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Item 7. Management’s Discussion and Analysis

2025-03-12 compared with 2024-03-14 · 452 added, 333 removed, 30 unchanged (96% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included in Part II, Item 8 of this report.

The following

discussion contains forward-looking statements.

See “CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS” in Part I of this report.

Forward-looking statements are not guarantees of future activities or results.

Many factors could cause our

actual activities or results to differ materially from those anticipated in forward-looking statements, including those discussed in “Item 1A.

Risk Factors” of Part I of this report.

We are a life science company committed to realizing the potential of mRNA cell engineering to provide patients with transformational new medicines.

We have in-licensed a portfolio of over 100

patents covering key mRNA cell engineering technologies, including technologies for mRNA cell reprogramming, mRNA gene editing, the NoveSlice TM and UltraSlice TM gene-editing proteins, and the ToRNAdo TM mRNA delivery system, which we collectively

refer to as our “mRNA technology platform.” We refer to aspects of our mRNA technology platform as “mRNA delivery,” “mRNA gene editing” and “mRNA cell reprogramming.” We license our mRNA technology platform from Factor Bioscience Limited (“Factor

Limited”) under an exclusive license agreement.

Our near-term focus is on entering into strategic partnerships to deploy our mRNA technology platform.

We expect that potential strategic partners will use our mRNA technology

platform for preclinical and eventual clinical development of product candidates for a variety of clinical indications.

Following receipt of the results from the INSPIRE phase 2 trial of IRX-2, our only product candidate, in June 2022, we determined to cease the development of IRX-2.

We do not currently plan to

develop any product candidates.

In the future we may develop and advance product candidates, either internally and/or through strategic partnerships.

Recent Financings

In July 2023, we received $8.7 million from a private placement in which we issued $8.7 million in aggregate principal amount of convertible notes (the “July 2023 convertible notes”) and warrants

to purchase an aggregate of approximately 6.1 million shares of our common stock (the “July 2023 warrants”).

On December 8, 2023, we received $1.5 million in exchange for a 6% promissory note with an aggregate principal amount of $1.5 million we issued to Charles Cherington.

The promissory note was to

mature on January 8, 2024, and interest accrued at a rate of 6.0% per annum, payable at maturity.

On December 14, 2023, we repaid the $1.5 million of principal and $1,500 of accrued interest due under the promissory note.

There are no further

obligations under the promissory note.

On December 14, 2023, we entered into a purchase agreement with certain purchasers for the private placement of $9.2 million of convertible notes (the “December 2023 convertible notes” and

together with the July 2023 convertible notes, the “convertible notes”) and warrants to purchase an aggregate of approximately 9.6 million shares of our common stock (the “December 2023 warrants” and together with the July 2023 warrants, the

“note warrants”).

There were two closings under this purchase agreement:

on December 15, 2023, we received $7.8 million and issued $7.8 million in December 2023 convertible notes and December 2023 warrants to purchase approximately 8.1 million

shares of our common stock, and on January 11, 2024, we received the remaining $1.4 million and issued an aggregate of $1.4 million in December 2023 convertible notes and December 2023 warrants to purchase approximately 1.5 million shares of our

common stock.

The July 2023 convertible notes bear interest at 6% per annum, and the December 2023 convertible notes bear interest at 12% per annum, both of which are payable quarterly in arrears.

election, we may pay interest either in cash or in-kind by increasing the outstanding principal amount of the applicable notes.

The July 2023 convertible notes mature on July 14, 2028, and the December 2023 convertible notes mature on December

15, 2028 and January 11, 2029, depending on the issuance date of such notes, unless earlier converted or repurchased.

We may not redeem any of the convertible notes prior to maturity.

At the option of the holder, the July 2023 convertible notes and the December 2023 convertible notes may be converted from time-to-time in whole or in part into shares of our common stock at a

conversion rate of $2.86 per share and $1.9194 per share, respectively, subject to customary adjustments for stock splits, stock dividends, recapitalization and the like.

The convertible notes contain conversion limitations such that no

conversion may be made if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99%, 9.99% or 19.99% immediately after conversion thereof, subject to certain increases not in excess of either 9.99%

or 19.99% at the option of the holder.

The convertible notes provide for customary events of default (subject in certain cases to customary grace and cure periods), which include, among others:

nonpayment of principal or interest;

breach of covenants or other agreements in the convertible notes;

the occurrence of a material adverse effect event and certain events of bankruptcy.

Generally, if an event of default occurs and is continuing under the convertible notes, the

holder thereof may require us to repurchase some or all of their convertible notes at a repurchase price equal to 100% of the principal amount of the convertible notes being repurchased, plus accrued and unpaid interest thereon.

In connection with the issuance of the December 2023 convertible notes, we agreed to reduce the exercise price of the warrants we issued in a private placement in December 2022 to purchase an

aggregate of approximately 4.4 million shares of our common stock from $3.28 to $1.43 per share and of the July 2023 warrants from $2.61 to $1.43 per share.

Basis of Presentation

Our near-term focus is on deploying our mRNA technology platform through strategic partnerships.

We are not currently developing any product candidates.

Our future revenue, if any, is primarily

expected to come from out-licensing our mRNA technology platform and/or aspects thereof.

In February 2023, we entered into an exclusive option and license agreement with a third party, under which we granted such third party an option to obtain an exclusive sublicense to certain of

our technology for preclinical, clinical and commercial purposes in exchange for a non-refundable up-front payment to us of $0.3 million.

In August 2023, that third party requested that we begin developing certain induced pluripotent stem cell

lines in exchange for a cell line customization fee.

The third party paid us $0.4 million towards the customization fee, which we are recognizing ratably over the customization period, which is expected to be approximately 20 to 25 months.

will only earn the remaining amount of the customization fee if we make certain progress towards delivery of the customized cell line.

We estimate the amount of consideration we expect to recognize as revenue that is not probable of having a

significant reversal of such recognized revenue, and we place a constraint on the remaining contractual consideration.

As it becomes evident that the constrained amounts are no longer at risk of a significant reversal of revenue, we will remove

the constraint from the related revenue and recognize a cumulative catch-up adjustment to revenue in the period in which the constraint was removed.

For additional information, see Note 5 to the consolidated financial statements included in Part

Discussion and Analysis of Financial Condition and Results of Operations

following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included in Part

II, Item 8 of this report.

License Costs

We recognize certain license costs payable to Factor Limited under the exclusive license agreement we entered into with Factor Limited.

Research and Development Expenses

We expense our research and development costs as incurred.

Our research and development expenses consist of costs incurred for company-sponsored research and development activities, as well as

support for selected investigator-sponsored research.

Upfront payments and milestone payments we make for the in-licensing of technology are expensed as research and development in the period in which they are incurred if the technology is not

expected to have any alternative future uses other than the specific research and development project for which it was intended.

The major components of research and development costs include salaries and employee benefits, stock-based compensation expense, supplies and materials, preclinical study costs, expensed licensed

technology, consulting, scientific advisors and other third-party costs, and allocations of various overhead costs related to our product development efforts.

Research and development costs for the year ended December 31, 2022 also included

expenses related to our former IRX-2 clinical trials as well as insurance coverage for the clinical trials.

We have contracted with third parties to perform various studies.

The financial terms of these agreements vary from contract to contract and may result in uneven payment flows.

We accrue for

third party expenses based on estimates of the services received and efforts expended during the reporting period.

If the actual timing of the performance of the services or the level of effort varies from the estimate, the accrual is adjusted

The expenses for some third-party services may be recognized on a straight-line basis if the expected costs are expected to be incurred ratably during the period.

Payments under the contracts depend on factors such as the

achievement of certain events or milestones, the successful enrollment of patients, the allocation of responsibilities among the parties to the agreement, and the completion of portions of the clinical study or trial or similar conditions.

General and Administrative Expenses

Our general and administrative expenses consist primarily of salaries, benefits and other costs, including equity-based compensation, for our executive and administrative personnel, legal and

other professional fees, travel, insurance, and other corporate costs.

Comparison of the Years Ended December 31, 2023 and 2022

Years ended December 31,

The following discussion contains forward-looking statements.

See “CAUTIONARY

NOTE REGARDING FORWARD-LOOKING STATEMENTS ” in Part I of this report .

Forward-looking statements are not guarantees of future activities or results.

Many factors could cause our actual activities or results

to differ materially from those anticipated in forward-looking statements, including those discussed in “Item 1A.

Risk Factors”

of Part I of this report.

are a preclinical-stage synthetic allogeneic iMSC therapy company.

Our vision is to improve the lives of patients with difficult-to-treat

diseases through innovative, effective, and safe, but accessible cellular therapies, and our mission is to develop allogenic off-the-shelf

cellular therapies, leveraging induced pluripotent stem cell (“iPSC”)-derived mesenchymal stem cells (“iMSCs”)

to target solid tumors and autoimmune diseases.

2024 Transactions

to exchange agreements we entered into on September 24, 2024 with the holders of certain of our warrants and convertible notes, on October

29, 2024, we issued an aggregate of 38.3 million shares of our common stock in exchange for:

(i) warrants to purchase an aggregate of

approximately 4.4 million shares of our common stock that we issued in December 2022 with an exercise price of $1.43 per share;

$8.7 million in the aggregate principal amount of convertible notes that we issued in July 2023 and warrants to purchase an aggregate

of approximately 6.1 million shares of our common stock that we issued in July 2023 with an exercise price of $1.43 per share;

$9.2 million in the aggregate principal amount of convertible notes that we issued in December 2023 and warrants to purchase an aggregate

of approximately 9.6 million shares of our common stock that we issued in December 2023 with an exercise price of $1.43 per share (the

“exchange transactions”).

holders of the warrants described in the paragraph above exchanged all their warrants for shares of our common stock at an exchange ratio

of 0.5 of a share of common stock for every one share of common stock issuable upon exercise of the applicable warrant (rounded up to

the nearest whole number), and the holders of the convertible notes described in the paragraph above exchanged all their convertible

notes for shares of our common stock at an exchange ratio equal to (A) the sum expressed in U.S.

dollars of (1) the principal amount

of the applicable convertible note, plus (2) all accrued and unpaid interest thereon through the date the applicable convertible note

is exchanged plus (3) all interest that would have accrued through, but not including, the maturity date of applicable convertible note

if it was outstanding from the date such convertible note is exchanged through its maturity date, divided by (B) $1.00 (rounded up to

the nearest whole number).

of Bridge Notes

September 24, 2024, we closed a private placement in which we sold an aggregate principal amount of approximately $3.9 million of 12.0%

senior convertible notes (the “bridge notes”).

October 29, 2024, in accordance with the terms of the bridge notes, approximately $3.0 million of the principal amount of the bridge

notes plus all accrued and unpaid interest thereon, plus such amount of interest that would have accrued on the principal amount through

December 24, 2024, was automatically converted at a conversion price of $0.50 into 6.2 million shares of our common stock, and approximately

$0.9 million of the principal amount of the bridge notes plus all accrued and unpaid interest thereon, plus such amount of interest that

would have accrued on the principal amount through December 24, 2024, was automatically converted at a conversion price of $0.50 into

pre-funded warrants to purchase 1.8 million shares of our common stock.

to a securities purchase agreement we entered into with certain investors on September 24, 2024, on October 29, 2024, we closed a private

placement (the “common stock private placement” and together with the bridge notes and the exchange transactions, the “September

2024 Transactions”) in which we sold an aggregate of 1.4 million shares of our common stock and pre-funded warrants to purchase

0.1 million shares of our common stock at a purchase price of $0.75 per share of common stock and $0.745 per pre-funded warrant.

approximately $1.1 million in gross proceeds from the issuance of such securities.

For additional information regarding this private

placement, see Note 6 to the accompanying consolidated financial statements.

additional information regarding the September 2024 Transactions, see Note 6 to the accompanying consolidated financial statements.

total, the Company issued approximately 45.9 million shares of common stock and 1.9 million pre-funded warrants on October 29, 2024 pursuant

to the private placement, the exchange transactions and the conversion of the bridge notes discussed above and had 51.4 million shares

of common stock issued and outstanding after the closing of the September 2024 Transactions.

October 2022, we entered into a sublease for office and laboratory space in Somerville, Massachusetts.

In connection with entering into

the sublease, we delivered a security deposit in the form of a letter of credit in the amount of $4.1 million.

The letter of credit was

collateralized with $4.1 million of cash deposited in a restricted account.

August 5, 2024, the sublessor drew down on the letter of credit for the full $4.1 million to cover the approximately $4.0 million of

past due rent payments for February 2024 through August 2024, plus interest and penalties.

August 9, 2024, we and the sublessor entered into a sublease termination agreement pursuant to which the parties agreed to terminate

the sublease effective August 31, 2024.

Pursuant to the sublease termination agreement, we agreed to surrender and vacate the premises,

all of our right, title and interest in all furniture, fixtures and laboratory equipment at the premises will become the property of

the sublessor, and both parties will be released of their obligations under the sublease.

As a result of the sublease termination, we

recognized a gain on lease termination of approximately $1.6 million for the year ended December 31, 2024, and we expect to save approximately

$72 million in base rental payments, parking, operating expenses, taxes and utilities that we would have paid over the remaining lease

of Presentation

February 2023, we entered into an exclusive option and license agreement (the “Lineage Agreement”) with Lineage Cell Therapeutics,

(“Lineage”), under which we granted Lineage an option to obtain an exclusive sublicense to certain of our technology

for preclinical, clinical and commercial purposes in exchange for a non-refundable up-front payment to us of $0.3 million.

2023, Lineage requested that we begin developing certain induced pluripotent stem cell lines in exchange for a cell line customization

Lineage paid us $0.4 million towards the customization fee, which we were recognizing ratably over the customization period.

September 24, 2024, we entered into an agreement with Factor Bioscience whereby we assigned the Lineage Agreement to Factor Bioscience

(the “Lineage Assignment Agreement”).

The Lineage Assignment Agreement with Factor Bioscience.

assigns all our rights and

obligations under that the Lineage Agreement to Factor Bioscience.

Payments to us related to the Lineage Agreement will now be subject

to the Lineage Assignment Agreement, which provides for Factor Bioscience paying us thirty percent (30%) of all amounts it receives from

Lineage in the event that Lineage obtains a sublicense from Factor Bioscience.

Upon receipt of future payments for the customization

activities set forth in the Lineage Agreement, Factor Bioscience will pay us twenty percent (20%) of all amounts Factor Bioscience receives

from Lineage.

Because we have no further obligations under the agreement with Lineage, we have fully recognized as revenue amounts previously

recorded in deferred revenue of approximately $0.5 million for the year ended December 31, 2024.

For additional information, see Note

5 to the accompanying consolidated financial statements.

We have no other revenue generating contracts at this time.

recognize direct labor and supplies associated with generating our revenue as cost of revenues.

As provided for in the A&R Factor

License Agreement discussed in Note 11 to the accompanying consolidated financial statements, we were obligated to pay Factor Limited

20% of any amounts we receive from a customer that was related to the licensed technology under the A&R Factor License Agreement,

which we also recognize as a cost of revenue.

and Development Expenses

expense our research and development costs as incurred.

Research and development expenses consist of costs incurred for company-sponsored

research and development activities.

Upfront payments and milestone payments made for the licensing of technology are expensed as research

and development in the period in which they are incurred if the technology is not expected to have any alternative future uses other

than the specific research and development project for which it was intended.

major components of research and development costs include salaries and employee benefits, stock-based compensation expense, supplies

and materials, preclinical study costs, expensed licensed technology, consulting, scientific advisors and other third-party costs, as

well as allocations of various overhead costs related to our product development efforts.

have contracted with third parties to perform various studies.

The financial terms of these agreements vary from contract to contract

and may result in uneven payment flows.

We accrue for third party expenses based on estimates of the services received and efforts expended

during the reporting period.

If the actual timing of the performance of the services or the level of effort varies from the estimate,

the accrual is adjusted accordingly.

The expenses for some third-party services may be recognized on a straight-line basis if the expected

costs are expected to be incurred ratably during the period.

Payments under the contracts depend on factors such as the achievement of

certain events or milestones, the allocation of responsibilities among the parties to the agreement, and the completion of portions of

the preclinical study or similar conditions.

and Administrative Expenses

general and administrative expenses consist primarily of salaries, benefits and other costs, including equity-based compensation, for

our executive and administrative personnel, legal and other professional fees, travel, insurance, and other corporate costs.

of the Years Ended December 31, 2024 and 2023

ended December 31,

(in thousands)

Cost of revenues

Gross income (loss)

Operating expenses:

1 unchanged sentence

General and administrative

Acquisition of Exacis IPR&D

Impairment of IRX-2 IPR&D

Gain on lease termination

Acquisition of Exacis

Total operating expenses

Loss from operations

Other expense, net:

Other (expense) income, net:

Loss on extinguishment of debt

Change in fair value of convertible notes

Change in fair value of bridge notes derivative

Change in fair value of warrant liabilities

3 unchanged sentences

Interest expense

Other income (expense),

other expense, net

Total other (expense) income, net

Loss before income taxes

Benefit (provision) for income taxes

During the year ended December 31, 2023, we recognized revenue related to the cell line customization activities we performed for a third party.

We did not perform any such activities, or

otherwise recognize any revenue, during the year ended December 31, 2022.

Cost of Revenue

During the year ended December 31, 2023, our cost of revenues includes direct labor and materials to perform the customization cell line activities for a third party, as well as royalty expense

owed to Factor Limited in accordance with our exclusive license agreement with Factor Limited.

There were no comparable expenses for the year ended December 31, 2022.

Research and Development Expenses

Years ended December 31,

(in thousands)

License and MSA expense

(Provision) benefit for income taxes

the years ended December 31, 2024 and 2023, we recognized revenue related to the cell line customization activities we performed for

The increase in revenue is due to accelerating the recognition of approximately $0.5 million of deferred revenue related to

nonrefundable payments we received from Lineage due to the Lineage Assignment Agreement we entered into on September 24, 2024 with Factor

Bioscience discussed earlier.

As of December 31, 2024, we did not have any deferred revenue balances on our consolidated balance sheet.

the years ended December 31, 2024 and 2023, our cost of revenues included direct labor and materials to perform the customization cell

line activities for Lineage.

The decrease in cost of revenue was primarily related to a 20% license fee paid to Factor Bioscience during

the year ended December 31, 2023 related to the Lineage Agreement, which was not repeated in 2024.

and Development Expenses

ended December 31,

Professional fees

MSA/license expense

Payroll-related

Stock-based compensation

Professional fees

Allocated occupancy expense

Other expenses, net

Total research and development expenses

Total research and development expenses decreased by approximately $4.5 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to (a) decreased

expenses under our master services agreement (“MSA”) with Factor Bioscience during 2023 and (b) decreased payroll expense and stock-based compensation expense due to employee terminations and a reduction in clinical trial expense as a result of

our clinical trial ending in 2022, partially offset by (i) a full year of fees paid to Factor Bioscience under the MSA during 2023 and (ii) an increase in professional fees in 2023 related to consulting activities.

General and Administrative Expenses

Years ended December 31,

(in thousands)

research and development expenses

research and development expenses decreased by approximately $1.3 million for the year ended December 31, 2024 compared to the year ended

December 31, 2023, primarily due to decreased professional fees due to a reduction in consultant services, MSA/license fees as a result

of the new Factor L&C Agreement, payroll-related expenses and stock-based compensation from a reduction in headcount, and other expenses

incurred during 2023 related to closing down a clinical trial we ended in 2022.

and Administrative Expenses

ended December 31,

Professional fees

1 unchanged sentence

Stock-based compensation

Loss on disposal or sale of fixed assets

Occupany expense

Occupancy expense

Other expenses, net

Total general and administrative expenses

Our general and administrative expenses decreased by approximately $2.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to (a) decreases

in professional fees resulting from less legal and consulting fees, (b) decreases in payroll expense and stock-based compensation expense resulting from lower headcount, (c) a reduction in insurance premiums and (d) a reduction in the loss on

disposal of fixed assets.

These decreases were offset by increased occupancy expenses as a result of the June 2023 rent commencement date for our Somerville lease and the recognition of the related rent expense.

We expect our occupancy expenses to increase substantially in 2024 compared to 2023 due to our payment obligations under our sublease for office and laboratory space in Somerville,

Massachusetts.

The term of the sublease is approximately 10 years, and our base rent obligations over the term is estimated to be approximately $63.0 million, plus our share of the sublessor’s parking spaces and operating expenses.

Acquisition of Exacis In-Process Research and Development

We acquired from Exacis Biotherapeutics Inc.

(“Exacis”) substantially all of its intellectual property assets, including all of its right, title and interest in and to an exclusive license

agreement by and between Exacis and Factor Limited (the “Purchased License”).

The Purchased License was determined to be an IPR&D asset that has no alternative future use and no separate economic value from its original intended purpose,

which is expensed in the period the cost is incurred.

As a result, we expensed the fair value of the Purchased License of approximately $0.5 million during the year ended December 31, 2023.

For additional information, see Note 4 to the

accompanying consolidated financial statements included in this report.

Impairment of In-Process Research and Development

During the year ended December 31, 2022, we received the results from the INSPIRE phase 2 trial of IRX-2.

Despite outcomes that favored IRX-2 in certain predefined subgroups, the trial did not

meet its primary endpoint of event-free survival at two years of follow up.

Based on the totality of available information, following receipt of the results described above we determined we would not further develop IRX-2 and that the carrying

value of the IPR&D asset was impaired.

Accordingly, we recognized a non-cash impairment charge of approximately $6.0 million during the year ended December 31, 2022, which reduced the value of this asset to zero.

Change in Fair Value of Warrant Liabilities

For the year ended December 31, 2023 and 2022, we recognized credits to expense related to the change in the fair value of warrant liabilities due to a decrease in the market price of our common

Change in Fair Value of Contingent Consideration

On the closing date of our acquisition of the intellectual property assets of Exacis, we recognized a contingent consideration liability of $0.2 million for future payments that may be payable to

Exacis, which was included as part of the $0.5 million fair value of the Purchased License and expensed as IPR&D for the year ended December 31, 2023.

We remeasured the fair value of the contingent consideration liability at the end of each

quarterly period enduring the year, and for the year ended December 31, 2023, the change in fair value was approximately $0.1 million, which is recognized in the consolidated statement of operations.

There were no contingent consideration

liabilities during the same period in 2022.

Loss on Non-Controlling Investment

We account for our 25% non-controlling investment in NoveCite, Inc.

general and administrative expenses

general and administrative expenses decreased by approximately $1.5 million for the year ended December 31, 2024 compared to the year

ended December 31, 2023 primarily due to decreases in professional fees related to legal services and consultants, insurance expense

due to lower premiums and payroll-related expenses resulting from less severance expense during the year ended December 31, 2024 compared

to the year ended December 31, 2023.

These decreases were offset by increased occupancy expense related to our Somerville sublease that

we began to incur expense for in July 2023 and was terminated effective August 31, 2024, as well as increased stock-based compensation

due to stock option awards granted to the chief executive officer during the year ended December 31, 2024.

on Lease Termination

August 9, 2024, we and the sublessor of our Somerville sublease entered into a sublease termination agreement effective August 31, 2024.

Pursuant to the sublease termination agreement, we agreed to surrender and vacate the premises, all of our right, title and interest

in all furniture, fixtures and laboratory equipment at the premises will become the property of the sublessor, and both parties will

be released of their obligations under the sublease.

As a result of the sublease termination, we recognized a gain on lease termination

of approximately $1.6 million for the year ended December 31, 2024.

There was no similar transaction during the year ended December 31,

of Exacis In-Process Research and Development

April 2023, we acquired from Exacis substantially all of its intellectual property assets, including all of its right, title and interest

in an exclusive license agreement between Exacis and Factor Limited (the “Purchased License”).

The Purchased License was

determined to be an in-process research and development (“IPR&D”) asset that has no alternative future use and no separate

economic value from its original intended purpose, which is therefore expensed in the period the cost is incurred.

As a result, we expensed

the fair value of the Purchased License of approximately $0.5 million during the year ended December 31, 2023.

For additional information,

see Note 4 to the accompanying financial statements included in this report.

There was no similar transaction during the year ended December

on Extinguishment of Debt

recognized a $22.4 million loss on extinguishment of debt for the year ended December 31, 2024 related to the exchange transaction and

common stock private placement entered into on September 24, 2024.

There was no similar transaction during the year ended December 31,

See Note 6 to the accompanying consolidated financial statements for more information on the exchange transaction and common stock

private placement.

in Fair Value of Convertible Notes

the modification of our convertible notes was accounted for as an extinguishment of debt and marked to fair value as of September

24, 2024 upon modification, we recognized income of approximately $1.0 million during the year ended December 31, 2024 related to

the change in fair value of the convertible notes.

This was due to such convertible notes being marked to fair value as of October 29, 2024

when such convertible notes were converted to shares of common stock.

There was no similar transaction during the year ended

December 31, 2023.

in Fair Value of Bridge Notes Derivative Liability

recognized expense of $1.6 million related to the initial measurement at September 24, 2024 of the incremental fair value of the bridge

notes derivative liability over the carrying value due to bifurcation of the conversion feature (recognized as a derivative liability)

from the bridge notes.

This was offset by $0.1 million in income recognized for the change in fair value of the bridge notes derivative

liability due to remeasuring the liability during the year ended December 31, 2024.

There was no similar transaction during the year

ended December 31, 2023.

See Note 6 to the accompanying consolidated financial statements for more information on the bridge notes.

in Fair Value of Warrant Liabilities

recognized income of $0.4 million and $0.2 million for the years ended December 31, 2024 and 2023, respectively, for the change in the

fair value of our warrant liabilities.

The change in fair value of warrant liabilities for the year ended December 31, 2024 includes

certain warrants that were reclassified to a liability in September 2024 and then exchanged for shares of common stock in October 2024

as part of the September 2024 Transactions described above.

See Note 6 to the accompanying consolidated financial statements for more

information on the exchanged warrants.

in Fair Value of Contingent Consideration

the closing date of the acquisition of assets from Exacis in April 2023, we recognized a contingent consideration liability of $0.2 million

for future payments that may be payable to Exacis, which was included as part of the $0.5 million fair value of the Purchased License

asset and expensed as IPR&D during the year ended December 31, 2023.

This contingent consideration liability is remeasured at each

period end, and any change in the fair value of the contingent liability is recognized in the statement of operations.

As of December

31, 2024 and 2023, we remeasured the contingent liability and recognized income of $0.1 million for each of the years ended December

31, 2024 and 2023 due to the decrease in the fair value of the contingent consideration liability.

on Non-Controlling Investment

account for our 25% non-controlling investment in NoveCite, Inc.

(“NoveCite”) under the equity method.

We have not guaranteed any obligations of NoveCite, nor are we otherwise committed to

providing further financial support for NoveCite.

Therefore, we only record 25% of NoveCite’s losses up to our investment carrying amount of $1.0 million.

For the years ended December 31, 2023 and 2022, we recognized losses of approximately

$0.1 million and $0.9 million, and as of December 31, 2023, the carrying value of our initial investment is zero.

Interest Income

We recognized interest income for the year ended December 31, 2023 due to depositing our cash into interest bearing accounts

compared to the same period in 2022.

Interest Expense

We recognized an increase in interest expense for the year ended December 31, 2023 primarily due to interest related to the

convertible notes of approximately $0.3 million as well as the amortization of the debt discount and debt issuance costs associated with the convertible note financings.

There were no convertible notes for the same period in 2022.

Other (Expense) Income, Net

Years ended December 31,

(in thousands)

Q1-22 PIPE transaction fees

Liquidated damages

Other (expense) income, net

Total other expense, net

For the year ended December 31, 2023, we recognized (a) commitment fees and other fees related to the SEPA we entered into with Lincoln Park in April 2023 and (b) other miscellaneous expense.

During the year ended December 31, 2022, we expensed fees associated with a private placement we completed in the first quarter of 2022, as all of the fees incurred were allocated to the warrants issued in connection with such transaction, and we

incurred a loss for liquidated damages under a registration rights agreement we entered into with investors in the private placement resulting from not timely filing our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022.

Provision for Income Taxes

During 2023, we expect to incur state income tax liabilities related to our operations.

We have established a full valuation allowance for all deferred tax assets, including our net operating

loss carryforwards, since we could not conclude that we were more likely than not able to generate future taxable income to realize these assets.

The effective tax rate differs from the statutory tax rate due primarily to our full valuation

Liquidity and Capital Resources

At December 31, 2023, we had cash and cash equivalents of approximately $11.7 million, of which approximately $4.1 million was restricted cash (see —Material Cash Requirements—Somerville

Sublease, below) and an accumulated deficit of approximately $187.0 million.

We have to date incurred operating losses, and we expect these losses to continue in the future.

For the year ended December 31, 2023, we incurred a net loss of $21.7

million, and we used $20.4 million in operating activities.

Currently, our sole source of liquidity is through sales of our common stock under the standby equity purchase agreement (the “SEPA”) we entered into with Lincoln Park Capital Fund, LLC (“Lincoln

Park”) in April 2023, pursuant to which Lincoln Park committed to purchase up to $10.0 million of our common stock.

Such sales of common stock by us, if any, are subject to certain conditions and limitations set forth in the SEPA, including a

condition that we may not direct Lincoln Park to purchase any shares of common stock under the SEPA if such purchase would result in Lincoln Park beneficially owning more than 4.99% of our issued and outstanding shares of common stock.

under the SEPA may occur from time to time, at our sole discretion, through April 2025.

To date, we have issued and sold approximately 214,000 shares of our common stock to Lincoln Park, including the 74,000 commitment shares, and have received

approximately $0.3 million in gross proceeds from such sales.

Based on our current financial condition and forecasts of available cash, we will not have sufficient capital to fund our operations for the 12 months following the issuance date of the

accompanying consolidated financial statements.

We can provide no assurance that we will be able to obtain additional capital when needed, on favorable terms, or at all.

If we cannot raise capital when needed, on favorable terms or at all, we

will need to reevaluate our planned operations and may need to reduce expenses, file for bankruptcy, reorganize, merge with another entity, or cease operations.

If we become unable to continue as a going concern, we may have to liquidate our

assets, and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock.

See the risk factor in Item 1A of Part II of this

report titled, “We will require substantial additional capital to fund our operations, and if we fail to obtain the necessary financing, we may not be able to pursue our business strategy.”

Historically, the cash used to fund our operations has come from a variety of sources and predominantly from sales of shares of our common stock and of convertible notes.

We will continue to

evaluate and plan to raise additional funds to support our working capital needs through public or private equity offerings, debt financings, strategic partnerships, out-licensing our intellectual property or other means.

There can be no

assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to us and our stockholders.

Our ability to raise capital through sales of our common stock will depend on a variety of factors

including, among others, market conditions, the trading price and volume of our common stock, and investor sentiment.

In addition, macroeconomic factors and volatility in the financial market, which may be exacerbated in the short term by

concerns over inflation, interest rates, impacts of the wars in Ukraine and the Middle East, strained relations between the U.S.

and several other countries, and social and political discord and unrest in the U.S., among other things, may make

equity or debt financings more difficult, more costly or more dilutive to our stockholders.

In addition, equity or debt financings may have a dilutive effect on the holdings of our existing stockholders, and debt financings may subject us to restrictive covenants, operational

restrictions and security interests in our assets.

If we raise capital through collaborative arrangements, we may be required to relinquish some rights to our technologies or grant sublicenses on terms that are not favorable to us.

We prepared the accompanying consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of

As discussed above, there is substantial doubt about our ability to continue as a going concern because we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements over at least the next 12

months from the date of issuance of the accompanying consolidated financial statements.

The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and

reclassification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of our ability to remain a going concern.

In addition, while we are not presently pursuing product development, we may do so in the future.

Developing product candidates, conducting clinical trials and commercializing products requires

substantial capital, and we would need to raise substantial additional funds if we were to pursue the development of one or more product candidates.

Cash flows from operating, investing and financing activities, as reflected in the accompanying consolidated statements of cash flows, are summarized as follows:

For the years ended

(in thousands)

We have not guaranteed

any obligations of NoveCite, nor are we otherwise committed to providing further financial support for NoveCite.

Therefore, we only record

25% of NoveCite’s losses up to our investment carrying amount.

As a result, we did not recognize additional losses related to NoveCite

for the year ended December 31, 2024.

We recognized a loss of approximately $0.1 million for the year ended December 31, 2023.

recognized an increase in interest income for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to having

our cash into interest bearing accounts for the full year of 2024 compared to 2023.

recognized an increase in interest expense for the year ended December 31, 2024 of approximately $6.1 million compared to the year ended

December 31, 2023 primarily due to interest expense and amortization of debt issuance costs associated with the 2023 convertible note

financings and the 2024 bridge notes.

Income (Expense), Net

ended December 31,

Other income (expense),

the year ended December 31, 2024, we recognized other income related to amounts earned from Factor Bioscience under the Lineage Assignment

Agreement entered into in September 2024.

For the year ended December 31, 2023, we recognized (a) commitment fees and other fees related

to the SEPA we entered into with Lincoln Park in April 2023 and (b) other miscellaneous expense.

for Income Taxes

2024, we expect to incur state income tax liabilities related to our operations.

We have established a full valuation allowance for all

deferred tax assets, including our net operating loss carryforwards, since we could not conclude that we were more likely than not able

to generate future taxable income to realize these assets.

The effective tax rate differs from the statutory tax rate due primarily to

our full valuation allowance.

and Capital Resources

of December 31, 2024, we had cash of approximately $1.7 million, and we had an accumulated deficit of approximately $231.5 million.

have to date incurred operating losses, and we expect these losses to continue in the future.

For the year ended December 31, 2024, we

incurred a net loss of $44.5 million, and we used $15.8 million of cash in operating activities.

On March 11, 2025,

we received $1.5 million in exchange for the issuance of a promissory note with an aggregate principal amount of $1.5 million to an investor.

The promissory note matures on the earlier of (i) June 15, 2025 or (ii) upon us receiving greater than $5 million in aggregate proceeds

from a subsequent capital raise.

Interest accrues at a rate of 5.0% per annum, payable at maturity.

October 29, 2024, we also received approximately $1.1 million upon the closing of the common stock private placement.

Other than the

proceeds raised under the bridge notes and the common stock private placement, our sole source of liquidity is through sales of our common

stock under the SEPA, pursuant to which Lincoln Park committed to purchase up to $10.0 million of our common stock.

Such sales of common

stock by us, if any, are subject to certain conditions and limitations set forth in the SEPA, including a condition that we may not direct

Lincoln Park to purchase any shares of common stock under the SEPA if such purchase would result in Lincoln Park beneficially owning

more than 4.99% of our issued and outstanding shares of common stock.

Sales under the SEPA may occur from time to time, at our sole discretion,

through April 2025.

To date, we have issued and sold approximately 214,000 shares of our common stock to Lincoln Park, including approximately

74,000 commitment shares, and have received approximately $0.3 million in gross proceeds from such sales.

We sold no shares under the

SEPA during the year ended December 31, 2024.

on our current financial condition and forecasts of available cash, we will not have sufficient capital to fund our operations for the

12 months following the issuance date of the accompanying consolidated financial statements.

We can provide no assurance that we will

be able to obtain additional capital when needed, on favorable terms, or at all.

If we cannot raise capital when needed, on favorable

terms or at all, we will need to reevaluate our planned operations and may need to reduce expenses, file for bankruptcy, reorganize,

merge with another entity, or cease operations.

If we become unable to continue as a going concern, we may have to liquidate our assets,

and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose

all or part of their investment in our common stock.

See the risk factor in Item 1A of Part II of this report titled, “We will

require substantial additional capital to fund our operations, and if we fail to obtain the necessary financing, we may not be able to

pursue our business strategy.”

Historically,

the cash used to fund our operations has come from a variety of sources and predominantly from sales of shares of our common stock and

convertible notes.

We will continue to evaluate and plan to raise additional funds to support our working capital needs through public

or private equity offerings, debt financings, strategic partnerships, out-licensing our intellectual property or other means.

be no assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to us and our

stockholders.

Our ability to raise capital through sales of our common stock will depend on a variety of factors including, among others,

market conditions, the trading price and volume of our common stock, and investor sentiment.

In addition, macroeconomic factors and volatility

in the financial market, which may be exacerbated in the short term by concerns over inflation, interest rates, impacts of the wars in

Ukraine and the Middle East, strained relations between the U.S.

and several other countries, and social and political discord and unrest

in the U.S., among other things, may make equity or debt financings more difficult, more costly or more dilutive to our stockholders.

addition, equity or debt financings may have a dilutive effect on the holdings of our existing stockholders, and debt financings may

subject us to restrictive covenants, operational restrictions and security interests in our assets.

If we raise capital through collaborative

arrangements, we may be required to relinquish some rights to our technologies or grant sublicenses on terms that are not favorable to

prepared the accompanying condensed consolidated financial statements on a going concern basis, which assumes that we will realize our

assets and satisfy our liabilities in the normal course of business.

As discussed above, there is substantial doubt about our ability

to continue as a going concern because we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements

over at least the next 12 months from the date of issuance of the accompanying condensed consolidated financial statements.

The accompanying

condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability

and reclassification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty

of our ability to remain a going concern.

addition, while we are not presently pursuing product development, we may do so in the future.

Developing product candidates, conducting

clinical trials and commercializing products requires substantial capital, and we would need to raise substantial additional funds if

we were to pursue the development of one or more product candidates.

flows from operating, investing and financing activities, as reflected in the accompanying condensed consolidated statements of cash

flows, are summarized as follows:

the years ended

Cash (used in) provided by:

1 unchanged sentence

Investing activities

Financing activities

Net decrease in cash and cash equivalents

Net Cash Used in Operating Activities

There was an increase of approximately $0.6 million in cash used in operating activities for the year ended December, 2023, as compared to year ended December 31, 2022.

This change was due to an

increase in cash used in operating assets and liabilities of $5.5 million, primarily related to MSA fees, insurance premiums and accrued severance payments, offset by a $6.1 million decrease in net loss, after giving effect to adjustments made for

non-cash transactions, for the year ended December 31, 2023 when compared to the year ended December 31, 2022.

Net Cash Used in Investing Activities

Total cash used in investing activities remained relatively flat for the year ended December 31, 2023 compared to 2022.

Purchases of property and equipment decreased by $0.3 million for the year

ended December 31, 2023 compared to 2022, which was offset by a decrease in proceeds received from the sale of fixed assets of $0.3 million for the year ended December 31, 2022 compared to 2022.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2023 includes approximately $16.3 million in net proceeds received from convertible note financings and approximately

$0.3 million in net proceeds received under the SEPA.

Net cash provided by financing activities for the year ended December 31, 2022 includes approximately $19.6 million in net proceeds received from capital raising transactions.

Material Cash Requirements

Somerville Sublease

In October 2022, we entered into a sublease for approximately 45,500 square feet of office and laboratory space in Somerville, Massachusetts.

The term of the sublease is approximately 10 years,

and our base rent obligations over the term is estimated to be approximately $63.0 million, plus our share of the sublessor’s parking spaces and operating expenses.

Our base rent obligations under the sublease during 2024 are expected to be $0.5

million per month.

As part of the sublease, we delivered 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 sublease.

The letter of credit

was issued by our commercial bank, which required that we cash collateralize the letter of credit with $4.1 million of cash deposited in a restricted account maintained by such bank.

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.

Convertible Notes

As of the date of this report, the aggregate amount outstanding under our convertible notes, including accrued interest, is $18.2 million, of which $9.0 million and $9.2 million relates to the

July 2023 convertible notes and the December 2023 convertible notes, respectively.

The July 2023 convertible notes mature on July 14, 2028, and the December 2023 convertible notes mature on December 15, 2028 and January 11, 2029, depending on the

issuance date of such notes, unless earlier converted or repurchased.

We may not redeem any of the convertible notes prior to maturity.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S.

preparation of these consolidated financial statements requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the

consolidated financial statements, as well as the reported expenses during the reporting periods.

We continually evaluate our judgments, estimates and assumptions.

We base our estimates on the terms of underlying agreements, our expected course

of development, historical experience and other factors we believe are reasonable based on the circumstances, the results of which form our management’s basis for making judgments about the carrying value of assets and liabilities that are not

readily apparent from other sources.

Actual results may differ from these estimates.

We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our consolidated financial

Goodwill Impairment

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in the acquisition of IRX Therapeutics, Inc.

in November 2018, which was accounted for

as a business combination.

Goodwill is not amortized but is tested for impairment annually or more frequently if events occur or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying

Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other

relevant events.

Management evaluates our company as a single reporting unit, therefore, our goodwill is tested for impairment at the entity level.

Goodwill is tested for impairment as of December 31 st of each year, or more frequently as warranted by events or changes in circumstances mentioned above.

Accounting guidance also permits an optional qualitative assessment for goodwill to determine

whether it is more likely than not that the carrying value of a reporting unit exceeds its fair value.

If, after this qualitative assessment, we determine that it is not more likely than not that the fair value of a reporting unit is less than

its carrying amount, then no further quantitative testing would be necessary.

A quantitative assessment is performed if the qualitative assessment results in a more likely than not determination or if a qualitative assessment is not performed.

The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value.

Contingent Consideration

Contingent consideration from an asset acquisition that is indexed to or settled in shares of our common stock and that is classified as a liability is initially measured at fair value, with

subsequent changes in fair value recognized in earnings.

Measuring the fair value requires various inputs, and a significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the

fair value of the contingent consideration liability, which could also result in material non-cash gains or losses being reported in the Company’s consolidated statement of operations.

Recent Accounting Pronouncements

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

Net decrease in cash

and cash equivalents

Cash Used in Operating Activities

was a decrease of approximately $4.6 million in cash used in operating activities for the year ended December 31, 2024 compared to the

year ended December 31, 2023.

This change was due a $4.5 million decrease in net loss, after giving effect to adjustments made for non-cash

transactions, primarily due to an increase in recognition of revenue as well as a reduction in professional and consulting expenses,

offset by a slight increase of $0.1 million in cash used in operating assets and liabilities for the year ended December 31, 2024 compared

to the year ended December 31, 2023.

Cash Used in Investing Activities

used approximately $0.4 million to pay for the purchases of property and equipment during the year ended December 31, 2024.

an immaterial amount of investing activities during the year ended December 31, 2023.

Cash Provided by Financing Activities

cash provided by financing activities for the year ended December 31, 2024 includes approximately $6.4 million of gross proceeds received

from the convertible note financing, the bridge note financing and the common stock private placement that occurred in January 2024,

September 2024 and October 2024, respectively.

Net cash provided by financing activities for the year ended December 31, 2023 includes

approximately $16.5 million of gross proceeds from convertible note financings and $0.3 million of proceeds received from selling approximately

214,000 shares to Lincoln Park under the SEPA.

The Company did not sell any shares under the SEPA during the year ended December 31,

Sheet Arrangements

did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable

Accounting Estimates

discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which

have been prepared in accordance with U.S.

The preparation of these consolidated financial statements requires us to make judgments,

estimates, and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities

at the date of the consolidated financial statements, as well as the reported expenses during the reporting periods.

We continually evaluate

our judgments, estimates and assumptions.

We base our estimates on the terms of underlying agreements, our expected course of development,

historical experience and other factors we believe are reasonable based on the circumstances, the results of which form our management’s

basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

results may differ from these estimates.

We believe the following critical accounting estimates affect our more significant judgments

and estimates used in the preparation of our consolidated financial statements.

represents the excess of the purchase price over the fair value of identifiable assets acquired and the liabilities assumed.

is not amortized but is tested for impairment annually or more frequently if events occur or circumstances indicate it is more likely

than not that the fair value of a reporting unit is less than its carrying value.

Events that would indicate impairment and trigger an

interim impairment assessment include, but are not limited to, macroeconomic conditions, industry and market considerations, cost factors,

overall financial performance and other relevant events.

Management evaluates our company as a single reporting unit, therefore, our

goodwill is tested for impairment at the entity level.

Goodwill is tested for impairment as of December 31 st of each year,

or more frequently as warranted by events or changes in circumstances mentioned above.

Accounting guidance also permits an optional qualitative

assessment for goodwill to determine whether it is more likely than not that the carrying value of a reporting unit exceeds its fair

If, after this qualitative assessment, we determine that it is not more likely than not that the fair value of a reporting unit

is less than its carrying amount, then no further quantitative testing would be necessary.

A quantitative assessment is performed if

the qualitative assessment results in a more likely than not determination or if a qualitative assessment is not performed.

The quantitative

assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded

to the extent the reporting unit’s carrying value exceeds its fair value.

Accounting Pronouncements

Adopted Accounting Standards

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

Standards Update (“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 permitted.

We do not expect a material impact on

our consolidated financial statements as a result of adopting this ASU.

In October 2023, the FASB issued ASU No.

2023-06, Disclosure Improvements – Codification Amendment in Response to the SEC’s Disclosure Update and Simplification

This ASU modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations.

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.

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 was effective for fiscal years beginning after December

15, 2023, and interim periods within those fiscal years with early adoption permitted.

The adoption of this ASU did not have a material

impact to our consolidated financial statements.

November 2023, the FASB issued ASU No.

2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures , which

provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant

segment expenses and increased interim disclosure requirements, among others.

2023-07 was effective for fiscal years beginning

after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024.

Early adoption was permitted, and the

amendments should be applied retrospectively.

The adoption of this ASU did not have an impact to our consolidated financial statements,

but did result in additional disclosures made in the notes to the consolidated financial statements.

Issued Accounting Standards to be Adopted

October 2023, the FASB issued ASU No.

2023-06, Disclosure Improvements – Codification Amendment in Response to the SEC’s

Disclosure Update and Simplification Initiative.

This ASU modified the disclosure and presentation requirements of a variety of codification

topics by aligning them with the SEC’s regulations.

The amendments to the various topics should be applied prospectively, and the

effective date will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure.

If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30,

2027, then this ASU will not become effective.

effective date will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related

If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this

ASU will not become effective.

Early adoption is prohibited.

We do not expect the amendments in this ASU to have a material impact on our consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures , which provides updates to

qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others.

2023-07 is effective for fiscal years

beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024.

Early adoption is permitted, and the amendments should be applied retrospectively.

We do not expect the amendments in this ASU to have a

material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures , which requires disclosure of disaggregated income taxes paid,

prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

2023-09 is effective for fiscal years beginning after December 15, 2024 and allows for adoption

on a prospective basis, with a retrospective option.

The Company does not expect the amendments in this ASU to have a material

impact on its consolidated financial statements.

December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures , which requires disclosure of disaggregated

income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income

tax-related disclosures.

2023-09 is effective for fiscal years beginning after December 15, 2024 and allows for adoption on a

prospective basis, with a retrospective option.

Early adoption is permitted.

We do not expect the amendments in this ASU to have a material impact on our consolidated financial statements.

Quantitative and Qualitative Disclosures about Market Risk

Under SEC rules and regulations, as a smaller reporting company we are not required to provide the information otherwise required by this item.

Financial Statements and Supplementary Data

See “Index to Consolidated Financial Statements” on page F-1 for the consolidated financial statements filed with this report.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

We do not expect the adoption of this ASU to have a material

impact on our consolidated financial statements.

November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation

Disclosures (Subtopic 220-40).

This ASU is intended to improve disclosures about a public business entity’s expenses by requiring

disaggregated disclosure, in the notes to the financial statements, of prescribed categories of expenses within relevant income statement

2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning

after December 15, 2027 (as clarified in ASU No.

2025-01, Income Statement – Reporting Comprehensive Income – Expense

Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date) .

Early adoption is permitted.

The new standard may be

applied either on a prospective or retrospective basis.

We do not expect the adoption of this ASU to have a material impact on our consolidated

financial statements.

November 2024, the FASB issued ASU No.

2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions

of Convertible Debt Instruments.

This ASU clarifies the requirements for determining whether certain settlements of convertible debt

instruments should be accounted for as an induced conversion.

2024-04 is effective for annual reporting periods beginning

after December 15, 2025 and interim reporting periods within those annual reporting periods.

Early adoption is permitted, and the amendments

may be applied on either a prospective or retrospective basis.

We do not expect the amendments in this ASU to have a material impact

on our consolidated financial statements.

and Qualitative Disclosures about Market Risk

SEC rules and regulations, as a smaller reporting company we are not required to provide the information otherwise required by this item.

Statements and Supplementary Data

“Index to Consolidated Financial Statements” on page F-1 for the consolidated financial statements filed with this report.

in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 7. Management’s Discussion and Analysis