CIRCLE8 GROUP INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES . Evaluation of disclosure controls and procedures Our Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer), conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of December 31, 2023. As of December 31, 2023, based upon the evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective. Disclosure controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Management’s Report on Internal Controls Over Financial Reporting As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. 50 Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting at December 31, 2023. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on our assessments and those criteria, management determined that our internal controls over financial reporting were effective as of December 31, 2023. This Report does not include an attestation report of our independent registered public accounting firm due to our status as an emerging growth company and a smaller reporting company. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not Applicable. 51 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Executive Officers and Directors The following table provides information regarding our key employees and directors: Name Age Position(s) Executive Officers Daniel Jones 43 President, Chief Executive Officer and Chairman Frances Scally 56 Chief Financial Officer and Secretary Non-Employee Directors Patrice M. Milos, Ph.D. 65 Director Douglas Miscoll 63 Director David Pfeffer 64 Director Executive Officers Daniel Jones is our Chief Executive Officer and Chairman of the Board. He has been our co-founder, President, and a member of our board of directors since our inception. He has served as Chief Executive Officer since May 2018 and was elected Chairman of the Board in March 2021. Prior to becoming our CEO, he was President from inception to May 2018. Mr. Jones has over 15 years of biotechnology industry experience, including 12 plus years in single molecule sequencing research. Prior to founding our company, Mr. Jones held various positions at Helicos Biosciences, a publicly-traded biotechnology tools company. During his career at Helicos Biosciences, his responsibilities included applications development, instrument prototyping and validation, customer support and bioinformatics analysis, as well as sales and operations. In 2008, Mr. Jones ran the first ever direct RNA sequencing experiments while at Helicos. From December 2003 to March 2007, Mr. Jones worked at U.S. Genomics in the Methods Development group and on development of its Trilogy 2020 Single Molecule Analyzer and Direct miRNA assays. From December 2002 to December 2003, Mr. Jones worked at EXACT Sciences on its ColoGuard assay, a non-invasive, now FDA-approved molecular diagnostic for colorectal cancer. Mr. Jones has authored or co-authored four publications and is named on multiple patents or patent applications. He holds a B.S. degree from Trinity College and has studied biotechnology and bioinformatics at Brandeis University and the University of Massachusetts. We believe Mr. Jones’ experience in the pharmaceutical industry as well as his extensive understanding of our business, operations and strategy qualifies him to serve on our board of directors. Frances Scally has served as our Chief Financial Officer and Secretary since August 2022. Ms. Scally has over 30 years’ experience in strategic accounting and financial leadership, including serving as chief financial officer, chief accounting officer and in other senior financial executive roles at both domestic and multi-national public and private companies. Since October 2021, Ms. Scally has been a Managing Director at DLA LLC, an Advisory firm, in which capacity she provides accounting advisory services. Prior to joining DLA LLC, Ms. Scally was the Chief Accounting Officer and Acting Chief Financial Officer of Aceto Holdings, L.P. from April 2019 to April 2020, as well as the Chief Accounting Officer of Aceto Corporation from March 2007 to April 2019. Aceto Corporation is an international company engaged in the development, marketing, sale and distribution of human health products, pharmaceutical ingredients and performance chemicals. Prior to joining Aceto, Ms. Scally was the Director of Financial Reporting and Compliance at Veeco Instruments Inc., a manufacturer of semiconductor process equipment, from 1998-2007. From 1989-1998, Ms. Scally was employed by Ernst & Young LLP. Ms. Scally received a bachelor’s degree in accounting from LIU Post and is a Certified Public Accountant. She is a member of New York State Society of CPAs and American Institute of Certified Public Accountants. Ms. Scally also is a Trustee and a member of the Finance Committee for St. Edward the Confessor Church and School. Ms. Scally’s services as our Chief Financial Officer are being secured pursuant to the terms of our Master Services Agreement with DLA LLC, where Ms. Scally is an employee. 52 Non-Employee Directors Patrice M. Milos, Ph.D. has served as a member of our board of directors since August 2021. Since September 2020, Dr. Milos has been Vice President, Scientific Operations of Proof Diagnostics, Inc., a company that is developing a low-cost, rapid diagnostic, point-of-care testing platform for the detection of COVID-19. From October 2016 to September 2020, Dr. Milos was a co-founder, President and Chief Executive Officer of Medley-Genomics Inc., a company focused on using advanced data analytics to support better diagnosis and treatment of complex diseases. From May 2013 to January 2016, Dr. Milos was President and Chief Executive Officer of Claritas Genomics Inc., a subsidiary of Boston Children’s Hospital that provided commercial next-generation pediatric molecular diagnostic testing. Additional experience included executive roles at Helicos BioSciences and Pfizer, Inc. Dr. Milos is also a member of the board of directors of 54Gene Inc., a U.S. and Nigeria-based startup that collects African genetic code for use in health research and drug development, Slater Technology Fund, a seed-stage venture investor in early-stage technology ventures, ProThera Biologics, a life-sciences company developing a fundamentally new paradigm for treating severe inflammation and RI Bio, a bioscience, biotech, health and life sciences industry network group dedicated to galvanizing collaboration among industry participants. Dr. Milos has received numerous awards and honors within the life sciences industry and has authored or co-authored over 60 biotech or life sciences publications. She earned a B.A. in biology and chemistry from The College of Saint Rose, a M.S. and Ph.D. in plant molecular genetics and biology from Rensselaer Polytechnic Institute and has completed Post-Doctoral work at Harvard University and Brown University in plant and mouse molecular genetics. We believe Dr. Milos’ management experience and her extensive background and experience in molecular genetics and biology qualifies her to serve on our board of directors. Douglas Miscoll has served as a member of our board of directors since October 2015. Mr. Miscoll founded Ravello Precision Partners in 2015, which operated as a hedge fund focused on genomic biology companies. Mr. Miscoll founded Ravello Partners LLC in 2010, which manages discretionary portfolios for families and small institutions and is active in the biotechnology sector. From 1999 until 2009, Mr. Miscoll was a Managing Director at Newlight Management, where he was responsible for managing all aspects of two private equity funds and a hedgefund focused on technology, media and communications companies. He originated and directed the firm’s public market investment activities. Previously, from 1994 to 1995, he was a Managing Director of Northgate Ventures, a venture capital fund focused on early stage technology companies. Mr. Miscoll was a founding member of the management team that created K-III Communications, a leveraged build-up in the publishing and information services industries sponsored by Kohlberg Kravis Roberts & Co. Mr. Miscoll received an M.B.A. from Georgetown University, a Graduate Certificate from Templeton College, Oxford University, and a B.A. from Santa Clara University. We believe Mr. Miscoll’s executive management experience qualifies him to serve on our board of directors. David Pfeffer has served as a member of our board of directors since September 2018 and is currently our Audit Committee Chairman. Mr. Pfeffer has over 30 years of experience in diverse roles in financial services; leading companies, developing and executing strategy, building businesses up from the ground floor and driving innovation to grow in today’s ultra-competitive and dynamic global economy. Mr. Pfeffer is currently CEO of Brick Citi Capital, LLC, an investment services and business advisory firm founded in 2019. Previously, he was Executive Vice President and Chief Financial Officer of Oppenheimer Funds, a global asset manager, from 2004 to 2019. He was a Management Director on the Oppenheimer Funds, Inc. board and President of Oppenheimer Funds Harbourview Asset Management. From 2009 to 2019, Mr. Pfeffer served as an Independent Director at ICI Mutual Insurance Co., including a role as Audit Committee Chairman. From 2000 to 2004, Mr. Pfeffer worked as Institutional Chief Financial Officer and Director at Citigroup Asset Management. Mr. Pfeffer was at J.P. Morgan from 1984 to 2000, where he gained significant international experience serving as Chief Financial Officer and Director of JPM Brazil for five years in São Paulo and supported JPM’s international businesses during his 16 year tenure there. Mr. Pfeffer worked as a public accountant at Ernst & Whinney from 1981 to 1984. Mr. Pfeffer is a Certified Public Accountant, a Chartered Global Management Accountant and has his FINRA Series 99 Operations Professional license. He graduated Cum Laude from the University of Delaware with a B.S. in Accounting. We believe Mr. Pfeffer’s experience in corporate governance and capital markets qualifies him to serve on our board of directors. Family Relationships There are no family relationships between or among any of our directors or executive officers. There are no family relationships among our officers and directors and those of our subsidiaries and affiliated companies. Board Composition and Classified Board Structure In accordance with the terms of our restated certificate of incorporation and amended and restated bylaws, our Board is currently divided into three classes with staggered, three-year terms. At each annual meeting of stockholders, the successor to each director whose term then expires will be elected to serve from the time of election and qualification until the third annual meeting of stockholders following election or such director’s death, resignation or removal, whichever is earliest to occur. The current class structure is as follows: Class I (consisting of Mr. Jones and Dr. Milos), whose term currently expires at the 2025 Annual Meeting of Stockholders; Class II (consisting of Mr. Miscoll), whose term will expire at the 2023 Annual Meeting of Stockholders; and Class III (consisting of Mr. Pfeffer), whose term will expire at the 2024 Annual Meeting of Stockholders. 53 The primary responsibilities of our board of directors are to provide oversight, strategic guidance, counseling and direction to our management. Our board of directors meets on a regular basis. Our bylaws provide that the authorized number of directors may be changed only by resolution of the board of directors. We have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will further the interests of our stockholders through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge of our business and understanding of the competitive landscape. Director Independence While our common stock is no longer listed on the Nasdaq Capital Market, our board of directors has determined that, with respect to our corporate governance, we will continue to comply with the Nasdaq Marketplace Rules. The Nasdaq Marketplace Rules require a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, the Nasdaq Marketplace Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. Under Rule 5605(a)(2) of the Nasdaq Marketplace Rules, a director will only qualify as an “independent director” if, in the opinion of our board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 of the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. Our board of directors has reviewed the composition of our board of directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that each of Patrice Milos, Doug Miscoll and David Pfeffer is an “independent director” as defined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules. Our board of directors also determined that the directors who serve on our audit committee, our compensation committee and our nominating and corporate governance committee satisfy the independence standards for such committees established by the SEC and the Nasdaq Marketplace Rules, as applicable. In making such determinations, our board of directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director. Board Diversity In August 2021, the SEC approved a Nasdaq Stock Market proposal to adopt new listing rules relating to board diversity and disclosure. As approved by the SEC, the new Nasdaq listing rules require all Nasdaq listed companies to disclose consistent, transparent diversity statistics regarding their boards of directors. The Board Diversity Matrix below presents the Board’s diversity statistics in the format prescribed by the Nasdaq rules. Board Diversity Matrix (As of March 31, 2024) Total Number of Directors 4 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 2 1 Part II: Demographic Background African American or Black Alaskan Native or Native American Asian Hispanic or Latin Native Hawaiian or Pacific Islander White 1 2 Two or More Races or Ethnicities LGBTQ+ Did Not Disclose Demographic Background 1 Board Meetings and Committees During the year ended December 31, 2023, our board of directors held nine meetings (including regularly scheduled and special meetings), and no director attended fewer than 75% of the total number of meetings of the board of directors and the committees of which he or she was a member. In addition, during the year ended December 31, 2023, our board of directors acted by unanimous written consent on 2 occasions. 54 Although we do not have a formal policy regarding attendance by members of our board of directors at annual meetings of stockholders, we encourage, but do not require, directors to attend. Our board of directors has established three standing committees — audit, compensation, and nominating and corporate governance — each of which operates under a charter approved by our board of directors. Copies of each committee’s charter has been posted on the Investor Relations section of our website, which is located at www.seqll.com . Each committee has the composition and responsibilities described below. Our board of directors may from time to time establish other committees. Audit Committee Our audit committee consists of David Pfeffer, who is the chair of the committee, Douglas Miscoll and Patrice Milos. Our board of directors has determined that each of the members of our audit committee satisfies the Nasdaq Marketplace Rules and SEC independence requirements. The functions of this committee include, among other things: ● evaluating the performance, independence and qualifications of our independent auditors and determining whether to retain our existing independent auditors or engage new independent auditors; ● reviewing and approving the engagement of our independent auditors to perform audit services and any permissible non-audit services; ● reviewing our annual and quarterly financial statements and reports, including the disclosures contained under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and discussing the statements and reports with our independent auditors and management; ● reviewing with our independent auditors and management significant issues that arise regarding accounting principles and financial statement presentation and matters concerning the scope, adequacy and effectiveness of our financial controls; ● reviewing our major financial risk exposures, including the guidelines and policies to govern the process by which risk assessment and risk management is implemented; and ● reviewing and evaluating on an annual basis the performance of the audit committee, including compliance of the audit committee with its charter. Our board of directors has determined that David Pfeffer qualifies as an “audit committee financial expert” within the meaning of applicable SEC regulations and meets the financial sophistication requirements of the Nasdaq Marketplace Rules. In making this determination, our board of directors has considered Mr. Pfeffer’s extensive financial experience and business background. Both our independent registered public accounting firm and management periodically meets privately with our audit committee. The audit committee had nine meetings in 2023. The audit committee operates under a written charter that was adopted by our board of directors and satisfies the applicable rules of the SEC and the listing standards of the NASDAQ Stock Market. A copy of the audit committee charter is available on our website at www.seqll. com . Compensation Committee Our compensation committee consists of Douglas Miscoll, who is the chair of the committee, and David Pfeffer and Patrice Milos. Our Board has determined that each of the members of our compensation committee satisfies the Nasdaq Marketplace Rules independence requirements. The functions of this committee include, among other things: ● reviewing, modifying and approving (or if it deems appropriate, making recommendations to the full board of directors regarding) our overall compensation strategy and policies; ● reviewing and approving the compensation, the performance goals and objectives relevant to the compensation, and other terms of employment of our executive officers; ● reviewing and approving (or if it deems appropriate, making recommendations to the full board of directors regarding) the equity incentive plans, compensation plans and similar programs advisable for us, as well as modifying, amending or terminating existing plans and programs; ● reviewing and approving the terms of any employment agreements, severance arrangements, change in control protections and any other compensatory arrangements for our executive officers; ● reviewing with management and approving our disclosures under the caption “Compensation Discussion and Analysis” in our periodic reports or proxy statements to be filed with the SEC; and ● preparing the report that the SEC requires in our annual proxy statement. 55 None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of another entity that had one or more of its executive officers serving as a member of our board of directors or compensation committee. None of the members of our compensation committee has been at any time one of our officers or employees. Our compensation committee had one meeting in 2023. The compensation committee operates under a written charter that was adopted by our board of directors and satisfies the applicable rules of the SEC and the listing standards of the NASDAQ Stock Market. A copy of the compensation committee charter is available on our website at www.seqll.com . Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Douglas Miscoll, who is the chair of the committee, and Patrice Milos and David Pfeffer. Our board of directors has determined that each of the members of this committee satisfies the Nasdaq Marketplace Rules independence requirements. The functions of this committee include, among other things: ● identifying, reviewing and evaluating candidates to serve on our board of directors consistent with criteria approved by our board of directors; ● evaluating director performance on our board of directors and applicable committees of our board of directors and determining whether continued service on our board of directors is appropriate; ● evaluating, nominating and recommending individuals for membership on our board of directors; and ● evaluating nominations by stockholders of candidates for election to our board of directors. During 2023, our nominating and corporate governance committee met one time. The nominating and corporate governance committee operates under a written charter that was adopted by our board of directors and satisfies the applicable rules of the SEC and the listing standards of the NASDAQ Stock Market. A copy of the nominating and corporate governance committee charter is available on our website at www.seqll.com . Scientific Advisors Our executive team is supported by our Scientific Advisors. The Scientific Advisors provide scientific advice regarding our tSMS technology to our executive team. Each our Scientific Advisors was selected based on experience with our tSMS technology and familiarity with our tSMS sequencers. The Scientific Advisors are not required to provide any particular services to us and are not currently compensated, except for periodic awards of stock options. Efrat Shema, Ph.D. — Principal Investigator and Assistant Professor at the Weizmann Institute of Science. Dr. Shema completed her M.Sc. and Ph.D. at the Weizmann Institute in 2007 and 2012 in molecular cell biology, after earning her B.Sc. in life sciences at the Hebrew University in Jerusalem in 2005. She moved to Boston in 2012 as a Fulbright Scholar, conducting post-doctoral work under Dr. Bradley Bernstein at Massachusetts General Hospital, Harvard Medical School, and the Broad Institute of MIT and Harvard. During her Ph.D. studies at the Weizmann Institute, Dr. Shema received a prestigious Adams Fellowship from the Israel Academy of Sciences and Humanities, as well as the Otto Schwartz Prize for Excellence and a UNESCO-L’OREAL national award for young women in life sciences. Dr. Shema collaborates with us to study epigenetic events that contribute to cellular differentiation, early development and cancer using innovative single-molecule technologies. Claes Wahlestedt, M.D., Ph.D. — Director, Center for Therapeutic Innovation, Leonard M. Miller Professor and Associate Dean for therapeutic innovation at the University of Miami. From 2005 to 2011, he was a professor and director of neuroscience at The Scripps Research Institute. The author of over 300 papers in scientific journals, with over 43,000 citations, Dr. Wahlestedt has a long-standing interest in genomics and epigenetics and has pioneered various translational efforts in these fields. At Scripps in 2008, he co-founded CuRNA (now part of Opko Health), a spin-off company based on his patent for targeting regulatory noncoding RNAs to up-regulate therapeutic proteins. In 2011, he co-founded Epigenetix Inc., a University of Miami spin-off focusing on small molecule drugs for a variety of drug targets in cancer and neuroscience. Dr. Wahlestedt advises us on applications development and scientific strategy. 56 Philipp Kapranov, Ph.D. — Professor and Director, Institute of Genomics at HuaQiao University, Xiamen, China. Dr. Kapranov’s primary research interest includes systems biology and genomics in the context of gene expression and discovery of new RNA species (both protein-coding and non-coding) and their functions, especially in the context of human disease particularly cancer. Dr. Kapranov received his B.Sc. in microbial biotechnology, from Kiev Institute of Food Industry, Ukraine, and his Ph.D. in genetics from Michigan State University. Previously, he was a Senior Scientist at Affymetrix where his research first demonstrated an order of magnitude increase in transcriptional activity on human chromosomes 21 and 22 over that accounted for by previously characterized and predicted exons. Dr. Kapranov is a long-time collaborator of ours who purchased and deployed the first HeliScope in China, which his lab uses for researching non-coding RNA and basic science. Code of Business Conduct and Ethics Our board of directors has adopted a written code of conduct that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code and all disclosures that are required by law or Nasdaq Marketplace Rules concerning any amendments to, or waivers from, any provision of the code is posted on our website, which is located at www.seqll.com . Board Leadership Structure Our board of directors is free to select the Chairman of the board of directors and a Chief Executive Officer in a manner that it considers to be in the best interests of our company at the time of selection. Currently, Daniel Jones serves as our Chief Executive Officer and Chairman of the board of directors. We currently believe that this leadership structure is in our best interests. As Chairman of the Board, Mr. Jones’ key responsibilities include facilitating communication between our board of directors and management, assessing management’s performance, managing board members, preparation of the agenda for each board meeting, acting as chair of board meetings and meetings of our company’s stockholders and managing relations with stockholders, other stakeholders and the public. We will take steps to ensure that adequate structures and processes are in place to permit our board of directors to function independently of management. The directors will be able to request at any time a meeting restricted to independent directors for the purposes of discussing matters independently of management and are encouraged to do so should they feel that such a meeting is required. Our board of directors, as a whole and also at the committee level, plays an active role overseeing the overall management of our risks. Our Audit Committee reviews risks related to financial and operational items with our management and our independent registered public accounting firm. Our board of directors is in regular contact with our Chief Executive Officer and Chief Financial Officer, who report directly to our board of directors and who supervise day-to-day risk management. Role of Board in Risk Oversight Process We face a number of risks, including those described herein under the caption “Risk Factors.” Our board of directors believes that risk management is an important part of establishing, updating and executing on our business strategy. Our board of directors has oversight responsibility relating to risks that could affect our corporate strategy, business objectives, compliance, operations, and the financial condition and performance. Our board of directors focuses its oversight on the most significant risks facing us and, on our processes, to identify, prioritize, assess, manage and mitigate those risks. Our board of directors receives regular reports from members of our senior management on areas of material risk to us, including strategic, operational, financial, legal and regulatory risks. While our board of directors has an oversight role, management is principally tasked with direct responsibility for management and assessment of risks and the implementation of processes and controls to mitigate their effects on us. 57 ITEM 11. EXECUTIVE COMPENSATION . The following table sets forth total compensation paid to our executive officers for the years ended December 31, 2023 and 2022. Nonqualified Non-Equity Deferred Option Incentive Plan Compensation All Other Name and Principal Position Year Salary Bonus Awards (1) Compensation Earnings Compensation Total Daniel Jones 2023 $ 260,673 $ — $ — — — — $ 260,673 Chief Executive Officer 2022 225,000 50,000 (4) 178,179 — — — 453,179 John W. Kennedy (3) 2023 — — — — — — — Chief Financial Officer 2022 115,000 100,000 133,634 — — — 248,634 Frances Scally (5) 2023 145,000 — — — — — 145,000 2022 78,250 — — — — — 78,250 (1) The amounts reported in the “Option Awards” column reflect the aggregate fair value of stock -based compensation awarded during the year computed in accordance with the provisions of the Financial Accounting Standard Board Accounting Standards Codification Topic 718, or ASC 718. See Note 2 to SeqLL’s consolidated financial statements for the year ended December 31, 2022 available at www.sec.gov regarding assumptions underlying the valuation of equity awards. These amounts reflect the accounting cost for these stock options and do not reflect the actual economic value that may be realized by the executive officer upon the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options. (2) Of this bonus, $75,000 was deferred to, and paid in, 2022. Mr. Jones shall resign from his positions with our company upon the completion of the Merger. (3) Mr. Kennedy resigned his position as our Chief Financial Officer on August 9, 2022. (4) The $50,000 bonus was paid in 2023. (5) Ms. Scally was appointed our Chief Financial Officer on August 8, 2022. Ms. Scally is a consultant to our company and all compensation for her services is paid to DLA, LLC, a financial consulting firm with which Ms. Scally is employed. Ms. Scally shall resign from her position with our company upon the completion of the Merger. Equity Compensation Plan Information The following table provides information as of December 31, 2023, regarding our compensation plans under which equity securities are authorized for issuance: Plan category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) 2014 Equity Incentive Plan – Equity compensation plan approved by security holders 54,020 $ 72.55 19,655 Equity compensation plans not approved by security holders -- -- — Total 54,020 $ 72.55 19,655 SeqLL Inc. 2014 Equity Incentive Plan Our board of directors and our stockholders originally approved our 2014 Equity Incentive Plan, or the 2014 Plan, in April 2014. Our 2014 Plan allows for the grant of equity-based awards to our and our affiliates’ officers, employees, directors and key persons. On March 18, 2021, our board of directors and stockholders approved an amendment and restatement of our 2014 Plan to increase the number of shares of common stock available for equity awards under the 2014 plan to 87,500 shares. The description below is of our 2014 Plan as amended and restated, except as otherwise noted. 58 Purpose. The purpose of our 2014 Plan, as amended and restated, is to encourage and enable our and our affiliates’ officers, employees, directors and other key persons (including consultants and prospective employees) upon whose judgment, initiative and efforts we largely depend for the successful conduct of our business to acquire a proprietary interest in our company. Eligibility. Participants in our 2014 Plan may include full or part-time officers, employees, directors and key persons (including advisors and consultants) of our company or our affiliates who are selected to receive awards from time to time by the administrator in its sole discretion. Administration. Our 2014 Plan is administered by our compensation committee, or, if at any time our compensation committee is not in existence, our board of directors. In addition, to the extent applicable law permits, our board of directors may delegate any of its authority under our 2014 Plan to another committee or one or more officers, and our compensation committee may delegate any of its authority hereunder to a sub-committee or to one or more officers, except that no such delegation is permitted with respect to awards made to individuals who are subject to Section 16 of the Exchange Act unless the delegation is to another committee consisting entirely of “nonemployee directors” within the meaning of Rule 16b-3 of the Exchange Act. Subject to the provisions of our 2014 Plan, the administrator has the power to administer the plan, including but not limited to, the power to select the eligible officers, employees, directors, and key employees to whom awards are granted; to determine the number of shares to be covered by each award; to determine the terms and conditions of any award and to amend any outstanding award. Authorized Shares. As of December 31, 2023, a total of 87,500 shares of our common stock were authorized for issuance under our 2014 Plan, and at such date, stock grants of an aggregate of 67,845shares had been made under the 2014 Plan, and 19,655 shares authorized under the 2014 Plan remained available for award purposes. All of the authorized shares may be issued pursuant to incentive stock options. The shares available for issuance may be authorized but unissued shares or shares reacquired by us and held in its treasury. The share reserve under our 2014 Plan is depleted by the maximum number of shares, if any, that may be issuable under an award as determined at the time of grant. However, awards that may only be settled in cash (determined at the time of grant) do not deplete the share reserve. If (1) an award lapses, expires, terminates or is cancelled without the issuance of shares, (2) it is determined during or at the conclusion of the term of an award that all or some portion of the shares with respect to which the award was granted will not be issuable on the basis that the conditions for such issuance will not be satisfied, (3) shares are forfeited under an award, (4) shares are issued under any award and we subsequently reacquire them pursuant to rights reserved upon the issuance, (5) an award or a portion thereof is settled in cash, or shares are withheld by us in payment of the exercise price or withholding taxes of an award, then such shares will be recredited to the reserve and may again be used for new awards. However, shares recredited to reserve pursuant to clause (4) in the preceding sentence may not be issued pursuant to incentive stock options. Adjustments to Shares. If, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in our capital stock, the outstanding shares are increased or decreased or are exchanged for a different number or kind of shares or other securities of our company, or additional shares or new or different shares or other securities of our company or other non-cash assets are distributed with respect to such shares or other securities, or, if, as a result of any merger, consolidation or sale of all or substantially all of our assets, the outstanding shares are converted into or exchanged for a different number or kind of securities of our company or any successor entity (or a parent or subsidiary thereof), the administrator will make an appropriate or proportionate adjustment in (1) the maximum number of shares reserved for issuance under our 2014 Plan; (2) the number and kind of shares or other securities subject to any then outstanding awards under our 2014 Plan; and (3) the exercise price for each share subject to any then outstanding stock options. The administrator also may adjust the number of shares subject to outstanding awards and the exercise price and the terms of outstanding awards to take into consideration material changes in accounting practices or principles, extraordinary dividends, acquisitions or dispositions of stock or property or any other event if it is determined by the administrator that such adjustment is appropriate to avoid distortion in the operation of our 2014 Plan, subject to the limitations described in our 2014 Plan. Effect of a Sale Event. Unless otherwise provided in an award or other agreement, upon a “sale event,” if the successor or surviving corporation (or parent thereof) so agrees, then, without the consent of any holder of an award (or other person with rights in an award), some or all outstanding awards may be assumed, or replaced with the same type of award with similar terms and conditions, subject to adjustments described in our 2014 Plan, by the successor or surviving corporation (or parent thereof) in the sale event. A “sale event” is generally defined for this purpose as (1) any person becoming the beneficial owner of 50% or more of the combined voting power of our then-outstanding securities (subject to exceptions and other limitations scribed in our 2014 Plan), (2) our stockholders approving a plan of complete liquidation or dissolution of our company, (3) the consummation of (a) an agreement for the sale or disposition of all or substantially all of our assets (other than to certain excluded persons), (b) a merger, consolidation or reorganization of our company with or involving any other corporation (subject to specified exceptions), or (4) a change in the majority of our board of directors that is not approved by a supermajority of the existing board. More detailed descriptions and additional information on limitations relating to each of these sale events are in our 2014 Plan. If, after a sale event in which the awards are assumed or replaced, the award holder experiences a termination event as a result of a termination of service without cause, due to death or disability, or as a result of a resignation for good reason, in each case within 24 months after a sale event, then the award holder’s awards will be vested in full or deemed earned in full (assuming target performance, if applicable). To the extent the awards are not assumed or replaced in the sale event, then, (1) each option will become immediately and fully vested and, unless the administrator determines otherwise, will be canceled on the sale event in exchange for a cash payment equal to the excess of the price paid in the sale event over the exercise price of the option, and all options with an exercise price lower than the price paid in the sale event will be canceled for no consideration, (2) restricted stock and restricted stock units (not subject to performance goals) will be vested in full and settled, along with any accompanying dividend equivalent units, and (3) all awards subject to performance goals with outstanding performance periods will be canceled in exchange for a cash payment equal to the amount that would have been due under the award if performance had been satisfied at the better of target or the performance trend through the sale event. 59 Limit on Director Awards. The maximum value of awards granted during a single fiscal year to any non-employee director, taken together with any cash fees paid during the fiscal year to the non-employee director in respect of the director’s service as a member of our board of directors during such year (including service as a member or chair of any committees of the board), shall not exceed $800,000 in total value for the first year of service and $400,000 for future years of service (calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes). Types of Awards. Awards under our 2014 Plan may consist of incentive stock options, non-qualified stock options, restricted stock awards, unrestricted stock awards, restricted stock units, or any combination of those awards. Some provisions of our 2014 Plan relating to these award types are summarized below. Stock Options. A stock option is an award entitling the recipient to acquire shares, at such exercise price as determined by the administrator (which may not be lower than the fair market value of the underlying shares on the date of grant) and subject to such restrictions and conditions as the administrator may determine at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives. Stock options granted under our 2014 Plan may be either non-qualified stock options or incentive stock options. Incentive stock options may be granted only to our employees or employees of our subsidiaries, and must certain requirements specified in our 2014 Plan and the Code. Stock options will become exercisable at such time or times as determined by the administrator at or after the grant date and set forth in the stock option agreement. The administrator may at any time accelerate the exercisability of all or any portion of any stock option. Restricted Stock. A restricted stock award is a grant (or sale, at such purchase price as determined by the administrator) of shares that are subject to such restrictions and conditions as the administrator may determine at the time of grant. Conditions may be based on continuing employment (or other service relationship) or achievement of pre-established performance goals and objectives. The terms and conditions of each such agreement shall be determined by the administrator. Unrestricted Stock. The administrator may grant (or sell at par value or such higher purchase price determined by the administrator) unrestricted shares, in respect of past services, in exchange for cancellation of a compensation right, as a bonus, or any other valid consideration, or in lieu of any cash compensation due to such individual. Restricted Stock Units and Dividend Equivalent Units. The administrator may grant restricted stock units representing the right to receive a future payment of cash, the amount of which is determined by reference to our shares, shares or a combination of cash and shares. The administrator will determine all terms and conditions of an award of restricted stock units, including but not limited to the number granted, in what form they will be settled, whether performance goals must be achieved for the restricted stock units to be earned, the length of any vesting or performance period and the date of payment, and whether the grant will include dividend equivalent units. The administrator will determine all terms and conditions of an award of dividend equivalent units, including whether payment will be made in cash or shares. However, no dividend equivalent units may be paid with respect to restricted stock units that are not earned or that do not become vested. Termination of Employment or Service. Except as otherwise provided in any award agreement or an award holder’s employment offer letter, severance letter or services agreement, or as determined by administrator at the time of the award holder’s termination of employment or service: ● If the termination is for cause, the award holder will forfeit all outstanding awards immediately upon termination and will not be permitted to exercise any stock options following termination. ● If the termination is due to the award holder’s death or disability (when the award holder could not have been terminated for cause), the award holder will forfeit the unvested portion of any award, and any vested stock options will remain exercisable until the earlier of the original stock option expiration date or 12 months from the date of termination. ● If the termination was for any reason other than cause, death or disability (when the award holder could not have been terminated for cause), the award holder will forfeit the unvested portion of any award, and any vested stock options will remain exercisable until the earlier of the original stock option expiration date or three months from the date of termination. Term of Plan and Plan Amendments. Our 2014 Plan will continue until all shares reserved for issuance under our 2014 Plan have been issued, or, if earlier, until such time as the administrator terminates our 2014 Plan as described below. No incentive stock options may be granted after the ten (10) year anniversary of the date of stockholder approval of the amendment and restatement of our 2014 Plan unless the stockholders have approved an extension. 60 Our board of directors may, at any time, amend, terminate or discontinue our 2014 Plan, except that our stockholders must approve any amendment to the extent approval is required by Section 16 of the Exchange Act, the Code, the listing requirements of any principal securities exchange or market on which our shares are then traded or any other applicable law. In addition, stockholders must approve any amendment to our 2014 Plan that would materially increase the number of shares reserved (except as permitted by the adjustment provisions of our 2014 Plan) or that would diminish the protections afforded by the anti-repricing provisions of our 2014 Plan. Any termination of our 2014 Plan will not affect the authority of our board of directors and the administrator to administer outstanding awards or affect the rights of award holders with respect to awards previously granted to them. Award Amendments, Cancellation and Disgorgement. Subject to the anti-repricing and other requirements of our 2014 Plan, the administrator may modify, amend or cancel any award. However, except as otherwise provided in our 2014 Plan or an award agreement, the consent of the award holder is required to any amendment that materially diminishes the holder’s rights under the award. Our 2014 Plan includes exceptions to the consent requirement for actions necessary to comply with applicable law or the listing requirements of securities exchanges, to preserve favorable accounting or tax treatment of any award for our company or to the extent the administrator determines that an action does not materially and adversely affect the value of the award or is in the best interest of the affected award holder or any other person who has an interest in the award. The administrator has full power and authority to terminate or cause an award holder to forfeit an award, and require an award holder to disgorge to us, any gains attributable to the award, if the award holder engages in any action constituting, as determined by the administrator in its discretion, cause for termination, or a breach of any award agreement or any other agreement between the award holder and us or one of our affiliates concerning noncompetition, non-solicitation, confidentiality, trade secrets, intellectual property, non-disparagement or similar obligations. In addition, any awards granted pursuant to our 2014 Plan, and any shares issued or cash paid pursuant to an award, will be subject to any recoupment or claw-back policy that is adopted by us from time to time, or any recoupment or similar requirement otherwise made applicable to us by law, regulation or listing standards. Repricing and Backdating Prohibited. Notwithstanding anything in our 2014 Plan to the contrary, and except for the adjustments provided for in our 2014 Plan, neither the administrator nor any other person may (1) amend the terms of outstanding stock options to reduce the exercise or grant price of such outstanding stock options; (2) cancel outstanding stock options in exchange for stock options with an exercise or grant price that is less than the exercise or grant price of the original stock options; or (3) cancel outstanding stock options with an exercise or grant price above the current fair market value of a share in exchange for cash or other securities. In addition, the administrator may not make a grant of a stock option with a grant date that is effective prior to the date the administrator takes action to approve the award. Incentive Plan Awards We did not make any stock option grants to our executive officers during the fiscal year ended December 31, 2023. 61 Outstanding Equity Awards at Fiscal Year-End The following table sets forth outstanding equity awards to our named executive officers as of December 31, 2023. Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price Option Expiration Date Number of Shares or Units of Stock that have not Vested Market Value of Shares or Units of Stock that have not Vested Daniel Jones 4,460 — $ 98.40 9/5/2028 — $ — Daniel Jones 2,396 2,604 $ 69.20 1/13/2032 — — Director Compensation General. The following discussion describes the significant elements of the expected compensation program for members of our board of directors and its committees. The compensation of our directors is designed to attract and retain committed and qualified directors and to align their compensation with the long-term interests of our shareholders. Directors who are also executive officers (each, an “Excluded Director”) will not be entitled to receive any compensation for his or her service as a director, committee member or Chair of our board of directors or of any committee of our board of directors. Director Compensation Arrangements. Our non-employee director compensation program is designed to attract and retain qualified individuals to serve on our board of directors. Our board of directors, on the recommendation of our compensation committee, will be responsible for reviewing and approving any changes to the directors’ compensation arrangements. In consideration for serving on our board of directors, each director (other than Excluded Directors) will be paid an annual retainer. All directors will be reimbursed for their reasonable out-of-pocket expenses incurred while serving as directors. Our board of directors has approved the following compensation program for the non-employee members of our board of directors. Cash Compensation. Under such program, we will pay each non-employee director a cash fee, payable quarterly, of $4,167 per month for service on our board of directors. Equity Awards. Each non-employee director will receive a one-time initial stock option award for 16,216 shares of our common stock, which options shall vest in arrears in two equal tranches on the first and second anniversaries of service on our Board. Each non-employee director shall also be eligible to receive grants of stock options, each in an amount designated by the Compensation Committee of our board of directors, from any equity compensation plan approved by the Compensation Committee of our Board. In addition to such compensation, we will reimburse each non-employee director for all pre-approved expenses within 30 days of receiving satisfactory written documentation setting out the expense actually incurred by such director. These include reasonable transportation and lodging costs incurred for attendance at any meeting of our board of directors. 62 The following table sets forth the director compensation we accrued in the year ended December 31, 2023 (excluding compensation to our executive officers set forth in the summary compensation table above). Name Fees Earned or Paid in Cash Option Awards Total ($) Douglas Miscoll $ 50,000 $ — $ 50,000 David Pfeffer 60,000 (1) — 60,000 Patrice M. Milos, Ph.D. 50,000 — 50,000 — — — Total: $ 160,000 $ $ 160,000 (1) Of the amount reported in the “Fees or Paid in Cash” column, $10,000 was deferred to and paid in 2023. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The following table sets forth certain information regarding the beneficial ownership of our common stock as of April 1, 2024 by: ● each person known by us to be a beneficial owner of more than 5% of our outstanding common stock; ● each of our directors; ● each of our named executive officers; and ● all directors and executive officers as a group. The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days after April 1, 2024. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed a beneficial owner of securities as to which he has no economic interest. Except as indicated by footnote, to our knowledge, the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. The applicable percentage ownership is based on 380,648 shares of common stock outstanding as of April 1, 2024. 63 Unless otherwise noted below, the address of the persons listed on the table is c/o SeqLL Inc., 3 Federal Street, Billerica, Massachusetts 01821. Name and Address of Beneficial Owner Number of Shares Percentage Executive Officers and Directors Daniel Jones (1) 67,081 17.3 % Frances Scally - - Dr. Patrice M. Milos (2) 2,176 * Douglas Miscoll (3) 4,080 1.1 David Pfeffer (4) 2,155 * All directors and executive officers as a group (5 persons) 75,492 19.2 5% Stockholders William C. St. Laurent (5) 87,105 22.8 St. Laurent Investments, LLC (6) 38,932 10.2 Wendy St. Laurent (7) 18,607 4.9 * Represents beneficial ownership of less than 1%. (1) Includes (i) 59,809 shares of common stock and (ii) 7,272 shares of common stock issuable upon the exercise of currently exercisable stock options. (2) Includes (i) 250 shares of common stock and (ii) 1,926 shares of common stock issuable upon the exercise of currently exercisable stock options. (3) Includes (i) 1,369 shares of common stock and (ii) 2,711 shares of common stock issuable upon the exercise of currently exercisable stock options. (4) Includes (i) 500 shares of common stock and (ii) 1,655 shares of common stock issuable upon the exercise of currently exercisable stock options. (5) Includes (i) 406 shares of common stock issuable upon the exercise of currently exercisable stock options and (ii) 18,607 shares of common stock held by Mr. St. Laurent’s spouse, (iii) 38,932 shares of common stock beneficially owned by St. Laurent Investments LLC, (iv) 14,580 shares of common stock beneficially owned by the Georges C. St. Laurent III Descendants’ Trust and (v) 14,580 shares of common stock beneficially owned by the William C. St Laurent Descendant’s Trust. The address of Mr. St. Laurent is 120 NE 136 Avenue, Vancouver, WA 98684. (6) Includes (i) 38,265 shares of common stock, and (ii) 667 shares of common stock issuable upon the exercise of currently exercisable warrants. William C. St. Laurent is the managing member of St. Laurent Investments, LLC and, as a result, may be deemed to have voting and investment power with respect to the shares held by St. Laurent Investments, LLC. The address of St. Laurent Investments, LLC is 120 NE 136 Avenue, Vancouver, WA 98684. (7) The address of Wendy St. Laurent is 120 NE 136 Avenue, Vancouver, WA 98684. 64 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. Procedures for Approval of Related Party Transactions A “related party transaction” is any actual or proposed transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds the lesser of (i) $120,000 or (ii) one percent of the average of our total assets at year-end for the last two completed fiscal years and in which any related party had or will have a direct or indirect material interest. A “related party” includes: ● any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors; ● any person who beneficially owns more than 5% of our common stock; ● any immediate family member of any of the foregoing; or ● any entity in which any of the foregoing is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest. In March 2021, our board of directors adopted a written related-party transactions policy. Pursuant to this policy, the Audit Committee of our board of directors will review all material facts of all related-party transactions and either approve or disapprove entry into the related-party transaction, subject to certain limited exceptions. In determining whether to approve or disapprove entry into a related-party transaction, our Audit Committee shall take into account, among other factors, the following: (i) whether the related-party transaction is on terms no less favorable to us than terms generally available from an unaffiliated third party under the same or similar circumstances; (ii) the extent of the related party’s interest in the transaction; and (iii) whether the transaction would impair the independence of a non-employee director. Related Party Transactions At December 31, 2023, the Company had the following outstanding payables to affiliated parties for past services: December 31, 2023 SeqLL Omics Inc. $ 73,764 St. Laurent Realty, Inc. 7,558 Total related party payables $ 81,322 St. Laurent Realty, Inc. assisted the Company by previously providing corporate accounting support, this entity is affiliated with William C. St. Laurent, a former member of the Company’s board of directors. SeqLL Omics was formed by Daniel Jones, the Chairman of the Board and Chief Executive Officer of the Company, and certain other Company employees, for the purpose of carrying on the Company’s pre-Merger business after the Mergers. SeqLL Omics currently performs research and development services for the Company, in order to facilitate the Company’s pre-Merger research and development efforts. The Company incurred $73,764 in relation to the services provided by SeqLL Omics during the year ended December 31, 2023. From April 29, 2019 to April 29, 2020, we entered into a series of non-convertible promissory notes (the “Promissory Notes”) with St. Laurent Investments LLC amounting to $1,375,000. The Promissory Notes, as amended, are accruing interest at 5% per annum. In June 2022, we entered into an agreement with St. Laurent Investments LLC to extend the maturity date of the Promissory Note to July 31, 2024. 65 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. The following table sets forth the fees billed to us for professional services rendered by Wolf & Co. for the years ended December 31, 2023 and 2022: Services 2023 2022 Audit fees $ 165,500 $ 147,800 Audit-related fees 109,350 8,700 Total fees $ 274,850 $ 156,500 (1) Audit Fees — Audit fees consist of fees billed for the audit of our annual financial statements and the review of the interim consolidated financial statements. (2) Audit-Related Fees — Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.”. Pre-Approval Policies and Procedures The Audit Committee has the authority to appoint or replace our independent registered public accounting firm (subject, if applicable, to stockholder ratification). The Audit Committee is also responsible for the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent registered public accounting firm was engaged by, and reports directly to, the Audit Committee. The Audit Committee pre-approves all audit services and permitted non-audit services (including the fees and terms thereof) to be performed for us by our independent registered public accounting firm, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act and Rule 2-01(c)(7)(i)(C) of Regulation S-X, provided that all such excepted services are subsequently approved prior to the completion of the audit. We have complied with the procedures set forth above, and the Audit Committee has otherwise complied with the provisions of its charter. 66 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . Incorporation by Reference Exhibit Number Description of Exhibits Form Filing Date Exhibit Number 2.1 Agreement and Plan of Reorganization 8-K 5/31/23 2.1 2.2 Amendment No. 1 to Agreement and Plan of Reorganization effective as of June 22, 2023 8-K 6/23/23 2.2 2.3 Amendment No. 2 to Agreement and Plan of Reorganization effective as of October 5, 2023 S-1/A 10/18/23 2.3 2.4 Amendment No. 3 to Agreement and Plan of Reorganization effective as of October 17, 2023 S-1/A 10/18/23 2.4 2.5 Amendment No. 4 to Agreement and Plan of Reorganization effective as of November 3, 2023 S-1/A 11/7/23 2.5 2.6 Amendment No. 5 to Agreement and Plan of Reorganization effective as of January 16, 2024 8-K 1/18/24 2.1 3.1 Amended and Restated Certificate of Incorporation 8-K 8/31/21 3.1 3.2 Amended and Restated Bylaws 8-K 8/31/21 3.2 4.1 Description of Securities 10-K 3/23/22 4.1 4.2 Specimen common stock certificate S-1/A 5/22/19 4.1 4.3 Warrant Agency Agreement dated as of August 31, 2021 between SeqLL Inc. and VSTOCK Transfer LLC 8-K 8/31/21 10.1 4.4 Form of Common Stock Purchase Warrant S-1/A 8/16/21 4.6 10.1# Amended and Restated 2014 Equity Incentive Plan S-1 3/31/21 10.1 10.2 License Agreement dated March 15, 2013 between SeqLL, LLC and Helicos Biosciences Corporation S-1 4/23/19 10.2 10.3 Sub-License Agreement dated March 15, 2013 between SeqLL, LLC and Helicos Biosciences Corporation S-1 4/23/19 10.3 10.4 Asset Purchase Agreement dated as of May 29, 2023 8-K 5/31/23 10.1 10.13 Investor Rights Agreement dated as of September 30, 2018 S-1/A 5/28/21 10.13 22* Subsidiaries of the Registrant 23* Consent of Wolf & Company, P.C. 31.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 32.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith. # Indicates a management contract or compensatory plan. ITEM 16. FORM 10–K SUMMARY None. 67 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on the 9th day of April, 2024. SEQLL INC. By: /s/ Daniel Jones Daniel Jones Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Daniel Jones Chief Executive Officer and Chairman April 9, 2024 Daniel Jones (Principal Executive Officer) /s/ Frances Scally Chief Financial Officer and Secretary April 9, 2024 Frances Scally (Principal Financial and Accounting Officer) /s/ Douglas Miscoll Director April 9, 2024 Douglas Miscoll /s/ David Pfeffer Director April 9, 2024 David Pfeffer /s/ Dr. Patrice Milos Director April 9, 2024 Dr. Patrice Milos 68 SEQLL INC. CONSOLIDATED FINANCIAL STATEMENTS Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 392 ) F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations and Comprehensive Loss F-4 Consolidated Statements of Changes in Stockholders’ Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of SeqLL, Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of SeqLL, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Emphasis of a Matter Regarding Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses and negative cash flows from operations and has a significant accumulated deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company 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. Our 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. /s/ Wolf & Company, P.C . We have served as the Company’s auditor since 2018. Boston, MA April 9, 2024 F- 2 SeqLL Inc. Consolidated Balance Sheets December 31, 2023 2022 Assets Current assets Cash and cash equivalents $ 2,693,991 $ 2,180,525 Marketable securities - 4,036,014 Accounts receivable, net of allowance for doubtful accounts of $ 24,507 and $ 6,016 as of December 31, 2023 and 2022, respectively 2,723 21,214 Other receivables - 60,000 Inventory - 165,852 Prepaid expenses 32,933 171,859 Total current assets 2,729,647 6,635,464 Other assets Property and equipment, net 625,360 530,108 Operating lease right-of-use asset 998,346 1,129,715 Other assets 83,008 118,954 Total assets $ 4,436,361 $ 8,414,241 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 522,940 $ 622,436 Accrued expenses 375,191 495,462 Current portion of finance lease liability 59,659 - Current portion of operating lease liability 198,314 110,114 Non-convertible promissory notes 1,375,000 - Total current liabilities 2,531,104 1,228,012 Non-current liabilities Finance lease liability, less current portion 51,481 - Operating lease liability, less current portion 1,246,033 1,444,343 Non-convertible promissory notes - long-term - 1,375,000 Total non-current liabilities 1,297,514 2,819,343 Total liabilities 3,828,618 4,047,355 Commitments and contingencies (Note 12) Stockholders’ equity Preferred stock, $ 0.00001 par value; 20,000,000 shares authorized; 0 shares issued and outstanding - - Common stock, $ 0.00001 par value; 300,000,000 shares authorized; 380,648 and 330,648 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively 4 3 Additional paid-in capital 24,744,014 22,853,116 Accumulated deficit ( 24,136,275 ) ( 18,508,684 ) Accumulated other comprehensive income - 22,451 Total stockholders’ equity 607,743 4,366,886 Total liabilities and stockholders’ equity $ 4,436,361 $ 8,414,241 See accompanying report of independent registered public accounting firm and notes to the consolidated financial statements. Reflects a 1-for-40 reverse stock split effective August 30, 2023 F- 3 SeqLL Inc. Consolidated Statements of Operations and Comprehensive Loss December 31, 2023 2022 Revenue Sales $ - $ 1,177 Grant revenue - 77,482 Total revenue - 78,659 Cost of sales - 690 Gross profit - 77,969 Operating expenses Research and development 2,253,354 1,568,266 General and administrative 3,479,155 2,506,851 Total operating expenses 5,732,509 4,075,117 Operating loss ( 5,732,509 ) ( 3,997,148 ) Other (income) and expenses Investment income ( 82,665 ) ( 44,879 ) Unrealized gain on marketable equity securities - ( 54,508 ) Realized loss (gain) on marketable equity securities ( 106,051 ) 106,324 Interest expense, net 83,798 90,748 Net loss ( 5,627,591 ) ( 4,094,833 ) Other comprehensive income Unrealized gain on marketable debt securities - 22,451 Reclassification adjustment for net gains included in net loss ( 22,451 ) - Total comprehensive loss $ ( 5,650,042 ) $ ( 4,072,382 ) Net loss per share – basic and diluted $ ( 15.03 ) $ ( 12.38 ) Weighted average common shares – basic and diluted 374,484 330,648 See accompanying report of independent registered public accounting firm and notes to the consolidated financial statements. Reflects a 1-for-40 reverse stock split effective August 30, 2023 F- 4 SeqLL Inc. Consolidated Statements of Changes in Stockholders’ Equity Preferred Stock Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Shares Amount Capital Income (Loss) Deficit Equity Balance as of December 31, 2021 - $ - 330,648 $ 3 $ 22,596,216 $ - $ ( 14,413,851 ) 8,182,368 Stock-based compensation expense - - - - 256,900 - - 256,900 Other comprehensive income - - - - - 22,451 - 22,451 Net loss - - - - - - ( 4,094,833 ) ( 4,094,833 ) Balance as of December 31, 2022 - $ - 330,648 $ 3 $ 22,853,116 $ 22,451 $ ( 18,508,684 ) $ 4,366,886 Issuance of common stock, net of issuance costs of $ 300,750 - - 50,000 1 1,499,249 - - 1,499,250 Stock-based compensation expense - - - - 391,649 - - 391,649 Other comprehensive loss - - - - - ( 22,451 ) - ( 22,451 ) Net loss - - - - - - ( 5,627,591 ) ( 5,627,591 ) Balance as of December 31, 2023 - $ - 380,648 $ 4 $ 24,744,014 $ - $ ( 24,136,275 ) $ 607,743 See accompanying report of independent registered public accounting firm and notes to the consolidated financial statements. Reflects a 1-for-40 reverse stock split effective August 30, 2023 F- 5 SeqLL Inc. Consolidated Statements of Cash Flows December 31, 2023 2022 Cash Flows from Operating Activities Net loss $ ( 5,627,591 ) $ ( 4,094,833 ) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation 154,234 87,937 Write-off of obsolete inventory 165,852 79,011 Unrealized gain on marketable equity securities - ( 54,508 ) Realized (gain)/loss on marketable debt and equity securities ( 106,051 ) 106,324 Provision for bad debts 78,491 - Stock-based compensation 391,649 256,900 Non-cash lease expense 21,259 111,984 Changes in operating assets and liabilities Accounts receivable, net - 9,500 Other receivables - ( 25,035 ) Prepaid expenses 101,420 14,197 Inventory - ( 20,708 ) Other assets 35,946 ( 68,466 ) Accounts payable ( 99,496 ) ( 248,928 ) Accrued expenses ( 120,271 ) 184,057 Net cash used in operating activities ( 5,004,558 ) ( 3,662,568 ) Cash Flows from Investing Activities Purchases of lab equipment ( 61,989 ) ( 40,020 ) Purchases of marketable debt securities ( 2,800,386 ) ( 4,014,153 ) Proceeds from sales of marketable equity securities - 5,882,138 Maturity of marketable debt securities 6,920,000 - Net cash provided by investing activities 4,057,625 1,827,965 Cash Flows from Financing Activities Proceeds from issuance of common stock, gross 1,800,000 - Payment for issuance costs of common stock ( 300,750 ) - Repayments of finance lease liability ( 38,851 ) - Net cash provided by financing activities 1,460,399 - Net increase (decrease) in cash and cash equivalents 513,466 ( 1,834,603 ) Cash and cash equivalents, beginning of period 2,180,525 4,015,128 Cash and cash equivalents, end of period $ 2,693,991 $ 2,180,525 Supplemental disclosure of cash flow information and non-cash financing transactions Right-of-use asset acquired through operating lease $ - $ 1,257,495 Fixed assets acquired through finance lease $ 187,497 $ - Leasehold improvements financed through tenant improvement allowance $ - $ 312,758 See accompanying report of independent registered public accounting firm and notes to the consolidated financial statements. F- 6 SeqLL Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2023 and 2022 Note 1 – Nature of Operations and Basis of Presentation SeqLL Inc. was incorporated as a Delaware corporation on April 3, 2014. On April 8, 2014, SeqLL Inc. acquired a 100 % ownership interest in SeqLL, LLC (“Subsidiary”), a domestic limited liability company formed on March 11, 2013 in the State of Massachusetts. SeqLL Inc. is a holding company of the Subsidiary (together the “Company” or “SeqLL”) and is a life sciences company focused on the development and application of innovative genetic analysis technologies and the monetization of these technologies and related intellectual property. The Subsidiary owns technology to enable the analysis of large volumes of genetic material by directly sequencing single molecules of DNA or RNA. The Subsidiary’s principal office is located in Billerica, Massachusetts. On April 26, 2023, SeqLL Merger LLC (“SeqLL Merger Sub”) was formed in the State of Delaware as a wholly-owned subsidiary of the Company. SeqLL Merger Sub was formed solely for the purpose of completing the Mergers (defined below). SeqLL Merger Sub has not carried on any activities as of December 31, 2023, except for activities incidental to its formation and activities undertaken in connection with the Merger. On August 30, 2023, the Company executed one-for-40 reverse stock split as disclosed further below. Proposed Merger On May 29, 2023, the Company, SeqLL Merger LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Purchaser Sub”), Atlantic Acquisition Corp, a Delaware corporation (“Atlantic”), Atlantic Merger LLC, a Delaware limited liability company and a majority-owned subsidiary of Atlantic (“Atlantic Merger Sub”), Lyneer Investments, LLC, a Delaware limited liability company (“Lyneer”), IDC Technologies, Inc., a California corporation (“IDC”), and Lyneer Management Holdings LLC, a Delaware limited liability company (“Lyneer Management”), entered into an Agreement and Plan of Reorganization (as amended, the “Merger Agreement”), pursuant to which (i) Atlantic Merger Sub will be merged with and into Lyneer, with Lyneer continuing as the surviving entity (the “Lyneer Merger”), and (ii) Purchaser Sub will subsequently be merged with and into Lyneer, with Lyneer continuing as the surviving entity and as a wholly-owned subsidiary of the Company (the “SeqLL Merger” and, together with the Lyneer Merger, the “Mergers”). The Merger Agreement contains customary representations and warranties from the parties, and each party has agreed to customary covenants applicable to such party, including, among others, covenants relating to (i) the conduct of their respective businesses in the ordinary course prior to the effective time of the Mergers and (ii) the requirement of each party to maintain and preserve intact their respective business organizations, assets, properties and material business relations. The obligation of each of the Company, Atlantic and Lyneer, and their respective subsidiaries, to complete the Mergers is subject to the fulfillment (or waiver, to the extent permissible under applicable law) of certain customary closing conditions, plus the conditions that (i) the stockholders of the Company shall have approved the issuance of the shares of the Company’s common stock in the Mergers, (ii) the Company completes the Capital Raise to certain amount of gross proceeds as defined in the Merger Agreement, part of which will be used to pay the Cash Consideration (as defined in the Merger Agreement), and (iii) the Company maintains the continued listing of the Company’s common stock on the Nasdaq Capital Market following the Mergers. F- 7 The Merger Agreement, as most recently amended on January 16, 2024, contains certain termination rights, including (i) by mutual consent of the Company, Atlantic, IDC and Lyneer Management, (ii) by any of the Company, Atlantic, IDC or Lyneer Management upon a material breach of the representations or of any covenants or agreements of certain other parties, (iii) by any of the Company, Atlantic, IDC or Lyneer Management if the Mergers have not been consummated by March 15, 2024 (the “Termination Date”), (iv) by any of the Company, Atlantic, IDC or Lyneer Management if any governmental authority shall have issued an order or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by the Merger Agreement, (v) by any of the Company, Atlantic, IDC or Lyneer Management if the special meeting of the Company’s stockholders has been held and the approval of the issuance of the common stock of the Company in the Mergers and the change of control of the Company that will be effected as a result of such issuance and certain other proposals contemplated by the related proxy statement was not approved, or (vi) by Atlantic, IDC or Lyneer Management if the Company is in breach of the rules and regulations of the Nasdaq Stock Market LLC (“Nasdaq”) or has received a notice from Nasdaq relating to the delisting or maintenance of listing of the Company’s common stock on Nasdaq and the Company fails to cure and maintain its listing on Nasdaq prior to the closing of the Mergers. Prior to its amendment, under the terms of the Merger Agreement, in connection with the consummation of the Mergers, the Company was required to declare (i) a cash dividend payable to its stockholders of record as of April 26, 2023 (the “Record Date”) in an amount equal to the Company’s cash and cash equivalents as of the closing date of the SeqLL Merger (exclusive of any proceeds of the Capital Raise), less any amounts withheld for taxes and certain other obligations as of such date and (ii) a stock dividend issuable to such stockholders of an aggregate of 819,352 shares of the Company’s common stock, assuming a public offering price of $ 10.00 per share in the Capital Raise. Subsequent amendments removed the requirement for the declaration of such dividends in consideration of the Company’s agreement to make a settlement offer within 90 days of the closing of the Mergers to its stockholders of record as of the Record Date for such dividends to settle any claims for failing to pay such dividends by issuing to such stockholders the amount of cash and the number of shares of the Company’s common stock that such stockholders would have received had such dividends been declared and made. The terms of the Merger Agreement as further disclosed and described in the Company’s filings with the Securities and Exchange Commission (the “SEC”), which can be accessed by the public over the Internet at the SEC’s website at http:/www.sec.gov or on the Company’s website at www.seqll.com/. Reverse Stock Split On August 29, 2023, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to the Company’s Third Amended and Restated Certificate of Incorporation to (i) effect a reverse stock split of its issued common stock, par value $ 0.00001 per share (“Common Stock”), in the ratio of one-for-40 (the “Reverse Stock Split”) to be effective at 11:59 p.m., eastern time, on August 30, 2023, and (ii) to increase the authorized capital stock of the Company to 320,000,000 shares, of which 300,000,000 shares shall be Common Stock, and 20,000,000 shares shall be Preferred Stock (the “Capital Stock Increase”). The Common Stock began trading on a split-adjusted basis at the market open on August 31, 2023. The Reverse Stock Split and the Capital Stock Increase were approved by the stockholders as part of the Special Meeting. No fractional shares were issued as a result of the Reverse Stock Split. Instead, any fractional shares that would have resulted from the Reverse Stock Split were rounded up to the nearest whole number. The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in the Company’s outstanding Common Stock, except for adjustments that may have resulted from the treatment of fractional shares. All of the Company’s historical share and per share information related to issued and outstanding common stock and outstanding options and warrants exercisable for common stock in these financial statements have been adjusted, on a retroactive basis, to reflect this 1-for-40 reverse stock split. F- 8 Asset Purchase Agreement In connection with the execution and delivery of the Merger Agreement, the Company entered into an asset purchase agreement (“Asset Purchase Agreement”) with SeqLL Omics, Inc., a Delaware corporation (“SeqLL Omics”) on May 29, 2023. SeqLL Omics was formed by Daniel Jones, the Chairman of the Board and Chief Executive Officer of the Company, and certain other Company employees, for the purpose of carrying on the Company’s pre-Merger business after the Mergers. Subject to the terms and conditions of the Asset Purchase Agreement, including the consummation of the Mergers, SeqLL Omics has agreed to purchase from the Company, and the Company has agreed to sell to SeqLL Omics, for a purchase price of $ 1,000 , all of the Company’s rights, title and interests in the assets and properties of the Company as it exists immediately prior to consummation of the Mergers, excluding cash and cash equivalents, including without limitation: ● all inventory; ● all leasehold interests in real estate; ● all contracts with customers, vendors and suppliers and all technology license agreements; ● all intellectual property and general intangibles; ● all equipment and other tangible assets used in, or related to, its business operations; and ● all accounts receivable. In addition to keeping its cash and cash equivalents, the Company will not sell or transfer, and SeqLL Omics will not acquire, certain contracts unrelated to the Company’s pre-Merger business operations, the Company’s corporate records or its rights under the Merger Agreement. Pursuant to the Asset Purchase Agreement, SeqLL Omics will assume from the Company all obligations or liabilities of the Company related to its pre-Merger business operations, including those under the contracts and leases that it will purchase, other than the following: ● obligations to pay any rent pursuant to the Company’s real estate lease prior to the first anniversary of the closing under the Asset Purchase Agreement; ● all obligations of the Company under the Merger Agreement; ● obligations of the Company that are not related to the Company’s current business operations and arise following the closing; ● amounts payable under the promissory note of the Company in the principal amount of $ 1,375,000 payable to St. Laurent Investments LLC, an entity affiliated with William C. St. Laurent, one of the founders and (directly and through affiliates) a principal stockholder of the Company; and ● any obligations under the excluded contracts. The Company will be responsible for the payment of transfer taxes, if any, related to the transfer of the transferred assets. Common Stock Issuance On February 15, 2023, the Company issued 50,000 shares of common stock to investors, after the reflection of the Reverse Stock Split, at a price of $ 36.00 per share. The gross proceeds of the issuance was $ 1,800,000 . The Company incurred offering costs of $ 300,750 . Delisting from the Nasdaq Stock Market On September 8, 2023, and September 18, 2023, the Company received letters from Nasdaq regarding our compliance with Nasdaq Listing Rule 5550(a)(4), which requires us to have a minimum of 500,000 publicly-held shares of common stock, exclusive of shares held by officers, directors and 10 % stockholders. The letters from Nasdaq indicated that according to its calculations, as of September 7, 2023, the Company no longer met the requirements of such Rule, and the Company was given until September 25, 2023 to submit a plan to Nasdaq to regain compliance. On September 22, 2023, the Company advised Nasdaq that it expected to regain compliance with Rule 5550(a)(4) upon consummation of the Merger and Nasdaq granted the Company an extension through October 15, 2023 to demonstrate compliance with the public float rule. On October 16, 2023, the Company submitted a late request asking that the public float exception be extended through October 31, 2023. On October 17, 2023, Nasdaq issued a final extension to October 31, 2023 and advised the Company that no further continuances would be granted and that the Company’s failure to meet the terms of the extension would result in the immediate delisting of our securities from Nasdaq. F- 9 On November 9, 2023, the Company confirmed to Nasdaq that our public float as of October 31, 2023 and November 10, 2023, was below the minimum requirement in Rule 5550(a)(4). On November 10, 2023, the Company received a letter from Nasdaq indicating that, in light of the Company’s inability to meet the terms of Nasdaq’s amended decision of October 17, 2023, Nasdaq determined to delist the Company’s securities from Nasdaq. Nasdaq suspended trading in the Company’s securities effective at the open of trading on November 13, 2023. As the Company is pursuing a new listing of its securities on Nasdaq, the Company has withdrawn its request for a hearing on the delisting. On February 21, 2024, the Company received the remove from listing notice from Nasdaq as it relates to the Company’s common stock and warrants. Risks and Uncertainties The Company is subject to a number of risks similar to other companies in its industries, including rapid technological change, competition from larger pharmaceutical and biotechnology companies and dependence on key personnel. Results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond the Company’s control. The Company’s business could be impacted by, among other things, downturns in the financial markets or in economic conditions, inflation, increases in interest rates, and geopolitical instability, such as the military conflicts in Ukraine and the Israel-Hamas war. The Company cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact the Company’s business. Basis of Presentation The accompanying consolidated financial statements include the accounts of SeqLL Inc. and its wholly-owned subsidiaries, SeqLL, LLC and SeqLL Merger Sub. All intercompany accounts and transactions have been eliminated in consolidation. Going Concern Uncertainty The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We experienced negative cash flows from operations of $ 5,004,558 for the year ended December 31, 2023, which included our costs and expenses related to the transactions contemplated by the Merger Agreement. As a result of our recent common stock offerings in August 2021 and February of 2023 and the maturity of our marketable debt securities, we had cash and cash equivalents of we had cash and cash equivalents of $ 2,693,991 at December 31, 2023. The Company estimates cash resources will be sufficient to fund its operations into the first quarter of 2025. The Company will need additional capital to fund its planned operations for the next 12 months, if the Merger is not completed. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements for the years ended December 31, 2023 and 2022 were prepared under the assumption that the Company will continue as a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. Since inception, we have funded our operations primarily through equity and debt financings, as well as from modest sales of products and research services. As of December 31, 2023, and we had an accumulated deficit of $ 24,136,275 . The Company expects that it will seek to raise additional capital through equity offerings, grant financing, and convertible debt. Additional funds may not be available when it needs them on terms that are acceptable to them, or at all. If adequate funds are not available, it may be required to delay its operational strategies, and to delay or reduce the scope of its research or development programs. F- 10 Note 2 – Significant Accounting Policies A summary of significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are as follows: Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include but are not limited to stock-based compensation expense, and discount rates used to establish operating and finance lease liabilities. Actual results could differ from those estimates and changes in estimates may occur. Cash and Cash Equivalents The Company considers all highly liquid securities readily convertible to cash that mature within three months or less from the original date of purchase to be cash equivalents. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are held by financial institutions and are federally insured up to certain limits. At times, the Company’s cash and cash equivalents balance exceeds the federally insured limits. As of December 31, 2023, the Company has not experienced a loss on its accounts for which it exceeds federally insured deposit limits, and does not expect a loss to occur. Accounts Receivable Accounts receivable are presented net of an allowance for credit losses, which is an estimate of amounts that may not be collectible. The Company performs ongoing credit evaluations of its customers and monitors economic conditions to identify facts and circumstances that may indicate its receivables are at risk of collection. The Company provides reserves against accounts receivable for estimated credit losses, if any, that may result from a customer’s inability to pay based on the composition of its accounts receivable, current economic conditions and historical credit loss activity. Amounts deemed uncollectible are charged or written-off against the reserve. The allowance for doubtful accounts was $ 24,507 and $ 6,016 as of December 31, 2023, and 2022. Investments in marketable securities The Company accounts for its investments in debt securities in accordance with Accounting Standards Codification (“ASC”) 320, Investments — Debt Securities (“ASC 320”). Debt securities (which were comprised of investments in U.S. Treasury Securities at December 31, 2022), are measured at fair value, based on quoted market prices. As the Company has classified its investments in debt securities as available-for-sale, the Company recognizes all unrealized gains and losses in other comprehensive income, net of tax, and recognizes all realized gains and losses in net income/loss within the Company’s consolidated statement of operations and comprehensive loss. F- 11 The Company accounts for its investments in equity securities in accordance with ASC 321, Investments — Equity Securities (“ASC 321”). Equity securities, which are comprised of investments in mutual funds shares, are measured at fair value, based on quoted market prices, with all gains and losses reported in net income/loss within the Company’s consolidated statement of operations and comprehensive loss. The Company may sell its debt or equity securities in response to changes in interest rates, risk/reward characteristics, liquidity needs or other factors. Inventory Inventory consists of finished goods, work-in-process and raw materials and is valued at the lower of cost or net realizable value, determined by the first-in, first-out (“FIFO”) method. As the Company manufactures the finished goods and work-in-process materials, overhead costs are included in inventory. The Company evaluates the carrying cost of finished goods, work-in-process and raw materials items. To the extent that such costs exceed future demand estimates and /or exhibit historical turnover at rates less than current inventory levels, the Company reduces the carrying value of the applicable inventories. Inventory consisted of the following: December 31, 2023 2022 Raw materials $ - $ 114,175 Work in process - 51,677 Total inventory $ - $ 165,852 In December of 2022, the Company performed a detailed evaluation of its inventory and determined $ 79,011 was obsolete. As such, the Company has written off this inventory as of December 31, 2022. In March 2023, the Company performed a detailed evaluation of its inventory and given the lack of sales activity in prior periods, the Company has written off its remaining inventory. Property and Equipment Property and equipment are recorded at cost and depreciated over the estimated useful lives of the related assets using the straight-line method. Lab and office equipment are depreciated over a five-year period. Leasehold improvements are depreciated over the shorter of the useful life and the term of the lease. Refer to Leases below for the Company’s finance lease accounting policy. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the balance sheet and any resulting gains or losses are included in the consolidated statement of operations and comprehensive loss in the period of disposals. Long-lived Assets The Company assesses, on an annual basis, the recoverability of the carrying amount of long-lived assets used in continuing operations. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net cash flow expected to be generated by the asset. A loss is recognized when expected future cash flow (undiscounted and without interest) are less than the carrying amount of the asset. The impairment loss is determined as the difference by which the carrying amount of the asset exceeds its fair value. No impairments were recognized in the years ended December 31, 2023, and 2022. Revenue Recognition The Company’s revenue is generated primarily from the sale of products and research services. Product revenue primarily consists of sales of genetic sequencing equipment and sequencing reagent kits. Research service revenue primarily consists of revenue generated from gene sequencing services and grants. F- 12 The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue when control of its products and services is transferred to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products and services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, the Company performs a five-step process. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when (or as) the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company only applies the five-step process to contracts when it is probable that the entity will collect consideration it expects to be entitled to in exchange for the goods or services it transfers to the customer. The Company evaluates contingent payments to estimate the amount which is not probable of a material reversal to include in the transaction price using the most likely amount method. Future payments that are not within the control of the Company, are not considered probable of being achieved until the contingencies are resolved. Revenue from product sales, including customized sequencing instruments and sequencing reagent kits and off-the-shelf consumables, is recognized generally upon delivery, which is when control of the product is deemed to be transferred. Revenue from gene sequencing services, using the tSMS platform, is recognized generally as the services are provided to the customer. The components of the sequencing process, including reagent kits and off-the-shelf consumables, sample loader and sequencer, are not distinct within the context of the gene sequencing service contract. This is because in a gene sequencing service contract the reagent kits and other components, such as off-the-shelf consumables, used in the sequencing process, become required inputs to achieve the specified gene sequencing analysis, and the components in the sequencing process are sequential in nature and highly interrelated as they work together to generate sample-specific data. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company has elected to exclude sales tax from revenue. The Company generally has no obligations for returns, refunds and other similar obligations and does not provide separate equipment warranties. The Company recognized $ 0 in revenues from gene sequencing services for the years ended December 31, 2023 and 2022, respectively. The Company recognized $ 0 and $ 1,177 in revenues from product sales for the years ended December 31, 2023 and 2022, respectively. Grant Revenue The Company’s grant revenues are derived from research programs by various departments of the National Institute of Health (“NIH”). Grants awarded to SeqLL for research and development by government entities are outside the scope of the contracts with customers and contributions guidance. This is because these granting entities are not considered to be customers and are not receiving reciprocal value for their grant support provided to the Company. These grants provide the Company with payments for certain types of expenditures in return for research and development activities over a contractually defined period. The Company recognizes NIH grant revenue as reimbursable grant costs that are incurred up to pre-approved award limits within the budget period. The costs associated with these reimbursements are reflected as a component of research and development expense in the accompanying consolidated statements of operations and comprehensive loss. In the years ended December 31, 2023, and 2022, the Company recognized grant revenue of $ 0 and $ 77,482 , respectively. F- 13 Income Taxes The Company utilizes the liability method of accounting for income taxes as required by ASC 740, Income Taxes . Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets and liabilities as well as net operating loss carryforwards and tax credits and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that these assets may not be realized. Currently, there is no provision for income taxes, as the Company has incurred operating losses to date, and a full valuation allowance has been provided on the net deferred tax assets. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, none of the benefit attributable to the position is recognized. The tax benefit to be recognized for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50 % likely of being realized upon resolution of the contingency. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes. The Company has no accruals for interest or penalties related to income tax matters. Tax years subsequent to 2020 remain open to examination by federal and state tax authorities. Stock-based Compensation The Company’s stock-based compensation program awards include stock options and restricted stock awards. The fair value of stock option grants is estimated as of the date of the grant using the Black-Scholes option pricing model. The fair value of restricted stock units is based on the fair value of the Company’s common stock on the date of the grant. The fair value of the awards is then expensed over the requisite service period, generally the vesting period, for each award as compensation expense. The Company’s expected stock price volatility assumption is based on the volatility of comparable public companies. The expected term of a stock option granted to employees and directors (including non-employee directors) is based on the average of the contractual term (generally 10 years) and the vesting period. For non-employee options, the expected term is the contractual term. The risk-free interest rate is based on the yield of U.S. Treasury securities consistent with the life of the option. The expected dividend yield was set to zero as the Company does not pay dividends on its common stock and there was no expectation of doing so as of the respective grant dates. The Company recognizes forfeitures related to stock-based awards as they occur. The Company has periodically granted stock options and restricted stock units to non-employees for services pursuant to the Company’s stock plans at the fair market value on the respective dates of grant. Should the Company terminate any of its consulting agreements, the unvested options underlying the agreements would be cancelled. For awards granted to non-employees, compensation expense is recognized over the service period. The assumptions used in determining the fair value of share-based awards granted during the years ended December 31, 2023 and 2022 are as follows: December 31, 2023 2022 Risk-free interest rate 3.59 % – 4.13 % 1.64 % Expected option life 6 – 6.1 years 6 – 6.1 years Expected dividend yield 0 % 0 % Expected stock price volatility 57 % 54 % F- 14 Research and Development Expenses The Company expenses all research and development costs as incurred. Included in research and development costs are wages, stock-based compensation and benefits of employees and other operational costs related to the Company’s research and development activities, including facility-related expenses and external costs of outside contractors engaged by the Company. Segments The Company operates in a single business segment that includes the design, development and commercialization of products and services based on its proprietary genetic analysis technologies. Leases The Company accounts for its leases in accordance with ASU No. 2016-02, Leases (Topic 842) . The Company assesses its contracts at inception to determine whether the contract contains a lease, including evaluation of whether the contract conveys the right to control an explicitly or implicitly identified asset for a period of time. The Company classifies its leases as either finance or operating leases, with classification affecting the pattern of expense recognition in the Company’s consolidated financial statements. The Company accounts for the leases of less than 12 months as short-term leases. The Company recognizes right-of-use assets and lease liabilities that represent the net present value of future lease payments utilizing the discount rate implicit in the lease. If the implicit rate is not available, the Company uses incremental borrowing rate. The Company amortizes the right-of-use assets over the remaining terms of the specific lease. The Company’s operating lease is included in Operating lease right-of-use asset, and Current portion of operating lease liability and Operating lease liability, less current portion in the consolidated balance sheets. The Company’s finance lease is included in Property and equipment, net, Current portion of finance lease liability and Finance lease liability, less current portion in the consolidated balance sheets. Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potentially dilutive securities if their effect is antidilutive. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury stock and if-converted methods. Dilutive common stock equivalents are comprised of options outstanding under the Company’s stock option plan and warrants. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive. The following potential shares of common stock were not considered in the computation of diluted net loss per share as their effect would have been antidilutive: December 31, 2023 2022 Restricted stock units 13,825 - Stock options 54,020 50,098 Warrants for common stock 95,777 109,705 F- 15 Recently Adopted Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments . ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments , or ASU 2016-13. The guidance is effective for fiscal years beginning after December 15, 2022. The Company adopted this standard on January 1, 2023, which had no material impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards The Company does not believe that any recently issued but not yet effective accounting pronouncements will have a material effect on the accompanying consolidated financial statements. Note 3 – Property and Equipment, net Property and equipment are recorded at historical cost and consist of the following: December 31, 2023 2022 Lab equipment $ 739,557 $ 767,010 Leasehold improvements 357,006 312,758 Office equipment 23,193 23,193 1,119,756 1,102,961 Less: accumulated depreciation ( 494,396 ) ( 572,853 ) $ 625,360 $ 530,108 During the year ended December 31, 2023, the Company wrote off $ 232,693 of fully depreciated obsolete assets. Depreciation expense amounted to $ 154,234 and $ 86,397 for the years ended December 31, 2023 and 2022, respectively, of which $ 28,125 and $ 0 related to the equipment under the finance lease for the years ended December 31, 2023 and 2022, respectively. Note 4 – Accrued Expenses Accrued expenses consist of the following: December 31, 2023 2022 Accrued interest 375,191 306,821 Accrued bonuses - 135,000 Other - 53,641 $ 375,191 $ 495,462 Note 5 – Fair Value Measurements The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and requires disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets. Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. F- 16 The Company did not have any assets or liabilities that were measured at fair value on a recurring basis as of December 31, 2023. The following table summarizes fair value measurements by level on December 31, 2022 of the Company’s assets measured at fair value on a recurring basis: Fair Value Measurements Using Fair Value Level 1 Level 2 Level 3 U.S. government and agency obligations $ 4,036,014 $ 4,036,014 - - There are no assets or liabilities measured at fair value on a non-recurring basis during the years ended December 31, 2023 and 2022. The carrying values of financial instruments such as accounts receivable, net, other receivables, accounts payable, and accrued expenses approximated their fair values as of December 31, 2023 and December 31, 2022 due to their short-term maturities. The carrying value of the Company’s Non-Convertible Promissory Notes approximated its fair value as of December 31, 2023 and December 31, 2022. Note 6 – Stock Option Plan The Company’s 2014 Equity Incentive Plan (the “2014 Plan”) permits the grant of options and restricted stock units for its common stock and shares of common stock to its employees, board members and consultants for up to 87,500 shares. As of December 31, 2023, there were 19,655 shares available for future issuance under the 2014 Plan. Generally, option awards are granted with an exercise price equal to the fair value of the Company’s stock at the date of grant and vest over a period of three to four years. No option may have a term in excess of ten years from the option grant date. Certain option and share awards provide for accelerated vesting if there is a change in control (as defined by the 2014 Plan). The weighted average grant date fair value of options granted during the years ended December 31, 2023 and 2022 was $ 11.60 and $ 35.60 , respectively, per share. The stock option activity for the year ended December 31, 2023 is as follows: Number of Options Weighted- Average Exercise Price per Share Weighted Average Remaining Contractual Term (in Years) Outstanding as of December 31, 2022 50,098 $ 75.20 7.09 Granted 13,550 $ 20.04 10.00 Cancelled/Forfeited ( 9,628 ) $ 116.68 Outstanding of December 31, 2023 54,020 $ 72.55 6.81 Exercisable at December 31, 2023 27,075 $ 50.56 2.53 F- 17 The restricted stock unit activity for the year ended December 31, 2023 is as follows: Number of Shares Weighted- Average Exercise Price per Share Weighted Average Remaining Contractual Term (in Years) Outstanding as of December 31, 2022 - $ - - Granted 13,825 $ 25.60 Outstanding of December 31, 2023 13,825 $ 25.60 9.17 Exercisable at December 31, 2023 - $ - - During the years ended December 31, 2023 and 2022, the Company recorded $ 391,649 and $ 256,900 of stock-based compensation associated with granted and vested stock options and restricted stock units, respectively. As of December 31, 2023, there was $ 682,312 of unrecognized compensation expense related to unvested stock-based compensation awards, which will be recognized over approximately 1.16 years. Note 7 – Related Party Transactions At December 31, 2023 and 2022, the Company had the following outstanding payables, which are included within the Company’s accounts payable above, to affiliated parties for past services: December 31, 2023 December 31, 2022 SeqLL Omics Inc. $ 73,764 $ - Genomic Diagnostic Technologies - 925 St. Laurent Institute - 232,418 St. Laurent Realty, Inc. 7,558 7,558 Total related party payables $ 81,322 $ 240,901 The above entities are affiliated with (1) William C. St. Laurent, a former member of the Company’s board of directors, (2) relatives of Mr. St. Laurent or (3) entities controlled by the St. Laurent family, who are controlling shareholders of the Company. St. Laurent Realty, Inc. and Genomic Diagnostic Technologies assisted the Company by previously providing corporate accounting support; St. Laurent Institute, a non-for-profit company, provided bioinformatics specialist support for certain sequencing services. SeqLL Omics was formed by Daniel Jones, the Chairman of the Board and Chief Executive Officer of the Company, and certain other Company employees, for the purpose of carrying on the Company’s pre-Merger business after the Mergers. SeqLL Omics currently performs research and development services for the Company, in order to facilitate the Company’s pre-Merger research and development efforts. The Company incurred $ 73,764 in relation to the services provided by SeqLL Omics during the year ended December 31, 2023. Note 8 – Notes Payable From April 29, 2019, to April 29, 2020, the Company entered into a series of non-convertible promissory notes, as amended (the “Promissory Notes”) with a certain preferred stockholder amounting to $ 1,375,000 . The Promissory Notes had a one-year term with interest accruing at 5 % per annum. In June 2022, the Company entered into an agreement with St. Laurent Investments LLC to extend the maturity date of the $ 1,375,000 Promissory Note to July 31, 2024. The Company accounted for this transaction as a modification on a prospective basis. For the years ended December 31, 2023 and 2022, interest expense related to the non-convertible promissory notes was $ 68,370 and $ 90,748 , respectively. F- 18 Note 9 – Common Stock Warrants The following table summarizes information with regard to outstanding warrants to purchase common stock as of December 31, 2023: Number of Shares Issuable Upon Exercise of Outstanding Exercise Issuance Date Warrants Price Expiration Date 1/31/2019 48 $ 124.00 1/30/2024 2/7/2019 41 $ 124.00 2/6/2024 2/21/2019 41 $ 124.00 2/20/2024 3/20/2019 84 $ 124.00 3/18/2024 4/8/2019 48 $ 124.00 4/6/2024 11/19/2020 1,333 $ 164.00 6/30/2024 11/19/2020 213 $ 164.00 6/30/2024 1/8/2021 333 $ 164.00 6/30/2024 1/11/2021 667 $ 164.00 6/30/2024 2/13/2021 333 $ 164.00 6/30/2024 3/16/2021 267 $ 164.00 6/30/2024 3/16/2021 333 $ 164.00 6/30/2024 8/31/2021 87,975 $ 170.00 8/31/2026 8/31/2021 3,825 $ 187.00 8/26/2026 9/29/2021 236 $ 187.00 8/26/2026 95,777 During the year ended December 31, 2023, warrants to purchase 12,162 and 1,763 shares of common stock with an exercise price of $ 86.40 and $ 124.00 , respectively, expired. During the year ended December 31, 2022, warrants to purchase 130 shares of common stock with an exercise price of $ 124.00 expired. Note 10 – Marketable Securities The Company did not hold any marketable securities as of December 31, 2023. The cost and fair value of marketable securities, which are available-for-sale debt securities, were $ 4,013,563 and $ 4,036,014 as of December 31, 2022, respectively, resulting in a $ 22,451 unrealized gain included in the other comprehensive income for the year ended December 31, 2022. The Company recognized a net realized loss of $ 51,816 on marketable equity securities for the year ended December 31, 2022. The Company’s interest and dividend income amounted to $ 106,051 and $ 44,879 for the years ended December 31, 2023, and 2022, respectively. F- 19 Note 11 - Income Taxes The Tax Cuts and Jobs Act (the “TCJA”) resulted in significant changes to the treatment of research or experimental (“R&E”) expenditures under Section 174. For tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize all R&E expenditures that are paid or incurred in connection with their trade or business which represent costs in the experimental or laboratory sense. Specifically, costs for U.S. based R&E activities must be amortized over five years and costs for foreign R&E activities must be amortized over 15 years; both using a midyear convention. The Company has implemented this standard on January 1, 2022, noting that the impact on the Company’s consolidated financial statements was immaterial. The Company is subject to United States federal and Massachusetts state income taxes at an approximate combined rate of 29 % in 2023. During the years ended December 31, 2023 and 2022, there was no provision for income taxes as the Company incurred losses during both periods. The primary component of the Company’s deferred tax assets are its net operating loss carryforwards. At December 31, 2023, the Company has a federal and state net, operating loss carryforward of approximately $ 21,893,488 and $ 21,486,471 , respectively, which begin expiring in 2034. The Company’s 2018 and after federal net operating losses can be carried forward indefinitely. The valuation allowance against deferred tax assets was approximately $ 6.3 million and $ 5.5 million as of December 31, 2023, and 2022, respectively. During the years ended December 31, 2023 and 2022, the valuation allowance increased by approximately $ 0.8 million and $ 1.2 million, respectively. As of December 31, 2023, the Company did not maintain any foreign subsidiaries and did not have previously deferred foreign earnings subject to the transition tax. The income tax benefit differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended December 31, 2023 and 2022 due to the following: 2023 2022 Computed “expected” tax benefit ( 21.0 )% ( 21.0 )% Increase (decrease) in income taxes resulting from: State taxes, net of federal benefit ( 8.0 )% ( 8.0 )% Permanent differences 0 % 0 % Increase in valuation reserve 29.0 % 29.0 % 0 % 0 % Note 12 – Commitments and Contingencies Leases The Company’s office space lease in Woburn, Massachusetts (the “Woburn Lease”) for the Company’s corporate headquarters was on a month-to-month basis since November 2020 and was terminated in February 2022. The rent expense for this lease was $ 0 and $ 14,239 for the years ended December 31, 2023 and 2022, respectively. On February 2, 2022, the Company entered into a lease agreement for approximately 15,638 square feet of its new corporate office space in Billerica, Massachusetts (the “Billerica Lease”). The Billerica Lease has a term of 92 months from its effective date and included access to certain additional office space until August 1, 2022. In addition, the Company is required to share in certain taxes and operating expenses of the Billerica Lease. The Billerica Lease is classified as an operating lease. At the inception date of the Billerica Lease, the Company recorded a right-of-use asset of $ 1,481,646 in operating lease right-of-use asset, as well as a lease liability of $ 12,222 in current liabilities and $ 1,547,614 in long-term liabilities. The operating lease right-of use asset is less than that of the Company’s lease liabilities as of the lease inception date. This is due to the fact that the Company as part of the Billerica Lease was allowed certain tenant improvement allowances, which amounted to $ 78,190 at lease inception. This lease liability represented the net present value of future lease payments for the lease utilizing a discount rate of 5.98 %, which corresponded to the Company’s incremental borrowing rate. In August 2022, the Company received the tenant improvement allowance from the landlord, which totaled approximately $ 312,758 . This allowance covered the leasehold improvements to the Billerica space and was accounted for as a reduction to the right-of-use asset. As of December 31, 2023, the remaining lease term was 5.75 years. The Company recorded expense related to the Billerica Lease in the amount of $ 218,563 and $ 200,350 for the years ended December 31, 2023 and 2022, respectively. During the years ended December 31, 2023 and 2022, the Company made cash payments of $ 197,307 and $ 88,366 , for amounts included in the measurement of lease liabilities. As of December 31, 2023, the Company has presented $ 198,314 in current portion of operating lease liability and $ 1,246,033 in operating lease liability, less current portion. F- 20 Finance Lease On May 1, 2023, the Company entered into a lease agreement for laboratory equipment (the “Equipment Lease”). The Equipment Lease has a term of 36 months from its effective date, and an end of lease purchase option of $ 1 . The Equipment Lease was classified as a finance lease. At the inception date of the Equipment Lease, the Company recorded a right-of-use asset of $ 187,497 in property and equipment, net, as well as a lease liability of $ 52,881 in current liabilities and $ 97,110 in long-term liabilities. The finance lease right of use asset is more than that of the Company’s lease liabilities at the inception of the lease due to a prepayment on the lease made by the Company of $ 37,506 . The lease liability represented the net present value of future lease payments over the lease term utilizing a discount rate of 17.44 %, which corresponded to the rate implicit to the lease. As of December 31, 2023, the remaining lease term was 1.75 years. The Company recorded expense of $ 38,854 related to the Equipment Lease for the year ended December 31, 2023. The Company made cash payments of $ 54,281 for the year ended December 31, 2023. Interest expense related to the Equipment Lease totaled $ 15,428 for the year ended December 31, 2023. The equipment is included in Property and equipment, net and is depreciated on a straight-line basis over a five-year period. The Company amortizes the equipment over its useful life as the Company is reasonably certain to exercise the $ 1 purchase option for the equipment at the end of the lease term. Depreciation expense related to finance lease assets totaled $ 28,125 for the year ended December 31, 2023. As of December 31, 2023, the Company has presented $ 59,659 in current portion of finance lease liability and $ 51,481 in finance lease liability, less current portion. The following table reconciles the undiscounted lease liabilities to the total lease liabilities recognized on the consolidated balance sheet as of December 31, 2023: Operating Lease Finance Lease 2024 $ 275,875 $ 72,375 2025 284,151 54,281 2026 292,676 - 2027 301,456 - 2028 310,500 - Thereafter 238,078 - Total undiscounted lease liabilities $ 1,702,736 $ 126,656 Less effects of discounting 258,389 15,516 Total lease liabilities $ 1,444,347 $ 111,140 Note 13 – Subsequent Events As part of the Company’s continuing efforts to reduce operating expenses and conserve cash following the execution of the Merger Agreement, the Company further reduced its workforce by terminating the employment of three full-time employees. The Company incurred total costs of approximately $ 44,956 associated with this workforce reduction. F-21