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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-01 · 413 added, 437 removed, 70 unchanged (92% of the section changed)

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

Forward-Looking

Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking

Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,”

“anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking

These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending

on a variety of factors, many of which are not within our control.

These factors include but are not limited to economic conditions generally

and in the industries in which we may participate;

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Forward-Looking Statements

This Form 10-Q contains certain

forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

For this purpose, any statements

contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements.

Without limiting

the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,”

“estimate” or “continue” or comparable terminology are intended to identify forward-looking statements.

statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety

of factors, many of which are not within our control.

These factors include but are not limited to economic conditions generally and in

the industries in which we may participate;

competition within our chosen industry, including competition from much larger competitors;

technological advances and failure to successfully develop business relationships.

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

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

involved in immune dysfunction associated with chronic diseases such as cancer and neurodegenerative diseases.

The Company’s drugs

are still in the clinical trial stage and have not been approved by a regulatory authority.

The Company has two therapeutic platforms

– a dominant-negative TNF platform (“DN-TNF”, “XPro™”, “XPro1595™” or “ pegipanermin

and pSar DN-TNF” ) and a Natural Killer (“NK”, or “INKmune™”) platform.

The DN-TNF platform neutralizes

soluble tumor necrosis factor (“sTNF”) without affecting trans-membrane TNF (“tmTNF”) or TNF receptors -TNFR1

This unique biologic mechanism differentiates the DN-TNF drugs from currently approved non-selective TNF inhibitors that inhibit

both sTNF and tmTNF.

Protecting the function of tmTNF and TNF receptors while neutralizing the function of sTNF is a potentially potent

anti-inflammatory strategy that does not cause immunosuppression or demyelination which occur in the currently approved non-selective

TNF inhibitors.

Currently approved non-selective TNF inhibitors treat autoimmune disease, but are contraindicated in patients with infection,

cancer and neurologic diseases because they increase the risk of infection, cancer and demyelinating neurologic diseases, respectively;

Description of Business

We are a clinical-stage immunology

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 immune dysfunction

associated with chronic diseases such as cancer and neurodegenerative diseases.

The Company’s drugs are in clinical trials and

have not been approved by a regulatory authority.

The Company has two therapeutic platforms – a dominant-negative TNF platform

(“DN-TNF”, “XPro™”, “XPro1595™” or “pegipanermin”) and a Natural Killer (“NK”,

or “INKmune™”) platform.

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

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

This unique biologic mechanism differentiates the DN-TNF drugs from currently

approved non-selective TNF inhibitors that inhibit both sTNF and tmTNF.

Protecting the function of tmTNF and TNF receptors while neutralizing

the function of sTNF is a potent anti-inflammatory strategy that does not cause immunosuppression or demyelination which occur in the

currently approved non-selective TNF inhibitors.

Currently approved non-selective TNF inhibitors treat autoimmune disease, but are contraindicated

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

diseases, respectively;

these safety problems are due to off-target effects on inhibiting tmTNF.

The NK platform targets the dysfunctional natural killer 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 eliminating residual disease.

Residual disease is the cancer left behind after therapy is

The NK platform targets the dysfunctional

natural killer 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 eliminating residual disease.

Residual disease is the cancer left behind

after therapy is finished.

Residual disease can grow to cause relapse.

The mechanism by which INKmune may improve the ability of the patient’s NK

cells to kill their cancer is complex.

The mechanism by which INKmune improves the ability of the patient’s

NK cells to kill their cancer is complex.

The NK cells of cancer patients lose the ability to bind and kill cancer cells.

A measure of NK

cell binding to cancer cells is avidity.

The higher the avidity, the greater the bond between the NK cell to cancer cell and thus the

greater NK killing of cancer cells.

NK cell binding to cancer cells is avidity.

The higher the avidity, the greater the bond between the NK cell to cancer cell and thus

the greater NK killing of cancer cells.

INKmune increases NK avidity and further improves mitochondrial function and upregulates nutrient

These metabolic changes may help the INKmune primed NK cell to function in the hostile tumor microenvironment and persist

much longer in the patient.

These mechanisms thus may improve the ability of INKmune primed NK cells to overcome the immune evasion of

the patient’s cancer cells.

We believe INKmune would best be used to eliminate residual disease after the patient has completed

other cancer therapies.

Both the DN-TNF platform and the INKmune platform have the potential to be used to treat multiple diseases.

DN-TNF platform is being developed to be used as an immunotherapy for the treatment of cancer and neurodegenerative disease.

is being developed to treat NK sensitive hematologic malignancies and solid tumors.

believe our DN-TNF platform can be used as a cancer therapy to reduce resistance in immunotherapy and as a CNS (“central nervous

system”) therapy to target glial activation to prevent progression of Alzheimer’s disease (“AD”), to target neuroinflammation

in treatment resistant depression (“TRD”), and as a drug to prevent muscle degeneration, prevent fibrosis and promote muscle

regeneration in Duchene muscular dystrophy (“DMD”).

The drug is named differently for the oncology and CNS indications;

or XPro™, respectively, but it is the same drug product.

For DMD, the company is exploring pSar DN-TNF compounds optimized for

the treatment of DMD.

The pSar DN-TNF compound has the same mechanism of action, a different half-life extender and novel IP protection.

These mechanisms improve the ability of INKmune primed NK cells to overcome the immune evasion of the patient’s cancer

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 and neurodegenerative disease.

INKmune is being developed to treat NK sensitive hematologic malignancies

and solid tumors.

We believe our DN-TNF platform

can be used as a CNS (“central nervous system”) therapy to target glial activation to prevent progression of Alzheimer’s

disease (“AD”);

to target neuroinflammation in treatment resistant depression (“TRD”);

as a drug to prevent muscle

degeneration, prevent fibrosis and promote muscle regeneration in Duchene muscular dystrophy (“DMD”);

and as a cancer therapy

to reduce resistance in immunotherapy.

The primary focus of the company’s development efforts for XPro is AD.

The next indication

to be developed with XPro will be TRD.

Treatment of DMD and cancer will occur when partners for the programs are found.

The drug is named

differently for the oncology and CNS indications;

INB03™ or XPro, respectively, but it is the same drug product.

For DMD, the company

is exploring DN-TNF compounds that is optimized for the treatment of DMD.

This novel compound has the same mechanism of action but has

novel IP protection.

In each case, we believe neutralizing sTNF is a cornerstone to the treatment of these diseases.

As an immunotherapy for cancer, we are

developing INB03 to neutralize sTNF produced by HER2+ trastuzumab resistant breast cancers to reverse resistance to targeted therapy.

sTNF produced by the tumor causes an up-regulation of MUC4 expression causing steric hindrance of trastuzumab binding to the HER receptor

on HER2+ breast cancer cells.

As an immunotherapy

for cancer, we are using INB03 to neutralize sTNF produced by HER2+ trastuzumab resistant breast cancers to reverse resistance to targeted

sTNF produced by the tumor causes an up-regulation of MUC4 express causing steric hindrance of trastuzumab binding to the HER

receptor on HER2+ breast cancer cells.

Without binding, trastuzumab based therapies are not effective.

Neutralizing sTNF reverses MUC4 expression

converting a trastuzumab resistant breast cancer cell into a trastuzumab sensitive breast cancer cell.

In addition, INB03 may change

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 and phagocytic macrophages in the TME.

the Company has shown the combination of INB03 with trastuzumab-deruxtecan (Enhertu), decreases tumor growth in the multi-resistant JIMT-1

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 planned Phase II trial by demonstrating that INB03 was safe and

well tolerated, defining the dose of INB03 to carry into Phase II trials, and demonstrating a pharmacodynamic endpoint – a decrease

in inflammatory cytokines in the blood.

A Phase II trial is planned in patients with advanced MUC4+ expressing cancer.

we believe the DN-TNF platform can be used to treat selected neurodegenerative diseases by modifying the brain microenvironment (“BME”).

The Company believes the core pathology of cognitive decline is a combination of neurodegeneration and synaptic dysfunction.

Neurodegeneration

is nerve cell death that may include demyelination.

Neutralizing sTNF reverses MUC4

expression converting a trastuzumab resistant breast cancer cell into a trastuzumab sensitive breast cancer cell.

In addition, INB03 may

change 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 and phagocytic macrophages in the TME.

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 pre-clinical data in MUC4+ expressing tumors and the clinical trial informs the design of a future 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

The company does not plan to commence a Phase II trial in patients with advanced MUC4+ expressing cancer until a partner can

Likewise, we believe the DN-TNF

platform can be used to treat selected neurodegenerative diseases by modifying the brain microenvironment (“BME”).

believes the core pathology of cognitive decline is a combination of neurodegeneration and synaptic dysfunction.

Neurodegeneration is

nerve cell death that may include demyelination.

Synaptic dysfunction means the connections between nerve cells stop working efficiently

and may decrease in number or become disconnected.

The combination of neurodegeneration and synaptic dysfunction causes cognitive decline

and behavioral changes associated with Alzheimer’s disease (“AD”).

XPro completed a Phase I trial treating patients

with Alzheimer’s disease that was partially funded by a Part-the-Clouds Award from the Alzheimer’s Association.

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

and may decrease in number.

The combination of neurodegeneration and synaptic dysfunction causes cognitive decline and behavioral changes

associated with Alzheimer’s disease (“AD”).

XPro completed a Phase I trial treating patients with Alzheimer’s

disease that was partially funded by a Part-the-Clouds Award from the Alzheimer’s Association.

We believe XPro targets activated

microglia and astrocytes of the brain that produce sTNF that promotes nerve cell loss, synaptic dysfunction and prevents myelin repair

- key elements in the development of dementia.

In animal models, elimination of sTNF prevents nerve cell dysfunction and reverses synaptic

In animal models, elimination of sTNF prevents nerve cell dysfunction, reverses synaptic

pruning and promotes myelin repair.

The Phase I trial in patients with biomarkers of inflammation with AD has been completed.

The open label, dose escalation trial

was designed to demonstrate that XPro can safely decrease neuroinflammation in patients with ADi.

ADi is the term used to delineate patients

with AD with biomarkers of inflammation.

This appears to be more than 40% of patients with AD.

The endpoints of the trial are measures

of neuroinflammation and neurodegeneration in blood and cerebral spinal fluid by measuring changes in inflammatory cytokine levels in

the CNS and using MRI-DTI to measure white matter free water.

White matter free water is a validated measure of neuroinflammation in

XPro, at the 1mg/kg/week dose decreased inflammatory cytokines in the CSF and decreased white matter free water in the brain

demonstrating that XPro can decrease neuroinflammation in patients with ADi.

We also studied downstream benefits of decreasing neuroinflammation

by measuring changes in the CSF proteome and quantifying changes in novel white matter MRI biomarkers.

XPro significantly decreased biomarkers

of neurodegeneration as measured by changes in the CSF proteome including neurofilament light chain, phospho Tau 217 and VILIP-1;

of 84%, 46% and 91% respectively were observed after 3 months of therapy.

Three months of XPro therapy improved measures of synaptic

function, as measured in the CSF proteome including a 222% increase in contactin 2 and a 56% decrease of neurogranin, changes that contribute

to improved synaptic function.

successful completion of the Phase I trial in AD has informed the design of a blinded randomized, placebo-controlled Phase II trial in

patients with early ADi.

Early ADi includes patients with AD and MCI who have at least one biomarker of inflammation (ADi and MCI 2

respectively).

The early ADi trial is a blinded randomized trial to test if treatment of early AD patients with neuroinflammation

with XPro will affect cognitive decline.

label, dose escalation trial was designed to demonstrate that XPro can safely decrease neuroinflammation in patients with ADi.

the term used to delineate patients with AD with biomarkers of inflammation.

The endpoints of the trial were measures of neuroinflammation

and neurodegeneration in blood and cerebral spinal fluid by measuring changes in inflammatory cytokine levels in the CNS and using MRI-DTI

to measure brain microstructural changes.

XPro, at the 1mg/kg/week dose, decreased inflammatory cytokines in the CSF in the brain demonstrating

that XPro can decrease neuroinflammation in patients with AD.

We also studied downstream benefits of decreasing neuroinflammation by measuring

changes in the CSF proteome and quantifying changes in novel white matter MRI biomarkers.

XPro significantly decreases biomarkers of neurodegeneration as

measured by changes in the CSF proteome including neurofilament light chain, phospho Tau 217 and VILIP-1;

decreases of 84%, 46% and 91%

respectively after 3 months of therapy.

Three months of XPro therapy improved measures of synaptic function, as measured in the CSF proteome

including a 222% increase in Contactin 2 and a 56% decrease neurogranin, changes that contribute to improved synaptic function.

The successful completion

of the Phase I trial in AD has informed the design of a blinded randomized, placebo-controlled Phase II trial in patients with early

Early ADi includes patients with AD and MCI who have at least one biomarker of inflammation (ADi and MCI2 respectively).

early ADi trial is a blinded randomized trial to test if treatment of early AD patients with neuroinflammation with XPro will affect

cognitive decline.

The Phase II trial in early ADi has six important elements.

Two hundred and ten patients will

be enrolled in a 2:1 ratio (XPro vs placebo).

Two hundred and one patients are being enrolled in a 2:1

ratio (XPro vs placebo).

The patients will receive 1mg/kg/week as a subcutaneous injection for six months.

An enrichment

strategy identical to the successful strategy used in the Phase I trial will be used to ensure patients have neuroinflammation.

will need to have one or more enrichment criteria:

elevated blood level of at least one of C-reactive protein, hemoglobin A1c, erythrocyte

sedimentation and/or at least one allele of ApoE4.

The primary endpoint will be Early/ild Alzheimer’s Cognitive Composite (“EMACC”),

An enrichment strategy identical

to the successful strategy used in the Phase I trial will be used to ensure patients have neuroinflammation.

Patients will need to have

one or more enrichment criteria:

elevated blood level of at least one of C-reactive protein, hemoglobin A1c, erythrocyte sedimentation

and at least one allele of ApoE4.

The primary end-point will be Early/mild Alzheimer’s Cognitive Composite (“EMACC”),

a validated cognitive measure that is more sensitive than traditional end-points used in many studies of patients with early AD.

trial is open in Australia, Canada and the United Kingdom and will open in the US pending the lift of a clinical hold by the FDA.

patients will be offered to stay on therapy for at least 12 months in an extension trial.

AD program is open in the United States, Australia, Canada, the United Kingdom, France, Germany, Spain, Czech Republic and Slovakia.

All patients will be offered to stay on therapy for at least 12 months in an extension trial.

Clinical and biomarker data will be collected

during the extension trial.

are at least 4 clinical milestones associated with the Phase II trial in AD.

Enrollment of 201 patients in the Phase II AD trial should

be complete by mid-year.

Six months after the last patient is enrolled, top line cognition data with EMACC will be available.

end-points which include blood biomarker, neuroimaging and additional neuropsychiatric end-points will be available after data base lock

2-3 months after top line data.

Finally, several months after all the data are analyzed, the Company plans an end-of-phase II meeting

with the FDA to finalize plans for the pivotal Phase III trial.

The Company plans to apply for an accelerated pathway during 2024.

for treatment of AD may be eligible for one or both accelerated approval pathways.

The Company plans to submit of Fast Track status in

We expect to be eligible for Break Through status after completion of the Phase II in 2025.

therapy for TRD is a large unmet need.

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was explored in a small open label clinical trial by Prof.

Andrew Miller, MD of Emory University.

This study involved patients with elevated

TNF levels who were treated with infliximab for their depression (Miller, 2011).

Andrew Miller, MD of Emory University demonstrated the patients have elevated

TNF levels and treatment with infliximab treated their depression (Miller, 2011).

The Company received a $2.9M USD award from the National

3 unchanged sentences

Patients will be treated for 6 weeks.

Primary endpoints include both

Primary end-points include both

clinical and neuroimaging measures.

The final trial design is ongoing and discussions with the FDA are not complete.

The Company anticipates

receiving authorization to initiate the clinical trial once the pending clinical hold is lifted.

Company completed an extensive series of studies in murine models of DMD.

The data shows DN-TNF decreased muscle fiber inflammation and

degeneration, and increased muscle fiber regeneration in an acute model of DMD.

Cardiac function was studied using echocardiography after

30 weeks of treatment.

Cardiac function did not change compared to placebo treated or prednisone treated animals.

These data strongly

suggest DN-TNF may be a therapy for treatment of patients with DMD that may have unique biologic attributes, muscle fiber regeneration,

without corticosteroid associated metabolic toxicity such as insulin resistance, diabetes, obesity, hirsutism, short stature and muscle

The Company received

authorization to initiate a clinical trial in AD in the US during January 2024.

The TRD trial is expected to start enrollment after the

AD Phase II trial finishes patient enrollment.

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

INKmune interacts with the patient’s

NK cells to convert them from inert resting NK cells into memory-like NK cells that attack the patient’s cancer cells.

is a replication incompetent proprietary cell line 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 INKmune can be used to treat numerous hematologic malignancies and solid tumors including leukemia,

multiple myeloma, lymphoma, lung, ovary, breast, renal, nasopharyngeal and prostate cancer.

The Company has initiated a Phase I trial

using INKmune to treat patients with high risk MDS/AML, a form of leukemia.

Two patients have been treated in the Phase I trial for MDS

and three patients have been treated compassionately in AML.

In the five patients, INKmune therapy showed a favorable safety profile,

produced memory-like NK cells that killed cancer in vitro, and promoted development of cancer killing memory-like NK cells that were

found in the patient’s circulation after 4 months.

The Company will continue to enroll patients in the Phase I trial.

intends to initiate a separate Phase I/II trial of INKmune in a metastatic castration resistant prostate cancer (“mCRPC”)

tumor during 2024.

An IND for a Phase I/II trial in men with mCRPC was filed in May 2023.

The trial will treat up to 30 patients with

mCRPC in an open label trial.

The trial has four goals:

i) demonstrate safety of INKmune in men with mCRPC;

ii) determine what dose of

INKmune should be used in a blinded randomized Phase II trial on men with mCRPC;

iii) determine tumor response using traditional biomarkers

of mCRPC including blood PSA level and iv) use exploratory biomarkers of tumor response including circulating tumor DNA and PET PMSA

imaging studies.

The first patients should be treated 9 months after the IND is open.

Since our inception in 2015, we have devoted substantially all our

resources to the discovery and development of our product candidates, including clinical trials and preclinical studies as well as general

and administrative support for these operations.

To date, we have generated no significant revenue.

We have incurred net losses in each

year since our inception and, as of September 30, 2023, we had an accumulated deficit of approximately $112.6 million.

Our net losses

were $21,600,000 and $21,466,000 for the nine months ended September 30, 2023 and 2022, 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.

We anticipate that we will continue to generate substantial losses for the

foreseeable future.

may be significant uncertainty resulting from the impact of other geopolitical and macroeconomic factors, including the ongoing COVID-19

(coronavirus) pandemic, inflation, supply chain issues, rising interest rates, future bank failures, a potential US government shutdown,

and the impact of the conflicts in Russia/Ukraine and Israel, in addition to geopolitical, trade and investment tensions between the

United States and China.

Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited

to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, compliance

with government regulations and the need to obtain additional financing to fund operations.

Product candidates currently under development

will require significant additional research and development efforts, including extensive preclinical studies, clinical trials and regulatory

approval prior to commercialization.

These efforts require significant amounts of additional resources, adequate personnel, infrastructure

and extensive compliance and reporting.

Company’s product candidates are still in development and, to date, none of the Company’s product candidates have been approved

can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the

Company’s intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory

approval or that any approved products will be commercially viable.

Even if the Company’s product development efforts are successful,

it is uncertain when, if ever, the Company will generate any revenue from any of its products.

The Company operates in an environment

of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies.

Company relies and expects to continue to rely on a small number of vendors to manufacture supplies and materials for its use in the

clinical trial programs.

These programs could be adversely affected by a significant interruption in these manufacturing services.

classify our operating expenses into two categories:

research and development;

and general and administrative expenses.

Personnel costs

including salaries, benefits and stock-based compensation expense comprise a significant component of our research and development and

general and administrative expense categories.

qualify as an “emerging growth company” under the JOBS Act.

As an emerging growth company, we may take advantage of specified

reduced disclosure and other requirements that are otherwise applicable generally to public companies.

NK cells to convert them from inert resting NK cells into memory-like NK cells that kill the patient’s cancer cells.

a replication incompetent proprietary cell line 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 that remains after treatment with

cytotoxic therapy.

We believe INKmune can be used to treat numerous hematologic malignancies and solid tumors including leukemia, multiple

myeloma, lymphoma, lung, ovary, breast, renal and prostate cancer.

The Company had a Phase I trial using INKmune to treat patients with

high risk MDS/AML, a form of leukemia.

Two patients were treated in the Phase I trial for MDS, three patients have been treated compassionately

in AML and another MDS patient is expected to be treated shortly.

During March 2024, the Company decided to terminate further enrollment

in the MDS/AML trial.

In the patients, INKmune therapy is safe, produces memory-like NK cells that kill cancer in vitro, and promotes

development of cancer killing memory-like NK cells that can be found in the patient’s circulation of 4 months.

The Company initiated

a separate Phase I/2 trial of INKmune in a metastatic castrate resistant prostate cancer.

The open label trial enrolled the first patient

in December 2023.

Phase I/II trial using INKmune to treat patients with metastatic castrate resistant prostate cancer (mCPRC) is an open label trial.

data from the patients will be visible as patients are treated.

The Company will report data from each cohort as it becomes available.

In addition to clinical data, the Company will communicate when the Phase I portion of the trial has completely enrolled.

This is expected

in September 2024.

Because of the modified Bayesian design, the Company estimates the trial will be completely enrolled 1H25 with top-line

data available 6 months later.

Topline data is divided into immunologic and tumor response variables.

The most important immunologic response

variable is related to memory like NK cell persistence.

This is how long are the number of mlNK cells in patients’ blood compared to baseline.

There are 3 important variables to tumor response:

i) blood PSA changes;

ii) change in PMSA scan and iii) change in circulating tumor

Ideally, the levels of all three variables decrease with treatment.

We do not expect this 6 month trial to provide survival

We continue to incur significant

development and other expenses related to our ongoing operations.

As a result, we are not and have never been profitable and have incurred

losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern.

We reported a

net loss of $11.0 million for the three months ended March 31, 2024.

As of March 31, 2024 and December 31, 2023, we had cash and cash

equivalents of $26.0 million and $35.8 million, respectively.

We expect to continue to incur significant losses for the foreseeable future,

and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product

The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate

revenues, if any.

Our recurring net losses and

negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after

the issuance of our unaudited condensed consolidated financial statements for the three months ended March 31, 2024.

Until we can generate

sufficient revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private

sale of equity, debt financings or other capital sources, such as government funding, collaborations, strategic alliances, divestment

of non-core assets, or licensing arrangements with third parties.

To date, the Company has relied on equity and debt financing to fund

its operations.

As a company with less than

$1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” under the JOBS Act.

emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally

to public companies.

These provisions include:

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” disclosure;

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 years

or such earlier time that we are no longer an emerging growth company.

We would cease to be an emerging growth company if we have more

than $1.235 billion in annual revenues, we have more than $700 million in market value of our stock held by non-affiliates, or we issue

more than $1 billion of non-convertible debt over a three-year period.

We may choose to take advantage of some but not all of these reduced

and Development

and development expense consists of expenses incurred while performing research and development activities to discover and develop our

product candidates.

This includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities

related to regulatory filings for product candidates.

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” disclosure;

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.

We have elected to take advantage

of the above-referenced exemptions and we may take advantage of these exemptions for up to five years or such earlier time that we are

no longer an emerging growth company.

We would cease to be an emerging growth company if we have more than $1.235 billion in annual revenues,

we have more than $700 million in market value of our stock held by non-affiliates, or we issue more than $1 billion of non-convertible

debt over a three-year period.

We may choose to take advantage of some but not all of these reduced burdens.

Research and Development

Research and development expense

consists of expenses incurred while performing research and development activities to discover and develop our product candidates.

includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings

for product candidates.

We recognize research and development expenses as they are incurred.

and development expense primarily consist of:

clinical trial and regulatory-related

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.

following table summarizes our research and development expenses by product candidate for the periods indicated (in thousands):

Our research and development expense primarily

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.

The following table summarizes

our research and development expenses by product candidate for the periods indicated (in thousands):

Three Months Ended

External Costs

DN-TNF - Alzheimer’s

INKmune - High Risk MDS/AML

& Prostate cancer

DN-TNF - Alzheimer’s disease

INKmune - High Risk MDS/AML & Prostate cancer

Preclinical and other programs

research and development rebate

Accrued research and development rebate

Total external costs

Internal costs

typically use our employee resources across our development programs.

We track outsourced development costs by product candidate or development

program, but we do not allocate internal costs personnel costs including salaries and stock-based compensation to specific product candidates

or development programs.

We typically use our employee

resources across our development programs.

We track outsourced development costs by product candidate or development program, but we do

not allocate internal costs personnel costs including salaries and stock-based compensation to specific product candidates or development

participate, through our wholly owned subsidiary in Australia, in the Australian research and development tax incentive program, such

2 unchanged sentences

The Australian research and development tax incentive is recognized

when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of

the consideration can be reliably measured.

when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the

consideration can be reliably measured.

participate, through our wholly owned subsidiary in the United Kingdom, in the research and development program provided by the United

4 unchanged sentences

has been incurred and the amount of the consideration can be reliably measured.

Substantially

all our research and development expenses to date have been incurred in connection with our current and future product candidates.

expect our research and development expenses to increase significantly for the foreseeable future as we advance an increased number of

our product candidates through clinical development, including the conduct of our planned clinical trials and manufacturing drug to be

used in those clinical trials.

Substantially all our research

and development expenses to date have been incurred in connection with our current and future product candidates.

We expect our research

and development expenses to increase significantly for the foreseeable future as we advance an increased number of our product candidates

through clinical development, including the conduct of our planned clinical trials and manufacturing drug to be used in those clinical

The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming.

The successful development of product candidates is highly uncertain.

At this time, we cannot reasonably estimate the nature, timing

or costs required to complete the remaining development of any product candidates.

This is due to the numerous risks and uncertainties

associated with the development of product candidates.

costs of clinical trials may vary significantly over the life of a project owing to, but not limited to, the following:

The successful

development of product candidates is highly uncertain.

At this time, we cannot reasonably estimate the nature, timing or costs required

to complete the remaining development of any product candidates.

This is due to the numerous risks and uncertainties associated with the

development of product candidates.

The costs of clinical trials

may vary significantly over the life of a project owing to, but not limited to, the following:

per patient trial costs;

the number of sites included

in the clinical trials;

the countries in which

the clinical trials are conducted;

the length of time required

to enroll eligible patients;

the number of patients

that participate in the clinical trials;

the number of doses that

patients receive;

the cost of comparative

agents used in clinical trials;

the drop-out or discontinuation

rates of patients;

potential additional safety

monitoring or other studies requested by regulatory agencies;

the duration of patient

the efficacy and safety

profile of the product candidate;

the cost of manufacturing,

finishing, labelling and storage drug used in the clinical trial.

do not expect any of our product candidates to be commercially available for at least the next several years, if ever.

We expect to continue

to incur significant expenses and increasing operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter

and year-to-year.

the number of sites included in the clinical trials;

the countries in which the clinical trials are conducted;

the length of time required to enroll eligible patients;

the number of patients that participate in the clinical trials;

the number of doses that patients receive;

the cost of comparative agents used in clinical trials;

the drop-out or discontinuation rates of patients;

potential additional safety monitoring or other studies requested by regulatory agencies;

the duration of patient follow-up;

the efficacy and safety profile of the product candidate;

the cost of manufacturing, finishing, labelling and storage drug used in the clinical trial.

We do not expect any of our

product candidates to be commercially available for at least the next several years, if ever.

We expect to continue to incur significant

expenses and increasing operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter and year-to-year.

We anticipate that our expenses will increase substantially as we:

continue research and development,

including preclinical and clinical development of our existing product candidates;

potentially seek regulatory

approval for our product candidates;

seek to discover and develop

additional product candidates;

establish a commercialization

infrastructure and scale up our manufacturing and distribution capabilities to commercialize any of our product candidates for which

we may obtain regulatory approval;

seek to comply with regulatory

standards and laws;

maintain, leverage and

expand our intellectual property portfolio;

hire clinical, manufacturing,

scientific and other personnel to support our product candidates development and future commercialization efforts;

add operational, financial

and management information systems and personnel;

incur additional legal,

accounting and other expenses in operating as a public company.

and Administrative Expenses

and administrative expenses consist principally of payroll and personnel expenses, including stock-based compensation;

professional fees

for legal, consulting, accounting and tax services;

overhead, including rent and utilities;

and other general operating expenses not

otherwise classified as research and development expenses.

income (expense)

income (expense consists) primarily of interest expense incurred on debt and interest income on investments in money market accounts.

of Operations

of the Three Months Ended September 30, 2023 and 2022

following table summarizes our results of operations for the periods indicated:

September 30,

continue research and development, including preclinical and clinical development of our existing product candidates;

potentially seek regulatory approval for our product candidates;

seek to discover and develop additional product candidates;

establish a commercialization infrastructure and scale up our manufacturing and distribution capabilities to commercialize any of our product candidates for which we may obtain regulatory approval;

seek to comply with regulatory standards and laws;

maintain, leverage and expand our intellectual property portfolio;

hire clinical, manufacturing, scientific and other personnel to support our product candidates development and future commercialization efforts;

add operational, financial and management information systems and personnel;

incur additional legal, accounting and other expenses in operating as a public company.

Results of Operations

Comparison of the Three Months Ended March

31, 2024 and 2023

The following table summarizes

our results of operations for the periods indicated:

Three Months Ended

(in thousands)

5 unchanged sentences

Other expense, net

the three months ended September 30, 2023 and 2022, the Company sold MSC’s to one third-party and recognized $43,000 and $98,000,

respectively, of revenues.

and Administrative

and administrative expenses were approximately $2.6 and $2.4 million during the three months ended September 30, 2023 and 2022, respectively.

The $0.2 million increase in general and administrative expenses was due to higher consulting expense in 2023.

and Development

and development expenses were approximately $6.0 million during the three months ended September 30, 2023, compared to approximately

$5.2 million during the three months ended September 30, 2022.

The change in research and development expenses during the three months

ending September 30, 2023 compared to the three months ending September 30, 2022 is largely due to incurring $0.5 million of additional

expenses related to our Alzheimer’s clinical program, $0.4 million of additional expenses on our INKmune clinical program, $0.1

million of additional other clinical program expenses and $0.1 million of higher employee compensation costs, partially offset by an

increase of $0.4 million of accrued rebate.

Company’s other expense, net is lower during the three months ended September 30, 2023, due to the Company earning higher interest

income on its money market accounts, which partially offsets the interest expense incurred on our debt.

of the Nine Months Ended September 30, 2023 and 2022

following table summarizes our results of operations for the periods indicated:

September 30,

Operating expenses:

During the three months ended

March 31, 2024 and 2023, the Company sold MSC’s to one third-party and recognized $14,000 and $38,000, respectively, of revenues.

General and Administrative

General and administrative

expenses were approximately $2.3 million during each of the three months ended March 31, 2024 and 2023, respectively.

Research and Development

and administrative

Total operating expenses

Loss from operations

the nine months ended September 30, 2023, and 2022, the Company sold MSC’s to one third-party and recognized $127,000 and $277,000,

respectively, of revenues.

and Administrative

General and administrative expenses were approximately $7.2 million

and $6.9 million during the nine months ended September 30, 2023 and 2022, respectively.

The $0.3 million increase in general and administrative

expenses was due to higher stock-based compensation expense and higher consulting fees in 2023.

and Development

and development expenses were approximately $14.3 million and $13.7 million during the nine months ended September 30, 2023 and

2022, respectively.

The increase in research and development expenses during the nine months ending September 30, 2023 compared to the

nine months ending September 30, 2022 is largely due to incurring $0.9 million of additional expenses related to our INKmune clinical

program, incurring $0.2 million of additional expenses with our Alzheimer’s clinical program and $0.5 million of additional employee

compensation, partially offset by incurring $0.7 million less expenses associated with other clinical programs and $0.2 million of additional

accrued rebate.

Company’s other expense, net is lower during the nine months ended September 30, 2023, due to the Company earning higher interest

income on its money market accounts, which partially offsets the interest expense incurred on our debt.

and Capital Resources

Research and development expenses

were approximately $8.7 million during the three months ended March 31, 2024, compared to approximately $4.1 million during the three

months ended March 31, 2023.

The change in research and development expenses during the three months ending March 31, 2024 compared to

the three months ending March 31, 2023 is largely due to incurring $4.0 million of additional expenses related to our Alzheimer’s

clinical program, $0.7 million of additional expenses on our INKmune clinical program, and $0.1 million of higher employee compensation

costs, partially offset by an increase of $0.2 million of accrued rebate.

Other Expense, net

The Company’s other

expense, net is lower during the three months ended March 31, 2024, mainly due to the Company incurring lower interest expense on our

debt due to having less debt outstanding.

Liquidity 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 $21.6 million and $21.5 million for the nine months ended September 30, 2023 and 2022, respectively.

used in operating activities was $8.6 million and $17.0 million for the nine months ended September 30, 2023 and 2022, respectively.

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

As of September 30, 2023,

we had cash and cash equivalents of approximately $41.8 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.

incurred a net loss of $11.0 million and $6.5 million for the three months ended March 31, 2024 and 2023, respectively.

Net cash used

in operating activities was $7,476,000 and $1,141,000 for the three months ended March 31, 2024 and 2023, respectively.

Since inception,

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

As of March 31, 2024, we had cash and cash equivalents

of $26,002,000.

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.

During the period from April

4, 2024 through May 6, 2024, the Company sold 198,364 shares of common stock at an average price of $10.56 for gross proceeds of approximately

$2,095,000 under the ATM offering.

April 19, 2024, the Company entered into securities purchase agreements with purchasers in which the Company sold 571,592 shares of common

stock and warrants to purchase 571,592 shares of common stock for aggregate gross proceeds of approximately $4,771,000.

price of the warrants is $9.152, and the term is the earlier of two years from the issuance of the warrants and thirty trading days following

the release of top line data in the Phase 2 Alzheimer’s program, provided that directors and officers of the Company that are subject

to a blackout with respect to trading in the Company’s stock will have an additional 60 days from the termination of the blackout

date to exercise the warrant.

Directors and officers that participated in the offering paid

a combined offering price of $8.445 per share and warrant, and other investors paid $8.32 per share and warrant.

On April 24, 2024, the Company

entered into a securities purchase agreement with an investor in which the Company sold 986,000 shares of common stock and warrants to

purchase 986,000 shares of common stock for gross proceeds of approximately $9,702,000.

The exercise price of the warrants is $9.84, and

the term is the earlier of two years from the issuance of the warrants and thirty trading days following the release of top line data

in the Phase 2 Alzheimer’s program.

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, professional fees, 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 various 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 September 30, 2023, the cash balance held by our foreign subsidiaries with currencies other than the United States dollar was less

than $0.1 million.

We do not have any material financial exposure to one customer or one country that would significantly hinder our

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.

of September 30, 2023, the Company had an accumulated deficit of $112.6 million and working capital of $31.3 million.

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.

As of September 30, 2023,

we had cash and cash equivalents of approximately $41.8 million.

We believe our cash and cash equivalents will be sufficient to fund

our operations for at least the next 12 months following the filing date of this Quarterly Report on Form 10-Q based on the balance of

cash available as of September 30, 2023.

We anticipate, however, that we will continue to generate

losses for the foreseeable future, and we expect the losses to increase materially as we continue the development of, and seek regulatory

approvals for, our drug candidates, and seek to commercialize any drugs for which we receive regulatory approval.

We will need to raise

additional capital to fund our operations and complete our ongoing and planned clinical trials.

Although we expect to finance future

cash needs through public equity or debt offerings, no assurance can be given that any future funding will be available to us, or if

available that such proposed funding will be on terms that are acceptable to us.

If we are unable to raise additional capital in sufficient

amounts or on terms acceptable to us, we may be required to delay, limit, reduce or terminate our drug development or future commercialization

efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

following table summarizes our cash flows for the periods indicated:

September 30,

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 significant 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 March 31, 2024, the cash balance held by our foreign subsidiaries with currencies other than the United

States dollar was approximately $0.1 million.

recurring net losses and negative cash flows from operations, as well as forecast of continued losses and negative cash flows from operations,

raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our unaudited condensed

consolidated financial statements for the year ended March 31, 2024.

Until we can generate sufficient revenue from the commercialization

of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing or other capital

sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with

third parties.

Our cash and cash equivalents were $26.0 million and total current assets were $29.8 million at March 31, 2024, which the

Company is projecting will be insufficient to sustain its operations through one year following the date that the financial statements

capital may not be available on reasonable terms, if at all.

If we are unable to raise additional capital in sufficient amounts or on

terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates

or cease operations.

If we raise additional funds through the issuance of additional debt or equity securities it could result in dilution

to our existing stockholders, increased fixed payment obligations and these securities may have rights senior to those of our common stock

and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our

ability to incur additional debt, limitations on our ability to acquire, sell or license our intellectual property rights and other operating

restrictions that could adversely impact our ability to conduct our business.

Any of these events could significantly harm our business,

financial condition and prospects.

strategies we may pursue include, but are not limited to, the public or private sale of equity, debt financing or funds from other capital

sources, such as government or grant funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements

with third parties.

There can be no assurances additional capital will be available to secure additional financing, or if available, that

it will be sufficient to meet our needs on favorable terms.

If we are unable to raise additional capital in sufficient amounts or on terms

acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates.

If we raise additional funds through the public or private sale of equity or debt financings, it could result in dilution to our existing

stockholders or increased fixed payment obligations and these securities may have rights senior to those of our common stock and could

contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to

incur additional debt, limitations on our ability to acquire, sell or license our intellectual property rights and other operating restrictions

that could adversely impact our ability to conduct our business.

Any of these events could significantly harm our business, financial

condition and prospects.

The following table summarizes

our cash flows for the periods indicated:

Three Months Ended

(in thousands)

4 unchanged sentences

Impact on cash from foreign currency translation

Cash and cash equivalents,

beginning of period

Cash and cash equivalents,

end of period

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

activities used approximately $8.6 million of cash during the nine months ended September 30, 2023, resulting from our loss of $21.6

million, partially offset by changes in our net operating assets and liabilities of $7.4 million and non-cash stock-based compensation

of $5.5 million.

The change in our net operating assets and liabilities was mainly due to a decrease in research and development tax

credit receivable of $6.0 million and a decrease in prepaid expenses of $2.5 million, partially offset by a decrease in accounts payable

and accrued liabilities of $1.5 million.

activities used approximately $17.0 million of cash during the nine months ended September 30, 2022, resulting from our loss of $21.5

million and changes in our net operating assets and liabilities of $1.1 million, partially offset by non-cash stock-based compensation

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Operating Activities

Our cash used in operating

activities was primarily driven by our net loss.

Operating activities used

approximately $7.5 million of cash during the three months ended March 31, 2024, resulting from our loss of $11.0 million, partially offset

by changes in our net operating assets and liabilities of $1.7 million and non-cash stock-based compensation of $1.8 million.

in our net operating assets and liabilities was mainly due to an increase in accounts payable and accrued liabilities of $1.4 million

and a decrease in prepaid expenses of $0.4 million.

Operating activities used

approximately $1.1 million of cash during the three months ended March 31, 2023, resulting from our loss of $6.5 million, partially offset

by changes in our net operating assets and liabilities of $3.6 million and non-cash stock-based compensation of $1.7 million.

in our net operating assets and liabilities was mainly due to a decrease in research and development tax credit receivable of approximately

$6.3 million and an increase in prepaid expenses of $0.4 million, partially offset by a decrease in accounts payable and accrued liabilities

of $3.1 million.

The change in our net operating assets and liabilities was mainly due to an increase in prepaid expenses of approximately

$2.3 million, partially offset by a decrease in other tax receivable of $0.5 million and a decrease in research and development tax credit

receivable of $0.5 million.

During the nine months ended September 30, 2023, the Company sold 75,697

shares of its common stock for net proceeds of $775,000 under the Company’s ATM program with BTIG.

The Company suspended its Sales

Agreement with BTIG during September 2023.

the nine months ended September 30, 2023, the Company repaid $2,500,000 of its debt.

the nine months ended September 30, 2022, the Company sold 82,900 shares of its common stock to certain officers and directors for approximately

$0.7 million.

Accounting Policies

discussion and analysis of our financial condition and results of operations is based upon our unaudited consolidated financial statements,

which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.

The preparation of

these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses.

Actual results may differ from these estimates.

Our critical accounting policies and estimates are discussed in our Annual Report on

Form 10-K for the fiscal year ended December 31, 2022, and there have been no material changes during the nine months ended September

Quantitative and Qualitative Disclosures About Market Risk

to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as

it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Financing Activities

During the three months ended March 31, 2024, the Company repaid $2.5

million of its debt.

Critical Accounting Policies and Estimates

Our discussion and analysis

of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have

been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.

The preparation of these financial

statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses.

Actual results

may differ from these estimates.

Our critical accounting policies and estimates are discussed in our Annual Report on Form 10-K for the

fiscal year ended December 31, 2023, and there have been no material changes during the three months ended March 31, 2024.

Quantitative and Qualitative Disclosures

About Market Risk

Pursuant to Item 305(e) of

Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller

reporting company,” as defined by Rule 229.10(f)(1).

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis