What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-11 · 632 added, 434 removed, 549 unchanged (66% of the section changed)

Financial Statements

BROOKLYN IMMUNOTHERAPEUTICS, INC.

ETERNA THERAPEUTICS INC.

CONDENSED CONSOLIDATED

1 unchanged sentence

(In thousands, except par value amount)

September 30,

Current assets:

6 unchanged sentences

Investment in non-controlling interest

Security deposits and other assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

3 unchanged sentences

Operating lease liabilities, current

Finance lease liabilities, current

Other current liabilities

2 unchanged sentences

Operating lease liabilities, non-current

Finance lease liabilities, non-current

Other liabilities

2 unchanged sentences

Preferred stock, $ 0.005 par value, 1,000 shares authorized, 156

designated, issued and outstanding of Series A convertible preferred stock at June 30 , 2022 and December 31 , 2021 , $ 156 liquidation

Common stock, $ 0.005 par value, 100,000 shares authorized at June 30, 2022 and December 31, 2021;

57,469 and 52,021 issued and outstanding at June 30 , 2022 and December 31 , 2021 ,

designated and outstanding of Series A convertible preferred stock at September 30 , 2022 and December 31 , 2021 , $ 156 liquidation

Common stock, $ 0.005 par value, 100,000 shares authorized at September 30, 2022 and December 31, 2021;

2,942 and 2,601 issued and outstanding at September 30 , 2022 and December 31 , 2021 ,

Additional paid-in capital

2 unchanged sentences

Total liabilities and stockholders’ equity

Share and per share data have been adjusted for all periods

presented to reflect a 1-for-20 reverse stock split effective October 17, 2022.

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROOKLYN IMMUNOTHERAPEUTICS, INC.

ETERNA THERAPEUTICS INC.

CONDENSED CONSOLIDATED

1 unchanged sentence

(In thousands, except per share amounts)

Three months ended June 30 ,

Six months ended June 30 ,

Three months ended September 30 ,

Nine months ended September 30 ,

Operating expenses:

Research and development

In-process research and development

General and administrative

Impairment of in-process research and development

Transaction costs

5 unchanged sentences

Loss on non-controlling investment

Other expense, net

Other (expense) income, net

Total other income (expense), net

Loss before income taxes

Provision for income taxes

Series A preferred stock dividend

2 unchanged sentences

Weighted average shares outstanding - basic and diluted

Share and per share data have been adjusted for all periods

presented to reflect a 1-for-20 reverse stock split effective October 17, 2022.

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROOKLYN IMMUNOTHERAPEUTICS, INC.

ETERNA THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ AND MEMBERS’ EQUITY

For the three and six months ended June 30, 2022 and 2021 (unaudited)

For the three and nine months ended September 30, 2022 and 2021 (unaudited)

(in thousands)

Series A Preferred

Balances at April 1, 2022

Additional Paid-

Balances at July 1, 2022

Issuance of common stock from vested restricted stock units

Issuance of common stock from exercise of pre-funded warrants

Stock-based compensation

Cash dividends to Series A preferred stockholders

Balances at June 30, 2022

Balances at September 30 , 2022

Balances at January 1, 2022

2 unchanged sentences

Issuance of common stock from vested restricted stock units

Issuance of common stock from exercise of pre-funded warrants

Stock-based compensation

Cash dividends to Series A preferred stockholders

Balances at June 30, 2022

Balances at September 30 , 2022

Share and per share data have been adjusted for all periods presented to

reflect a 1-for-20 reverse stock split effective October 17, 2022.

The accompanying notes are an integral part of these condensed consolidated financial statements.

ETERNA THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ AND MEMBERS’

For the three and nine months ended September 30, 2022 and 2021

(in thousands)

Membership Equity

Series A Preferred

Balances at April 1, 2021

Additional Paid -

Balances at July 1, 2021

Common stock to be retained by NTN stockholders

2 unchanged sentences

Issuance of common stock in lieu of cash dividend to Series A preferred stockholders

Issuance of common stock in connection with the acquisition of Novellus, Inc.

Forfeiture of unvested restricted stock

Stock-based compensation

Balances at June 30, 2021

Balances at September 30 , 2021

Balances at January 1, 2021

8 unchanged sentences

Issuance of common stock in lieu of cash dividend to Series A preferred stockholders

Issuance of common stock in connection with the acquisition of Novellus, Inc.

Forfeiture of unvested restricted stock

Stock-based compensation

Balances at June 30, 2021

Balances at September 30 , 2021

Share and per share data have been adjusted for all periods presented to reflect a 1-for-20 reverse stock split effective October 17, 2022.

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROOKLYN IMMUNOTHERAPEUTICS, INC.

ETERNA THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF

(in thousands)

For the six months ended

September 30,

Cash flows used in operating activities:

5 unchanged sentences

Impairment of in-process research and development

In-process R&D acquired in Novellus asset acquisition

Transaction costs - shares to Financial Advisor

1 unchanged sentence

Loss on disposal of fixed assets

Gain on forgiveness of PPP loan

Gain on lease termination

Gain on warrant liabilities

Gain on lease warrant liabilities

Loss on non-controlling investment

2 unchanged sentences

Prepaid expenses and other current assets

Security deposits and other non-current assets

Other non-current assets

Accounts payable and accrued expenses

2 unchanged sentences

Net cash used in operating activities

Cash flows (used in) provided by investing activities:

Cash flows used in investing activities:

Purchase of property and equipment

Purchase of Novellus, net of common stock issue and cash acquired

Proceeds from the sales of fixed assets

1 unchanged sentence

Proceeds from the sale of NTN assets, net of cash disposed

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows provided by financing activities:

Proceeds from issuance of common stock and warrants in connection with private offering

Issuance of common stock from exercise of pre-funded warrants

Payroll tax remitted on net share settlement of equity awards

Dividends paid to Series A preferred stockholders

Principal payments on finance leases

Proceeds from issuance of common stock to Lincoln Park

4 unchanged sentences

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Conversion of warrant liability to equity

Issuance of common stock for Series A preferred stock dividend

Issuance of common stock for business combination

Issuance of common Stock for Novellus acquisition

Series A preferred stock retained in business combination

Initial measurement of ROU assets and liabilities

Initial measurement of ROU assets, net of tenant improvement allowance

Initial measurement of operating lease liabilities

Initial measurement of finance lease liabilities

The accompanying notes are an integral part of these condensed consolidated financial statements.

BROOKLYN IMMUNOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

ETERNA THERAPEUTICS INC.

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Brooklyn ImmunoTherapeutics Inc., a Delaware corporation (“Brooklyn” or the “Company”), together with its subsidiaries including Brooklyn

ImmunoTherapeutics LLC (“Brooklyn LLC”), Novellus, Inc.

(“Novellus”) and Novellus Therapeutics, Ltd.

(“Novellus, Ltd.”), is a biopharmaceutical company utilizing its mRNA technology platform, including mRNA-based cell reprogramming and gene

editing technologies, to create next generation mRNA, gene editing and cell therapies, including iPSC therapies for multiple therapeutic indications.

As used herein, the “Company” refers collectively to Brooklyn and its subsidiaries.

On August 12, 2020, Brooklyn (then known as “NTN Buzztime, Inc.”), Brooklyn LLC and BIT Merger Sub, Inc., a wholly owned subsidiary of

Brooklyn (the “Merger Sub”), entered into an agreement and plan of merger and reorganization (the “Merger Agreement”) pursuant to which, among other matters, Merger Sub merged with and into Brooklyn LLC, with Brooklyn LLC continuing as a

wholly owned subsidiary of Brooklyn and as the surviving company of the merger (the “Merger”).

On October 11, 2022, Eterna Therapeutics Inc., a Delaware corporation, (“Eterna” or the “Company”), filed with the Secretary of State of the State of Delaware a Certificate of A mendment to its Restated Certificate of Incorporation, as amended (the “Charter”), to change its name from Brooklyn ImmunoTherapeutics, Inc.

to Eterna Therapeutics Inc., which became effective on October 17, 2022

(the “Name Change”).

The Name Change did not require approval of the Company’s stockholders and did not affect the rights of the Company’s security holders.

In connection with the Name Change, the trading symbol of the Company’s common stock, par value

$ 0.005 per share (“common stock”), on The Nasdaq Global Market changed from “BTX” to “ERNA.”

Eterna, together with its subsidiaries including Brooklyn ImmunoTherapeutics LLC ( “Brooklyn LLC”), Novellus,

(“Novellus”) and Novellus Therapeutics Limited (“Novellus Ltd.”), is a biopharmaceutical company using its mRNA technology platform, including mRNA-based cell reprogramming and gene editing technologies, to create next generation mRNA,

gene editing and cell therapies, including iPSC therapies for multiple therapeutic indications.

The Company also plans to develop and advance a pipeline of therapeutic products both internally and through strategic partnerships.

As used herein, the

“Company” refers collectively to Eterna and its subsidiaries.

On August 12, 2020, Eterna (then known as “NTN Buzztime, Inc.”), Brooklyn LLC and BIT Merger Sub, Inc., a wholly owned subsidiary of Eterna

(the “Merger Sub”), entered into an agreement and plan of merger and reorganization (the “Merger Agreement”) pursuant to which, among other matters, Merger Sub merged with and into Brooklyn LLC, with Brooklyn LLC continuing as a wholly owned

subsidiary of Eterna and as the surviving company of the merger (the “Merger”).

The Merger closed on March 25, 2021.

After the Merger, Brooklyn changed its name from “NTN Buzztime, Inc.” to “Brooklyn ImmunoTherapeutics, Inc.”

In connection with the Merger, the Company changed its name from “NTN Buzztime, Inc.” to “Brooklyn ImmunoTherapeutics, Inc.,”

and, as described above, the Company has since changed

its name to Eterna Therapeutics Inc.

The Merger was accounted for as a reverse acquisition, in which Brooklyn LLC was deemed the acquiring company for accounting purposes.

On March 26, 2021, Brooklyn sold (the “Disposition”) its rights, title and interest in and to the assets relating to the business operated

under the name “NTN Buzztime, Inc.” prior to the Merger to eGames.com Holdings LLC (“eGames.com”) in accordance with the terms of an asset purchase agreement dated September 18, 2020, as amended, between Brooklyn and eGames.com (the “Asset

On March 26, 2021, Eterna sold its rights, title and interest in and to the assets relating to the business operated under the name “NTN

Buzztime, Inc.” (the “Disposition”) prior to the Merger to eGames.com Holdings LLC (“eGames.com”) in accordance with the terms of an asset purchase agreement dated September 18, 2020, as amended, between Eterna and eGames.com (the “Asset

Purchase Agreement”).

On July 16, 2021, Brooklyn and its newly formed, wholly owned subsidiary Brooklyn Acquisition Sub, Inc.

On July 16, 2021, Eterna and its newly formed, wholly owned subsidiary Brooklyn Acquisition Sub, Inc.

entered into an

agreement and plan of acquisition (the “Acquisition Agreement”) with (a) Novellus LLC, (b) Novellus (the sole equity holder of Novellus, Ltd.

and, prior to the closing under the Acquisition Agreement, a subsidiary of Novellus, LLC), and (c) a

seller representative (the “Acquisition”), pursuant to which Brooklyn acquired Novellus and its subsidiary, Novellus, Ltd.

As part of the Acquisition, Brooklyn also acquired 25.0 % of the total outstanding equity interests of NoveCite, Inc.

(“NoveCite”), a corporation focused on developing an allogeneic mesenchymal stem cell product for patients with acute

respiratory distress syndrome, including from COVID-19.

agreement and plan of acquisition (the “Novellus Acquisition Agreement”) with (a) Novellus LLC, (b) Novellus (the sole equity holder of Novellus Ltd.

and, prior to the closing under the Novellus Acquisition Agreement, a subsidiary of Novellus

LLC), and (c) a seller representative (the “Novellus Acquisition”), pursuant to which Eterna acquired Novellus and its subsidiary, Novellus Ltd.

As part of the Novellus Acquisition, Eterna also acquired 25.0 % of the total outstanding equity interests of NoveCite, Inc.

(“NoveCite”), a corporation focused on developing an allogeneic mesenchymal stem cell product for patients

with acute respiratory distress syndrome, including from COVID-19.

Basis of Presentation

4 unchanged sentences

normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented.

condensed consolidated financial statements should be read together with the audited consolidated financial statements and notes thereto contained in Brooklyn’s Annual Report on Form 10-K/A for the year ended December 31, 2021 filed with the

condensed consolidated financial statements should be read together with the audited consolidated financial statements and notes thereto contained in Eterna’s Annual Report on Form 10-K/A for the year ended December 31, 2021 filed with the

Securities and Exchange Commission (the “SEC”) on June 30, 2022 (the “10-K/A”).

1 unchanged sentence

not include all of the information and footnotes required by GAAP for complete financial statements.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be anticipated for

the entire year ending December 31, 2022, or any other period.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be anticipated

for the entire year ending December 31, 2022, or any other period.

Reverse Stock Split

A s approved by the Company’s stockholders at the Company’s Annual Meeting of Stockholders held

on September 21, 2022, the Company effected a reverse stock split of its common stock at a ratio of 1-for-20 , as determined by the

Company’s Board of Directors within the parameters approved by the Company’s stockholders (the “Reverse Stock Split”).

The Reverse Stock Split became effective under Delaware law at 11:59 p.m.

Eastern time on October 16, 2022.

Upon the effectiveness of the Reverse Stock Split, every twenty shares of the issued and outstanding common stock were automatically

combined and reclassified into one issued and outstanding share of common stock.

The Reverse Stock Split did not affect any stockholder’s ownership percentage of the common stock, alter the par value of the common stock or modify any voting

rights or other terms of the common stock.

The number of authorized shares of common stock under the Charter remains unchanged.

No fractional shares were issued in connection with the Reverse Stock Split.

In lieu of any fractional shares to

which a stockholder would otherwise be entitled, the Company paid an amount of cash equal to the product of (i) the fractional share to which the holder would otherwise be entitled and (ii) the then fair value of a share as determined in good

faith by the Board.

The Company paid an aggregate of $ 719 for a total of 175 fractional shares.

All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse

Reclassifications

Certain reclassifications have been made

to Brooklyn’s prior years’ financial statements to conform to the current year presentation.

These reclassifications had no effect on Brooklyn’s previously reported results of operations or accumulated deficit.

to Eterna’s prior years’ financial statements to conform to the current year presentation.

These reclassifications had no effect on Eterna’s previously reported results of operations or accumulated deficit.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

administrative support for operations.

As of June 30, 2022, the Company had a cash balance of approximately $ 19.4 million and an

accumulated deficit of approximately $ 153.5 million.

For the three and six months ended June 30, 2022, the Company incurred a net

loss of $ 3.4 million and $ 12.8

million, respectively, and the Company used cash in operating activities of $ 9.4 million.

In connection with preparing the accompanying condensed consolidated financial statements as of and for the three months ended June 30, 2022, the Company’s management concluded that there is substantial doubt regarding the Company’s

ability to continue as a going concern because it does not expect to have sufficient cash or working capital resources to fund operations for the twelve-month period subsequent to the issuance date of these financial statements.

will need to raise additional capital, which could be through the remaining availability under an equity line purchase agreement with Lincoln Park Capital Fund, LLC (the “Second Purchase Agreement”) (to the extent the Company is permitted to

use such agreement) (see Note 11), public or private equity offerings, debt financings, corporate collaborations or other means.

As of September 30, 2022, the Company had a cash balance of approximately $ 13.3 million and

an accumulated deficit of approximately $ 160.8 million.

For the three and nine months ended September 30, 2022, the Company

incurred a net loss of $ 7.3 million and $ 20.1 million, respectively, and for the nine months ended September 30, 2022, the Company used cash in operating activities of $ 15.5 million.

On October 18, 2022, the Company

entered into a facility sublease agreement (the “Sublease”) for approximately 45,500 square feet of office and laboratory space

in Somerville, Massachusetts.

Pursuant to the Sublease, the Company delivered to the sublessor a security deposit in the form of a letter of credit in the amount of $ 4.1 million, which will be reduced on an incremental basis throughout the term of the lease.

The letter of credit was issued by the Company’s commercial bank, which

required that the Company cash collateralize the letter of credit by depositing $ 4.1 million in a restricted cash account with

The amount of required restricted cash collateral will decline in parallel with the reduction in the amount of the letter of credit over the term of the sublease.

The Company’s deposit of this restricted cash reduced the amount

of working capital the Company has to fund its operations.

See Note 15, Subsequent

Events, for more information on the

In connection with preparing the accompanying condensed consolidated financial statements as of and for the three and nine months ended September 30, 2022, the Company’s management concluded that there is substantial doubt regarding

the Company’s ability to continue as a going concern because it does not expect to have sufficient cash or working capital resources to fund operations for the twelve-month period subsequent to the issuance date of these financial statements.

The Company will need to raise additional capital, which could be through the remaining availability under an equity line purchase agreement with Lincoln Park Capital Fund, LLC (the “Second Purchase Agreement”) (to the extent the Company is

permitted to use such agreement) (see Note 12), public or private equity offerings, debt financings, corporate collaborations or other means.

The Company may also seek governmental grants to support its clinical trials and preclinical trials.

currently has no arrangements for such capital and no assurances can be given that it will be able to raise such capital when needed, on acceptable terms, or at all.

The accompanying condensed

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.

The accompanying condensed consolidated

financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to the

Company’s ability to continue as a going concern .

The Company currently has no arrangements for such capital and no assurances can be given that it will be able to raise such capital when needed, on acceptable terms, or at all.

The accompanying condensed 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.

accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may

result from uncertainty related to the Company’s ability to continue as a going concern.

MERGER, DISPOSITION AND ACQUISITION TRANSACTIONS

On August 12, 2020, Brooklyn, Brooklyn LLC and the Merger Sub

On August 12, 2020, Eterna, Brooklyn LLC and the Merger Sub

entered into the Merger Agreement, and the Merger closed on March 25, 2021.

1 unchanged sentence

Brooklyn LLC, as the accounting

acquirer, recorded the assets acquired and liabilities assumed of Brooklyn in the Merger at their fair values as of the acquisition date.

acquirer, recorded the assets acquired and liabilities assumed of Eterna in the Merger at their fair values as of the acquisition date.

Brooklyn LLC was determined to be the accounting acquirer

based upon the terms of the Merger and other factors including that (i) Brooklyn LLC members, received common stock in the Merger that represented 96.35 %

of Brooklyn’s outstanding common stock on a fully diluted basis, (ii) all of the directors of Brooklyn immediately after the Merger were designated by Brooklyn LLC under the terms of the Merger Agreement and (iii) existing members of Brooklyn

LLC’s management became the management of Brooklyn immediately after the Merger.

of Eterna’s outstanding common stock on a fully diluted basis, (ii) all of the directors of Eterna immediately after the Merger were designated by Brooklyn LLC under the terms of the Merger Agreement and (iii) existing members of Brooklyn LLC’s

management became the management of Eterna immediately after the Merger.

At the closing of the Merger, all the outstanding membership

interests of Brooklyn LLC converted into the right to receive an aggregate of approximately 39,992,000 shares of common stock, of

which 1,068,000 shares were issued as compensation to Maxim Group LLC, Brooklyn LLC’s financial advisor (the “Financial Advisor”) for

its services to Brooklyn LLC in connection with the Merger.

The purchase price of $ 8.2 million, which represents the consideration transferred in the Merger to stockholders of Brooklyn immediately before the Merger, was calculated

interests of Brooklyn LLC converted into the right to receive an aggregate of approximately 1,999,000 shares of common stock, of which

53,000 shares were issued as compensation to Brooklyn LLC’s financial advisor for its services to Brooklyn LLC in connection with the

The purchase price of $ 8.2 million, which represents the consideration transferred in the Merger to stockholders of Eterna immediately before the Merger, was calculated

based on the closing price of $ 108 per share for approximately 76,000 shares common stock that those stockholders owned on March 25, 2021 immediately prior to the Merger because that represented a more reliable measure of the fair value of

1 unchanged sentence

Under the acquisition method of accounting, the total

purchase price has been allocated to the acquired tangible and intangible assets and assumed liabilities of Brooklyn based on their estimated fair values as of March 25, 2021, the Merger closing date.

Because the consideration paid by Brooklyn

LLC in the Merger is more than the estimated fair values of Brooklyn’s net assets deemed to be acquired, goodwill is equal to the difference of approximately $ 8.6 million, which has been calculated using the fair values of the net assets of Brooklyn as of March 25, 2021.

purchase price has been allocated to the acquired tangible and intangible assets and assumed liabilities of Eterna based on their estimated fair values as of March 25, 2021, the Merger closing date.

Because the consideration paid by Brooklyn LLC

in the Merger is more than the estimated fair values of Eterna’s net assets deemed to be acquired, goodwill is equal to the difference of approximately $ 8.6

million, which has been calculated using the fair values of the net assets of Eterna as of March 25, 2021.

The allocation of the purchase price to the tangible and

intangible assets acquired and liabilities deemed to be assumed from Brooklyn, based on their estimated fair values as of March 25, 2021, is as follows (in thousands):

intangible assets acquired and liabilities deemed to be assumed from Eterna, based on their estimated fair values as of March 25, 2021, is as follows (in thousands):

March 25, 2021

4 unchanged sentences

Software development costs

Accounts payable, accrued liabilities and other current

Accounts payable, accrued liabilities and other current liabilities

Net assets acquired, excluding goodwill

6 unchanged sentences

million into Brooklyn LLC immediately prior to the closing of the Merger.

During March 2021, Brooklyn offered its Class A unit holders an additional 5 %

During March 2021, Eterna offered its Class A unit holders an additional 5 %

rights offering for an additional $ 0.5 million to be raised by a rights offering.

Brooklyn received funds from the rights offering

Eterna received funds from the rights offering

between February 17, 2021 and April 5, 2021.

On March 26, 2021, Brooklyn sold its rights, title and

interest in and to the assets relating to the business it operated (under the name NTN Buzztime, Inc.) prior to the Merger to eGames.com in exchange for a purchase price of $ 2.0 million and assumption of specified liabilities relating to that business.

On March 26, 2021, Eterna sold its rights, title and interest

in and to the assets relating to the business it operated (under the name NTN Buzztime, Inc.) prior to the Merger to eGames.com in exchange for a purchase price of $ 2.0 million and assumption of specified liabilities relating to that business.

The sale was completed in accordance with the terms of the Asset Purchase Agreement.

18 unchanged sentences

Total loss on sale of assets

On July 16, 2021, Brooklyn and Brooklyn Acquisition Sub, Inc.

entered into the Acquisition Agreement.

The Acquisition closed contemporaneously with the execution and delivery of the Acquisition Agreement.

On July 16, 2021, Eterna and Brooklyn Acquisition Sub, Inc.

entered into the Novellus Acquisition Agreement.

The Novellus Acquisition closed contemporaneously with the execution and delivery of the Novellus Acquisition Agreement.

At the closing:

Brooklyn acquired all of the outstanding equity interests of Novellus, Inc.

as the result of the merger of Brooklyn Acquisition Sub, Inc.

with and into Novellus, Inc., following which, Novellus, Inc., as

the surviving corporation, became Brooklyn’s wholly owned subsidiary and Novellus Ltd.

became Brooklyn’s indirectly owned subsidiary;

Brooklyn acquired 25.0 % of the total outstanding equity interests of NoveCite.

As consideration for the Acquisition, Brooklyn paid $ 22.9 million in cash and delivered approximately 7,022,000

shares of common stock, which under the terms of the Acquisition Agreement, were valued at a total of $ 102.0 million based on an agreed

upon price of $ 14.5253 per share.

Eterna acquired all of the outstanding equity interests of Novellus as the result of the merger of Brooklyn Acquisition Sub, Inc.

with and into Novellus, following which, Novellus, as the surviving

corporation, became Eterna’s wholly owned subsidiary and Novellus Ltd.

became Eterna’s indirectly owned subsidiary;

Eterna acquired 25.0 % of the total outstanding equity interests of NoveCite.

As consideration for the Novellus Acquisition, Eterna paid $ 22.9 million in cash and delivered approximately 351,000

shares of common stock, which under the terms of the Novellus Acquisition Agreement, were valued at a total of $ 102.0 million based on

an agreed upon price of $ 290.5060 per share.

At the date of issuance, the fair value of the shares was approximately $ 58.7 million.

The Acquisition Agreement contained customary

The Novellus Acquisition Agreement contained customary

representations, warranties and certain indemnification provisions.

Approximately 37,000 of the shares issued as consideration were

placed in escrow for a period of up to 12 months in order to secure indemnification obligations to Brooklyn under the Acquisition

The Acquisition Agreement also contains certain non-competition and non-solicitation provisions pursuant to which Novellus LLC agreed not to engage in certain competitive activities for a period of five years following the closing, including customary restrictions relating to employees.

placed in escrow to secure indemnification obligations to Eterna under the Novellus Acquisition Agreement, and all such shares were released to the sellers in July 2022.

The Novellus Acquisition Agreement also contains certain non-competition and

non-solicitation provisions pursuant to which Novellus LLC agreed not to engage in certain competitive activities for a period of five years

following the closing, including customary restrictions relating to employees.

No employees of Novellus Ltd.

or Novellus, Inc.

Acquisition continued their employment, or were otherwise engaged by Brooklyn, following the Acquisition.

In connection with the Acquisition, the co-founders of

Novellus, Inc.

entered into lock-up agreements with respect to approximately 3,378,000 of the shares of common stock received in the

Acquisition, and Brooklyn’s Chairman of the Board of Directors (the “Board”) and its former Chief Executive Officer and President entered into identical lock-up agreements with respect to their current holdings of Brooklyn stock.

agreement extends for a period of three years , provided that up to 75 % of the shares of common stock subject to the lock-up agreement may be released from the lock-up restrictions earlier if the price of common stock on the Nasdaq exceeds specified

or Novellus prior to the Novellus Acquisition continued their employment, or were otherwise engaged by Eterna, immediately following the

Novellus Acquisition.

In connection with the Novellus Acquisition, the co-founders

of Novellus entered into lock-up agreements with respect to approximately 169,000 of the shares of common stock received in the

Novellus Acquisition, and Eterna’s Chairman of the Board and its former Chief Executive Officer and President entered into identical lock-up agreements with respect to their current holdings of Eterna stock.

Each lock-up agreement extends for a

period of three years , provided that up to 75 % of the shares of common stock subject to the lock-up agreement may be released from the lock-up restrictions earlier if the price of common stock on the Nasdaq exceeds specified

The lock-up agreements include customary exceptions for transfers during the applicable lock-up period.

The Company expects the Acquisition will advance its

evolution into a platform company with a pipeline of next generation mRNA cellular and gene editing programs.

Company expects the Novellus Acquisition will advance its evolution into a platform company with a pipeline of next generation mRNA cellular and gene editing programs.

In addition, the acquisition of Novellus Ltd.

builds on the License Agreement

(See Note 9).

The completion of the acquisition of

Novellus, Ltd.

relieved Brooklyn LLC from potential obligations to pay Novellus, Ltd.

certain upfront fees, clinical development milestone fees and post-registration royalties under the License Agreement.

The agreement with Factor Bioscience

Limited (“Factor”) under the License Agreement, which grants Brooklyn LLC exclusive rights to develop certain next-generation mRNA gene editing and cell therapy products, remained unchanged.

Although Brooklyn acquired all of the outstanding equity

interests of Novellus, Inc., the Company accounted for the Acquisition as an asset acquisition (as the assets acquired did not constitute a business as defined in Accounting Standards Codification (“ASC”) Topic 805, Business Combinations ), and was measured by the amount of cash paid and by the fair value of the shares of common stock issued.

(as defined in Note 10).

As a result of the Novellus Acquisition, in accordance with the terms of the Novellus-Factor License Agreement, the rights and obligations of Novellus Ltd.

thereunder pertaining to any and all licensed products have

inured to Eterna.

The License Agreement with Factor Bioscience Limited (“Factor Limited”) under the License Agreement, which grants Brooklyn LLC exclusive rights to develop certain next-generation mRNA gene editing and cell therapy products,

remained unchanged after the completion of the Novellus Acquisition.

Although Eterna acquired all of the outstanding equity

interests of Novellus, the Company accounted for the Novellus Acquisition as an asset acquisition (as the assets acquired did not constitute a business as defined in Accounting Standards Codification (“ASC”) Topic 805, Business Combinations ), and was measured by the amount of cash paid and by the fair value of the shares of common stock issued.

As a result, substantially all of the value acquired was attributed to in-process research and

development (IPR&D), with the exception of the cash paid for the investment in NoveCite, which is being accounted for as an investment in equity securities, as discussed further below.

Brooklyn paid $ 22.9 million in cash, net of cash acquired, as part of the consideration for the Acquisition, of which $ 1.0 million was paid in cash for the investment in NoveCite.

Brooklyn also issued approximately 7,022,000 shares of the Company’s common stock, of which approximately 3,644,000 shares are unrestricted and 3,378,000

shares are subject to the three-year lockup.

The unrestricted shares were valued at $ 10.05 per share, which was the closing price of Brooklyn’s common stock on July 16, 2021.

The fair value of the restricted shares was discounted by approximately 35 % to $ 6.53 per restricted share,

which was derived from the average discount rate between the Black Scholes and Finnerty valuation models.

The resulting fair value of the asset acquired is as follows (in thousands):

Eterna paid $ 22.9 million in cash, net of cash acquired, as part of the consideration for the Novellus Acquisition, of which $ 1.0 million was paid in cash for the investment in NoveCite.

Eterna also issued approximately 351,000

shares of the Company’s common stock, of which approximately 182,000 shares are unrestricted and 169,000 shares are subject to the three-year

The unrestricted shares were valued at $ 201 per share, which was the closing price of Eterna’s common stock on July 16, 2021.

The fair value of the restricted shares was discounted by approximately 35 % to $ 130.60 per restricted share, which was derived from the average discount rate between the Black Scholes and Finnerty valuation models.

The resulting fair value of the asset acquired is as follows

(in thousands):

Fair Value of

11 unchanged sentences

Investment in NoveCite

As a result of the Acquisition, Brooklyn acquired and

currently owns 25 % of NoveCite and Citius Pharmaceuticals, Inc.

(“Citius”) owns the remaining 75 %.

A member of the Company’s management holds one of three

board seats on NoveCite’s board of directors.

a result of the Novellus Acquisition, Eterna acquired and currently owns 25 % of NoveCite and Citius Pharmaceuticals, Inc.

owns the remaining 75 %.

A member of the Company’s management is entitled to hold one of three board seats on NoveCite’s board of directors.

Citius’ s officers and directors hold the other two board seats.

The Company is accounting for its interest in NoveCite under ASC Topic 323, Investments – Equity

Method and Joint Ventures .

The investment was recorded at cost, which was $ 1.0 million and is adjusted for the Company’s share

of NoveCite’s earnings or losses, which are reflected in the accompanying condensed consolidated statement of operations.

The Company is accounting for its interest in NoveCite

under ASC Topic 323, Investments – Equity Meth od and Joint Ventures .

The investment was recorded at cost, which was $ 1.0 million and is adjusted for the Company’s share of NoveCite’s earnings or losses, which are reflected in the accompanying condensed consolidated statement of operations.

The investment may also reflect an equity loss in the event that circumstances indicate an other-than-temporary impairment.

For the three and six months ended June 30, 2022, the Company recorded $ 0.3 million and $ 0.9 million, respectively, in losses from its investment in NoveCite, and of the $ 0.9

million loss for the six months ended June 30, 2022, $ 0.5 million related to NoveCite’s year ended December 31, 2021.

For the three and nine months ended September 30, 2022, the Company recorded approximately $ 21,000 and $ 0.9 million, respectively,

in losses from its investment in NoveCite, and of the $ 0.9 million loss for the nine months ended September 30, 2022, $ 0.5 million related to NoveCite’s year ended December 31, 2021.

The Company does not guarantee obligations of NoveCite nor is it otherwise committed

to providing further financial support for NoveCite.

Therefore, the Company will record losses only up to its investment carrying amount.

FAIR VALUE OF FINANCIAL INSTRUMENTS

9 unchanged sentences

3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions.

The following tables summarize the liabilities that are measured at fair value as of June 30, 2022 (in thousands).

There were no liabilities measured at fair value as of Decem ber 31, 2021:

As of June 30,

Warrant liabilities - Pre-Funded Warrants

T here were no liabilities measured at fair value as of Decem ber 31, 2021.

The following tables summarize the liabilities that are measured at fair value as of September 30, 2022 (in thousands) :

As of September 30,

Warrant liabilities - Common Warrants

March 9, 2022, the Company issued pre-funded warrants exercisable for approximately 68,000 shares of common stock (the “Pre-Funded

Warrants”) and warrants exercisable for approximately 6,857,000 shares of common stock (the “Common Warrants”) in connection with the

PIPE Transaction (as defined below).

Warrants”) and warrants exercisable for approximately 343,000 shares of common stock (the “Common Warrants”) to the PIPE Investor in

connection with the PIPE Transaction (as each such term is defined in Note 12).

On July 12, 2022, the PIPE Investor exercised its 68,000

Pre-Funded Warrants at an exercise price of $ 0.10 per share for an aggregate exercise price of approximately $ 7 ,000 in cash.

The Company issued 68,000

shares of common stock to the PIPE Investor on July 14, 2022 upon receipt of the cash proceeds.

Following the exercise, no Pre-Funded

Warrants remained outstanding.

See Note 12 for more information related to the PIPE Transaction.

2 unchanged sentences

These warrant

liabilities were measured at fair value at inception and are then subsequently measured on a recurring basis, with changes in fair value presented within the Company’s statement of operations.

liabilities were measured at fair value at inception and are then subsequently measured on a recurring basis, with changes in fair value presented within the Company’s statements of operations.

The Company uses a Black-Scholes option pricing model to estimate the fair value of the Common

4 unchanged sentences

Company’s consolidated statement of operations.

The estimated fair value of the Pre-Funded Warrants was deemed a Level 2 measurement as of June 30, 2022, as all significant inputs to the valuation model used to estimate the fair value of the Pre-Funded Warrants

were directly observable from the Company’s publicly-traded common stock.

The estimated fair value of the Pre-Funded Warrants was deemed a Level 2 measurement as all significant inputs to the valuation model used to estimate the fair value of the Pre-Funded Warrants were directly

observable from the Company’s publicly-traded common stock.

Upon exercise of the Pre-Funded Warrants on July 12, 2022, the Company reclassified the fair value of the Pre-Funded Warrants to equity as of such date.

The fair values of the Common Warrants and the Pre-Funded Warrants at the issuance date totaled $ 12.6 million in the aggregate, which was $ 0.6 million more

than the $ 12.0 million proceeds received in the PIPE Transaction.

The excess $ 0.6 million represents an inducement to the purchaser to enter into the PIPE Transaction and was recorded in warrant liabilities expense in the accompanying consolidated statement of

The excess $ 0.6 million represents an inducement to the purchaser to enter into the PIPE Transaction and was recorded in warrant liabilities expense in the accompanying consolidated

statement of operations.

Given the Company’s capital requirements and market conditions, the Company consummated this financing on market terms available at the time of the transaction.

The Company remeasured the fair value of the warrant liabilities as of June 30, 2022, and the following table presents the changes in the

warrant liabilities from the issuance date (in thousands):

The Company remeasured the fair value of the Common Warrants as of September 30, 2022.

The following table presents the changes in the warrant

liabilities from the issuance date (in thousands):

Common Warrants

Total Warrant

2 unchanged sentences

Change in fair value of warrant liabilities

Fair value at June 30, 2022

The Company has operating leases for office and laboratory space in the borough of

Manhattan in New York, New York and in Cambridge, Massachusetts, which expire in 2026 and 2028, respectively.

On March 31, 2022, the Company entered into the Torrey Pines Science Center Lease in San Diego, California (the “San Diego Lease”) with Torrey Pines Science Center Limited Partnership for approximately 5,200

square feet of lab and office space.

The term of the San Diego Lease is 62 months and the lease commencement date was April 19, 2022.

Exercise of pre-funded warrants

Fair value at September 30, 2022

Operating Leases

The Company has operating leases for office and laboratory space in the borough of Manhattan in New York, New York and in Cambridge, Massachusetts, which expire in 2026 and 2028, respectively.

On March 31, 2022, the

Company entered into a facility lease in San Diego, California (the “San Diego Lease”) with Torrey Pines Science Center Limited Partnership for approximately 5,200 square feet of laboratory and office space.

The term of the San Diego Lease is 62 months and

the lease commencement date was April 19, 2022.

The San Diego Lease will expire in June 2027.

See Note 15 for information regarding an additional lease the Company entered into in October 2022.

Base rent for the San Diego Lease is $ 6.35

6 unchanged sentences

for the San Diego Lease.

During the second quarter of 2022, the Company made the decision to consolidate its research and

development efforts in Cambridge, Massachusetts, and the Company intends to sublease the San Diego lab and office space.

As a result, the Company recognized an impairment charge of approximately $ 0.8 million on the San Diego Lease ROU asset.

During the second quarter of 2022, the Company decided to

consolidate its research and development efforts in Cambridge, Massachusetts, and the Company intends to sublease the San Diego laboratory and office space.

As a result, the Company recognized an impairment charge of approximately $ 0.8 million on the San Diego Lease ROU asset during the nine months ended September 30, 2022, which is recorded in general and administrative expense on the condensed

consolidated statements of operations.

There was no impairment charge recognized for the three months ended September 30, 2022.

On March 5, 2022, the Company entered into an Agreement to Assign Space Lease with Regen Lab USA LLC (“Regen”) pursuant to which the Company

1 unchanged sentence

The effective date of the assignment was contingent upon, among other things, a consent from BioBat, Inc.

(the “Landlord”) to assign the Brooklyn Lease.

Additionally,

Regen agreed to purchase certain equipment from the Company for $ 50,000 , partly reimburse the Company $ 50,000 toward certain existing unamortized leasehold improvements, and to reimburse the Company for the existing security deposit the Company had

under the Brooklyn Lease of approximately $ 63,000 .

On March 25, 2022, the Company entered into an Assignment and Assumption of Lease Agreement (the

“Assignment Agreement”) with Regen, the consent of which was provided by the Landlord in the Assignment Agreement.

(the “Landlord”).

Additionally, Regen agreed to purchase

certain equipment from the Company for $ 50,000 , partly reimburse the Company $ 50,000 toward certain existing unamortized leasehold improvements, and to reimburse the Company for the existing security deposit the Company had under the Brooklyn Lease of approximately

O n March 25, 2022, the Company entered into an Assignment and Assumption of Lease Agreement (the “Assignment Agreement”) with Regen,

which included the Landlord’s consent to the assignment.

The effective date of the assignment was March 28, 2022.

Under the Assignment Agreement, Regen (i) accepts the assignment of

the Brooklyn Lease;

(ii) assumes all of the obligations, liabilities, covenants and conditions of the Company’s as tenant under the Brooklyn Lease;

(iii) assumes and agrees to perform and observe all of the obligations, terms, requirements,

covenants and conditions to be performed or observed by the Company under the Brooklyn Lease;

and (iv) makes all of the representations and warranties binding under the Brooklyn Lease with the same force and effect as if Regens had executed

the Brooklyn Lease originally as the tenant.

Notwithstanding the above assumptions by Regen, the Company shall be and remain liable and

responsible for the due keeping, and full performance and observance, of all the provisions of the Brooklyn Lease on the part of the tenant to be kept, performed and observed.

As a result of the Assignment Agreement, the Company wrote off

the remaining ROU asset balance and the corresponding lease liability.

Under the Assignment Agreement, Regen (i) accepted the assignment of the Brooklyn Lease;

(ii) assumed all of the obligations,

liabilities, covenants and conditions of the Company’s as tenant under the Brooklyn Lease;

(iii) assumed and agreed to perform and observe all of the obligations, terms, requirements, covenants and conditions to be performed or observed by

the Company under the Brooklyn Lease;

and (iv) made all of the representations and warranties under the Brooklyn Lease with the same force and effect as if Regen had executed the Brooklyn Lease originally as the tenant.

N otwithstanding Regen’s assumption of the Brooklyn Lease, the Company remains liable and responsible for the due keeping, and full

performance and observance, of all the provisions of the Brooklyn Lease applicable to the tenant thereunder.

As a result of the Assignment Agreement, the Company wrote off the remaining ROU asset balance and the corresponding lease liability .

The Company accounts for leases under ASC 842, Leases .

14 unchanged sentences

Accordingly, all expenses associated with a lease contract are accounted for as lease expenses.

During the three and six months ended June 30, 2022 and 2021, the net operating lease expenses were as follows (in thousands):

Three months ended June 30,

During the three and nine months ended September 30, 2022 and 2021, the net operating lease expenses were as follows (in thousands):

Three months ended September 30,

Operating lease expense

2 unchanged sentences

Total lease expense

Six months ended June 30,

Nine months ended September 30,

Operating lease expense

3 unchanged sentences

The tables below show the beginning

balances of the operating ROU assets and lease liabilities as of January 1, 2022 and the ending balances as of June 30, 2022, including the changes during the period (in thousands).

balances of the operating ROU assets and lease liabilities as of January 1, 2022 and the ending balances as of September, 2022, including the changes during the period (in thousands).

Operating Lease

4 unchanged sentences

Impairment of ROU assets

Remeasurement of ROU asset

Write off of ROU asset due to lease termination

Operating lease ROU assets at

June 30, 2022

September 30, 2022

Operating Lease

6 unchanged sentences

Operating lease liabilities at

June 30, 2022

September 30, 2022

Less non-current portion

Current portion at June 30, 2022

As of June 30, 2022, the Company’s operating leases had a weighted-average remaining

life of 5.2 years with a weighted-average discount rate of 8.97 %.

Current portion at September 30,

As of September 30, 2022, the Company’s operating leases had a weighted-average

remaining life of 4.9 years with a weighted-average discount rate of 8.97 %.

The maturities of the operating lease liabilities are as follows (in thousands):

June 30, 2022

September 30,

Total payments

4 unchanged sentences

The Company recorded IPR&D in the

amount of $ 6.0 million, which represents the fair value assigned to technologies that were acquired in connection with the IRX

amount of $ 6.0 million, which represented the fair value assigned to technologies that were acquired in connection with the IRX

acquisition and which have not reached technological feasibility and have no alternative future use.

9 unchanged sentences

that indicate that the fair value of the entity is less than its carrying values.

As of June 30, 2022, the Company performed a qualitative assessment to determine whether it is more likely than not that the fair value of the

entity is less than its carrying value.

Such qualitative factors include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events.

In June 2022, the Company received results from the INSPIRE phase 2 trial of IRX-2, a multi-cytokine biologic immunotherapy, in patients with newly diagnosed stage II, III or IVA squamous cell carcinoma of the oral

4 unchanged sentences

the treatment effect of IRX-2 in patient subgroups and in combination with checkpoint inhibitor therapies.

The INSPIRE trial is the only Company-sponsored study of IRX-2.

The INSPIRE trial was the only Company-sponsored study of IRX-2.

IRX-2 has been studied externally in other clinical settings outside of

2 unchanged sentences

product candidate.

As such, the Company determined that the carrying value of the IPR&D asset was impaired and recognized a non-cash impairment charge of approximately $ 6.0 million on the condensed consolidated statement of operations for the three and six months ended June 30, 2022, which reduced the value of the asset to zero .

The Company also determined that there were qualitative indications of a goodwill impairment, namely the Company’s stock price declined from $ 2.05 per share as of March 31, 2022 to $ 0.52 per share as of June 30,

Accordingly, the Company proceeded to the first step in the quantitative assessment of impairment and determined that the fair value of the reporting unit exceeded the carrying amount of the reporting unit, and therefore, the goodwill

was no t impaired as of June 30, 2022 .

As such, the Company determined that the carrying value of the IPR&D asset was impaired and recognized a non-cash impairment charge of approximately $ 6.0 million on the condensed consolidated statement of operations during the second quarter of 2022, which reduced the value of the asset to zero .

As of September 30, 2022, the Company performed a qualitative assessment to determine whether it was more likely than not that the fair value of

the entity is less than its carrying value of goodwill.

Such qualitative factors include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events.

As a result of the

decline in the Company’s stock price from $ 10.40 per share as of June 30, 2022 to $ 4.94 per share as of September 30, 2022, the Company determined that there were indications of impairment.

Accordingly, the Company proceeded to the first step in the

quantitative assessment of impairment and determined that the fair value of the reporting unit exceeded the carrying amount of goodwill, and therefore, the goodwill was no t impaired as of September 30, 2022.

CEO SEPARATION AGREEMENT

7 unchanged sentences

Federoff resigned from his positions as Chief Executive Officer and as an officer, director and employee of the Company and all subsidiaries.

Federoff’s resignation from the Board was not due to any disagreement with

the Company on any matter relating to the Company’s operations, policies or practices.

Federoff’s resignation from the Board was not due to any disagreement with the

Company on any matter relating to the Company’s operations, policies or practices.

In consideration for Dr.

Federoff’s execution of the Separation Agreement and non-revocation of a waiver and release of claims relating thereto, Dr.

will receive following benefits under the Separation Agreement:

Federoff will

receive following benefits under the Separation Agreement:

a lump sum cash severance benefit in the amount of $ 0.2 million, representing Dr.

6 unchanged sentences

together with outstanding options that vested prior to the separation date, representing collectively approximately 76,000

shares of common stock, may be exercised for a period of thirty-six months after the separation date.

(See Note 10 for

shares of common stock, may be exercised for a period of thirty-six months after the separation date (see Note 11 for

modification accounting impact);

acceleration and vesting of 25/36 th of the Milestone Grant options, representing collectively approximately 21,000 shares of

common stock, may be exercised for a period of thirty-six months after the separation date.

(See Note 10 for modification

common stock, may be exercised for a period of thirty-six months after the separation date (see Note 11 for modification

accounting impact);

8 unchanged sentences

subject matter of the agreement, including those with respect to severance payments and benefits.

ACCRUED EXPENSES

RELATED PARTY TRANSACTIONS

On September 9, 2022, the Company entered into

a Master Services Agreement (the “MSA”) with Factor Bioscience Inc.

(“Factor”), pursuan t to which Factor has agreed to provide services to the Company as agreed between the Company and Factor and as set forth in one or more work orders under

the MSA, including the first work order included in the MSA.

Under the first work order, Factor has agreed to provide the Company with mRNA cell engineering research support services, including access to certain facilities, equipment, materials and

training, and the Company has agreed to pay Factor an initial fee of $ 5.0 million, payable in twelve equal monthly installments of approximately $ 0.4 million.

Following the initial 12-month period, the Company has agreed to pay Factor a monthly fee of $ 0.4 million until such time as the first work

order under the MSA is terminated.

The Company paid a deposit of $ 0.4 million, which will be applied to the last month of the first work

Company may terminate the first work under the MSA on or after the second anniversary of the date of the MSA, subject to providing Factor with 120

days’ prior notice.

Factor may terminate such work order only on and after the fourth anniversary of the date of the MSA, su bject to providing the Company with 120 days’ prior notice.

The MSA contains customary confidentiality provisions and representations and warranties of the parties, and the MSA may be terminated by ether party

upon 30 days’ prior notice, subject to any superseding termination provisions contained in a particular work order.

In connection with entering into the MSA, on September

9, 2022, Factor’s subsidiary, Factor Limited, entered into a waiver agreement (the “Waiver Agreement”) with Brooklyn LLC, pursuant to which Factor Limited agreed to waive payment of $ 3.5 million otherwise payable to it (the “License Fee Obligation”) in October 2022 by Brooklyn LLC under a license agreement by and among Factor Limited, Novellus Ltd., and

Brooklyn LLC.

See Note 10, License Agreements , for more information on this

Under the terms of the Waiver Agreement, the License Fee Obligation is waived conditionally on the Company paying Factor Inc.

amounts due under the MSA.

result of entering into the Waiver Agreement and the MSA on September 9, 2022, the Company recognized $ 3.5 million in research and

development expense, as the license does not have an alternative future use, and a corresponding liability.

September 1, 2022, Novellus and Eterna entered into a Second Amendment to the Limited Waiver and Assignment Agreement (the “Waiver and Assignment Agreement”) with Drs.

Matthew Angel and Christopher Rohde (the “Founders”) whereby the Company has

agreed to be responsible for all future, reasonable and substantiated legal fees, costs, settlements and judgments incurred by the Founders, the Company or Novellus for certain claims and actions and any pending or future litigation brought against

the Founders, Novellus and/or the Company by or on behalf of the Westman and Sowydra legal matters described in Note 10 (the “Covered Claims”).

The Founders will continue to be solely responsible for any payments made to satisfy a judgement or

settlement of any pending or future wage act claims.

Under the Waiver and Assignment Agreement, the Founders agreed that they are not entitled to, and waived any right to, indemnification or advancement of past, present or future legal fees, costs,

judgments, settlement or other liabilities they may have been entitled to receive from the Company or Novellus in respect of the Covered Claims.

The Company and the Founders will share in any recoveries up to the point at which the parties have

been fully compensated for legal fees, costs and expenses incurred, with the Company retaining any excess recoveries.

The Company has the sole authority to direct and control the prosecution, defense and settlement of the Covered Claims.

On Sept ember

6, 2022, the Company entered into an

assignment and assumption of contracts agreement (the “Assignment and Assumption Agreement”) with Factor, pursuant to which the Company assumed certain contracts with third parties that Factor had previously entered into in anticipation of

entering into a sublease for premises in Somerville, Massachusetts.

In October 2022, the Company entered into a sublease for the premises (see Note 15).

Under the Assignment and Assumption Agreement, the Company agreed to reimburse Factor

for costs already incurred or paid by it under the assumed contracts in the amount of approximately $ 0.1 million, and the Company

assumed the future obligations under these contracts, which relate to the design and build-out of the subleased space.

MSA, any work orders under the MSA, the Waiver Agreement, the Waiver and Assignment Agreement, and the Assignment and Assumption Agreement have been deemed related party transactions, as the Company’s Interim Chief Executive Officer, Dr.

Matthew Angel, is also the Chairman and Chief Executive Officer of Factor and the Director of Factor Limited.

ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses consisted of the following (in thousands):

September 30,

Accrued compensation

2 unchanged sentences

Total accrued expenses

Accrued compensation includes $ 1.0 million of severance, of which, approximately $ 0.5

million relates to severance for Dr.

Other liabilities consisted of the following (in thousands):

September 30,

Current portion of License Fee Obligation

Insurance policy premiums

Total other current liabilities

Long term portion of License Fee Obligation

Total other liabilities

Accrued compensation at September 30,

2022 includes approximately $ 1.0 million of severance, of which, approximately $ 0.3 million relates to severance for Dr.

Federoff pursuant to the Separation Agreement discussed above.

Accrued general and administration expenses includes $ 1.2 million for legal-related matters.

Accrued general and administration expenses at

September 30, 2022 includes $ 0.6 million for legal-related matters.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

The Company is involved in litigation and arbitrations from time to time in the ordinary course of business.

Legal fees and other costs

associated with such actions are expensed as incurred.

Legal fees and other costs associated

with such actions are expensed as incurred.

In addition, the Company assesses the need to record a liability for litigation and contingencies.

The Company reserves for costs relating to these matters when a loss is probable, and the

amount can be reasonably estimated.

The Company reserves for costs relating to these matters when a loss is probable, and the amount can be

reasonably estimated.

Dhesh Govender v.

1 unchanged sentence

650847/2021 (N.Y.

On or about February 5, 2021, Dhesh Govender, a former short-term consultant of Brooklyn LLC, filed a complaint against Brooklyn LLC and certain individuals that plaintiff alleges were directors of Brooklyn LLC.

The complaint is

captioned, Dhesh Govender v.

or about February 5, 2021, Dhesh Govender, a former short-term consultant of Brooklyn LLC, filed a complaint against Brooklyn LLC and certain individuals that plaintiff alleges were directors of Brooklyn LLC.

The complaint is captioned, Dhesh

Brooklyn Immunotherapeutics, LLC, et al., Index No.

650847/2021 (N.Y.

Plaintiff alleges that Brooklyn LLC and certain of its officers and directors (“defendants”) engaged in unlawful and

discriminatory conduct based on race, national origin and hostile work environment.

Plaintiff also asserts various breach of contract, fraud and quantum meruit claims based on an alleged oral agreement pursuant to which he alleges Brooklyn

LLC agreed to hire him as an executive once the Merger was completed.

In particular, plaintiff alleges that, in exchange for transferring an opportunity to obtain an agreement to acquire a license from Novellus for its mRNA-based gene editing

and cell reprogramming technology to Brooklyn LLC, he was promised a $ 0.5 million salary and 7 % of the equity of Brooklyn LLC.

Plaintiff alleges that Brooklyn LLC and certain of its officers and directors (“defendants”) engaged in unlawful and discriminatory

conduct based on race, national origin and hostile work environment.

Plaintiff also asserts various breach of contract, fraud and quantum meruit claims based on an alleged oral agreement pursuant to which he alleges Brooklyn LLC agreed to hire

him as an executive once the Merger was completed.

In particular, plaintiff alleges that, in exchange for transferring an opportunity to obtain an agreement to acquire a license from Novellus for its mRNA-based gene editing and cell

reprogramming technology to Brooklyn LLC, he was promised a $ 0.5 million salary and 7 % of the equity of Brooklyn LLC.

Based on these and other allegations, plaintiff seeks damages of not less than $ 10 million .

By Order dated November 10, 2021, the Court granted defendants’ motion to compel Govender to arbitrate all of his claims against them, based on the arbitration clause

of his consulting agreement with Brooklyn LLC.

By Order dated November 10, 2021, the Court granted defendants’ motion to compel Govender to arbitrate all of his claims against them, based on the arbitration clause of his consulting agreement with Brooklyn

Govender thereafter filed his Statement of Claim (the “Demand”) with the American Arbitration Association (“AAA”), Case No.

01-21-0017-9417, on December 15, 2021 against the same defendants,

and served it on defendants’ counsel on February 3, 2022.

In his Demand, Govender continues to assert statutory discrimination claims against all defendants, claims against Brooklyn LLC premised on the breach of an alleged oral promise to

issue Govender 7 % of the equity of Brooklyn LLC and to employ Govender at a $ 0.5 million annual salary in exchange for allegedly arranging and negotiating the Novellus license, common law fraud claims against Brooklyn LLC and Cherington based on

the breach of these same promises and a claim for quantum meruit against the Brooklyn LLC.

01-21-0017-9417, on December 15, 2021 against the same defendants, and served it on defendants’ counsel on

February 3, 2022.

In his Demand, Govender continues to assert statutory discrimination claims against all defendants, claims against Brooklyn LLC premised on the breach of an alleged oral promise to issue Govender 7 % of the equity of Brooklyn LLC and to employ Govender at a $ 0.5 million annual salary in exchange for allegedly arranging and negotiating the Novellus license, common law fraud claims against Brooklyn LLC and Cherington based on the breach of these same promises and a

claim for quantum meruit against the Brooklyn LLC.

In his Demand, Govender now claims that the fair and reasonable value of his services on the quantum meruit claim exceeded $ 100 million and is seeking damages in an amount to be determined at the hearing.

Defendants filed an answering statement to the Demand on

February 28, 2022 and the parties have selected a three -member arbitration panel.

arbitration is scheduled to begin December 5, 2022.

Defendants filed an answering statement to the Demand on February 28, 2022 and the

parties have selected a three -member arbitration panel.

The date on which arbitration is

scheduled to begin has not yet been set.

Defendants intend to vigorously defend themselv es against these claims.

At this stage in the litigation, the Company is not able to predict the probability of a favorable

or unfavorable outcome.

At this stage in the litigation, the Company is not able to predict the probability of a favorable or unfavorable

Emerald Private Equity Fund, LLC Matter

By a letter dated July 7, 2021, Emerald Private Equity Fund, LLC (“Emerald”), a stockholder of Brooklyn, made a demand pursuant

220 to inspect certain books and records of Brooklyn.

The stated purpose of the demand was to investigate possible wrongdoing by persons responsible for the implementation of the Merger and the issuance of paper

stock certificates, including investigating whether:

(i) Brooklyn’s stock certificates were issued in accordance with the Merger Agreement;

(ii) certain restrictions on the sale of Brooklyn common stock following the Merger were

proper and applied without favor;

(iii) anyone received priority in post-Merger issuances of Brooklyn’s stock certificates that allowed them to benefit from an increase in the trading price of Brooklyn’s common stock;

it should pursue

remedial measures and/or report alleged misconduct to the SEC.

Brooklyn responded to the demand letter and produced certain information to Emerald in connection with the demand, which is subject to the terms of a

confidentiality agreement entered into among the parties, including certain additional stockholders who subsequently joined as parties to such agreement.

In October 2021, Emerald requested that Brooklyn produce additional

information related to the authority, purpose and justification for the restriction imposed on the sale of Brooklyn common stock following the Merger and the timing of share delivery to Brooklyn stockholders, following which

request Brooklyn agreed to produce certain additional information and emails relating to these topics.

By a letter dated July 7, 2021, Emerald Private Equity Fund, LLC (“Emerald”), a stockholder of Eterna, made a demand pursuant to 8

220 to inspect certain books and records of Eterna.

The stated purpose of the demand was to investigate possible wrongdoing by persons responsible for the implementation of the Merger and the issuance of paper stock

certificates, including investigating whether:

(i) Eterna’s stock certificates were issued in accordance with the Merger Agreement;

(ii) certain restrictions on the sale of Eterna common stock following the Merger were proper and

applied without favor;

(iii) anyone received priority in post-Merger issuances of Eterna’s stock certificates that allowed them to benefit from an increase in the trading price of Eterna’s common stock;

and (iv) it should pursue remedial

measures and/or report alleged misconduct to the SEC.

Eterna responded to the demand letter and produced certain information to Emerald in connection with the demand, which is subject to the terms of a confidentiality agreement

entered into among the parties, including certain additional stockholders who subsequently joined as parties to such agreement.

In October 2021, Emerald requested that Eterna produce additional information related to the

authority, purpose and justification for the restriction imposed on the sale of Eterna common stock following the Merger and the timing of share delivery to Eterna stockholders, following which request Eterna agreed to produce

certain additional information and emails relating to these topics.

On March 30, 2022, counsel to Emerald advised the Company that it was prepared to file suit against the Company, certain current and former directors of the

1 unchanged sentence

of fiduciary duty, conversion and aiding and abetting breach of fiduciary duty.

Emerald’s counsel expressed a willingness to engage in private pre-suit early resolution discussions with the Company and its financial advisor

on behalf of individual stockholders whom counsel represents in addition to Emerald (collectively, the “Emerald Plaintiffs”);

and the Company engaged in such discussions in lieu of incurring the legal costs anticipated in

respect of litigating the Emerald Plaintiffs’ claims, all of which the Company disputes.

Following such discussions, with no admission of wrongdoing, the Company and the Emerald Plaintiffs entered into a

confidential settlement agreement, pursuant to which the Company agreed to pay $ 1.2 million in full settlement of

all of the Emerald Plaintiffs’ purported claims, including a release by the Emerald Plaintiffs in favor of the Company in respect of any and all such claims .

subsequently made such payment.

Emerald’s counsel expressed a willingness to engage in private pre-suit early resolution discussions with the Company and its financial advisor on

behalf of individual stockholders whom counsel represents in addition to Emerald (collectively, the “Emerald Plaintiffs”);

and the Company engaged in such discussions in lieu of incurring the legal costs anticipated in respect

of litigating the Emerald Plaintiffs’ claims, all of which the Company disputes.

Following such discussions, with no admission of wrongdoing, the Company and the Emerald Plaintiffs entered into a confidential

settlement agreement, pursuant to which the Company paid $ 1.2 million in full settlement of all of the Emerald

Plaintiffs’ purported claims, including a release by the Emerald Plaintiffs in favor of the Company in respect of any and all such claims .

John Westman v.

2 unchanged sentences

On or about September 7, 2021, John Westman, a former employee of Novellus, Inc.

filed a Complaint in Middlesex

County (Massachusetts) Superior Court against Novellus, Inc.

filed a Complaint in Middlesex County

(Massachusetts) Superior Court against Novellus, Inc.

and the company’s founders and former executives, Dr.

1 unchanged sentence

Matthew Angel (collectively, “Defendants”).

The case includes allegations that

Novellus, Inc.

The case includes allegations that Novellus,

violated the Massachusetts Wage Act.

Brooklyn acquired Novellus, Inc.

Eterna acquired Novellus, Inc.

on July 16, 2021.

Westman’s claims relate to alleged conduct that took place before Brooklyn acquired Novellus, Inc.

liability in association with any Wage Act claims have been assumed by Dr.

Westman’s claims relate to alleged conduct that took place before Eterna acquired Novellus, Inc.

Defense and liability in

association with any Wage Act claims have been assumed by Dr.

Rohde and Dr.

On December 24, 2021, Westman dismissed the case without prejudice so the parties could mediate the matter.

February 2022 mediation was unsuccessful and the dispute is currently pending in arbitration.

The parties’ February 2022

mediation was unsuccessful and the dispute is currently pending in arbitration.

Novellus, Inc .

2 unchanged sentences

On October 25, 2021 Novellus, Inc.

filed a complaint in the Superior Court of

Massachusetts, Suffolk County, against former Novellus, Inc.

employees Paul Sowyrda and John Westman and certain other former investors in Novellus LLC (Novellus, Inc.’s former parent company prior to the Company’s

acquisition of Novellus, Inc.), alleging breach of fiduciary duty, breach of contract and civil conspiracy.

Brooklyn acquired Novellus, Inc.

filed a complaint in the Superior Court of Massachusetts,

Suffolk County, against former Novellus, Inc.

employees Paul Sowyrda and John Westman and certain other former investors in Novellus LLC (Novellus, Inc.’s former parent company prior to the Company’s acquisition of Novellus,

Inc.), alleging breach of fiduciary duty, breach of contract and civil conspiracy.

Eterna acquired Novellus, Inc.

on July 16, 2021.

On May 27, 2022 Novellus, Inc.

amended the complaint to withdraw

all claims against all defendants except Paul Sowyrda and John Westman.

On July 1, 2022, Westman filed a motion to compel arbitration or in the alternative, to stay the litigation pending the disposition of certain

litigations in the Court of Chancery for the State of Delaware filed by Mr.

amended the complaint to withdraw all claims against all

defendants except Paul Sowyrda and John Westman.

On July 1, 2022, Westman filed a motion to compel arbitration or in the alternative, to stay the litigation pending the disposition of certain litigation in the Court of

Chancery for the State of Delaware filed by Mr.

Sowyrda against Novellus LLC, Dr.

5 unchanged sentences

Novellus LLC , C.A.

2021-0882-NAC (the “Delaware

On July 1, 2022, Sowyrda answered the complaint and asserted counterclaims against Novellus, Inc, and third-party defendants Dr.

2021-0882-NAC (the “Delaware Actions”).

On July 1, 2022,

Sowyrda answered the complaint and asserted counterclaims against Novellus, Inc, and third-party defendants Dr.

Matthew Angel and Dr.

Christopher Rohde alleging violations of the Massachusetts

Wage Act, Massachusetts Minimum Fair Wage Law, the Fair Labor Standards Act, breach of contract, unjust enrichment and quantum meruit.

Christopher Rohde alleging violations of the Massachusetts Wage Act, Massachusetts Minimum

Fair Wage Law, the Fair Labor Standards Act, breach of contract, unjust enrichment and quantum meruit.

Sowyrda also joined in Westman’s motion to stay the case pending the Delaware Actions.

Novellus, Inc.’s claims and Mr.

Sowyrda’s counterclaims relate to alleged conduct that took place before Brooklyn acquired Novellus, Inc.

Sowyrda’s counterclaims relate to alleged conduct that took place before Eterna acquired Novellus, Inc.

Defense and liability in association with any Wage Act claims have been assumed by Dr.

Rohde and Dr.

The Company believes that the plaintiffs ’ claims in the foregoing matters are without merit, and the Company intends to defend against them vigorously .

filed its opposition to Sowyrda and Westman’s motions on August 19, 2022.

On September 9, 2022, Westman and Sowyrda filed replies in support of their motions and requested to be heard.

The hearing is scheduled for November

Under applicable Delaware law and Novellus Inc.’s organizational documents, the Company may be required to advance or reimburse certain legal

1 unchanged sentence

in connection with the foregoing Westman and Sowyrda matters.

However, a future advance or reimbursement is not currently probable nor can it be reasonably

Licensing Agreements

Brooklyn LLC has license agreements with University

of South Florida Research Association, Inc.

Brooklyn LLC has license agreements with University of

South Florida Research Association, Inc.

(“USF”), granting Brooklyn LLC the right to sell, market, and distribute IRX-2, subject to a 7 %

5 unchanged sentences

Novellus Ltd.

and Factor Limited

In December 2020, Brooklyn LLC entered into option agreements (the

“Option Agreements”) with Novellus Ltd.

and Factor (together, the “Licensors”) to obtain the right to exclusively license the Licensors’ intellectual property and mRNA cell reprogramming and gene editing technology for use in the

and Factor Limited (together, the “Licensors”) to obtain the right to exclusively license the Licensors’ intellectual property and mRNA cell reprogramming and gene editing technology for use in the

development of certain cell-based therapies to be evaluated and developed for treating human diseases, including certain types of cancer, sickle cell disease, and beta thalassemia (the “Licensed Technology”).

The option was exercisable

before February 28, 2021 (or April 30, 2021 if the Merger had not closed by that date) and required Brooklyn LLC to pay a non-refundable option fee of $ 0.5 million and then an initial license fee of $ 4.0 million (including the non-refundable fee of $ 0.5 million) in order to exercise the option.

In April 2021, Brooklyn LLC and the Licensors amended the Option Agreements to extend the exercise period to May 21, 2021 and to require Brooklyn, LLC to pay a

total $ 1.0 million of the $ 4.0

million initial license fees to the Licensors by April 15, 2021.

In April 2021, Brooklyn LLC and the Licensors entered into an exclusive license agreement (the “License Agreement”) pursuant to which Brooklyn LLC acquired an exclusive worldwide license to the Licensed Technology for

use in the development of certain mRNA, gene-editing, and cellular therapies to be evaluated and developed for treating human diseases, including certain types of cancer, sickle cell disease, and beta thalassemia.

terms of the License Agreement, Brooklyn LLC is obligated to pay the Licensors a total of $ 4.0 million in connection with

the execution of the License Agreement, all of which was paid as of June 2021.

The completion of the acquisition of Novellus, Ltd.

relieved Brooklyn LLC from potential obligations to pay Novellus, Ltd.

certain upfront fees, clinical

development milestone fees and post-registration royalties under the License Agreement.

The agreement with Factor under the License Agreement, which grants Brooklyn LLC exclusive rights to develop certain next-generation mRNA gene

editing and cell therapy products, remained unchanged.

Accordingly, Brooklyn LLC is obligated to pay to Factor a fee of $ 3.5

million in October 2022, which will be in addition to a fee of $ 2.5 million paid to Factor in October 2021.

LLC is also required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory milestones and specified commercialization milestones.

In general, upon its

achievement of these milestones, Brooklyn LLC will be obligated to pay, in the case of development and regulatory milestones, milestone payments to the Licensors in specified amounts and, in the case of commercialization milestones,

specified royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers.

In the event Brooklyn LLC fails to timely achieve certain delineated milestones, the Licensors will have the right to terminate

Brooklyn LLC’s rights under provisions of the License Agreement relating to those milestones.

the non-refundable fee of $ 0.5 million) in order to exercise the option.

In April 2021, Brooklyn LLC and the Licensors amended the Option Agreements to extend the exercise period to May 21, 2021 and to require Brooklyn LLC to pay a total $ 1.0 million of the $ 4.0 million

initial license fees to the Licensors by April 15, 2021.

April 2021, Brooklyn LLC and the Licensors entered into an exclusive license agreement (the “License Agreement”) pursuant to which Brooklyn LLC acquired an exclusive worldwide license to the Licensed Technology for use in the development of certain mRNA,

gene-editing, and cellular therapies to be evaluated and developed for treating human diseases, including certain types of cancer, sickle cell disease, and beta thalassemia.

Under the terms of the License Agreement, Brooklyn

LLC is obligated to pay the Licensors a total of $ 4.0 million in connection with the execution of the License Agreement, all

of which was paid as of June 2021.

As a result of the Novellus Acquisition, in accordance with the terms of the Novellus-Factor License Agreement, the rights and obligations of Novellus Ltd.

thereunder pertaining to any and all licensed

products have inured to Eterna .

The agreement with Factor Limited under the License Agreement, which grants Brooklyn LLC exclusive rights to develop certain

next-generation mRNA gene editing and cell therapy products, remained unchanged after the completion of the Novellus Acquisition.

Accordingly, under the License Agreement, Brooklyn LLC remained obligated to pay to Factor

Limited a fee of $ 3.5 million in October 2022, which would have been in addition to a fee of $ 2.5 million paid to Factor Limited in October 2021.

In connection with the Company entering into the MSA (see Note 8), Factor Limited

entered into the Waiver Agreement with Brooklyn LLC, pursuant to which Factor Limited waived payment of the $ 3.5 million

otherwise payable to it in October 2022 by Brooklyn LLC .

Brooklyn LLC is also

required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory milestones and specified commercialization milestones.

In general, upon its achievement of

these milestones, Brooklyn LLC will be obligated to pay, in the case of development and regulatory milestones, milestone payments to the Licensors in specified amounts and, in the case of commercialization milestones, specified

royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers.

In the event Brooklyn LLC fails to timely achieve certain delineated milestones, the Licensors will have the right to terminate Brooklyn

LLC’s rights under provisions of the License Agreement relating to those milestones.

Novellus Ltd.

also has a license agreement with Factor, which was entered into in February 2015, amended in June 2018 and March 2020, and then amended and restated

in November 2020.

This license agreement provides for Novellus, Ltd.

to use certain technology owned by Factor for the development of certain cellular therapies to be evaluation and developed for treating diseases.

also has a license agreement with Factor Limited, which was entered into in February 2015, amended in June

2018 and March 2020, and then amended and restated in November 2020 (the “Novellus-Factor License Agreement”).

The Novellus-Factor License Agreement grants to Novellus Ltd.

an exclusive license to use certain technology owned by Factor

Limited for the development of mesenchymal stem cell-based cellular therapies for treating diseases and conditions in humans and animals (the “Novellus-Factor Licensed Technology”).

Under the License Agreement, Novellus Ltd.

granted a sublicense to Brooklyn LLC to use the Novellus-Factor Licensed Technology to develop up to four mesenchymal stem cell-based therapy products for use in the treatment of cancer in humans.

Under the Novellus-Factor License Agreement, Novellus Ltd.

is required to use commercially reasonably efforts to achieve

certain delineated milestones, including specified clinical development and regulatory milestones and specified commercialization milestones.

The Novellus-Factor License Agreement states that upon its achievement of these milestones,

Novellus Ltd.

is required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory

milestones and specified commercialization milestones.

In general, upon its achievement of these milestones, Novellus, Ltd.

will be obligated, in the case of development and regulatory milestones, to make milestone payments of up to $ 51.0 million in aggregate to Factor and, in the case of commercialization milestones, specified royalties with respect to product sales,

sublicense fees or sales of pediatric review vouchers.

will be obligated to make milestone payments of up to $ 51.0 million in aggregate to Factor Limited as well as

specified royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers.

In the event Novellus Ltd.

fails to timely achieve certain delineated milestones, Factor may have the right to terminate Novellus, Ltd.’s rights under provisions of the License

Agreement relating to those milestones.

fails to timely achieve certain delineated milestones under the Novellus-Factor License Agreement,

Factor Limited could seek to terminate the license granted thereunder.

The Novellus-Factor License Agreement provides that in the event of termination of the Novellus-Factor License Agreement, if Novellus Ltd.

requests that its

sublicense to Brooklyn LLC under the License Agreement survive such termination, such sublicense shall be considered a direct license from Factor Limited to Brooklyn LLC, provided that Brooklyn LLC agrees in writing that (i) Factor

Limited is entitled to enforce all relevant provisions directly against Brooklyn LLC, and (ii) Factor Limited shall not assume, and shall not be responsible to Brooklyn LLC for, any representations, warranties or obligations of Novellus

to Brooklyn LLC, other than to permit Brooklyn LLC to exercise any rights to the technology sublicensed by Novellus Ltd.

to Brooklyn LLC.

Factor Limited also agreed under the License Agreement that upon the termination of the

Novellus-Factor License Agreement for any reason other than Brooklyn LLC’s breach of the License Agreement, the rights and licenses granted to Brooklyn LLC by Novellus Ltd.

under the License Agreement shall survive such termination of

the Novellus-Factor License Agreement, and Factor Limited grants to Brooklyn LLC such rights and licenses on the same terms and conditions as granted by Novellus Ltd.

to Brooklyn LLC under the License Agreement..

Following the

expiration of one of the delineated milestone deadlines in the Novellus-Factor License Agreement without Novellus Ltd.’s achievement of the required regulatory filing on November 1, 2022, Novellus Ltd., Brooklyn LLC and Factor began

discussions regarding an amendment to the terms of the License Agreement and the Novellus-Factor License Agreement in order for Brooklyn LLC, among other things, to directly license the Novellus-Factor Licensed Technology from Factor

and consolidate and amend the milestone, payment and other terms with respect thereto accordingly.

There can be no assurance that such an amendment will be made on the forgoing terms, if at all.

In October 2020, Novellus Ltd.

sublicensor) and NoveCite (as sublicensee) entered into an exclusive license agreement (the “Sublicense”) to license novel cellular therapy for acute respiratory distress syndrome, which NoveCite is licensing from Factor.

the sublicense agreement, NoveCite is required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory milestones and specified commercialization

Under the sublicense agreement, NoveCite is required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory milestones and specified

commercialization milestones.

In general, upon its achievement of these milestones, NoveCite will be obligated, in the case of development and regulatory milestones, to make milestone payments to the Novellus Ltd.

in specified amounts and, in

the case of commercialization milestones, specified royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers.

Under the terms of the Sublicense, in the

event that Novellus, Ltd.

amounts and, in the case of commercialization milestones, specified royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers.

Under the terms of the Sublicense, in the event

that Novellus Ltd.

receives any revenue involving the original cell line included in the licensed technology, then Novellus Ltd.

5 unchanged sentences

The Termination Agreement was assigned to Brooklyn LLC in November 2018 when Brooklyn LLC acquired the assets of IRX.

connection with the Termination Agreement, all of the rights granted to the Collaborator under the RDO and Options Agreements were terminated, and Brooklyn LLC has no obligation to refund any payments received from the Collaborator.

consideration for entering into the Termination Agreement, the Collaborator will receive a royalty equal to 6 % of revenues from the

sale of IRX-2, for the period of time beginning with the first sale of IRX-2 through the later of (i) the twelfth anniversary of the first sale of IRX-2 or (ii) the expiration of the last IRX patent, or other exclusivity of IRX-2.

In connection

with the Termination Agreement, all of the rights granted to the Collaborator under the RDO and Options Agreements were terminated, and Brooklyn LLC has no obligation to refund any payments received from the Collaborator.

As consideration for

entering into the Termination Agreement, the Collaborator will receive a royalty equal to 6 % of revenues from the sale of IRX-2, for the

period of time beginning with the first sale of IRX-2 through the later of (i) the twelfth anniversary of the first sale of IRX-2 or (ii) the expiration of the last IRX patent, or other exclusivity of IRX-2.

Royalty Agreement with certain former IRX Therapeutics Investors

4 unchanged sentences

when Brooklyn LLC becomes obligated to pay royalties to USF under the agreement described above under “Licensing Agreements-USF,” it will pay an additional royalty of 1 % of gross sales to an entity organized by the investors who participated in such financing transaction.

There are no termination provisions in the IRX Investor Royalty

There are no termination provisions in the IRX Investor Royalty Agreement.

Brooklyn LLC has not recognized any revenues to date, and no royalties are due pursuant to any of the above-mentioned royalty agreements.

Investor Royalty Agreement

March 22, 2021, Brooklyn LLC restated its royalty agreement with certain beneficial holders of Brooklyn ImmunoTherapeutics Investors GP LLC and Brooklyn ImmunoTherapeutics Investors LP, whereby such beneficial holders will continue to receive,

on an annual basis, royalties in an aggregate amount equal to 4 % of the net revenues of IRX-2, a cytokine-based therapy being

developed by Brooklyn LLC to treat patients with cancer.

an annual basis, royalties in an aggregate amount equal to 4 % of the net revenues of IRX-2, a cytokine-based therapy being developed

by Brooklyn LLC to treat patients with cancer.

STOCK-BASED COMPENSATION

Stock Options

During the three and six months ended June 30, 2022 and 2021, the Company granted the

following stock options (in thousands):

Three months ended June 30,

Six months ended June 30,

During the three and nine months ended September 30, 2022 and 2021, the Company

granted the following stock options (in thousands):

Three months ended September 30,

Nine months ended September 30,

Stock options granted

The following weighted-average assumptions were used for stock options granted during the three and six months ended June

30, 2022 and 2021:

Three months ended June 30,

The following weighted-average assumptions were used for stock options granted during the three and nine months ended

September 30, 2022 and 2021:

Three months ended September 30,

Weighted average risk-free rate

2 unchanged sentences

Expected term

Six months ended June 30,

Nine months ended September 30,

Weighted average risk-free rate

2 unchanged sentences

Expected term

Of the 1,981 ,000 stock options granted during the six months ended June 30, 2022, approximately 414,000 stock

options were granted in March 2022 to Dr.

Federoff, who served as the Company’s Chief Executive Officer and President until May 26, 2022 (the “March 2022 Stock Option Grant”).

The March 2022 Stock Option Grant vests in 36 substantially equal monthly installments from the grant date and had an exercise price equal to the closing price of the Company’s common stock on the

Of the 3,366 ,000 stock options granted during the six months ended June 30, 2021, approximately 3,225,000 stock

options were granted to Dr.

During the three and nine months ended September 30, 2022, options to purchase approximately 124,000 shares of common stock were granted to Dr.

Matthew Angel, the Company’s Interim Chief Executive Officer.

Angel’s stock options vest at rate of 1/24 on the grant

date with the remaining options to vest in 46 substantially equal monthly installments thereafter.

For the nine months ended September

30, 2022, stock options to

purchase approximately 21,000 shares of common stock were granted to Dr.

Federoff, who served as the Company’s Chief

Executive Officer and President until May 26, 2022 (the “March 2022 Stock Option Grant”).

The March 2022 Stock Option Grant vests in 36

substantially equal monthly installments from the grant date and had an exercise price equal to the closing price of the Company’s common stock on the grant date.

During the nine months ended September 30, 2021 , options to purchase approximately 161,000 shares of common stock were granted to Dr.

Federoff upon his appointment as Chief Executive Officer and President in April 2021.

2,628,000 stock options

were under a time-based grant (the “Time-Based Grant”) and 597,000 were under a performance-based grant (the “Milestone Grant”).

Time-Based Grant vests over four years , with 25 %

vesting on the one-year anniversary of the grant date and the remaining options vesting in 36 substantially equal monthly installments

The Milestone Grant vests upon the first concurrence by the U.S.

Food and Drug Administration that a proposed investigation may proceed following review of a Company filed investigational new drug application in connection with that the

License Agreement.

Both the Time-Based Grant and the Milestone Grant had an exercise price equal to the closing price of the Company’s common stock on the grant date.

Approximately 131,000 stock options were under a time-based grant (the “Time-Based Grant”) and approximately 30,000 stock options were under a performance-based grant (the “Milestone Grant”).

The Time-Based Grant vests over four years , with 25 % vesting on the one-year anniversary of the grant date and

the remaining options vesting in 36 substantially equal monthly installments thereafter.

The Milestone Grant vests upon the first

concurrence by the U.S.

Food and Drug Administration that a proposed investigation may proceed following review of a Company filed investigational new drug application in connection with that the License Agreement.

Both the Time-Based Grant and the

Milestone Grant had an exercise price equal to the closing price of the Company’s common stock on the grant date.

Vesting of all stock options grants is subject to continuous service with the Company

through such vesting dates.

As discussed above, pursuant to the Separation Agreement that the Company entered into

Federoff, the Company accelerated the vesting of approximately 138,000 stock options under the

March 2022 Stock Option Grant and approximately 657,000 stock options under the Time-Based Grant.

The Company also waived the

performance condition under the Milestone Grant and accelerated the vesting of approximately 415,000 stock options under the Milestone

Lastly, the Company extended the post-termination exercise period from 90 days to 36 months immediately following the Separation Date for all options that were vested after such accelerations.

As discussed above, pursuant to the Separation Agreement with Dr.

Federoff, the Company accelerated the vesting of approximately 7,000 stock options under the March 2022 Stock Option Grant and

approximately 33,000 stock options under the Time-Based Grant.

The Company also waived the performance condition under the Milestone

Grant and accelerated the vesting of approximately 21,000 stock options under the Milestone Grant.

Lastly, the Company extended the

post-termination exercise period from 90 days to 36 months immediately following the Separation Date for all options that were vested after such accelerations.

The above modifications to Dr.

Federoff’s stock options grants resulted in modification accounting under ASC 718, Compensation – Stock Compensation.

As a result, the Company immediately recognized approximately $ 0.1 million for the incremental fair value of stock options that were vested prior to the modification by calculating the difference between

the fair value of the modified award and the fair value of the original award immediately before it was modified.

For stock options that were not vested prior to the modification but then vested as a result of the acceleration, the Company

reversed any stock compensation expense previously recognized, remeasured the fair value of the modified award and immediately recognized approximately $ 0.1

value of the modified award and the fair value of the original award immediately before it was modified.

For stock options that were not vested prior to the modification but then vested as a result of the acceleration, the Company reversed any

stock compensation expense previously recognized, remeasured the fair value of the modified award and immediately recognized approximately $ 0.1

million of stock compensation expense in full since there was no future service period required to be provided.

During the three and six months ended June 30, 2021, there were 1,300 options exercised for total cash proceeds of $ 10,202 .

During the three and nine months ended September 30, 2021, there were 65 options exercised for total cash proceeds of $ 10,202 .

The options exercised had a total intrinsic value of $ 57,212 .

There were no options exercised during the three and six months ended June 30, 2022.

As of June 30, 2022, there were approximately 3,750,000 stock options outstanding.

There were no options exercised during the three and nine months ended September 30, 2022.

As of September 30, 2022, there were approximately 362,000 stock options outstanding.

Restricted Stock Units

During the three and six months ended June 30, 2022 and 2021, the Company granted the

following restricted stock units (“RSUs”) (in thousands):

Three months ended June 30,

Six months ended June 30,

During the three and nine months ended September 30, 2022 and 2021, the Company granted

the following restricted stock units (“RSUs”) (in thousands):

Three months ended September 30,

Nine months ended September 30,

The Company recognizes the fair value of RSUs granted as expense on

9 unchanged sentences

settlement of vested RSUs, at the Company’s discretion, an employee may elect to have shares of common stock withheld that would otherwise be issued at settlement, the value of which is equal to the amount of withholding taxes payable.

The following table shows the number of RSUs that vested and were settled during the three and six months ended

June 30, 2022, as well as the number of shares of common stock withheld to cover the withholding taxes and the net shares issued upon settlement (in thousands):

The following table shows the number of RSUs that vested and were settled during the three and nine months ended

September 30, 2022, as well as the number of shares of common stock withheld to cover the withholding taxes and the net shares issued upon settlement (in thousands):

Three months ended

Six months ended

June 30, 2022

Nine months ended

September 30, 2022

Common stock withheld to cover

Common stock issued

The 1,101,000 RSUs granted during the six months ended June 30, 2022 are performance-based RSUs (the “2022 PSUs”), of which approximately 414,000 were awarded to Dr.

The 2022 PSUs are subject to the achievement of four performance goals, which are weighted equally.

The 55,000 RSUs granted during the nine months ended September 30, 2022 are performance-based RSUs (the “2022 PSUs”), of which approximately 21,000 were awarded to Dr.

The 2022 PSUs are subject to the achievement of four

performance goals, which are weighted equally.

Once a performance goal is achieved, the tranche of shares allocated to that performance goal will be earned and will begin to vest over a three-year annual basis beginning on the date the performance goal was achieved.

If a performance goal is not achieved, the tranche of shares allocated

to that performance goal will be unearned and forfeited.

As of June 30, 2022, one of the performance goals was not achieved by its due

date, and as a result, approximately 275,000 2022 PSUs were cancelled and any previously recognized stock compensation expense was

If a performance goal is not achieved, the tranche of shares allocated to that performance goal will be

unearned and forfeited.

As of September 30, 2022, two of the performance goals were not achieved by the due date, and as a result,

approximately 28,000 2022 PSUs were cancelled and any previously recognized stock compensation expense was reversed.

Pursuant to Dr.

7 unchanged sentences

Federoff’s 2022 PSUs was reversed and approximately $ 0.1 million was recognized as compensation expense.

As of June 30, 2022, there were approximately 587,000 RSUs outstanding.

As of September 30, 2022, there were approximately 15,000 RSUs outstanding.

Restricted Stock

Pursuant to the Merger, Brooklyn LLC’s approximately 3,000 outstanding restricted common units were exchanged for approximately 630,000 shares of Brooklyn’s restricted common stock.

Pursuant to the Merger, Brooklyn LLC’s approximately 3,000 outstanding restricted common units were exchanged for approximately 32,000 shares of Eterna’s restricted common stock.

There were no changes to any conditions and requirements of the restricted common stock.

The shares vested quarterly beginning on March

31, 2021 and were to continue through December 31, 2022, contingent on continued service.

Due to the modification of the restricted common units, the fair value of the restricted common stock immediately after the Merger was compared to the fair

value of the restricted common units immediately prior to the Merger, and the change in fair value of $ 0.3 million was recognized in the

statement of operations during the six months ended June 30, 2021.

The shares vested quarterly beginning on March 31, 2021 and were to continue

through December 31, 2022, contingent on continued service.

Due to the modification of the restricted common units, the fair value of the restricted common stock immediately after the Merger was compared to the fair value of the restricted common

units immediately prior to the Merger, and the change in fair value of $ 0.3 million was recognized in the statement of operations during

the nine months ended September 30, 2021.

The Company recognizes the fair value of restricted common stock as an expense on a straight-line basis over the requisite service period.

During the six months ended June 30, 2022,

approximately 78,000 shares of unvested restricted common stock were forfeited due to the holders of such shares no longer providing

services to the Company.

As of June 30, 2022, there were no shares of unvested restricted stock outstanding.

During the nine months ended September 30, 2022, approximately 4,000 shares of unvested restricted common stock were forfeited due to the holders of such shares no longer providing services to the Company.

September 30, 2022, there were no shares of unvested restricted stock outstanding.

Stock-Based Compensation Expense

For the three and six months ended June 30, 2022 and 2021, the

Company recognized stock-based compensation expense as follows, which includes the expense related to Dr.

For the three and nine months ended September 30, 2022 and 2021,

the Company recognized stock-based compensation expense as follows, which includes the expense related to Dr.

Federoff’s modified awards discussed above (in thousands):

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Research and development

3 unchanged sentences

On March 6, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an investor (the “PIPE Investor”)

providing for the private placement (the “PIPE Transaction”) to the PIPE Investor of approximately 6,857,000 units

(collectively, the “Units”), each Unit consisting of (i) one share of the Company’s common stock (or, in lieu thereof, one

Pre-Funded Warrant to purchase one share of common stock) and (ii) one warrant (the “Common Warrants”) to purchase one share of

common stock, for an aggregate gross purchase price of approximately $ 12.0 million (the “Subscription Amount”).

Transaction closed on March 9, 2022.

Pursuant to the Purchase Agreement, the Company is prohibited from issuing equity in variable rate transactions for a period of one-year following consummation of the PIPE Transaction, including issuing equity under the Second Purchase Agreement.

Each Pre-Funded Warrant has an exercise price of $ 0.005 per share of common stock, was immediately exercisable, may be

exercised at any time, has no expiration date and is subject to customary adjustments.

The Pre-Funded Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 9.99 % immediately after exercise thereof.

providing for the private placement (the “PIPE Transaction”) to the PIPE Investor of approximately 343,000 units (collectively,

the “Units”), each Unit consisting of (i) one share of the Company’s common stock (or, in lieu thereof, one Pre-Funded Warrant

to purchase one share of common stock) and (ii) one warrant (the “Common Warrants”) to purchase one share of common stock, for an aggregate gross purchase price of approximately $ 12.0 million (the “Subscription Amount”).

The PIPE Transaction closed on March 9, 2022.

Pursuant to the Purchase Agreement, the Company is prohibited from issuing equity in variable

rate transactions for a period of one-year following consummation of the PIPE Transaction, including issuing equity under the

Second Purchase Agreement.

Each Pre-Funded Warrant had an exercise price of $ 0.10 per share of common stock, was immediately exercisable, could be

exercised at any time, had no expiration date and was subject to customary adjustments.

The Pre-Funded Warrants could not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 9.99 % immediately after exercise thereof.

Upon the closing of the PIPE Transaction, the Company issued 275,000 shares of common stock and issued Pre-Funded Warrants representing approximately 68,000 shares of common stock.

On July 12, 2022, the PIPE Investor exercised its 68,000

Pre-Funded Warrants at an exercise price of $ 0.10 per share for an aggregate exercise price of $ 6,786 , in cash.

The Company issued 68,000 shares of common stock to

the PIPE Investor on July 14, 2022 upon receipt of the cash proceeds.

Subsequent to the exercise, no Pre-Funded Warrants

remained outstanding.

Each Common Warrant has an exercise price of $ 38.20 per share, becomes exercisable six months following the closing of the PIPE Transaction, expires five-and-one-half years from the date of issuance and is subject to customary adjustments.

The Common Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99 % immediately after exercise thereof, subject to increase to 9.99 % at the option of the holder.

As of June 30, 2022, the Company had 6,857,000

As of September 30, 2022, the Company had 343,000

Common Warrants outstanding with a weighted average exercise price of $ 38.20 per share and a weighted average contractual life of 4.95 years.

As of June 30, 2022, the Company had 1,357,000

Pre-Funded Warrants outstanding with a weighted average exercise price of $ 0.005 per share.

The Pre-Funded Warrants do not expire.

Common Warrants and Pre-Funded Warrants were accounted for as liabilities under ASC 815-40, as these warrants provide for a cashless settlement provision that does not meet the requirements of the indexation guidance under ASC 815-40.

warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the statement of operations.

Upon exercise of the Common Warrants and Pre-Funded Warrants, the fair value on the exercise date is reclassified from warrant

liabilities to equity .

The fair values of the Common Warrants and the Pre-Funded Warrants at the issuance date totaled $ 12.6 million in the aggregate, which was $ 0.6 million more

4 unchanged sentences

available at the time of the transaction.

The Company incurred fees of approximately $ 1.0 million through June 30, 2022 related to the PIPE Transaction, which were allocated to the fair value of the Common Warrants and the Pre-Funded Warrants and recorded in other expense, net on the

The Company incurred fees of approximately $ 1.0 million through September 30, 2022 related to the PIPE Transaction, which were allocated to the fair value of the Common Warrants and the Pre-Funded Warrants and recorded in other expense, net on the

accompanying condensed consolidated statement of operations.

14 unchanged sentences

consecutive calendar days, the Company accrued $ 0.2 million during the first quarter of 2022 for the contingent loss the Company

incurred as liquidated damages as a result of the late Q1 2022 10Q filing, which is recorded in other expense, net for the six months ended June 30, 2022 in the accompanying condensed consolidated statements of operations.

The Company paid

such $ 0.2 million liquidated damages payment in June 2022.

incurred as liquidated damages as a result of the late Q1 2022 10Q filing, which is recorded in other expense, net for the nine months ended September 30, 2022 in the accompanying condensed consolidated statements of operations.

paid such $ 0.2 million liquidated damages payment in June 2022.

On June 30, 2022, the Company filed its Q1 2022 10-Q along with the 10-K/A, and on July 1, 2022, the Company provided its notice to the PIPE

1 unchanged sentence

Under the terms of the Merger

Agreement (see Note 3) , on March 25, 2021, Brooklyn issued shares of common stock to the equity holders of Brooklyn LLC.

Agreement (see Note 3) , on March 25, 2021, Eterna issued shares of common stock to the equity holders of Brooklyn LLC.

Class A units of Brooklyn LLC were converted into approximately 1,114,000 shares of common stock;

4 unchanged sentences

converted into approximately 31,000 shares of common stock, and 10,500,000 rights options were converted into approximately 591,000 shares of common stock.

Brooklyn also issued approximately 1,068,000 shares of common stock to the Financial Advisor pursuant to the Merger Agreement .

issued approximately 53,000 shares of common stock to its financial advisor pursuant to the Merger Agreement .

EARNINGS PER SHARE

2 unchanged sentences

determined that the exercise of the Pre-Funded Warrants requires nominal consideration for the delivery of shares of common stock, and as such, has considered the 68,000 shares underlying the Pre-Funded Warrants to be outstanding effective on March 9, 2022 for the purposes of calculating basic EPS.

Diluted net loss per share is calculated by dividing net loss by the

weighted-average number of common shares outstanding (including the weighted average effect of the Pre-Funded Warrants) plus dilutive securities.

Stock options, RSUs, warrants and other convertible securities are considered potential common

shares and are included in the calculation of diluted net loss per share using the treasury method when their effect is dilutive.

Diluted net loss per share is the same as basic net loss per share in periods where the effect of potentially

dilutive shares of common stock are antidilutive.

The following table presents the amount of stock options, RSUs, warrants and convertible preferred stock that were excluded from the computation of diluted net loss per common share for three

and six months ended June 30, 2022 and 2021, as their effect was anti-dilutive:

Three and Six months ended June 30,

Diluted net loss per share is calculated by

dividing net loss by the weighted-average number of common shares outstanding (including the weighted average effect of the Pre-Funded Warrants) plus dilutive securities.

Stock options, RSUs, warrants and other convertible securities are

considered potential common shares and are included in the calculation of diluted net loss per share using the treasury method when their effect is dilutive.

Diluted net loss per share is the same as basic net loss per share in periods where the

effect of potentially dilutive shares of common stock are antidilutive.

The following table presents the amount of stock options, RSUs, warrants and convertible preferred stock that were excluded from the computation of diluted net loss per

common share for the three and nine months ended September 30, 2022 and 2021, as their effect was anti-dilutive:

Three and Nine months ended September 30,

Stock options

2 unchanged sentences

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2022, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update

In September 2022, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier

Finance Program Obligations (“ASU

ASU 2022-04 requires a buyer that uses supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period, and

associated roll-forward information.

ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the requirement to disclose roll-forward information, which is

effective for fiscal years beginning after December 15, 2023.

The Company does not expect a material impact on its financial statements as a result of adopting this amendment.

In June 2022, the FASB issued ASU No.

2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”).

The FASB issued ASU 2022-03 to (1) clarify the guidance in Topic 820, Fair Value

Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for

equity related securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the

unit of account of the equity security and, therefore, is not considered in measuring fair value.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years with early adoption

Fair Value Measurement

of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”).

The FASB issued ASU 2022-03 to (1) clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual

restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity related securities subject to contractual sale restrictions that are measured at

fair value in accordance with Topic 820.

ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years with early adoption permitted.

The Company is evaluating when to adopt the amendments in ASU 2022-02.

The Company does not expect a material impact as a result of adopting this amendment.

SUBSEQUENT EVENT

July 12, 2022, the PIPE Investor exercised its 1,357,000

Pre-Funded Warrants at an exercise price of $ 0.005

per share for an aggregate exercise price of $ 6,786 ,

The Company issued 1,357,000 shares of common stock to

the PIPE Investor on July 14, 2022 upon receipt of the cash proceeds.

Subsequent to the exercise, no Pre-Funded Warrants

remained outstanding.

does not expect a material impact as a result of adopting this amendment.

SUBSEQUENT EVENTS

Facility Sublease

On October 18, 2022, the Company entered into the Sublease with E.R.

Squibb & Sons, L.L.C., a Delaware

limited liability company and subsidiary of Bristol-Myers Squibb Company (“Sublessor”), for office, laboratory and research and development space (the “Premises”).

The Premises consists of approximately 45,500 square feet on the ninth floor of the building currently under construction located at 250 Water Street, Somerville, Massachusetts 02141.

The Sublease rent commences on the date that is the earlier of (i) the date that the Company commences

business operations from the Premises and (ii) the date that is the one-year anniversary of the later to occur of (A) October 18, 2022 and (B) the date that Sublessor obtains the primary landlord’s consent for the Sublease (such applicable

date, the “Rent Commencement Date”).

The Sublease has a term of 10 years from the Rent Commencement Date (the “Term”), subject to a

five-year extension in accordance with the terms of the Sublease.

Pursuant to the Sublease, within two business days following receipt of the primary landlord’s consent to the Sublease, the Company will pay Sublessor a security deposit in the form of a letter of credit

in the amount of approximately $ 4.1 million.

Provided there are no events of default by the Company under the Sublease, the letter of

credit will be reduced on an incremental basis throughout the Term.

Pursuant to the Sublease, the Company has agreed to pay base rent of approximately $ 0.5

million per month during the first year of the Term, increasing on an incremental basis each subsequent year of the Term, as well as traditional lease expenses including, certain taxes, operating expenses and utilities.

Exacis Option Agreement (Related Party Transaction)

On October 8, 2022, the Company entered into an option agreement (the “Option Agreement”) with Exacis

Biotherapeutics, Inc., a Delaware corporation (“Exacis”), pursuant to which Exacis granted the Company the option to negotiate and enter into an exclusive worldwide license to certain of the technology licensed by Exacis for the treatment of

cancer in humans (the “Option”).

The Option Agreement provides that the Company will pay Exacis a fee of $ 0.3 million for the Option,

which would be creditable against the fees or purchase price payable under any such license if entered into by the Company in accordance with Option Agreement.

The Option Agreement provides for certain payments upon the execution of a

definitive license agreement, which would become payable only upon execution, and in accordance with the terms, of the applicable license agreement, if any.

The Option Agreement has been deemed a related party transaction, as one of the Company’s Board members, Dr.

Fiore, is the Chief Executive Officer of Exacis.

Additionally, the Company’s Interim Chief Executive Office, Dr.

Matthew Angel, is Chairman of Exacis’ scientific advisory board.

Angel is also the Chairman and Chief Executive Officer of Factor, which is the majority shareholder of Exacis.

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-Q

Item 1. Financial Statements