What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-31 compared with 2024-03-28 · 344 added, 374 removed, 469 unchanged (60% of the section changed)

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TO CONSOLIDATED FINANCIAL STATEMENTS

of Independent Registered Certified Public Accounting Firm (PCAOB ID No.

Report of Independent Registered Certified Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets

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of Directors and Stockholders

on the Consolidated Financial Statements

on the Financial Statements

have audited the accompanying consolidated balance sheets of Cocrystal Pharma, Inc.

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generally accepted in the United States of America.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 1 to the consolidated financial statements, the Company suffered a net loss from operations and used cash in operations, which

raises substantial doubt about its ability to continue as a going concern.

Management’s plans regarding those matters are also

described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this

consolidated financial statements are the responsibility of the Company’s management.

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We are a public accounting firm registered with the Public

Company Accounting Oversight Board of the United States (“PCAOB”) and are required to be independent with respect to the

Company in accordance with the U.S.

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

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

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

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

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.

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have served as the Company’s auditor since 2019.

& Company, P.A.

& Company , P.A

Weinberg & Company, P.A

Angeles, California

BALANCE SHEETS

thousands, except per share data)

and shares in thousands, except per share data)

December 31, 2024

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Accounts payable and accrued expenses

Current maturities of finance lease liabilities

Current maturities of operating lease liabilities (including $ 49 and $ 42 to related party)

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Common stock $ 0.001 par value;

150,000 shares authorized as of December 31, 2023 and December 31, 2022, respectively;

10,174 and 8,143 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

100,000 and 150,000 shares authorized as of December 31, 2024 and 2023, respectively;

10,174 shares issued and outstanding as of December 31, 2024 and 2023, respectively

Additional paid-in capital

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STATEMENTS OF OPERATIONS

thousands, except per share data)

and shares in thousands, except per share data)

Operating expenses:

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Loss from operations

Other (expense) income:

Interest income (expense), net

Change in fair value of derivative liabilities

Other income (expense):

Interest income, net

Foreign exchange loss

Total other income (expense), net

Net loss per common share:

Loss per share, basic and diluted

Total other income, net

Net loss per common share, basic and diluted

Weighted average number of common shares outstanding, basic and diluted

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Stock-based compensation

Sale of common stock to related entities, net of transaction costs

Balance as of December 31, 2023

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Stock-based compensation

Sale of common stock to related entities, net of transaction costs

Balance as of December 31, 2024

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STATEMENTS OF CASH FLOWS

to reconcile net loss to net cash used in operating activities:

Depreciation-and-amortization

of use assets

on impairment of goodwill

in operating lease liabilities

in fair value of derivative liabilities

in operating assets and liabilities:

credit receivable

expenses and other current assets

payable and accrued expenses

cash used in operating activities

of property and equipment

cash used in investing activities

of finance lease obligations

from sale of common stock, net of transaction costs

cash provided by (used in) financing activities

decrease in cash and restricted cash

and restricted cash at beginning of period

and restricted cash at end of period

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense

Right of use assets

Stock-based compensation

Change in operating lease liabilities

Changes in operating assets and liabilities:

Tax credit receivable

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Net cash used in operating activities

Investing activities:

Purchases of property and equipment

Net cash used in investing activities

Financing activities:

Payments of finance lease obligations

Proceeds from sale of common stock, net of transaction costs

Net cash provided by (used in) financing activities

Net decrease in cash and restricted cash

Cash and restricted cash at beginning of period

Cash and restricted cash at end of period

Supplemental disclosure:

Non-cash investing and financing activities

Initial recognition of right-of-use assets and lease liabilities

accompanying notes to consolidated financial statements.

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Australia”) with the objective of operating clinical trials in Australia.

September 27, 2022, the Company filed a Certificate of Amendment to the Certificate of Incorporation (the “Amendment”) with

the Delaware Secretary of State to effect a reverse stock split of all outstanding shares of the Company’s common stock at a ratio

of one-for-12.

At the Company’s 2022 Annual Meeting of Stockholders, holders of a majority of the outstanding voting power approved

an amendment to the Certificate of Incorporation of the Company to effect a reverse stock split of all outstanding shares of our common

stock at a ratio to be determined by the Board of Directors within a range of one-for-four through one-for-12.

Following such approval,

The Board of Directors determined to effect the reverse stock split at the ratio of one-for-12.

The Amendment became effective October

11, 2022 and the effect of the reverse stock split was reflected on the Nasdaq Stock Market.

share and per share amounts have been retroactively restated to reflect the one-for-12 stock split

as if it occurred at the beginning of the earliest period presented.

Company’s consolidated financial statements are prepared using generally accepted accounting principles in the United States of

America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal

course of business.

The Company has incurred net losses and negative operating cash flows since inception.

For the year ended December

31, 2023, the Company recorded a net loss of approximately $ 17,984,000 and used approximately $ 14,666,000 of cash in operating activities.

December 31, 2023, the Company had cash and cash equivalents of approximately $ 26,353,000 .

We believe that our current resources will

be sufficient to fund our operations beyond the next 12 months.

Company’s consolidated financial statements have been prepared and presented on a basis assuming it will continue as a going concern.

As reflected in the accompanying consolidated financial statements, for the year ended December 31, 2024, the Company recorded a net

loss of approximately $ 17.5 million and used cash in operating activities of $ 16.5 million, and at December 31, 2024, the Company has

an accumulated deficit of $ 333.4 million.

As of December 31, 2024, the Company had a cash balance of $ 9.9 million and working capital

of approximately $ 9.1 million.

We believe that our current resources will not be sufficient to fund our operations beyond the next 12

This estimate is based, in part, upon our currently projected expenditures.

Due in large part to the ongoing Phase 2a clinical

trial for the Company’s antiviral influenza candidate, we expect to continue to incur net losses and negative cash flows from operating

activities for the foreseeable future.

These conditions raise substantial doubt about our ability to continue as a going concern within

one year from the issuance of these consolidated financial statements.

Company’s activities since inception have principally consisted of acquiring product and technology rights, raising capital, and

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products, the availability of financing, our success in developing markets for our product candidates and legal proceedings that may

We have historically not generated sustained positive cash flow and if we are not able to secure additional funding when needed,

we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research and development programs.

Company is unable to obtain adequate capital, it could be forced to cease operations or substantially curtail its drug development activities.

We have historically not generated positive cash flow and if we are not able to secure additional funding when needed, we may

have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research and development programs.

If the Company

is unable to obtain adequate capital, it could be forced to substantially curtail its drug development activities or cease operations.

The Company expects to continue incurring substantial operating losses and negative cash flows from operations over the next several

years during its pre-clinical and clinical development phases.

Additionally,

the rapid development and fluidity of the COVID-19 pandemic and new variants of the virus makes it very difficult to predict its ultimate

impact on our business, results of operations and liquidity.

We will continue to monitor and assess the impact COVID-19 and new variants

of the virus may have on our business and financial results.

Basis of Presentation and Significant Accounting Policies

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transactions and balances have been eliminated.

Company operates in one segment.

In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating

decision makers have been identified as the Co-Chief Executive Officers, who review operating results to make decisions about allocating

resources and assessing performance for the entire Company.

Existing guidance, which is based on a management approach to segment reporting,

establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products

and services, major customers, and the countries in which the entity holds material assets and reports revenue.

All material operating

units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in:

characteristics;

nature of products and services;

and procurement, manufacturing and distribution processes.

Since the Company operates

in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial

Company’s Co-Chief Executive Officer and President (“CEO”) is our chief operating decision maker (“CODM”)

and evaluates performance and makes operating decisions about allocating resources based on financial data presented on a consolidated

Because our CODM evaluates financial performance on a consolidated basis, the Company has determined that it operates as a single

reportable segment composed of the consolidated financial results of Cocrystal Pharma, Inc.

The measure of segment assets is reported

on the consolidated balance sheets as total assets (see Note 13).

of the Company’s consolidated financial statements in conformance with U.S.

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assets and liabilities in the Company’s consolidated financial statements and accompanying notes.

The significant estimates in

the Company’s consolidated financial statements relate to the valuation of equity awards and derivative liabilities, recoverability

of deferred tax assets, estimated useful lives of fixed assets, and forecast assumptions used in the impairment testing of goodwill.

The Company bases estimates and assumptions on historical experience, when available, and on various factors that it believes to be reasonable

under the circumstances.

The Company evaluates its estimates and assumptions on an ongoing basis, and its actual results may differ from

estimates made under different assumptions or conditions.

The most significant estimates

in the Company’s consolidated financial statements relate to clinical trial costs and accruals and the fair value of stock-based

compensation.

The Company bases estimates and assumptions on historical experience, when available, and on various factors that it believes

to be reasonable under the circumstances.

The Company evaluates its estimates and assumptions on an ongoing basis, and its actual results

may differ from estimates made under different assumptions or conditions.

Concentrations

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The restriction will end upon the conclusion of these financing arrangements.

and Equipment

and Equipment, net

and equipment, which consists of lab equipment (including lab equipment under capital lease), computer equipment, and office equipment,

is recorded at cost and depreciated over the estimated useful lives of the underlying assets (three to five years) using the straight-line

Maintenance and repairs are charged directly to expense as incurred.

Company accounts for its leases in accordance with ASC 842, Leases .

The Company determines whether a contract is, or contains,

a lease at inception.

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the lease commencement

date based on the present value of lease payments over the lease term.

ROU assets represent the Company’s right to use an underlying

asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing

rate in determining the present value of lease payments.

The Company’s incremental borrowing rate is a hypothetical collateralized

borrowing rate based on its understanding of what its credit rating would be.

Value Measurements

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Note 6 – Warrants.

At December 31, 2023 the Company had approximately 11,000 warrants that expired in January 2024, there we no warrants

outstanding at December 31, 2024.

December 31, 2024 and 2023, the carrying amounts of financial assets and liabilities, such as cash, other assets, and accounts payable

and accrued expenses approximate their fair values due to their short-term nature.

Company has not transferred any financial instruments into or out of Level 3 classification during the years ended December 31, 2023

A reconciliation of the beginning and ending Level 3 liabilities for is as follows (in thousands):

of Reconciliation of Beginning and Ending Level 3 Liabilities

Fair Value Measurements Using

Significant Unobservable Inputs

Balance, January 1,

Change in fair value of warrants potentially settleable in cash (Note 9)

Balance at December 31,

Ending balance

November 2014, goodwill was recorded in connection with the acquisition of RFS Pharma.

evaluate indefinite-lived intangible assets and goodwill for impairment annually, as of November 30, or more frequently when events or

circumstances indicate that impairment may have occurred.

As part of the impairment evaluation, we may elect to perform an assessment

of qualitative factors.

If this qualitative assessment indicates that it is more likely than not that the fair value of the indefinite-lived

intangible asset or the reporting unit (for goodwill) is less than its carrying value, we then would proceed with the quantitative impairment

test to compare the fair value to the carrying value and record an impairment charge if the carrying value exceeds the fair value.

value is typically estimated using an income approach based on the present value of future discounted cash flows.

The significant estimates

in the discounted cash flow model primarily include the discount rate, and rates of future revenue and expense growth and/or profitability

of the acquired assets.

In performing an impairment test, the Company considers, among other factors, the Company’s intention for

future use of acquired assets, analyses of historical financial performance and estimates of future performance of Cocrystal’s

product candidates.

Company regularly reviews the carrying value and estimated lives of its long-lived assets, including property and equipment, to determine

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During the year ended December 31, 2024, the Company recorded tax

credits receivable of $ 890,000 , of which approximately $ 823,000 was recorded as a reduction

of research and development expense.

credits receivable of $ 1,123,843 , of which approximately $ 1,146,593 was

recorded as a reduction of research and development expense.

Company accounts for income taxes under the asset and liability method.

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their inclusion would be anti-dilutive (in thousands):

of Antidilutive Securities Excluded from Calculations of Net Loss Per Share

Schedule of Anti-dilutive Securities Excluded from Calculations of Net Loss Per Share

Outstanding options to purchase common stock

Warrants to purchase common stock

Unvested restricted stock units

Accounting Pronouncements

Company’s management has evaluated all the recently issued, but not yet effective, accounting standards and guidance that have

been issued or proposed by the FASB or other standards-setting bodies through the filing date of these financial statements and does

not believe the future adoption of any such pronouncements will have a material effect on the Company’s financial position and

results of operations.

November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure.”

The amendments expand a public entity’s segment disclosures by requiring disclosure of significant segment expenses that are regularly

provided to the chief operating decision maker, requiring other new disclosures, and requiring enhanced interim disclosures.

requires public entities with a single reportable segment to provide all the disclosures required by this standard and all existing segment

disclosures in Topic 280 on an interim and annual basis.

ASU 2023-07 is effective for annual periods beginning after December 15, 2023,

and interim periods beginning after December 15, 2024, applied retrospectively with early adoption permitted.

As of December 31, 2024,

the Company has adopted ASU 2023-07.

The adoption of this standard did not have a material impact on the Company’s consolidated

financial statements but has resulted in additional disclosures within the footnotes to our consolidated financial statements (See Note

November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures

(Subtopic 220-40).

ASU 2024-03 amends the FASB Accounting Standards Codification to require specified information about certain costs

and expenses in the notes to the financial statements at each interim and annual reporting period, including disclosure of the amounts

of purchases of inventory;

employee compensation;

depreciation;

intangible asset amortization;

and depreciation, depletion, and amortization

included in each relevant expense caption on the face of the income statement within continuing operations that contains any of the expense

categories previously listed.

Disclosure will also be required of the total amount of selling expenses and an entity’s definition

of selling expenses in annual reporting periods.

ASU 2024-03 does not change or remove current expense disclosure requirements, but does

affect where and how this information is presented in the notes to the financial statements.

ASU 2024-03 is effective for annual reporting

periods beginning January 1, 2027, and interim periods within annual reporting periods beginning January 1, 2028.

Early adoption is permitted.

The Company is in the process of evaluating ASU 2024-03 to determine its impact on the Company’s consolidated financial statement

presentation and related disclosures.

does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material

impact on the Company’s financial statements, including their presentation and related disclosures.

Foreign Currency Remeasurement

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the remeasurement of monetary assets and liabilities are recognized in other income (loss).

The Company recognized an loss of approximately

The Company recognized a loss of approximately

$ 163,000 and $ 65,000 for the years ended December 31, 2024 and 2023, respectively.

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and equipment as of December 31, consists of the following (table in thousands):

of Property and Equipment

Schedule of Property and Equipment

Lab equipment (excluding equipment under finance leases)

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expense was $ 126,000 and $ 189,000 for the years ended December 31, 2024 and 2023, respectively.

Company completed its annual impairment test in November 2021, and at that time determined the fair value of its reporting unit, as determined

utilizing both the Company’s Nasdaq market capitalization and an income approach analysis;

exceeded the carrying value of the reporting

unit as of December 31, 2021;

therefore, management did not consider the $ 19,092,000 of goodwill to be impaired.

Company uses judgement in assessing whether assets may have become impaired between annual impairment tests.

The occurrence of a change

in circumstances, such as a continued decline in the market capitalization of the Company, would determine the need for impairment testing

between annual impairment tests.

During the six months ended June 30, 2022, the Company saw a significant decrease in its price of common

stock resulting in an overall reduction in market capitalization and our recorded net book value exceeded our market capitalization as

of June 30, 2022.

Pre-impairment, the carrying value of the reporting unit exceeded the market capitalization of the Company at June

30, 2022 and management concluded that goodwill was impaired in its entirety and recorded a $ 19,092,000 non-cash impairment.

of December 31, 2023, the Company had no remaining goodwill.

Accounts Payable and Accrued Expenses

payable and accrued expenses consisted of the following as of December 31, (table in thousands):

of Accounts Payable and Accrued Expenses

other expenses

accounts payable and accrued expenses

Schedule of Accounts Payable and Accrued Expenses

Accounts payable

Accrued compensation

Accrued other expenses

Total accounts payable and accrued expenses

payable and accrued other expenses contain unpaid general and administrative expenses and costs related to research and development that

have been billed and estimated unbilled, respectively, as of year-end.

On June 27, 2024, the Company, following approval of the Company’s

stockholders at the 2024 Annual Meeting of Stockholders filed an amendment to its Certificate of Incorporation with the Secretary of State

of the State of Delaware (the “Amendment”) to decrease the number of shares of authorized capital stock of the Company from 155,000,000 shares

of capital stock, consisting of 150,000,000 shares of common stock and 5,000,000 shares of preferred stock, to 101,000,000 shares

of capital stock consisting of 100,000,000 shares of common stock and 1,000,000 shares of preferred stock.

The Amendment

became effective on June 27, 2024.

of December 31, 2024, the Company has authorized 100,000,000 shares of common stock, $ 0.001 par value per share.

The Company had approximately

10,174,000 and 8,143,000 shares issued and outstanding as of December 31, 2023 and 2022, respectively.

10,174,000 shares issued and outstanding as of December 31, 2024 and 2023, respectively.

holders of common stock are entitled to one vote for each share of common stock held.

Sale of Common Stock to Related

April 4, 2023, the Company entered into a Securities Purchase Agreement with two accredited investors (the “Purchasers”)

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another investor who subsequently joined the Company’s Board of Directors.

Company was a party to the At-The-Market Offering Agreement, dated July 1, 2020 (“ATM Agreement”) with H.C.

At-The-Market

Company is a party to the At-The-Market Offering Agreement, dated July 1, 2020 (“ATM Agreement”) with H.C.

Co., LLC (“Wainwright”), pursuant to which the Company may issue and sell over time and from time to time, to or through

Wainwright, up to $ 10,000,000 of shares of the Company’s common stock.

January 2021, the Company sold 85,834 shares of its common stock pursuant to the ATM Agreement for net proceeds of approximately $ 2.1

There have been no sales under the ATM Agreement since then.

have been no sales under the ATM Agreement during the years ended December 31, 2024 and 2023.

The following is a summary of activity in the number

of warrants outstanding to purchase the Company’s common stock for the years ended December 31, 2024 and 2023 (table in thousands):

of Warrants Activity

Accounted for as:

Outstanding, December 31, 2022

Outstanding, December 31, 2023

Outstanding, December 31, 2024

Expiration date

As of December 31, 2023, the above outstanding warrants

were liability classified warrants, which had de minimis fair value as of the year then ended.

As of December 31, 2023 the Company had approximately

11,000 warrants that expired in January 2024, there we no warrants outstanding as of December 31, 2024.

Stock Based Awards

Incentive Plans

Company adopted an equity incentive plan in 2007 (the “2007 Plan”).

The 2007 Plan has expired, and the Company no longer

issues any awards under the 2007 Plan.

As of December 31, 2022, there are 424 outstanding incentive stock options granted under the 2007

Plan that are eligible to purchase shares of the Company’s common stock.

The maximum term of options granted under the 2007 Plan

was ten years.

Company adopted a second equity incentive plan in 2015 (the “2015 Plan”) under which 833,333 shares of common stock have

been reserved for issuance to employees, and non-employee directors and consultants of the Company.

Recipients of incentive stock options

granted under the 2015 Plan shall be eligible to purchase shares of the Company’s common stock at an exercise price equal to no

less than the estimated fair market value of such stock on the date of grant.

The maximum term of options granted under the 2015 Plan

is ten years .

The options generally vest 25% after one year, with the remaining balance vesting monthly over the following three years.

As of December 31, 2023, approximately 276 million options remain available for future grant under the 2015 Plan.

following table summarizes stock option transactions for the 2007 Plan and 2015 Plan, collectively, for the years ended December 31,

2023 and 2022 (table in thousands, except per share amounts):

Schedule of Share-based Compensation, Stock Options, Activity

Company adopted an equity incentive plan in 2015 (the “2015 Plan”) under which 833,333 shares of common stock have been reserved

for issuance to employees, and non-employee directors and consultants of the Company.

Recipients of incentive stock options granted under

the 2015 Plan shall be eligible to purchase shares of the Company’s common stock at an exercise price equal to no less than the

estimated fair market value of such stock on the date of grant.

The maximum term of options granted under the 2015 Plan is ten years .

As of December 31, 2024, 27,000 shares remain available for future grants under the 2015 Plan.

Stock Reserved for Future Issuance

following table presents information concerning common stock available for future issuance (in thousands) as of December 31, 2024:

Schedule of Common Stock Available

for Future Issuance

Shares Available

Balance at December 31, 2023

Restricted Stock Units (RSU) Granted

Cancelled or returned

Balance at December 31, 2024

following table summarizes stock option transactions for the 2015 Plan, collectively, for year ended December 31, 2024 (in thousands,

except per share amounts):

Schedule of Stock Option Transactions

Total Options

Weighted Average

Exercise Price

Intrinsic Value

Balance at December 31, 2022

the year ended December 31, 2023 the Company granted stock options to officers, directors, employees and consultants to purchase a total

of 209,216 shares of common stock.

The options have an exercise price of $ 2.67 per share, expire in ten years , and vest as follows:

half vests on the one-year anniversary of the grant date and the remainder will vest in eight equal quarterly increments with the first

such quarterly increment vesting on September 30, 2023.

The total fair value of these options at the grant date was approximately $ 470,000

using the Black-Scholes Option pricing model.

The Black-Scholes option pricing model includes the following weighted average assumptions

for grants made during the year ended December 31, 2023:

Balance at December 31, 2023

Balance at December 31, 2024

options were granted during the year ended December 31, 2024.

During the year ended December 31, 2023 the Company granted stock options

to officers, directors, employees and consultants to purchase a total of 209,216 shares of common stock.

The options have an

exercise price of $ 2.67 per share, expire in ten years , and vest as follows:

one half vests on the one-year anniversary of

the grant date and the remainder will vest in eight equal quarterly increments with the first such quarterly increment vesting on September

The total fair value of these options at the grant date was approximately $ 470,000 using the Black-Scholes Option pricing

The Black-Scholes option pricing model includes the following weighted average assumptions for grants made during the year ended

December 31, 2023:

Schedule of Weighted Average Assumptions Used for Grants

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Expected terms (in years)

the year ended December 31, 2022 the Company granted stock options to officers, directors, employees and consultants to purchase a total

of 158,012 shares of common stock.

The options have an exercise price of $ 5.04 per share, expire in ten years , and vest as follows:

half vests on the one-year anniversary of the grant date and the remainder will vest in eight equal quarterly increments with the first

such quarterly increment vesting on September 30, 2022.

The total fair value of these options at the grant date was approximately $ 633,000

using the Black-Scholes Option pricing model.

The Black-Scholes option pricing model includes the following weighted average assumptions

for grants made during the year ended December 31, 2022:

Weighted average per share grant date fair value

Risk-free interest rate

Expected dividend yield

Expected volatility

Expected terms (in years)

the years ended December 31, 2023 and 2022, equity-based compensation expense for options vesting during the period was $ 801,000 and

$ 855,000 , respectively.

of December 31, 2023, there was $ 717,000 of total unrecognized compensation expense related to non-vested stock options that is expected

to be recognized over a weighted average period of 1 years.

For options granted and outstanding, there were 558,000 options outstanding

which were fully vested or expected to vest, with an aggregate intrinsic value of $ 0.0 , a weighted average exercise price of $ 10.38 ,

and weighted average remaining contractual term of 8.2 years at December 31, 2023.

For vested and exercisable options, outstanding shares

totaled 279,000 , with an aggregate intrinsic value of $ 0.0 .

These options had a weighted-average exercise price of $ 17.17 per share and

a weighted-average remaining contractual term of 7.2 years at December 31, 2023.

aggregate intrinsic value of outstanding and exercisable options at December 31, 2023 was calculated based on the closing price of the

Company’s common stock as reported on the Nasdaq Capital Market on December 31, 2023 of approximately $ 1.72 per share (less the

exercise price of the options).

The aggregate intrinsic value is calculated based on the positive difference between the closing fair

market value of the Company’s common stock and the exercise price of the underlying options.

Stock Reserved for Future Issuance

following table presents information concerning common stock available for future issuance as of December 31, (in thousands):

For options granted and outstanding, there were 550,000

options outstanding which were fully vested or expected to vest, a weighted average exercise price of $ 10.37 and weighted average remaining

contractual term of 7.22 years at December 31, 2024.

For vested and exercisable options, outstanding shares totalled 453,000 .

These options

had a weighted average exercise price of $ 11.92 per share and a weighted-average remaining contractual term of 6.98 years at December

aggregate intrinsic value of outstanding and exercisable options at December 31, 2024 was calculated based on the positive

difference between the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on December 31,

2024 of approximately $ 2.02

per share and the exercise price of the underlying options.

As of December 31, 2024, total outstanding and exercisable options had

no intrinsic value.

Common Stock Reserved for Future Issuance

The following table presents information concerning

common stock available for future issuance as of December 31, (in thousands):

Schedule of Common Stock Reserved for Future Issuance

options issued and outstanding

authorized for future option grants

following is a summary of activity in the number of warrants outstanding to purchase the Company’s common stock for the years ended

December 31, 2023 and 2022 (table in thousands):

of Warrants Activity

Warrants Accounted for as:

Accounted for as:

Outstanding, December 31, 2021

Outstanding, December 31, 2022

Outstanding, December 31, 2023

Expiration date

outstanding as of December 31, 2023 and 2022 included warrants with the potential to be settled in cash, which are liability-classified

During the year ended December 31, 2022, the 6,732 warrants accounted as equity expired and the 13,268 warrants accounted for

as liabilities remained outstanding as of December 31, 2022.During the year ended December 31, 2023, the 2,000 warrants accounted as

liabilities expired and the 11,000 warrants accounted for as liabilities remained outstanding as of December 31, 2023.

of December 31, 2023, outstanding warrants had no intrinsic value.

Classified as Liabilities

Liability-classified

warrants consist of warrants issued by the Company in connection with its merger with Biozone in January 2014.

Warrants accounted for

as liabilities have the potential to be settled in cash or are not indexed to the Company’s own stock.

estimated fair value of outstanding warrants accounted for as liabilities is determined at each balance sheet date.

Any decrease or increase

in the estimated fair value of the warrant liability since the most recent balance sheet date is recorded in the consolidated statement

of operations as changes in fair value of derivative liabilities.

The fair value of the warrants classified as liabilities is estimated

using the Black-Scholes option-pricing model with the following inputs as of December 31, 2023:

Schedule of Fair Value of Warrants Classified as Liabilities

Warrants (expired October 24, 2023)

Expected dividend yield

Expected term (years)

Cumulative volatility

Risk-free rate

Fair value (in thousands)

fair value of the warrants classified as liabilities is estimated using the Black-Scholes option-pricing model with the following inputs

as of December 31, 2022:

Expected dividend yield

Expected term (years)

Cumulative volatility

Risk-free rate

Fair value (in thousands)

Company estimates volatility using its own historical stock price volatility based upon the range of periods consistent with the expected

life of the warrants.

The expected life assumption is based on the remaining contractual terms of the warrants.

The risk-free rate is

based on the zero-coupon rates in effect at the balance sheet date.

The dividend yield used in the pricing model is zero, because the

Company has no present intention to pay cash dividends.

Stock options issued and outstanding

Shares authorized for future option grants

Warrants outstanding

August 12, 2024, the Company’s Compensation Committee approved the issuance of 256,000 restricted stock unit (“RSU”)

awards to non-employee directors, officers, consultants and employees.

The aggregate fair value of the restricted stock unit awards granted

was estimated to be $ 451,000 using the market price of the stock on the date of the grant which is expensed using the straight-line method

over the vesting period.

Schedule of Restricted Stock Units

Weighted Average

Intrinsic Value

Unvested December 31, 2023

Unvested and expected to vest at December 31, 2024

Company accounts for share-based awards to employees and nonemployee directors and consultants in accordance with the provisions of

ASC 718, Compensation—Stock Compensation.

, and under the recently issued guidance following FASB’s pronouncement,

ASU 2018-07, Compensation—Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting .

Under ASC 718, and applicable updates adopted, share-based awards are valued at fair value on the date of grant and that fair value

is recognized over the requisite service, or vesting, period.

The Company values its equity awards using the Black-Scholes option

pricing model, and accounts for forfeitures when they occur.

For the twelve months ended December 31, 2024 and 2023, equity-based

compensation expense recorded on vested options and RSU was $ 643,000 and 801,000 ,

respectively.

As of December 31, 2024, there was approximately $ 252,000 of

total unrecognized compensation expense related to non-vested stock options that is expected to be recognized over a weighted

average period of 0.4 years.

Licenses and Collaborations

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December 15, 2023, the Company received written notice from Merck of Merck’s election to terminate the Exclusive License and Collaboration

The termination of the Agreement is effective on March 14, 2024.

The termination of the Agreement was effective on March 14, 2024.

According to Merck’s termination notice, Merck determined

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State University Research Foundation

February 18, 2020, the Company entered into a License Agreement (the “Agreement”) with Kansas State University Research Foundation

(the “Foundation”) effective February 12, 2020.

to the terms of the Agreement, the Foundation granted the Company an exclusive for human use a royalty bearing license to practice under

certain patent rights, including a patent and a patent application covering antiviral compounds against coronaviruses and norovirus,

and related know-how, to make and sell therapeutic, diagnostic and prophylactic products.

Company agreed to pay the Foundation a one-time non-refundable license initiation fee in the amount of $ 80,000 and an annual license

maintenance fee in the amount of $ 20,000 per year and agreed to reimburse the Foundation for third party expenses associated with the

filing, prosecution, and maintenance of the patent rights in question.

The Company also agreed to make certain future milestone payments

up to $ 3.1 million, dependent upon the progress of clinical trials, regulatory approvals, and initiation of commercial sales in the United

States and certain countries outside the United States.

April 17, 2020, the Company entered into an Agreement with Foundation effective April 1, 2020.

Pursuant to the terms of the Agreement,

the Foundation granted the Company an exclusive for human use a royalty bearing license to practice under certain patent rights, including

a patent and a patent application covering antiviral compounds against coronaviruses and norovirus, and related know-how, to make and

sell therapeutic, diagnostic and prophylactic products.

Company agreed to pay the Foundation a one-time non-refundable license initiation fee in the amount of $ 110,000 and an annual license

maintenance fee in the amount of $ 20,000 per year for the first seven (7) years and $ 50,000 per year thereafter and agreed to reimburse

the Foundation for third party expenses associated with the filing, prosecution and maintenance of the patent rights in question.

Company also agreed to make certain future milestone payments up to $ 4,150,000 , dependent upon the progress of clinical trials, regulatory

approvals, and initiation of commercial sales in the United States and certain countries outside the United States.

As of December 31,

2023, no milestone payments to the Foundation were due under the agreement.

February 28, 2024, the Company provided notice to the Foundation of the Company’s election to terminate both License Agreements.

entered into two License Agreement with Kansas State University Research Foundation (the “Foundation”) on February 18, 2020

to further develop certain proprietary broad-spectrum antiviral compounds for the treatment of norovirus and coronavirus infections.

February 28, 2024, the Company provided notice to the Foundation of the Company’s election to terminate the 2020 License Agreements.

The terminations, which were made due to the Company’s determination that further development efforts under the License Agreements

would be futile, are effective on March 29, 2024.

The Company continues to clinically progress its fully owned compound CDI-988 for coronaviruses

and norovirus.

would be futile, took effect on March 29, 2024.

2a Clinical Trial

August, 2022, the Company engaged hVIVO, a subsidiary of London-based Open Orphan plc (AIM:

ORPH), a rapidly growing specialist contract

research organization (CRO), to conduct a Phase 2a clinical trial (the “Study”) with the Company’s novel, broad-spectrum,

orally administered antiviral influenza candidate.

The Company paid a reservation fee of $ 1.7 million upon execution of the Start-Up

Agreement (the “Agreement”) for the Study.

The Company recognized the reservation fee as prepaid asset on its balance sheet

at December 31, 2022.

In September 2023, the Clinical Trial Agreement (“CTA”) was executed by the Company and hVIVO, which

supersedes the Agreement, including the terms attributable to the reservation fee.

Under the terms of the CTA, total budget of the Study

was approximately $ 6.8 million, which consisted of the reservation fee of $ 1.7 million and additional milestone payments totaling approximately

ORPH), a contract research organization (CRO),

to conduct a Phase 2a clinical trial (the “Study”) with the Company’s novel, broad-spectrum, orally administered antiviral

influenza candidate.

The Company paid a reservation fee of $ 1.7 million upon execution of the Start-Up Agreement (the “Agreement”)

for the Study.

The Company recognized the reservation fee as prepaid asset on its balance sheet at December 31, 2022.

In September 2023,

the Clinical Trial Agreement (“CTA”) was executed by the Company and hVIVO, which superseded the Agreement, including the

terms attributable to the reservation fee.

Under the terms of the CTA, total budget of the Study was approximately $ 6.8 million, which

consisted of the reservation fee of $ 1.7 million and additional milestone payments totaling approximately $ 5.1 million.

The reduction

of the reservation fee and the milestone payments will become due during the length of the CTA as milestones are realized.

the year ended December 31, 2024 and 2023, upon achievement of certain milestones, the reservation fee was reduced by approximately

$ 1.28 million and

$ 0.4 million,

The reduction of the reservation fee and the milestone payments will become due during the length of the CTA as milestones

are realized.

the year ended December 31, 2023, upon achievement of certain milestones, the reservation fee was reduced by approximately $ 440,000 ,

which was recognized as expense during the year then ended.

As a result, the balance of the reservation fee was approximately $ 1.28 million

which is included in prepaid expenses as of December 31, 2023.

Pursuant to the CTA, additional milestones payments totaling approximately

$ 2.61 million became due during the year ended December 31, 2023, resulting in the recognition during the year of aggregate expenses

of $ 3.05 million incurred on the CTA.

As of December 31, 2023, $ 1.9 million was due on the CTA which is included in accounts payable

and accrued expenses in the accompanying consolidated balance sheet.

respectively, which was recognized as expense during the year then ended.

As a result, there was no

balance of the reservation fee included in prepaid expenses as of December 31, 2024.

Pursuant to the CTA, additional milestones

payments became due during the year ended December 31, 2024 and 2023, resulting in the recognition during the year of aggregate

expenses of $ 2.2

million and $ 3.05

million, respectively.

As of December 31, 2024, $ 0.5

million was due on the CTA which is included in accounts payable and accrued expenses in the accompanying consolidated balance

accordance with the authoritative guidance for income taxes under ASC 740, a deferred tax asset or liability is determined based on the

29 unchanged sentences

than not that deferred tax assets will be realizable, the valuation allowance will be reduced.

March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).

Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund

a nationwide effort to curtail the effect of COVID-19.

While the CARES Act provides sweeping tax changes in response to the COVID-19

pandemic, some of the more significant provisions are the extension of the carryback period of certain losses to five years, and increasing

the ability to deduct interest expense from 30 percent to 50 percent of modified taxable income.

The CARES Act also provides for a credit

against employee wages, the opportunity to defer payment of a portion of federal payroll taxes to December 2022 and December 2023 and

enhanced small business loans to assist business impacted by the pandemic.

The Company’s tax provision and financial position was

not materially impacted by the CARES Act.

December 27, 2020, the United States enacted the Consolidated Appropriations Act which extended and modified many of the tax related

provisions of the CARES Act.

The Company does not anticipate a material impact of the Consolidated Appropriations Act on its tax provision

or financial position.

December 31, 2024, the Company has federal and state net operating losses (“NOL”) carryforwards of approximately $ 110.4 million

2 unchanged sentences

carryforward indefinitely.

Under the CARES Act, the Internal Revenue Code was amended to allow for federal NOL carrybacks for five years

to offset previous income, or can be carried forward indefinitely to offset 100% of the taxable income for the tax year 2020 and 80%

of the taxable income for the tax years 2021 and thereafter.

The federal NOL carryforwards begin to expire in 2026.

December 31, 2024, the Company had federal research credit carryforwards of approximately $ 3.5 million that expire in 2028.

December 31, 2023, the Company did not have any federal and state capital loss carryforwards.

above NOL carryforward and the research tax credit carryforward are subject to an annual limitation under the Section 382 and 383 of

10 unchanged sentences

Statutory federal income tax rate

Goodwill impairment

Research credits

Change in valuation allowance

Equity compensation

Foreign rate differential

Other tax, credit and adjustments

1 unchanged sentence

Lease Commitments

Company leases office space in Miami, Florida and laboratory space in Bothell, Washington under operating leases that expire on August

31, 2024 and January 31, 2031 , respectively.

The lease for our Miami office is with a related party (see below).

Company leases office space in Miami, Florida and research and development laboratory space in Bothell, Washington under operating leases

that expire on September 30, 2027 and January 31, 2031 , respectively.

For operating leases, the weighted average discount rate is 6.4 %

and the weighted average remaining lease term is 5.2 years.

lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease

10 unchanged sentences

of Components of Rent Expense and Supplemental Cash Flow Information

Operating lease cost (included in operating expenses in the Company’s consolidated statement of operations)

December 31, 2024

December 31, 2023

Operating lease cost (included in operating expenses in the Company’s consolidated statements of operations)

Other Information

4 unchanged sentences

of Supplemental Balance Sheet Information

At December 31,

December 31, 2024

December 31, 2023

Operating leases

Long-term right-of-use assets of which $ 42 and $ 99 relates to related party, net of accumulated amortization of $ 950 and $ 592

Short-term operating lease liabilities, of which $ 42 and $ 59 relates to related party

Long-term operating lease liabilities, of which $ 0 and $ 42 relates to related party

Long-term right-of-use assets of which $ 152 and $ 42 relates to related party, respectively, net of accumulated amortization of $ 1,270 and $ 950 , respectively

Short-term operating lease liabilities, of which $ 49 and $ 42 relates to related party, respectively

Long-term operating lease liabilities, of which $ 104 and $ 0 relates to related party, respectively

Total operating lease liabilities

6 unchanged sentences

Total operating lease liabilities

minimum lease payments above do not include common area maintenance (CAM) charges, which are contractual obligations under the Company’s

Bothell, Washington lease, but are not fixed and can fluctuate from year to year.

CAM charges for the Bothell, Washington facility is

calculated and billed based on total common expenses for the building incurred by the lessor and apportioned to tenants based on square

In 2023 and 2022, approximately $ 98,000 and $ 98,000 of CAM charges for the Bothell, Washington lease was included in operating

expenses in the consolidated statements of operations, respectively.

September 1, 2018, the Company entered into a lease agreement with a limited liability company controlled by Dr.

Phillip Frost, a director,

and a principal stockholder of the Company for the lease of its Miami office (see Note 13 – Transactions with Related Parties).

On September 1, 2021, the Company extended this lease agreement into an additional three -year with

m onthly lease payments under this lease total $ 186,000 through September 2024.

The minimum lease payments above include taxes

and fees, which are expected to be approximately $ 9,000 annually.

As of December 31, 2023, the remaining right of use asset relating

to this lease was $ 42,000 and the remaining lease obligation was $ 42,000 .

September 21, 2018, the Company amended the lease agreement with a North Creek Tec LLC, to expand its laboratory facility in Bothell

– WA, with additional 6,000 sq ft for a period of 5 years that expires on January 31, 2029, with monthly lease payments under this

lease total $ 660,000 .

In addition, the Company amended the lease agreement to extend the original laboratory facility for an additional

7 years with monthly lease payments under this lease total $ 1,498,000 Through January 2031.

The minimum lease payment combined totals

approximately $ 380,000 annually.

expense, excluding capital leases and CAM charges, for 2023 and 2022 totaled $ 233,000 and $ 233,000 , respectively.

April 2020, the Company entered into a lease agreements to acquire equipment with 36 monthly payments of $ 2,420 payable through March

The lease agreement have an effective interest rate of 8.01 %.

leased lab equipment is included under property and equipment and depreciable over five years .

Total assets and accumulated depreciation

recognized, net, under finance leases was $ 162,000 and $ 162,000 as of December 31, 2023, respectively.

Total assets and accumulated depreciation

recognized, net, under finance leases was $ 194,000 and $ 158,000 as of December 31, 2022.

In April 2023, the Company renewed

its lease for the unit 100 at the Bothel, Washington facility (“Bothel 100”) for an 84-month (7 years) term, starting February

1, 2024, and ending on January 31, 2031.

The Company classified the amended lease as an operating lease pursuant to the provisions of

ASC 842 and calculated the discounted value of the total lease payments to be approximately $ 1,224,000 using a discount rate of 6 %.

amount was recognized as the lease liability and right-of use asset at the renewal date of the lease.

As the renewal occurred in 2023,

the Company deemed it appropriate to recognize both the right-of-use asset and lease liability for the extension term in 2023, with no

amortization of the asset until the commencement of the extension term in February 2024.

In September 2023, following

the renewal of the Bothell 100 facility lease, the Company amended the agreement to expand the premises to include Suite 200 (“Bothell

200 facility”).

The lease for the Bothell 200 facility has a 60-month (5-year) term, running from February 1, 2024, through January

The Company classified the lease as an operating lease and calculated the discounted value of the total lease payments to be

approximately $ 571,000 , using a 6 % discount rate.

This amount was recognized as the lease liability and right-of-use asset at the

lease commencement date.

As the lease for the Bothell 200 facility is tied to an existing lease and was executed in 2023, the Company

deemed it appropriate to recognize both the right-of-use asset and lease liability in 2023, with no amortization of the asset until the

lease term begins in February 2024.

In August 2024, the Company

renewed its lease for the Miami, Florida location for a 36-month term, starting from October 1, 2024, and ending on September 30, 2027,

with an optional two-year extension.

At the time of renewal, the Company classified the lease as an operating lease pursuant to the provisions

of ASC 842 and calculated the discounted value of the total lease payments to be approximately $ 163,000 , using a discount rate of 10.75 %,

and recognized this amount as the lease liability and right-of-use asset at renewal date.

The lessor of the Miami, Florida lease is a limited liability company controlled

Phillip Frost, a director and a principal stockholder of the Company.

minimum lease payments above do not include common area maintenance (CAM) charges, which are contractual obligations under the

Company’s Bothell, Washington lease, but are not fixed and can fluctuate from year to year.

CAM charges for the Bothell,

Washington facility is calculated and billed based on total common expenses for the building incurred by the lessor and apportioned

to tenants based on square footage.

In 2024 and 2023, approximately $ 174,000

of CAM charges for the Bothell, Washington lease was included in operating expenses in the consolidated statements of operations,

respectively.

the twelve months ended December 31, 2024 and 2023, operating lease expense, excluding short-term leases, finance leases and CAM charges,

totaled approximately $ 393,000 and

respectively, of which $ 62,000

for each period was to a related party.

Commitments and Contingencies

31 unchanged sentences

Transactions with Related Parties

September 2018, the Company leased administrative offices from a limited liability company owned by one of the Company’s directors

and principal stockholder, Dr.

August 14, 2024, the Company entered into a three-year lease extension with a limited liability company controlled by Dr.

Phillip Frost,

The lease term is three years with an optional three-year extension.

On an annualized basis,

rent expense, including taxes and fees, for this location would be approximately $ 62,000 .

The Company paid a lease deposit of $ 4,000

and total rent and other expenses paid in connection with this lease were $ 63,000 and $ 61,000 for the years ended December 31, 2023 and

2022 respectively.

Subsequent Events

February 28, 2024, the Company provided notice to KSURF of the Company’s election to terminate the License Agreements.

The terminations,

which were made due to the Company’s determination that further development efforts under the License Agreements would be futile,

are effective on March 29, 2024.

a director and a principal stockholder of the Company.

On an annualized basis, straight-line rent expense is approximately $ 64,000 including

fixed and estimable fees and taxes.

Upon the extension of the lease, the Company recognized a right-of-use asset of approximately $ 163,000 .

rate used to measure the lease assets and liabilities for the extension was 10.75 %.

Company paid a lease deposit of $ 4,000 on the original agreement and total rent and other expenses paid in connection with this lease

were $ 62,000 and $ 63,000 for the years ended December 31, 2024 and 2023 respectively.

Segment information

The Company operates and manages its business as one

reportable and operating segment dedicated to the research and development Company’s novel orally administered antiviral influenza

The measure of segment assets is reported on the balance sheet as total consolidated assets.

In addition, the Company manages

the business activities on a consolidated basis.

Company’s CODM reviews financial information presented on a consolidated basis and decides how to allocate resources based on net

income (loss).

segment expenses include research and development, salaries, insurance, and stock-based compensation.

Operating expenses include all

remaining costs necessary to operate our business, which primarily include external professional services and other administrative expenses.

The following table presents the significant segment expenses and other segment items regularly reviewed by our CODM (table in thousands):

of Segment Information

Year ended December 31,

Research and development

Salaries and personnel costs

Stock-based compensation

Operating expenses

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data