What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-04 compared with 2020-03-11 · 356 added, 491 removed, 167 unchanged (84% of the section changed)

7 unchanged sentences

of record holders.

of Unregistered Securities

December 2019, we issued to certain of our employees, consultants and directors, options to purchase an aggregate of 1,785,000

shares of our common stock at a $3.91 exercise price.

We deemed these issuances to be exempt from registration under the Securities

Act either in reliance on Rule 701 of the Securities Act as sales and offers under compensatory benefit plans and contracts relating

to compensation in compliance with Rule 701, or in reliance on Section 4(a)(2), as transactions by an issuer not involving a public

All recipients either received adequate information about our company or had access, through employment or other relationships,

to such information.

No underwriters were involved in the foregoing issuances of securities.

May 16, 2018, the Company entered into a consulting agreement with Pacific Seaboard Investments Ltd.

for corporate governance,

compliance services regarding the filing of a listing application and assist with activities related to its initial public offering.

The term of the consulting agreement is from April 24, 2018 to May 1, 2021.

In consideration of the consultant’s services,

the Company agreed to issue 600,000 shares of its restricted common stock, of which 200,000 shares were to be issued on May 16,

2018 (these shares are not yet issued as of December 31, 2018), 200,000 shares shall be locked up for six months after the effective

date of the Company’s registration statement and 200,000 shares shall be locked up for 10 months after the date of the Company’s

Pursuant to this agreement, the Company recorded $4,626,000 of stock-based compensation expense during the year ended

December 31, 2018 for the 600,000 shares of common stock to be issued.

During June 2019,

the Company issued 400,000 shares of its common stock to Pacific Seaboard, whereby the Company was initially required to issue

600,000 shares to Pacific Seaboard, but subsequently received a waiver from Pacific Seaboard during April 2019 permanently waiving

the last 200,000 shares owed.

The Company recorded a waiver of common stock issuable of $1,542,000 during the year ended December

31, 2019 pursuant to the waiver agreement.

the year ended December 31, 2018, the Company received $900,000 in cash from Luminus in exchange for 400,000 shares of the Company’s

common stock.

Luminus is owned by a significant shareholder of the Company.

of Equity Securities by the Issuer

were no repurchases of our common stock during the year ended December 31, 2019.

February 4, 2019, the Company sold 1,020,820 shares of common stock in an initial public

offering at a price of $8.00 per share pursuant to a Registration Statement on Form S-1 (File No.

333-227122) , which was declared

effective by the Securities and Exchange Commission on December 19, 2018.

The aggregate proceeds to the Company from the offering

were $7,251,142 reflecting gross proceeds of $8,166,560 less offering costs of $915,418.

During the period from the offering through

December 31, 2019, the Company used the proceeds from the initial public offering to fund operations, including our research and

development activities.

Compensation Plan Information

following table provides certain information with respect to all of our compensation plans in effect as of December 31, 2019:

Plan Category

Number of Securities to be Issued

Upon Exercise of Outstanding Options, Warrants and Rights

Weighted Average

Exercise Price of

Options, Warrants

Number of Securities

Remaining Available

Under Equity Compensation

Plans (excluding

securities reflected in

Equity Compensation Plans approved by stockholders

3,417,000 (1)

Equity Compensation Plans not approved by stockholders

of shares subject to outstanding stock options, under the INmune Bio, Inc.

2019 Stock Incentive Plan (the “2019 Plan”)

and INmune Bio, Inc.

2017 Stock Incentive Plan (the “2017 Plan) some of which are vested and some of which remain subject

to the vesting of the respective equity award.

of shares available for future issuance under the 2019 Plan and the 2017 Plan.

As of December 31, 2019, an aggregate

of 206,525 shares of common stock were available for issuance under the 2019 Plan and 68,000 shares of common stock were available

for issuance under the 2017 Plan.

January 2020, the Company purchased and cancelled 220,000 shares of its common stock from a shareholder in exchange for $1,012,000

Immediately following the purchase, the investor owned less than 10% of the outstanding common stock of the Company.

have not declared any cash dividends on our common stock since inception and do not anticipate paying such dividends in the foreseeable

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and “Forward-Looking Statements.”

are a clinical-stage immunotherapy company focused on reprogramming the patient’s innate immune system to treat disease.

We do this by targeting four key cells of the innate immune system, natural killer, or NK cells, and myeloid derived suppressor

cells, or MDSC, hepatic stellate cells of the liver, or HSC, and microglial cells of the central nervous system.

the body’s first line of defense due to their innate ability to rapidly seek and destroy abnormal cells, such as cancer

or virally-infected cells, without prior exposure or activation by other support molecules required to activate adaptive immune

cells such as T-cells.

NK cells play a key role in the immune-surveillance that prevents people from getting cancer and in eliminating

residual disease which may cause people to relapse after cytotoxic therapy.

MDSC are myeloid cells produced in the bone marrow,

take up residence in the tumor microenvironment, the tissue associated with the cancerous cells, to protect the tumor from immunological

attack by the patient’s immune system.

MDSC play a critical role in making the cancer resistant to immunotherapy such as

currently approved checkpoint inhibitors.

Microglial cells are the primary immune cells of the central nervous system responsible

for protecting the neural unit of microglia, astrocytes, oligodendrocytes and neurons from infection.

In the setting of chronic

inflammation, microglial cells become activated and cause dysfunction of the other three cells types in the neural unit resulting

in neurodegenerative and neuropsychiatric diseases.

Hepatic stellate cells are immunologically active cells that are part of the

liver architecture that support hepatocyte function in health and disease.

INB03, LivNate and XPro1595 are the identical drug

used in different therapeutic arenas.

INB03 is the name of the drug for cancer targeted applications.

XPro1595 in the name of

the drug for neurology and psychiatric indications.

LivNate is the name of the drug for treatment of liver diseases.

believe INKmune, our NK cell directed therapy, and INB03, our MDSC directed therapy, and XPro1595, our microglial directed therapy

and LivNate, or HSC directed therapy offer unique strategies to improve the response of patients’

innate immune system to

their cancer, neurologic and liver disease respectively.

These therapies will use a precision medicine approach to select patients

who will benefit from the therapy and monitor the response to the therapy.

For oncology, neither INB03 nor INKmune therapy is

cancer specific.

The decision to use either INKmune or INB03 as part of cancer therapies, or with each other, depends on immunologic

parameters that can be tested in patients before treatment.

The type of cancer is not important.

This means that both therapies

can be used to treat patients with a variety of hematologic malignancies and solid tumors that have the immunologic profile needed

Put simply, we are treating the immune system to attack the patients’

cancer, not targeting the patient’s

cancer directly.

are a clinical-stage immunotherapy company focused on developing drugs that may reprogram the patient’s innate immune system

to treat disease.

We believe this may be done by targeting cells of the innate immune system that cause acute and chronic inflammation

and are involved in the immune dysfunction associated with chronic diseases such as cancer, neurodegenerative, metabolic and infectious

The Company has two therapeutic platforms –

dominant-negative TNF platform (“DN-TNF”) and the Natural

Killer (“NK”) platform.

The DN-TNF platform neutralizes soluble TNF (“sTNF”) without affecting trans-membrane

TNF (“tmTNF”) or the receptors TNFR1 and TNFR2.

This unique biologic mechanism differentiates the DN-TNF drugs from

currently approved non-selective TNF inhibitors that inhibit the function of both sTNF and tmTNF.

Protecting the function of tmTNF

while neutralizing the function of sTNF is a potent anti-inflammatory drug that does not cause immunosuppression or demyelination.

Currently approved non-selective TNF inhibitors are approved to treat autoimmune disease, however they are contraindicated in

patients with infection, cancer and neurologic diseases because they increase the risk of infection, cancer and demyelinating

neurologic diseases, respectively, because of off-target effects on inhibiting tmTNF.

The NK platform targets the dysfunctional

natural killer cells (“NK cells”) in patients with cancer.

NK cells are part of the normal immunologic response to

cancer with important roles in immunosurveillance to prevent cancer and in preventing relapse by clearing residual disease.

disease is the cancer left behind, often undetected, that can grow and cause relapse.

The NK cells of cancer patients have the

ability to kill cancer cells but are not effective because cancer cells mutate to evade NK cell immune surveillance.

INKmune provides

the missing signals needed to prime NK cells to overcome the immune evasion mutation to allow NK cells to kill the cancer cell.

We believe INKmune is best used to eliminate residual disease after the patient has completed other cancer therapies.

DN-TNF platform and the INKmune platform can be used to treat multiple diseases.

The DN-TNF platform will be used as an immunotherapy

for the treatment of cancer, neurodegenerative, metabolic and infectious diseases.

INKmune is being developed to treat NK sensitive

hematologic malignancies and solid tumors.

believe our DN-TNF platform can be used to reverse resistance in immunotherapy, to target glial activation to prevent progression

of Alzheimer’s disease (“AD”), to target neuroinflammation in treatment resistant depression (“TRD”),

to target intestinal leak and inflammation to treat non-alcoholic steatohepatitis (“NASH”) and to treat complications

of the cytokine storm associated with COVID-19 infection.

The drug is named differently for each indication;

INB03, XPro1595,

LIVNate and Quellor, respectively, but it is the same drug product.

In each case, we believe neutralizing sTNF is a cornerstone

to the treatment of each of these diseases.

As an immunotherapy for cancer, we are using INB03 to neutralize sTNF produced by

HER2+ trastuzumab resistant breast cancers to reverse resistance to therapy.

sTNF causes an up-regulation of MUC4 expression that

causes steric hindrance of trastuzumab binding to the HER2/Neu receptor on HER2+ breast cancer cells.

Without binding, trastuzumab

is not effective.

In addition, INB03 changes the immunobiology of the tumor microenvironment by decreasing the number of immunosuppressive

myeloid cells, both myeloid derived suppressor cells and tumor active macrophages, and increasing the number of cytotoxic lymphocytes

The Company has completed an open label dose escalation trial in cancer patients with metastatic solid tumors that

have failed multiple lines of therapy.

The trial informs the design of the Phase II trial by demonstrating that INB03 was safe

and well tolerated, defined the dose of INB03 to carry into Phase II trials, and demonstrated a pharmacodynamic end-point.

II trial is planned in women with advanced HER2+ breast cancer with metastasis.

we believe the DN-TNF platform can be used to treat selected neurodegenerative diseases.

XPro1595 is being used to treat patients

with Alzheimer’s disease in a Phase I trial partially funded by a Part-the-Clouds Award from the Alzheimer’s Association.

XPro1595 targets activated microglia and astrocytes of the brain that produce sTNF that promotes nerve cell loss and synaptic

dysfunction, key elements in the development of dementia.

In animal models, elimination of sTNF prevents nerve cell dysfunction

and reverses synaptic pruning.

The Phase I trial in patients with biomarkers of inflammation with AD is enrolling patients.

open label, dose escalation trial is designed to demonstrate that XPro1595 decreases neuroinflammation in patients with AD.

end-points of the trial are measures of neuroinflammation and neurodegeneration in blood and cerebral spinal fluid, measures of

neuroinflammation by MRI by measuring white matter free water and breath by measuring volatile organic compounds in exhaled breath

and by monitoring neuropsychiatric symptoms known to be associated with neuroinflammation including depression, apathy, aggression,

hallucinations and sleep disorders.

addition, we believe the DN-TNF platform can be used to treat selected metabolic diseases.

LIVNate is being developed to treat

NASH is a pleiotropic disease caused by a complex mix of metabolic, inflammatory and fibrotic pathophysiology.

targeting inflammation caused by intestinal leak, mesenteric and peripheral fat will prevent lipotoxicity, hepatic stellate cell

activation and hepatocyte death that causes fibrosis and liver dysfunction associated with advanced disease.

sTNF is elevated

in obesity and is believed to cause intestinal leak.

Intestinal leak combined with cytokines coming from mesenteric fat may dramatically

increase the concentration of inflammatory cytokines in portal blood destined for the liver.

The cytokine load contributes to

the development of non-alcoholic fatty liver disease (“NAFLD”) and progression to NASH.

LIVNate, by neutralizing sTNF

improves insulin sensitivity, decreases the inflammation in peripheral and mesenteric fat and may also seal the intestinal leak.

This combination prevents development of NAFLD or NASH in animal models.

The Company is planning a Phase II open label randomized

study using non-invasive measures to enroll patients with NASH in a study using a fixed dose of LIVNate delivered as a once a

week sub-cutaneous injection.

also believe the DN-TNF platform may be used to treat the complications associated with the cytokine storm caused by coronavirus

disease 2019 (“COVID-19”).

Three inflammatory cytokines make up the cytokine storm associated with COVID19 infection

sTNF, IL-6 and IL-1β.

Targeting sTNF with Quellor may have advantages because IL-6 and IL-1 expression occur after

sTNF expression;

sTNF promotes endothelial activation causing expression of proteins that promote trafficking of immune cells

from the blood vessel to the tissue and expression of Tissue Factor that stimulates the coagulopathy that is a prominent pathology

of COVID-19 infection.

The Company plans a Phase II trial in patients with symptomatic COVID-19 infection and hypoxia.

of the study is to prevent the catastrophic complications of advanced COVID-19 infection including one or more of the need for

mechanical ventilation, new onset of cardiovascular, neurologic or thromboembolic disease, admission to an intensive care unit

The randomized trial will treat patients requiring hospitalization because of their disease.

therapy for treatment resistant depression (TRD) is a large unmet need.

Twenty percent of patients with a Major Depressive Disorder

Once third of TRD patients have peripheral biomarkers to inflammation (elevated CRP).

This is a large patient population.

The role of TNF and anti-TNF therapeutics was explored in a small open label clinical trial by Prof.

Andrew Miller, MD of Emory

University demonstrated the patients have elevated TNF levels and treatment with infliximab treated their depression (Miller,

The Company received a $2.9M USD award from the National Institute of Mental Health (NIMH) to treat TRD with XPro1595.

The blinded, randomized Phase II trial will use a biomarkers of peripheral inflammation to select patients with TRD for enrollment.

Patients will be treated for 6 weeks.

Primary end-points include both clinical and neuroimaging measures.

The final trial design

has is ongoing and discussions with the FDA are not complete.

The Company anticipates receiving authorization to initiate the

clinical trial in the second half of 2021.

believe that INKmune improves the ability of the patient’s own NK cells to attack their tumor.

INKmune itself will not kill

cancer cells.

INKmune interacts with the patient’s NK cells to convert them from inert resting NK cells that ignores the

cancer into primed NK cells that kill the cancer cell.

INKmune is a replication incompetent proprietary cell line we have named

INB16 that is given to the patient after determining that i) the patient has adequate NK cells in their circulation and ii) those

NK cells are functional when exposed to INKmune in vitro.

INKmune is designed to be given to patients after their immune system

has recovered after cytotoxic chemotherapy to target the residual disease the remains after treatment with cytotoxic therapy.

we believe XPro1595, our microglial directed therapy, offers a unique strategy to decrease neuroinflammation, a key pathophysiology

in neurodegenerative and neuropsychiatric diseases.

XPro1595 will use a precision medicine approach to select patients who will

benefit from the therapy and monitor the response to the therapy.

The therapy is not diagnosis specific but will be used in patients

who have biomarkers of neuroinflammation.

Our initial program with XPro1595 will be treating patients with Alzheimer’s disease

with biomarkers inflammation.

we believe LivNate, our HSC directed therapy, offers a unique strategy to treat NASH by decreasing peripheral , regional and local

inflammatory cycles that results in hepatocyte ballooning and death, hepatitis and fibrosis, the core pathophysiology of many

inflammatory liver diseases.

Our initial program with LivNate will be treating patients with NASH.

shown in Figure 4 above, is an engineered protein therapeutic that neutralizes soluble TNF using Dominant-Negative technology.

Dominant-Negative TNF biology is possible because of the unique properties of TNF.

TNF is comprised of 3 identical proteins that

form a homotrimer that bind the TNF receptor.

INB03, a mutated form of the monomer, can displace one or more of the monomers for

the sTNF homotrimer to form a heterotrimer.

The heterotrimer is unable to bind TNFR.

Without sTNF/TNFR interaction, there is not

biologic affect.

This is shown in Figure 5 below.

unique mechanism of action allows INB03 to be the only selective TNF inhibitor that affects only sTNF.

All currently available

TNF inhibitors are non-selective TNF inhibitors that block both sTNF and tmTNF.

This functional difference shown in Figure 6 below

translates into therapeutic differences.

The most obvious in the use of a TNF inhibitor in the treatment of cancer patients is

related to safety.

Non-selective TNF inhibitors are immunosuppressive because they inhibit both sTNF and tmTNF.

INB03 is not immunosuppressive

because it inhibits only sTNF and allows tmTNF to function normally (please refer to Figure 3).

In animal models of cancer, the

combination of no sTNF with functional tmTNF after treatment with INB03 improved the immune response against the tumor compared

to animals treated with the non-selective TNF inhibitor etanercept (Vujanovic 2016).

In summary, sTNF, by binding to TNFR1, is

essential for MDSC proliferation by causing phosphorylation of STAT3.

Without the binding of sTNF to TNFR1, the proliferation

of the MDSC stops and the MDSC population collapses.

Without the immunosuppressive shield provided by the MDSC population, the

patient’s immune system, without concomitant immunotherapy, can attack the tumor.

A secondary effect of INB03 is to improve

NK cells-dendritic cell (NK/DC) cross-talk to help expand patient’s anti-tumor immune response by recruiting cytotoxic T

cells of the adaptive immune system.

tmTNF is essential to NK/DC cross-talk.

believe our innate immune system reprogram platforms provides unique strategies to repair the immunologic dysfunction that characterizes

the innate immune system of patients with cancer.

The products can be used alone, in combination with other anti-tumor or immunotherapy

treatments or with each other.

In the near term, we are developing the products separately.

After completion of proof-of-concept

Phase II trials, we will consider developing them as a combination therapy.

Until we complete clinical trials, we cannot predict

if either product will be successful when used alone, in combination with other therapies or in combination with each other.

mechanism of action for XPro1595 is identical to INB03, but the cell type targeted in neurodegenerative and neuropsychiatric disease

is different.

Microglial cells are macrophage like immune cells that are unique to the central nervous system.

Activated microglial

cells produce inflammatory cytokines and phagocytos debris in the brain to promote normal function of the neural unit and protect

the brain against infection.

Chronic inflammation is a low grade, unrelenting inflammatory process that is destructive to the

host resulting in dendritic pruning, synaptic dysfunction and cell dysfunction and death.

Death of nerve cells can cause cognitive

decline of AD, motor dysfunction of Parkinson’s disease or amyotrophic lateral sclerosis (“ALS”).

Death of oligodendrocytes

that produce myelin can cause MS and other demyelinating diseases.

In the brain, the unique action of XPro1595 to neutralize the

destructive cytokine soluble TNF while promoting the function of the trans-membrane TNF, the protective cytokine is unique.

Neutralization

of soluble TNF and polarization of the immunology to trans-membrane TNF effects prevents dendritic pruning and synaptic dysfunction,

promotes phagocytosis of debris by microglial cells and prevents demyelinization of neurons.

These effects have benefits across

a broad range of neurodegenerative and neuropsychiatirc diseases.

At this time, due to non-dilutive funding provided by the Part-the-Cloud

Award from the Alzheimer’s Association, we will focus our develop efforts on Alzheimer’s disease.

The funding provided

by the Alzheimer’s Association supports a Phase I trial.

If the trial is successful and the Company decides to pursue additional

development is AD, additional funding will be needed to support a Phase II trial.

In the future, when resources become available,

we may expand our activities other neurodegenerative or neuropsychiatric diseases.

mechanism of action for LivNate is identical to INB03 and XPro1595, but the cell type targeted in liver disease is different.

In the liver, LivNate targets HSC, a key cell in the treatment of inflammatory diseases of the liver.

Our first therapeutic program

will use LivNate to treat NASH.

NASH is a complex, but silent liver disease that has reached epidemic proportions in the US;

to be the primary cause of liver transplantation in the US.

The company views NASH as a disease of chronic inflammation caused

by three inflammatory loops.

The peripheral inflammatory loop is due to obesity and insulin resistance.

The regional inflammatory

loop is due to intestinal inflammation and mesenteric fat.

The local inflammatory loop is due to lipotoxicity and innate immune

These inflammatory loops combine to promote hepatitis, hepatocyte dropout and fibrosis –

the hallmarks of NASH.

Pre-clinical models of LivNate in NASH support initiating a clinical study next year.

Three well defined inflammatory loops contribute the development and progression of NASH.

The peripheral loop includes obesity

and insulin resistance.

Adipocytes contribute to systemic inflammation and insulin resistance that initiates fat deposition in

As obesity and insulin resistance progress, the regional inflammatory loop begins to contribute to the disease.

intense inflammation associated with mesenteric fat and intestinal inflammation secondary to a leaky gut target the liver directly

via the portal vein.

The combination of peripheral and regional inflammation results in lipotoxicity and activation of resident

innate immune cells in the liver results in the local inflammatory loop that causes hepatitis, hepatocyte ballooning and death,

and fibrosis - the pathologic hallmarks of NASH.

Based on preclinical data, LivNate appears to target, directly or indirectly,

multiple elements of the inflammatory loops by decreasing adipocyte inflammation in peripheral and mesenteric fat, improving insulin

resistance, decreasing the intestinal leak associated with intestinal inflammation, reducing hepatic lipotoxicity, liver inflammation,

hepatocyte ballooning and fibrosis.

Stem Cells (“MSC”) are pluripotent cells with potent immunologic effects which can be used alone as an anti-inflammatory

treatment strategy or a vector to deliver gene therapy.

We have access to a large quantity of human, GMP-grade MSC that can be

repurposed for use in medical research or clinical trials.

We plan to sell these cells to third parties.

We may expand this activity

in the future to include positioning the Company as a contract manufacturer for companies developing MSC products or developing

our own MSC based products.

At this time, the program will be self-sustaining and growing on reinvestment of revenues from the

sale of the MSC products.

Integrated Discovery and Development Process.

Our focus on reprogramming the patient’s immune system to better attack

disease allows for synergies between the development and discovery process.

A majority of our effort is focused on the development

process that includes improving the manufacturing systems for INKmune and the DN-TNF platform (INB03/XPro1595/LivNate) and optimizing

bioassays to be used during the clinical trials.

These manufacturing and monitoring programs may produce discoveries that the

company can capitalize on as product improvements or new products.

INB03 has uses beyond treatment of resistance to immunotherapy

in oncology, and XPro1595 has uses beyond the treatment of AD in the treatment of neurodegenerative and neuropsychiatric diseases.

The DN-TNF platform may have therapeutic opportunities in other diseases including cardiovascular diseases including arrythmias,

congestive heart failure, renal disease and metabolic diseases including nonalcoholic fatty liver disease (“NAFLD”)

and other inflammatory diseases of the liver and gastrointestinal tract.

Although the Company will focus on the immuno-oncology

uses of INB03, the treatment of NASH with LivNate and the treatment of AD with XPro1595 in the near-term, the Company plans to

expand the development into other indications as resources become available.

All attempts will be made to fund new research and

development with non-dilutive resources that come from grants or revenue from sales of the MSC products.

our inception in 2015, we have devoted substantially all of our resources to the discovery and development of our product candidates,

including preparing for clinical trials, drug manufacturing and funding general and administrative support for these operations.

To date, we have generated no revenue.

We have incurred net losses in each year since our inception and, as of December 31, 2019,

we had an accumulated deficit of $21,276,181.

Our net losses were $7,678,313 and $12,440,023 for the years ended December 31,

2019 and 2018, respectively.

Substantially all of our net losses resulted from costs incurred in connection with our research

and development programs and from general and administrative costs associated with our operations, including stock-based compensation.

do not expect to generate revenue from product sales of INKmune or any products from the DN-TNF platform until we successfully

complete development and obtain marketing approval for one or more of our product candidates.

We do not expect that to happen

for at least the next several years, if ever.

Until such time that we can generate substantial revenue from product sales, if

ever, we expect to finance our operating activities through a combination of equity offerings, debt financings, government or

other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing

arrangements.

However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable

terms or at all, which would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate

our research and development programs or commercialization efforts.

Failure to receive additional funding could cause the Company

INKmune interacts with the

patient’s NK cells to convert them from inert resting NK cells that ignores the cancer into primed NK cells that kill the

INKmune is a replication incompetent proprietary cell line we have named INB16 that is given to the patient after

determining that i) the patient has adequate NK cells in their circulation and ii) those NK cells are functional when exposed

to INKmune in vitro.

INKmune is designed to be given to patients after their immune system has recovered after cytotoxic chemotherapy

to target the residual disease the remains after treatment with cytotoxic therapy.

INKmune can be used to treat numerous

hematologic malignancies and solid tumors including leukemia, multiple myeloma, lymphoma, lung, ovary, breast, renal and prostate

The Company plans Phase I trials using INKmune to treat patients with high risk MDS, a form of leukemia and women with

relapsed refractory ovarian.

a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company”

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These provisions include:

two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly

reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

disclosure about our executive compensation arrangements;

non-binding advisory votes on executive compensation or golden parachute arrangements;

from the auditor attestation requirement in the assessment of our internal control over financial reporting;

the adoption of new or revised accounting standards that have different effective dates for public and private companies until

those standards apply to private companies.

only two years of

audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced

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

reduced disclosure

about our executive compensation arrangements;

no non-binding advisory

votes on executive compensation or golden parachute arrangements;

exemption from the

auditor attestation requirement in the assessment of our internal control over financial reporting;

delaying the adoption

of new or revised accounting standards that have different effective dates for public and private companies until those standards

apply to private companies.

have elected to take advantage of the above-referenced exemptions and we may take advantage of these exemptions for up to five

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Our research and development expense primarily consist of:

clinical trial and regulatory-related costs;

expenses incurred under agreements with investigative sites and consultants that conduct our clinical trials;

manufacturing and testing costs and related supplies and materials;

employee-related expenses, including salaries, benefits, travel and stock-based compensation

trial and regulatory-related costs;

incurred under agreements with investigative sites and consultants that conduct our clinical trials;

manufacturing

and testing costs and related supplies and materials;

employee-related

expenses, including salaries, benefits, travel and stock-based compensation

typically use our employee, consultant and infrastructure resources across our development programs.

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issuing 200,000 shares owed to the consultant which were expensed in a prior period.

income primarily consists of interest income on money market accounts.

income primarily consists of income from a settlement in 2020.

In addition, other income includes interest income on money market

accounts during 2020 and 2019.

Accounting Policies and Significant Judgments and Estimates

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the selection of an appropriate discount rate, and other assumptions and estimates.

and Development (“R&D”)

expenses consist primarily of costs related to clinical studies and outside services, personnel expenses, and other R&D expenses.

Clinical studies and outside services costs relate primarily to services performed by clinical research organizations and related

clinical or development manufacturing costs, materials and supplies, filing fees, regulatory support, and other third-party fees.

Personnel expenses relate primarily to salaries, benefits and share-based compensation.

R&D expenditures are charged to operations

recognize R&D tax credits receivable from the United Kingdom and Australian government for spending on R&D as an offset

of R&D expenses.

measure and recognize compensation expense for all stock-based awards granted to service providers.

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interest rates and the expected common stock price volatility over the term of the option awards.

The expected volatility is based

on the historical volatility of a few unrelated public companies within our industry over the most recent period commensurate

with the estimated expected term of our stock options as we have insufficient historical information regarding the volatility

of the share price of our common stock.

The risk-free interest rate for periods within the contractual life of the option is based

Treasury yield in effect at the time of grant.

We have never declared or paid dividends and have no plans to

do so in the foreseeable future.

recognize the fair value of stock options on a straight-line basis over the period during which a service provider is required

1 unchanged sentence

We account for forfeitures as they occur.

Market value of common stock on grant date

Dividend yield

Expected term (in years)

Risk-free interest rate

1.71% –

2.40% –

Expected volatility

Market value of common stock on grant

During 2019, the market value on the grant date was the closing stock price on the date of grant.

During 2018, we

determined the fair value of the common stock on grant date based upon a third-party valuation as we were a private company.

Dividend Yield.

dividend is zero as we have never declared dividends and have no current plans to do so in the foreseeable future.

Expected Term.

term represents the period that our stock-based awards are expected to be outstanding.

Risk-Free Interest Rate.

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant for zero-coupon U.S.

notes with maturities approximately equal to the stock option’s expected term.

Expected Volatility.

the expected volatility from the average historical stock volatilities of a few unrelated public companies within our industry

that we consider to be comparable to our business over a period equivalent to the expected term of the stock option grants.

intend to continue to consistently apply this process using the same or similar companies to estimate the expected volatility until

sufficient historical information regarding the volatility of the share price of our common stock becomes available.

Off-Balance Sheet Arrangements

During the periods

presented, we did not have any off-balance sheet arrangements as defined under SEC rules.

Licensing and Collaboration Agreements

We anticipate that

in-licensing, out-licensing and strategic collaborations will become an integral part of our operations, providing the company

with opportunities to leverage our partners’

expertise and capabilities to further expand the potential of our technologies,

product candidates and revenue streams.

In October 2017,

we licensed INB03, also known as XPro1595, from Xencor.

This exclusive, global, unrestricted license came with considerable know-how,

intellectual property, pre-clinical data, regulatory documentation and product stocks.

Currently, we are focused on the immune-oncology

uses of this unique asset.

In the future, we may develop the asset in a wide variety of therapeutic areas, with a variety of delivery

techniques by ourselves or in conjunction with partners.

Initial Public Offering

the year ended December 31, 2019, the Company completed its initial public offering in which the Company sold 1,020,820 shares

of its common stock for gross proceeds of $8,166,560 (net proceeds of $7,251,142).

Results of Operations

Comparison of the Years Ended December

31, 2019 and December 31, 2018

Sheet Arrangements

the periods presented, we did not have any off-balance sheet arrangements as defined under SEC rules.

and Collaboration Agreements

anticipate that in-licensing, out-licensing and strategic collaborations will become an integral part of our operations, providing

the company with opportunities to leverage our partners’

expertise and capabilities to further expand the potential of our

technologies, product candidates and revenue streams.

October 2017, we licensed INB03 (also known as XPro1595, Quellor, and LIVNate) from Xencor.

This exclusive, global, unrestricted

license came with considerable know-how, intellectual property, pre-clinical data, regulatory documentation and product stocks.

Currently, we are focused on the immune-oncology uses of this unique asset.

In the future, we may develop the asset in a wide

variety of therapeutic areas, with a variety of delivery techniques by ourselves or in conjunction with partners.

of Operations

of the Years Ended December 31, 2020 and December 31, 2019

General and Administrative

$ (3,069,044 )

Research and Development

2 unchanged sentences

$ (7,678,313 )

$ (4,761,710 )

General and Administrative

General and administrative expenses were $6,016,056 for the

year ended December 31, 2019, compared to $9,085,100 for the year ended December 31, 2018.

The decrease was primarily attributable

to lower stock-compensation ($5.5 million lower in 2019), partially offset by higher costs associated with being a public company

($1.7 million higher in 2019) and higher salaries ($0.3 million higher in 2019).

Research and Development

Research and development

expenses decreased to $3,281,945 for the year ended December 31, 2019 from $3,354,923 for the year ended December 31, 2018.

the year ending December 31, 2019, the Company recorded $0.9 million of contra research and development expenses related to a grant

received from the Alzheimer’s Association.

During the years ended December 31, 2019

and 2018, the Company recorded stock-based compensation of $1.8 million and $2.1 million, respectively, within research and development

Excluding stock-based compensation and the grant, research and development expense was higher in 2019, compared to 2018

as a result of the Company continuing to advance its drug platform.

During 2019, the

Company earned $77,688 of interest on money market investments and recorded the interest within other income.

Liquidity and Capital Resources

Liquidity is the

ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate

on an ongoing basis.

We incurred a net

loss of $7,678,313 and $12,440,023 for the years ended December 31, 2019 and 2018, respectively.

Net cash used in operating activities

was $5,384,656 and $2,058,994 for the years ended December 31, 2019 and 2018, respectively.

inception, we have funded our operations primarily with proceeds from the sales of our common stock.

As of December 31, 2019,

we had cash and cash equivalents of $7.0 million.

We anticipate that operating losses and net cash used in operating activities

will increase over the next few years as we advance our products under development.

Our primary uses of

capital are, and we expect will continue to be, third-party clinical and preclinical research and development services, compensation

and related expenses, legal, patent and other regulatory expenses and general overhead costs.

We believe our use of CROs provides

us with flexibility in managing our spending.

As a publicly traded

company, we incur significant legal, accounting and other expenses.

In addition, the Sarbanes-Oxley Act of 2002, as well as

rules adopted by the SEC and The Nasdaq Stock Market, require public companies to implement specified corporate governance

practices that were inapplicable to us as a private company.

We expect these rules and regulations will increase our legal

and financial compliance costs and will make some activities more time-consuming and costly.

As of December 31,

2019, the Company had an accumulated deficit of $21,276,181 and working capital of $7,064,399.

Losses have principally occurred

as a result of stock-based compensation expense as well as the substantial resources required for research and development of the

Company’s products which included the general and administrative expenses associated with its organization and product development,

as well as the lack of sources of revenues until such time as the Company’s products are commercialized.

These factors raise

substantial doubt about the Company’s ability to continue as a going concern for the 12 months from the issuance date of

these financial statements.

Furthermore, our independent auditors, in their report on our audited financial statements for the

year ended December 31, 2019 expressed substantial doubt about the Company’s ability to continue as a going concern.

plans to pursue additional funding through the issuance of common stock for cash and by implementing its strategic plan to allow

the opportunity for the Company to continue as a going concern, however there cannot be any assurance that we will be successful

We estimate our existing cash and cash equivalents will be sufficient to meet our anticipated cash requirements into

the third quarter of 2020.

Initial Public Offering

During the year ended

December 31, 2019, the Company completed its initial public offering in which the Company sold 1,020,820 shares of its common stock

for gross proceeds of $8,166,560 (net proceeds of $7,251,142).

April and May sale of common stock

April and May 2019, the Company sold 522,212 shares of its common stock to certain investors for cash proceeds of $4,727,879, of

which the Company’s CEO purchased 11,100 shares for $119,325 of cash and the Company’s CFO purchased 5,000 shares for

$53,550 of cash.

The Lincoln Park Transaction

On May 15, 2019, the

Company entered into the Lincoln Park Purchase Agreement pursuant to which Lincoln Park has agreed to purchase from us up to an

aggregate of $20.0 million of the Company’s common stock (subject to certain limitations) from time to time over the 24-month

term of the agreement.

The Company also entered into a registration rights agreement with Lincoln Park pursuant to which the Company

filed with the Securities and Exchange Commission (the “SEC”) the registration statement to register for resale under

the Securities Act of 1933, as amended, or the Securities Act, the shares of common stock that have been or may be issued to Lincoln

Park under the Purchase Agreement.

2020, the Company sold MSC’s to one third-party and recognized $10,916 of revenues.

There were no sales during 2019.

and Administrative

and administrative expenses were $6.3 million for the year ended December 31, 2020, compared to $6.0 million for the year ended

December 31, 2019.

The increase was primarily attributable to higher stock-compensation ($0.2 million higher in 2020), higher

insurance expense ($0.2 million higher in 2020) and higher wages and benefits ($0.2 million higher in 2020) partially offset by

lower professional fees ($0.4 million lower in 2020).

and Development

and development expenses increased to $5.9 million for the year ended December 31, 2020 from $3.3 million for the year ended December

During the years ended December 31, 2020 and 2019, the Company recorded stock-based compensation of $0.6 million and

$1.8 million, respectively, within research and development expenses.

The increase in research and development expenses during

the year ending December 31, 2020 compared to December 31, 2019 is due to additional amounts incurred for the advancement

of our drug platform and due to the Company incurring manufacturing costs in connection with producing its DN-TNF product.

of Common Stock Issuable

the year ended December 31, 2019, the Company reversed $1.5 million of expense as a result of a consultant permanently waiving

the Company’s obligation to issue 200,000 shares owed to the consultant which were expensed in a prior period.

transaction occurred during the year ended December 31, 2020.

income increased during the year ended December 31, 2020 compared to 2019 as a result of the Company receiving a refund from a

third-party vendor pursuant to a release and settlement agreement of approximately $0.1 million for services provided in a previous

year, partially offset by earning lower interest in 2020 compared to 2019.

and Capital Resources

is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise

operate on an ongoing basis.

incurred a net loss of $12,099,159 and $7,678,313 for the years ended December 31, 2020 and 2019, respectively.

Net cash used

in operating activities was $8,943,646 and $5,384,656 for the years ended December 31, 2020 and 2019, respectively.

Since inception,

we have funded our operations primarily with proceeds from the sales of our common stock and from the receipts of grants.

December 31, 2020, we had cash and cash equivalents of $22.0 million.

We anticipate that operating losses and net cash used in

operating activities will increase over the next few years as we advance our products under development.

primary uses of capital are, and we expect will continue to be, third-party clinical and preclinical research and development

services, costs incurred to manufacture our drugs under development, compensation and related expenses, legal, patent and other

regulatory expenses and general overhead costs.

We believe our use of CROs provides us with flexibility in managing our spending.

Company incurs the majority of its research and development expenses in Australia and the United Kingdom.

Fluctuations in the

rate of exchange between the United States dollar and the pound sterling as well as the Australian dollar could adversely

affect our financial results, including our expenses as well as assets and liabilities.

We currently do not hedge foreign currencies

but will continue to assess whether that strategy is appropriate.

As of December 31, 2020, the cash balance held by our foreign

subsidiaries with currencies other than the United States dollar was approximately $0.6 million.

We do not have any material financial

exposure to one customer or one country that would significantly hinder our liquidity.

of December 31, 2020, the Company had an accumulated deficit of $33,375,340 and working capital of $22,209,460.

Losses have principally

occurred as a result of stock-based compensation expense as well as the substantial resources required for research and development

of the Company’s products which included the general and administrative expenses associated with its organization and product

development, as well as the lack of sources of material revenues until such time as the Company’s products are commercialized.

As of December 31, 2020, we had cash and cash equivalents of $22.0 million.

In addition, during January and February 2021, we

raised an additional $29.0 million in gross proceeds through sales of common stock under the ATM program.

As such, we believe

our cash and cash equivalents, including the proceeds received in January and February 2021, will be sufficient to fund our operations

for at least the next 12 months following the filing date of this Annual Report on Form 10-K.

Public Offering

the year ended December 31, 2019, the Company completed its initial public offering in which the Company sold 1,020,820 shares

of its common stock for gross proceeds of $8.2 million (net proceeds of $7.3 million).

and May sale of common stock

April and May 2019, the Company sold 522,212 shares of its common stock to certain investors for cash proceeds of $4.7 million,

of which the Company’s CEO purchased 11,100 shares for $0.1 million of cash and the Company’s CFO purchased 5,000

shares for $0.1 million of cash.

Lincoln Park Transaction

May 15, 2019, the Company entered into the Lincoln Park Purchase Agreement pursuant to which Lincoln Park has agreed to purchase

from us up to an aggregate of $20.0 million of the Company’s common stock (subject to certain limitations) from time to

time over the 24-month term of the agreement.

The Company also entered into a registration rights agreement with Lincoln Park

pursuant to which the Company filed with the Securities and Exchange Commission (the “SEC”) the registration statement

to register for resale under the Securities Act of 1933, as amended, or the Securities Act, the shares of common stock that have

been or may be issued to Lincoln Park under the Purchase Agreement.

The registration statement was effective as of July 2, 2019.

As a result, on May

15, 2019, 70,000 newly issued shares of the Company’s common stock were issued to Lincoln Park as consideration for Lincoln

Park’s commitment to purchase shares of the Company’s common stock under the agreement, and 30,000 newly issued shares

of common stock, valued at $10.00 per share, were sold to Lincoln Park in an initial purchase for an aggregate gross purchase price

of $300,000 ($230,000 net of offering costs).

Under the terms and

subject to the conditions of the Lincoln Park Purchase Agreement, the Company has the right, but not the obligation, to sell to

Lincoln Park, and Lincoln Park is obligated to purchase up to, an additional $19.7 million worth of shares of the Company’s

a result, on May 15, 2019, 70,000 newly issued shares of the Company’s common stock were issued to Lincoln Park as consideration

for Lincoln Park’s commitment to purchase shares of the Company’s common stock under the agreement, and 30,000 newly

issued shares of common stock, valued at $10.00 per share, were sold to Lincoln Park in an initial purchase for an aggregate gross

purchase price of $0.3 million ($0.2 million net of offering costs).

During the year ended December 31, 2020, the Company issued

196,000 shares of the Company’s common stock to Lincoln Park for gross proceeds of $1,002,644.

the terms and subject to the conditions of the Lincoln Park Purchase Agreement, the Company has the right, but not the obligation,

to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to, an additional $18.7 million worth of shares of the Company’s

common stock.

Such future sales of common stock by the Company, if any, will be subject to certain limitations, and may occur from

time to time, at the Company’s option, over the 24-month term of the agreement.

As contemplated by

the Lincoln Park Purchase Agreement, and so long as the closing price of the Company’s common stock exceeds $3.50 per share,

then the Company may direct Lincoln Park, at its sole discretion to purchase up to 20,000 shares of its common stock on any business

Such future sales of common stock by the Company, if any, will be subject to certain limitations, and may occur

from time to time, at the Company’s option, over the 24-month term of the agreement.

contemplated by the Lincoln Park Purchase Agreement, and so long as the closing price of the Company’s common stock exceeds

$3.50 per share, then the Company may direct Lincoln Park, at its sole discretion to purchase up to 20,000 shares of its common

stock on any business day.

The price per share for such purchases will be equal to the lower of:

(i) the lowest sale price on the applicable purchase

date and (ii) the arithmetic average of the three (3) lowest closing sale prices for the Company’s common stock during the

twelve (12) consecutive business days ending on the business day immediately preceding such purchase date (in each case, to be

appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction that

occurs on or after the date of the purchase agreement).

The maximum amount of shares subject to any single regular purchase increases

as the Company’s share price increases, subject to a maximum of $1.0 million.

In addition to regular

purchases, the Company may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional purchases

if the closing sale price of the common stock exceeds certain threshold prices as set forth in the purchase agreement.

no trading volume requirements or restrictions under the purchase agreement nor any upper limits on the price per share that Lincoln

Park must pay for shares of common stock.

The Lincoln Park Purchase

Agreement and the registration rights agreement contain customary representations, warranties, agreements and conditions to completing

future sale transactions, indemnification rights and obligations of the parties.

The Company has the right to terminate the purchase

agreement at any time, at no cost or penalty.

(i) the lowest sale price on

the applicable purchase date and (ii) the arithmetic average of the three (3) lowest closing sale prices for the Company’s

common stock during the twelve (12) consecutive business days ending on the business day immediately preceding such purchase date

(in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other

similar transaction that occurs on or after the date of the purchase agreement).

The maximum amount of shares subject to any single

regular purchase increases as the Company’s share price increases, subject to a maximum of $1.0 million.

addition to regular purchases, the Company may also direct Lincoln Park to purchase other amounts as accelerated purchases or

as additional purchases if the closing sale price of the common stock exceeds certain threshold prices as set forth in the purchase

There are no trading volume requirements or restrictions under the purchase agreement nor any upper limits on the price

per share that Lincoln Park must pay for shares of common stock.

Lincoln Park Purchase Agreement and the registration rights agreement contain customary representations, warranties, agreements

and conditions to completing future sale transactions, indemnification rights and obligations of the parties.

The Company has

the right to terminate the purchase agreement at any time, at no cost or penalty.

During any “event of default”

under the purchase agreement, all of which

are outside of Lincoln Park’s control, Lincoln Park does not have the right to terminate the purchase agreement;

the Company may not initiate any regular or other purchase of shares by Lincoln Park, until such event of default is cured.

addition, in the event of bankruptcy proceedings by or against the Company, the purchase agreement will automatically terminate.

Actual sales of shares

of common stock to Lincoln Park under the purchase agreement will depend on a variety of factors to be determined by the Company

from time to time, including, among others, market conditions, the trading price of the common stock and determinations by the

Company as to the appropriate sources of funding for the Company and its operations.

Lincoln Park has no right to require any sales

by the Company, but is obligated to make purchases from the Company as it directs in accordance with the purchase agreement.

Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s

The following table

provides information regarding our cash flows for the years ended December 31, 2019 and 2018:

Year Ended December 31,

the purchase agreement, all of which are outside of Lincoln Park’s control, Lincoln Park does not have the right to terminate

the purchase agreement;

however, the Company may not initiate any regular or other purchase of shares by Lincoln Park, until such

event of default is cured.

In addition, in the event of bankruptcy proceedings by or against the Company, the purchase agreement

will automatically terminate.

sales of shares of common stock to Lincoln Park under the purchase agreement will depend on a variety of factors to be determined

by the Company from time to time, including, among others, market conditions, the trading price of the common stock and determinations

by the Company as to the appropriate sources of funding for the Company and its operations.

Lincoln Park has no right to require

any sales by the Company, but is obligated to make purchases from the Company as it directs in accordance with the purchase agreement.

Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of

the Company’s shares.

Sales Agreement

April 16, 2020, we entered into a sales agreement with BTIG, as sales agent, to establish an ATM offering program.

We were required

to pay BTIG a commission of 3% of the gross proceeds from the sale of shares.

During the year ended December 31, 2020, we issued

and sold 178,600 shares of common stock at an average price of $5.45 per share under the ATM program.

The aggregate net proceeds

were approximately $0.8 million after BTIG’s commission and other offering expenses.

January and February 2021, we issued and sold 1,439,480 shares of common stock at an average price of $20.17 per share under the

The aggregate net proceeds were approximately $28.4 million after offering expenses.

July 2020, the Company completed an underwritten public offering in which it sold 2,500,000 shares of common stock at a public

offering price of $10.00 per share.

The 2,500,000 shares sold included the full exercise of the underwriters’

purchase 326,086 shares at a price of $10.00 per share.

Aggregate net proceeds from the underwritten public offering were approximately

$23.1 million, net of approximately $1.9 million in underwriting discounts and commissions and offering expenses.

2019, the Company was awarded a $1.0 million grant from the Alzheimer’s Association to advance XPro1595, a novel therapy

targeting neuroinflammation as a cause of Alzheimer’s disease.

The endowment was awarded under the Part the Cloud to RESCUE

During the years ended December 31, 2020 and 2019, the Company received $0.1 million and $0.9 million, respectively, related

to the grant, which the Company recorded as a reduction of research and development expense.

As of December 31, 2020, the Company

has received $1.0 million of cash proceeds from the Alzheimer’s Association and no additional amounts are available to the

Company pursuant to this grant.

the year ended December 31, 2020, the Company was awarded a $0.5 million grant from the Amyotrophic Lateral Sclerosis (“ALS”)

Association to fund a study of the efficacy of XPro1595 to reverse ALS in vitro and to fund a study of the efficacy of XPro1595

to protect against ALS model phenotypes in vivo.

During the year ended December 31, 2020, the Company received $0.3 million

of cash proceeds pursuant to this grant which the Company recorded as deferred liabilities.

During the year ended December 31,

2020, the Company recorded $0.2 million as a reduction of research and development expense related to the ALS grant.

As of December

31, 2020, the Company recorded $0.1 million as deferred liabilities in the consolidated balance sheet related to the ALS grant.

September 2020, the Company was awarded a grant of up to $2.9 million from the National Institutes of Health (“NIH”).

As of December 31, 2020, the Company has not received any proceeds pursuant to this grant.

following table provides information regarding our cash flows for the years ended December 31, 2020 and 2019:

Net cash used in operating activities

3 unchanged sentences

Impact on cash from foreign currency translation

Net increase (decrease) in cash and cash equivalents

$ (1,184,507 )

Net Cash Used in Operating Activities

Our cash used in operating activities was

primarily driven by our net loss.

Operating activities used $5.4 million

of cash for the year ended December 31, 2019, primarily resulting from our net loss of $7.7 million, a net cash outflow of $0.3

million for changes in our net operating assets and liabilities, offset by non-cash stock-based compensation charges of $4.1 million,

partially offset by a waiver of common stock issuable of $1.5 million.

The change in our net operating assets and liabilities was

primarily due to a decrease in accounts payable and accrued liabilities of $0.2 million and a $0.1 million increase in prepaid

Operating activities used $2.1 million

of cash for the year ended December 31, 2018, primarily resulting from our net loss of $12.4 million, partially offset by non-cash

stock-based compensation charges of $10.0 million.

Net Cash Provided by Financing Activities

During the year ended December 31, 2019,

the Company completed its initial public offering in which the Company sold 1,020,820 shares of its common stock for gross cash

proceeds of $8.2 million (net cash proceeds of $7.3 million).

On May 15, 2019, the Company entered into

a purchase agreement and a registration rights agreement with an institutional investor, Lincoln Park Capital Fund, LLC (“Lincoln

Park”), an Illinois limited liability company, providing for the purchase of up to $20.0 million worth of the Company’s

common stock, $0.001 par value per share, over the 24-month term of the purchase agreement.

In connection therewith and as contemplated

by the purchase agreement, on May 15, 2019, the Company sold 30,000 newly issued shares of its common stock, valued at $10.00 per

share, to Lincoln Park for $300,000 in gross cash proceeds (net cash proceeds of $230,000) and issued 70,000 shares of its common

stock to Lincoln Park pursuant to the terms of the purchase agreement as consideration for its commitment to purchase shares under

the purchase agreement.

During April and May 2019, the Company

sold 522,212 shares of its common stock to certain investors for cash proceeds of $4,727,879, of which the Company’s CEO

purchased 11,100 shares for $119,325 of cash and the Company’s CFO purchased 5,000 shares for $53,550 of cash.

During the year ended December 31, 2018,

to complete a series of funding provided for in the Company’s joint development agreement dated September 3, 2016, the Company

received $0.9 million in cash from Luminus in exchange for 400,000 shares of the Company’s common stock.

Luminus is owned

by a significant shareholder of the Company.

Quantitative and Qualitative

Disclosures about Market Risk

We are exposed to market risk from changes

in foreign currency rates.

Net increase in cash and cash equivalents

Cash Used in Operating Activities

cash used in operating activities was primarily driven by our net loss.

activities used $8.9 million of cash for the year ended December 31, 2020, primarily resulting from our net loss of $12.1 million,

partially offset by non-cash stock-based compensation charges of $3.1 million.

activities used $5.4 million of cash for the year ended December 31, 2019, primarily resulting from our net loss of $7.7 million,

a net cash outflow of $0.3 million for changes in our net operating assets and liabilities, offset by non-cash stock-based compensation

charges of $4.1 million, partially offset by a waiver of common stock issuable of $1.5 million.

The change in our net operating

assets and liabilities was primarily due to a decrease in accounts payable and accrued liabilities of $0.2 million and a $0.1

million increase in prepaid expenses.

Cash Provided by Financing Activities

July 2020, the Company completed an underwritten public offering in which it sold 2,500,000 shares of common stock at a public

offering price of $10.00 per share.

Aggregate net proceeds from the underwritten public offering were approximately $23.1 million,

net of approximately $1.9 million in underwriting discounts and commissions and offering expenses.

the year ended December 31, 2020, the Company purchased 220,000 shares from an investor for approximately $1.0 million.

the Company sold 196,000 shares of its common stock to Lincoln Park for cash proceeds of approximately $1.0 million.

the year ended December 31, 2020, the Company issued and sold 178,600 shares of common stock at an average price of $5.45 per

share under the ATM program for net cash proceeds of approximately $0.8 million.

February 2019, the Company completed its initial public offering in which the Company sold 1,020,820 shares of its common stock

for gross proceeds of approximately $8.2 million (net proceeds of approximately $7.3 million).

April and May 2019, the Company sold 522,212 shares of its common stock to certain investors for cash proceeds of approximately

$4.7 million of which the Company’s CEO purchased 11,100 shares for $119,325 of cash and the Company’s CFO purchased

5,000 shares for $53,550 of cash.

May 15, 2019, the Company sold 30,000 shares of its common stock to Lincoln Park for $300,000 in gross cash proceeds (net cash

proceeds of $230,000) and issued 70,000 shares of its common stock to Lincoln Park pursuant to the terms of the purchase agreement

as consideration for its commitment to purchase shares under the purchase agreement.

Quantitative and Qualitative Disclosures about Market Risk

are exposed to market risk from changes in foreign currency rates.

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 5. Market for Registrant’s Common Equity