To date, we have not yet made any sales under this arrangement.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

March 13, 2023, the Company signed an amendment to extend

its operating lease for a period of two

The commencement of the extended period is May 1, 2024 and will terminate on April

This amendment provides for monthly rent, real estate taxes and operating expenses.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

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-K

Item 8. Financial Statements and Supplementary Data