What changed in this filing

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Item 9A. Controls and Procedures

2023-03-30 compared with 2022-03-31 · 724 added, 625 removed, 1264 unchanged (52% of the section changed)

13 unchanged sentences

a) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and

expenditures of a company are being made only in accordance with authorizations of management and the board of directors of the Company;

b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and

that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of the Company;

c) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on its financial statements.

14 unchanged sentences

There was no change in our internal control over financial reporting that occurred during the fourth quarter of 2021 that has materially affected, or is reasonably likely to materially affect, our internal control

over financial reporting.

Except as follows, there was no change in our internal control over financial reporting that occurred during the fourth quarter of 2022 that has materially affected, or is reasonably likely to materially affect,

our internal control over financial reporting.

During the course of preparing and reviewing the Company’s interim financial statements for the period ended September 30, 2022, we identified a computational error in an accrual relating to

research and development costs.

This error was corrected in the financial statements as of and for the period ended September 30, 2022.

We determined that this deficiency constitutes a "material weakness" in our internal control over financial

We have advised our audit committee of this deficiency in our internal control over financial reporting, and the fact that this deficiency constitutes a "material weakness." A material weakness in internal control over financial

reporting is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be

prevented or detected on a timely basis by our internal controls.

We performed additional procedures during the fourth quarter of 2022 to remediate this material weakness.

Specifically, we have implemented additional reviews of research and

development accruals and have enhanced documentation of processes.

Management believes that these efforts have effectively remediated the material weakness.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

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Member of nominating and governance committee

Amelio, Ph.D ., a director since

February 2009, began his career at Bell Labs in Murray Hill, New Jersey.

Amelio, Ph.D ., a director since February 2009, began his career at Bell Labs in Murray Hill, New Jersey.

Since January 1, 2012, Dr.

Amelio has provided consulting and advisory services through GFA, LLC, a California limited liability company.

He was a Senior Partner of Sienna

Ventures (a privately held venture capital firm in Sausalito, California) from April 2001 until the fund closed per plan on December 31, 2011.

He was a Senior Partner of Sienna Ventures (a privately held venture capital firm in Sausalito, California) from

April 2001 until the fund closed per plan on December 31, 2011.

Amelio was Chairman and Chief Executive Officer of Jazz Technologies, Inc.

(now a wholly owned

subsidiary of Tower Semiconductor Ltd., an independent specialty wafer foundry) from August 2005 until his retirement in September 2008 (when he was named Chairman Emeritus).

Amelio was Chairman and Chief Executive Officer of Beneventure

Capital, LLC (a full-service venture capital firm in San Francisco, California) from 1999 to 2005 and was Principal of Aircraft Ventures, LLC (a consulting firm in Newport Beach, California) from April 1997 to December 2004.

elected a Director of AT&T in February 2001 and had previously served as an Advisory Director of AT&T (then known as SBC Communications Inc.) from April 1997 to February 2001.

He served as a Director of Pacific Telesis Group from 1995

until the company was acquired by AT&T in 1997.

Prior to 1997, he served as Chairman, President and CEO of National Semiconductor (1991-1996) and Apple Computer (1996-1997).

(now a wholly owned subsidiary of Tower Semiconductor Ltd., an independent specialty wafer foundry)

from August 2005 until his retirement in September 2008 (when he was named Chairman Emeritus).

Amelio was Chairman and Chief Executive Officer of Beneventure Capital, LLC (a full-service venture capital firm in San Francisco, California)

from 1999 to 2005 and was Principal of Aircraft Ventures, LLC (a consulting firm in Newport Beach, California) from April 1997 to December 2004.

Amelio was elected a Director of AT&T in February 2001 and had previously served as an

Advisory Director of AT&T (then known as SBC Communications Inc.) from April 1997 to February 2001.

He served as a Director of Pacific Telesis Group from 1995 until the company was acquired by AT&T in 1997.

Prior to 1997, he served as

Chairman, President and CEO of National Semiconductor (1991-1996) and Apple Computer (1996-1997).

We believe Dr.

Amelio’s qualifications to sit on our Board of

Directors include his executive leadership and management experience, as well as his extensive experience with global companies, his financial expertise and his years of experience providing strategic advisory services to organizations.

Czirr , has served as a director pursuant

to contractual rights set forth in certain warrants to purchase Common Stock that 10X Fund L.P.

holds since February 2009, served as Chairman of the Board from February 2009 until January 2016 and Executive Chairman from February 2010 until

January 2016, is a co-founder of 10X Fund, L.P.

Amelio’s qualifications to sit on our Board of Directors include his executive leadership and management experience, as well as his

extensive experience with global companies, his financial expertise and his years of experience providing strategic advisory services to organizations.

Czirr , has served as a director pursuant to contractual rights set forth in certain warrants to purchase Common

Stock that 10X Fund L.P.

holds since February 2009, served as Chairman of the Board from February 2009 until January 2016 and Executive Chairman from February 2010 until January 2016, is a co-founder

of 10X Fund, L.P.

and is a managing member of 10X Capital Management LLC, the general partner of 10X Fund, L.P.

Czirr was a co-founder of Galectin Therapeutics in July 2000.

Czirr was instrumental in the

early-stage development of Safe Science Inc., a developer of anti-cancer drugs;

served from 2005 to 2008 as Chief Executive Officer of Minerva Biotechnologies Corporation, a developer of nano particle bio chips to determine the cause of solid

Czirr is an early stage investor and on the board of directors of Gold Express a private gold mining company with multiple exploration properties in the U.S.

Czirr was instrumental in the early-stage development

of Safe Science Inc., a developer of anti-cancer drugs;

served from 2005 to 2008 as Chief Executive Officer of Minerva Biotechnologies Corporation, a developer of nano particle bio chips to determine the cause of solid tumors.

early stage investor and on the board of directors of Gold Express a private gold mining company with multiple exploration properties in the U.S.

Czirr received a B.B.A.

degree from the University of Michigan.

believe that Mr.

Czirr is best situated to sit on our Board because he is the director who was a co-founder of the Company and is familiar with our business and industry.

Kary Eldred, is a director since 2018 and Chief

Investment Officer for the Living Stones Foundation since July 2015 and has been an active private equity investor for many years.

In these capacities, he serves and has served on a number of corporate boards of companies with potential for and

driving toward initial public offerings and is currently serving as a board member in Buy It Installed (since 2017), Babywise and Wise King Media (since 2015).

We believe that Mr.

best situated to sit on our Board because he is the director who was a co-founder of the Company and is familiar with our business and industry.

Kary Eldred, is a director since 2018 and Chief Investment Officer for the Living Stones Foundation since July 2015 and has been an active private equity investor for many years.

In these capacities, he serves and has served on a number of corporate boards of companies with potential for and driving toward initial public offerings and is currently serving as a board

member in Buy It Installed (since 2017), Babywise and Wise King Media (since 2015).

Kary Eldred also served on the board and audit committee of GCT Semiconductor.

January 2011 through October 2014, Mr.

Eldred was CEO & Chairman of Altadona, S.A.

a software integration company based in Europe and prior to that was a principal in Parakletos Ventures, an institutional venture capital firm with several

investments in companies that went on to be acquired or become publicly listed on different exchanges around the world including the NASDAQ, KOSDAQ and the GEM market.

Eldred has an Executive MBA from IE Business School and a BA in Foreign

Service from Baylor University.

From January 2011 through October 2014, Mr.

Eldred was CEO & Chairman of

Altadona, S.A.

a software integration company based in Europe and prior to that was a principal in Parakletos Ventures, an institutional venture capital firm with several investments in companies that went on to be acquired or become publicly

listed on different exchanges around the world including the NASDAQ, KOSDAQ and the GEM market.

Eldred has an Executive MBA from IE Business School and a BA in Foreign Service from Baylor University.

We believe that Mr.

Eldred’s qualifications to sit on our board include his experience serving on boards of several companies and experience in venture capital and private equity investing.

Freeman, a director since May 2011,

holds the Chartered Financial Analyst designation and is Chief Executive Officer of Cross Consulting and Services, LLC, an investment advisory and consulting firm founded in 2004.

He is also author of a New York Times best-selling book about

the stock market and economy and the host of a television program (Economic War Room with Kevin Freeman) that airs on BlazeTV.

qualifications to sit on our board include his experience serving on boards of several companies and experience in venture capital and private equity investing.

Freeman, a director since May 2011, holds the Chartered Financial Analyst designation and is Chief Executive Officer of Cross Consulting and Services, LLC, an investment advisory and consulting firm founded in 2004.

He is also author of a New York Times best-selling book about the stock market and economy and the host of a television program (Economic War Room

with Kevin Freeman) that airs on BlazeTV.

Formerly he was Chairman of Separate Account Solutions, Inc.

and held several offices at Franklin Templeton

Investment Services from 1991 to 2000.

and held several offices at Franklin Templeton Investment Services from 1991 to 2000.

He holds a B.S.

in business administration from University of Tulsa, Tulsa, Oklahoma.

in business administration from

University of Tulsa, Tulsa, Oklahoma.

We believe Mr.

Freeman’s qualifications to sit on our Board of Directors includes his extensive financial expertise and

his years of experience providing financial advisory services.

Freeman’s qualifications to sit on our Board of Directors includes his extensive financial expertise and his years of experience providing financial advisory services.

Joel Lewis , a director since 2017, became our President and Chief Executive Officer on September 2, 2020.

Previously, he was the Managing Director of Shareholder Services at Uline, Inc.

(a distributor of shipping, packaging and industrial supplies),

a position he held from 2007 through 2019.

Lewis is a financial executive with over 26 years of experience started his career in public accounting in 1992.

Previously, he was the Managing Director

of Shareholder Services at Uline, Inc.

(a distributor of shipping, packaging and industrial supplies), a position he held from 2007 through 2019.

Lewis is a financial executive with over 26 years of experience started his career in public

accounting in 1992.

Prior to his employment with Uline Inc., Mr.

Lewis served as a Tax and Accounting

Manager for Century America LLC from 2001 to 2006 and a Tax Manager for Deloitte & Touche from 1998 to 2001.

After spending a decade in public accounting where he specialized in both financial reporting and taxation, Mr.

Lewis migrated to

privately held companies focusing on high-net-worth family businesses.

Lewis has a wide range of expertise including working in a variety of industries and disciplines including taxation, restructuring, acquisition and private equity

Lewis served as a Tax and Accounting Manager for Century America LLC from 2001 to 2006 and a Tax Manager for Deloitte & Touche from 1998 to 2001.

After spending a decade in

public accounting where he specialized in both financial reporting and taxation, Mr.

Lewis migrated to privately held companies focusing on high-net-worth family businesses.

Lewis has a wide range of expertise including working in a variety

of industries and disciplines including taxation, restructuring, acquisition and private equity ventures.

Lewis is a registered CPA in the state of Illinois.

He holds a B.S.

in Accountancy from the University of Illinois and a Masters in Taxation from DePaul University.

in Accountancy from the University of Illinois and a Masters in

Taxation from DePaul University.

We believe that Mr.

Lewis’ qualifications to sit on our Board

include his business and financial expertise and his service as a board observer on our Board during 2017 .

Lewis’ qualifications to sit on our Board include his business and financial expertise and his service as a board observer on our Board during 2017.

Omenn, M.D., Ph.D.

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for 27 years and of Rohm & Haas Company for 22 years.

He currently serves on the boards of Oncofusion Therapeutics and MedsynBio LLC of

Ann Arbor, MI.

He currently serves on the boards of Oncofusion Therapeutics and MedsynBio LLC of Ann Arbor, MI.

Omenn is the Harold T.

Shapiro Distinguished University Professor of Computational Medicine & Bioinformatics, Internal Medicine, Human Genetics, and Public Health and Director of the university-wide Center for

Computational Medicine and Bioinformatics at the University of Michigan.

Omenn served as executive vice president for medical affairs and as chief executive officer of the University of Michigan Health System from 1997 to 2002.

was dean of the School of Public Health and Community Medicine and professor of medicine and a Howard Hughes Medical Institute investigator at the University of Washington and Member of the Fred Hutchinson Cancer Research Center.

Earlier he was Associate Director of the White House Office of Science and Technology Policy and of the Office of Management and Budget.

He is the author of 600

research papers and scientific reviews and author/editor of 18 books.

Shapiro Distinguished University Professor of Computational Medicine &

Bioinformatics, Internal Medicine, Human Genetics, and Public Health and Director of the university-wide Center for Computational Medicine and Bioinformatics at the University of Michigan.

Omenn served as executive vice president for

medical affairs and as chief executive officer of the University of Michigan Health System from 1997 to 2002.

Prior, he was dean of the School of Public Health and Community Medicine and professor of medicine and a Howard Hughes Medical

Institute investigator at the University of Washington and Member of the Fred Hutchinson Cancer Research Center.

Earlier he was Associate Director of the White House Office of Science and Technology Policy and of the Office of Management and

He is the author of 600 research papers and scientific reviews and author/editor of 18 books.

Omenn received his B.A.

1 unchanged sentence

magna cum laude from Harvard Medical School, and Ph.D.

in genetics from the University of

from the University of Washington.

We believe Dr.

Omenn’s qualifications to sit on our Board of Directors include his extensive executive leadership and management experience in the medical industry and his continuing cutting-edge research.

Marc Rubin, M.D, a director since

October 2011 and Chairman of the Board from January 2016 through May 2018, is Executive Chairman of the Board of Directors of Titan Pharmaceuticals, Inc.

OTC BB) and served as its President and Chief Executive Officer from October 2007

to January 2009.

Marc Rubin, M.D, a director since October 2011 and Chairman of the Board from January 2016 through May 2018, is Executive Chairman of the Board

of Directors of Titan Pharmaceuticals, Inc.

OTC BB) and served as its President and Chief Executive Officer from October 2007 to January 2009.

Until February 2007, Dr.

Rubin served as Head of Global Research and Development for Bayer Schering Pharma, as well as a member of the Executive Committee of Bayer Healthcare and the Board of Management of Bayer Schering

Rubin served as Head of Global Research and Development for Bayer

Schering Pharma, as well as a member of the Executive Committee of Bayer Healthcare and the Board of Management of Bayer Schering Pharma.

Prior to the merger of Bayer Pharmaceuticals and Schering AG in June 2006, Dr.

Rubin was a member of the Executive Board of Schering AG since joining the company in October 2003, as well as Chairman of Schering Berlin Inc.

and President

of Berlex Pharmaceuticals, a division of Schering AG.

Rubin was a member of the

Executive Board of Schering AG since joining the company in October 2003, as well as Chairman of Schering Berlin Inc.

and President of Berlex Pharmaceuticals, a division of Schering AG.

From 1990 until August 2003, Dr.

Rubin was employed by GlaxoSmithKline where he held positions of responsibility in global clinical and commercial development overseeing programs in the

United States, Europe, Asia and Latin America.

From 2001 through 2003 at GlaxoSmithKline, he was Senior Vice President of Global Clinical Pharmacology & Discovery Medicine.

Rubin was employed by

GlaxoSmithKline where he held positions of responsibility in global clinical and commercial development overseeing programs in the United States, Europe, Asia and Latin America.

From 2001 through 2003 at GlaxoSmithKline, he was Senior Vice

President of Global Clinical Pharmacology & Discovery Medicine.

Rubin holds an M.D.

from Cornell University Medical College and

is board certified in internal medicine with subspecialties in medical oncology and infectious diseases.

from Cornell University Medical College and is board certified in internal medicine with subspecialties in medical oncology and infectious diseases.

Rubin is a member of the Board of Directors of Curis Inc.

CRIS) and formerly served on the Board of Directors of Medarex,

Inc., now a subsidiary of Bristol-Myers Squibb Company.

CRIS) and formerly served on the Board of Directors of Medarex, Inc., now a subsidiary of Bristol-Myers Squibb Company.

We believe Dr.

Rubin’s qualifications to sit on our Board of Directors include his extensive executive leadership and management experience in the pharmaceutical industry.

Schwartz, Ph.D., a

director appointed by the board in September 2020, is a disease modeler who is currently a professor of biological sciences and mathematics at Washington State University (WSU).

She received a PhD in Biomedical Sciences from Mount Sinai–NYU, a

BA in Mathematics from UC Berkeley, and interdisciplinary postdoctoral training in Biomathematics and Biostatistics from UCLA.

She is also affiliated with the WSU College of Veterinary Medicine in microbiology and pathology, and she is

currently on the WSU COVID-19 modeling task force.

Schwartz is the author of over 30 scientific publications on infectious disease, the immune response, and biological modeling.

She serves on the Board of Directors for the Society for

Mathematical Biology, and she previously served as a consultant for Pharmerit International, LP, a pharmaceutical economics company.

Schwartz has held fellowships with the Mathematical Biosciences Institute (Ohio State University) and the

African Institute for Mathematical Sciences (Cape Town, South Africa), and she served on the teaching faculty for courses in British Columbia, India, and Nepal.

Rubin’s qualifications to sit on our Board

of Directors include his extensive executive leadership and management experience in the pharmaceutical industry.

Schwartz, Ph.D., a director appointed by the board in September 2020, is a disease modeler who is currently a professor of biological sciences and mathematics at Washington State University (WSU).

She received a PhD in Biomedical Sciences from Mount Sinai–NYU, a BA in Mathematics from UC Berkeley, and interdisciplinary postdoctoral training in

Biomathematics and Biostatistics from UCLA.

She is also affiliated with the WSU College of Veterinary Medicine in microbiology and pathology, and she is currently on the WSU COVID-19 modeling task force.

Schwartz is the author of over 30

scientific publications on infectious disease, the immune response, and biological modeling.

She serves on the Board of Directors for the Society for Mathematical Biology, and she previously served as a consultant for Pharmerit International,

LP, a pharmaceutical economics company.

Schwartz has held fellowships with the Mathematical Biosciences Institute (Ohio State University) and the African Institute for Mathematical Sciences (Cape Town, South Africa), and she served on the

teaching faculty for courses in British Columbia, India, and Nepal.

We believe Dr.

Schwartz’ qualifications to sit on our Board of Directors include

her extensive expertise in biomathematics and biostatistics in the pharmaceutical industry.

Schwartz’ qualifications to sit on our Board of Directors include her extensive expertise in biomathematics and biostatistics in the pharmaceutical industry.

Harold Shlevin, Ph.D.

, retired from being our

President and Chief Executive Officer on September 2, 2020, a position he had held since June 14, 2018;

, retired from being our President and Chief Executive Officer on September 2, 2020, a position he had held since June 14, 2018;

Shlevin has entered into a consulting agreement with the Company which ran through December 31, 2021.

Shlevin previously

served as our Chief Operating Officer and Secretary from October 1, 2012.

Shlevin previously had been employed at the Georgia Institute of Technology’s Advanced Technology Development Center as Principle and Manager of bioscience

commercialization efforts since November 2009, where he has assisted faculty in identifying technology worthy of commercialization, catalyzed formation of new start-up bioscience companies, and mentored new company management.

From October 2008

to November 2009, he served as Head of Operations and Commercial Development for Altea Therapeutics Corporation, an advanced drug delivery company focused on the delivery of therapeutic levels of water-soluble biotherapeutics and small drugs

through the skin.

At Altea, he was responsible for pharmaceutical research and development, clinical research, regulatory affairs, engineering, clinical and commercial manufacturing, quality assurance, information technology, facility

operations and finance.

Shlevin previously served as our Chief Operating Officer and Secretary from October 1, 2012.

Shlevin previously had been employed at the Georgia Institute of Technology’s Advanced Technology Development Center as Principle and Manager of bioscience commercialization efforts since November 2009, where he has assisted faculty in

identifying technology worthy of commercialization, catalyzed formation of new start-up bioscience companies, and mentored new company management.

From October 2008 to November 2009, he served as Head of Operations and Commercial Development

for Altea Therapeutics Corporation, an advanced drug delivery company focused on the delivery of therapeutic levels of water-soluble biotherapeutics and small drugs through the skin.

At Altea, he was responsible for pharmaceutical research and

development, clinical research, regulatory affairs, engineering, clinical and commercial manufacturing, quality assurance, information technology, facility operations and finance.

From July 2006 to September 2008, Dr.

Shlevin served as the President and Chief Executive Officer of Tikvah Therapeutics, Inc., a start-up pharmaceutical enterprise focused on later-stage development of neuroscience

therapeutics.

From May 2000 to January 2006, he served as President and CEO of Solvay Pharmaceuticals, Inc.

In January 2006, he was promoted to a global senior Vice President role within Solvay Pharmaceuticals, SA and member of the Board

of Solvay Pharmaceuticals, SA.

Shlevin served as the

President and Chief Executive Officer of Tikvah Therapeutics, Inc., a start-up pharmaceutical enterprise focused on later-stage development of neuroscience therapeutics.

From May 2000 to January 2006, he served as President and CEO of Solvay

Pharmaceuticals, Inc.

In January 2006, he was promoted to a global senior Vice President role within Solvay Pharmaceuticals, SA and member of the Board of Solvay Pharmaceuticals, SA.

Previously, Dr.

Shlevin served on the Board of Directors of Cardiome Pharma Corporation (NASDAQ:

Shlevin served on the Board of

Directors of Cardiome Pharma Corporation (NASDAQ:

CRME), now known as Correvio Pharma Corp.

CORV) from 2004 to June 2016.

He was Chair of the Compensation

Committee and member of the Corporate Governance Committee and Audit Committees.

He was Chair of the Compensation Committee and member of the Corporate Governance Committee and Audit Committees.

We believe Dr.

Shlevin’s qualifications to sit on our Board of Directors include his extensive executive leadership and management experience in the pharmaceutical

Uihlein , a director since 2017 and

Chairman since May 2018, co-founded Uline, Inc.

Shlevin’s qualifications to sit on our Board of Directors include his extensive executive leadership and management experience in the pharmaceutical industry.

Uihlein , a director since 2017 and Chairman since May 2018, co-founded Uline, Inc.

(a leading distributor of shipping, packaging and industrial supplies) in 1980, and has served as its Chief Executive Officer and Chairman since its founding.

4 unchanged sentences

We believe Mr.

Uihlein’s qualifications to sit on our Board

includes his extensive executive leadership and management experience.

Zordani, a director appointed by the

board in September 2020, has been the Director of Shareholder Services at Uline, Inc.

Uihlein’s qualifications to sit on our Board includes his extensive executive leadership and management experience.

Zordani, a director appointed by the board in September 2020, has been the Director of Shareholder Services at Uline, Inc.

(a distributor of shipping, packaging and industrial supplies) since 2013.

Prior to joining Uline, Mr.

Zordani served as a Director and Vice President for

Diversified Financial Management Corp.

(Pritzker family office) where he advised on complex legal and tax structures for domestic and foreign entities and trusts from 2003 through 2013 and an Audit Manager for Altschuler, Melvoin & Glasser

LLP (now RSM McGladrey) from 1996 through 2003.

Zordani received his undergraduate degree from the University of Illinois at Urbana/Champaign and is a Registered CPA in the state of Illinois.

Zordani served as a Director and Vice President for Diversified Financial Management Corp.

(Pritzker family office) where he advised on

complex legal and tax structures for domestic and foreign entities and trusts from 2003 through 2013 and an Audit Manager for Altschuler, Melvoin & Glasser LLP (now RSM McGladrey) from 1996 through 2003.

Zordani received his

undergraduate degree from the University of Illinois at Urbana/Champaign and is a Registered CPA in the state of Illinois.

We believe that Mr.

Zordani’s qualifications to

sit on our Board include his business and financial expertise.

Zordani’s qualifications to sit on our Board include his business and financial expertise.

Code of Ethics

6 unchanged sentences

and exchange funds) or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s equity securities.

Clawback Policy

At this time, the Company has not adopted a policy regarding the recovery by the Company of certain incentive-based compensation awarded to current and former executives in the event of a accounting errors.

February 2023, the Nasdaq Stock Market released a proposed version of a clawback rule that would require listed companies to have a clawback policy.

Upon the SEC’s approval of such rule, the Company intends to adopt a clawback policy in

compliance with Nasdaq listing requirements.

Director Nominations

5 unchanged sentences

reporting practices of Galectin Therapeutics.

More specifically, it assists the Board of Directors in fulfilling its oversight responsibilities relating to (i) the quality and integrity of our financial statements, reports and related information

provided to stockholders, regulators and others, (ii) our compliance with legal and regulatory requirements, (iii) the qualifications, independence and performance of our independent registered public accounting firm, (iv) the internal control

over financial reporting that management and the Board have established, and (v) the audit, accounting and financial reporting processes generally.

The Committee is also responsible for review and approval of related-party transactions.

has determined that Mr.

More specifically, it assists the Board of Directors in fulfilling its oversight responsibilities relating to (i) the quality and integrity of our financial statements, reports and related

information provided to stockholders, regulators and others, (ii) our compliance with legal and regulatory requirements, (iii) the qualifications, independence and performance of our independent registered public accounting firm, (iv) the

internal control over financial reporting that management and the Board have established, and (v) the audit, accounting and financial reporting processes generally.

The Committee is also responsible for review and approval of related-party

transactions.

The Board has determined that Mr.

Zordani is an “audit committee financial expert” within the meaning of SEC rules.

The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from the Company for, outside

legal, accounting or other advisors as it deems necessary to carry out its duties.

The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from

the Company for, outside legal, accounting or other advisors as it deems necessary to carry out its duties.

Risk Management

11 unchanged sentences

Use of multiple compensation vehicles that provide a balance of long- and short-term incentives with fixed and variable components;

Equity incentive awards that generally vest over several years, so while the potential compensation payable for equity incentive awards is tied directly to appreciation of our stock price, taking excessive risk for a short term gain is

discouraged because it would not maximize the value of equity incentive awards over the long-term.

is discouraged because it would not maximize the value of equity incentive awards over the long-term.

EXECUTIVE OFFICERS

Joel Lewis , see above under directors.

Boudes, M.D., age 64, became the

Company’s Chief Medical Officer on March 2, 2020.

Boudes, M.D., age 65, became the Company’s Chief Medical Officer on March 2, 2020.

Prior to joining the Company, Dr.

Boudes served as the Chief Medical Officer of CymaBay Therapeutics from March 2014 through October 2019, where he worked on CymaBay’s proprietary NASH compound

and was instrumental in inventing and launching programs in rare liver diseases.

Boudes served as the Chief Medical Officer of CymaBay Therapeutics from March 2014 through October 2019, where he worked on CymaBay’s proprietary NASH compound and was instrumental in inventing and launching programs in rare liver diseases.

Prior to his time at CymaBay, Dr.

1 unchanged sentence

Following this experience, Dr.

Boudes became a Board member of Protalix BioTherapeutics, a company developing plant cell expressed recombinant proteins with improved therapeutic profiles, notably for lysosomal disorders.

Before his time working

as a Chief Medical Officer, Dr.

Boudes held positions of increased responsibilities in clinical development at Bayer HealthCare Pharmaceuticals, Wyeth Research, Hoffman-La Roche and Pasteur Merieux.

Callicutt , age 54, became our Chief

Financial Officer on July 1, 2013.

Boudes became a Board member of Protalix

BioTherapeutics, a company developing plant cell expressed recombinant proteins with improved therapeutic profiles, notably for lysosomal disorders.

Before his time working as a Chief Medical Officer, Dr.

Boudes held positions of increased

responsibilities in clinical development at Bayer HealthCare Pharmaceuticals, Wyeth Research, Hoffman-La Roche and Pasteur Merieux.

Callicutt , age 55, became our Chief Financial Officer on July 1, 2013.

From August 2011 through June 2012, Mr.

Callicutt was the Chief Financial Officer of REACH Health, Inc., a telemedicine technology company headquartered in Alpharetta, GA.

From April 2010 through August 2012,

Callicutt was the Chief Financial Officer of Vystar Corporation, a publicly traded company that holds proprietary technology to remove antigenic proteins from natural rubber latex.

From April 2010 through August 2012, Mr.

Callicutt was the Chief Financial Officer of Vystar Corporation, a publicly

traded company that holds proprietary technology to remove antigenic proteins from natural rubber latex.

Prior to that Mr.

Callicutt was Chief Financial Officer of

IVOX, Inc., Tikvah Therapeutics and Corautus Genetics, a publicly traded biotechnology company which was developing gene therapy for treatment of cardiovascular disease.

Callicutt previously spent more than fourteen years in public

accounting, most recently as a senior manager at Deloitte, where he specialized in technology companies from 1989 to 2003.

Callicutt was Chief Financial Officer of IVOX, Inc., Tikvah Therapeutics and Corautus Genetics, a publicly traded

biotechnology company which was developing gene therapy for treatment of cardiovascular disease.

Callicutt previously spent more than fourteen years in public accounting, most recently as a senior manager at Deloitte, where he specialized

in technology companies from 1989 to 2003.

Callicutt is a Certified Public Accountant and graduated with honors from Delta State University with a B.B.A.

accounting and computer information systems.

in accounting and computer information systems.

None of the directors, executive officers and significant employees share any familial relationship.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers and directors, and persons who beneficially own more than ten percent of our common stock, to file reports of ownership and changes of ownership of such securities with the SEC.

reports were timely filed during the fiscal year ended December 31, 2021.

securities with the SEC.

All reports were timely filed during the fiscal year ended December 31, 2022, except as set forth below.

Delinquent Section 16(a) Reports

One of our directors, James C.

Czirr, and one of our 10% shareholders, 10X Fund, L.P.

did not timely file two change on ownership reports on Form 4, resulting in the untimely disclosure of two transactions.

Executive Compensation

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practices, focusing primarily on the compensation of our named executive officers, or NEOs.

This Compensation Discussion is intended to be read in conjunction with the tables that follow, which provide detailed historical compensation information

for our following NEOs:

This Compensation Discussion is intended to be read in conjunction with the tables that follow, which provide detailed historical compensation

information for our following NEOs:

Chief Executive Officer and President

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experience of the members of the Compensation Committee and our Board, many of whom sit on the boards of directors of, or have previously advised, numerous companies, including companies in the life sciences industry.

At our last “Say-on-Pay vote” held at our 2019 annual meeting of stockholders approximately 86% of our outstanding common stock voting on the matter voted in favor of the compensation of our NEOs, as disclosed in

the proxy materials for the 2019 annual meeting.

At our 2019 annual meeting, the holders of approximately 78% of our outstanding common stock voting on the matter voted in favor of holding the stockholder advisory vote every three years.

result of such vote, our Board decided to hold the “Say-on-Pay” advisory vote every three years.

At our last “Say-on-Pay vote” held at our 2022 annual meeting of stockholders approximately 90% of votes cast were in favor of the compensation of our NEOs, as disclosed in the proxy materials for the 2022 annual

At our 2019 annual meeting, the holders of approximately 78% of our outstanding common stock voting on the matter voted in favor of holding the tockholder advisory vote every three years.

As a result of such vote, our Board decided to

hold the “Say-on-Pay” advisory vote every three years.

Accordingly, the Company’s next “Say-on-Pay” advisory vote on the compensation of our NEOs will be held at our 2025 annual meeting of stockholders.

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continued to inform the Compensation Committee’s decisions on compensation in subsequent years, including 2022.

The Compensation Committee may use a compensation consultant in the future and to take into account publicly-available data relating to the compensation practices and policies of other companies within and outside

our industry.

The Compensation Committee may use a compensation consultant in 2023 and will take into account publicly-available data relating to the compensation practices and policies of other companies within and outside our

The Compensation Committee intends to benchmark its executive compensation program to target at least the 50 th percentile of the total compensation

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annually and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance, and experience.

In making decisions regarding salary increases, the Company may also draw upon the

experience of members of the Compensation Committee and the Board of Directors, many of whom sit on the boards of directors of, or have previously advised, numerous companies, including companies in the life sciences industry.

The Compensation

Committee has not previously applied specific formulas to determine increases.

In making decisions regarding salary increases, the Company may also draw upon

the experience of members of the Compensation Committee and the Board of Directors, many of whom sit on the boards of directors of, or have previously advised, numerous companies, including companies in the life sciences industry.

Compensation Committee has not previously applied specific formulas to determine increases.

This strategy is consistent with the Company’s intent of offering base salaries that are cost-effective while remaining competitive.

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2021 Base Salary

500,000 (1)(3)

Boudes, M.D..

Lewis became our President and Chief Executive Officer on September 2, 2020.

Boudes became our Chief Medical Officer on March 3, 2020.

Pursuant to Mr.

Lewis’s Employment Agreement and Deferred Stock Unit Agreement, 20% of Mr.

Lewis’ base salary will be paid in cash and 80% will be paid in the form of deferred-stock units in accordance with the terms and subject to the

provisions of the DSU Agreement.

Lewis’ base salary will be paid in cash and 80% will be paid in the form of deferred-stock units in accordance with the terms and subject to

the provisions of the DSU Agreement.

Performance Bonuses

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Program is a performance-based program and was adopted in recognition of the importance of aligning executive and employee interests with that of our stockholders.

Our Program is designed to reward the efforts of our executives and employees and

to be competitive in attracting and retaining them.

Our Program is designed to reward the efforts of our executives and employees

and to be competitive in attracting and retaining them.

There are two elements of the Program:

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Lewis’s Employment Agreement and Deferred Stock Unit Agreement, 20% of Mr.

Lewis’ bonus will be paid in cash and 80% will be paid in the form of deferred-stock units in accordance with the terms and subject to the

provisions of the DSU Agreement

Lewis’ bonus will be paid in cash and 80% will be paid in the form of deferred-stock units in

accordance with the terms and subject to the provisions of the DSU Agreement

Long-Term Incentive Compensation

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The stock awards enable the NEOs to participate in the appreciation in the value of the Company’s stock, while personally participating in the risks of business setbacks.

Under the long-term incentive portion of the Program, the NEOs are granted options based upon achievement of the Company performance and individual performance objectives and rank in the Company.

All option grants

under the Program through December 2019 were made under the 2009 Incentive Compensation Plan.

Under the long-term incentive portion of the Program, the NEOs are granted options based upon achievement of the Company performance and individual performance objectives and rank in the

All option grants under the Program through December 2019 were made under the 2009 Incentive Compensation Plan.

Grants made after January 1, 2020, were made pursuant to the 2019 Omnibus Equity Incentive Plan.

On March 25, 2021, the NEOs were awarded the options noted below based on 2020 performance.

For the performance options, 25% vest on each of September 30, 2021, March 31, 2022, September 30, 2022 and March 31,

On January 24, 2022, the NEOs were awarded the options noted below based on 2021 performance.

For the performance options, 25% vest on each of June 30, 2022, December 31, 2022, June 30, 2023, and December 31, 2023.

The exercise price of the options is set at the closing price of our stock as of the grant date.

The NEOs also were awarded longer term option grants that vest 100% when the Company has received the interim results of the NAVIGATE clinical

trial and makes a public announcement that it has received the interim results.

Number of Securities

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Pol Boudes, M.D.

Material Terms of Employment Contracts of Named Executive Officers

Set forth below are descriptions of the principal terms of the employment agreements for each of our NEOs.

Each employment agreement provides for post-termination restrictive covenants and payments due upon

termination of employment or change in control of the Company, which is provided in further detail under the section entitled “Potential Payments Upon Termination or Change in Control.”

Each employment agreement provides for post-termination restrictive covenants and

payments due upon termination of employment or change in control of the Company, which is provided in further detail under the section entitled “Potential Payments Upon Termination or Change in Control.”

Joel Lewis, Chief Executive Officer

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Lewis, the Company and Mr.

Lewis entered into an employment agreement, dated August 31, 2020 (the “ Employment Agreement ”), and a Deferred Stock

Unit Agreement, dated August 31, 2020 (the “ DSU Agreement ”).

Lewis entered into an employment agreement, dated August 31, 2020 (the “ Employment Agreement ”), and a Deferred Stock Unit Agreement, dated

August 31, 2020 (the “ DSU Agreement ”).

The Employment Agreement has an initial term of two years and automatically renews for additional one-year terms thereafter, unless either Mr.

Lewis or the Company elects not to

Lewis will serve as Chief Executive Officer of the Company effective as of September 2, 2020 (the “ Start Date ”), and will be paid an annual base salary of $500,000.

Under the terms of the Employment Agreement, 20% of his base

salary will be paid in cash, and 80% will be paid in the form of deferred-stock-units (“ DSUs ”) in accordance with the terms and subject to the provisions set forth in the DSU Agreement.

Lewis or the Company elects not to renew.

will serve as Chief Executive Officer of the Company effective as of September 2, 2020 (the “ Start Date ”), and will be paid an annual base salary of $500,000.

Under the terms of the Employment Agreement, 20% of his base salary will be

paid in cash, and 80% will be paid in the form of deferred-stock-units (“ DSUs ”) in accordance with the terms and subject to the provisions set forth in the DSU Agreement.

In addition, Mr.

Lewis is entitled to participate in

the Company’s performance bonus plan with a potential of up to 50% of his annual base salary, which will also be paid 20% in cash and 80% in DSU’s.

Lewis is entitled to participate in the Company’s

performance bonus plan with a potential of up to 50% of his annual base salary, which will also be paid 20% in cash and 80% in DSU’s.

Lewis received on the date of the agreement an initial grant of options to purchase 250,000

250,000 shares of the Company’s common stock, par value $0.001 per share, which options shall vest one-twelfth on a quarterly basis for twelve consecutive quarters, such that the options shall be fully vested twelve quarters following the date of

grant (the “ Award ”).

shares of the Company’s common stock, par value $0.001 per share, which options shall vest one-twelfth on a quarterly basis for twelve consecutive quarters, such that the options shall be fully vested twelve quarters following the date of grant

(the “ Award ”).

The options under the Award shall be issued pursuant to the Company’s 2019 Omnibus Equity Incentive Plan (the “ Plan ”).

Pursuant to the Employment Agreement, Mr.

Lewis is also eligible to receive healthcare

benefits as may be provided from time to time by the Company to its employees generally, to participate in the Company’s 401(k) plan and to receive paid time off annually in accordance with the Company’s policies in effect from time to time.

Finally, pursuant to the Employment Agreement, the Company will be required to furnish a lump sum cash payment to Mr.

Lewis is also eligible to receive healthcare benefits

as may be provided from time to time by the Company to its employees generally, to participate in the Company’s 401(k) plan and to receive paid time off annually in accordance with the Company’s policies in effect from time to time.

pursuant to the Employment Agreement, the Company will be required to furnish a lump sum cash payment to Mr.

Lewis upon a termination of Mr.

Lewis without “Cause” or upon Mr.

Lewis’ resignation for “Good Reason” as such terms are defined

in the Employment Agreement or in the event the Company gives notice of non-renewal on or before September 30, 2023.

Lewis’ resignation for “Good Reason” as such terms are defined in the

Employment Agreement or in the event the Company gives notice of non-renewal on or before September 30, 2023.

The Employment Agreement includes customary intellectual property, assignment, and other representations by Mr.

On July 25, 2022, we entered into amendments to the Employment Agreement and DSU Agreement with Mr.

Pursuant to the amendments, Mr.

Lewis’ base salary

earned in 2023 will be paid 20% in cash and 80% in DSUs.

Additionally, the term of the Employment Agreement was extended until December 31, 2024.

Unless either party gives written notice of non-renewal at least 60 days prior to December

31, 2024, the amended employment agreement will automatically renew for an additional twelve months.

Also, if either Mr.

Lewis terminates his employment for Good Reason (ii) the Company terminates Mr.

Lewis’s employment without Cause, or if

this Employment Agreement expires as a result of the Company giving written notice of non-renewal, then the Company shall pay to Mr.

Lewis (1) any accrued benefits, (2) a lump sum amount equal to twelve (12) months of Mr.

Lewis’s base salary

payable within thirty (30) days after the date of such termination, and (3) the performance bonus, if any, for the year in which termination occurs, based on actual individual and Company performance results and multiplied by a fraction, (A)

the numerator of which shall be the number of days elapsed from the beginning of the fiscal year in which such termination occurs and (B) the denominator of which shall be 365;

provided, however, that the portion of the performance bonus

payable in the form of DSUs, will be paid in accordance with the terms of the DSU Award Agreements.

Notwithstanding the foregoing, the payments described in clauses above are expressly conditioned upon Mr.

Lewis executing returning a full

release of the Company and its affiliates and from all obligations and any usual and customary indemnification obligations of the Company to Mr.

Lewis as an officer thereof.

Pursuant to the DSU Agreement, 80% of Mr.

Lewis’ base salary under the Employment Agreement shall be payable in DSUs, which DSUs credited to Mr.

Lewis as of any date shall be fully vested and

nonforfeitable at all times.

The Company shall issue the shares underlying the outstanding whole number of DSUs credited to Mr.

Lewis as of any date shall be fully vested and nonforfeitable at all

Pursuant to an amendment to the DSU Agreement in July 2022, the Company shall issue the shares underlying the outstanding whole number of DSUs credited to Mr.

Lewis as follows:

twenty five percent shall be issued on March 1, 2023, twenty five percent shall be issued on

September 1, 2023 and fifty percent shall be issued on March 1, 2024.

twenty five percent shall be issued on March 1, 2023, twenty

five percent shall be issued on September 1, 2028 and fifty percent shall be issued on March 1, 2024.

Boudes, M.D., Chief Medical Officer

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Boudes (the “ Agreement ”), which governs the terms of Dr.

Boudes’ employment in his position as the Company’s

Chief Medical Officer.

Boudes’ employment in his position as the Company’s Chief Medical

Boudes will serve as the Chief Medical Officer of the Company during an initial term that commences on March 2, 2020 (the “ Commencement Date ”) and expires on February 28, 2021 (the “ Initial Term ”).

Following the Initial Term, the term of the Agreement automatically renews for successive twelve (12) month terms unless either party provides the other party with notice of non-renewal at least sixty (60) days prior to the expiration of the

then-current term.

Following the

Initial Term, the term of the Agreement automatically renews for successive twelve (12) month terms unless either party provides the other party with notice of non-renewal at least sixty (60) days prior to the expiration of the then-current

Under the Agreement, the Company has agreed to pay Dr.

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Provided that certain performance objectives are met, Dr.

Boudes will also be entitled to receive an

annual performance bonus equal to thirty percent (30%) of the Base Salary (the “ Performance Bonus ”).

Boudes will also be entitled to receive an annual

performance bonus equal to thirty percent (30%) of the Base Salary (the “ Performance Bonus ”).

Subject to certain restrictions described in the Agreement, Dr.

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Callicutt dated July 1, 2013 (the “Callicutt Employment Agreement”), in conjunction with Mr.

Callicutt’s appointment as our Chief Financial

Pursuant to the terms of the Callicutt Employment Agreement, Mr.

Callicutt’s appointment as our Chief Financial Officer.

Pursuant to the

terms of the Callicutt Employment Agreement, Mr.

Callicutt received an initial base salary of $175,000 and was eligible to receive a performance bonus equal to 20% of his base salary.

Effective March 31, 2015, Mr.

Callicutt’s annual base salary was increased to $240,000, and his annual base salary was increased again to $260,000 in February 2016.

Callicutt’s annual base salary

was increased to $240,000, and his annual base salary was increased again to $260,000 in February 2016.

In June 2018, Mr.

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He also received a signing bonus of $10,000.

In addition to his cash compensation, the Company awarded Mr.

Callicutt a grant of options to purchase 200,000 shares of the Company’s Common Stock at an exercise price equal to the closing price of the Company’s Common Stock on July 1,

2013, with 25,000 shares vesting on December 31, 2013, 50,000 shares vesting on December 31, 2014, 50,000 shares vesting on December 31, 2015 and 75,000 shares vesting on December 31, 2016.

The options were granted pursuant to the 2009 Incentive

Compensation Plan and expire ten years after the date of grant.

In addition to his cash

compensation, the Company awarded Mr.

Callicutt a grant of options to purchase 200,000 shares of the Company’s Common Stock at an exercise price equal to the closing price of the Company’s Common Stock on July 1, 2013, with 25,000 shares

vesting on December 31, 2013, 50,000 shares vesting on December 31, 2014, 50,000 shares vesting on December 31, 2015 and 75,000 shares vesting on December 31, 2016.

The options were granted pursuant to the 2009 Incentive Compensation Plan and

expire ten years after the date of grant.

On August 11, 2017, we entered into an amendment to the Callicutt Employment Agreement with Mr.

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Pursuant to the Amendment, (i) Mr.

Callicutt’s target bonus opportunity was increased to 30% of his base salary and (ii) an error in the severance provision of the Callicutt Employment Agreement was corrected.

to the Amendment, the Callicutt Employment Agreement did not provide for any severance if Mr.

Callicutt’s employment was terminated by the Company “without cause,” or by Mr.

Callicutt for

“good reason” after the date that was 24 months after the Commencement Date.

Callicutt’s target bonus opportunity was increased to

30% of his base salary and (ii) an error in the severance provision of the Callicutt Employment Agreement was corrected.

Prior to the Amendment, the Callicutt Employment Agreement did not provide for any severance if Mr.

Callicutt’s employment

was terminated by the Company “without cause,” or by Mr.

Callicutt for “good reason” after the date that was 24 months after the Commencement Date.

Employee Benefits & Perquisites

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useful in attracting, motivating, and retaining the executive talent for which the Company competes.

The Company believes that these additional benefits may assist the NEOs in performing their duties and provide time efficiencies for the NEOs in

appropriate circumstances, and the Company may consider providing additional employee benefits and perquisites in the future.

All future practices regarding employee benefits and perquisites will be approved and subject to periodic review by the

Compensation Committee.

The Company believes that these additional benefits may assist the NEOs in performing their duties and provide time efficiencies for the NEOs

in appropriate circumstances, and the Company may consider providing additional employee benefits and perquisites in the future.

All future practices regarding employee benefits and perquisites will be approved and subject to periodic review by

the Compensation Committee.

SUMMARY COMPENSATION TABLE

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Black-Scholes options pricing model.

For a description of the assumptions used to determine these amounts, see Note 7 of the Notes to the Consolidated Financial Statements in our Annual Reports on Form 10-K (or Form 10-K/A, as applicable)

for the fiscal years ended December 31, 2021 and 2020.

Lewis’s performance bonus for 2021 was approved in January 2022.

Pursuant to his employment agreement 20% of his salary and bonus are paid in cash and 80% are in deferred stock units.

For a description of the assumptions used to determine these amounts, see Note 9 of the Notes to the Consolidated Financial Statements in our Annual Reports on Form 10-K (or Form 10-K/A, as

applicable) for the fiscal years ended December 31, 2022 and 2021.

Lewis’s performance bonuses for 2022 and 2021 were approved in January 2022 and January 2023, respectively.

Pursuant to his employment agreement 20% of his salary and bonus are paid in cash and 80% are awarded in deferred stock

Includes $73,047 for health and other insurance and $12,200 for 401(k) plan contributions.

Lewis became our Chief Executive Officer and President effective September 2, 2020, and his performance bonus was prorated for 2020 and paid in March 2021.

Pursuant to his employment agreement, 20% his salary and bonus are paid in

cash and 80% are in deferred stock units.

Includes $76,844 for health and other insurance and $11,600 for 401(k) plan contributions.

Boudes’ performance bonus for 2021 was paid in February 2022.

Boudes’ performance bonuses for 2022 and 2021 were approved in January 2022 and January 2023, respectively.

Includes $92,604 for health and other insurance and $11,200 for 401(k) plan contributions.

Boudes became our Chief Medical Officer effective March 2, 2020.

He was paid a $100,000 bonus upon joining the Company.

His performance bonus of $110,000 was prorated for 2020 and paid in March 2021.

Includes $87,874 for health and other insurance and $11,600 for 401(k) plan contributions.

Callicutt’s performance bonus for 2021 was paid in February 2022.

Callicutt’s performance bonuses for 2022 and 2021 were approved in January 2022 and January 2023, respectively.

Includes $65,916 for health and other insurance and $12,200 for 401(k) plan contributions.

Callicutt’s bonus amount in 2020 consisted of $75,525 retention bonuses paid in July 2020 and January 2021 and $85,000 performance bonus earned in 2020 which was paid in March 2021.

Includes $66,462 for health and other insurance and $11,600 for 401(k) plan contributions.

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The following table sets forth information regarding all outstanding equity awards held by the NEOs at December 31, 2022.

The exercise price of the options is set at the closing price of our stock at the date prior

to or as of the date of grant.

The exercise price of the options is set at the closing price of our

stock at the date prior to or as of the date of grant.

Outstanding options have been approved by our Compensation Committee and our Board.

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One-twelfth of the total options vest quarterly from August 31, 2020, which was the grant date.

25% of the options vested on September 30, 2021, 25% vest on March 31, 2022, 25% vest on September 30, 2022, 25% vest on March 31, 2023.

25% of the options vested on September 30, 2021, 25% vested on March 31, 2022, 25% vested on September 30, 2022, 25% vest on March 31, 2023.

100% of the options vest when the Company has received the interim results of the NAVIGATE clinical trial and makes a public announcement that it has received the interim results.

25% of the options vested on June 30, 2022, 25% vested on December 31, 2022, 25% vest on June 30, 2023, 25% vest on December 31, 2023.

20% of the options vest on each of March 2, 2021, March 2, 2022, and March 2023 and 40% of the options vest on March 2, 2024.

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The options granted under our 2009 Incentive Compensation Plan, the options will become immediately vested and exercisable upon a change of control.

Upon termination of employment for cause, all outstanding

options immediately terminate.

Options remain exercisable for one year following termination due to the executive’s death or disability or retirement, or for twelve months after termination for any other reason other than for cause.

Upon termination of employment for cause,

all outstanding options immediately terminate.

Options remain exercisable for one year following termination due to the executive’s death or disability or retirement, or for twelve months after termination for any other reason other than for

Under the 2009 Incentive Compensation Plan, change of control is defined as:

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2019 Omnibus Equity Incentive Plan

Under the 2019 Omnibus Equity Incentive Plan, if there is a merger or consolidation of the Company with or into another corporation or a sale of substantially all of the Company’s stock (a “Corporate

Transaction”), and the outstanding awards are not assumed by surviving company (or its parent company) or replaced with economically equivalent awards granted by the surviving company (or its parent company), the Company will cancel any

outstanding awards that are not vested and nonforfeitable as of the consummation of such Corporate Transaction (unless the Company accelerates the vesting of any such awards) and with respect to any vested and nonforfeitable awards, the Company

may either (i) allow all grantees to exercise options and SARs within a reasonable period prior to the consummation of the Corporate Transaction and cancel any outstanding options or SARs that remain unexercised upon consummation of the

Corporate Transaction, or (ii) cancel any or all of such outstanding awards (including options and SARs) in exchange for a payment (in cash, or in securities or other property) in an amount equal to the amount that the grantee would have

received (net of the exercise price with respect to any options or SARs) if the vested awards were settled or distributed or such vested options and SARs were exercised immediately prior to the consummation of the Corporate Transaction.

exercise price of the option or SAR exceeds the fair market value of our Common Stock and the option or SAR is not assumed or replaced by the surviving company (or its parent company), such options and SARs will be cancelled without any payment

to the grantee.

Potential Payments Upon Termination or

Change-in-Control

Lewis’ Employment Agreement, the Company is required to furnish a lump sum cash payment to Mr.

Lewis upon a termination of Mr.

Lewis without “Cause” or upon Mr.

Lewis’ resignation for “Good Reason” as

such terms are defined in the Employment Agreement or in the event the Company gives notice of non-renewal on or before September 30, 2023.

and the outstanding awards are not assumed by surviving company (or its parent company) or replaced with economically equivalent awards granted by the surviving company (or its parent company), the Company will cancel any outstanding awards

that are not vested and nonforfeitable as of the consummation of such Corporate Transaction (unless the Company accelerates the vesting of any such awards) and with respect to any vested and nonforfeitable awards, the Company may either (i)

allow all grantees to exercise options and SARs within a reasonable period prior to the consummation of the Corporate Transaction and cancel any outstanding options or SARs that remain unexercised upon consummation of the Corporate Transaction,

or (ii) cancel any or all of such outstanding awards (including options and SARs) in exchange for a payment (in cash, or in securities or other property) in an amount equal to the amount that the grantee would have received (net of the exercise

price with respect to any options or SARs) if the vested awards were settled or distributed or such vested options and SARs were exercised immediately prior to the consummation of the Corporate Transaction.

If an exercise price of the option or

SAR exceeds the fair market value of our Common Stock and the option or SAR is not assumed or replaced by the surviving company (or its parent company), such options and SARs will be cancelled without any payment to the grantee.

Potential Payments Upon Termination or Change-in-Control

If either Mr.

Lewis terminates his employment for Good Reason (ii) the Company terminates Mr.

Lewis’s employment without Cause, or if this Employment Agreement

expires as a result of the Company giving written notice of non-renewal, then the Company shall pay to Mr.

Lewis (1) any accrued benefits, (2) a lump sum amount equal to twelve (12) months of Mr.

Lewis’s base salary payable within thirty (30)

days after the date of such termination, and (3) the performance bonus, if any, for the year in which termination occurs, based on actual individual and Company performance results and multiplied by a fraction, (A) the numerator of which

shall be the number of days elapsed from the beginning of the fiscal year in which such termination occurs and (B) the denominator of which shall be 365;

provided, however, that the portion of the performance bonus payable in the form of

DSUs, will be paid in accordance with the terms of the DSU Award Agreements.

Notwithstanding the foregoing, the payments described in clauses above are expressly conditioned upon Mr.

Lewis executing returning a full release of the Company and

its affiliates and from all obligations and any usual and customary indemnification obligations of the Company to Mr.

Lewis as an officer thereof.

Under the Deferred Stock Unit Agreement, if a Change in Control of the Company occurs prior to the date on which Mr.

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Represents the grant date fair value of option awards based upon the Black Scholes valuation model made in 2022.

Two option grants were made on March 25, 2021.

The option grants were made on January 24, 2022.

Each non-employee director received one grant of 40,000 options which

will vest in full on March 31, 2022.

Each non-employee director also received one grant of 70,000 options which will vest 100% when the Company has received the interim results of the NAVIGATE clinical trial and makes a public

announcement that it has received the interim results.

For a description of the assumptions used to determine these amounts, see Note 9 to the Notes to the Consolidated Financial Statements herein our Annual Report on Form 10-K for the

fiscal year ended December 31, 2021.

will vest in full on December 31, 2022.

For a description of the assumptions used to determine these amounts, see Note 9 to the Notes to the Consolidated Financial Statements herein our Annual Report on Form 10-K for the fiscal year

ended December 31, 2022.

Excludes travel expense reimbursements.

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Richard Uihlein

For a more detailed description of the assumptions used for purposes of determining grant date fair value, see Note 9 to the Consolidated Financial Statements and “Management’s Discussion and Analysis of

Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Stock-Based Compensation” included herein the Form 10-K for the 2021 fiscal year.

For a more detailed description of the assumptions used for purposes of determining grant date fair value, see Note 9 to the Consolidated Financial Statements and “Management’s Discussion and

Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Stock-Based Compensation” included herein the Form 10-K for the 2022 fiscal year.

We also reimburse our directors for reasonable travel and other related expenses.

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the Audit Committee Chairman will receive an annual cash retainer of $7,500.

Additionally, in December 2016, the Board approved cash retainers of $3,500 to be paid to each member of the Board’s investor relation/public relations committee.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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combined voting power of the voting securities on all matters presented to the stockholders for their approval at the Annual Meeting, except for such separate class votes as are required by law.

The number of shares beneficially owned by each 5% stockholder, director or executive officer is determined under the rules of the Securities and Exchange Commission, or SEC, and the information is not

necessarily indicative of beneficial ownership for any other purpose.

Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares that

the individual or entity has the right to acquire within 60 days after February 28, 2022 through the exercise of any stock option, warrant or other right, or the conversion of any security.

Unless otherwise indicated, each person or entity has

sole voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table.

The inclusion in the table below of any shares deemed beneficially owned does not constitute an

admission of beneficial ownership of those shares.

indicative of beneficial ownership for any other purpose.

Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares that the

individual or entity has the right to acquire within 60 days after February 28, 2023 through the exercise of any stock option, warrant or other right, or the conversion of any security.

Unless otherwise indicated, each person or entity has sole

voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table.

The inclusion in the table below of any shares deemed beneficially owned does not constitute an admission of

beneficial ownership of those shares.

Name and Address (1)

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20,684,300(12

Name and Address (1)

Schwartz, Ph.D.

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All executive officers and directors as a group (13 persons)

39,124,738(14

* Less than 1%.

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Includes (i) 8,027,001 shares of common stock, (ii) 3,136,384 common shares issuable upon the exercise of common stock purchase warrants, (iii) 146,362 common shares issuable upon the exercise of common stock options, (iv) 83,334

common shares issuable upon conversion of Series C preferred non-voting stock and (iv) 5,307,546 common shares issuable upon conversion of convertible notes payable.

common shares issuable upon conversion of Series C preferred non-voting stock, (iv) 5,915,409 common shares issuable upon conversion of convertible notes payable and (v) 3,375,810 common shares issuable upon conversion of convertible

line of credit..

Includes 47,215 shares of common stock, 16,869 common stock purchase warrants, and 181,875 common stock options personally owned by Mr.

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Certain Relationships and Related Transactions

Except as set forth below, since the beginning of fiscal year 2021, we did not participate in any transactions in which any of the Company Nominees, Series B Directors or Series B Nominees, executive officers,

any beneficial owner of more than 5% of our common stock, nor any of their immediate family members, had a direct or indirect material interest.

Except as set forth below, since the beginning of fiscal year 2022, we did not participate in any transactions in which any of the Company’s executive officers, any beneficial owner of more than 5% of our common

stock, nor any of their immediate family members, had a direct or indirect material interest.

Our Audit Committee Charter requires that members of the Audit Committee, all of whom are independent directors, conduct an appropriate review of, and be responsible for the oversight of, all related party

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Except as set forth below, there were no related party transactions during the fiscal year ended December 31, 2022.

The Company entered into three separate $10 million convertible notes payable with Richard E.

Uihlein, a director and shareholder, pursuant to agreements in April, September and December 2021.

details of the convertible notes payable are included in Footnote 5 to the financial statements in this Form 10-K.

In connection with the issuance of the last of the three convertible notes in December 2021, the Company terminated its then

existing $10 million Line of Credit arrangement with Richard E.

The Company entered into an unsecured convertible line of credit totaling $60 million convertible notes payable with Richard E.

Uihlein, a director and shareholder, pursuant to an agreement in July 2022.

details of the convertible line of credit are included in Footnote 10 to the financial statements in this Form 10-K.

Compensation Committee Interlocks and Insider Participation

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All Other Fees

These are fees for professional services for the

audit of our annual financial statements dated December 31, 2021 and 2020 included in our Annual Reports on Form 10-K for fiscal years then ended, and review of financial statements included in our Quarterly Reports on Form 10-Q for

each fiscal quarter during the 2021 and 2020 fiscal years.

These are fees for professional services for the audit of our annual financial statements dated December 31, 2022 and 2021 included in our

Annual Reports on Form 10-K for fiscal years then ended, and review of financial statements included in our Quarterly Reports on Form 10-Q for each fiscal quarter during the 2022 and 2021 fiscal years.

Audit-Related Fees .

These are fees for assurance and related

services that are reasonably related to the performance of the audit or review of our financial statements, including financial disclosures made in our equity finance documentation and registration statements filed with the SEC that

incorporate financial statements and the auditors’ report thereon and reviewed with our Audit Committee on financial accounting/reporting standards.

These are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial

statements, including financial disclosures made in our equity finance documentation and registration statements filed with the SEC that incorporate financial statements and the auditors’ report thereon and reviewed with our Audit

Committee on financial accounting/reporting standards.

The Audit Committee has considered whether the provision of non-core audit services to Galectin Therapeutics by Cherry Bekaert LLP is compatible with maintaining independence.

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Description of Document

Amended and Restated Articles of Incorporation of Galectin Therapeutics Inc., as amended (Incorporated by reference to the Company’s

Current Report on Form 8-K filed with the Commission on May 30, 2012.)

Amended and Restated Bylaws of Galectin Therapeutics Inc., as amended (Incorporated by reference to the Company’s Current Report on Form

8-K filed with the Commission on September 27, 2016.)

Certificate of Designation of Preferences, Rights and Limitations of Series A 12% Convertible Preferred Stock of Pro Pharmaceuticals, Inc., as

filed with the Secretary of State of the State of Nevada on October 5, 2007.

Amended and Restated Articles of Incorporation of Galectin Therapeutics Inc., as amended (Incorporated by

reference to the Company’s Current Report on Form 8-K filed with the Commission on May 30, 2012.)

Amended and Restated Bylaws of Galectin Therapeutics Inc., as amended (Incorporated by reference to the

Company’s Current Report on Form 8-K filed with the Commission on September 27, 2016.)

Certificate of Designation of Preferences, Rights and Limitations of Series A 12% Convertible Preferred Stock of Pro

Pharmaceuticals, Inc., as filed with the Secretary of State of the State of Nevada on October 5, 2007.

(Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on October 9, 2007.)

First Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series A 12% Convertible Preferred Stock of

Galectin Therapeutics, Inc., as filed with the Secretary of State of the State of Nevada on May 15, 2017.

(Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on May 19, 2017.)

Description of Document

Certificate of Designation of Preferences, Rights and Limitation of Series C Super Dividend Convertible Preferred Stock of Pro-Pharmaceuticals,

Inc., as filed with the Secretary of State of Nevada on December 30, 2010.

First Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series A 12%

Convertible Preferred Stock of Galectin Therapeutics, Inc., as filed with the Secretary of State of the State of Nevada on May 15, 2017.

(Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission

on May 19, 2017.)

Certificate of Designation of Preferences, Rights and Limitation of Series C Super Dividend Convertible Preferred

Stock of Pro-Pharmaceuticals, Inc., as filed with the Secretary of State of Nevada on December 30, 2010.

(Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on January 6, 2011.)

Certificate of Change as filed with the Nevada Secretary of State on March 1, 2012.

(Incorporated by reference to the Company’s Current

Report on Form 8-K as filed with the Commission on March 23, 2012.)

Form of Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission

on December 29, 2016.)

Form of Common Stock Purchase Warrant issued to Richard E.

Uihlein (Incorporated by reference to the Company’s Current Report on Form 8-K

(Incorporated by reference

to the Company’s Current Report on Form 8-K as filed with the Commission on March 23, 2012.)

Amendment to the Articles of Incorporation of Galectin Therapeutics Inc.

Form of Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K

as filed with the Commission on December 29, 2016.)

Form of Common Stock Purchase Warrant issued to Richard E.

Uihlein (Incorporated by reference to the Company’s

Current Report on Form 8-K as filed with the Commission on December 19, 2017.)

First Amendment to Common Stock Purchase Warrant, dated December 20, 2018, by and between Richard E.

Uihlein and the Company (Incorporated

by reference to the Company’s Current Report on Form 8-K as filed with the Commission on January 3, 2019.)

and the Company (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on January 3, 2019.)

Second Amendment to Common Stock Purchase Warrant, dated January 11, 2019, by and between Richard E.

Uihlein and the Company (Incorporated

by reference to the Company’s Current Report on Form 8-K as filed with the Commission on January 15, 2019.)

Form of Amended and Restated Class B Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K

as filed with the Commission on January 15, 2019.)

and the Company (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the Commission on January 15, 2019.)

Form of Amended and Restated Class B Common Stock Purchase Warrant (Incorporated by reference to the Company’s

Current Report on Form 8-K as filed with the Commission on January 15, 2019.)

Description of Document

Form of Amended and Restated 10X Fund Class B Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report on

Form 8-K as filed with the Commission on January 15, 2019.)

Form of Amended and Restated 10X Fund Class B Common Stock Purchase Warrant (Incorporated by reference to the Company’s Current Report

on Form 8-K as filed with the Commission on January 15, 2019.)

Form of Common Stock Purchase Warrant (Incorporated by reference to the Company’s Registration Statement on Form S-3 as filed with the

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Commission on March 6, 2019.)

Description of Registrant’s securities (Incorporated by reference to

exhibit 4.20 the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed on March 31, 2021.)

Galectin Therapeutics 2009 Incentive Compensation Plan (as amended) (Incorporated by reference to the Company’s Annual Report on Form 10-K

as filed with the Commission on March 6, 2019.)

Form of Common Stock Purchase Warrant (Incorporated by reference to exhibit 4.1 the Company’s Current Report on Form 8-K as filed with

the Commission on July 26, 2022.)

Description of Registrant’s securities (Incorporated by reference to exhibit 4.20 the Company’s Annual

Report on Form 10-K for the year ended December 31, 2020, as filed on March 31, 2021.)

Galectin Therapeutics 2009 Incentive Compensation Plan (as amended) (Incorporated by

reference to the Company’s Annual Report on Form 10-K as filed with the Commission on March 6, 2019.)

Form of Restricted Stock Grant Agreement (under the 2009 Incentive Compensation Plan).

(Incorporated by reference to the Company’s Annual Report

on Form 10-K as filed with the Commission on March 30, 2009.)

(Incorporated by reference to the Company’s Annual

Report on Form 10-K as filed with the Commission on March 30, 2009.)

Form of Non-Qualified Stock Option Grant Agreement (under the 2009 Incentive Compensation Plan).

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Form of Incentive Stock Option Grant Agreement (under the 2009 Incentive Compensation Plan).

(Incorporated by reference to the Company’s Annual

Report on Form 10-K as filed with the Commission on March 30, 2009.)

(Incorporated by reference to the Company’s

Annual Report on Form 10-K as filed with the Commission on March 30, 2009.)

Galectin Therapeutics 2019 Omnibus Equity Incentive Plan (Incorporated by reference to Appendix A to the Company’s

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and PPD Development, L.P.

(Incorporated

by reference to the Company’s Annual Report on Form 10-K as filed with the Commission on March 15, 2016.)***

(Incorporated by

reference to the Company’s Annual Report on Form 10-K as filed with the Commission on March 15, 2016.)***

Employment Agreement, dated February 19, 2020, by and between Galectin Therapeutics Inc.

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the Commission on April 19, 2021.)

Loan Agreement, dated September 17, 2021 (Incorporated by reference to the Company’s Current

Report on Form 8-K as filed with the Commission on September 21, 2021.)

Loan Agreement, dated September 17, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the

Commission on September 21, 2021.)

Unsecured Convertible Promissory Note, dated September 17, 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K as

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8-K as filed with the Commission on December 21, 2021.)

Line of Credit Letter Agreement, dated as of July 25, 2022, by and between Richard E.

Uihlein and the

(Incorporated by reference to exhibit 10.1 the Company’s Current Report on Form 8-K as filed with the Commission on July 26, 2022.)

Form of Convertible Promissory Note issued to Richard E.

(Incorporated by reference to exhibit

10.2 the Company’s Current Report on Form 8-K as filed with the Commission on July 26, 2022.)

Employment Agreement Amendment of Joel Lewis.

(Incorporated by reference to exhibit 10.3 the Company’s

Current Report on Form 8-K as filed with the Commission on July 26, 2022.)

2023 Deferred Stock Unit Agreement.

(Incorporated by reference to exhibit 10.4 the Company’s Current

Report on Form 8-K as filed with the Commission on July 26, 2022.)

2020 Deferred Stock Unit Amendment.

(Incorporated by reference to exhibit 10.5 the Company’s Current

Report on Form 8-K as filed with the Commission on July 26, 2022.)

Description of Document

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Certification Pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act

Section 1350, as Adopted Pursuant to Section

906 of the Sarbanes-Oxley Act of 2002.

Certification Pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act

Section 1350, as Adopted Pursuant to Section

906 of the Sarbanes-Oxley Act of 2002.

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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Form 10–K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 31, 2022.

March 30, 2023.

GALECTIN THERAPEUTICS INC.

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Consolidated Statements of Operations for the years ended December 31, 2022 and 2021

Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2021 and 2020

Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended

December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021

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At December 31, 2022, the

Company’s derivative liabilities related to the related party convertible notes payable totaled $1.1 million.

Company’s derivative liabilities related to the related party convertible notes payable totaled $573 thousand.

As more fully described in Note 6 to the consolidated financial statements, the Company utilizes a Monte Carlo Geometric

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Description of Matter

The Company’s accrued expenses total approximately $7.2 million at December 31, 2021, which included the estimated obligation for clinical trial expenses incurred as of December 31, 2021, but not paid

as of that date in the amount of approximately $6.4 million.

In addition, the Company’s total prepaid expenses and other current assets totaled $2.2M, which included amounts that were paid in advance of services incurred pursuant to

The Company’s accrued expenses total approximately $9.1 million at December 31, 2022, which included the estimated obligation for clinical trial expenses incurred as of December 31, 2022, but not paid as

of that date in the amount of approximately $7.3 million.

In addition, the Company’s total prepaid expenses and other current assets totaled $2.0 million, which included amounts that were paid in advance of services incurred pursuant to

clinical trials in the amount of approximately $1.1 million.

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CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(in thousands, except per share

Current assets:

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Property and equipment, net

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

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Derivative liabilities (Note 6)

Borrowing and accrued interest under convertible line of credit, net of debt discount – related party (Note 10)

Other liabilities

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at December 31, 2022

Stockholders’ equity:

Stockholders’ equity (deficit):

Undesignated stock, $ 0.01 par value;

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1,742,500 shares authorized,

1,302,500 issued and outstanding at December 31, 2021 and 2020, liquidation value $ 1,302,500 at December 31, 2021

Common stock, $ 0.001 par value;

1,260,000 and 1,302,500

shares authorized at December 31, 2021 and 2020, respectively, 59,341,305 and 57,077,055 issued and outstanding at December 31, 2021 and 2020, respectively

issued and outstanding at December 31, 2022 and 2021, respectively, liquidation value $ 1,260,000 at December 31, 2022

Common stock, $ 0.001 par value;

150,000,000 shares authorized at December 31, 2022 and 2021, 59,426,005 and 59,341,305 issued and outstanding at December 31, 2022 and 2021,

Additional paid-in capital

Accumulated deficit

Total stockholders’ equity

Total liabilities, redeemable convertible preferred stock and stockholders’ equity

Total stockholders’ equity (deficit)

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)

See notes to consolidated financial statements.

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Issuance of common stock

Conversion of Series A Convertible Preferred to common

Issuance of common stock for warrant exercises

Issuance of common stock for stock option exercises

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Series C super dividend redeemable convertible preferred stock dividend

Issuance of common stock

Issuance of common stock for warrant exercises

Issuance of common stock for stock option exercises

Conversion of Series A Convertible Preferred to common

Issuance of common stock purchase warrants in connection with related party line of credit

Stock-based compensation expense

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Prepaid expenses and other assets

Accrued interest on convertible notes payable and convertible line of credit – related party

Accounts payable, accrued expenses and other liabilities

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CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from convertible line of credit – related party

Net proceeds from convertible notes payable – related party

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Reclassification of accrued bonus to additional paid in capital

Noncash right to use lease asset

Common stock purchase warrants issued in connection with related party line of credit

See notes to consolidated financial statements.

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The Company has operated at a loss since its inception and has had no revenues.

The Company anticipates that

losses will continue for the foreseeable future.

At December 31, 2021, the Company had $ 39,648,000 of unrestricted cash and cash

equivalents available to fund future operations.

The Company believes there is sufficient cash, to fund currently planned operations at least through March 31, 2023.

We will require more cash to fund our operations after March 31, 2023 and

believe we will be able to obtain additional financing.

The currently planned operations include costs related to our adaptively designed NAVIGATE Phase 2b/3 clinical trial.

Currently, we expect to require an additional approximately $ 45 -$ 50 million to cover costs of the

trial to reach the planned interim analysis estimated to occur in the first half of 2024 along with drug manufacturing and other scientific support activities and general and administrative costs.

However, there can be no assurance that we will

be successful in obtaining such new financing or, if available, that such financing will be on terms favorable to us.

If we are unsuccessful in raising additional capital to fund operations before March 31, 2023, we may be required to cease

The Company anticipates that losses will continue for the foreseeable future.

At December 31, 2022, the company had $ 18,592,000 of unrestricted cash and cash equivalents available to fund future operations.

In July 2022, the Company entered into a $ 60 million unsecured line of credit financing with its chairman, Richard E.

Uihlein (See Note 10).

The Company believes there is sufficient cash,

including availability of the line of credit, to fund currently planned operations at least through December 31, 2024.

To meet its future capital needs, the Company intends to raise additional capital through debt or equity financings,

collaborations, partnerships or other strategic transactions.

However, there can be no assurance that the Company will be able to complete any such transactions on acceptable terms or otherwise.

The inability of the Company to obtain sufficient

funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company has the ability to delay certain research activities and related clinical expenses if

necessary due to liquidity concerns until a date when those concerns are relieved.

The Company is subject to a number of risks similar to those of clinical stage companies, including dependence on key individuals, uncertainty of product development

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Basis of Consolidation.

consolidated financial statements include the accounts of the Company and Galectin Therapeutics Security Corp., its wholly-owned subsidiary, which was incorporated in Delaware on December 23, 2003 and Galectin Sciences LLC (see Note 13).

intercompany transactions have been eliminated.

The consolidated

financial statements include the accounts of the Company and Galectin Therapeutics Security Corp., its wholly-owned subsidiary, which was incorporated in Delaware on December 23, 2003 and Galectin Sciences LLC (see Note 13).

All intercompany

transactions have been eliminated.

Use of Estimates.

The preparation

of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that may affect the reported amounts of assets, liabilities, equity, revenue,

expenses and related disclosure of contingent assets and liabilities.

Management’s estimates and judgments include assumptions used in stock option valuations, useful lives of property and equipment and intangible assets, accrued liabilities,

derivative valuations, deferred income taxes and various other assumptions that are believed to be reasonable under the circumstances.

The preparation of financial

statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that may affect the reported amounts of assets, liabilities, equity, revenue, expenses and

related disclosure of contingent assets and liabilities.

Management’s estimates and judgments include assumptions used in stock option valuations, useful lives of property and equipment and intangible assets, accrued liabilities, derivative

valuations, deferred income taxes and various other assumptions that are believed to be reasonable under the circumstances.

Actual results may differ from those estimates under different assumptions or conditions.

Fair Value Measurements .

Company has certain financial assets and liabilities recorded at fair value.

The Company has

certain financial assets and liabilities recorded at fair value.

Fair values determined by Level 1 inputs utilize observable data such as quoted prices in active markets.

Fair values determined by Level 2 inputs utilize data points

other than quoted prices in active markets that are observable either directly or indirectly.

Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, which require the reporting entity

to develop its own assumptions.

Fair values determined by Level 2 inputs utilize data points other than

quoted prices in active markets that are observable either directly or indirectly.

Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, which require the reporting entity to develop

its own assumptions.

The estimated value of accounts payable and accrued expenses approximates their carrying value due to their short-term nature.

There were no Level 2 or 3 assets or liabilities at December 31, 2020.

See Footnote 6 for Fair Value of Derivatives related to Convertible Notes Payable at December 31,

2021, which are level 3 liabilities.

See Footnote 6 for Fair Value of Derivatives related to Convertible Notes Payable at

December 31, 2022 and 2021, which are level 3 liabilities.

Cash and Cash Equivalents.

Company considers all highly-liquid investments with original maturities of 90 days or less at the time of acquisition to be cash equivalents.

considers all highly-liquid investments with original maturities of 90 days or less at the time of acquisition to be cash equivalents.

The Company had no cash equivalents at December 31, 2022 or 2021.

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Property and Equipment.

and equipment, including leasehold improvements, are stated at cost, net of accumulated depreciation and amortization, and are depreciated or amortized using the straight-line method over the estimated useful lives of the related assets of

generally three years for computers and office equipment, five years for furniture and fixtures and the shorter of the useful life or life of the lease for leasehold improvements.

Property and equipment,

including leasehold improvements, are stated at cost, net of accumulated depreciation and amortization, and are depreciated or amortized using the straight-line method over the estimated useful lives of the related assets of generally three years for computers and office equipment, five years for furniture and fixtures and the shorter of the useful life or life of the lease for leasehold improvements.

Security Deposit.

At December 31,

2021 and 2020, the Company had a security deposit of $ 6,000 for leased office space included in Prepaid Expenses and Other Current

At December 31, 2022 and

2021, the Company had a security deposit of $ 6,000 for leased office space included in Prepaid Expenses and Other Current Assets.

Long-Lived Assets.

reviews all long-lived assets for impairment whenever events or circumstances indicate the carrying amount of such assets may not be recoverable.

Recoverability of assets to be held or used is measured by comparison of the carrying value of the

asset to the future undiscounted net cash flows expected to be generated by the asset.

If such asset is considered to be impaired, the impairment recognized is measured by the amount by which the carrying value of the asset exceeds the discounted

future cash flows expected to be generated by the asset.

The Company reviews all

long-lived assets for impairment whenever events or circumstances indicate the carrying amount of such assets may not be recoverable.

Recoverability of assets to be held or used is measured by comparison of the carrying value of the asset to the

future undiscounted net cash flows expected to be generated by the asset.

If such asset is considered to be impaired, the impairment recognized is measured by the amount by which the carrying value of the asset exceeds the discounted future cash

flows expected to be generated by the asset.

There were no impairments of long-lived assets at December 31, 2022 or 2021.

Accrued Expenses .

As part of the

process of preparing our consolidated financial statements, we are required to estimate accrued expenses.

This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and

the associated cost incurred on these services as of each balance sheet date in our consolidated financial statements.

Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys

and accountants and accrued payroll expenses.

In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service

As part of the process of

preparing our consolidated financial statements, we are required to estimate accrued expenses.

This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the

associated cost incurred on these services as of each balance sheet date in our consolidated financial statements.

Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys and

accountants and accrued payroll expenses.

In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers.

In the event that we do not identify certain costs that have been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated.

The date on which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment.

We make these judgments based upon the facts and circumstances known to us in

accordance with accounting principles generally accepted in the U.S.

The Company has issued

common stock warrants in connection with the execution of certain equity and debt financings.

The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding volatility of our common share price,

remaining life of the warrant, and risk-free interest rates at each period end.

There were no warrant liabilities as of December

31, 2021 or 2020.

which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment.

We make these judgments based upon the facts and circumstances known to us in accordance with

accounting principles generally accepted in the U.S.

The Company has issued common stock

warrants in connection with the execution of certain equity and debt financings.

The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding volatility of our common share price, remaining

life of the warrant, and risk-free interest rates at each period end.

There were no warrant liabilities as of December 31, 2022 or

Research and Development Expenses.

Research and development expenses, including personnel costs, allocated facility costs, lab supplies, outside services, contract laboratory costs related to manufacturing drug product, clinical trials and preclinical studies are charged to

research and development expense as incurred.

The Company accounts for nonrefundable advance payments for goods and services that will be used in future research and development activities as expense when the service has been performed or when

the goods have been received.

development expenses, including personnel costs, allocated facility costs, lab supplies, outside services, contract laboratory costs related to manufacturing drug product, clinical trials and preclinical studies are charged to research and

development expense as incurred.

The Company accounts for nonrefundable advance payments for goods and services that will be used in future research and development activities as expense when the service has been performed or when the goods have

been received.

Our current NAVIGATE clinical trial is being supported by third-party contract research organizations, or CROs, and other vendors.

We accrue expenses for clinical trial activities performed by CROs based upon the

estimated amount of work completed on each trial.

For clinical trial expenses and related expenses associated with the conduct of clinical trials, the significant factors used in estimating accruals include the number of patients enrolled, the

number of active clinical sites, and the duration for which the patients have been enrolled in the trial.

We monitor patient enrollment levels and related activities to the extent possible through internal reviews, review of contractual terms and

correspondence with CROs.

We accrue expenses for clinical trial activities performed by CROs based upon the estimated amount

of work completed on each trial.

For clinical trial expenses and related expenses associated with the conduct of clinical trials, the significant factors used in estimating accruals include the number of patients enrolled, the number of active

clinical sites, and the duration for which the patients have been enrolled in the trial.

We monitor patient enrollment levels and related activities to the extent possible through internal reviews, review of contractual terms and correspondence

We base our estimates on the best information available at the time.

We monitor patient enrollment levels and related activities to the extent possible through discussions with CRO personnel and based our estimates of

clinical trial costs on the best information available at the time.

We monitor patient enrollment levels and related activities to the extent possible through discussions with CRO personnel and based our estimates of clinical trial

costs on the best information available at the time.

However, additional information may become available to us which will allow us to make a more accurate estimate in future periods.

In that event, we may be required to record

adjustments to research and development expenses in future periods when the actual level of activity becomes more certain.

In that event, we may be required to record adjustments to

research and development expenses in future periods when the actual level of activity becomes more certain.

Income Taxes.

accounts for income taxes in accordance with the accounting rules that requires an asset and liability approach to accounting for income taxes based upon the future expected values of the related assets and liabilities.

Deferred income tax assets

and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and for tax loss and credit carry forwards and are measured using the expected tax rates estimated to be in effect

when such basis differences reverse.

The Company accounts for income

taxes in accordance with the accounting rules that requires an asset and liability approach to accounting for income taxes based upon the future expected values of the related assets and liabilities.

Deferred income tax assets and liabilities are

determined based on the differences between the financial reporting and tax bases of assets and liabilities and for tax loss and credit carry forwards and are measured using the expected tax rates estimated to be in effect when such basis

differences reverse.

Valuation allowances are established, if necessary, to reduce the deferred tax asset to the amount that will, more likely than not, be realized.

Concentration of Credit Risk.

Financial instruments that subject the Company to credit risk consist of cash and cash equivalents and certificates of deposit.

The Company maintains cash and cash equivalents and certificates of deposit with well-capitalized financial

institutions.

At times, those amounts may exceed federally insured limits.

The Company has no significant concentrations of credit risk.

instruments that subject the Company to credit risk consist of cash and cash equivalents.

The Company maintains cash and cash equivalents and certificates of deposit with well-capitalized financial institutions.

At times, those amounts may exceed

federally insured limits.

The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company has no

other significant concentrations of credit risk.

Stock-Based Compensation.

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the service period, which generally represents the vesting period.

For awards that have performance-based vesting

conditions the Company recognizes the expense over the estimated period that the awards are expected to be earned.

compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the service period, which generally represents the vesting period.

For awards that have performance-based vesting conditions

the Company recognizes the expense over the estimated period that the awards are expected to be earned.

The Company generally uses the Black-Scholes option-pricing model to calculate the grant date fair value of stock options.

expense recognized over the service period is required to include an estimate of the awards that will be forfeited.

recognized over the service period is required to include an estimate of the awards that will be forfeited.

Recent Accounting Standards.

In August 2020, the Financial Accounting

Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to

simplify accounting for certain financial instruments.

ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope

exception guidance pertaining to equity classification of contracts in an entity’s own equity.

The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s

ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments.

ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified

retrospective basis, with early adoption permitted beginning on January 1, 2021.

The Company adopted ASU 2020-06 effective January 1, 2022.

The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

See Notes 5 and 10

for disclosures related to convertible borrowings.

Property and Equipment

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is prepayable at the option of the Company in whole or in part at any time and is convertible into the Company’s common stock at a conversion price equal to $ 5.00 per share at the option of the noteholder.

The April Note bears interest at the rate of two percent ( 2 %) per annum, compounded annually.

For the year ended December 31, 2021, approximately $ 142,000

of interest expense was accrued and included with the principal in the financial statements.

The April 2021 Note bears interest at the rate of two percent ( 2 %) per annum, compounded annually with an effective interest rate of approximately 3 %.

For the years ended December 31, 2022 and 2021, approximately $ 200,000 and $ 142,000 , respectively, of interest expense was accrued and included with the principal in the financial statements.

The April 2021 Note also includes a contingent interest component that requires the Company to pay additional interest at a rate of two and one-half percent ( 2.5 %) per quarter ( 10 % per annum) (the

“Additional Interest”) beginning on the date of issuance of this Note and ending on the maturity date, provided however, that such payment is only required if and only if the noteholder elects to convert the entire balance of the April Note into

the Company’s common stock on or prior to maturity.

As the contingent event is not based on creditworthiness, such feature is not clearly and closely related to the host instrument and accordingly must be bifurcated and recognized as a derivative

liability and a debt discount on the April Note at its inception.

into the Company’s common stock on or prior to maturity.

As the contingent event is not based on creditworthiness, such feature is not clearly and closely related to the host instrument and accordingly must be bifurcated and recognized as a

derivative liability and a debt discount on the April 2021 Note at its inception.

The fair value of the contingent interest derivative liability was $ 420,000

and $ 495,000 at note inception (April 16, 2021) and December 31, 2021, respectively, and is recognized as a derivative liability in the

consolidated balance sheet.

The change in the fair value of the derivative liability from April 16, 2021 to December 31, 2021 of $ 75,000

was charged to other expense for the period ended December 31, 2021.

The amortization of the debt discount of $ 420,000 recorded initially

upon note inception of $ 74,000 was recorded as additional interest expense for the for the year ended December 31, 2021.

at note inception (April 16, 2021).

The fair value of the contingent interest derivative liability was $ 249,000 and $ 495,000 and December 31, 2022 and 2021, respectively, and is recognized as a derivative liability in the consolidated balance sheet.

The change in the

fair value of the derivative liability from April 16, 2021 to December 31, 2021 and for the year ended December 31, 2022 of $ 75,000 and $( 246,000 ), respectively, was charged to other expense/(income) for the years ended December 31, 2022 and 2021.

The amortization of the original $ 420,000 debt discount of $ 105,000 and $ 74,000 was recorded as additional interest expense for the years ended December 31, 2022 and 2021, respectively.

On September 17, 2021, the Company and Mr.

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is prepayable at the option of the Company in whole or in part at any time and is convertible into the Company’s common stock at a conversion price equal to $ 8.64 per share at the option of the noteholder.

The September Note bears interest at the rate of two percent ( 2 %) per annum, compounded annually.

For the year ended December 31, 2021, approximately $ 58,000

of interest expense was accrued and included with the principal in the financial statements.

The September 2021 Note bears interest at the rate of two percent ( 2 %) per annum, compounded annually with an effective interest rate of approximately 3 %.

For the years ended December 31, 2022 and 2021, approximately $ 200,000 and $ 58,000 , respectively, of interest expense was accrued and included with the principal in the financial statements.

The September 2021 Note also includes a contingent interest component that requires the Company to pay additional interest at a rate of two and one-half percent ( 2.5 %) per quarter ( 10 % per annum) (the

into the Company’s common stock on or prior to maturity.

Note into the Company’s common stock on or prior to maturity.

As the contingent event is not based on creditworthiness, such feature is not clearly and closely related to the host instrument and accordingly must be bifurcated and recognized as a

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The fair value of the contingent interest derivative liability was $ 433,000

and $ 250,000 at note inception (September 17, 2021) and December 31, 2021, respectively, and is recognized as a derivative liability in

the consolidated balance sheet.

The change in the fair value of the derivative liability from September 17, 2021 to December 31, 2021 of ($ 183,000 )

was recorded to other expense for the year ended December 31, 2021.

The amortization of the debt discount of $ 433,000 recorded initially

upon note inception of $ 32,000 was recorded as additional interest expense for the for the year ended December 31, 2021.

at note inception (September 17, 2021).

The fair value of the contingent interest derivative liability was $ 109,000 and $ 250,000 and December 31, 2022 and 2021, respectively, and is recognized as a derivative liability in the consolidated balance sheet.

The change in the

fair value of the derivative liability from September 17, 2021 to December 31, 2021 and for the year ended December 31, 2022 of ($ 183,000 )

and ($ 141,000 ), respectively, was recorded to other expense/(income) for the years ended December 31, 2021 and 2022.

The amortization of

the original $ 433,000 debt discount of $ 108,000

and $ 32,000 was recorded as additional interest expense for the years ended December 31, 2022 and 2021, respectively.

On December 20, 2021, the second of the two promissory

notes under the Loan Agreement was executed and delivered, (the “December 2021 Note”) to evidence the second loan in the principal amount of $ 10,000,000 .

The December Note has a maturity date of December 20, 2025 , is prepayable at the option of the Company in whole or in part at any time

and is convertible into the Company’s common stock at a conversion price equal to $ 5.43 per share at the option of the noteholder.

December Note bears interest at the rate of two percent ( 2 %) per annum, compounded annually.

For the year ended December 31, 2021,

approximately $ 7,000 of interest expense was accrued and included with the principal in the financial statements.

The December 2021 Note has a maturity date of December 20, 2025 , is prepayable at the option of the Company in whole or in part at any

time and is convertible into the Company’s common stock at a conversion price equal to $ 5.43 per share at the option of the noteholder.

The December Note bears interest at the rate of two percent ( 2 %) per annum, compounded annually with an effective interest rate of

approximately 3 %.

For the year ended December 31, 2022 and 2021, approximately $ 200,000 and $ 7,000 , respectively, of interest expense was accrued

and included with the principal in the financial statements.

The December 2021 Note also includes a contingent interest component that requires the Company to pay additional interest at a rate of two and one-half percent ( 2.5 %) per quarter ( 10 % per annum) (the

the Company’s common stock on or prior to maturity.

As the contingent event is not based on creditworthiness, such feature is not clearly and closely related to the host instrument and accordingly must be bifurcated and recognized as a derivative

liability and a debt discount on the December Note at its inception.

into the Company’s common stock on or prior to maturity.

As the contingent event is not based on creditworthiness, such feature is not clearly and closely related to the host instrument and accordingly must be bifurcated and recognized as a

derivative liability and a debt discount on the December Note at its inception.

The fair value of the contingent interest derivative liability was $ 415,000

and $ 385,000 at note inception (December 20, 2021) and December 31, 2021, respectively, and is recognized as a derivative liability in

the consolidated balance sheet.

The change in the fair value of the derivative liability from December 20, 2021 to December 31, 2021 of ($ 30,000 )

was recorded to other expense for the year ended December 31, 2021.

The amortization of the debt discount of $ 415,000 recorded initially

upon note inception of $ 3,000 was recorded as additional interest expense for the for the year ended December 31, 2021.

at note inception (December 20, 2021).

The fair value of the contingent interest derivative liability was $ 214,000 and $ 385,000 at December 31, 2022 and 2021, respectively, and is recognized as a derivative liability in the consolidated balance sheet.

The change in the

fair value of the derivative liability from December 20, 2021 to December 31, 2021 and for the year ended December 31, 2022 of ($ 30,000 )

and ($ 170,000 ), respectively was recorded to other expense/(income) for the years ended December 31, 2022 and 2021.

The amortization of

the original $ 415,000 debt discount of $ 104,000

and $ 3,000 was recorded as additional interest expense for the years ended December 31, 2022 and 2021, respectively.

The Company’s contractual cash obligations related to the outstanding convertible notes payable is a repayment of the April 2021 Note of the $ 10,000,000 plus accrued interest on April 16, 2025 and a repayment of the September 2021 Note of the $ 10,000,000 plus accrued interest on September 17, 2025 and a repayment of the December 2021 Note of the $ 10,000,000 plus accrued interest on December 30, 2025, unless converted at the option of the noteholder.

Fair Value of Financial Instruments

Assets and liabilities measured and recorded at fair value on a recurring basis at December 31, 2021 were as follows:

There were no level 1 or 2 assets or liabilities at December 31, 2022 or 2021.

Level 3 assets and liabilities measured and recorded at fair value on a recurring basis at December 31, 2022 and 2021 were as follows:

December 31, 2022

December 31, 2021

Derivative Liability – Contingent Interest April Note

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The April 2021 Note derivative liability – contingent interest was valued using a Monte Carlo Geometric Brownian Stock Path Model.

The key assumptions used in the model at

inception, and at December 31, 2021 are as follows:

The key assumptions used in the model

at December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

Conversion Price of conversion feature

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Balance – December 31, 2021

Fair Value Adjustment

Balance – December 31, 2022

The September 2021 Note derivative liability – contingent interest was valued using a Monte Carlo Geometric Brownian Stock Path Model.

The key assumptions used in the model

at inception, and at December 31, 2021 are as follows:

The key assumptions used in the

model at inception, and at December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

Conversion Price of conversion feature

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Balance – December 31, 2021

Fair Value Adjustment

Balance – December 31, 2022

The December 2021 Note derivative liability – contingent interest was valued using a Monte Carlo Geometric Brownian Stock Path Model.

The key assumptions used in the model at

inception, and at December 31, 2021 are as follows:

The key assumptions used in the

model at inception, and at December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

Conversion Price of conversion feature

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Balance – December 31, 2021

Fair Value Adjustment

Balance – December 31, 2022

Stockholders’ Equity

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shares of common stock and 20,000,000 undesignated shares authorized.

As of December 31, 2021, 1,742,500 shares have been designated for Series A 12% Convertible Preferred Stock, 900,000 shares have been designated for Series B-1 Convertible Preferred Stock, 2,100,000 shares have

been designated for Series B-2 Convertible Preferred Stock, 1,000 shares have been designated for Series C Super Dividend Convertible

Preferred Stock, 2,508,000 shares have been designated for Series B-3 Convertible Preferred Stock, 12,748,500 have been designated as common stock and no shares remain undesignated.

As of December 31, 2022, 1,742,500 shares have been designated for Series A 12% Convertible Preferred Stock, 900,000 shares have been designated for Series B-1 Convertible Preferred Stock, 2,100,000

shares have been designated for Series B-2 Convertible Preferred Stock, 1,000 shares have been designated for Series C Super Dividend

Convertible Preferred Stock, 2,508,000 shares have been designated for Series B-3 Convertible Preferred Stock, 12,748,500 have been designated as common stock and no shares remain undesignated.

All issued and outstanding shares of Series B-1, Series B-2 and

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Market Agreement for net proceeds of $ 3,864,000 .

In June 2020, the Company issued 14,452 shares of its common stock under the 2020 At Market Agreement for net proceeds of approximately $ 44,000 .

Rights Offering

On May 23, 2019, the Company completed an offering of common stock and warrants to its shareholders of record as of April 29, 2019.

In the offering, the Company

received approximately $ 44.9 million for the issuance of 10,488,161 shares of common stock and warrants which may be exercised for 2,622,154 shares of common

The warrants may be exercised at $ 7.00 per share of common stock and expire on May 23, 2026.

The warrants were valued at

approximately $ 8.2 million as of the issuance, using the closing price of $ 4.01 , a life of 7 years, a volatility of 101 % and a risk-free interest rate of 2.33 %.

Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity” the Company has determined that warrants issued in connection with this financing transaction were not

derivative liabilities and therefore, were recorded as additional paid-in capital.

There were no issuances of common stock under the 2020 At Market Agreement during the year ended December 31, 2022.

Series A 12 % Convertible Preferred

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On February 4, 2008, the Company closed a private placement begun in October 2007 of its Series A 12 % Convertible Preferred Stock (“Series A”) and related warrants.

In this transaction, the Company sold units of securities at $ 6.00 per unit, each unit comprised of (i) one share of Series A

Preferred, (ii) a warrant to purchase one share of common stock for $ 9.00 , and (iii) a warrant to purchase one share of common stock for

Each share of the Series A is entitled to dividends at the rate of 12 % per annum payable at the Company’s option in cash or shares of common stock valued at the higher of $ 6.00 per share or 100 % of the value weighted average price of

the Company’s share price for the 20 consecutive trading days prior to the applicable dividend payment date.

Dividends are payable

semi-annually on March 30 and September 30.

In this transaction, the Company sold units of securities at $ 6.00 per unit, each unit comprised of (i) one share of Series A Preferred,

(ii) a warrant to purchase one share of common stock for $ 9.00 , and (iii) a warrant to purchase one share of common stock for $ 12.00 .

share price for the 20 consecutive trading days prior to the applicable dividend payment date.

Dividends are payable semi-annually on

March 30 and September 30.

The dividend paid on the initial dividend payment date is calculated from the date the Company deposited each subscription advance.

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In 2022, 42,500 shares of Series A were converted into

4,553 shares of common stock which included 387

shares relating to the prorated dividend prior to conversion.

There were no shares of Series A converted into shares of common stock in

Prior to 2018, a total of 410,000 shares of Series A had been converted into 69,312 shares of common stock.

7,287 shares of common stock.

There were no

shares of Series A converted into shares of common stock in 2021.

Prior to 2021, a total of 465,000 shares of Series A had been

converted into 73,865 shares of common stock.

Series C 6 % Super Dividend Redeemable

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shares of Series C at a price of $ 10,000 per share for gross proceeds of $ 2,120,000 .

The Company incurred $ 47,000 of cash transaction costs

resulting in net cash proceeds of $ 2,073,000 .

In addition, the Company issued 500 warrants exercisable at $ 7.20 to a placement agent which had

a de minimis value.

The Company incurred $ 47,000 of cash transaction costs resulting in

net cash proceeds of $ 2,073,000 .

In addition, the Company issued 500 warrants exercisable at $ 7.20 to a placement agent which had a de minimis

Additionally, in January 2011, the Company sold and issued 13 shares of Series C at a price of $ 10,000 per share for gross proceeds of $ 130,000 .

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Conversion Rights .

Each holder of

Series C may convert all, but not less than all, of his Series C shares plus accrued and unpaid dividends into Common Stock at the price of $ 6.00

Each holder of Series C may

convert all, but not less than all, of his Series C shares plus accrued and unpaid dividends into Common Stock at the price of $ 6.00

per share of Common Stock (“Conversion Price”), such that approximately 1,667 shares of Common Stock will be issued per each converted

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per share for 15 consecutive trading days.

Holders of Series C

shall be entitled to receive cumulative non-compounding dividends at the rate per share of Series C equal to the greater of (i) 6 % per

annum of the Stated Value (also defined as the “Floor”) or (ii) 2.5 % of net sales until the total dividends paid is equal to the

initial investment and 1.25 % of net sales thereafter.

The maximum amount each Series C shareholder will receive in dividend payments

is equal to $ 100,000 (the “Maximum Payout”).

For purposes of this dividend calculation, net sales shall mean gross revenues actually

received by the Company, from the sale or licensing of the product DAVANAT ® (GM-CT-01), less chargebacks, returns, expenses attributable to product recalls, duties,

customs, sales tax, freight, insurance, shipping expenses, allowances and other customary deductions.

Holders of Series C shall be

entitled to receive cumulative non-compounding dividends at the rate per share of Series C equal to the greater of (i) 6 % per annum of

the Stated Value (also defined as the “Floor”) or (ii) 2.5 % of net sales until the total dividends paid is equal to the initial

investment and 1.25 % of net sales thereafter.

The maximum amount each Series C shareholder will receive in dividend payments is equal

to $ 100,000 (the “Maximum Payout”).

For purposes of this dividend calculation, net sales shall mean gross revenues actually received by

the Company, from the sale or licensing of the product DAVANAT ® (GM-CT-01), less chargebacks, returns, expenses attributable to product recalls, duties, customs,

sales tax, freight, insurance, shipping expenses, allowances and other customary deductions.

The dividend shall be payable in arrears semiannually on March 31 and September 30, beginning with the first such date after the original issue date;

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Series C Post Conversion Dividend Right .

In the event that any share of Series C is converted into Common Stock before the Maximum Payout is paid in respect of such converted share of Series C, then the holder shall have the right to continue to receive dividends in respect

of such converted share of Series C equal to the remaining payout (the “Series C Preferred Stock Post Conversion Dividend Right”) which shall be equal to the Maximum Payout less the cumulative dividends received through the conversion date.

share of Series C Preferred Stock Post Conversion Dividend Right shall be issued for each such converted share of Series C.

The holder of each Series C Preferred Stock Post Conversion Dividend Right shall receive the remaining payout on an equal

basis and in conjunction with the then outstanding shares of Series C and all the other then outstanding Series C Post Conversion Dividend Rights, in the same manner and subject to the same terms and conditions as applicable to the payment of

dividends on each share of Series C, except that for purposes of calculating the dividend the Floor shall not apply.

The Series C Preferred Stock Post Conversion Dividend Right shall have no stated value, liquidation preference or right to any

dividends or distributions other than the remaining payout.

event that any share of Series C is converted into Common Stock before the Maximum Payout is paid in respect of such converted share of Series C, then the holder shall have the right to continue to receive dividends in respect of such converted

share of Series C equal to the remaining payout (the “Series C Preferred Stock Post Conversion Dividend Right”) which shall be equal to the Maximum Payout less the cumulative dividends received through the conversion date.

One share of Series C

Preferred Stock Post Conversion Dividend Right shall be issued for each such converted share of Series C.

The holder of each Series C Preferred Stock Post Conversion Dividend Right shall receive the remaining payout on an equal basis and in

conjunction with the then outstanding shares of Series C and all the other then outstanding Series C Post Conversion Dividend Rights, in the same manner and subject to the same terms and conditions as applicable to the payment of dividends on

each share of Series C, except that for purposes of calculating the dividend the Floor shall not apply.

The Series C Preferred Stock Post Conversion Dividend Right shall have no stated value, liquidation preference or right to any dividends or

distributions other than the remaining payout.

The Series C Preferred Stock Post Conversion Right is subject to redemption in the same manner as outstanding Series C shares.

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converted into 40,193 shares of common stock and 24 Dividend Rights were issued.

In 2014, 20 shares of Series C were converted into 33,756 shares of

common stock and 20 Dividend Rights were issued.

Per the terms of the Series C, these Dividend Rights shall continue to participate in

dividends, however the Floor shall not apply.

In 2014, 20 shares of Series C were converted into 33,756

shares of common stock and 20 Dividend Rights were issued.

Per the terms of the Series C, these Dividend Rights shall continue to

participate in dividends, however the Floor shall not apply.

At December 31, 2016 and 2015, these Dividend Rights were determined to have a de minimis value, as the payment of a dividend is considered improbable at this time.

The Company will continue to evaluate

and assess the Series C Post Conversion Dividend Right for each reporting period.

The Company will

continue to evaluate and assess the Series C Post Conversion Dividend Right for each reporting period.

Liquidation Rights .

of any liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the holders of Series C will receive $ 10,000

In the event of any

liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the holders of Series C will receive $ 10,000

per share plus accrued and unpaid dividends, payable prior and in preference to any distributions to the holders of Common Stock but after and subordinate to the Series A 12 % Convertible Preferred Stock (“Series A”), Series B-1 and Series B-2, subject to the Maximum Payout.

Upon a sale of the

Company, the Company shall redeem all of the then outstanding shares of Series C and Series C Preferred Stock Post Conversion Rights within thirty ( 30 )

Upon a sale of the Company, the

Company shall redeem all of the then outstanding shares of Series C and Series C Preferred Stock Post Conversion Rights within thirty ( 30 )

days after the transaction constituting the sale of the Company is closed and such closing is fully funded.

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through the redemption date.

The redemption price shall be payable at the Company’s option either in cash or in shares of common stock valued at the higher of (i) $ 3.00 per share or (ii) the average market price for the ten consecutive trading days ending

immediately prior to the date of redemption.

trading days ending immediately prior to the date of redemption.

The ROI Percentage shall mean the percentage that applies as of the redemption date, as follows:

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Voting Rights .

shares have no voting rights.

The Series C shares have no voting rights.

Warrant activity is summarized as follows:

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Expiration Date

February 12, 2009

Series B-1 Transaction $ 3.00 Investor Warrants — Class B

February 12, 2009 Series B-1 Transaction $ 3.00 Investor Warrants — Class B

February 12, 2009

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May 13, 2009 Series B-2 Transaction $ 3.00 Investor Warrants — Class B

June 30, 2009 Series

B-2 Transaction $ 3.00 Investor Warrants — Class B

June 30, 2009 Series B-2 Transaction $ 3.00 Investor Warrants — Class B

June 30, 2009

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August 12, 2024

September 30, 2009

Series B-2 Transaction $ 3.00 Investor Warrants — Class B

September 30, 2009 Series B-2 Transaction $ 3.00 Investor Warrants — Class B

September 30, 2009

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May 23, 2019 Rights offering warrants

July 22, 2022 Warrants issued in connection of related party line of credit

July 22, 2022

July 31, 2029

December 19, 2022 Warrants issued for draw on related party line of credit

December 19, 2022

July 31, 2029

Total outstanding warrants

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grants made prior to that date remain outstanding for their legal term.

In addition, the Company has awarded 1,477,379

non-plan stock option grants to employees and non-employees.

These non-plan grants have vesting periods and expiration dates similar to those options granted under the Incentive Plans.

At December 31, 2021, there were no non-plan grants outstanding.

Stock-Based Compensation

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the Company’s historical employee turnover;

however, any forfeitures will be accounted for as incurred.

The following table summarizes the stock option activity in the stock-based compensation plans:

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Restricted Stock Issuances

In January 2020, two directors elected to take

restricted stock grants in lieu of cash retainers for 2020.

A total of 32,693 shares of restricted stock valued at approximately $ 93,500 was amortized to expense on a straight-line basis until January 9, 2021 when the stock vested in full.

In March 2021, one director elected to take a

restricted stock grant in lieu of cash retainers for 2021.

A total of 16,588 shares of restricted stock valued at approximately $ 35,000 is being amortized to expense on a straight-line basis until December 31, 2021 when the stock vested in full.

In March 2021, one director elected to take a restricted stock grant in lieu of cash retainers for 2021.

A total of 16,588 shares of restricted stock valued at approximately $ 35,000

is being amortized to expense on a straight-line basis until December 31, 2021 when the stock vested in full.

In January 2022, one director elected to take a restricted stock grant in lieu of cash retainers for 202 2.

A total of 17,677 shares of restricted stock valued at approximately $ 35,000

is being amortized to expense on a straight-line basis until December 31, 2022 when the stock vested in full.

Deferred Stock Units

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Lewis as of any date shall be fully vested and nonforfeitable at all

The Company shall issue the shares underlying the outstanding whole number of DSUs credited to Mr.

Pursuant to an amendment to the DSU Agreement in July 2022, the Company shall issue the shares underlying

the outstanding whole number of DSUs credited to Mr.

Lewis as follows:

twenty five percent

shall be issued on March 1, 2023, twenty five percent shall be issued on September 1, 2023 and fifty percent shall be issued on March 1, 2024.

twenty five percent shall be issued on March 1, 2023, fifty percent shall be issued on March 1, 2024 and twenty five percent shall be issued on

September 1, 2028 .

For the year ended December 31, 2022, $ 418,000 of Mr.

Lewis’ compensation was recorded as stock compensation expense

representing 268,596 shares of common stock to be issued under the DSU agreement with a weighted average grant date fair value of $ 1.56 per share.

Lewis’ bonus for the year ended December 31, 2021 of $ 200,000 (which was included in accrued compensation at December 31, 2021) was approved in January 2022, and represents 103,627 shares of common stock to be issued under the DSU agreement with a grant date fair value of $ 1.93 per share.

The $ 200,000 was reclassified from accrued

compensation to additional paid in capital in January 2022.

For the year ended December 31, 2021, $ 400,000 of Mr.

Lewis’ compensation was recorded as stock compensation expense representing 142,206 shares of common stock to be issued under the DSU

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compensation to additional paid in capital in March 2021.

For the year ended December 31, 2020, approximately $ 132,000 of his

compensation was recorded as stock compensation expense representing 50,307 shares of common stock to be issued under the DSU agreement

with a weighted average grant date fair value of $ 2.62 per share.

There is no unrecognized compensation expense related to the DSUs.

Line of Credit – Related Party

The Company had a $ 10 million Line of Credit arrangement

with Richard E.

Uihlein, Chairman of Board of Directors and a shareholder pursuant to an agreement established in December, 2017 and amended in December, 2018 and January, 2019.

The line of credit was terminated in conjunction with the December

2021 Convertible Note Payable (see Note ).

Under the arrangement the Company was permitted borrow up to $ 10 million from Mr.

an unsecured basis and with any borrowings bearing interest at the Applicable Federal Rate for short terms loans published by the Internal Revenue Service ( 0.13 %

in June 2021).

Borrowings were to be made through December 31, 2021 with repayment due on December 31, 2022 .

In connection with the Line

of Credit agreement, the Company issued to Mr.

Uihlein warrants to purchase 1 million shares of the Company’s common stock for $ 5 per share.

Half of the warrants vested at closing of the Line of Credit, and the other half would have vested ratably with borrowings under the

agreement but expired with the termination of the Line of Credit.

The 500,000 warrants that vested at closing were exercised in May 2019

for cash proceeds to the Company of $ 2.5 million.

There were no borrowings under the Line of Credit prior to its termination in December 2021.

The fair value of the 500,000 warrants vested at closing

in December 2017 was $ 696,000 at the date of issuance based on the following assumptions:

an expected life of 7 years, volatility of 98 %, risk free

interest rate of 2.05 % and zero

The fair value of the vested warrants was recorded in other current assets and other assets (non-current) as a deferred financing cost and were to be amortized on a straight-line basis from December 19, 2017 through December 31, 2019.

The remaining unamortized balance of the deferred financing cost on January 11, 2019 was adjusted to be recorded as expense on a straight-line basis through December 31, 2022.

Upon termination of the Line of Credit in December 2021, all remaining

unamortized costs were expensed.

Amortization for the year ended December 31, 2021 and 2020 of $ 174,000 and $ 87,000 , respectively, was recorded as interest expense.

Convertible Line of Credit – Related Party

On July 25, 2022, the Company and Richard E.

Uihlein (the “Lender”) entered into a Line of Credit Letter Agreement (the “Credit Agreement”), pursuant

to which the Lender shall provide the Company a line of credit of up to $ 60.0 million (the “Line of Credit”) to finance the Company’s

working capital needs.

The Company may draw upon the Line of Credit through July 31, 2024.

Each advance made pursuant to the Credit Agreement shall be evidenced by an unsecured, convertible promissory note (individually, a “Promissory

Note,” and collectively, the “Promissory Notes”), and bear interest at the Applicable Federal Rate for short term loans, plus two ( 2 %)

Principal and interest on the Promissory Notes are due on or before January 31, 2026 .

Only with the consent of the Lender,

may the Promissory Notes be prepaid, in whole or in part, at any time without premium or penalty, but with interest on the amount or amounts prepaid.

At the election of Lender, the principal and accrued interest on Promissory Note(s) may be converted into the number of shares of the Company’s

Common Stock equal to the amount of principal and accrued interest on such Promissory Note divided by the price equal to the closing price of the Common Stock on the date of such Promissory Note, but in no event less than $ 3.00 per share.

In connection with the Credit Agreement, the Company agreed to issue the Lender warrants to purchase up to an aggregate of 1,700,000 shares of the Company’s common stock, par value $ 0.001 per share (collectively, the “Warrants”).

Upon execution of the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 500,000 shares of Company’s Common Stock at an exercise price of $ 5.00

per share, which Warrant is exercisable upon issuance.

Further, pursuant to the Credit Agreement, the Company shall issue to the Lender additional Warrants to purchase up to the remaining 1,200,000 shares of the Company’s common stock, ratably, upon borrowings under the Credit Agreement, with exercise prices equal to 150 % of the closing price of the Company’s common Stock on the date of the Promissory Note evidencing such draw, but in no event more than $ 10.00 per share nor less than $ 3.00 per share.

expire on July 31, 2029 .

The fair value of the 500,000

warrants vested at closing on July 25, 2022 was $ 738,000 at the date of issuance based on the following assumptions:

an expected life

of 7 years, volatility of 92 %,

risk free interest rate of 3.19 % and zero

The fair value of the vested warrants was recorded in other assets (non-current) as a deferred financing cost and will be amortized on a straight-line basis from July 25, 2022 through January 31, 2026.

Amortization for the period ended

December 31, 2022 of $ 92,000 was recorded as interest expense.

On December 19, 2022, the Company executed a $ 10

million Promissory Note under the Line of Credit.

The interest rate on this draw is 6.4 % (Applicable Federal Rate for short term loans

on date of draw of 4.46 % plus 2 %).

The effective interest rate is approximately 7.1 %.

Accrued interest on this draw was $ 23,000 at December 31, 2022.

The principal and accrued interest is convertible at the option of the Lender at $ 3.00 per share.

In accordance with the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 200,000 shares of Company’s Common Stock at an exercise price of $ 3.00 per

share, which Warrant is exercisable upon issuance.

The fair value of the 200,000

warrants vested at closing on December 19, 2022 was $ 160,780 at the date of issuance based on the following assumptions:

life of 7 years , volatility of 91 %,

risk free interest rate of 4.06 % and zero

The proceeds were allocated between the Promissory Note and the warrants issued, and the amount allocated to the warrants was recorded as a debt discount netted against principal to be amortized on a straight-line basis, which is not

materially different than the effective interest method, from December 19, 2022 through January 31, 2026.

Amortization for the period ended December 31, 2022 of $ 2,000 was recorded as interest expense.

The fair value of warrants that vest in the future based on borrowings will be computed when those borrowings occur and amortized over the remaining

period through January 31, 2026.

Loss Per Share

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Options to purchase shares of common stock

Shares of common stock issuable upon conversion of convertible notes payable

Shares of common stock issuable upon conversion of convertible notes payable – related party

Shares of common stock issuable upon conversion of convertible line of credit – related party

Shares of common stock issuable upon conversion preferred stock

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The Company has one operating lease for its office

space which was amended effective January 1, 2019 for a term of 38 months with no residual value guarantees or material restrictive

The amended lease provided for free rent for the first two months of the lease and continues the security deposit of $ 6,000 .

In addition to base rental payments included in the contractual obligations table below, the Company is responsible for our pro-rata share of the

operating expenses for the building.

Our lease cost for the years ended December 31, 2021 and 2020 was $ 44,000 and $ 44,000 and is included in general and administrative expenses.

As of December 31, 2021, the right to use lease asset consisted of $ 7,000 and is included in other assets .

Also, at December 31, 2021, current lease liability of $ 8,000 is included in accrued expenses .

The Company renewed its existing office space lease effective in February 2022 for 38 months at substantially

the same terms.

space which was amended effective March 1, 2022 for a term of 38 months with no residual value guarantees or material restrictive

The amended lease provided for free rent for the first six and one-half months of the lease and continues the security

deposit of $ 6,000 .

In addition to base rental payments included in the contractual obligations table below, the Company is responsible

for our pro-rata share of the operating expenses for the building.

Our lease cost for the years ended December 31, 2022 and 2021 was $ 43,000

and $ 44,000 , respectively, and is included in general and administrative expenses.

As of December 31, 2022, the right to use lease asset

consisted of $ 86,000 and is included in other assets .

Also, at December 31, 2022, current lease liability of $ 40,000 is included in accrued expenses and the noncurrent lease liability of $ 66,000

is included in other long term liabilities .

The Company renewed its existing office space lease effective in February 2022 for 38 months at substantially the same terms.

Maturity of operating lease as of December 31, 2022 in thousands:

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Initially, the Company and SBH have a 50 % equity ownership interest in the LLC, with neither party having control over the LLC.

Accordingly, from inception through the fourth quarter of 2014, the Company accounted for its

investment in the LLC using the equity method of accounting.

Under the equity method of accounting, the Company’s investment was initially recorded at cost with subsequent adjustments to the carrying value to recognize additional investments in or

distributions from the Investee, as well as the Company’s share of the Investee’s earnings, losses and/or changes in capital.

The estimated fair value of the IPR&D contributed to the LLC was immediately expensed upon contribution as there was

no alternative future use available at the point of contribution.

The operating agreement provides that if either party does not desire to contribute its equal share of funding required after the initial capitalization, then the other party,

providing all of the funding, will have its ownership share increased in proportion to the total amount contributed from inception.

Accordingly, from inception through the fourth quarter of 2014, the Company accounted

for its investment in the LLC using the equity method of accounting.

Under the equity method of accounting, the Company’s investment was initially recorded at cost with subsequent adjustments to the carrying value to recognize additional

investments in or distributions from the Investee, as well as the Company’s share of the Investee’s earnings, losses and/or changes in capital.

The estimated fair value of the IPR&D contributed to the LLC was immediately expensed upon

contribution as there was no alternative future use available at the point of contribution.

The operating agreement provides that if either party does not desire to contribute its equal share of funding required after the initial capitalization,

then the other party, providing all of the funding, will have its ownership share increased in proportion to the total amount contributed from inception.

In the fourth quarter of 2014, after the LLC had expended the $ 400,000 in cash, SBH decided not to contribute its share of the funding required.

As a result, the Company contributed the $ 73,000 needed for the fourth quarter of 2014 expenses of the LLC and an additional $ 1,858,000

in total from 2015 through 2019.

The Company contributed $ 226,000 and $ 448,000 for the LLC expenses (recorded in research and development expenses) in 2021 and 2020, and SBH contributed $ 35,000 in 2019 and a total of $ 123,000 in 2017 and 2016, respectively.

December 31, 2021, the Company’s ownership percentage in the LLC was 84.4 %.

The Company accounts for the interest in the LLC as a

consolidated, less than wholly owned subsidiary.

As a result, the Company contributed the $ 73,000 needed for the fourth quarter of 2014 expenses of the LLC and an additional $ 2,306,000 in total from 2015 through 2020.

The Company contributed $ 213,000

and $ 226,000 for the LLC expenses (recorded in research and development expenses) in 2022 and 2021, and SBH contributed $ 35,000 in 2019 and a total of $ 123,000 in

2017 and 2016, respectively.

As of December 31, 2022, the Company’s ownership percentage in the LLC was 85.3 %.

The Company accounts for

the interest in the LLC as a consolidated, less than wholly owned subsidiary.

Because the LLC’s equity is immaterial, the value of the non-controlling interest is also deemed to be immaterial.

The Company’s portion of the LLC’s net loss for 2014, prior to the change in

accounting discussed previously, was $ 400,000 , which includes the Company’s proportionate share of the non-cash charge associated with

the contributed IPR&D of $ 200,000 .

The Company’s portion of the LLC’s net loss for 2014,

prior to the change in accounting discussed previously, was $ 400,000 , which includes the Company’s proportionate share of the non-cash

charge associated with the contributed IPR&D of $ 200,000 .

The components of the net deferred tax assets are as follows at December 31:

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As of December 31, 2022, the Company has federal and state net operating loss carryforwards totaling $ 131,317,000 and $ 102,003,000 respectively, which expire through

In addition, the Company has federal and state research and development credits of $ 2,437,000 and $ 1,282,000 , respectively, which expire through 2035 .

Ownership changes, as defined by Section 382 of the Internal Revenue Code, may have limited the amount of net operating loss carryforwards that

can be utilized annually to offset future taxable income.

In addition, the Company has federal and state research and development credits of $ 2,276,000 and $ 1,282,000 , respectively, which expire

through 2042 .

Ownership changes, as defined by Section 382 of the Internal Revenue Code, may have limited the amount of net operating

loss carryforwards that can be utilized annually to offset future taxable income.

Past and subsequent ownership changes could further affect the limitation in future years.

Because of the Company’s limited operating history and its recorded losses, management has

provided, in each of the last two years, a 100 % valuation allowance against the Company’s net deferred tax assets.

Because of the Company’s limited operating history and its recorded losses,

management has provided, in each of the last two years, a 100 % valuation allowance against the Company’s net deferred tax assets.

The Company is subject to taxation in the U.S.

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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 9A. Controls and Procedures