What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-27 compared with 2022-03-28 · 640 added, 379 removed, 491 unchanged (67% of the section changed)

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Consolidated Financial Statements for the Years Ended December 31, 2022 and 2021:

of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2022 and 2021

Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Stockholders’ Equity 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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on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Immix Biopharma,

and its subsidiary (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations

and comprehensive loss, stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31,

2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December

31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021,

in conformity with accounting principles generally accepted in the United States of America.

have audited the accompanying consolidated balance sheets of Immix Biopharma, Inc.

and its subsidiaries (the “Company”) as

of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and

cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material

respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows

for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United

States of America.

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

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have served as the Company’s auditor since 2021.

March 28, 2022

Biopharma, Inc.

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Equipment, net

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

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Accrued interest

Convertible notes payable

Derivative liability

Total current liabilities

Funds held for subsidiary private offering

Total liabilities

Commitments and contingencies

Stockholders’ equity (deficit):

Stockholders’ equity:

Preferred stock, $ 0.0001 par value;

shares authorized at December 31, 2021 and 2020, respectively;

shares issued and outstanding

Common stock, $ 0.0001 par value;

and 20,000,000

10,000,000 shares authorized;

at December 31, 2021 and 2020, respectively;

and 3,375,000

shares issued and outstanding at December 31, 2021 and 2020, respectively

no shares issued and outstanding

Common stock, $ 0.0001

shares authorized;

shares issued and 13,892,122

shares outstanding at December 31, 2022, and 13,228,689

shares issued and outstanding at December 31, 2021

Additional paid-in capital

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( 29,755,534 )

Stockholders’ equity (deficit)

( 4,730,584 )

Total liabilities and stockholders’ equity (deficit)

Treasury stock at cost, 72,363 and no shares as of December 31, 2022 and 2021, respectively

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes to the consolidated financial statements.

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Statements of Operations and Comprehensive Loss

For the Years Ended

For the Years Ended December 31,

Operating expenses:

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( 8,218,948 )

Other income (expense):

( 1,352,014 )

Other expense:

Change in fair value of derivative liability

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Interest expense

Total other expense, net

Total other expense

( 23,025,852 )

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( 24,383,879 )

Other comprehensive income (loss):

Other comprehensive loss:

Foreign currency translation

Total other comprehensive income (loss)

Total other comprehensive loss

Comprehensive loss

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Biopharma, Inc.

Statements of Stockholders’ Equity (Deficit)

Statements of Stockholders’ Equity

the Years Ended December 31, 2022 and 2021

Comprehensive

Stockholders’

Common Shares

Common Stock Amount

Additional Paid-in Capital

Accumulated Other Comprehensive Income

Accumulated Deficit

Treasury Shares

Treasury Stock Amount

Total Stockholders’ Equity

Balance December 31, 2020

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Shares issued for cash proceeds, net of offering costs

Shares issued for cash proceeds, net of offering costs, shares

Shares issued for conversion of convertible notes payable and

related accrued interest

Shares issued for conversion of convertible notes payable and

related accrued interest, shares

Shares issued for conversion of convertible notes payable, related accrued interest and settlement of derivative liability

Relative fair value of warrants issued in connection with debt

Stock-based compensation

Stock-based compensation, shares

Settlement of derivative liability upon conversion of convertible

notes payable

( 24,383,879 )

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( 29,755,534 )

( 4,730,584 )

Shares issued for cash proceeds, net of offering costs

Shares issued for conversion of convertible notes payable, related accrued interest, and settlement of derivative liability

Relative fair value of warrants issued in connection with debt

Shares issued for cashless exercise of stock options

Shares issued for services

Stock-based compensation

Repurchase of common shares

( 8,229,713 )

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Statements of Cash Flows

For the Years Ended

For the Years Ended December 31,

Operating Activities:

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Stock-based compensation

Shares issued for services

Convertible note issued in exchange for services

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( 7,408,303 )

( 1,589,307 )

Investing Activities:

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Financing Activities:

Payments of deferred offering costs

Proceeds from convertible notes payable

Payments on note payable

Proceeds from sale of common stock, net of offering costs

Funds received for subsidiary private offering

Repurchase of common stock

Net cash provided by financing activities

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Net change in cash

( 4,207,764 )

Cash - beginning of year

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Common stock issued upon conversion of notes payable, related accrued interest and settlement of derivative liability

Cashless exercise of stock options

accompanying notes to the consolidated financial statements.

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Biopharma, Inc.

(the “Company”) is a clinical-stage pharmaceutical company organized as a Delaware corporation on January

7, 2014 to focus on the development of safe and effective therapies for patients with cancer and inflammatory diseases.

In August 2016,

the Company established a wholly-owned Australian subsidiary, Immix Biopharma Australia Pty Ltd.

(“IBAPL”), in order to conduct

various preclinical and clinical activities for its development candidates.

(the “Company”) is a clinical-stage pharmaceutical company organized as a Delaware corporation on

January 7, 2014 to focus on the development of therapies for patients with cancer and inflammatory diseases.

In August 2016, the

Company established a wholly-owned Australian subsidiary, Immix Biopharma Australia Pty Ltd.

(“IBAPL”), in order to

conduct various preclinical and clinical activities for its development candidates.

In November 2022, the Company established a

majority-owned subsidiary, Nexcella, Inc.

(formerly known as Immix Biopharma Cell Therapy, Inc.) (“Nexcella”) in order

to conduct various preclinical and clinical activities for its development candidates.

2 – Summary of Significant Accounting Policies

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In addition, the Company is dependent upon the services of its employees, consultants and other third parties.

in late 2019, the outbreak of a novel strain of virus named SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), or

coronavirus, which causes coronavirus disease 2019, or COVID-19, evolved into a global pandemic.

The extent of the impact of the

coronavirus outbreak on the Company’s business will depend on certain developments, including the duration and spread of the

outbreak and the extent and severity of the impact on the Company’s clinical trial activities, research activities and

suppliers, all of which are uncertain and cannot be predicted.

At this point, the extent to which the coronavirus outbreak may

materially impact the Company’s financial condition, liquidity or results of operations is uncertain.

The Company has expended

and will continue to expend substantial funds to complete the research, development and clinical testing of product candidates.

Company will also be required to expend additional funds to establish commercial-scale manufacturing arrangements and to

provide for the marketing and distribution of products that receive regulatory approval.

The Company may require additional funds to

commercialize its products.

The Company is unable to entirely fund these efforts with its current financial resources.

funds are unavailable on a timely basis from operations or additional sources of financing, the Company may have to delay, reduce

the scope of or eliminate one or more of its research or development programs which may materially and adversely affect its

business, financial condition and operations.

of Estimates in Financial Statement Presentation - The preparation of these consolidated financial statements in

conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

The Company uses significant judgements when making estimates related to the valuation of deferred tax assets and related valuation

allowances, accrual and prepayment of research and development expenses, valuation of stock-based compensation, and the valuation of

derivative financial instruments.

Actual results could differ from those estimates.

in late 2019, the outbreak of a novel strain of virus named SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), or coronavirus,

which causes coronavirus disease 2019, or COVID-19, has evolved into a global pandemic.

The extent of the impact of the coronavirus outbreak

on the Company’s business will depend on certain developments, including the duration and spread of the outbreak and the extent

and severity of the impact on the Company’s clinical trial activities, research activities and suppliers, all of which are uncertain

and cannot be predicted.

At this point, the extent to which the coronavirus outbreak may materially impact the Company’s financial

condition, liquidity or results of operations is uncertain.

The Company has expended and will continue to expend substantial funds to

complete the research, development and clinical testing of product candidates.

The Company also will be required to expend additional

funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution of products that receive

regulatory approval.

The Company may require additional funds to commercialize its products.

The Company is unable to entirely fund these

efforts with its current financial resources.

If adequate funds are unavailable on a timely basis from operations or additional sources

of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development programs which

may materially and adversely affect its business, financial condition and operations.

of Estimates in Financial Statement Presentation - The preparation of these consolidated financial statements in conformity with

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date

of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

The Company uses significant

judgements when making estimates related to the valuation of deferred tax assets and related valuation allowances, accrual and prepayment

of research and development expenses, the valuation of derivative financial instruments, and stock-based compensation.

Actual results

could differ from those estimates.

Stock Split – On October 4, 2021, the Company effected a 3-for-1 forward stock split of its issued and outstanding common stock.

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accompanying consolidated financial statements have been retroactively adjusted, where applicable, to reflect the forward stock split.

of Consolidation – The accompanying consolidated financial statements include the accounts of Immix Biopharma, Inc.

accounts of its 100% owned subsidiary, IBAPL.

All intercompany transactions and balances have been eliminated in consolidation.

and Going Concern - These consolidated financial statements have been prepared on a going concern basis, which assumes

the Company will continue to realize its assets and discharge its liabilities in the normal course of business.

The continuation of

the Company as a going concern is dependent upon the ability of the Company to obtain financing to continue operations.

2021, the Company received $ 18,648,934

in net proceeds from the initial public offering (“IPO”) of its common stock (see Note 5).

of Consolidation – The accompanying consolidated financial statements include the accounts of Immix Biopharma, Inc., the accounts

of its 100 % owned subsidiary, IBAPL, and the accounts of its majority owned subsidiary, Nexcella.

All intercompany transactions and balances

have been eliminated in consolidation.

For consolidated entities where the Company owns less than 100 % of the subsidiary, the Company

records net loss attributable to non-controlling interests in its consolidated statements of operations and comprehensive loss equal

to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties.

and Going Concern -

These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to

realize its assets and discharge its liabilities in the normal course of business.

The continuation of the Company as a going

concern is dependent upon the ability of the Company to obtain financing to continue operations.

In December 2021, the Company

received $ 18,648,934 in

net proceeds from the initial public offering (“IPO”) of its common stock (see Note 6).

In January 2022, the Company

raised additional net proceeds of $ 2,913,750

from the exercise of the underwriter’s over-allotment option in connection with the Company’s IPO (See Note 8).

raised additional net proceeds of $ 2,913,750 from

the exercise of the underwriter’s over-allotment option in connection with the Company’s IPO (See Note 6).

2023, the Company entered into an ATM Sales Agreement (the “Sales Agreement”) with ThinkEquity LLC (the “Sales

Agent”), pursuant to an “at the Market” offering program (the “ATM Facility”), under which the

Company, may, from time to time, issue and sell through the Sales Agent, up to $ 5

million of shares of the Company’s common stock in sales deemed to be

“at-the-market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended

(see Note 10).

Company has a history of, and expects to continue to report, negative cash flows from operations and a net loss.

Management believes

that its cash on hand at December 31, 2021 and the net proceeds received in

January 2022 will be sufficient to meet the Company’s working capital requirements through at least March 31, 2023.

While the Company’s

estimates of its operating expenses and working capital requirements could be incorrect and the Company may use its cash resources faster

than it anticipates, management believes that its cash on hand at December 31, 2022, and funds available to be raised from the

ATM Facility, will be sufficient to meet the Company’s working capital requirements through at least March 27,

Concentration

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management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not

Equipment is recorded at cost and depreciated over its estimated useful lives using the straight-line depreciation method as follows:

– Equipment is recorded at cost and depreciated over its estimated useful

lives using the straight-line depreciation method as follows:

of Property and Equipment Estimated Useful Lives

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and accrued expenses, and notes payable approximate fair value due to the relatively short period to maturity for these instruments.

Derivative instruments are carried at fair value based on unobservable market inputs (see Note 4).

value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal

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at fair value on a recurring basis (see Notes 4 and 5).

Instruments – The Company evaluated its convertible notes to determine if those contracts or embedded components of those contracts

qualified as derivatives to be separately accounted for in accordance with Accounting Standards Codification (“ASC”) 815,

Derivatives and Hedging .

The result of this accounting treatment is that the fair value of the embedded derivative is marked to

market each balance sheet date and recorded as a liability.

In the event that the fair value is recorded as a liability, the change in

fair value is recorded in the consolidated statements of operations and comprehensive loss as other income or expense.

Upon conversion

or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified

circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other

embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments

are accounted for as a single, compound derivative instrument.

Instruments – Prior to the conversion of the convertible notes payable in December 2021, the Company evaluated its convertible

notes to determine if those contracts or embedded components of those contracts qualified as derivatives to be separately accounted for

in accordance with Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging .

The result of this accounting

treatment was that the fair value of the embedded derivative was marked to market at each balance sheet date and recorded as a liability.

The change in fair value was recorded in the consolidated statements of operations and comprehensive loss as other income or expense.

Upon conversion of the derivative instrument, the instrument was marked to fair value at the conversion date and then that fair value

was reclassified to equity.

Company determined that the convertible notes contained embedded features that provided the noteholders with multiple settlement alternatives.

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of a capital raising transaction, change of control or default by the Company, which are referred to as “redemption features.”

redemption features of the convertible notes met the requirements for separate accounting and were accounted for as a single

derivative instrument.

The derivative instrument was recorded at fair value at inception and was subject to remeasurement to fair

value at each balance sheet date, with any changes in fair value recognized in the consolidated statements of operations and

comprehensive loss (see Notes 3 and 4).

redemption features of the convertible notes met the requirements for separate accounting and were accounted for as a single derivative

The derivative instrument was recorded at fair value at inception and was subject to remeasurement to fair value at each

balance sheet date, with any changes in fair value recognized in the statements of operations and comprehensive loss (see Notes 4 and

Taxes – The Company uses the asset and liability method of accounting for income taxes.

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upon examination and ultimate settlement with the tax authorities in the tax jurisdictions in which it operates.

Tax Incentive –- IBAPL is eligible to receive a cash refund from the Australian Taxation Office for eligible research and development

(“R&D”) expenditures under the Australian R&D Tax Incentive Program (the “Australian Tax Incentive”).

The Australian Tax Incentive is recognized as a reduction to R&D expense when there is reasonable assurance that the relevant expenditure

has been incurred, the amount can be reliably measured and that the Australian Tax Incentive will be received.

The Company recognized

reductions to R&D expense of $ 79,978 and $ 212,521 for the years ended December 31, 2021 and 2020, respectively.

Tax Incentive – IBAPL is eligible to receive a cash refund from the Australian Taxation Office for eligible

research and development (“R&D”) expenditures under the Australian R&D Tax Incentive Program (the

“Australian Tax Incentive”).

The Australian Tax Incentive is recognized as a reduction to R&D expense when there is

reasonable assurance that the relevant expenditure has been incurred, the amount can be reliably measured and that the Australian

Tax Incentive will be received.

The Company recognized reductions to R&D expense of $ 236,376

for the years ended December 31, 2022 and 2021, respectively.

Compensation – Stock-based compensation expense represents the estimated grant date fair value of the Company’s equity

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31, 2022 and 2021.

and Development Costs –- R&D costs consist primarily of clinical research fees paid to consultants and

outside service providers, and other expenses relating to design, development and testing of the Company’s therapy candidates.

R&D costs are expensed as incurred.

trial costs are a component of R&D expenses.

and Development Costs – Research and development costs are expensed as incurred.

Research and development costs consist primarily

of clinical research fees paid to consultants and outside service providers, other expenses relating to design, development and testing

of the Company’s therapy candidates, and for license and milestone costs related to in-licensed products and technology.

Costs incurred

in obtaining technology licenses are charged to research and development expense if the technology licensed has not reached commercial

feasibility and has no alternative future use.

Such licenses purchased by the Company require substantial completion of research and

development, regulatory and marketing approval efforts in order to reach commercial feasibility and has no alternative future use.

trial costs are a component of research and development expenses.

The Company estimates expenses incurred for clinical trials that are

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Comprehensive Income (Loss) – Other comprehensive income (loss) includes foreign currency translation gains and losses.

cumulative amount of translation gains and losses are reflected as a separate component of stockholders’ equity (deficit) in the

consolidated balance sheets, as accumulated other comprehensive income.

Currency Translation and Transaction Gains (Losses) –- The Company maintains its accounting records in U.S.

The Company’s operating subsidiary, IBAPL, is located in Australia and maintains its accounting records in Australian dollars,

which is its functional currency.

Assets and liabilities of the subsidiary are translated into U.S.

dollars at exchange rates at the

balance sheet date, equity accounts are translated at historical exchange rate and revenues and expenses are translated by using the

average exchange rates for the period.

Translation adjustments are reported as a separate component of other comprehensive income

(loss) in the consolidated statements of operations and comprehensive loss.

Foreign currency denominated transactions are translated

at exchange rates approximating those in effect at the transaction dates.

Exchange gains (losses) are recognized in earnings and

were $( 6,093 )

cumulative amount of translation gains and losses are reflected as a separate component of stockholders’ equity in the consolidated

balance sheets, as accumulated other comprehensive income.

Currency Translation and Transaction Gains (Losses) – The Company, and its majority-owned subsidiary Nexcella,

maintain their accounting records in U.S.

The Company’s operating wholly-owned subsidiary, IBAPL, is located in

Australia and maintains its accounting records in Australian Dollars, which is its functional currency.

Assets and liabilities of

the subsidiary are translated into U.S.

dollars at exchange rates at the balance sheet date, equity accounts are translated at

historical exchange rate and revenues and expenses are translated by using the average exchange rates for the period.

adjustments are reported as a separate component of other comprehensive income (loss) in the consolidated statements of operations

and comprehensive loss.

Foreign currency denominated transactions are translated at exchange rates approximating those in effect at

the transaction dates.

Exchange gains and (losses) are recognized in income and were $ 2,245

and $ ( 6,093 )

for the years ended December 31, 2022 and 2021, respectively, and are included in general and administrative expenses in the

accompanying consolidated statements of operations and comprehensive loss.

accompanying statements of operations and comprehensive loss.

Per Common Share – Basic loss per common share is computed by dividing net loss available to common stockholders by

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dilutive shares and options, which were not included in the calculation of net loss per share, included stock options and warrants

exercisable for 1,686,984

for 2,168,742

and 1,686,984

common shares, respectively.

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The Company may take advantage

of these exemptions until it is no longer an EGC.

Accounting Pronouncements

Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted,

would have a material effect on the accompanying consolidated financial statements.

of these exemptions up until it is no longer an EGC.

Accounting Pronouncements - In August 2020, the 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):

Accounting for Convertible Instruments and Contracts in an Entity’s Own

ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock,

which results in fewer embedded conversion features being separately recognized from the host contract as compared with current U.S.

Additionally, ASU 2020-06 affects the diluted earnings per share calculation for instruments that may be settled in cash or shares and

for convertible instruments and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s

ASU 2020-06 allows entities to use a modified or full retrospective transition method and is effective for smaller reporting

companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption

The Company has chosen to early adopt the ASU as of January 1, 2022.

Upon adoption, no retrospective changes were required in

the Company’s consolidated financial statements.

3 – Agreements with Nexcella Subsidiary

December 8, 2022, the Company entered a Founders Agreement with Nexcella (the “Nexcella Founders Agreement”).

Nexcella Founders Agreement provides that prior to a Qualified IPO (as defined in Nexcella’s Amended and Restated Certificate

of Incorporation, as amended (the “Nexcella COI”)) or Qualified Change in Control (as defined in the Nexcella COI), the

Company shall provide funds to Nexcella as requested by Nexcella, in good faith, to be evidenced by a senior unsecured promissory

In exchange for the time and capital expended in the formation of Nexcella and the identification of specific assets, the

acquisition of which benefit Nexcella, on December 21, 2022, the Company loaned Nexcella approximately $ 2.1 million,

evidenced by a senior unsecured promissory note, representing the up-front fee required to acquire Nexcella’s license

agreement with Hadasit Medica Research Services & Development, Ltd.

(“HADASIT”) and BIRAD Research and Development

(“BIRAD”), and for use as working capital for its research and development activities.

The note, which

matures on January 31, 2030, accrues interest at a rate of 7.875 % per annum and is convertible into shares of common stock of

Nexcella at a conversion price of $ 2.00 per share, subject to adjustment;

provided, however, that such note shall automatically

convert into shares of Nexcella common stock immediately prior to certain conversion triggers set forth in the note.

not prepay the note without the Company’s prior written consent.

The Nexcella Founders Agreement has a term of 15 years,

which, upon expiration, automatically renews for successive one-year periods unless terminated by the Company upon notice at least

six months prior to the end of the term or upon the occurrence of a Change of Control (as defined in the Nexcella Founders

In connection with the Nexcella Founders Agreement, the Company was issued 250,000 shares

of Nexcella’s Class A Preferred Stock, 1,000,000 shares

of Nexcella’s Class A Common Stock, and 5,000,000 shares

of Nexcella’s common stock.

The Class A Preferred Stock is identical to the common stock other than as to conversion rights

and the PIK Dividend right (as defined below) and voting rights.

share of Class A Preferred Stock is convertible, at the Company’s option, into one fully paid and nonassessable share of Nexcella’s

common stock, subject to certain adjustments.

As a holder of Nexcella’s Class A Preferred Stock, the Company will receive on each

March 13 (each a “PIK Dividend Payment Date”) until the date all outstanding Class A Preferred Stock is converted into Nexcella’s

common stock or redeemed (and the purchase price is paid in full), pro rata per share dividends paid in additional fully paid and nonassessable

shares of Nexcella common stock (“PIK Dividends”) such that the aggregate number of shares of common stock issued pursuant

to such PIK Dividend is equal to 2.5 %

of Nexcella’s fully-diluted outstanding capitalization on the date that is one business day prior to any PIK Dividend Payment Date.

In addition, as a holder of Class A Preferred Stock, the Company shall be entitled to cast for each share of Class A Preferred Stock held as

of the record date for determining stockholders entitled to vote on matters presented to the stockholders of Nexcella, the number of

votes that is equal to 1.1 times a fraction, the numerator of which is the sum of (A) the shares of outstanding Nexcella common stock

and (B) the whole shares of Nexcella common stock into which the shares of outstanding Nexcella Class A Common Stock and the Class A

Preferred Stock are convertible and the denominator of which is number of shares of outstanding Nexcella Class A Preferred Stock.

share of Class A Common Stock is convertible, at the Company’s option, into one fully paid and nonassessable share of Nexcella’s

common stock, subject to certain adjustments.

In addition, upon a Qualified IPO (as defined the Nexcella COI”) or Qualified Change in Control (as defined in the Nexcella

COI), the shares of Class A Common Stock, will automatically convert into one fully paid and nonassessable share of Nexcella’s

common stock;

provided however, if at that time, the Class A Common Stock is not then convertible into a number of shares of Nexcella

common stock (or such other capital stock or securities at the time issuable upon the conversion of the Class A Common Stock) that have

(a) in the case of a Qualified IPO, at least $ 5,000,000

based on the initial offering price in such initial

public offering, or (b) in the case of a Qualified Change in Control, at least $ 5,000,000

in cash or at least $ 5,000,000

of equity based on the implied value of a share

of Nexcella common stock resulting from the price paid upon the consummation of such Qualified Change of Control, the Class A Common

Stock will automatically convert into such number of shares of Nexcella common stock (or such other capital stock or securities at the

time issuable upon the conversion of the Class A Common Stock) that have a value of $ 5,000,000

based in the initial offering price in such initial

public offering or the implied value of a share of Nexcella common stock resulting from the price paid upon the consummation of such

Qualified Change of Control (or if such Qualified Change of Control results in the Class A Shares being exchanged solely for cash, then

The Company shall be entitled to

cast such number of votes equal to the number of whole

shares of Nexcella common stock into which the Company’s Class A Common Stock is convertible as of the record date for determining stockholders

entitled to vote on matters presented to the stockholders of Nexcella.

addition to the foregoing, the Company shall be entitled to one vote for each share of Nexcella common stock held by it.

Except as provided

by law or by the Nexcella COI, holders

of Nexcella Class A Common Stock and Class A Preferred Stock shall vote together with the holders of Nexcella common stock, as a single

additional consideration under the Nexcella Founders Agreement, Nexcella will also:

(i) pay an equity fee in shares of common stock,

payable within five business days of the closing of any equity or debt financing for Nexcella or any of its respective subsidiaries that

occurs after the effective date of the Nexcella Founders Agreement and ending on the date when the Company no longer has majority voting

control in Nexcella’s voting equity, equal to 2.5% of the gross amount of any such equity or debt financing;

and (ii) pay a cash

fee equal to 4.5% of Nexcella’s annual Net Sales (as defined in the Nexcella Founders Agreement), payable on an annual basis, within 90 days of the end of each calendar year.

In the event of a Change of Control, Nexcella will pay a one-time change in control fee equal to five times the product of (A) Net Sales

for the 12 months immediately preceding the Change of Control and (B) 4.5% .

Management Services Agreement

as of December 8, 2022, the Company entered into a Management Services Agreement (the “Nexcella MSA”) with Nexcella.

Pursuant to the terms of the Nexcella MSA, the Company will render management, advisory and consulting services to Nexcella.

Services provided under the Nexcella MSA may include, without limitation, (i) advice and assistance concerning any and all aspects

of Nexcella’s operations, clinical trials, financial planning and strategic transactions and financings and (ii) conducting

relations on behalf of Nexcella with accountants, attorneys, financial advisors and other professionals (collectively, the

At the request of the Company, Nexcella shall utilize clinical research services, medical

education, communication and marketing services and investor relations/public relation services of companies or individuals

designated by the Company, provided those services are offered at market prices.

In consideration for the Services, Nexcella will pay the Company an

annual base management and consulting fee of $ 500,000

(the “Annual Consulting Fee”), payable in advance in equal quarterly installments on the first business day of each

calendar quarter in each year;

provided, however, that such Annual Consulting Fee shall be increased to $ 1.0

million for each calendar year in which Nexcella has Net Assets (as defined in the Nexcella MSA) in excess of $ 100

million at the beginning of the calendar year.

Notwithstanding the foregoing, the first Annual Consulting Fee payment shall be made

on the first business day of the calendar quarter immediately following the completion of the first equity financing for Nexcella

that is in excess of $ 10

million in gross proceeds.

The first payment shall include all amounts in arrears from the effective date of the Nexcella MSA

through such payment as well as the amounts in advance for such first quarterly payment.

Actual and direct out-of-pocket expenses

reasonably incurred by the Company in performing the Services shall be reimbursed to the Company

The Nexcella MSA shall continue for a period of five years from the effective date thereof and shall be automatically extended

for additional five year periods unless the Company and Nexcella provide written notice to not extend the term at least 90 days prior

to the end of the term, unless the Nexcella MSA is terminated earlier by mutual agreement of the Company and Nexcella.

4 – Notes Payable

September 1, 2016, the Company entered into a secured convertible promissory note, as amended, with an entity affiliated with a

stockholder of the Company for aggregate borrowings of $ 3,000,000

(as amended, “2016 Note”).

The 2016 Note was scheduled to mature on March

31, 2022 , and accrued interest at the applicable federal rate per annum.

The 2016 Note was secured by (i) all of the

Company’s purchased equipment (to the extent not already encumbered) and (ii) any amounts received as a tax rebate or

incentive during the term of the 2016 Note.

On December 20, 2021, the outstanding principal and accrued interest were converted into

shares of the Company’s common stock in connection with the Company’s IPO (see below).

As of December 31, 2020, the

outstanding principal balance on the 2016 Note was $ 3,000,000 .

October 30, 2018, the Company entered into an unsecured convertible promissory note in the principal amount of $ 250,000

(as amended, “2018 Note”).

The 2018 Note was scheduled to mature on March

31, 2022 , and accrued interest at a rate of 4 %

September 1, 2016, the Company entered into a secured convertible promissory note, as amended, with an entity affiliated with a stockholder

of the Company for aggregate borrowings of $ 3,000,000 (as amended, “2016 Note”).

The 2016 Note was scheduled to mature on

March 31, 2022 , and bore interest at the applicable federal rate per annum.

The 2016 Note was secured by (i) all of the Company’s

purchased equipment (to the extent not already encumbered) and (ii) any amounts received as a tax rebate or incentive during the term

of the 2016 Note.

On December 20, 2021, the outstanding principal and accrued interest were converted into shares of the Company’s

common stock in connection with the Company’s IPO (see below).

As of December 31, 2020, the outstanding principal balance on

the 2018 Note was $ 250,000 .

October 30, 2018, the Company entered into an unsecured convertible promissory note in the principal amount of $ 250,000 (as amended,

“2018 Note”).

The 2018 Note was scheduled to mature on March 31, 2022 , and bore interest at 4 % per annum.

On December 20,

2021, the outstanding principal and accrued interest were converted into shares of the Company’s common stock in connection with

the Company’s IPO (see below).

October 30, 2019, the Company entered into a series of unsecured convertible promissory notes (as amended, “2019 Notes”)

in the aggregate principal amount of $ 800,000 .

The 2019 Notes were scheduled to mature on March

31, 2022 and accrued interest at a rate of 6 %

On December 20, 2021, the outstanding principal and accrued interest was converted into shares of the Company’s

common stock in connection with the Company’s IPO (see below).

As of December 31, 2020, the outstanding principal balance on

the 2019 Notes was $ 800,000 .

March and April 2021, the Company issued a series of unsecured convertible promissory notes (“2021A Notes”) in the

aggregate principal amount of $260,000 to the Company’s Chief Financial Officer and Alwaysraise LLC, an entity in which the

Company’s Chief Financial Officer is the sole member .

Of the $ 260,000 principal

amount, the Company received $ 200,000 in

cash proceeds and issued a $ 60,000 note

in exchange for services.

The 2021A Notes were scheduled to mature on March

1, 2023 , and accrued interest at a rate of 6 % per

In connection with the issuance of the 2021A Notes, the Company issued ten-year warrants to purchase 156,000 shares

of the Company’s common stock at an exercise price of $ 0.80 per

The warrants were valued using the Black-Scholes option pricing model with the following inputs:

an expected and contractual

life of 10 years,

an assumed volatility of 117% ,

a zero dividend

rate, and a risk free rate of 1.70 % .

The relative fair value of the warrants amounting to $ 74,603 was

recorded to debt discount and was amortized to interest expense through the date of the Company’s IPO, at which time the

outstanding principal and accrued interest was converted into shares of the Company’s common stock (see below).

The 2019 Notes were scheduled to mature on March 31, 2022 and bore interest at 6 % per

On December 20, 2021, the outstanding principal and accrued interest was converted into shares of the Company’s common stock

in connection with the Company’s IPO (see below).

March and April 2021, the Company issued a series of unsecured convertible promissory notes (“2021A Notes”) in the aggregate

principal amount of $ 260,000 to the Company’s Chief Financial Officer and Alwaysraise LLC, an entity in which the Company’s

Chief Financial Officer is the sole member.

Of the $ 260,000 principal amount, the Company received $ 200,000 in cash proceeds and issued

a $ 60,000 note in exchange for services.

The 2021A Notes were scheduled to mature on March 1, 2023 , and bore interest at 6 % per annum.

In connection with the issuance of the 2021A Notes, the Company issued ten-year warrants to purchase 156,000 shares of the Company’s

common stock at an exercise price of $ 0.80 per share.

The warrants were valued using the Black-Scholes option pricing model with the

following inputs:

an expected and contractual life of 10 years, an assumed volatility of 117 %, a zero dividend rate, and a risk free

rate of 1.70 %.

The relative fair value of the warrants amounting to $ 74,603 was recorded to debt discount and was amortized to interest

expense through the date of the Company’s IPO, at which time the outstanding principal and accrued interest was converted into

shares of the Company’s common stock (see below).

2016 Note, 2018 Note, 2019 Notes and 2021A Notes are collectively referred to as the “Notes.” In the event that the Company

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conversion of notes, other indebtedness or other convertible securities issued for capital raising purposes).

December 20, 2021, in connection with the Company’s IPO, which was deemed a Qualified Financing, the Notes along with the

corresponding accrued interest, were automatically converted into an aggregate of 5,633,689

shares of the Company’s common stock.

As a result of the conversion, the Company recorded a loss on debt extinguishment of

December 20, 2021, in connection with the Company’s IPO, which was deemed a Qualified Financing, the Notes along with the corresponding

accrued interest, were automatically converted into an aggregate of 5,633,689 shares of the Company’s common stock.

of the conversion, the Company recorded a loss on debt extinguishment of $ 86,170 .

Notes contained embedded derivative instruments, including automatic conversion into equity securities upon completion of a Qualified

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IPO, at which time the 2021A Notes were converted into shares of the Company’s common stock.

During the years ended December 31,

2021 and 2020, the Company recognized expense of $ 22,759,829

and $ 575,000 ,

respectively, related to the change in fair value of the derivative instruments.

Upon the conversion of the Notes, the Company reclassified

the estimated fair value of the derivative liability of $ 23,414,829

to additional paid-in capital.

31, 2020, the estimated fair value of the derivative instruments was $ 575,000.

expense related to the Notes was $ 118,904 and $ 99,824 for the years ended December 31, 2021 and 2020, respectively.

As of December 31,

2021 and 2020, accrued interest on the Notes was $ 0 and $ 334,988 , respectively.

During the year ended December 31,

2021, the Company recognized expense of $ 22,759,829 related to the change in fair value of the derivative instruments.

Upon the conversion

of the Notes, the Company reclassified the estimated fair value of the derivative liability of $ 23,414,829 to additional paid-in capital.

expense related to the Notes was $ 118,904 for the year ended December 31, 2021.

Amortization of the debt discounts related to the 2021A

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Payable – Related Party

September 14, 2014, the Company issued an unsecured promissory note in the principal amount of $ 50,000

to a stockholder of the Company.

The note matured on September

14, 2017 and accrued interest at a rate of 2.5 %

On June 9, 2021, the note was amended to extend the maturity date to September

As of December 31, 2021 and 2020, the outstanding principal balance on this note was $ 50,000 .

September 14, 2014, the Company issued an unsecured promissory note in the principal amount of $ 50,000 to a stockholder of the Company.

The note matured on September 14, 2017 and bore interest at 2.5 % per annum.

On June 9, 2021, the note was amended to extend the maturity

date to September 14, 2022 .

On May 26, 2022, the Company repaid the outstanding principal balance and accrued interest in full.

December 31, 2022 and 2021, the outstanding principal balance on this note was $ 0 and $ 50,000 , respectively.

expense related to the note was $ 497 and $ 1,250 for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022

and 2020, accrued interest on the Notes was $ 9,099 and $ 7,849 , respectively.

and 2021, accrued interest on the note was $ 0 and $ 9,099 , respectively.

5 – Fair Value Measurements

following table presents information about the Company’s financial liabilities measured at fair value on a recurring basis and

indicate the level of the fair value hierarchy utilized to determine such fair values:

of Liabilities Fair Value Measured on a Recurring Basis

Fair Value at

December 31, 2020

Current liabilities:

Derivative liability

Total liabilities measured at fair value

fair value of the embedded derivative instrument identified in the Notes has been estimated using a two-step approach to valuation, employing

of December 31, 2022 and 2021, the Company had no assets or liabilities required to be measured at fair value on a recurring basis.

fair value of the embedded derivative instrument identified in the Notes was estimated using a two-step approach to valuation, employing

a probability-weighted scenario valuation method and then comparing the instrument’s value with-and-without the derivative features

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As of December 31, 2020, the embedded derivative was remeasured to $ 575,000 .

As such, an expense of $ 575,000 was recorded in the fourth quarter of 2020.

Immediately prior to the conversion of the Notes in connection

with the Company’s IPO, the Company estimated a 100% probability of a Qualified Financing occurring, a de minimis probability of

a change of control occurring and a 0% probability of bankruptcy or dissolution of the Company.

Accordingly, the estimated fair value

of the embedded derivative was remeasured at $ 23,414,829 .

A loss of $ 22,759,829 related to the change in fair value of the derivative

liability was recorded during the year ended December 31, 2021.

There were no transfers among Level 1, Level 2 or Level 3 categories

in the years ended December 31, 2021 and 2020.

following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the years ended

December 31, 2021 and 2020:

Immediately prior to the conversion of the Notes in connection with the Company’s IPO, the Company estimated a 100% probability

of a Qualified Financing occurring, a de minimis probability of a change of control occurring and a 0% probability of bankruptcy or dissolution

of the Company.

Accordingly, the estimated fair value of the embedded derivative was remeasured at $ 23,414,829 .

A loss of $ 22,759,829

related to the change in fair value of the derivative liability was recorded during the year ended December 31, 2021.

There were no transfers

among Level 1, Level 2 or Level 3 categories in the years ended December 31, 2022 and 2021.

following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the year ended December

of Changes in Fair Value of Level 3 Financial Liabilities

Balance, January 1, 2021

Loss from change in fair value included in earnings

Balance, December 31, 2020

Additions – initial issuance of 2021A Notes recognized as debt discount

Loss from change in fair value included in earnings

Reclassification to additional paid-in capital upon conversion of convertible

notes payable

Loss from change in fair value included in earnings

Reclassification to additional paid-in capital upon conversion of convertible notes payable

( 23,414,829 )

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Company has authorized 200,000,000 shares of common stock and 10,000,000 shares of preferred stock each with a par value of $ 0.0001 per

December 20, 2021, the Company closed its IPO of 4,200,000

shares of its common stock offered at a price of $ 5.00

per share for gross proceeds of $ 21,000,000 .

In connection with the IPO, the Company paid $ 2,351,066

in offering costs resulting in net proceeds of $ 18,648,934 .

December 20, 2021, in connection with the IPO, the Notes along with the related accrued interest, were automatically converted into

an aggregate of 5,633,689

shares of the Company’s common stock.

December 20, 2021, the Company issued 20,000 shares

of restricted common stock to an unrelated third party for entering into an investor relations contract.

The stock was valued at a

share price of $ 5.00 , the closing price of the Company’s common stock on date of issuance, for a total value of $ 59,000 related to services which is included in

general and administrative expenses.

January 5, 2022, the Company sold 630,000 shares of its common stock pursuant to the full exercise of the over-allotment option in connection

with the Company’s IPO.

The shares were sold at the IPO price of $ 5.00 per share, resulting in gross proceeds of $ 3,150,000 and

bringing the total gross proceeds of the IPO to $ 24,150,000 .

In connection with the exercise of the over-allotment, the Company paid

$ 243,275 in offering costs resulting in net proceeds of $ 2,913,750 and bringing total net proceeds to $ 21,562,684 .

the year ended December 31, 2022, the Company issued 43,264 shares of its common stock with a fair value of $ 100,000 for services.

the year ended December 31, 2022, the Company purchased 72,363 shares of its common stock at a cost of $ 99,963 pursuant to its share

repurchase program.

The shares are being held in treasury.

The share repurchase plan was approved by the Company’s board of directors

(“Board of Directors” or “Board”) on May 9, 2022 and authorized the repurchase of up to $ 1,000,000 of the Company’s

common stock.

The share repurchase plan expired on December 31, 2022.

the year ended December 31, 2022, the Company issued 62,532 shares of its common stock upon the cashless exercise of 140,992 stock options.

December 20, 2021, the Company closed on its IPO of 4,200,000 shares offered at a price of $ 5.00 for gross proceeds of $ 21,000,000 .

connection with the offering the Company paid $ 2,351,066 in offering costs resulting in net proceeds of $ 18,648,934 .

December 20, 2021, in connection with the IPO, the Notes along with the related accrued interest, were automatically converted into an

aggregate of 5,633,689 shares of the Company’s common stock.

December 20, 2021, the Company issued 20,000 shares of restricted common stock to an unrelated third party for entering into an investor

relations contract.

The stock was valued at a share price of $ 2.95 , the closing price of the Company’s common stock on date of

issuance, for a total value of $ 59,000 related to services which is included in general and administrative expenses.

Value of Common Stock – prior to establishing a public market

to establishing a public market for the Company’s common stock, the estimated fair value of the Company’s common stock was determined by the Company’s board of directors

as of the date of each option grant, with input from management, considering the Company’s most recently available third-party valuations of common

stock, and the Company’s board of directors’ assessment of additional objective and subjective factors that it believed were relevant and

which may have changed from the date of the most recent valuation through the date of the grant.

to establishing a public market for the Company’s common stock, the estimated fair value of the Company’s common stock was

determined by the Company’s Board of Directors as of the date of each option grant, with input from management, considering the

Company’s most recently available third-party valuations of common stock, and the Board of Directors’ assessment of additional

objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation

through the date of the grant.

valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting

and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation .

The Company’s common stock valuations

were prepared using a hybrid method that incorporated elements of both a probability-weighted expected return method (“PWERM”)

and an option pricing method (“OPM”).

The Company’s common

stock valuations were prepared using a hybrid method that incorporated elements of both a probability-weighted expected return method

(“PWERM”) and an option pricing method (“OPM”).

OPM was based on the Black-Scholes option pricing model, which allows for the identification of a range of possible future outcomes.

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public offering liquidity event and stay private outcomes, as well as the values the Company expected those outcomes could yield.

to establishing a public trading market for the Company’s capital stock, the Company’s board of directors exercised reasonable judgment

and considered a number of objective and subjective factors to determine its estimate of the fair value of the Company’s common stock,

including changes in the following factors between the date of the valuation and the grant date:

the Company’s business, financial condition and results of operations, including related industry trends affecting the Company’s operations;

to establishing a public trading market of the Company’s capital stock, the Company’s Board of Directors exercised reasonable

judgment and considered a number of objective and subjective factors to determine its estimate of the fair value of the Company’s

common stock, including changes in the following factors between the date of the valuation and the grant date:

the Company’s business, financial condition and results of operations, including related industry trends affecting the Company’s

the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions;

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and global economic and capital market conditions and outlook.

assumptions underlying the Company’s board of directors’ valuations represented the board’s best estimates, which involved inherent

uncertainties and the application of the board’s judgment.

As a result, if factors or expected outcomes had changed or the Company’s board

of directors had used significantly different assumptions or estimates, the Company’s equity-based compensation expense could have been materially

Following the completion of the Company’s IPO, the Company’s board of directors will determine the fair value of the Company’s common stock based on the

quoted market prices of the Company’s common stock.

assumptions underlying the Company’s Board of Directors’ valuations represented the Board’s best estimates, which involved

inherent uncertainties and the application of the Board’s judgment.

As a result, if factors or expected outcomes had changed or

the Company’s Board of Directors had used significantly different assumptions or estimates, the Company’s equity-based compensation

expense could have been materially different.

Following the completion of our IPO, the Company’s Board of Directors began determining

the fair value of the Company’s common stock based on the quoted market prices of its common stock.

2016, the Board of Directors of the Company approved the Immix Biopharma, Inc.

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The 2016 Plan allows for the Board of Directors to grant various forms of incentive awards covering up to 417,120

shares of the Company’s common stock.

During the year ended December 31, 2021, the board of directors amended the 2016 Plan to

increase the aggregate number of shares available for issuance under the 2016 Plan to 1,761,120

shares of common stock.

During the year ended December 31, 2021, the Board of Directors amended the 2016 Plan to increase the

aggregate number of shares available for issuance under the 2016 Plan to 1,761,120

shares of common stock.

On September 10, 2021, the Board of Directors approved the 2021 Equity Incentive Plan (the “2021

Plan”), reserving 900,000

shares of the Company’s common stock for future issuance under the 2021 Plan.

As of December 31, 2021, there were an aggregate of 1,340,136

shares of the Company’s common stock remaining for issuance under the 2016 Plan and 2021 Plan.

Plan”) which reserves and makes available for future issuance under the 2021 Plan (i) 900,000

shares of common stock, plus (ii) the number of shares of common stock reserved, but unissued under the 2016 Plan, and (iii) the

number of shares of common stock underlying forfeited awards under the 2016 Plan, provided that shares of common stock issued under

the 2021 Plan with respect to an Exempt Award (as defined in the 2021 Plan) shall not count against such share limit.

Subsequent to

September 10, 2021, no further awards shall be issued under the 2016 Plan, but all awards under the 2016 Plan which were outstanding

as of September 10, 2021 (including any Grandfathered Arrangement (as defined in the 2021 Plan)) shall continue to be governed by

the terms, conditions and procedures set forth in the 2016 Plan and any applicable award agreement.

As of December 31, 2022, there

awards remaining to be issued under the 2021 Plan.

the year ended December 31, 2022, the Company granted options to purchase 500,000

shares of the Company’s common stock to officers of the Company, and options to purchase 292,500

shares of the Company’s common stock to members of the board of directors and scientific advisors of the Company.

price of the options is $ 0.80 -$ 1.86

shares of the Company’s common stock to officers of the Company, and granted options to purchase 91,250

shares of the Company’s common stock to non-employee members of the Board of Directors and scientific advisors of the Company.

The exercise price of the options is $ 2.64 -$ 5.83

and the options expire ten

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options vest in equal monthly installments beginning on the grant date ranging from 12 to 48 months .

the year ended December 31, 2021, the Company granted options to purchase 736,500

shares of the Company’s common stock to officers of the Company, and granted options to purchase 292,500

shares of the Company’s common stock to non-employee members of the Board of Directors and scientific advisors of the Company.

The exercise price of the options is $ 0.80 -$ 1.86

and the options expire ten

years following grant.

options vest in equal monthly installments beginning on the grant date ranging from 24 to 48 months .

Company estimated the fair value of the stock options using the Black-Scholes option pricing model.

The fair value of stock options is

being amortized on a straight-line basis over the requisite vesting period of the awards.

The fair value of stock options was estimated

using the following assumptions for the year ended December 31, 2021:

an expected and contractual life of 10 years, an assumed volatility

of 117 %- 128 %, a zero dividend rate, a risk free rate of 1.37 %- 1.74 %, and fair value of common stock of $ 0.83 .

The Company recognized

stock-based compensation of $ 159,983 related to stock options for the year ended December 31, 2021, which is included in general and

administrative expenses.

The fair value of stock options

is being amortized on a straight-line basis over the requisite vesting period of the awards.

The fair value of stock options was

estimated using the following assumptions for the year ended December 31, 2022:

an expected and contractual life of 5.27 - 10

years, an assumed volatility of 117 %- 124 %,

dividend rate, a risk free rate of 1.70 %- 3.06 %,

and fair value of common stock of $ 2.21 -$ 5.50 .

The fair value of stock options was estimated using the following assumptions for the year ended December 31, 2021:

an expected and

contractual life of 10

years, an assumed volatility of 117 % - 128 % ,

dividend rate, a risk free rate of 1.37 %- 1.74 %,

and fair value of common stock of $ 0.83 .

The Company recognized stock-based compensation of $ 476,746

and $ 159,983 related to stock options for the years ended December 31, 2022 and 2021, respectively, which is included in general and administrative

As of December 31, 2022, the Company

had unrecognized stock-based compensation expense of $ 1,554,372 ,

related to unvested stock options, which is expected to be recognized over the weighted-average vesting period of 1.65 years.

following table summarizes the stock option activity under the 2021 Plan for the years ended December 31, 2022 and 2021:

of Stock Option Activity

Weighted-Average Exercise Price

Weighted-Average

Exercise Price

Outstanding and exercisable, January 1, 2021

Outstanding and exercisable, December 31, 2020

Outstanding, December 31, 2021

Outstanding and expected to vest, December 31, 2022

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of Stock Outstanding and Exercisable

of Option Shares

Average Exercise Price

Average Remaining Life (Years)

of Option Shares

Average Exercise Price

Exercise Price

Number of Option Shares

Weighted Average Exercise Price

Weighted Average Remaining Life (Years)

Number of Option Shares

Weighted Average Exercise Price

intrinsic value is calculated as the difference between the exercise price of the underlying stock option and the fair value of the Company’s

common stock for stock options that were in-the-money at year end.

common stock for stock options that were in-the-money at period end.

As of December 31, 2022, the intrinsic value for the options vested

and outstanding was $ 603,294 and $ 858,809 , respectively.

March and April 2021, in connection with the issuance of the 2021A Notes as discussed in Note 3, the Company issued ten-year

warrants for the purchase of 156,000 shares

of the Company’s common stock at an exercise price of $ 0.80 per

share, which vested immediately.

December 2021, in connection with the IPO, the Company issued five-year warrants for the purchase of 210,000 shares

of the Company’s common stock at an exercise price of $ 6.25 per

share which vest six months after the date of issuance.

following table summarizes the stock warrant activity for the year ended December 31, 2021:

The total intrinsic value of stock options exercised during the year ended

December 31, 2022 was $ 148,982 .

January 5, 2022, in connection with the issuance of shares of the Company’s common stock pursuant to the exercise of the over-allotment

discussed above, the Company issued warrants for the purchase of 31,500 shares of the Company’s common stock with a term of 5 years

and an exercise price of $ 6.25 per share, which warrants vested six months after the date of issuance.

March and April 2021, in connection with the issuance of the 2021A Notes as discussed in Note 4, the Company issued warrants for the

purchase of 156,000 shares of the Company’s common stock, with a term of 10 years and an exercise price of $ 0.80 per share which

vested immediately.

December 2021, in connection with the IPO discussed above, the Company issued warrants for the purchase of 210,000 shares of the Company’s

common stock, with a term of 5 years and an exercise price of $ 6.25 per share which vested six months after the date of issuance.

following table summarizes the stock warrant activity for the years ended December 31, 2022 and 2021:

of Stock Warrant Activity

Weighted-Average Exercise Price Per Share

Weighted-Average

Exercise Price

Outstanding and exercisable, January 1, 2021

Outstanding and exercisable, December 31, 2021

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of Stock Outstanding and Exercisable

Exercise Price

Number of Option Shares

Weighted Average Exercise Price

Weighted Average Remaining Life

Weighted Average Remaining Life (Years)

Number of Option Shares

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intrinsic value is calculated as the difference between the exercise price of the underlying stock warrant and the fair value of the

Company’s common stock for stock warrants that were in-the-money at year end.

Company’s common stock for stock warrants that were in-the-money at period end.

As of December 31, 2022, the intrinsic value for

the warrants vested and outstanding was $ 232,440 .

Equity Transactions

2022 Plan allows for the Board of Directors to grant various forms of incentive awards covering i) up to 375,000

shares of common stock and ii) up to 1,125,000

options to purchase shares of common stock.

As of December 31, 2022, there were 25,000

shares of common stock available for issuance under the Nexcella 2022 Plan.

incentive stock options have been issued pursuant to the Nexcella 2022 Plan as of December 31, 2022.

the year ended December 31, 2022, Nexcella entered into subscription agreements for the sale of 73,188

common shares of Nexcella, at a purchase price

per share for total proceeds of $ 475,000 .

As of December 31, 2022, the offering had not yet closed, and the shares were not issued by Nexcella as of December 31, 2022, and accordingly,

the Company has recorded the proceeds of $ 475,000

in funds held for subsidiary private offering

in the accompanying consolidated balance sheet at December 31, 2022 (see Note 10).

December 8, 2022, Nexcella issued 350,000 shares of Nexcella restricted common stock to the officers of the Company for services to

be performed, which vest in 48 equal monthly installments.

The stock was valued at a share price of $ 6.49 on the date of issuance, which

represents the most recent cash sales price of Nexcella’s common stock, for a total value of $ 2,271,500 related to services,

of which $ 47,323 was included in general and administrative expenses for the year ended December 31, 2022.

As of December 31, 2022, the Company

had unrecognized stock-based compensation expense of $ 2,224,177 ,

related to unvested restricted common stock, which is expected to be recognized over the remaining vesting period of 3.9 years.

7 – Licenses Acquired

December 8, 2022, Nexcella entered into a Research

and License agreement with HADASIT and BIRAD (collectively, the “Licensors”) to acquire intellectual property rights

pertaining to CAR-T (the “H&B License”).

Pursuant to the H&B License, Nexcella paid the Licensors an upfront

license fee of $ 1.5 million

in December 2022 (included in research and development expenses on the consolidated statements of operations and comprehensive

Additional quarterly

payments totaling approximately $13.0 million are due through September 2026 along

with an annual license fee of $ 50,000 .

Future royalty payments of 5 % are

due on net sales of licensed products, combined with sales milestone payments in the aggregate amount of up to $ 20 million when

annual net sales reach certain thresholds for each licensed product.

The royalties for each licensed product on a country-to-country

basis are to be paid through the latter of (a) the expiration of the last-to-expire valid claim under a licensed patent (if any) in

such country;

(b) the date of expiration of any other Exclusivity Right (as defined in the H&B License) or data protection

period granted by a regulatory or other governmental authority with respect to a licensed product that provides exclusivity in the

relevant country;

or (c) the end of a period of 15 years from the date of the First Commercial Sale (as defined in the H&B

License) of the applicable Licensed Product (as defined in the H&B License) in such country.

8 – Income Taxes

Company is subject to taxation in the United States, California and Australia.

At December 31, 2021, the Company had federal, state, and

foreign net operating loss (“NOL”) carryforwards of approximately $ 1,875,000 , $ 1,875,000 and $ 680,000 , respectively.

federal loss carryforwards generated after 2017 of approximately $ 1,270,000 will carryforward indefinitely and can be used to offset

up to 80% of future annual taxable income, while those loss carryforwards generated prior to 2018 begin expiring in 2034, unless previously

State loss carryforwards also begin expiring in 2034, unless previously utilized , while the Company’s foreign loss carryforward

do not expire .

The Company also has federal and California R&D credit carryforwards totaling $ 11,697 and $ 20,905 ,

At December 31, 2022, the Company had federal, state,

and foreign net operating loss (“NOL”) carryforwards of approximately $ 5,800,000 ,

and $ 1,500,000 ,

respectively.

The Federal credits begin to expire in 2026, unless previously utilized , while the state credits do not expire .

also has foreign withholding tax carryforwards totaling $ 63,058 at December 31, 2021.

The foreign withholding tax carryforward credit

begins to expire in 2028, unless previously utilized .

federal loss carryforwards generated after 2017 of approximately $ 5,800,000

will carryforward indefinitely and can be used to offset up to 80% of future annual taxable income, while those loss carryforwards

generated prior to 2018 begin expiring in 2034, unless previously utilized .

loss carryforwards also begin expiring in 2034, unless previously utilized, while the Company’s

foreign loss carryforward do not expire .

The Company also has federal and California research and development credit

carryforwards totaling approximately $ 110,000

and $ 106,000 ,

respectively, at December 31, 2022.

The Federal credits begin to expire in 2034, unless previously utilized, while the

State credits do not expire .

The Company also has foreign withholding tax carryforwards totaling $ 67,000

at December 31, 2022.

foreign withholding tax carryforward credit begins to expire in 2028, unless previously utilized .

Company’s NOL and credit carryforwards to offset future taxable income may be subject to a substantial annual limitation as a result

4 unchanged sentences

period resulting in an ownership change of more than 50 percent of the outstanding stock of a company by certain stockholders or public

Company’s federal income tax returns from 2014 forward, state income tax returns from 2014 forward, and its Australian tax returns

beginning in 2017 are subject to examination by tax authorities.

Company’s federal income tax returns from 2019 forward, state income

tax returns from 2018 forward, and its Australian tax returns beginning in 2020 are subject to examination by tax authorities.

reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate to the loss

from operations for the years ended December 31, 2022 and 2021 is as follows:

Schedule of Provision for Income Taxes

Year Ended December 31, 2021

Year Ended December 31, 2020

of Provision for Income Taxes

December 31, 2022

December 31, 2021

Expected income tax benefit computed at the statutory rate

5 unchanged sentences

Tax effect of:

Change in federal valuation allowance

Change in valuation allowance

Change in fair value of derivative liability

11 unchanged sentences

Valuation allowance

( 3,378,250 )

Net deferred tax assets

6 unchanged sentences

has been established by the Company to fully offset these net deferred tax assets.

the years ended December 31, 2021 and 2020, domestic and foreign pre-tax losses were as follows:

the years ended December 31, 2022 and 2021, domestic and foreign pre-tax loss were:

of Pre-tax Loss

37 unchanged sentences

paid or accrued under the MSA.

As of December 31, 2022, the MSA has expired and the Company does not intend to extend the MSA;

the royalty obligations shall survive the termination of the MSA .

time to time we may be involved in claims that arise during the ordinary course of business.

4 unchanged sentences

management’s attention from important business matters and initiatives, negatively impacting our overall operations.

June 18, 2021, the Company entered into an Employment Agreement with Ilya Rachman (the “Rachman Employment Agreement”),

June 18, 2021, the Company entered into an Employment Agreement with Ilya Rachman (as amended, the “Rachman Employment Agreement”),

effective for a three-year term.

Pursuant to the Rachman Employment Agreement, the Company employs Dr.

Rachman as Chief Executive

Officer and Dr.

Rachman is entitled to a base salary of $ 360,000

Rachman is also entitled to a performance-based bonus of 100 %

of the base salary (subject to, and determined by, the board in its sole discretion) plus additional performance bonuses to be

determined by the board.

Rachman as Chief Executive Officer

Rachman was entitled to a base salary of $ 360,000 annually.

Rachman was also entitled to a performance-based bonus of 100 %

of the base salary (subject to, and determined by, the Board in its sole discretion) plus additional performance bonuses to be determined

by the Board.

On July 14, 2022, the Compensation Committee of the Board of Directors approved a new compensation package for Dr.

and on November 9, 2022, the Company entered into an amendment to the Rachman Employment Agreement dated

as of June 18, 2021 pursuant to which (i) Dr.

Rachman’s annual base salary was increased to $ 425,000 , retroactive as of

January 1, 2022 and (ii) entitling Dr.

Rachman to a performance-based bonus of up to 50 % of his base salary (subject to, and determined

by, the Board in its sole discretion) plus additional performance bonuses to be determined by the Board.

In addition, on July 14, 2022,

the Company issued Dr.

Rachman options to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $ 2.64

Unless terminated by the Company without “cause” or by Dr.

Rachman with “good

reason” (as such terms are defined in the Rachman Employment Agreement), upon termination, Dr.

Rachman will be entitled only to

his base salary through the date of termination, valid expense reimbursements and unused vacation pay.

If terminated by the Company without

“cause” or by Dr.

Rachman with “good reason,” he is entitled to be paid his base salary through the end of

the term at the rate of 150 %,

Rachman with “good reason” (as such terms

are defined in the Rachman Employment Agreement), upon termination, Dr.

Rachman will be entitled only to his base salary through the

date of termination, valid expense reimbursements and unused vacation pay.

If terminated by the Company without “cause” or

Rachman with “good reason,” he is entitled to be paid his base salary through the end of the term at the rate of 150 %,

valid expense reimbursements and accrued but unused vacation pay.

Rachman’s employment agreement contains provisions for

the protection of the Company’s intellectual property and contains non-compete restrictions in the event of his termination other than by the Company

without “cause” or by Dr.

Rachman with “good reason” (generally imposing restrictions on (i)

employment or consultation with competing companies or customers, (ii) recruiting or hiring employees for a competing company and

(iii) soliciting or accepting business from our customers for a period of six months following termination) .

Pursuant to the

Rachman Employment Agreement, Dr.

Rachman may serve as a consultant to, or on boards of directors of, or in any other capacity to

other companies provided that they will not interfere with the performance of his duties to the Company.

March 18, 2021, the Company entered into the Management Services Agreement with Alwaysraise LLC, an entity which Gabriel Morris is sole

member, effective for a three-year term, which was amended effective June 18, 2021 (the “Morris MSA”).

Pursuant to the Morris

MSA, the Company employs Mr.

Morris as Chief Financial Officer and Mr.

Morris is entitled to a base salary of $ 240,000 annually beginning in December

2021 ($120,000 annually prior).

Morris is also entitled to a performance-based bonus of 100 % of the base salary (subject to, and

determined by, the board in its sole discretion) plus additional performance bonuses to be determined by the board.

Unless terminated

by the Company without “cause” or by Alwaysraise LLC (as such terms are defined in the Morris MSA), upon termination Mr.

be entitled only to his base salary through the date of termination, valid expense reimbursements and unused vacation pay.

If terminated

by the Company without “cause” he is entitled to be paid his base salary through the end of the term at the rate of 150 %, valid expense

reimbursements and accrued but unused vacation pay.

The Morris MSA contains provisions for the protection of the Company’s intellectual property

and confidential information.

Rachman’s employment agreement contains provisions for the

protection of the Company’s intellectual property and contains non-compete restrictions in the event of his termination other than

by the Company without “cause” or by Dr.

Rachman with “good reason” (generally imposing restrictions on (i) employment

or consultation with competing companies or customers, (ii) recruiting or hiring employees for a competing company and (iii) soliciting

or accepting business from our customers for a period of six months following termination) .

Pursuant to the Rachman Employment Agreement,

Rachman may serve as a consultant to, or on boards of directors of, or in any other capacity to other companies provided that they

will not interfere with the performance of his duties to the Company.

March 18, 2021, the Company entered into a Management Services Agreement with Alwaysraise LLC, an entity which Gabriel Morris, the Company’s

Chief Financial Officer and a member of the Board, is sole member, effective for a three-year term, which was amended effective June

18, 2021 (as amended, the “Morris MSA”).

Pursuant to the Morris MSA, the Company employs Mr.

Morris as Chief Financial Officer

Morris was entitled to a base salary of $ 240,000 annually beginning in December 2021 ($ 120,000 annually prior).

also entitled to a performance-based bonus of 100 % of the base salary (subject to, and determined by, the Board in its sole discretion)

plus additional performance bonuses to be determined by the Board.

On July 14, 2022, the Compensation Committee of the Board of Directors

approved a new compensation package for Mr.

Morris, and on November 9, 2022, the Company entered into an amendment to the Morris MSA

dated as of March 24, 2021 pursuant to which (i) Mr.

Morris’ annual base salary was

increased to $ 425,000 , retroactive as of January 1, 2022 and (ii) entitling Mr.

Morris to a performance-based bonus of up to 50 % of his

base salary (subject to, and determined by, the Board in its sole discretion) plus additional performance bonuses to be determined by

In addition, on July 14, 2022, the company issued Mr.

Morris options to purchase up to 250,000 shares of the Company’s

common stock at an exercise price of $ 2.64 per share.

Unless terminated by the Company without “cause” or by Alwaysraise

LLC (as such terms are defined in the Morris MSA), upon termination, Mr.

Morris will be entitled only to his base salary through the

date of termination, valid expense reimbursements and unused vacation pay.

If terminated by the Company without “cause,”

he is entitled to be paid his base salary through the end of the term at the rate of 150 %, valid expense reimbursements and accrued but

unused vacation pay.

The Morris MSA contains provisions for the protection of the Company’s intellectual property and confidential

June 24, 2021, the Company issued an offer letter to Graham Ross Oncology Consulting Services Ltd., a United Kingdom company, of which

Graham Ross, the Company’s consulting Acting Chief Medical Officer and Head of Clinical Development is the sole member, regarding Dr.

provision of consultative services to the Company (the “Offer Letter”).

Pursuant to the Offer Letter (signed by Dr.

Ross on June 24,

Graham Ross, the Company’s consulting Acting Chief Medical Officer and Head of Clinical Development is the sole member, regarding

Ross’ provision of consultative services to the Company (the “Offer Letter”).

Pursuant to the Offer Letter (signed

Ross on June 24, 2021), Dr.

Ross is entitled to an hourly rate for his consulting services and an option grant.

On June 24, 2021, the Company also entered into a mutual

confidentiality and non-disclosure agreement with Graham Ross Oncology Consulting Services Ltd.

On June 24, 2021,

the Company also signed a mutual confidentiality and non-disclosure agreement with Graham Ross Oncology Consulting Services Ltd.

Collaboration

6 unchanged sentences

and supply (including shipping, taxes and duty if applicable and any third-party license payments that may be due) will be solely borne

To date, no amounts have been paid to BeiGene.

10 – Subsequent Events

January 5, 2022, the Company sold an additional 630,000

shares of its common stock pursuant to the full exercise of the underwriters’ over-allotment option in connection with the

Company’s IPO.

The additional shares were sold at the IPO price of $ 5.00

per share, resulting in additional gross proceeds of $ 3,150,000

and bringing the total gross proceeds from the IPO to $ 24,150,000 .

In connection with the exercise of the underwriters’ over-allotment, the Company paid $ 243,275

in offering costs resulting in net proceeds of $ 2,913,750

and bringing total net proceeds from the IPO to $ 21,562,684 .

January 5, 2022, in connection with the exercise of the over-allotment option, the Company issued five-year warrants to purchase 31,500 shares

of the Company’s common stock at an exercise price of $ 6.25 per

share which vest six

months after the date of

Nexcella Private Placement Offering

January 12, 2023, the Company, through its majority-owned subsidiary, Nexcella, closed on a private placement offering in which it

sold an aggregate of 100,152 shares

of Nexcella’s common stock at a purchase price of $ 6.49 ,

for gross proceeds of approximately $ 650,000 .

The Company’s Chief Executive Officer purchased 7,704

shares of Nexcella’s common stock for a purchase price of $ 50,000

in the private placement offering.

In addition, the Company’s Chief Financial Officer through Alwaysraise, LLC and Alwaysraise

Ventures I, L.P., entities affiliated with the Company’s Chief Financial Officer, purchased an aggregate of 15,408

shares of Nexcella’s common stock in the private placement offering for $ 100,000.

Stock Issuance – Marketing Services Agreement

March 16, 2023, the Company, issued 6,700

shares of the Company’s common stock valued at $ 12,730 , pursuant to a marketing services agreement for future services to be

provided to the Company.

ATM Sales Agreement

March 22, 2023, the Company entered into an ATM Sales Agreement (the “Sales Agreement”) with ThinkEquity LLC (the “Sales

Agent”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agent, shares (the “Shares”)

of the Company’s common stock, par value $ 0.0001 per share, having an aggregate offering price of up to $ 5,000,000 , subject to

the terms and conditions set forth in the Sales Agreement.

The Shares will be offered and sold pursuant to the Company’s prospectus

supplement, dated March 22, 2023, filed by the Company with the Securities and Exchange Commission (the “SEC”), to the prospectus

forming a part of the Company’s shelf Registration Statement on Form S-3 (File No.

333-269100) filed by the Company with the SEC

(the “Registration Statement”) on January 3, 2023 and declared effective by the SEC on January 11, 2023.

The aggregate market

value of Shares eligible for sale under the Sales Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3.

the Sales Agreement, the Sales Agent may sell the Shares in sales deemed to be “at-the-market offerings” as defined in Rule

415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly

on or through The Nasdaq Capital Market or any other existing trading market for the Common Stock, in negotiated transactions at market

prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or any other method permitted by law.

The Company may instruct the Sales Agent not to sell any Shares if the sales cannot be effected at or above the price designated by the

Company from time to time.

delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, the Sales Agent will use commercially

reasonable efforts, consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations,

and the rules of The Nasdaq Capital Market, to sell the Shares from time to time based upon the Company’s instructions, including

any price, time or size limits specified by the Company.

offering pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all of the Shares subject to the Sales Agreement,

and (ii) termination of the Sales Agreement as permitted therein.

The Company may terminate the Sales Agreement in its sole discretion

at any time by giving ten days’ prior notice to the Sales Agent.

The Sales Agent may terminate the Sales Agreement under the circumstances

specified in the Sales Agreement and in its sole discretion at any time by giving ten days’ prior notice to the Company.

the Sales Agreement may be terminated upon mutual agreement of the Company and the Sales Agent.

Company will pay the Sales Agent a fixed commission rate of 3.75 % of the aggregate gross proceeds from the sale of the Shares pursuant

to the Sales Agreement.

The Company has paid an expense deposit of $ 15,000 to the Sales Agent, which will be applied against the actual

out-of-pocket accountable expenses that will be paid by the Company to the Sales Agent in connection with the offering.

The Company has

agreed to reimburse the Sales Agent for all expenses related to the offering including, without limitation, the fees and expenses of

the Sales Agent’s legal counsel up to $ 50,000 , and shall reimburse the Sales Agent, upon request, for such costs, fees and expenses

in an amount not to exceed $ 7,500 on a quarterly basis for the first three fiscal quarters of each year and $ 10,000 for the fiscal fourth

quarter of each year.

The Company has also agreed to provide indemnification and contribution to the Sales Agent with respect to certain

liabilities, including liabilities under the Securities Act.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data