What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-04-01 compared with 2023-03-24 · 485 added, 424 removed, 898 unchanged (50% of the section changed)

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Notes to Consolidated Financial Statements

101 Larkspur Landing Circle

Larkspur, California 94939

www.rbsmllp.com

Report of Independent Registered Public Accounting Firm

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Accordingly, we express no such opinion.

New York, NY Washington DC Las Vegas, NV, San Francisco, CA Athens, GRE Beijing, CHN Mumbai, and Pune IND

Member ANTEA INTERNATIONAL with offices worldwide

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment of Intangible Assets, Net—Refer to Note 2 and Note 6 to the financial statements

Critical Audit Matter Description

As of December 31, 2022, the Company had intangible assets, net, of $22.4 million.

Intangible assets are evaluated based on the asset group based on product as well as being evaluated between definite-lived and indefinite-lived intangible assets for the purpose of the impairment assessment.

The Company assesses potential impairments whenever events or circumstances indicate that the asset may be impaired.

For finite-lived intangibles assets the impairment is based on recoverability.

Recoverability of an asset group is measured by a comparison of the carrying amount of an asset group to its forecasted cash flows expected to be generated by the asset group.

If the carrying amount of the asset group exceeds its estimated forecasted cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.

An indefinite-lived intangible asset is considered impaired if the carrying amount exceeds the fair value of the asset group.

The fair value of the asset group was determined using the income approach.

The Company did not recognize an impairment loss in the financial statements for the year ended December 31, 2022.

We identified the evaluation of intangible asset impairment as a critical audit matter because the determination of the forecasted individual asset group’s cash flows, including revenue, expenses, and other items, requires a high degree of auditor judgment and increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

The principal considerations for our determination that performing procedures relating to the valuation of intangible assets as a critical audit matter are (1) there was a high degree of auditor judgment and subjectivity in applying procedures relating to the fair value of intangible assets acquired due to the significant judgment by management when developing the estimates and (2) significant audit effort was required in evaluating the significant assumptions relating to the estimates, including the income projections and discount rates.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included the following:

● Inquiry of management regarding the development of the assumptions used in the valuation of the intangible assets.

● Testing management’s process included evaluating the appropriateness of the valuation models, testing the completeness, accuracy, and relevance of underlying data used in the models, and testing the reasonableness of significant assumptions, including the income projections and discount rates.

● Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of significant assumptions.

● Evaluated the experience, qualifications and objectivity of the Company’s specialist, a third-party valuation firm.

● Obtained an understanding of the nature of the work the Company’s specialist performed, including the objectives and scope of the specialist’s work;

the methods or assumptions used;

and a comparison of the methods or assumptions used with those used in the preceding period.

Identified and evaluated assumptions

developed by the specialist considering assumptions generally used in the specialist’s field;

supporting evidence provided by the specialist;

existing market data;

historical or recent experience and changes in conditions and events affecting the Company.

● Tested the accuracy and completeness of company-produced data used by the specialist, and evaluated the relevance and reliability of externally obtained data.

For assumptions provided to the specialist by the company, evaluated whether there is a reasonable basis for using each assumption considering whether other reasonably likely outcomes could materially affect the relevant financial statement assertions.

Identified and evaluated significant assumptions used by the specialist for reasonableness.

● Evaluated the Company’s estimates of future revenue projections by completing a retrospective comparison to historical revenue projections.

We tested the significant assumptions discussed above, as well as the completeness and accuracy of the underlying data used in the projected cash flows and valuations.

● To reflect the uncertainty inherent in the projections, we performed our own sensitivity analyses by increasing or decreasing the significant assumptions and evaluated the potential impact on the fair value.

In addition, we tested the reconciliation of the fair value of the asset group developed by management to the market capitalization of the Company as of the valuation date.

We determined that there are no critical audit matters.

/s/ RBSM, LLP

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Larkspur, California

March 24, 2023

April 1, 2024

PCAOB ID Number 587

New York, NY Washington DC Las Vegas, NV, San Francisco, CA Athens, GRE Beijing, CHN Mumbai, and Pune IND

Member ANTEA INTERNATIONAL with offices worldwide

JAGUAR HEALTH, INC.

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Current assets:

Accounts receivable

Accounts receivable, net

Other receivable

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Accrued liabilities

Warrant liability

Operating lease liability, current

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Operating lease liability, net of current portion

Notes payable, net of discount, net of current portion (includes hybrid instrument designated at Fair Value Option amounting to $ 7.8 million as of December 31, 2022 and December 31, 2021, respectively)

Notes payable, net of discount, net of current portion (includes notes designated at Fair Value Option amounting to $ 31.0 million as of December 31, 2023 and $ 7.8 million December 31, 2022, respectively)

Total liabilities

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Stockholders' equity (deficit)

Series B-2 convertible preferred stock:

10,165 shares authorized at December 31, 2022 and December 31, 2021;

zero shares issued and outstanding at December 31, 2022 and December 31, 2021

Series C perpetual preferred stock:

1,011,000 shares authorized at December 31, 2022 and December 31, 2021;

zero shares issued and outstanding at December 31, 2022 and December 31, 2021

Series E perpetual preferred stock:

4,475,074 shares authorized at December 31, 2022 and December 31, 2021;

Series G convertible preferred stock:

$ 0.0001 par value;

137 and zero shares designated from 10,000,000 preferred stock authorized at December 31, 2023 and December 31, 2022;

122 and zero shares issued and outstanding at December 31, 2023 and December 31, 2022

Series H convertible preferred stock:

$ 0.0001 par value;

105 and zero shares designated from 10,000,000 preferred stock authorized at December 31, 2023 and December 31, 2022;

zero shares issued and outstanding at December 31, 2023 and December 31, 2022

Series I convertible preferred stock:

$ 0.0001 par value;

118 and zero shares designated from 10,000,000 preferred stock authorized at December 31, 2023 and December 31, 2022;

56 and zero shares issued and outstanding at December 31, 2023 and December 31, 2022

Common stock - voting:

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(In thousands, except share and per share data)

Product revenue

Total revenue

Product revenue, net

Operating expenses

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General and administrative

Series 3 warrants inducement expense

ELOC warrants inducement expense

Impairment loss on intangible assets

Total operating expenses

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Interest expense

Loss on extinguishment of debt

Change in fair value of financial instruments and hybrid instrument designated at Fair Value Option

Other income (expense)

Change in fair value of freestanding and hybrid financial instruments designated at Fair Value Option

Gain (loss) on extinguishment of debt

Loss before income tax

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Net loss attributable to common stockholders

Net loss per share, basic and diluted

Weighted-average common shares outstanding, basic and diluted

Net loss per share, basic

Net loss per share, diluted

Weighted-average common stock outstanding, basic

Weighted-average common stock outstanding, diluted

The accompanying notes are an integral part of these consolidated financial statements.

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(In thousands, except share and per share data)

Other comprehensive loss

Other comprehensive income (loss)

Net comprehensive loss

Common stockholders:

Net loss attributable to common stockholders

Other comprehensive loss attributable to common stockholders

Translation adjustments

Net loss and comprehensive loss

Net comprehensive loss attributable to common stockholders

Non-controlling interests:

Net loss attributable to non-controlling interests

Other comprehensive loss attributable to non-controlling interests

Translation adjustments

Net comprehensive loss attributable to non-controlling interests

The accompanying notes are an integral part of these consolidated financial statements.

JAGUAR HEALTH, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

preferred stock

Stock - voting

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Balances as of January 1, 2022

Shares issued on exercise of Series 1, Series 2, and 2019 Bridge Note Warrants

Shares issued in PIPE financing

Shares issued in At the Market offering, net of issuance and offering costs of $ 465

Shares issued to Iliad in exchange of notes payable and accrued interest

Shares issued to third party for services

Shares issued in registered public offering, net of issuance and offering costs of $ 2,550

Shares issued in extinguishment of Exchange Note 2

Shares issued on exercise of Series 3 warrants

Shares issued upon exercise of stock options

Shares issued on conversion of Napo merger common shares

Acquisition of a subsidiary

Fractional shares

Warrants issued to Oasis for ELOC amendment, net of offering costs of $ 48

Common stock issued in At the Market offering, net of issuance and offering costs of $ 103

Common stock issued to Iliad in exchange of notes payable and accrued interest

Common stock issued to Streeterville in exchange of notes payable and accrued interest

Shares issued to Synworld for services

Common stock issued upon exercise of restricted stock units

Common stock issued to other third party for services

Stock-based compensation

Translation loss

Balances as of December 31, 2022

The accompanying notes are an integral part of these consolidated financial statements.

preferred stock

Stock - voting

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Balances as of January 1, 2023

Shares issued in At the Market offering, net of issuance and offering costs of $ 103

Shares issued to Streeterville in exchange of notes payable and accrued interest

Shares issued to Iliad in exchange of notes payable and accrued interest

Shares issued to Synworld for services

Shares issued to other third party for services

Shares issued upon vesting and release of restricted stock units

Common stock issued in At the Market offering, net of issuance and offering costs of $ 242

Preferred stock issued in PIPE financing, net of issuance and offering costs of $ 12

Preferred stock issued to Streeterville in exchange of notes payable and accrued interest

Preferred stock issued to Irving in exchange of notes payable and accrued interest

Common stock issued to Iliad in exchange of notes payable and accrued interest

Common shares issued to Streeterville from conversion of Series H Preferred Stock

Common shares issued to Irving from conversion of Series I Preferred Stock

Common stock issued to Irving in exchange of notes payable and accrued interest

Common shares issued to Irving from conversion of Series H Preferred Stock

Common shares issued to from conversion of Series G Preferred Stock

Common stock issued upon exercise of restricted stock units

Common stock issued to other third party for services

Warrants issued to Irving in exchange of Standstill

Warrants issued in PIPE financing

Warrants issued to Iliad in exchange of Standstill

Warrants issued to Irving through Royal Global Amendment Exchange

Warrants issued to Streeterville through Royal Global Amendment Exchange

Warrants issued to Iliad through Royal Global Amendment Exchange

Stock-based compensation

Translation adjustments

Additional investment from non-controlling interests

Translation gain

Balances as of December 31, 2023

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Cash flows from operating activities

Net loss and comprehensive loss

Net comprehensive loss

Adjustments to reconcile net loss and comprehensive loss to net cash used in operating activities:

Amortization of debt issuance costs, debt discount, and non-cash interest expense

Change in fair value of freestanding and hybrid financial instruments designated at Fair Value Option

Stock-based compensation, vested and released restricted stock units and exercised stock options

Loss on extinguishment of debt

Depreciation and amortization expense

Shares issued in exchange for services

Depreciation and amortization expenses

Amortization of operating lease - right-of-use-asset

Change in fair value of financial instruments and hybrid instrument designated at Fair Value Option

Series 3 warrants inducement expense

ELOC warrants inducement expense

Derecognition of debt discount on settlement of receivables secured borrowing

Impairment loss on intangible assets

Shares issued in exchange for services

Share in joint venture's loss

(Gain) Loss on extinguishment of debt

Changes in assets and liabilities

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Total cash used in operating activities

Cash flows from investing activity

Cash flows from investing activities

Purchase of equipment

Costs incurred in software development activities

Total cash used in investing activity

Purchase of intangible assets

Total cash used in investing activities

Cash flows from financing activities

Proceeds from issuance of shares in At the Market offering, net of issuance and offering costs of $ 242 and $ 103 in 2023 and 2022, respectively

Proceeds from notes payable with Streeterville

Proceeds from issuance of warrants in PIPE financing

Investment from non-controlling interest

Proceeds from issuance of preferred stock in PIPE financing, net of issuance cost of $ 12

Payment of Tempesta Note

Repayment of insurance financing

Proceeds from issuance of shares in registered public offering, net of issuance and offering costs of $ 2,550

Proceeds from issuance of notes payable, net of issuance costs of $ 50

Proceeds from issuance of shares on conversion of Series 1, Series 2, and 2019 Bridge Note warrants

Proceeds from issuance of shares in PIPE financing

Noncontrolling interest

Proceeds from exercise of stock options

Repayment of receivables secured borrowing

Payment of ELOC warrants offering costs

Repayment of notes payable

Proceeds from notes payable with Streeterville

Total cash provided by financing activities

Effects of foreign exchange rate changes on assets and liabilities

Net (decrease) increase in cash

Net increase (decrease) in cash

Cash at beginning of the year

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Supplemental schedule of non-cash financing and investing activities

Shares issued to Iliad in exchange of notes payable and accrued interest

Insurance financing

Shares issued to Streeterville in exchange of notes payable and accrued interest

Recognition of operating lease - right-of-use asset and operating lease liability

Shares issued on exercise of Series 3 warrants

Shares issued in exchange of partial settlement of royalty interest

Preferred stock issued to Irving in exchange of notes payable and accrued interest

Common stock issued to Irving in exchange of notes payable and accrued interest

Warrants issued to Irving in exchange of Standstill

Preferred stock issued to Streeterville in exchange of notes payable and accrued interest

Common stock issued to Iliad in exchange of notes payable and accrued interest

First Insurance Financing

Warrants issued to Iliad in exchange of Standstill

Lease modification

Offering costs included in accounts payable and accrued liabilities

Umbrella Insurance Financing

Warrants issued to Irving due to Royal Interest Global Amendment

Warrants issued to Streeterville due to Royal Interest Global Amendment

Warrants issued to Iliad due to Royal Interest Global Amendment

Recognition of operating lease - right-of-use asset and operating lease liability

The accompanying notes are an integral part of these consolidated financial statements.

Jaguar Health, Inc.

Notes to Financial Statements

Notes to Consolidated Financial Statements

Organization and Business

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(“Jaguar” or the “Company”) was founded in San Francisco, California as a Delaware corporation on June 6, 2013 (inception).

The Company was a majority-owned subsidiary of Napo until the close of the Company's initial public offering on May 18, 2015.

The Company was a majority-owned subsidiary of Napo Pharmaceuticals (“Napo”) until the close of the Company's initial public offering on May 18, 2015.

The Company was formed to develop and commercialize first-in-class prescription and non-prescription products for companion animals.

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Minimum Stockholders’ Equity Requirement

On February 18, 2022 the Company received a letter from the Staff of Nasdaq indicating that the bid price of the Company’s common stock for the last 30 consecutive business days had again closed below the minimum $ 1.00 per share required for the continued listing under Nasdaq Listing Rule 5550(a)(2).

On January 23, 2023, the Company effected a one-for-seventy-five reverse split of the Company’ issued and outstanding shares of common stock, par value $ 0.0001 per share.

As a result of the Reverse Split every seventy-five shares of common stock issued and outstanding were automatically combined into one share of issued and outstanding common stock, without any change in the par value per share.

All information related to Common Stock, stock options, restricted stock units, warrants and earnings per share have been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented.

On February 7, 2023, the Company received a letter from the Nasdaq Office of General Counsel notifying that the minimum bid price deficiency had been cured and that the Nasdaq had determined to continue the listing of the Company’s common stock on the Nasdaq stock market.

On May 10, 2023, the Company received a letter from the Staff of Nasdaq indicating that the bid price for the Company’s common stock for the last 30 consecutive business days had closed below the minimum $ 1.00 per share required for continued listing under Nasdaq Listing Rule 5550(a)(2).

Under Nasdaq Listing Rule 5810(c)(3)(A), the Company has been granted a 180 -calendar day grace period, or until November 6, 2023, to regain compliance with the minimum bid price requirement.

The continued listing standard will be met if the Company evidences a closing bid price of at least $ 1.00 per share for a minimum of 10 consecutive business days during the 180 calendar-day grace period.

In order for Nasdaq to consider granting the Company additional time beyond November 6, 2023, the Company would be required, among other things, to meet the continued listing requirement for the market value of publicly held shares as well as all other standards for initial listing on Nasdaq, with the exception of the minimum bid price requirement.

If measured today, the Company would qualify for Nasdaq’s consideration of an extension because the Company currently has stockholders’ equity of at least $ 2.5 million.

In the event the Company does not regain compliance with the $ 1.00 bid price requirement by November 6, 2023, eligibility for Nasdaq’s consideration of a second 180 -day day grace period would be determined on the Company’s compliance with the above referenced criteria on November 6, 2023.

On November 8, 2023, the Company received a formal notice from the Staff of Nasdaq granting the Company an additional 180-day grace period, through May 6, 2024 to regain compliance with the $ 1.00 bid price requirement for the continued listing on the Nasdaq Capital Market.

Liquidity and Going Concern

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There is no assurance that the Company will have adequate cash balances to maintain its operations.

Although the Company plans to finance its operations and cash flow needs through equity and/or debt financing, collaboration arrangements with other entities, license royalty agreements, joint ventures, as well as revenue from future product sales, the Company does not believe its current cash balances are sufficient to funds its operating plan through one year from the issuance of these consolidated financial statements.

The Company has an immediate need to raise cash.

Although the Company plans to finance its operations and cash flow needs through equity and/or debt financing, collaboration arrangements with other entities, license royalty agreements, joint ventures, as well as revenue from future product sales, the Company does not believe its current cash balances are sufficient to fund its operating plan through one year from the issuance of these consolidated financial statements.

There can be no assurance that additional funding will be available to the Company on acceptable terms, or on a timely basis, if at all, or that the Company will generate sufficient cash from operations to adequately fund operating needs.

If the Company is unable to obtain an adequate level of financing needed for the long-term development and commercialization of our products, the Company will need to curtail planned activities and reduce costs.

Doing so will likely have an adverse effect on our ability to execute our business plan;

Doing so will likely have an adverse effect on the ability to execute the Company’s business plan;

accordingly, there is substantial doubt about the ability of the Company to continue in existence as a going concern.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The accompanying audited consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S.

The audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with U.S.

GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and include the accounts of the Company and its subsidiaries.

The consolidated financial statements have been prepared in accordance with US GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and include the accounts of the Company and its subsidiaries.

All inter-company transactions and balances have been eliminated in consolidation.

The reporting currency of the Company is the U.S.

The reporting currency of the Company is the US dollar.

Non-controlling interest

The Company consolidates the results of Napo Therapeutics, which was owned 88 % and 90 % by the Company and 12 % and 10 % by private investors as of December 31, 2023 and 2022, respectively.

The potential voting rights with a certainty of being exercised in its shares are included in the ownership percentage.

During the year ended December 31, 2023, an additional investment from a private entity amounting to € 1.1 million equivalent to $ 1.23 million resulted in the increase in non-controlling interest percentage.

Use of Estimates

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

GAAP requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its audited consolidated financial statements and the accompanying notes.

The accounting policies that reflect the Company’s more significant estimates and judgments and that the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results are the valuation of stock options, restricted stock units (“RSUs”), valuation of hybrid instruments designated at fair value option (“FVO”), valuation of warrant liabilities, acquired in-process research and development (“IPR&D”), and useful lives assigned to long-lived assets;

The preparation of the consolidated financial statements in conformity with US GAAP requires the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its audited consolidated financial statements and the accompanying notes.

The accounting policies that reflect the Company’s more significant estimates and judgments and that the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results are the valuation of stock options, restricted stock units (“RSUs”), valuation of freestanding and hybrid instruments designated at fair value option (“FVO”), valuation of warrant liabilities, acquired in-process research and development (“IPR&D”), and useful lives assigned to long-lived

impairment assessment of non-financial assets;

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Those estimates could change, and as a result, actual results could differ materially from those estimates.

In March 2020, the World Health Organization declared the COVID-19 outbreak to be a pandemic.

During the year ended December 31, 2022, the Company’s financial results were not significantly affected by the COVID-19 outbreak.

The Company has considered all information available as of the date of issuance of these financial statements and the Company is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities.

These estimates may change as new events occur and additional information becomes available.

The extent to which the COVID-19 outbreak affects the Company’s future financial results and operations will depend on future developments which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the outbreak, and current or future domestic and international actions to contain and treat it.

The Company’s cash on deposit may exceed United States federally insured limits at certain times during the year.

The Company maintains cash accounts with certain major financial institutions in the United States.

The Company’s cash on deposit may exceed the US and European federally insured limits at certain times during the year.

The Company maintains cash accounts with certain major financial institutions in the US and Europe.

The Company does not have cash equivalents as of December 31, 2023 and 2022.

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Accounts receivable is recorded net of allowances for discounts for prompt payment and credit losses.

The Company estimates an allowance for credit losses by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay.

The credit loss allowance was immaterial as of December 31, 2022 and 2021.The corresponding expense for the credit loss allowance is reflected in general and administrative expenses.

The Company utilizes a loss rate approach in determining its lifetime expected credit losses on receivables from customers.

This method calculates an estimate of credit losses based on historical experience, credit quality, age of the accounts receivable balances, and current and forecasted economic and business conditions that may affect a customer’s ability to pay.

In determining the loss rates, the Company evaluates information related to its historical losses, adjusted for existing conditions and further adjusted for the period of time that can reasonably be forecasted.

The facts and circumstances as of the balance sheet date are used to adjust the estimate for periods beyond those that can reasonably be forecasted.

The past due status of accounts receivable is determined based on the contractual due dates for payments.

Receivable is deemed past due when payment hasn’t been received 30 days after the contractual due date.

The credit loss allowance was immaterial as of December 31, 2023 and 2022.

The corresponding expense for the credit loss allowance is reflected in general and administrative expenses.

Current Expected Credit Losses

The Company recognizes an allowance for credit losses for financial assets carried at amortized cost to present the net amount expected to be collected as of the balance sheet date.

Such allowance is based on credit losses that are expected to arise over the contractual term of the asset, which includes consideration of historical credit loss information adjusted for current conditions and reasonable and supportable forecasts.

Changes in the allowance for credit losses are recorded as provision of (or reversal of) credit loss expense.

Assets are written off when the Company determines that such are deemed uncollectible.

Write-offs are recognized as a deduction from the allowance for credit losses.

Expected recoveries of amounts previously written off, not to exceed the aggregate of the amount previously written off, are included in determining the necessary allowance at the balance sheet date.

Concentrations

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For the years ended December 31, 2023 and 2022, substantially all of the Company’s revenue was derived from the sale of Mytesi.

In looking at sales by the Company to distributors whose net revenue percentage of total net revenue was equal to or greater than 10 %, for fiscal years 2022 and 2021, the Company earned Mytesi revenue primarily from three and one major pharmaceutical distributor(s) located in the United States, respectively.

In looking at sales by the Company to distributors whose net revenue percentage of total net revenue was equal to or greater than 10 %, for fiscal years 2023 and 2022, the Company earned Mytesi revenue

primarily from two major pharmaceutical distributor(s) located in the US, respectively.

Revenue earned from each major customer as a percentage of total revenue is as follows:

On September 3, 2021, the Company ended its engagement with Cardinal Health as its exclusive title model customer for commercial sales and fully implemented its limited distribution Specialty Pharmacy model.

Cardinal Health continues to provide third-party logistics services for Mytesi.

The Company is subject to credit risk from its accounts receivable related to its sales.

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The Company is subject to concentration risk from its suppliers.

The Company sources raw material used to produce the active pharmaceutical ingredient (“API”) in Mytesi from two suppliers and is dependent on a single third-

party contract manufacturer for the supply of API in Mytesi and a single third-party contract manufacturer as well for the supply of finished products for commercialization.

The Company sources raw material used to produce the active pharmaceutical ingredient (“API”) in Mytesi from two suppliers and is dependent on a single third-party contract as well for the supply of finished products for commercialization.

Other Risks and Uncertainties

The Company’s future results of operations involve a number of risks and uncertainties.

Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, obtaining second source suppliers, regulatory approval from the FDA or other regulatory authorities, the results of clinical trials and the achievement of milestones, market acceptance of the Company’s product candidates, competition from other products and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals.

Recent Global Events

Macroeconomic conditions, including the war in Ukraine and related sanctions, exchange rate and interest rate volatility, and inflationary pressures, will continue to evolve globally.

The greatest impact was a decline in Europe where the impacts of foreign currency exchange rates, the war in Ukraine, and energy inflation were the greatest.

The Company’s partially owned subsidiary in Italy, Napo Therapeutics, does not generate any revenue yet for the year ended December 31, 2022.

There were no significant changes in the subsidiary’s operations for the year ended December 31, 2022, because of these recent global events.

Silicon Valley Bank (SVB) Failure

On March 2023, SVB, has been closed by regulators after the bank’s announcement of a $ 1.8 billion securities loss following a deposit outflow and plans to raise $ 2.25 billion by selling its common and preferred stocks.

As a result, venture capital firms urged companies to withdraw their cash and investments from SVB to prevent being possibly caught-up of its failure.

After its close, SVB became under the receivership of FDIC.

As of December 31, 2022, the Company has no cash deposits nor investments within the bank and does not expect any impact from its cash deposits from its financial institutions.

The Company’s financial instruments include accounts receivable, accounts payable, accrued liabilities, warrant liability, operating lease liability, equity-linked financial instruments, and debt.

Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations including, but not limited to, war, rapid technological change, obtaining second source suppliers and manufacturers, regulatory approval from the US Food and Drug Administration (“FDA”) or other regulatory authorities, the results of clinical trials and the achievement of milestones, market acceptance of the Company’s product candidates, competition from other products and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals.

Other Global Events

Macroeconomic conditions around the world are subject to constant change, influenced by several factors, including persistently high inflation, structural weaknesses in the labor market, low productivity growth, and adverse weather conditions.

The UK's recession has severely impacted Europe's decline.

The Company’s subsidiary in Italy, Napo Therapeutics, has not generated any revenue for the year ending December 31, 2023.

Despite these recent global events, there have been no significant changes in the subsidiary's operations.

The Company’s financial instruments include accounts receivable, net, other receivable, accounts payable, accrued liabilities, operating lease liability and debt.

The recorded carrying amount of accounts receivable, accounts payable and accrued liabilities reflect their fair value due to their short-term nature.

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In accordance with the options presented in ASC 825-10, the Company elected to present the aggregate of fair value and non-fair-value amounts in the same line item in the consolidated balance sheets and parenthetically disclose the amount measured at fair value in the aggregate amount.

The fair values of the Company's financial instruments reflect the amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

The fair value estimates presented in these financial statements are based on information available to the Company as of December 31, 2023 and 2022.

Inventory is stated at the lower of cost or net realizable value.

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The Company’s policy is to capitalize costs for prelaunch inventories within the drug development phase that evidence that the product’s reasonably likely critical attributes for success are present and feasible, and the key causes of failures are absent based on management’s assumptions.

The costs that can be capitalized for pre-launch inventory are recorded as “Prepayments and Other Assets”.

Property and Equipment

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Costs of major additions and betterments are capitalized and depreciated on a straight-line basis over their estimated useful lives.

Upon retirement or sale, the cost and related accumulated depreciation of assets disposed of are removed from the accounts and any resulting gain or loss is included in the consolidated statements of operations.

Upon retirement or sale, the cost and related accumulated depreciation of assets disposed of are removed from the accounts and any resulting gain or loss is included in the audited consolidated comprehensive loss.

Software Developed for Internal Use

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The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objectives.

If the Company determines that an impairment trigger has been met, the Company evaluates the realizability of its long-lived assets (asset group) based on a comparison of projected undiscounted cash flows from use and eventual disposition with the carrying value of the related asset.

If the Company determines that events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable, the Company evaluates the realizability of its long-lived assets (asset group) based on a comparison of projected undiscounted cash flows from use and eventual disposition with the carrying value of the related asset.

Any write-downs (which are measured based on the difference between the fair value and the carrying value of the asset) are treated as permanent reductions in the carrying amount of the assets (asset group).

Based on this evaluation, the Company believes that, as of each of the balance sheet dates presented, none of the Company’s long-lived assets were impaired.

The Company’s had no impairment of long-lived assets for the years ended December 31, 2022 and 2021.

The Company evaluated the carrying value of its internal use software costs as at December 31, 2023 in accordance with ASC 360-10, Impairment of Long-lived Assets to be Held or Used .

Based on the evaluation, the Company determined that the internal use software costs – registry's carrying value as of December 31, 2023, were no longer recoverable and recorded a corresponding impairment loss.

The impairment loss was calculated as the difference between the registry's carrying value and its estimated fair value on December 31, 2023.

The fair value was determined using a discounted cash flow (“DCF”) model, a Level 3 evaluation technique under ASC 820, Fair Value Measurements .

The DCF model utilized entity-specific assumptions regarding future sales volume, pricing and costs.

These assumptions considered factors such as continuity of existing customer relationships, potential shifts in economic conditions and other relevant market influences.

The net cash flows generated by the model were then discounted to present value using a rate reflective of the time value of money and the inherent use associated with the expected cash flows.

The discount rate was based on the comparable debt instrument deemed appropriate by management.

Given the changing market conditions, there is a reasonable possibility that the estimates used to determine the registry's fair value may require adjustments in the near future.

Any such changes in assumptions could result in further impairment charges.

The Company recognized an expense for the year ended December 31, 2023, and a corresponding reduction in the carrying value of the internal use software-registry as a result of the impairment.

As at December 31, 2022, none of the Company’s long-lived assets were deemed impaired.

Indefinite-lived Intangible Assets

Acquired IPR&D are intangible assets acquired in the July 2017 Napo merger.

Under ASC 805, IPR&D are initially recognized at fair value and classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts.

Under ASC 805, Business Combinations, IPR&D are initially recognized at fair value and classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts.

During the development period, these assets will not be amortized as charges to earnings;

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An impairment loss is measured based on the excess of the carrying amount over the asset’s fair value.

The Company recorded an impairment of zero for the years ended December 31, 2022 and 2021.

The Company had no impairment of indefinite-lived intangible assets for the years ended December 31, 2023 and 2022.

The Company accounts for its leases in accordance with ASC 842, Leases .

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The Company elected to include both the lease and non-lease components as a single component and account for it as a lease.

Lease Modification

ASC 842 defines lease modification as a change to the terms and conditions of a contract that results in a change in the scope of or the consideration for a lease.

A lease modification can result in either a separate new contract that is accounted for separately from the original contract or a single modified contract.

The Company shall account for a modification to a contract as a separate contract when the modification grants the lessee an additional right of use not included in the original lease and the lease payments increase commensurate with the standalone price for the additional right of use, adjusted for the circumstances of the particular contract.

When the Company concludes that a lease modification should be accounted for as a new contract that is separate and apart from the original lease, the new contract should be evaluated for whether it is a lease or contains an embedded lease.

If the new contract is a lease or contains an embedded lease, the new lease should be accounted for as any other new lease.

The new lease is recorded on the commencement date of the new lease, which is the date the lessee has access to the leased asset.

If a lease modification is not accounted for as a separate contract, the Company should reassess whether the contract contains a lease.

If the modified contract is a lease or contains an embedded lease, a lessee should reallocate contract consideration, reassess the lease classification, remeasure the lease liability, and adjust the right-of-use asset.

Research and Development Expense

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Contracts and Agreements

Effective January 16, 2019, Napo engaged Cardinal Health SPS as its exclusive third-party logistics distribution agent for commercial sales for the Company’s Mytesi product and to perform certain other services which include, without limitation, storage, distribution, returns, customer support, financial support, Electronic Data Interchange and system access support (the “Exclusive Distribution Agreement”).

Cardinal Health continues to provide third-party logistics services for Mytesi.

The Company's Canalevia-CA1 and Neonorm products are primarily sold to distributors, who then sell the products to the end customers.

Since 2021, the Company has entered into two distribution agreements with established distributors to distribute the Company’s animal health products in the United States.

Since 2021, the Company has entered into two distribution agreements with established distributors to distribute the Company’s animal health products in the US.

The distribution agreements and the related purchase orders together meet the contract existence criteria under ASC 606-10-25-1.

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Product warranties are assurance-type warranties that do not represent a performance obligation.

For the Company’s human health product, Mytesi, the single performance obligation identified above is the Company’s promise to transfer Mytesi to specialty pharmacies, based on specified payment and shipping terms as outlined in the Exclusive Distribution Agreement.

Transaction price

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Net revenues from the sale of Mytesi were $ 9.6 million and $ 11.7 million for the years ended December 31, 2023 and 2022, respectively.

The Company recognized Canalevia-CA1 products revenues of $ 167,000 and zero for the years ended December 31, 2022 and 2021, respectively.

The Company recognized Canalevia-CA1 products revenues of $ 130,000 and $ 167,000 for the years ended December 31, 2023 and 2022, respectively.

The Company recognized Neonorm revenues of $ 42,000 and $ 48,000 for the years ended December 31, 2023 and 2022, respectively.

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Sales of Mytesi are recognized as revenue at a point in time when the products are delivered to the specialty pharmacies.

Net revenues from the sale of Mytesi to the specialty pharmacies were $ 10.3 million and $ 993,000 for the years ended December 31, 2022 and 2021, respectively.

Net revenues from the sale of Mytesi to the specialty pharmacies were $ 8.1 million and $ 10.3 million for the years ended December 31, 2023 and 2022, respectively.

Collaboration Revenue

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Revisions in these values or estimations have the effect of increasing or decreasing collaboration revenue in the period of revision.

On September 24, 2018, the Company entered into a Distribution, License and Supply Agreement (“License Agreement”) with Knight Therapeutics ("Knight").

The License Agreement has a term of 15 years (with automatic renewals) and provides Knight with an exclusive right to commercialize current and future Jaguar human health products (including crofelemer, NP-300, and any product containing a proanthocyanidin or with an anti-secretory mechanism) in Canada and Israel.

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Knight will pay a transfer price for all licensed products, and upon achievement of certain regulatory and sales milestones, the Company may receive payments from Knight in an aggregate amount of up to approximately $ 18 million payable throughout the initial 15 -year term of the agreement.

The Company did not have any license revenues for the years ended December 31, 2022 and 2021.

The Company did not have any significant license revenues for the years ended December 31, 2023 and 2022.

Modifications to Liability-classified Instruments

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A debt modification or exchange transaction that is not within the scope of the ASC 470-60 is accounted for under ASC 470-50 to determine if the transaction is a mere modification or an extinguishment.

For the year December 31, 2022, the Company entered into another amendment on the terms of its October 2020 and March 2021 Purchase Agreements (see Note 7).

For the year ended December 31, 2023, the Company entered amendments to the terms of the October 2020 Royalty Interest, December 2020 Royalty Interest, and August 2022 Royalty Interest.

For the year December 31, 2022, the Company entered into another amendment on the terms of its October 2020 and March 2021 Purchase Agreements.

The cumulative impact of these amendments significantly modified the terms of the royalty interest resulting to extinguishments (see Note 7).

Modifications to Equity-classified Instruments

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If the amendment results in a modification, the Company follows the model in either ASC 718 or ASC 470-50, depending on the nature of the amendment.

The Company did not modify any equity-classified preferred stock in the year 2022 and 2021.

The Company did not modify any equity-classified preferred stock in the years 2023 and 2022.

Stock-Based Compensation

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The Company has adopted the provisions of ASC 740, Income Taxes Related to Uncertain Tax Positions .

Under these principals, tax positions are evaluated in a two-step process.

Under these principles, tax positions are evaluated in a two-step process.

The Company first determines whether it is more-likely-than-not that a tax position will be sustained upon examination.

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Exchange gains or losses from remeasuring transactions and monetary accounts in a currency other than the functional currency are included in current earnings.

For certain subsidiaries, translation adjustments resulting from the process of translating the functional currency of subsidiary financial statements into the U.S.

Dollar reporting currency.

For certain subsidiaries, translation adjustments resulting from the process of translating the functional currency of subsidiary financial statements into the US Dollar reporting currency.

These translation adjustments are

reported separately and accumulated in the consolidated balance sheets as a component of accumulated other comprehensive loss.

reported separately and accumulated in the consolidated balance sheets as a component of accumulated other comprehensive income (loss).

Comprehensive Loss

The Company follows ASC 220, Comprehensive Income , which establishes standards for reporting and displaying comprehensive income and its components (revenue, expenses, gains and losses) in a full set of general-purpose financial statements.

For the years ended December 31, 2022 and 2021, the amount of other comprehensive losses from translation adjustments were $ 680,000 and zero , respectively.

For the years ended December 31, 2023 and 2022, the amount of other comprehensive income (loss) from translation adjustments were $ 31,000 and ($ 680,000 ), respectively.

Basic and Diluted Net Loss Per Common Share

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Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

The Company adopted the standard on January 1, 2022.

The adoption of this standard did not have a material effect on the Company’s audited consolidated financial statements and related disclosures.

In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modification or Exchanges of Freestanding Equity-Classified Written Call Options – a consensus of the FASB Emerging Issues Task Force.

The ASU provides a principles-based framework to determine whether an issue should recognize the modification or exchange as an adjustment to equity or an expense.

The Company adopted the standard on January 1, 2022.

The adoption of this standard did not have a material effect on the Company’s audited consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

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The update is effective for the Company beginning January 1, 2023 with early adoption permitted.

The Company adopted the standard on January 1, 2023.

The adoption of this standard did not have a material effect on the Company’s audited consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06—Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative.

The main objective of the amendment is to modify the disclosure or presentation requirements of various Topics in the Codification.

Certain amendments represent clarifications to or technical corrections of the current requirements.

to eliminate disclosure requirements that were redundant, duplicative, overlapping, outdated, or superseded.

The effective date for each amendment will be when the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The Company is still evaluating the impact of the adoption of this standard.

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, to provide specific guidance to eliminate diversity in practice on how to recognize and measure acquired contract assets and contract liabilities from revenue contracts from customers in a business combination consistent with revenue contracts with customers not acquired in an acquisition.

The amendments in this update provide that the acquirer should consider the terms of the acquired contracts, such as timing of payment, identify each performance obligation in the contracts, and allocate the total transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception (that is, the date the acquiree entered into the contracts) or contract modification to determine what should be recorded at the acquisition date.

These amendments are effective for the Company beginning with fiscal year 2023.

The impact of the adoption of the amendments in this update will depend on the magnitude of any customer contracts assumed in a business combination in 2023 and beyond.

Fair Value Measurements

ASC 820 "Fair Value Measurements,"

defines fair value, establishes a framework for measuring fair value under U.S.

GAAP and enhances disclosures about fair value measurements.

Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

ASC 820, Fair Value Measurements ("ASC 820"), defines fair value, establishes a framework for measuring fair value under US GAAP and enhances disclosures about fair value measurements.

on the measurement date.

Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs.

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● Level 3 – Unobservable inputs that reflect the reporting entity’s own assumptions.

The following tables set forth the fair value of the Company’s consolidated financial instruments that were measured at fair value on a recurring basis as of December 31, 2022 and 2021:

The following tables set forth the fair value of the Company’s consolidated financial instruments that were measured at fair value as of December 31, 2023 and 2022:

December 31, 2023

(in thousands)

Warrant liability

Streeterville 2

Streeterville Note

2 unchanged sentences

(in thousands)

Warrant liability

Streeterville Note

Total fair value

The change in the estimated fair value of the Level 3 liability is summarized below:

The change in the estimated fair value of the Level 3 liabilities is summarized below:

December 31, 2023

(in thousands)

Warrant liability

Streeterville 2

Streeterville Note

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Ending fair value of Level 3 liability

Warrant Liability

The warrants associated with the Level 3 warrant liability were valued at zero and $ 1,000 , respectively, in the Company’s audited consolidated balance sheet.

Warrants as at December 31, 2022 and 2021 were computed using the Black-Scholes-Merton pricing model.

December 31, 2022

(in thousands)

Streeterville 2

Streeterville Note

The fair value of the Streeterville Note at January 13, 2021, date of issuance and as of December 31, 2022 and 2021 amounting to $ 6.0 million and $ 7.8 million, respectively, were based on the weighted average discounted expected future cash flows representing the terms of the note, discounting them to their present value equivalents.

This was classified as Level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including the Company’s own credit risk.

The Company determined and performed the valuations of the Streeterville Note with the assistance of an independent valuation service provider.

On a quarterly basis, the Company considers the main Level 3 inputs used as follows:

● Discount rate for the Streeterville note was determined using a comparison of various effective yields on bonds as of the valuation date.

Beginning fair value of Level 3 liability

Change in fair value

Ending fair value of Level 3 liability

The fair value of the Streeterville Note recognized as a Level 3 liability at the date of issuance and as of December 31, 2023 amounted to $ 7.8 million and $ 9.8 million, respectively.

The fair value of the remaining Level 3 liabilities at the election date and as of December 31, 2023 amounted to $ 20.2 million and $ 21.0 million.

The fair values were based on the weighted average discounted expected future cash flows representing the terms of the notes, discounting them to their present value equivalents.

The notes were classified as Level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including the Company’s own credit risk.

The Company determined and performed the valuations with the assistance of an independent valuation service provider.

On a quarterly basis, the Company considers the main Level 3 inputs for the hybrid instrument used derived as follows:

● Discount rate which was determined using a comparison of various effective yields on bonds as of the valuation date

● Market indications for vouchers, which affect the Return Bonus from the sale of Tropical Disease Priority Review Voucher (“TDPRV”)

● Weighted probability of cash outflows was estimated based on the entity's knowledge of the business and how the current economic environment is likely to impact the timing of the cash outflows, attributed to the different repayment features of the note.

The following table summarizes the quantitative information about the significant unobservable inputs used in Level 3 fair value measurement:

● Weighted probability of cash outflows which was estimated based on the entity's knowledge of the business and how the current economic environment is likely to impact the timing of the cash outflows, attributed to the different repayment features of the notes.

The following table summarizes the quantitative information about the significant unobservable inputs used in Level 3 fair value measurement of the hybrid instrument:

Range of Inputs

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$ 67.5 million to $ 350 million ($ 100 million)

If expected cash flows by Management considered the lowest amount of market indications for vouchers, FV would have decreased by $ 940,000 .

If expected cash flows by Management considered the lowest amount of market indications for vouchers, FV would have decreased by $ 1.34 million.

If expected cash flows by Management considered the highest amount of market indications for vouchers, FV would have increased by $ 10.38 million.

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If expected cash flows by Management considered the scenario with the greatest amount of indicated value, FV would have increased by $ 3.18 million.

For the additional notes designated at FVO that are freestanding, the Company considers only the discount rate which was determined using a comparison of various effective yields on bonds as of valuation date.

The following table summarizes the quantitative information about the significant unobservable inputs used in Level 3 fair value measurement for the remaining instruments that are classified as freestanding:

Range of Inputs

(probability-weighted average)

Relationship of unobservable inputs

Unobservable Inputs

to fair value

Risk Adjusted Discount Rate

9.02 %- 26.59 % ( 26.59 %)

If discount rate is adjusted to total of additional 100 basis points (bps), fair value would have decreased by ($ 583,464 ).

If discount rate is adjusted to total deduction of 100 bps, fair value would have increased by $ 600,531 .

Fair Value Option

Beginning January 1, 2021, the Company elected to apply the FVO accounting to selected financial instruments to align the measurement attributes of those instruments under U.S.

GAAP and to simplify the accounting model applied to those financial instruments.

The Company elected to apply FVO accounting to the entire class of hybrid instruments, including structured notes, of which there are assessed embedded derivatives that would be eligible for bifurcation.

Changes in the fair value of FVO assets and liabilities as well as the mark-to-market adjustment on the entire class of hybrid instruments, including derivatives and the net realized gains or losses on these instruments are reported in the change in fair value of financial instruments and hybrid instrument designated at FVO in the consolidated statements of operations.

For the year ended December 31, 2022, the Company did not note any fair value movement on FVO liabilities attributable to any instrument-specific credit risk, which should be recorded in other comprehensive income (loss).

Hybrid Instruments

The Company elected to apply FVO accounting to all of the hybrid instruments issued, including structured notes.

The valuation of the hybrid instruments is predominantly driven by the derivative features embedded within the instruments.

The Company determined and performed the valuations of the hybrid instruments with the assistance of an independent valuation service provider.

The valuation methodology utilized is consistent with the income approach for estimating the fair value of the interest-bearing portion of the instrument and the related derivatives.

Cash flows of

the hybrid instruments in their entirety, including the embedded derivatives, are discounted at an appropriate rate for the applicable duration of the instrument.

Interest on the interest-bearing portion of the instrument that is held to maturity is aggregated as gain (loss) on instruments designated at fair value and related derivatives in the change in fair value of financial instruments and hybrid instruments designated at FVO in the consolidated statements of operations.

The Company elected to apply the FVO accounting to certain freestanding instruments and to the entire class of hybrid instruments, including structured notes, of which there are assessed embedded derivatives that would be eligible for bifurcation, to align the measurement attributes of those instruments under US GAAP and to simplify the accounting model applied to these financial instruments.

The valuations of these instruments were predominantly driven by the discount rate and the derivative features embedded within the instruments.

The Company determined and performed the valuations of the freestanding and hybrid instruments with the assistance of an independent valuation service provider.

The valuation methodology utilized is consistent with the income approach for estimating the fair value of the interest-bearing portion of the instruments and the related derivatives.

Cash flows of the financial instruments in their entirety, including the embedded derivatives, are discounted at an appropriate rate for the applicable duration of the instrument.

Interests on the interest-bearing portion of the instruments that are held to maturity and mark-to-market adjustments are aggregated in the change in fair value of freestanding and hybrid financial instruments designated at FVO in the consolidated statements of operations.

For the year ended December 31, 2023 and 2022, the Company did not note any fair value movement on FVO liabilities attributable to any instrument-specific credit risk, which should be recorded in other comprehensive income (loss).

The following table summarizes the fair value and unpaid principal balance for items the Company accounts under FVO:

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Unpaid Principal Balance

Fair Value Over (Under) Unpaid Principal Balance

Accrued Interest

Fair Value Over (Under) Outstanding Balance

At December 31, 2023

Hybrid Instrument:

Streeterville 2

Streeterville Note

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Unpaid Principal Balance

Fair Value Over (Under) Unpaid Principal Balance

Accrued Interest

Fair Value Over (Under) Outstanding Balance

At December 31, 2022

Hybrid Instrument:

Streeterville Note

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Commitments and Contingencies

August 31, 2020, the Company entered into an office sublease of approximately 5,263 square feet of office space in San Francisco.

The term of the sublease expired on May 31, 2021.

The rent sublease is $ 15,000 per month beginning on October 1, 2020, which includes operating expenses and taxes.

The Company recognizes rent expense on a straight-line basis over the non-cancellable lease period.

Rent expense, included in general and administrative expenses in the consolidated statements of operations, was zero and $ 75,000 for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, there were no remaining commitment under the lease.

On April 6, 2021, the Company entered into an office lease agreement of approximately 10,526 square feet of office space in San Francisco, inclusive of office space covered under the previous sublease agreement.

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This option was not included as part of the lease term as the Company was not reasonably certain to exercise it, hence the lease term only includes the noncancellable period of three years plus the period of early occupancy.

The base rent under the lease were $ 42,000 monthly for the first 12 months, $ 43,000 monthly for the next 12 months and $ 45,000 for the last twelve months.

The base rents under the lease were $ 42,000 monthly for the first 12 months, $ 43,000 monthly for the next 12 months and $ 45,000 for the last twelve months.

The lease agreement only contained one lease component, that is, the lease of the office space.

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The lease was classified as an operating lease.

On October 7, 2021, the Company entered into an agreement for the lease of office premises from November 1, 2021 to April 30, 2022, subject to automatic renewal for subsequent periods until terminated by either party.

On October 7, 2021, the Company entered into an agreement for the lease of office premises, one located on the 4 th floor of the building (“Suite 400”) and the other one on the 6 th floor (“Suite 600”), from November 1, 2021 to April 30, 2022, subject to automatic renewal for subsequent periods until terminated by either party.

Base rent amounted to € 10,000 or approximately $ 10,500 .

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Upon the happening of certain specified events, the lessor may immediately withdraw from the contract.

The Company is required leave the occupied spaces immediately in the same condition in which they were found in the event of contract termination or expiry.

The Company paid deposit of € 20,000 or approximately $ 21,000 to the lessor.

The Company is required to leave the occupied spaces immediately in the same condition in which they were found in the event of contract termination or expiry.

The Company paid a deposit of € 20,000 , or approximately $ 21,000 , to the lessor.

On January 26, 2022, the lease agreement was amended whereby the term was extended by 20 months from May 1, 2022 to December 31, 2023.

All other contract provisions remained the same.

On October 25, 2023, the Company entered into a second amendment to extend the lease of the office premises whereby Suite 600 shall extend until February 28, 2025, while, the Suite 400 shall be accounted for as a separate lease commencing on September 1, 2023, and expiring on August 31, 2030.

Under the second lease amendment, the office lease premises were separately remeasured with Suite 400 measuring approximately 5,735 square feet while Suite 600 at 5,263 square feet.

The base rent for Suite 400 was $ 18,000 monthly on the first two years, $ 18,000 monthly on the third and fourth year, $ 19,000 monthly on the fifth and sixth year, $ 20,000 monthly on the seventh and eighth year and $ 21,000 on the last year.

Accordingly, the Suite 600’s base rent was amended into $ 22,000 monthly on its remaining terms.

The option to renew at the end of the lease term was amended into one -to- five-year period from the original one -to- three-year period.

All other contract provisions remained the same.

On October 10, 2021, the Company also entered into a short-term office lease in Milan, Italy.

1 unchanged sentence

On January 26, 2022, the lease agreement was amended whereby the term was extended by 20 months from May 1, 2022 to December 31, 2023.

On September 12, 2023, the Company entered into a second lease amendment whereby the term was extended by another year from January 1, 2024 to December 31, 2024.

The Company recognizes rent expense on a straight-line basis over the non-cancellable lease period.

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Early termination of the contracts requires the payment of specified amounts.

On December 24, 2021, the Company entered into the first amendment of the lease of office space in San Francisco.

The expiration of the lease was extended to February 28, 2025 due to the change in the commencement date of one of the leased premises to March 1, 2022.

The base rent under the lease amendment remained the same but will only be due starting March 1, 2022.

The rent in one of the leased premises currently being occupied by the Company was and will still be $ 21,000 until the new commencement date.

The lease amendment constituted a lease modification where the Company remeasured the original lease liability using a discount rate determined at the effective date of the modification and the amount of remeasurement of the lease liability was recognized as an adjustment to the corresponding right-of-use asset without affecting profit or loss.

On January 25, 2022, the Company entered into an agreement for the lease of office premises from March 1, 2022 to December 31, 2023, subject to automatic renewal for subsequent periods until terminated by either party.

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For the years ended December 31, 2023 and 2022, cash paid for operating lease liabilities recognized under operating cash flows amounted to $ 394,000 and $ 315,000 , respectively.

Non-cash investing and financing activities for the years ended December 31, 2022 and 2021 include addition to right-of-use asset obtained from new operating liabilities amounting to $ 365,000 and $ 1.1 million, respectively, and lease modification amounting to zero and $ 91,000 respectively.

Non-cash investing and financing activities for the years ended December 31, 2023 and 2022 include addition to right-of-use asset obtained from new operating liabilities amounting to $ 30,000 and $ 365,000 , respectively, and lease modification amounting to $ 441,000 and zero respectively.

The following table summarizes the undiscounted cash payment obligations for the operating lease liability:

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Operating lease liability, net of current portion

Rent and lease expense included in the general and administrative expenses in the audited consolidated statements of operations for the year ended December 31, 2022 and December 31, 2021 was approximately $ 629,000 and $ 282,000 , respectively.

Purchase Commitment

On September 3, 2020, the Company entered into a manufacturing and supply agreement (the “Agreement”) with Glenmark Life Sciences Limited (“Glenmark”), pursuant to which Glenmark will continue to serve as the Company’s manufacturer of crofelemer for use in Mytesi, the Company’s human prescription drug product approved by the U.S.

Food and Drug Administration, and for other crofelemer-based products manufactured by the Company or its affiliates for human or animal use.

The term of the Agreement is approximately 2.5 years (i.e., until March 31, 2023) and may be extended for successive two-year renewal terms upon mutual agreement between the parties

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No payments have been made to date.

Joint Venture - Magdalena Biosciences, Inc.

In January 2023, Jaguar and Filament Health (“Filament”), with Funding from One Small Planet, formed the US-based joint venture Magdalena Biosciences, Inc.

(“Magdalena”).

Magdalena’s focus is on the development of novel, natural prescription medicines derived from plants for mental health indications including, initially, attention-deficit/hyperactivity disorder (“ADHD”) in adults.

The goal of the collaboration is to extend the botanical drug development capabilities of Jaguar and Filament in order to develop pharmaceutical-grade, standardized drug candidates for mental health disorders, and to partner with a potential future licensee to develop and commercialize these novel plant-based drugs.

This venture aligns with Jaguar's mental health Entheogen Therapeutics Initiative (“ETI”) and Filament's corporate mission to develop novel, natural prescription medicines from plants.

will leverage Jaguar's proprietary medicinal plant library and Filament's proprietary drug development technology.

Jaguar’s library of 2,300 highly characterized medicinal plants and 3,500 plant extracts, all from firsthand ethnobotanical investigation by Jaguar and members of the ETI Scientific Strategy Team, is a key asset Jaguar has generated over 30 years that bridges the knowledge of traditional healers and Western medicine.

Magdalena holds an exclusive license to plants and plant extracts in Jaguar's library, not including any sources of crofelemer or NP-300, for specific indications and is in the process of identifying plant candidates in the library that may prove beneficial for addressing indications such as ADHD.

The Company accounted for its 40 % investment in Magdalena under the equity method.

The summarized income statement information for the year ended December 31, 2023 of Magdalena is as follows:

(in thousands)

Operating expenses

Loss before income tax

Income tax expense

Net loss attributable to the Company

Contingencies

From time to time, the Company maybe a party to various legal actions, both inside and outside the U.S., arising in the ordinary course of its business or otherwise.

From time to time, the Company maybe a party to various legal actions, both inside and outside the US, arising in the ordinary course of its business or otherwise.

The Company accrues amounts, to the extent they can be reasonably estimated, that the Company believes will result in a probable loss (including, among other things, probable settlement value), to adequately address any liabilities related to legal proceedings and other loss contingencies.

A loss or a range of loss is disclosed when it is reasonably possible that a material loss will incur and can be estimated, or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision.

The Company did not have any material accruals for any currently active legal action in its consolidated

balance sheets as of December 31, 2022, as the Company could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure.

The Company did not have any material accruals for any currently active legal action in its consolidated balance sheets as of December 31, 2023, as the Company could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure.

Balance Sheet Components

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Prelaunch Inventory

Costs capitalized for the Company’s lyophilized drug amounting to $ 2.1 million and zero as of December 31, 2022, and 2021 are included in the prepayments and other assets account.

As of December 31, 2022, the Company has filed the POC for the lyophilized drug to European FDA and expects approval at the end of the first half of 2023.

Upon approval, the prelaunch inventory shall be reclassed as part of the Company’s inventory.

Costs capitalized for the Company’s lyophilized drug amounting to $ 2.8 million and $ 2.1 million as of December 31, 2023, and 2022 are included in the prepayments and other assets account.

The Company’s

proof-of-concept (“POC”) data is expected to be completed by the end of 2024.

Upon approval, the prelaunch inventory shall be reclassified as part of the Company’s inventory.

Property and Equipment, net

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Lab equipment

Clinical equipment

Furniture and fixtures

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Internal use software costs - registry

Accumulated internal use software costs impairment

Accumulated internal use software costs amortization

Internal use software costs - registry, net

Accumulated patents amortization

Total intangible assets, net

Amortization expense of finite-lived intangible assets was $ 1.8 million and $ 1.7 million for the years ended December 31, 2022 and 2021.

Amortization expense of finite-lived intangible assets was $ 2.0 million and $ 1.8 million for the years ended December 31, 2023 and 2022, respectively.

During 2023, the Company experienced lower-than-anticipated sales growth for Canalevia and Neonorm, its two primary animal health products.

This triggered a reevaluation of the carrying value of the entire asset group associated with these products.

Based on the evaluation, the Company determined that the internal use software costs - registry carrying value of $ 866,000 , was no longer recoverable.

For the year ended December 31, 2023, The Company wrote the internal use software costs – registry down to its estimated fair value of $ 495,000 and recognized an impairment loss on intangible asset of $ 371,000 .

No assets were determined to be impaired as at December 31, 2022.

The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite lives as of December 31, 2023:

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Accrued interest

Accrued audit and tax services

Accrued vacation

Accrued payroll and commission

Accrued legal costs

Accrued audit and tax services

Accrued local tax

Accrued payroll tax

Accrued legal costs

Accrued chargebacks and discounts

Accrued distributor services fees

Accrued consulting

Accrued payroll tax

Accrued other

Other accrued liabilities as of December 31, 2022 largely consist of other accrued interests, contract fees and scientific advisory board fees while other accrued liabilities as of December 31, 2021 significantly comprise of contract fees and scientific advisory board fees.

Other accrued liabilities as of December 31, 2023 and 2022 largely consist of consultancy fees, contract fees and scientific advisory board fees.

Notes payable at December 31, 2023 and 2022 consisted of the following:

(in thousands)

Notes designated at Fair Value Option

Royalty Interest

Streeterville Note

Insurance Financing

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(in thousands)

Years ended December 31,

Periods ended December 31,

unamortized discount and debt issuance costs

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Beginning on the 18-month anniversary of the Purchase Price Date and continuing until 24-month anniversary of the Purchase Price Date, the monthly Royalty Payment shall be the greater of (a) $ 600,000 and (b) the actual Royalty Payment amount Iliad is entitled to for such month.

Beginning on the 24-month anniversary of the Purchase Price Date and continuing until the Royalty Repayment Amount has been paid in full, the monthly Royalty Payment shall be the greater of (a) $ 750,000 , and (b) the actual Royalty Payment amount Iliad is entitled to for such month.

Beginning on the 24-month anniversary of the Purchase Price Date and continuing until the Royalty Repayment Amount has been paid in full, the

monthly Royalty Payment shall be the greater of (a) $ 750,000 , and (b) the actual Royalty Payment amount Iliad is entitled to for such month.

The Royalty Interest amount of $ 12.0 million is classified as debt, net of a $ 6.0 million discount.

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On November 18, 2022, the Company entered into another exchange agreement with Iliad, pursuant to which the parties agreed to partition $ 715,000 from the outstanding balance of the royalty interest.

The parties further agreed

to exchange the partitioned royalty for 73,333 shares of the Company’s stock.

The parties further agreed to exchange the partitioned royalty for 73,333 shares of the Company’s stock.

The exchange consisted of Iliad surrendering the partitioned royalty in exchange for the exchange shares.

Although there were exchanges that occurred within the 12-month period prior to the May 13, 2022, July 25, 2022 and November 18, 2022 exchanges, these were previously accounted for as extinguishment and, therefore, cumulative assessment was not anymore performed.

The exchange agreements were accounted for as a modification.

As of December 31, 2022, the forecasted future revenues changed which resulted to a new discount rate of 41.35 %.

Interest expense for the years ended December 31, 2022 and 2021 was $ 3.6 million and $ 4.2 million, respectively.

As of December 31, 2022 and 2021, the carrying value of the debt was $ 7.3 million and $ 6.3 million, respectively.

On March 17 and 23, 2023, the Company entered into another exchange agreement with Iliad, pursuant to which the parties agreed to partition $ 992,000 and $ 227,000 , respectively from the outstanding balance of the royalty interest.

The parties further agreed to exchange the partitioned royalty for 14,533 and 3,733 shares, respectively of the Company’s stock.

The exchange consisted of Iliad surrendering the partitioned royalty in exchange for the exchange shares.

The exchanges that occurred within the 12-month period prior to May 13, 2022 exchange were previously accounted for as extinguishment, therefore, cumulative assessment was not performed anymore.

On May 8, 2023, the Company entered into a standstill agreement (as amended, the “Standstill Agreement”) with Iliad, Uptown Capital, LLC (f/k/a Irving Park Capital, LLC) (“Uptown”) and Streeterville Capital, LLC (“Streeterville”, and together with Iliad and Uptown, collectively, “Investor”) to allow the Company to refrain from making royalty payments with respect to four outstanding royalty interests issued by the Company to Investor dated October 8, 2020, December 22, 2020, March 8, 2021, and August 24, 2022, respectively (each, a “Royalty Interest” and collectively, the “Royalty Interests”), including any royalty payments due and payable as of May 8, 2023 (the ”Standstill Date”), and refrain from buying, selling, or otherwise trading in the Company’s common stock for a period beginning on the Standstill Date and ending on the earliest of (a) the date that is six months following the Standstill Date (b) the date of the public announcement of the probability value in Jaguar’s OnTarget Phase 3 clinical trial of crofelemer for prophylaxis of cancer therapy-related diarrhea (c) and the date of any offering or sale of any debt or equity securities, including without limitation any at-the-market offering (the “Standstill Period”), but excluding any exempt issuances.

As a material inducement and consideration for Investor’s agreement to enter into the Standstill Agreement, the Company issued (i) Iliad warrants to purchase up to 826,738 shares of the common stock, (ii) Uptown

warrants to purchase up to 1,097,756 shares of the common stock, and (iii) Streeterville warrants to purchase up to 1,892,808 shares of the common stock, at an exercise price of $ 0.48 per share.

On June 28, 2023, the Company entered into the first amendment to the Standstill Agreement, pursuant to which the Standstill Agreement was amended to, among other things, permit (i) the Company to issue an aggregate of 105 shares of the Company’s Series H Convertible Preferred Stock to Investor in exchange for a $ 756,992 reduction in the outstanding balance of the December 2020 Royalty Interest and a $ 1,726,888 reduction in the outstanding balance of the August 2022 Royalty Interest (the “Exchange Transaction”) without triggering the termination of the Standstill Period, and (ii) Investor to (A) consummate the Exchange Transaction during the Standstill Period and (B) sell all shares of the Company’s common stock beneficially owned by Investor immediately prior to the consummation of the Exchange Transaction during the Standstill Period.

On June 30, 2023, the Company entered into a binding memorandum of understanding (the “Binding MOU”) with the Investor to modify the allocation of the warrants as set forth in the Standstill Agreement such that the Company issued (i) Iliad warrants to purchase up to 1,711,954 shares of the common stock and (ii) Uptown warrants to purchase up to 2,105,348 shares of the common stock, and no warrants were issued to Streeterville under the Standstill Agreement.

On August 14, 2023, the Company entered into an amendment (“the Second Amendment”) to the Standstill Agreement with Iliad and Uptown (together, “Standstill Investor”) to (i) permit the Company to offer and sell securities without triggering the termination of the Standstill Period, and (ii) remove the restriction on Standstill Investor’s ability to buy, sell, or otherwise trade in shares of the Company’s common stock during the Standstill Period.

On September 29, 2023, the Company entered into the Global Amendment No.

2 to the October 2020 Royalty Interest with Iliad, pursuant to which, beginning on January 1, 2026, the monthly Royalty Payment under the October 2020 Royalty Interest shall be the greater of (a) $ 750,000.00 , and (b) the actual Royalty Payment amount Iliad is entitled to for such month pursuant to the terms of the October 2020 Royalty Interest.

As a material consideration for Iliad’s agreement to enter into this amendment, the Company agreed to issue to Iliad warrants to purchase up to 232,500 shares of the Company’s common stock at an exercise price of $ 0.37 per share.

Such warrants may be exercisable for cash or on a cashless basis at any time and from time to time during the period commencing on September 29, 2023 (the “Issuance Date”) and ending on the five -year anniversary of the Issuance Date.

Pursuant to an analysis of the indicators provided in ASC 470-60-55-8, the Company is not deemed to be experiencing financial difficulty.

The debt restructuring is therefore not considered a TDR.

The cumulative effect of the exchanges to the October 2020 Royalty Interest resulted in significant modifications and was accounted for as extinguishment.

The Company recorded an extinguishment gain in the audited consolidated statements of comprehensive loss amounting to $ 2.0 million.

The extinguishment triggered a remeasurement event under ASC 825-10 and created an election date on whether to account for the October 2020 Royalty Interest under the fair value option accounting.

The Company irrevocably elected to remeasure and subsequently apply the FVO accounting to the entire note.

The Company used the valuation report from an independent valuation service provided to measure the reporting date fair value of the note.

On December 28, 2023, the Company entered into a privately negotiated exchange agreement with Iliad, pursuant to which the Company issued an aggregate of 4,875,000 shares of the Company’s Common Stocks to Iliad in exchange for a $ 789,000 reduction in the outstanding balance of the October 2020 Royalty Interest.

The effect of the exchange was accounted for as a debt modification.

On December 31, 2023, the fair value was determined to be $ 6.9 million.

For the year ended December 31, 2023, the net loss in the fair value was $ 1.1 million.

The net loss in fair value was recorded in the change in fair value of freestanding and hybrid financial instruments designated at FVO in the audited consolidated statements of comprehensive loss.

December 2020 Purchase Agreement

On December 22, 2020, the Company entered into a royalty interest purchase agreement (the “December 2020 Purchase Agreement”) with Irving Park Capital, LLC (“Irving”), pursuant to which the Company sold to Irving a royalty interest entitling Irving to receive $ 12.0 million of future royalties on sales of Mytesi and certain up-front license fees and milestone payments from licensees and/or distributors (the “Royalty Repayment Amount”) for an aggregate purchase price of $ 6.0 million.

Until such time as the Royalty Repayment Amount has been paid in full, the Company will pay Irving 10 % of the Company’s Net Sales on Included Products and 10 % of worldwide revenues related to upfront licensing fees and milestone payments from licensees and/or distributors, but specifically excluding licensing fees and/or milestone payments that are reimbursements of clinical trial expenses (the “Royalty Payments”).

On December 22, 2020, the Company entered into a royalty interest purchase agreement (the “December 2020 Purchase Agreement”) with Irving Park Capital, LLC (“Uptown”), pursuant to which the Company sold to Irving a royalty interest entitling Irving to receive $ 12.0 million of future royalties on sales of Mytesi and certain up-front license fees and milestone payments from licensees and/or distributors (the “Royalty Repayment Amount”) for an aggregate purchase price of $ 6.0 million.

Until such time as the Royalty Repayment Amount has been paid in full, the Company will pay Uptown 10 % of the Company’s Net Sales on Included Products and 10 % of worldwide revenues related to upfront licensing fees and milestone payments from licensees and/or distributors, but specifically excluding licensing fees and/or milestone payments that are reimbursements of clinical trial expenses (the “Royalty Payments”).

Beginning on the payment start date and continuing until the 12-month anniversary of the Purchase Price Date, the monthly Royalty Payment shall be the greater of (a) $ 750,000 , and (b) the actual Royalty Payment amount Irving is entitled to for such month.

The Royalty Interest amount of $ 12.0 million is classified as debt, net of a $ 6.0 million discount.

Under ASC 470-10-35-3, royalty payments to Irving will be amortized under the interest method per ASC 835-30.

The December 2020 Royalty Interest amount of $ 12.0 million is classified as debt, net of a $ 6.0 million discount, at initial recognition.

Under ASC 470-10-35-3, royalty payments to Uptown will be amortized under the interest method per ASC 835-30.

Because there is no set interest rate, and because the royalty payments are variable, the discount rate is variable.

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At issuance, based on projected cash outflows from future revenue streams, the discount rate was 23.70 %.

As of December 31, 2022, the forecasted future revenues changed which resulted to a new discount rate of 29.55 % .

On April 14, 2022, under the Royalty Interest Global Amendments, the Company is granted at its sole discretion, the right to exchange from time to time, all or any of the Royalty Interest under the original principal amount of $ 12.0 million or any portion of the December 2020 Purchase Agreement for shares of the Company’s common stock at a price per share equal to the Nasdaq Minimum Price (as defined in Nasdaq Listing Rule 5635(d)) as of date of the applicable exchange, subject to certain limitations.

Interest expense for the years ended December 31, 2022 and 2021 was $ 3.9 million and $ 2.9 million, respectively.

As of December 31, 2022 and 2021, the carrying value of the debt was $ 10.0 million and $ 7.6 million, respectively

On May 8, 2023, the Company entered into an exchange agreement with Uptown to (i) partition a new royalty interest in the royalty repayment amount of $ 1,073,807 from the outstanding balance of the royalty interest.

The parties further agreed to exchange the partitioned royalty for 1,908,651 shares of the Company’s common stock.

On the same date, the Company entered into the Standstill Agreement as described further above, pursuant to which the Company may refrain from making royalty payments on the December 2020 Royalty Interest during the Standstill Period.

On September 29, 2023, the Company entered into the Global Amendment No.

2 to the December 2020 Royalty Interest with Uptown, pursuant to which, beginning on January 1, 2026, the monthly Royalty Payment under the December 2020 Royalty Interest shall be the greater of (a) $ 750,000.00 , and (b) the actual Royalty Payment amount Uptown is entitled to for such month pursuant to the terms of the December 2020 Royalty Interest.

As a material consideration for Uptown’s agreement to enter into this amendment, the Company agreed to issue to Uptown warrants to purchase up to 262,500 shares of the Company’s common stock at an exercise price of $ 0.37 per share.

Pursuant to an analysis of the indicators provided in ASC 470-60-55-8, the Company is not deemed to be experiencing financial difficulty.

The debt restructuring is therefore not considered a TDR.

On the same date, the Company entered into a privately negotiated exchange agreement with Uptown (the “Exchange Agreement”), pursuant to which the Company issued an aggregate of 118 shares of the Company’s newly authorized Series I Convertible Preferred Stock (the “Series I Preferred Stock” or “Preferred Stock”) to Uptown, at an effective exchange price per share equal to the market price (defined as the Minimum Price under Nasdaq Listing

Rule 5635(d)) as of the date of the Exchange Agreement, in exchange for a $ 1,500,000.00 reduction in the outstanding balance of the December 2020 Royalty Interest (“Partitioned Royalty”).(the “Exchange Transaction”).

Subject to the terms of the Series I Preferred Stock, each share of Series I Preferred Stock is convertible into shares of the Company’s Common Stock (the “Conversion Shares”).

The cumulative effect of the exchanges to the December 2020 Purchase Agreement resulted in significant modifications and was accounted for as extinguishment.

The Company recorded an extinguishment gain in the audited consolidated statements of comprehensive loss amounting to $ 2.7 million.

The extinguishment triggered a remeasurement event under ASC 825-10 and created an election date on whether to account for the December 2020 Purchase Agreement under the FVO accounting.

The Company irrevocably elected to initially and subsequently apply the FVO accounting to the entire note.

The Company used the valuation report from an independent valuation service provided to measure the reporting date fair value of the note.

On December 31, 2023, the fair value was determined to be $ 7.5 million.

For the year ended December 31, 2023, the net loss in the fair value was $ 1.4 million.

The net loss in fair value was recorded in the change in fair value of freestanding and hybrid financial instruments designated at FVO in the audited consolidated statements of comprehensive loss.

March 2021 Purchase Agreement

On March 8, 2021, the Company entered into a purchase agreement (the “March 2021 Purchase Agreement”) with Streeterville Capital, LLC (“Streeterville”), a company affiliated with CVP, pursuant to which the Company sold a royalty interest entitling Streeterville to $ 10.0 million and any interest, fees, and charges as royalty repayment amount for an aggregate purchase price of $ 5.0 million.

Interest will accrue on the royalty repayment amount at a rate

of 5 % per annum, compounding quarterly, and will increase to 10 % per annum, compounding quarterly on the 12-month anniversary of the closing date.

Interest will accrue on the royalty repayment amount at a rate of 5 % per annum, compounding quarterly, and will increase to 10 % per annum, compounding quarterly on the 12-month anniversary of the closing date.

The Company will be obligated to make minimum royalty payments on a monthly basis beginning at the earlier of (a) 36 months following the closing date or (b) 30 days following the satisfaction of all existing royalties to Streeterville, and its affiliates namely Iliad and Irving, but not earlier than 18 months following the closing date in an amount equal to the greater of (i) $ 250,000 beginning on the royalty payment start date and continuing until either the royalty repayment amount has been paid in full or the 6-month anniversary of the royalty payment start date, $ 400,000 beginning on the 6-month anniversary of the royalty payment start date and continuing until either the royalty repayment amount has been paid in full or the 12-month anniversary of the royalty payment start date, $ 600,000 beginning on the 12-month anniversary of the royalty payment start date and continuing until either the royalty repayment amount has been paid in full or the 18-month anniversary of the royalty payment start date, $ 750,000 beginning on the 18-month anniversary of the royalty payment start date and continuing until the royalty repayment amount has been paid in full, and (ii) 10 % of the Company’s net sales on included products, 10 % of worldwide revenues related to upfront licensing fees and milestone payments from licensees and/or distributors but specifically excluding licensing fees and/or milestone payments that are reimbursements of clinical trial expenses or associated with the license of Included Products from the Company to Napo Therapeutics, including but not limited to the upfront fee payable by Napo Therapeutics to Napo for included products and Crofelemer for other indications;

and 50 % of royalties collected from licenses of the included products to third parties.

The Royalty Interest amount of $ 10.0 million is classified as debt, net of a $ 5.0 million discount, at initial recognition.

The March 2021 Royalty Interest amount of $ 10.0 million is classified as debt, net of a $ 5.0 million discount, at initial recognition.

Under ASC 470-10-35-3, royalty payments to Streeterville will be amortized under the interest method per ASC 835-30.

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At issuance, based on projected cash outflows from future revenue streams, the discount rate was 19.36 %.

As of December 31, 2022, the forecasted future revenues changed which resulted to a new discount of 19.14 %.

On April 14, 2022, under the Royalty Interest Global Amendments, the Company is granted at its sole discretion, the right to exchange from time to time, all or any of the Royalty Interest under the original principal amount of $ 10.0 million of the March 2021 Purchase Agreement for shares of the Company’s common stock at a price per share equal to the Nasdaq Minimum Price (as defined in Nasdaq Listing Rule 5635(d)) as of date of the applicable exchange, subject to certain limitations.

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Interest will accrue on the Royalty Repayment Amount at a rate of 5 % per annum from the closing of the Royalty Financing until the one-year anniversary of such closing and 10 % per annum thereafter, simple interest computed on the basis of a 360-day year comprised of twelve 30-day months.

The Company will be obligated to make minimum royalty payments on a monthly basis beginning on January 1, 2024 in an amount equal to the greater of (A) $ 250,000 (which increases to $ 400,000 beginning 6 months following the closing of the Royalty Financing, $ 600,000 beginning 12 months following the closing of the Royalty Financing, and $ 750,000 beginning 18 months following the closing of the Royalty Financing) and (B) the royalty payments to which Investor is entitled, consisting of (1) 10 % of the Company’s net sales of crofelemer for any indications that could cannibalize crofelemer indications or any other chronic indication (including any improvements, modifications and follow-on products, collectively referred to as “Included Products”) (2) 10 % of worldwide revenues related to upfront licensing fees and milestone payments from licensees and/or distributors, but specifically excluding licensing fees and/or milestone payments that are (A) reimbursements of clinical trial expenses or (B) associated with the license of the of the Included Products from the Company to Napo EU S.p.A.

the license of the of the Included Products from the Company to Napo EU S.p.A.

and (3) 50 % of royalties collected from licenses of the Included Products to third parties.

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At issuance, based on projected cash outflows from future revenue streams, the discount rate was 55.97 %.

Interest expense for the year ended December 31, 2022 was $ 1.1 million.

As of December 31, 2022, the carrying value of the debt is $ 4.8 million.

On September 29, 2023, the Company entered into a Global Amendment No.

2 (the “Global Amendment”) with the Investor as described further above, such that the Company issued Streeterville warrants to purchase 255,000 shares of the common stock the Global Amendment No.

1 and Global Amendment No.

2 to the August 2022 Royalty Interest with Streeterville, pursuant to which, (a) beginning on January 1, 2026, the monthly Royalty Payment under the August 2022 Royalty Interest shall be the greater of (x) $ 750,000.00 , and (y) the actual Royalty Payment amount Streeterville is entitled to for such month pursuant to the terms of the August 2022 Royalty Interest, and (b) the Company is prohibited from making prepayments of the Royalty Repayment Amount under the August 2022 Royalty Interest.

As a material consideration for Streeterville’s agreement to enter into these amendments, the Company agreed to issue to Streeterville warrants to purchase up to 255,000 shares of the Company’s common stock at an exercise price of $ 0.37 per share.

Pursuant to an analysis of the indicators provided in ASC 470-60-55-8, the Company is not deemed to be experiencing financial difficulty.

The debt restructuring is therefore not considered a TDR.

The cumulative effect of the exchanges to the August 2022 Purchase Agreement resulted to significant modifications and were accounted for as extinguishment.

The Company recorded an extinguishment loss in the audited consolidated statements of comprehensive loss amounting to $ 1.0 million.

The extinguishment triggered a remeasurement event under ASC 825-10 and created an election date on whether to account for the August 2022 Purchase Agreement resulted under the FVO accounting.

The Company irrevocably elected to initially and subsequently apply the FVO accounting to the entire note.

The Company used the valuation report from an independent valuation service provided to measure the reporting date fair value of the note.

On December 31, 2023, the fair value was determined to be $ 6.8 million.

For the year ended December 31, 2023, the net loss in the fair value was $ 661,000 .

The net loss in fair value was recorded in the change in fair value of freestanding and hybrid financial instruments designated at FVO in the audited consolidated statements of comprehensive loss.

Streeterville Note

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(ii) the Company fails to start the Phase 1 clinical trial of NP-300 for the symptomatic relief of infectious diarrhea for cholera by July 1, 2022;

or (iii) the Company fails to meet all primary endpoints in the pivotal trials of NP-300 for the

symptomatic relief if infectious diarrhea for cholera with statistical significance, Streeterville may elect to increase the outstanding balance as of the date of the trial failure by 25 % without acceleration (the “Trial Failure Effect”).

If Streeterville elects to apply the Trial Failure Effect, it reserves the right to declare the outstanding balance immediately due and payable at any time.

or (iii) the Company fails to meet all primary endpoints in the pivotal trials of NP-300 for the symptomatic relief if infectious diarrhea for cholera with statistical significance, Streeterville may elect to increase the outstanding balance as of the date of the trial failure by 25 % without acceleration (the “Trial Failure Effect”).

Streeterville elects to apply the Trial Failure Effect, it reserves the right to declare the outstanding balance immediately due and payable at any time.

As of December 31, 2022, no trial failure occurred.

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The Company irrevocably elected to initially and subsequently apply the FVO accounting to the entire note.

The fair value at transaction date was equal to the cash proceeds received of $ 6.0 million.

The fair value at the transaction date was equal to the cash proceeds received of $ 6.0 million.

The transaction expense of $ 25,000 was recognized in profit and loss as incurred.

The Company used the valuation report from an independent valuation service provided to measure the reporting date fair value of the note.

At December 31, 2022 and 2021, the fair value was determined to be $ 7.8 million.

For the year ended December 31, 2022, the net increase in the fair value of $ 20,000 was recorded as loss included in the change in fair value of financial instruments and hybrid instrument designated at FVO in the consolidated statements of operations.

At December 31, 2023 and 2022, the fair values were determined to be $ 9.8 million and $ 7.8 million, respectively.

For the year ended December 31, 2023 and 2022, the net losses in the fair value of $ 2.0 million and $ 20,000 , respectively were recorded in the change in fair value of freestanding and hybrid financial instruments designated at FVO in the consolidated statements of operations.

Insurance Financing

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Payment of principal and interest is due in equal monthly installments over ten months .

The Company granted and assigned First Insurance a first priority lien on and security interest in the financed policies and any additional premium required under the financed policies.

Interest expense for the year ended December 31, 2022 was $ 2,000 .

The financing balance was zero and $ 10,000 at December 31, 2022 and 2021.

The Company granted and assigned First Insurance a first priority lien on

and security interest in the financed policies and any additional premium required under the financed policies.

Interest expense for the year ended December 31, 2023 and 2022 was zero .

The financing balance was zero and $ 9,000 at December 31, 2023 and 2022, respectively.

May 2022 First Insurance Financing

In May 2021, the Company entered into another premium finance agreement for $ 1.1 million with First Insurance representing the unpaid balance of the total premiums, taxes, and fees of $ 1.4 million with an annual interest rate of 4.15 %.

In May 2022, the Company entered into another premium finance agreement for $ 752,000 with First Insurance representing the unpaid balance of the total premiums, taxes, and fees of $ 941,000 with an annual interest rate of 4.3 %.

The total finance charge was $ 15,000 .

Payment of principal and interest is due in equal monthly installments over ten months .

Interest expense for the years ended December 31, 2022 and 2021 was $ 6,000 and $ 13,000 , respectively.

Interest expense for the year ended December 31, 2023 and 2022 was zero .

The financing balance was zero and $ 226,000 at December 31, 2023 and 2022, respectively.

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Payment of principal and interest is due in equal monthly installments over ten months .

Interest expense for the year ended December 31, 2022 was zero .

The financing balance was $ 9,000 at December 31, 2022.

Interest expense for year ended December 31, 2023 $ 33,000 .

The financing balance was zero as of December 31, 2023.

May 2023 First Insurance Financing

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Interest expense for the year ended December 31, 2023, was $ 16,000 .

The financing balance was $ 226,000 at December 31, 2022.

The financing balance was $ 172,000 as of December 31, 2023.

2019 Tempesta Note

In October 2019, the Company entered into a License Termination and Settlement Agreement with Dr.

Michael Tempesta, pursuant to which certain royalty payment disputes between Napo and Tempesta were settled.

Michael Tempesta (“Tempesta”), pursuant to which certain royalty payment disputes between Napo and Tempesta were settled.

Per the terms of the Agreement, Tempesta received $ 50,000 in cash, an unsecured promissory note issued by the Company in the aggregate principal amount of $ 550,000 and 178 shares of the Company’s common stock in exchange for the cessation of all royalty payments by Napo to Dr.

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At December 31, 2023 and 2022, the net carrying value of the Tempesta note was $ 150,000 and $ 250,000 respectively.

Oasis Secured Borrowing

The Purchase Agreement

In May 2020, the Company, entered into a one-year Accounts Receivable Purchase Agreement (the “Purchase Agreement”) with Oasis Capital (“Oasis”).

In December 2020, the Company received cash proceeds of $ 1.6 million from Oasis (the “Tranche #6 Secured Note”).

Oasis purchased accounts receivable with a carrying value of $ 2.2 million, or gross accounts receivable of $ 3.8 million net of chargebacks and discounts of $ 1.6 million.

In February 2021, the Company made its final required payment to Oasis under Tranche #6 Secured Note, with total payments equaling the $ 1.8 million Threshold amount plus the transaction fee, and the Tranche #6 Secured Note was extinguished.

Exchange Note 2

In May 2019, CVP and the Company agreed to exchange two Napo convertible notes for a single CVP Note (“Exchange Note 1”).

Per agreement, in consideration of the extension of the maturity date of Exchange Note 1 from December 31, 2019 to December 31, 2021, the Company issued a note (“Exchange Note 2”) with a principal balance of $ 2.3 million.

As of December 31, 2021, the carrying value of Exchange Note 1 was zero .

In September 2020, the Company and CVP also entered into a global amendment agreement, pursuant to which the maturity date of Exchange Note 2 is extended to December 31, 2022.

In consideration of CVP’s grant of extension, together with the related fees and other accommodation set forth, principal debt was increased by 5 % of the outstanding balance of Exchange Note 2, which was $ 2.6 million as of the global amendment date.

The global amendment requires redemption of Series D Perpetual Preferred Stock prior to payment of principal of Exchange Note 2.

The global amendment agreement was accounted for as modification.

Pursuant to the global amendment agreement, the Company issued 842,500 shares of Series D Perpetual Preferred Stock.

The Series D Perpetual Preferred shares were redeemable upon the option or discretion of the Company.

The Series D Perpetual Preferred stockholders were entitled to receive 8 % cumulative stock dividends, to be payable in arrears on a monthly basis for 24 consecutive months.

Dividends payable on the Series D perpetual preferred shares shall be payable through the Company’s issuance of Series D Perpetual Preferred share by delivering to each record holder the calculated number of payment-in-kind (“PIK”) dividend shares.

The Series D Perpetual Preferred shares were classified as liability and were measured at fair value using the income approach, which considered the weighted probability of discounted cash flows at various scenarios of redemption and perpetual holding of the shares.

The Company determined the fair value of $ 6.4 million at contract inception date with the assistance of an independent valuation service provider to be based on discounted cash flows representing the settlement value of the shares and cumulative dividends issued using an effective borrowing rate of 12 % to 15 % adjusted for counterparty and a maturity date of September 30, 2021.

In consideration of the global amendment agreement, no principal payment shall be made to the Exchange Note 2 until the redemption of Series D Perpetual Preferred shares.

Due to the restrictive nature of the timing of cash outflows in response to the settlement of the Exchange Note 2, Series D Perpetual Preferred shares were implicitly deemed to be mandatorily redeemable upon the ultimate settlement of the outstanding balance of Exchange Note 2.

The shares were redeemable at $ 8.00 per share on or before December 31, 2024, the date in which contractual cash outflows of the Exchange Note 2 require the entire settlement or redemption of the Series D Perpetual Preferred shares.

In December 2020, the Company entered into a series of exchange agreements with a stockholder pursuant to which the Company agreed to issue a total of 70,622 shares of common stock in exchange for redeeming 859,348 shares of Series D Perpetual Preferred Stock.

The series of exchanges was accounted for as an extinguishment which resulted to a loss amounting to $ 1.3 million.

This is included in loss on extinguishment of debt and conversion of Series D Perpetual Preferred Stock on the statement of operations as of December 31, 2021.

As of December 31, 2022 and 2021, there were no Series D Perpetual Preferred shares outstanding.

In December 2020, the Company and CVP entered into a note exchange agreement to which the Company made a prepayment of principal amounting to $ 1.0 million, in lieu of making cash payments to CVP on Exchange Note 2, by issuing 5,556 shares of the Company’s common stock to CVP on December 31, 2021.

The exchange agreement was accounted for as a modification.

In January 2021, the Company and CVP entered into another note exchange agreement to which the Company made a prepayment of the remaining outstanding balance of Exchange Note 2 amounting to $ 1.8 million, in lieu of making cash payments to CVP by issuing 6,283 shares of the Company’s common stock to CVP on January 4, 2021.

The exchange was accounted for as debt extinguishment which resulted in a loss of $ 753,000 .

The following table summarizes information about warrants outstanding and exercisable into shares of the Company’s common stock for the years ended December 31, 2023 and 2022:

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As of December 31, 2023 and 2022, the Company’s outstanding warrants have an exercise price ranging from $ 0.24 to $ 1.47 per common share and generally expires prior to December 31, 2024.

PIPE Warrants

On May 8, 2023, the Company entered into a Securities Purchase Agreement (the “PIPE Purchase Agreement”) with certain investors named therein (collectively the “Purchasers”), pursuant to which the Company agreed to issue and sell to the Purchasers in a private placement an aggregate of (i) 137 shares (the “Preferred Shares”) of Series G Convertible Preferred Stock, par value $ 0.0001 per share, of the Company (“Series G Preferred Stock”) and (ii) warrants to purchase up to 6,850,000 shares of the Company’s common stock, at an exercise price of $ 0.48 per share (the “PIPE Warrants”), for an aggregate purchase price of approximately $ 1.86 million (the “Private Placement”).

The Company intends to use the proceeds from the Private Placement for working capital and general corporate purposes.

The PIPE Warrants may be exercisable for cash or on a cashless basis at any time and from time to time during the period commencing on the later of (i) January 1, 2024, and (ii) the date on which the approval by the Company’s stockholders (the “Stockholder Approval”) to remove both the Voting Cap and the Conversion Cap (both as defined below) is obtained (the “PIPE Warrants Initial Exercise Date”) and ending on the five-year anniversary of the PIPE Warrants Initial Exercise Date.

On May 10, 2023, the Company issued warrants equivalent to 6,850,000 shares of the Company’s common stock in relation to the PIPE Purchase Agreement.

The PIPE Purchase Agreement provides that during the period commencing on the signing of the PIPE Purchase Agreement and ending October 22, 2023, the Company will not effect or enter into any agreement to (i) issue securities in exchange for any securities of the Company issued and outstanding on the date of the PIPE Purchase Agreement pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), or (ii) effect issuance by the Company of common stock or Common Stock Equivalents (as defined in the PIPE Purchase Agreement), subject to certain customary exceptions set forth in the PIPE Purchase Agreement including, among others, issuance of shares of common stock pursuant to the At The Market Offering Agreement, dated December 10, 2021, by and between the Company and Ladenburg Thalmann & Co.

Inc., as amended (the “Ladenburg Thalmann ATM”), provided that such issuance in the Ladenburg Thalmann ATM has consented.

On August 14, 2023, the Company entered into an amendment (“the First Amendment”) to the PIPE Purchase Agreement with certain holders (the “Holders”) named in the PIPE Purchase Agreement, pursuant to which the parties agreed to terminate the restriction on subsequent equity sales by the Company.

In exchange for the Holders’ agreement to enter into the First Amendment, the Company agreed to issue the Holders warrants to purchase 685,000 shares of the Company’s common stock (the “PIPE Amendment Warrants”) in a private placement pursuant to Section 4(a)(2) of the Securities Act.

The PIPE Amendment Warrants are substantially the same as the PIPE

Warrants and have an exercise price of $ 0.48 per share.

The PIPE Amendment Warrants may be exercisable for cash or on a cashless basis at any time and from time to time during the period commencing on January 1, 2024 (the “PIPE Amendment Warrants Initial Exercise Date”) and ending on the fifth anniversary of the PIPE Amendment Warrants Initial Exercise Date.

At the date of the PIPE Amendment Warrants, the warrants were valued at $ 1.2 million using the Black-Scholes option pricing model as follows:

exercise price of $ 0.48 per share, stock price of $ 0.72 per share, expected life of five years, volatility of 145.95 % and a risk-free rate of 3.37 %.

The warrants were classified in additional paid-in-capital.

Standstill Agreement

Pursuant to the Company’s entry in the Standstill Agreement, as amended by the Binding MOU, as described further above, the Company agreed to issue (i) Iliad warrants to purchase up to 1,711,954 shares of the common stock, and (ii) Uptown warrants to purchase up to 2,105,348 shares of the common share, at an exercise price of $ 0.48 per share (the “Standstill Warrants”).

The Standstill Warrants may be exercisable for cash or on a cashless basis at any time and from time to time during the period commencing on the later of (i) January 1, 2024 and (ii) the date on which the Stockholder Approval is obtained (the “Standstill Warrant Initial Exercise Date”) and ending on the fifth anniversary of the Standstill Warrant Initial Exercise Date.

At the date of the Standstill Agreement, the warrants were valued at $ 2.5 million using the Black-Scholes option pricing model as follows:

exercise price of $ 0.48 per share, stock price of $ 0.73 per share, expected life of five years, volatility of 118.88 % and a risk-free rate of 3.49 %.

The warrants were classified in additional paid-in-capital.

Royalty Interest Global Amendments

On September 29, 2023, the Company entered into amendments (the “Royalty Interest Global Amendments”) to (i) the October 2020 Royalty Interest with Iliad, (ii) the December 2020 Royalty Interest with Uptown, and (iii) the August 2022 Royalty Interest with Streeterville, pursuant to which, among other things, the Company agreed to issue to (i) Iliad warrants to purchase up to 232,500 shares of the Company’s common stock, (ii) Uptown warrants to purchase up to 262,500 shares of the common stock, and (iii) Streeterville warrants to purchase up to 255,000 shares of the Common Stock, at an exercise price of $ 0.37 per share (collectively, the “Royalty Interest Global Amendment Warrants”).

The Royalty Interest Global Amendment Warrants may be exercisable for cash or on a cashless basis at any time and from time to time during the period commencing on September 29, 2023 (the “Royalty Interest Global Amendment Initial Exercise Date”) and ending on the five-year anniversary of the Royalty Interest Global Amendment Initial Exercise Date.

At the date the Royalty Interest Global Amendments, the warrants were valued at $ 173,000 using the Black-Scholes option pricing model as follows:

exercise price of $ 0.37 per share, stock price of $ 0.26 per share, expected life of five years, volatility of 139.53 % and a risk-free rate of 4.6 %.

The warrants were classified in additional paid-in-capital.

Preferred Stock

At December 31, 2023 and 2022, preferred stock consisted of the following:

December 31, 2023

( in thousands, except share and per share data)

Series C Perpetual Preferred Stock

In September 2020, the Company entered into an exchange agreement with Iliad to issue 842,500 shares of the Company's Series C Perpetual Preferred Stock at $ 0.0001 par value per share, for a non-cash exchange of equity instruments.

The exchange agreement was contemporaneously entered with the issuance of Series D Perpetual Preferred shares, in exchange of remaining Series A Convertible Preferred shares totaling 5,524,926 shares, and accreted value of $ 11.2 million as of the exchange date.

An amendment agreement of the Exchange Note 2 was also entered into, with issuance value of $ 2.3 million and carrying value of $ 2.6 million as of the exchange date, to extend maturity from December 31, 2020 to December 31, 2021, in consideration of 5 % increase in the outstanding balance.

The preferred stock has been classified as permanent stockholders' equity in accordance with authoritative guidance for the classification and measurement of perpetual shares without mandatory redemption period because the

redemption option was ultimately in the control of the Company.

There were no series C Preferred Shares outstanding at December 31, 2022 and 2021.

December 31, 2022

( in thousands, except share and per share data)

The Company is authorized to issue a total of 10,000,000 shares of its preferred stock as of December 31, 2023, and December 31, 2022 with a total of 7,534,834 shares and 7,534,474 shares designated to specific Series as of

December 31, 2023 and December 31, 2022, respectively.

Series E Preferred Stock

On August 18, 2022, the Company entered into an agreement (the “Securities Purchase Agreement”) with Synworld to issue 10 Series E Preferred Stock with a par value of $ 0.0001 , amounting to $ 100 .

In consideration of the Securities Purchase Agreement, the Company and Synworld agree to amend the existing definition of the term “Service Share Amount” in the License Agreement entered by both parties (See Note 2) and include a subsection for lock-up wherein Synworld agrees not to sell, transfer, loan, grant any option of the purchase of, or otherwise dispose of any shares of common stock acquired pursuant to the License Agreement until after the 90-day period following the date of acquisition.

In consideration of the Securities Purchase Agreement, the Company and Synworld agree to amend the existing definition of the term “Service Share Amount” in the License Agreement entered by both parties and include a subsection for lock-up wherein Synworld agrees not to sell, transfer, loan, grant any option of the purchase of, or otherwise dispose of any shares of common stock acquired pursuant to the License Agreement until after the 90-day period following the date of acquisition.

On October 4, 2022, the Company redeemed all 10 shares of Series E Preferred Stock in accordance with the terms of such securities.

As a result, no shares of Series E Preferred Stock remain outstanding.

Series F Preferred Stock

On November 11, 2022, the Company entered into an agreement (the “Securities Purchase Agreement”) with a third party to issue 10 Series F Preferred Stock with a par value of $ 0.0001 , amounting to $ 100 .

In consideration of the Securities Purchase Agreement, the Company and third party agree to amend the existing definition of the term “Service Share Amount” in the License Agreement entered by both parties and include a subsection for lock-up wherein the third party agrees not to sell, transfer, loan, grant any option of the purchase of, or otherwise dispose of any shares of common stock acquired pursuant to the License Agreement until after the 90-day period following the date of acquisition.

Series G Preferred Stock

On May 8, 2023, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to issue to such investors (i) 137 shares of Series G Convertible Preferred Stock, par value $ 0.0001 per share, of the Company (“Series G Preferred Stock”) and (ii) warrants to purchase up to 6,850,000 shares of the Company’s common stock, at an exercise price of $ 0.48 per share (the “PIPE Warrants”), for an aggregate purchase price of approximately $ 1.9 million (the “Private Placement”).

On December 28, 2023, the Company converted 15 shares of Series G Preferred Stock in accordance with the terms of such securities.

As a result, 122 shares of Series G Preferred Stock remain outstanding.

Series H Preferred Stock

On June 28, 2023, the Company entered into privately negotiated exchange agreements with Uptown and Streeterville, under which the Company issued 32 and 73 shares of the Company’s newly authorized Series H Convertible Preferred Stock (the “Series H Preferred Stock”) to Uptown and Streeterville, respectively, at an effective exchange price per share equal to the market price (defined as the Minimum Price under Nasdaq Listing Rule 5635(d)) as of the date of the exchange agreements, in exchange for a $ 757,000 reduction in the outstanding balance of the December 2020 Royalty Interest and a $ 1.7 million reduction in the outstanding balance of the August 2022 Royalty Interest, respectively.

As of December 31,2023, the company converted all issued shares of Series H and no shares remain outstanding.

Series I Preferred Stock

On September 29, 2023, the Company entered into a privately negotiated exchange agreement with Uptown (the “Exchange Agreement”), pursuant to which the Company issued an aggregate of 118 shares of the Company’s newly authorized Series I Convertible Preferred Stock (the “Series I Preferred Stock”) to Uptown, at an effective exchange price per share equal to the market price (defined as the Minimum Price under Nasdaq Listing Rule 5635(d)) as of the date of the Exchange Agreement, in exchange for a $ 1.5 million reduction in the outstanding balance of the December 2020 Royalty Interest.

On November 14, 2023, the Company converted 62 shares of Series I Preferred Stock in accordance with the terms of such securities.

As a result, 56 shares of Series I Preferred Stock remain outstanding.

Stockholders’ Equity

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Pursuant to such authority granted by the Company’s stockholders, the Company’s board of directors approved the Authorized Share Increase and the filing of the Sixth Amendment to effectuate the Authorized Share Increase.

On September 30, 2022, the Company filed the Sixth Amendment with the Secretary of State of the State of

Delaware (the “DE Secretary of State”), and the Authorized Share Increase became effective in accordance with the terms of the Sixth Amendment immediately upon filing with the DE Secretary of State (the “Effective Time”).

On September 30, 2022, the Company filed the Sixth Amendment with the Secretary of State of the State of Delaware (the “DE Secretary of State”), and the Authorized Share Increase became effective in accordance with the terms of the Sixth Amendment immediately upon filing with the DE Secretary of State (the “Effective Time”).

The Company is now authorized to issue a total number of 352,475,074 shares, of which 298,000,000 shares are common stock, 50,000,000 are non-voting common stock and 4,464,011 are preferred stock.

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On January 20, 2023, the Company approved another amendment to the Company’s Third Amendment and Restated Certificate of Incorporation to effect a 1 -for-75 reverse stock split of the Company’s issued and outstanding shares of voting common stock, effective January 23, 2023.

Upon effectivity, every seventy-five shares of the Company’s issued outstanding common stock immediately prior to the effective time shall automatically be reclassified into one share of common stock without any change in the par value.

Upon effectivity, every seventy-five shares of the

Company’s issued outstanding common stock immediately prior to the effective time shall automatically be reclassified into one share of common stock without any change in the par value.

The reverse stock splits reduces the number of shares of common stock issuable upon the conversion of the Company’s outstanding non-voting common stock and the exercise or vesting of its outstanding stock options and warrants in proportion to the ratio of the reverse stock split and causes a proportionate increase in the conversion and exercise prices of such non-voting common stock, stock options and warrants.

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The reverse stock split did not change the total number of authorized shares of common stock or preferred stock.

March 2020 ELOC (Equity Line of Credit)

In March 2020, the Company entered into an equity purchase agreement (the “March 2020 ELOC”) with Oasis Capital, which provides that Oasis Capital is committed to purchase up to an aggregate of $ 2.0 million shares of the Company’s common stock over the 36 -month term of the March 2020 ELOC.

In April 2020, the Company sold 231 common shares to Oasis for gross proceeds of $ 23,000 .

As of December 31, 2022 and 2021, the Company had not exercised any further put options to require Oasis Capital to purchase common stock under the equity purchase agreement.

At The Market Offering (“ATM”)

October 2020 ATM Agreement

On October 5, 2020, the Company entered into an ATM Agreement (“October 2020 ATM Agreement”) with Ladenburg, pursuant to which the Company may offer and sell, from time to time through Ladenburg, shares of common stock, subject to the terms and conditions of the October 2020 ATM Agreement.

The October 2020 ATM Agreement will terminate upon the earlier of (i) October 5, 2022 and (ii) termination of the October 2020 ATM Agreement as permitted therein.

During January and February 2021, the Company issued an aggregate of 8,931 shares under the October 2020 ATM Agreement for total net proceeds of $ 5.4 million after commissions and expenses of approximately $ 311,000 .

As of December 31, 2022, all shares under the October 2020 ATM Agreement have been issued.

December 2021 ATM Agreement

On December 10, 2021, the Company entered into another ATM Agreement (“December 2021 ATM Agreement”) with Ladenburg, pursuant to which the Company may offer and sell, from time to time through Ladenburg, shares of common stock having an aggregate offering price of up to $ 15.0 million, subject to the terms and conditions of the December 2021 ATM Agreement.

On December 10, 2021, the Company entered into an ATM Agreement (“December 2021 ATM Agreement”) with Ladenburg, pursuant to which the Company may offer and sell, from time to time through Ladenburg, shares of common stock having an aggregate offering price of up to $ 15.0 million, subject to the terms and conditions of the December 2021 ATM Agreement.

The offering will terminate upon the earlier of (i) December 10, 2024 and (ii) termination of the December 2021 ATM Agreement as permitted therein.

On February 2, 2022, the Company entered into an amendment to the December 2021 ATM Agreement, pursuant to which, the aggregate offering amount of the shares of the Company’s common stock which the Company may sell and issue through Ladenburg, as the sales agent, was increased from $ 15.0 million to $ 75.0 million (the “ATM Upsize”).

As of December 31, 2022, the Company has issued 923,164 shares under the December 2021 ATM Agreement for a total net proceeds of $ 20.5 million.

Securities Purchase Agreement

On January 13, 2021, the Company entered into a securities purchase agreement, pursuant to which the Company agreed to issue and sell, in a registered public offering an aggregate of 19,724 shares of common stock at an offering price of $ 760.50 per share for gross proceeds of approximately $ 15.0 million before deducting $ 1.6 million placement agent fee and related offering expenses.

The offering closed on January 15, 2021.

On April 29, 2021, the Company entered into another securities purchase agreement, pursuant to which the Company agreed to issue and sell, in a registered public offering through Ladenburg as the placement agent, an aggregate of 33,987 shares of common stock at an offering price of $ 317.25 per share for gross proceeds of approximately $ 10.8 million before deducting placement agent fees and related offering expenses of $ 948,000 .

The offering closed on May 3, 2022.

Subscription Agreement

On June 1, 2021, the Company entered into a subscription agreement with the SPAC and its sponsor, pursuant to which Dragon SPAC agreed to issue and sell, in a private placement by Dragon SPAC directly to the Company, units of Dragon SPAC, with each unit consisting of one ordinary share of Dragon SPAC and a warrant to purchase a share, for gross proceeds of approximately € 8.8 million (corresponding, as at June 1, 2021, to $ 10.8 million).

Dragon SPAC is an Italy special purpose acquisition company formed for the purpose of entering into a business combination with Napo Therapeutics, with the aim of developing the pharmaceutical activities of Dragon SPAC/Napo Therapeutics combined entity in Europe.

Each warrant will entitle the holder thereof to purchase one share at an exercise price of € 750 per share at any time prior to the earlier of (i) the 10-year anniversary of the consummation of the business combination and (ii) the five-year anniversary of the listing of the combined entity on a public exchange.

On November 3, 2021, Dragon SPAC issued 883,000 ordinary shares, each reserved to the exercise of warrants pursuant to the warrant agreement approved by Dragon SPAC.

As a result, Dragon SPAC became a substantially owned subsidiary, at the same time, the related advances were converted to investment at a stand-alone level eliminated at the consolidated level.

September 2021 PIPE Financing

On September 13, 2021, the Company entered into a securities purchase agreement (the “September 2021 PIPE Financing”) with certain investors, pursuant to which the Company agreed to issue and sell to the investors in a private placement an aggregate of 4,123 unregistered shares of the Company’s common stock for an aggregate purchase price of approximately $ 776,197 or $ 188.25 per share.

As of December 31, 2023, the Company has issued 55,222,809 shares under the ATM Agreement for a total net proceeds of $ 56.1 million.

Noncontrolling Interest

As a result of the merger last November 3, 2021 between Napo EU and Dragon SPAC, the Company assumed a non-controlling interest amounting to $ 242,000 as of December 31, 2021 which represents minority interest held by an investor in Napo Therapeutics.

For the year ended December 31, 2022, noncontrolling interest decreased by $ 941,000 due to the share in net loss on Napo Therapeutics’ financial performance.

As a result of the merger on November 3, 2021 between Napo EU and Dragon SPAC, the Company assumed a noncontrolling interest amounting to $ 242,000 as of December 31, 2021 which represents noncontrolling interest held by an investor in Napo Therapeutics.

For the year ended December 31, 2023, noncontrolling interest increased by $ 635,000 due to additional investment, net of share in comprehensive losses.

For the year ended December 31, 2022, noncontrolling interest decreased by $ 941,000 due to the share in net loss.

Stock-Based Compensation

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Outstanding grants continue to be exercisable, however, any unissued shares under the plan and any forfeitures of outstanding options do not rollover to the 2014 Stock Incentive Plan.

There were 2 option shares outstanding at December 31, 2022 and 2021.

There were zero and two option shares outstanding at

December 31, 2023 and 2022, respectively.

2014 Stock Incentive Plan

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The terms and conditions of the 2020 Inducement Award Plan are substantially similar to the Company’s 2014 Stock Incentive Plan, but with such other terms and conditions intended to comply with the Nasdaq inducement award rules.

In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, the only persons eligible to receive grants of equity awards under the

Inducement Award Plan are individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company.

In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, the only persons eligible to receive grants of equity awards under the Inducement Award Plan are individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company.

On April 13, 2022, the Board of Directors of the Company approved an amendment to the 2020 Inducement Award Plan to reserve an additional 471,833 shares of the Company’s common stock for issuance pursuant to equity awards granted under the Inducement Award Plan, thereby increasing the number of shares of the Company’s common stock issuable thereunder from 500,000 shares to 971,833 shares.

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Options canceled

RSUs vested and released

( 2,690,320 )

RSUs excercised

RSUs cancelled

1 unchanged sentence

Exercisable at December 31, 2023

Vested and expected to vest at

December 31, 2022

Vested and expected to vest at December 31, 2023

*Fair market value of Jaguar stock on December 31, 2023 was $ 0.15 per share.

The intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair market value of the Company's common stock for options that were in-the-money.

The number of options exercised during the year ended December 31, 2022 and 2021 were zero and 42 , respectively.

The weighted average grant date fair value of stock options granted was $ 22.04 and $ 379.66 per share during the years ended December 31, 2022, and 2021, respectively.

The number of options exercised during the year ended December 31, 2023 and 2022 were zero , respectively.

The weighted average grant date fair value of stock options granted was zero and $ 22.04 per share during the years ended December 31, 2023, and 2022, respectively.

The number of options that vested in the years ended December 31, 2023, and 2022 was 1,524 and 7,492 , respectively.

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General and administrative expense

As of December 31, 2022, the Company had $ 2.7 million of unrecognized stock-based compensation expense for options and RSU’s, which is expected to be recognized over a weighted-average period of 1.70 years.

As of December 31, 2023, the Company had $ 116,736 of unrecognized stock-based compensation expense for options and RSU’s, which is expected to be recognized over a weighted-average period of 0.35 years.

The fair value of options granted during the years ended December 31, 2023 and 2022, respectively, were calculated using the range of assumptions set forth below:

163.8 - 164.0 %

Expected term (years)

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(In thousands, except share and per share data)

Net loss attributable to common stockholders (basic and diluted)

Net loss attributable to common stockholders

Shares used to compute net loss per common share, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

Net loss per share attributable to common shareholders, basic and diluted

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of common shares and common share equivalents outstanding for the period.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock, convertible preferred stock, and certain common share equivalents outstanding for the period.

Common stock equivalents are only included when their effect is dilutive.

The Company's potentially dilutive securities which include stock options, convertible preferred stock, RSUs and common stock warrants have been excluded from the computation of diluted net loss per share as they would be anti-dilutive.

For all periods presented, there is no difference in the number of shares used to compute basic and diluted shares outstanding due to the Company's net loss position.

The following outstanding common stock equivalents have been excluded from diluted net loss per common share for the years ended December 31, 2022 and 2021 because their inclusion would be anti-dilutive:

The Company's potential securities which include Standstill warrants, PIPE warrants, Royal Global Amendment Exchange warrants and convertible preferred series stock and other common stock equivalents were excluded because their effect is anti-

For the prior periods presented, there is no difference in the number of shares used to compute basic and diluted shares outstanding.

The following are the other common stock equivalents of the Company for years ended December 31, 2023 and December 31, 2022:

Options issued and outstanding

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Warrants issued and outstanding

As of March 24, 2023, there were 11,680,245 shares of common stock issued after the balance sheet date.

Including these shares will have a material effect on the diluted net loss per common share in future periods.

As of April 1, 2024, there were 202,803,012 shares of common stock issued after the balance sheet date.

The Company's loss before provision for income taxes during the years ended December 31, 2023 and 2022, was a domestic loss of $ 35.6 million and $ 42.1 million, and a foreign loss of $ 6.3 million and $ 6.3 million, respectively.

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Utilization of the domestic NOL and tax credit forwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by the Internal Revenue Code Section 382, as well as similar state provisions.

In general, an "ownership change,"

as defined by the code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders or public groups.

In general, an "ownership change," as defined by the code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders or public groups.

Any limitation may result in expiration of all or a portion of the NOL or tax credit carryforwards before utilization.

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The CARES Act does not have a material impact on the Company’s financial results for the year ended December 31, 2023 and 2022.

The Consolidated Appropriations Act, 2021 (the "Act") was enacted in the United States on December 27, 2020.

The Consolidated Appropriations Act, 2021 (the "Act") was enacted in the US on December 27, 2020.

The Act enhances and expands certain provisions of the CARES Act.

1 unchanged sentence

Uncertain Tax Positions

The Company has adopted the provisions of ASC 740, “ Income Taxes Related to Uncertain Tax Positions .” Under these principals, tax positions are evaluated in a two-step process.

The Company has adopted the provisions of ASC 740, Income Taxes Related to Uncertain Tax Positions .

Under these principals, tax positions are evaluated in a two-step process.

The Company first determines whether it is more-likely-than-not that a tax position will be sustained upon examination.

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The animal health segment is focused on developing and commercializing prescription and non-prescription products for companion and production animals.

The human health segment is focused on developing and commercializing of human products and the ongoing commercialization of Mytesi, which is approved by the U.S.

FDA for the symptomatic relief of non-infectious diarrhea in adults with HIV/AIDS on antiretroviral therapy.

The Company’s reportable segments sales and net income consisted of:

The human health segment is focused on developing and commercializing of human products and the ongoing commercialization of Mytesi, which is approved by the FDA for the symptomatic relief of non-infectious diarrhea in adults with HIV/AIDS on antiretroviral therapy.

The Company's reportable segments net revenues and net loss for the years ended December 31, 2023 and 2022 consisted of the following:

(in thousands)

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December 2021 ATM Agreement

Subsequent to December 31, 2022, the Company has issued an additional 10,135,550 shares under the December 2021 ATM Agreement with a total net proceeds of $ 17.5 million.

Formation of Joint Venture Magdalena Biosciences, Inc.

In January 2023, Jaguar and Filament Health (“Filament”), with Funding from One Small Planet, formed the U.S.-based joint venture Magdalena Biosciences, Inc.

(“Magdalena”).

This new venture aligns with Jaguar's mental health Entheogen Therapeutics Initiative (“ETI”) and Filament's corporate mission to develop novel, natural prescription medicines from plants.

Magdalena will leverage Jaguar's proprietary medicinal plant library and Filament's proprietary drug development technology.

Jaguar’s library of 2,300 highly characterized medicinal plants and 3,500 plant extracts, all from firsthand ethnobotanical investigation by Jaguar and members of the ETI Scientific Strategy Team, is a key asset we have generated over 30 years that bridges the knowledge of traditional healers and Western medicine.

December 2020 Royalty Interest Exchange Agreement

On February 8, 2023, the Company entered into an exchange agreement (the “December 2020 Royalty Interest Exchange Agreement”) with Irving to (i) partition a new royalty interest in the royalty repayment amount of $ 675,000 (“Partitioned Royalty”) from the royalty interest of the December 2020 Purchase Agreement and then cause the outstanding balance of the royalty interest to be reduced by an amount equal to the initial outstanding balance of the Partitioned Royalty, and (ii) exchange (“Royalty Exchange”) the Partitioned Royalty for 150,000 shares of the Company’s common stock with a par value of $ 0.0001 in accordance with term of the December 2020 Royalty Interest Exchange Agreement.

Under the terms of the December 2020 Royalty Interest Exchange Agreement, the

Royalty Exchange will consist of Irving surrendering the Partitioned Royalty in exchange for the shares, free of any restrictive securities legend, and Irving shall give no consideration of any kind whatsoever to the Company in connection with the December 2020 Royalty Interest Exchange Agreement.

October 2020 Royalty Interest Exchange Agreements

On March 17 and 23, 2023, the Company entered into exchange agreements (the “October 2020 Royalty Interest Exchange Agreements”) with Iliad to (i) partition new royalty interests in the royalty repayment amounts of $ 992,000 and $ 227,000 , respectively (“Partitioned Royalties”) from the royalty interest of the October 2020 Purchase Agreement and then cause the outstanding balance of the royalty interest to be reduced by an amount equal to the initial outstanding balance of the Partitioned Royalties, and (ii) exchange (“Royalty Exchanges”) the Partitioned Royalties for 1,090,000 and 280,005 shares, respectively of the Company’s common stock with a par value of $ 0.0001 in accordance with term of the October 2020 Royalty Interest Exchange Agreements.

Under the terms of the October 2020 Royalty Interest Exchange Agreements, the Royalty Exchanges will consist of Iliad surrendering the Partitioned Royalties in exchange for the shares, free of any restrictive securities legend, and Iliad shall give no consideration of any kind whatsoever to the Company in connection with the October 2020 Royalty Interest Exchange Agreements.

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard

On January 5, 2023, the Company received notice from the Listing Qualifications Staff (“Staff”) of Nasdaq indicating that, because the bid price for the Company’s voting common stock, par value $ 0.0001 per share had closed below $ 0.10 per share for the preceding ten consecutive trading days, in contravention of Nasdaq Listing Rule 5810(3)(A)(iii) (the “$0.10 Rule”), the Company’s securities were subject to delisting unless the Company timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the Staff’s decision.

The Company intends to timely request a hearing before the Panel, which request will stay any further delisting action by Nasdaq at least pending the Company’s hearing and the expiration of any extension that the Panel may grant to the Company following such hearing.

There are no assurances that a stay will be granted or that a favorable decision will be obtained.

Nasdaq previously granted the Company a 180 -calendar grace period to regain compliance with the minimum $ 1.00 bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”) through February 13, 2023.

At the Special Meeting of Stockholders of the Company held on January 20, 2023, the Company received stockholder approval for the implementation of a reverse stock split of the Company’s issued and outstanding Common Stock at a ratio of not less than 1-for-3 and not greater than 1-for-75 to regain compliance with the Bid Price rule.

The Company believes that, after taking into account (i) the sale of shares of common stock between January 1, 2023 and March 23, 2023 pursuant to the Company’s December 2021 agreement, (ii) the issuance of 150,000 shares of common stock on February 8, 2023 to Irving in exchange for a $ 675,000 reduction in the outstanding balance of the royalty interest held by such holder, and (iii) the issuance of 1,090,000 shares of common stock on March 17, 2023 and 280,005 shares of common stock on March 24, 2023 to Iliad in exchange for a $ 992,000 and $ 227,000 , respectively reduction in the outstanding balance of the royalty interest held by such holder, and based on interim financial data available to the Company, the Company’s stockholders’ equity as of March 24, 2023, exceeds $ 2.5 million, which is the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market.

In addition, the Company’s cash balance as of March 24, 2023, is approximately $ 13.6 million.

Termination of a Material Definitive Agreement

On October 11, 2022, the Company entered into an Amended and Restated License and Services Agreement (the “License Agreement”) with SynWorld Technologies Corporation (“Licensee”), C&E Telecom, LTD (“C&E Telecom”), and Tao Wang (“Wang”), which License Agreement amended and restated in entirety the License and

Services Agreement, dated as of June 28, 2022, by and among the same parties, as amended by that certain First Amendment to the License and Services Agreement, dated as of August 18, 2022, by and between the Company and Licensee, for the grant of certain licenses by the Company to Licensee to commercialize the Product (as defined in the License Agreement) and the engagement of Licensee by the Company to obtain regulatory approval for the Product to treat all forms of diarrhea in dogs in the Licensee Territory (as defined in the License Agreement).

On January 31, 2023, the Company, Licensee, C&E Telecom and Wang entered into a Mutual Termination of License Agreement (the “Termination Agreement”), pursuant to which the parties agreed to mutually terminate the License Agreement, effective as of January 31, 2023.

Following its termination, the License Agreement is void, and there is no liability thereunder on the part of any party thereto except as set forth in the Termination Agreement.

The Termination Agreement contains mutual releases by all parties thereto, for all claims known and unknown, relating and arising out of, or relating to, among other things, the License Agreement, or the transactions contemplated by the License Agreement.

From January 1, 2024 to April 1, 2024 the Company issued an aggregate of 133,631,424 shares of common stock under the December 2021 ATM Agreement for total net proceeds of $ 11.6 million.

Series I Convertible Preferred Stock

On January 15, 2024, Uptown converted 56 shares of Series I Preferred Stock into 2,696,456 shares of common stock.

3a9 Exchanges

On January 29, 2024, the Company entered into an exchange agreement with Iliad pursuant to which the Company issued an aggregate of 8,000,000 shares of the Company’s common stock to Iliad in exchange for $ 900,800 reduction in the outstanding balance of the October 2020 Royalty Interest.

Additionally, the Company entered into an exchange agreement with Streeterville, which the Company issued an aggregate of 1,587,632 shares of the Company’s common stock in exchange for $ 179,000 reduction in the outstanding balance of the August 2022 Royalty Interest.

PIPE Warrant Exchanges

On February 27, 2024, pursuant to the PIPE Purchase Agreement, each of the PIPE investors entered into an exchange agreement with the Company (each, a “PIPE Warrant Exchange Agreement” and collectively, the “PIPE Warrant Exchange Agreements”).

Pursuant to the PIPE Warrant Exchange Agreements, the Company agreed to exchange the PIPE Warrants for shares of common stock at an exchange ratio of 1 -for-2.5 (“PIPE Warrant Exchange Transaction”).

Upon completion of the PIPE Warrant Exchange Transaction, the Company exchanged the PIPE Warrants to purchase up to 7,535,000 shares of Common Stock for 18,837,500 shares of Common Stock (the “PIPE Exchange Shares”), and the PIPE Warrants were terminated.

The PIPE Exchange Shares would be subject to a twelve-month lock-up, and any other equity security of the Company other than the PIPE Exchange Shares owned by the PIPE investors as of the date of the PIPE Warrant Exchange Agreement would be subject to a six-month lock-up.

On February 29, 2024, the PIPE investors converted 122 shares of Series G preferred stock into 3,050,000 shares of common stock subject to a six-month lock-up.

March 2021 Purchase Agreement Extinguishment and Streeterville Exchange

On March 1, 2024, the Company entered into a privately negotiated exchange agreement with Streeterville (the “Streeterville Exchange Agreement”), pursuant to which the Company issued an aggregate of 179.3822 shares of Series J Preferred Stock to Streeterville at an effective exchange price per share equal to the market price (defined as the Minimum Price under Nasdaq Listing Rule 5635(d)) as of the date of the Streeterville Exchange Agreement, in exchange for the surrender of the March 2021 Purchase Agreement by Streeterville (the “Streeterville Exchange Transaction”).

Upon completion of the Streeterville Exchange Transaction, all outstanding balance of the March 2021 Purchase Agreement was fully paid and the March 2021 Purchase Agreement was terminated.

Series J Convertible Preferred Stock

On March 5, 2024, the Company issued 10,000,000 shares of the Company’s common stock to Streeterville in exchange for the surrender and cancellation of 40 shares of Series J Perpetual Preferred Stock.

Subsequently, on March 19, 2024, the Company issued 8,333,333 shares of the Company’s common stock in exchange for the surrender and cancellation of another 40 shares of Series J Perpetual Preferred Stock.

Securities Purchase Agreement

On March 18, 2024, the Company entered into a privately negotiated securities purchase agreement (the “Securities Purchase Agreement”) with Gen Ilac Ve Saglik Urunleri Sanayi Ve Ticaret, A.S.

(the “Purchaser”), pursuant to which the Company issued 16,666,666 shares of the Company’s common stock at a price of $ 0.12 per share for gross proceeds of approximately $ 2.0 million.

The sale of the securities was consummated in connection with the Licensing Agreement (as defined below).

Licensing Agreement

On March 20, 2024, the Company had signed a binding term sheet covering the exclusive license and commercialization agreement for the Company's FDA-approved prescription drug crofelemer with Gen Ilac Ve Saglik Urunleri Sanayi Ve Ticaret, A.S.

(the “Purchaser”) in certain countries within Eastern Europe (the "Licensing Agreement”).

Aside from the Securities Purchase Agreement, The Licensing Agreement entails payment of royalties to Jaguar on all finished crofelemer products sold in the licensed territory, and transfer pricing terms for crofelemer supplied by Jaguar.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data