What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-14 · 133 added, 102 removed, 276 unchanged (46% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

September 30,

Current assets:

9 unchanged sentences

Accrued liabilities and other current liabilities

Short-term debt, net

Total current liabilities

7 unchanged sentences

250,000,000 shares

authorized and 37,823,394 shares issued at June 30, 2024

authorized and 37,823,394 shares issued at September 30, 2024

Additional paid-in capital

6 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenues

13 unchanged sentences

Condensed Statements of Changes in Stockholders’ Equity (Deficit)

For the Six Months Ended June 30, 2023 and 2024

For the Nine Months Ended September 30, 2023 and 2024

Stockholders’ Equity

7 unchanged sentences

Balance, June 30, 2023

Issuance of Common Stock upon exercise of stock options

Stock-based compensation

Balance, September 30, 2023

Stockholders’ Equity (Deficit)

9 unchanged sentences

Balance, June 30, 2024

Issuance of Common Stock upon exercise of stock options

Stock-based compensation

Balance, September 30, 2024

See accompanying notes to the unaudited condensed interim financial statements.

1 unchanged sentence

Condensed Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Unrealized loss (gain) on investments, net

Realized loss (gain) on investments, net

Changes in the carrying amount of right-of-use asset

8 unchanged sentences

Purchases of property and equipment

Net cash used in investing activities

Proceeds for sale or maturities of short-term investments

Net cash provided by (used in) investing activities

Cash flows from financing activities:

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Proceeds from issuance of debt

Offering costs

Debt repayment

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The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

As of June 30, 2024, the Company had not generated any revenue from commercial product sales of its internally-developed immunotherapeutic products for the treatment of cancer and other age-related diseases.

In the course of its development activities, the Company has sustained operating losses and expects to continue to incur operating losses for the foreseeable future.

Since inception to June 30, 2024, the Company incurred cumulative net losses o f $ 90.8 million.

As of June 30, 2024 , the Company had $ 1.2 million in cash and cash equivalents.

As of September 30, 2024, the Company had not generated any revenue from commercial product sales of its internally developed immunotherapeutic products for the treatment of cancer and other age-related diseases.

During its development activities, the Company has sustained operating losses and expects to continue to incur operating losses for the foreseeable future.

Since inception to September 30, 2024, the Company incurred cumulative net losses of $ 94.5 million.

These losses reflects the events reported in the Form 8-K filed on May 1, 2024 with the Securities and Exchange Commission (“SEC”), involving a scheme that resulted in the misdirection of approximately $ 1.3 million held in Company accounts to a fraudulent account controlled by a third party.

The Company has pursued relief through insurance claims and has reported the crime to legal authorities.

Management expects to incur additional losses in the future to conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan.

The cash balance as of June 30, 2024 reflects the events reported in the Form 8-K filed on May 1, 2024 with the Securities and Exchange Commission (“SEC”), in which the Company reported that it was a victim of a criminal scheme involving the impersonation of a purchaser upon the default on a legally binding commitment to purchase $ 8.0 million of secured notes from the Company.

Further, the scheme resulted in the misdirection of approximately $ 1.3 million held in Company accounts to a fraudulent account controlled by a third party.

The Company is pursuing all available remedies to recover this loss.

Given the limited success that these efforts have had to date for the recovery of funds, the Company recognized a loss of $ 1.3 million in the three- and six-month periods ended June 30, 2024.

As a result of these conditions, substantial doubt about the Company’s ability to continue as a going concern was raised.

This issue was first identified as of December 31, 2023.

As of September 30, 2024 , the Company had $ 1.0 million in cash and cash equivalents.

On August 15, 2022, the Company entered into a loan and security agreement (the “2022 Loan Agreement”) with Cogent Bank, pursuant to which it received $ 6.5 million in proceeds to purchase a building that will become the Company's new headquarters.

The loan is secured by a first priority lien on the building.

As of September 30, 2024, certain subcontractors have filed mechanics liens related to unpaid invoices issued in connection with the Company’s construction of its new manufacturing facilities and upgraded research laboratories.

The 2022 Loan Agreement contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements;

however, as of the reporting date, the lender has not elected to do so.

See Part I, Item 4.

-- “Controls and Procedures.” As of September 30, 2024, the Company has reflected this loan as Short-term debt, net, to reflect that the lender has the right to accelerate the loan under a discretionary default provision.

The Company continues to seek the financing required to complete the construction project, with the cooperation of the lender and lien holders.

To date, the Company has funded operations primarily through the sale of stock, issuance of senior secured notes and revenues generated from the Company’s exclusive worldwide license with Wugen, Inc.

(“Wugen”), pursuant to which Wugen licensed limited rights to develop, manufacture, and commercialize cell therapy treatments for cancer based on two of the Company’s internally-developed multi-cytokine fusion protein molecules, and its manufacturing and supply arrangement with Wugen.

In the three months ended June 30, 2023 and 2024, the Company recognized revenues generated from the supply of clinical and research grade material to Wugen of $ 622,807 and $ 618,854 , respectively.

In the six months ended June 30, 2023 and 2024, the Company recognized revenues generated from the supply of clinical and research grade material to Wugen of $ 664,690 and $ 1.7 million, respectively.

As of June 30, 2024, the conclusion of a going concern assessment was that there was substantial doubt about the Company’s ability to continue as a going concern.

Under the guidance of Topic 205-40 for going concern assessment, management evaluated whether there were facts or circumstances that mitigated substantial doubt over the Company’s ability to remain a going concern.

Management considered that the Company is expecting to continue to generate losses as its products are in clinical development and will not generate commercial sales.

The Company also considered the burden on resources of legal proceedings.

In the three months ended September 30, 2023 and 2024, the Company recognized revenues generated from the supply of clinical and research grade material to Wugen of $ 853,102 and $ 426,423 , respectively.

In the nine months ended September 30, 2023 and 2024, the Company recognized revenues generated from the supply of clinical and research grade material to Wugen of $ 1.5 million and $ 2.2 million, respectively.

The Company launched a financing plan in the third quarter of 2024.

The plan includes several capital-raising activities, such as issuance of secured notes, equity financings, as well as business development transactions, such as license agreements with guaranteed minimum payments.

Through October 31, 2024, the Company issued an aggregate of $ 6.9 million in secured notes.

September 25, 2024, the Company entered into a nonbinding term sheet with a party interested in licensing one of the Company’s preclinical molecules.

The Company expects to close this license transaction in the fourth quarter of 2024.

The proposed license agreement includes guaranteed minimum payments which are expected within the first year of the term.

On November 13, 2024, we entered into an engagement letter with the Maxim Group to act as the exclusive placement agent for a multi-step equity financing.

If the Company is not successful in raising additional capital through these activities, management intends to revise its business plan.

If such revisions are insufficient, the Company may have to curtail or cease operations.

The Company has received written notices from the Listing Qualifications Staff of the Nasdaq Stock Market LLC (“Nasdaq”) informing the Company it is not in compliance with continued listing requirements on the Nasdaq Global Market for the market value of listed securities.

Under Nasdaq Listing Rules, the Company has a period of 180 calendar days from the date of notice in which to regain compliance, and its first deadline is currently scheduled for December 16, 2024.

The Company intend to take all reasonable measures available to us to regain compliance with the continued listing requirements for the Nasdaq Global Market, including utilizing the right to appeal to Nasdaq to extend the deadline to regain compliance based on a solid financial plan to do so.

While the Company is exercising diligent efforts to maintain the listing of its common stock on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with the applicable continued listing standards set forth in the Nasdaq Listing Rules.

As of September 30, 2024, the conclusion of a going concern assessment was that there is substantial doubt about the Company’s ability to continue as a going concern.

The Company considered its financing plans for the next 12 months, along with expected continuing operating losses and the burden of expenses incurred in connection with past legal proceedings.

Management concluded that there were no mitigating circumstances which alleviated the substantial doubt over its ability to continue as a going concern.

As reported in the Company’s Form 8-K filed on July 18, 2024 and further described in Part II, Item 1.

– “Legal Proceedings” below, as of July 13, 2024, the Company and Dr.

Wong, the Company’s Founder and Chief Executive Officer, entered into a confidential Settlement Agreement and Release (the “Settlement Agreement”) with Altor BioScience, LLC (“Altor”), NantCell, Inc.

(“NantCell”), and ImmunityBio, Inc.

(the parent of Altor and NantCell, together with Altor and NantCell, “ImmunityBio”), to resolve the previously disclosed arbitration before JAMS brought by Altor and NantCell (the “Arbitration”) as well as a complaint Altor filed against the Company in the Chancery Court of the State of Delaware for the contribution of legal fees and expenses advanced to Dr.

Wong (“Complaint”).

Wong, the Company’s Founder and Chief Executive Officer, entered into a confidential Settlement Agreement and Release (the “Settlement Agreement”) with ImmunityBio and its affiliates.

The Settlement Agreement includes mutual general releases by and among the parties thereto.

No party is required to make any monetary payments to any other party or person under the Settlement Agreement and each party will bear its own expenses incurred in connection with the matter.

The Company is completing procedures required to be in compliance with the terms of the Settlement Agreement.

The Settlement Agreement provides that, upon completion of these procedures, the parties will stipulate that the Arbitration and Complaint should be dismissed.

In accordance with 17 CFR 229.601 (Item 601), the Company intends to include the Settlement Agreement in the Company’s third quarter report on Form 10-Q.

The Company has substantially completed remediation procedures required to be in compliance with the terms of the Settlement Agreement.

The Company entered into the Settlement Agreement to avoid the costs, disruption and distraction of further litigation.

In the accompanying condensed balance sheet as of June 30, 2024, the Company reported a balance of $ 10.0 million for legal fees incurred but not yet paid that were included within accounts payable and an accrual of $ 4.8 million for accrued legal fees within accrued liabilities and other current liabilities.

In the accompanying condensed balance sheet as of September 30, 2024, the Company reported a balance of $ 14.4 million for legal fees incurred but not yet paid that were included within Accounts payable and an accrual of $ 35,000 for accrued legal fees within Accrued liabilities and other current liabilities.

The Company is engaged in discussions with the law firms involved with this matter to arrange a reasonable payment plan with respect to those legal fees.

The Company continues to pursue bridge f inancing through the issuance of up to $ 10.0 million in Secured Notes.

Subsequent to the end of the second quarter of 2024, the Company issued an additional $ 1.8 million in Secured Notes, bringing the total issuance of Secured Notes to $ 5.5 million.

With the S ettlement Agreement and imminent dismissal of the Arbitration, the attendant uncertainties for the outcome and additional complexities, as well as on-going legal costs of the dispute have been lifted.

As a result, management believes that in addition to the secured note financing, other avenues of financing are now available to the Company.

The Company has developed and is implementing its financing plan involving other capital-raising activities for equity investments which it intends to close by year-end.

Management anticipates that the capital obtained through these financings will allow the Company to fund operations through to execution of its plans for business development transactions such as licenses, although there can be no assurance of this outcome.

In addition, near-term financing plans may include cooperative agreements for clinical trials and third-party collaboration funding.

If the Company is not successful in raising additional capital, management intends to revise its business plan and reduce costs.

If such revisions are insufficient, the Company may have to curtail or cease operations.

With the execution of the Settlement Agreement, the Company resolved the attendant uncertainties for the outcome of the arbitration and additional complexities, and it launched its new financing plan.

The accompanying interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

The Company believes that substantial doubt exists regarding its ability to continue as a going concern for at least 12 months from the date of issuance of the Company’s condensed interim financial statements, without additional funding or financial support.

After considering management’s plan for financing and funds raised that are probable to occur within one year, as well as that the Company expects to continue to incur losses from operations for the foreseeable future, management concluded that the substantial doubt that existed in its going concern analysis was not alleviated.

Summary of Significant Accounting Policies

Basis of Presentation

Unaudited Interim Financial Information

The accompanying unaudited condensed interim financial statements as of June 30, 2024 and for the three- and six-month periods ended June 30, 2023 and 2024 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The accompanying unaudited condensed balance sheet as of September 30, 2024, the condensed statements of operations, and condensed statements of changes in stockholders’ equity (deficit) for the three and nine-month periods ended September 30, 2023 and 2024 and the condensed statements of cash flows for the nine months ended September 30, 2023 and 2024, and all related disclosures contained in the accompanying notes have been prepared in accordance with accounting principles that are generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”).

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These unaudited condensed interim financial statements include only normal and recurring adjustments that the Company believes are necessary to fairly state the Company’s financial position and the results of its operations and cash flows.

The results for the three- and six-month periods ended June 30, 2024 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period.

The condensed interim balance sheet at December 31, 2023 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S.

The results for the three and nine-month periods ended September 30, 2024 are not necessarily indicative of the results expected for the full fiscal year or any subsequent interim period.

The condensed interim balance sheet at December 31, 2023 has been derived from the audited financial statements at that date but does not include all disclosures required by

GAAP for complete financial statements.

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There is no effect on reporting results of operations from prior periods.

Use of Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes.

Management must apply significant judgment in this process.

The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate.

Actual results could differ from estimates.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurement (“Topic 820”), establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between fair value measurements based on market data (observable inputs) and those based on the Company’s own assumptions (unobservable inputs).

This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs.

The three levels of inputs used to measure fair value are as follows:

Observable inputs such as quoted prices in active markets;

Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

Fair value measurements are classified based on the lowest level of input that is significant to the measurement.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels.

The determination of the fair values takes into account the market for the Company’s financial assets and liabilities, the associated credit risk, and other factors as required.

The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Revenue Recognition

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To date, the Company's revenues have been generated solely from transactions with Wugen.

The Wugen License includes licenses of intellectual property, cost reimbursements, upfront signing fees, milestone payments and royalties on future licensee’s product sales.

The Wugen License includes

licenses of intellectual property, cost reimbursements, upfront signing fees, milestone payments and royalties on future licensee’s product sales.

In addition, the Company and Wugen have an agreement for supply of materials, from which the Company also recognizes revenues.

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The Company reviews its estimate of the progress toward completion based on the best information available to recognize the cumulative progress toward completion as of the end of each reporting period, and makes revisions to such estimates, if facts and circumstances change during each reporting period.

For the three and six months ended June 30, 2023, the Company recognized $ 622,807 and $ 664,690 in revenue related to the sale of development supply materials to Wugen, respectively.

For the three and six months ended June 30, 2024, the Company recogni zed $ 618,854 and $ 1.7 million in re venue related to sale of development supply materials to Wugen, respectively.

For the three and nine months ended September 30, 2023, the Company recognized $ 853,102 and $ 1.5 million in revenue related to the sale of development supply materials to Wugen, respectively.

For the three and nine months ended September 30, 2024 , the Company recognized $ 426,423 and $ 2.2 million in revenue related to sale of development supply materials to Wugen, respectively.

The Company holds a minority interest in Wugen which is accounted for using the measurement alternative whereby the investment is recorded at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same investee.

No impairment has been recognized.

As of June 30, 2024 and December 31, 2023, the Compa ny included $ 1.6 million for the investment in Wugen in Investments in the accompanying condensed interim balance sheets.

As of September 30, 2024 and December 31, 2023, the Compa ny included $ 1.6 million for the investment in Wugen in Investments in the accompanying condensed interim balance sheets.

The Company used its equity interest in Wugen to collateralize the Secured Notes.

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Operating leases are included in Other assets, Accrued liabilities and other current liabilities, and Other liabilities on its condensed interim balance sheets.

Operating lease Right of Use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

Operating lease Right of Use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over

the lease term at commencement date.

As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

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As of December 31, 2023 , the Company had a balance of $ 2.6 million included in Accrued liabilities and other current liabilities i n the audited balance sheet, consisting of $ 392,000 for construction expenses, $ 105,000 for manufacturing expenses, $ 1.1 million for legal fees, $ 262,000 for clinical expenses, $ 365,000 for bonus payable, $ 160,000 for salary expenses, $ 119,000 for the current portion of long-term debt, $ 28,500 for a lease liability and $ 68,500 for other liabilities.

As of June 30, 2024 , the Company had a balance of $ 6.3 million included in Accrued liabilities and other current liabilities in the accompanying condensed interim balance sheet, consisting of $ 4.8 million for legal fees, $ 422,000 for construction in progress, $ 500,000 for manufacturing expenses, $ 139,000 for clinical expenses, $ 57,000 for bonus payable, $ 124,000 for the current portion of long-term debt and $ 152,000 for salary and benefits.

As of September 30, 2024 , the Company had a balance of $ 1.2 million included in Accrued liabilities and other current liabilities in the accompanying condensed interim balance sheet, consisting of $ 170,000 for legal fees, $ 422,000 for construction in progress, $ 49,000 for manufacturing expenses, $ 104,000 for property taxes, $ 117,000 for clinical expenses, $ 57,000 for bonus payable, $ 126,000 for the current portion of long-term debt and $ 90,000 for salary and benefits.

Cogent Bank Loan

On August 15, 2022, the Company entered into the 2022 Loan Agreement with Cogent Bank, pursuant to which it received $ 6.5 million in proceeds to purchase a building that will become the Company's new headquarters.

The loan is secured by a first priority lien on the building.

As of June 30, 2024, the Company had $ 6.3 million in principal outstanding in a loan under the 2022 Loan Agreement.

The interest-only period was one year followed by 48 months of equal payments of principal and interest beginning on September 15, 2023 based on a 25-year amortization rate.

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Upon the Maturity Date, a final payment of unamortized principal will be due.

The Company is in compliance with all covenants as of June 30, 2024.

The Company has the option to prepay the outstanding balance of the loan prior to the Maturity Date without penalty.

As of June 30, 2024 , the current portion of $ 123,956 is included in Accrued liabilities and other current liabilities, and the noncurrent portion of $ 6.3 million is included in Debt, net in the accompan y ing condensed interim balance sheet.

The 2022 Loan Agreement contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements;

however, as of the reporting date, the lender has not elected to do so.

As of September 30, 2024, the Company has reflected this loan as Short-term debt, net, to reflect that the lender has the right to accelerate the loan under a discretionary default provision.

As of September 30, 2024 , $ 6.3 million is included in Short-term debt, net in the accompanying condensed interim balance sheet.

Senior Secured Notes

On March 31, 2024, the Company entered into a Note Purchase Agreement with the Purchasers (as defined in the Note Purchase Agreement), pursuant to which the Company may issue secured notes up to an aggregate principal amount up to $ 10.0 million (“Secured Notes”).

As of June 30, 2024, the Company received $ 3.7 million in funding from the issuance of Secured Notes, which is included within Debt, Net on the accompanying condensed interim balance sheet.

As of September 30, 2024, the Company received $ 6.5 million in funding from the issuance of Secured Notes, which is included within Debt, Net on the accompanying condensed interim balance sheet.

Investors included Dr.

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Rebecca Byam, Chief Financial Officer, who invested $ 220,000 ;

Lee Flowers, Senior Vice President of Business Development, who invested $ 25,000 ;

Garrett, the Chairman of the Company’s board of directors, who invested $ 140,000 ;

Winer, a member of our board of directors, who invested $ 60,000 , as well as unrelated parties.

As of June 30, 2024, existing investors in Secured Notes unanimously agreed to an Amended and Restated Note Purchase Agreement and related documents (“Amended and Restated Note Purchase Agreement”).

Winer, a member of our board of directors, who invested $ 60,000 ;

Greene, a member of the board of directors, who invested $ 25,000 , as well as unrelated parties.

As of July 2, 2024, existing investors in Secured Notes unanimously agreed to an Amended and Restated Note Purchase Agreement and related documents (“Amended and Restated Note Purchase Agreement”).

On September 30, 2024, existing investors approved an amendment to the Amended and Restated Note Purchase Agreement which extended the last closing date to October 31, 2024.

No other terms were changed.

Under the terms of the Amended and Restated Note Purchase Agreement, the Secured Notes continu e to bear interest at a rate of 9 % per annum , payable quarterly in arrears.

The Secured Notes will mature on August 30, 2026 (the “Maturity Date”), on which date the principal balance, accrued but unpaid interest and other amounts owed under the terms of the Amended and Restated Note Purchase Agreement shall be due and payable.

The Company pledged its equity ownership interest in Wugen, which was equivalent to a 5.6 % ownership stake in that company as of June 30, 2024 (“Pledged Collateral”).

The Company pledged its equity ownership interest in Wugen, which was equivalent to a 5.6 % ownership stake in that company as of September 30, 2024 (“Pledged Collateral”).

The Pledged Collateral will be held and released according to the terms of the Escrow Agreement, as security for the Secured Notes.

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In the event of a Mandatory Prepayment, Secured Notes may receive a bonus payment based on the gross proceeds of the sale of the Pledged Collateral.

If the Secured Notes are repaid on the Maturity Date, holders will receive a fixed bonus payment in addition to payment of outstanding principal and accrued and unpaid interest.

If a bonus payment is paid, then there is no prepayment penalty.

The Amended and Restated Note Purchase Agreement also contains default provisions, according to which, following an event of default, the Company may be required to distribute the Pledged Collateral to the Purchasers on a pro rata basis based on a $ 10.0 million issuance of Secured Notes, in full satisfaction of the indebtedness evidenced by the Secured Notes.

Amended terms of the Amended and Restated Note Purchase Agreement include a conversion feature, which gives the holder a right to convert the outstanding indebtedness to shares of the Company’s common stock under certain conditions, subject to final documentation.

The holders of the Secured Notes have no obligation to exercise the conversion option, however, if the holders of the majority of principal of Secured Notes outstanding choose to do so, then all the holders of Secured Notes must do so.

As of September 30, 2024, the fair value of the embedded derivative, which incorporated the likelihood of certain events occurring, was immaterial.

Thus, as of September 30, 2024, the Company did not recognize the embedded derivative in the accompanying condensed financial statements.

The Company accounts for the bonus payment to be paid if the Secured Notes are repaid on the Maturity Date by accreting the bonus payment to the full amount due on the Maturity Date, utilizing the effective interest rate method.

As of September 30, 2024, the Company did not recognize accretion of the bonus payment, which was not considered material to the accompanying condensed financial statements.

Preferred Stock

As of December 31, 2023 and June 30, 2024 , the Company had 10,000,000 shares of preferred stock authorized and no such shares issued.

As of December 31, 2023 and September 30, 2024 , the Company had 10,000,000 shares of preferred stock authorized and no such shares issued.

Net Loss Per Share

The following table summarizes the computation of the basic and diluted net loss per share:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Weighted-average common shares outstanding

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The following table summarizes the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:

At September 30,

Common stock options

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No transfers between levels occurred during the periods presented.

The following table presents the Company’s assets, which were measured at fair value at December 31, 2023 and June 30, 2024:

The following table presents the Company’s assets, which were measured at fair value at December 31, 2023 and September 30, 2024:

At December 31, 2023:

Money market funds

At June 30, 2024:

At September 30, 2024:

Money market funds

The Company computes its quarterly income tax expense/(benefit) by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter.

The Company did no t have a provision for income taxes (current or deferred tax expense) as of December 31, 2023 and June 30, 2024.

The Company did no t have a provision for income taxes (current or deferred tax expense) as of December 31, 2023 and September 30, 2024.

The Company will continue to maintain a 100 % valuation allowance on total deferred tax assets.

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Operating Leases

The Company entered a new one-year lease for approximately 12,250 square feet of space located in Miramar, Florida, which was covered by two prior operating leases that had a two-year term that commenced on March 1, 2022 and ended on February 29, 2024 .

As of March 1, 2022, the Company entered a two-year lease, comprised of two operating leases, for approximately 12,250 square feet of space located in Miramar, Florida.

Upon the commencement of those leases, the Company used its incremental borrowing rate of 6.0 % to determine the amounts to recognize for a ROU asset and a lease liability.

The new lease commenced on March 1, 2024 and terminates on February 28, 2025.

On March 1, 2024, the Company entered a one-year lease for the same space, which expires on February 28, 2025 .

If a lease has a term that is 12 months or less in duration, the lease qualifies for a short-term lease exemption under ASC 842-20-25-2.

The Company elected to take advantage of this exemption, and it will account for this lease on a straight-line basis over the lease term and will not recognize a ROU asset and a lease liability as a result.

The remaining lease payments under the new short-term lease are $ 183,216 .

The Company has no obligations under financing leases.

For the three months ended June 30, 2023 and 2024 , rent expense recognized by the Company was $ 40,875 and $ 49,524 , respectively, of which $ 22,212 and $ 25,936 , respectively, are included in research and development in the accompanying condensed interim statements of operations.

For the six months ended June 30, 2023 and 2024, rent expense recognized by the Company was $ 84,825 and $ 96,907 , respectively, of which $ 44,424 and $ 49,389 , respectively are included in research and development in the accompanying condensed interim statements of operations.

The remaining lease payments under the new short-term lease ar e $ 114,510 .

T he Company has no obligations under financing leases.

For the three months ended September 30, 2023 and 2024 , rent expense recognized by the Company was $ 42,400 and $ 49,500 , respectively, of which $ 22,200 and $ 25,900 , respectively, are included in research and development in the accompanying condensed interim statements of operations.

For the nine months ended September 30, 2023 and 2024, rent expense recognized by the Company was $ 127,200 and $ 146,400 , respectively, of which $ 66,600 and $ 75,300 , respectively are included in research and development in the accompanying condensed interim statements of operations.

Contractual Commitments

The Company has commitments with a third-party manufacturing organization to supply us with clinical grade materials.

As of June 30, 2024, it is under contract for obligations of $ 163,750 it expects to pay during the year ending December 31, 2024.

As of December 31, 2023 and June 30, 2024, the Company had commitments to fund $ 4.4 million and $ 2.6 million, respectively, in construction costs related to the buildout of its new headquarters and manufacturing facility.

As of September 30, 2024, it is under contract for obligations of $ 12,500 it expects to pay during the year ending December 31, 2024.

As of December 31, 2023 and September 30, 2024, the Company had commitments to fund $ 4.4 million an d $ 2.5 million, respectively, in construction costs related to the buildout of its new headquarters and manufacturing facility.

Project Financing

On January 10, 2024 (the “Termination Date”), the Company exercised its right to terminate its credit agreement (the “Credit Agreement”), dated April 21, 2023, with Prime Capital Ventures, LLC (the “Lender”), as permitted under the terms of the Credit Agreement.

These funds were intended to finance the construction and renovation of the Company’s new headquarters (the “Property”).

The termination followed repeated delays in funding and related concerns.

4 unchanged sentences

The Company intends to pursue all available remedies to recover these funds, including legal actions, receivership and insurance.

The Company continues to seek financing to complete the construction and renovation of its Property, where it intends to build a new headquarters, including a biologics manufacturing facility, upgraded research laboratory facilities, vivarium, and upgraded office and common areas.

Nonoperating Loss

2 unchanged sentences

The Company is pursuing all available remedies to recover this loss.

Given the limited success that these efforts have had to date for the recovery of funds, the Company recognized a loss of $ 1.3 million in the three- and six-month periods ended June 30, 2024.

Given the limited success that these efforts have had to date for the recovery of funds, the Company recognized a loss of $ 1.3 million in the three- and nine-month periods ended September 30, 2024.

Legal Proceedings

20 unchanged sentences

The Settlement Agreement includes mutual general releases by and among the parties thereto.

No party is required to make any monetary payments to any other party or person under the Settlement Agreement and each party will bear its own expenses incurred in connection with the matter.

The Company is completing procedures required to be in compliance with the terms of the Settlement Agreement.

The Settlement Agreement provides that, upon completion of these procedures, the parties will stipulate that the Arbitration and Complaint should be dismissed.

In accordance with 17 CFR 229.601 (Item 601), the Company intends to include the Settlement Agreement in the Company’s third quarter report on Form 10-Q.

No party is required to make any monetary payments to any other party or person under the Settlement Agreement and each party will bear its own expenses incurred in

connection with the matter.

The Company has substantially completed remediation procedures required to be in compliance with the terms of the Settlement Agreement.

The Settlement Agreement provides that, upon completion of these procedures, the parties mutually agreed to stipulate that the Arbitration and Complaint should be dismissed.

As of the filing date, the parties to the Settlement Agreement are working together to finalize the notices and related final documentation to obtain dismissal of the Arbitration and Complaint.

Other Matters

As of June 30, 2024, certain subcontractors filed mechanics liens related to unpaid invoices issued in connection with the Company’s construction of its new manufacturing facilities and upgraded research laboratories.

The Company continues to seek the financing required to complete the construction project.

The 2022 Loan Agreement contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements;

however, as of the reporting date, to the Company’s knowledge, the lender has not elected to do so.

Inflationary Cost Environment, Banking Crisis, Supply Chain Disruption and the Macroeconomic Environment

7 unchanged sentences

In addition to the required recognition or disclosure disclosed in the footnotes herein, there were also the following subsequent events after the reporting date:

Subsequent to the end of the second quarter of 2024, the Company issued an additional $ 1.8 million in Secured Notes.

On July 2, 2024, the Company issued an additional $ 1.5 million in Secured Notes.

As of August 5, 2024, the Company issued $ 250,000 in Secured Notes, including an investment of $ 75,000 from Dr.

$ 50,000 from Mr.

$ 25,000 from Rick S.

Greene, a member of the board of directors;

and $ 25,000 from Lee Flowers, Senior Vice President of Business Development.

As reported in the Company’s Form 8-K filed on July 18, 2024 and further described in Part II, Item 1.

– “Legal Proceedings,” as of July 13, 2024, the Company and Dr.

Wong, the Company’s Founder and Chief Executive Officer, entered into a confidential Settlement Agreement and Release with Altor BioScience, LLC (“Altor”), NantCell, Inc.

(“NantCell”), and ImmunityBio, Inc.

(the parent of Altor and NantCell, to resolve the previously disclosed arbitration before JAMS brought by Altor and NantCell as well as a complaint Altor filed against the Company in the Chancery Court of the State of Delaware for the contribution of legal fees and expenses advanced to Dr.

Wong (“Complaint”).

In accordance with 17 CFR 229.601 (Item 601), the Company intends to include the Settlement Agreement in the Company’s third quarter report on Form 10-Q.

As reported on the Company’s Form 8-K filed on August 12, 2024, the Company received written notices from the Listing Qualifications Staff (“Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it is not in compliance with Nasdaq Listing Rules.

The notifications from Nasdaq do not impact the listing of the Company’s common stock at this time.

The Company received a notice that it was not in compliance with Nasdaq Listing Rules for the $ 50.0 million market value listed securities requirement as of June 17, 2024;

the minimum bid price as of August 6, 2024;

and the $ 15.0 million market value of publicly held shares requirement as of August 8, 2024.

The Company has 180 days from the respective date of notice to address each deficiency.

During October 2024, the Company issued $ 375,000 in Additional Secured No tes, including a $5 0,000 purchase by Dr.

Wong on October 31, 2024.

On November 13, 2024, we entered into an engagement letter with the Maxim Group to act as the exclusive placement agent for a multi-step equity financing.

As of the filing date, the parties to the Settlement Agreement are working together to finalize the notices and related final documentation to obtain dismissal of the Arbitration and Complaint.

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

What changed 10-Q

Item 1. Financial Statements