Lunai Bioworks Inc. 10-Q

Item 1. Financial Statements. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented. The results for the period ended March 31, 2024, are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2023, filed with the Securities and Exchange Commission on October 2, 2023. 1 RENOVARO INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, June 30, 2024 2023 (Unaudited) ASSETS CURRENT ASSETS: Cash $ 312,697 $ 1,874,480 Prepaids and other assets 907,218 690,925 Total Current Assets 1,219,915 2,565,405 Property and equipment, net 488,915 508,989 OTHER ASSETS: Definite life intangible assets, net 31,042 39,676 Indefinite life intangible assets 44,945,255 42,611,000 Goodwill 164,186,852 11,640,000 Deposits and other assets 21,742 21,741 Operating lease right-of-use assets 1,385,619 913,985 Total Other Assets 210,570,510 55,226,402 TOTAL ASSETS $ 212,279,340 $ 58,300,796 LIABILITIES CURRENT LIABILITIES: Accounts payable – trade $ 7,990,631 $ 5,296,823 Accrued expenses 3,754,976 723,173 Other current liabilities 519,427 184,733 Contingent consideration liability, current (Note 3) 1,006,438 — Current portion of operating lease liabilities 483,226 193,422 Notes payable, net 3,418,621 4,624,947 Convertible notes payable 3,700,694 — Total Current Liabilities 20,874,013 11,023,098 NON-CURRENT LIABILITIES: Operating lease liabilities, net of current portion 970,353 775,587 Contingent consideration liability, noncurrent (Note 3) 19,064,562 — Deferred tax liability 2,774,856 — Total Non-Current Liabilities 22,809,771 775,587 Total Liabilities 43,683,784 11,798,685 Commitments and Contingencies (Note 9) — — STOCKHOLDERS’ EQUITY: Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized; zero shares issued and outstanding at March 31, 2 0 24 and June 30, 2023 — — Common Stock, par value $ 0.0001 , 350,000,000 shares authorized, 147,488,598 shares issued and outstanding at March 31, 2024, and 63,698,144 shares issued and outstanding at June 30, 2023 14,750 6,371 Additional paid-in capital 442,304,652 290,554,875 Accumulated deficit ( 274,757,816 ) ( 244,029,253 ) Accumulated other comprehensive income (loss) 1,033,970 ( 29,882 ) Total Stockholders’ Equity 168,595,556 46,502,111 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 212,279,340 $ 58,300,796 See accompanying notes to the unaudited condensed consolidated financial statements. 2 RENOVARO INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months Ended For the Nine Months Ended March 31, March 31, 2024 2023 2024 2023 Operating Expenses General and administrative $ 7,652,379 $ 3,796,057 $ 19,558,981 $ 12,365,960 Research and development 1,087,156 239,137 2,274,321 3,170,471 Intangible asset impairment (Note 5) 8,421,000 — 8,421,000 — Depreciation and amortization 30,305 28,242 90,727 85,487 Total Operating Expenses 17,190,840 4,063,436 30,345,029 15,621,918 LOSS FROM OPERATIONS ( 17,190,840 ) ( 4,063,436 ) ( 30,345,029 ) ( 15,621,918 ) Other Income (Expense) Change in fair value of contingent consideration (Note 3) 486,500 — 486,500 — Loss on extinguishment of debt — — ( 120,018 ) — Loss on extinguishment of contingent consideration liability — — — ( 419,182 ) Interest expense ( 303,802 ) ( 122,289 ) ( 758,057 ) ( 310,766 ) Interest and other income (expense) ( 16,272 ) ( 142,571 ) 8,041 ( 133,938 ) Total Other Income (Expense) 166,426 ( 264,860 ) ( 383,534 ) ( 863,886 ) NET LOSS $ ( 17,024,414 ) $ ( 4,328,296 ) $ ( 30,728,563 ) $ ( 16,485,804 ) BASIC AND DILUTED NET LOSS PER SHARE $ ( 0.16 ) $ ( 0.08 ) $ ( 0.39 ) $ ( 0.30 ) WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING - BASIC AND DILUTED 107,480,475 55,974,605 79,168,663 55,524,511 See accompanying notes to the unaudited condensed consolidated financial statements. 3 RENOVARO INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) For the Three Months Ended For the Nine Months Ended March 31, March 31, 2024 2023 2024 2023 Net Loss $ ( 17,024,414 ) $ ( 4,328,296 ) $ ( 30,728,563 ) $ ( 16,485,804 ) Other Comprehensive Income (Loss) Foreign currency translation, net of taxes 1,061,201 ( 2,110 ) 1,063,852 ( 1,949 ) Comprehensive Loss $ ( 15,963,213 ) $ ( 4,330,406 ) $ ( 29,664,711 ) $ ( 16,487,753 ) See accompanying notes to the unaudited condensed consolidated financial statements. 4 RENOVARO INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) # of Series A Preferred Shares Series A Preferred Shares Amount # of common Shares Common Shares Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income Total June 30, 2023 — — 63,698,144 $ 6,371 $ 290,554,875 $ ( 244,029,253 ) $ ( 29,882 ) $ 46,502,111 Issuance of preferred stock and warrants in private placement 280,505 28 — — 1,999,972 — — 2,000,000 Issuance of preferred stock and warrants for conversion of Note Payable 280,505 28 — — 1,999,973 — — 2,000,001 Restricted shares issued for services rendered — — 2,000,000 200 4,469,800 — — 4,470,000 Stock-based compensation — — — — 983,829 — — 983,829 Net loss — — — — — ( 9,175,028 ) — ( 9,175,028 ) Foreign currency translation adjustment — — — — — — ( 34,601 ) ( 34,601 ) September 30, 2023 561,010 56 65,698,144 6,571 300,008,449 ( 253,204,281 ) ( 64,483 ) 46,746,312 Stock issued pursuant to warrants exercised — — 525,945 53 341,812 — — 341,865 Restricted shares issued for advisory services — — 1,000,000 100 ( 100 ) — — — Stock-based compensation — — — — 999,228 — — 999,228 Net loss — — — — — ( 4,529,121 ) — ( 4,529,121 ) Foreign currency translation adjustment — — — — — — 37,252 37,252 December 31, 2023 561,010 56 67,224,089 6,724 301,349,389 ( 257,733,402 ) ( 27,231 ) 43,595,536 Non-cash exercise of warrants — — 3,425,399 343 1,999,657 — — 2,000,000 Restricted shares issued for services rendered — — 50,000 5 99,995 — — 100,000 Issuance of common stock under private placement offering — — 344,827 34 999,966 — — 1,000,000 Issuance of common stock pursuant to acquisition of GEDi Cube (Note 11) — — 70,834,183 7,083 135,994,548 — — 136,001,631 Preferred stock converted to common stock pursuant to acquisition of GEDi Cube (Note 11) ( 561,010 ) ( 56 ) 5,610,100 561 ( 505 ) — — — Stock-based compensation — — — — 1,861,601 — — 1,861,601 Net loss — — — — — ( 17,024,414 ) — ( 17,024,414 ) Foreign currency translation adjustment — — — — — — 1,061,201 1,061,201 March 31, 2024 — $ — 147,488,598 $ 14,750 $ 442,304,652 $ ( 274,757,816 ) $ 1,033,970 $ 168,595,556 5 # of Series A Preferred Shares Series A Preferred Shares Amount # of Shares Common Shares Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income Total July 1, 2022 — — 53,007,082 $ 5,302 $ 276,989,179 $ ( 204,345,197 ) $ ( 30,436 ) $ 72,618,848 Stock issued pursuant to warrants exercised — — 1,250,000 125 1,624,875 1,625,000 Contingent shares issued pursuant to acquisition agreement — — 1,250,000 125 2,762,375 — — 2,762,500 Stock-based compensation — — — — 1,026,008 — — 1,026,008 Net loss — — — — — ( 7,699,760 ) — ( 7,699,760 ) Foreign currency translation adjustment — — — — — — ( 7,754 ) ( 7,754 ) September 30, 2022 — — 55,507,082 5,552 282,402,437 ( 212,044,957 ) ( 38,190 ) 70,324,842 Shares issued in lieu of interest on $1.2 million notes payable extension — — 198,439 20 204,372 — — 204,392 Stock-based compensation — — — — 819,955 — — 819,955 Net loss — — — — — ( 4,457,748 ) — ( 4,457,748 ) Foreign currency translation adjustment — — — — — — 7,915 7,915 December 31, 2022 — — 55,705,521 5,572 283,426,764 ( 216,502,705 ) ( 30,275 ) 66,899,356 Shares and warrants issued pursuant to private placement offering — — 2,178,070 218 2,482,782 — — 2,483,000 Restricted shares issued for services rendered — — 100,000 10 107,990 — — 108,000 Stock-based compensation — — — — 968,203 — — 968,203 Net loss — — — — — ( 4,328,296 ) — ( 4,328,296 ) Foreign currency translation adjustment — — — — — — ( 2,110 ) ( 2,110 ) March 31, 2023 — $ — 57,983,591 $ 5,800 $ 286,985,739 $ ( 220,831,001 ) $ ( 32,385 ) $ 66,128,153 See accompanying notes to the unaudited condensed consolidated financial statements. 6 RENOVARO INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 30,728,563 ) $ ( 16,485,804 ) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES: Depreciation and amortization 90,727 85,487 Change in fair value of contingent consideration ( 486,500 ) — Loss on extinguishment of debt 120,018 — Loss on extinguishment of contingent consideration liability — 419,182 Stock based compensation expense 3,844,658 2,922,166 Intangible asset impairment 8,421,000 — Restricted shares for services rendered 4,570,000 — Amortization of discount on notes payable 494,809 223,863 Changes in assets and liabilities: Other receivables — 46 Prepaid expenses/deposits 798,741 689,273 Accounts payable 2,110,232 3,069,487 Accrued expenses 2,194,293 ( 407,433 ) Other current liabilities — ( 18,520 ) Operating leases, net 12,936 ( 10,684 ) NET CASH USED IN OPERATING ACTIVITIES ( 8,557,649 ) ( 9,512,937 ) CASH FLOWS FROM INVESTING ACTIVITIES: Notes receivable prior to acquisition ( 1,225,779 ) — Cash received from acquisition 65,851 — Purchase of property and equipment ( 46,878 ) ( 23,633 ) NET CASH USED IN INVESTING ACTIVITIES ( 1,206,806 ) ( 23,633 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of promissory notes 3,645,000 — Repayment of finance agreement ( 646,128 ) ( 840,992 ) Proceeds from private placement 3,000,000 2,483,000 Proceeds from notes payable 1,710,000 — Proceeds from exercise of warrants 341,865 1,625,000 NET CASH PROVIDED BY FINANCING ACTIVITIES 8,050,737 3,267,008 Effect of exchange rates on cash 151,935 45,462 NET CHANGE IN CASH ( 1,561,783 ) ( 6,224,100 ) CASH, BEGINNING OF PERIOD 1,874,480 9,172,142 CASH, END OF PERIOD $ 312,697 $ 2,948,042 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 12,692 $ 43,627 Income taxes $ — $ — SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES Finance agreement entered into in exchange for prepaid assets $ 906,834 $ 1,139,875 Shares in lieu of interest on $1.2 million notes payable extension $ — $ 204,392 Common shares issued for contingent earn out liability $ — $ 2,762,500 Conversion of note payable for issuance of preferred stock $ 2,000,001 $ — Common shares issued upon acquisition $ 136,001,631 $ — Contingent consideration issued upon acquisition $ 20,557,500 $ — Note payable settled through non-cash exercise of warrants $ 2,000,000 $ — Debt discount related to notes payable $ 301,841 $ — See accompanying notes to the unaudited condensed consolidated financial statements. 7 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business – On February 13, 2024, the Company changed its corporate name from Renovaro Biosciences Inc. to Renovaro Inc. (“Renovaro”, and together with its subsidiaries, the “Company”, “we” or “us”). In August 2023, the Company changed its corporate name from Enochian Biosciences Inc. to Renovaro Biosciences Inc. The Company engages in the research and development of pharmaceutical and biological products for the treatment of cancer, HIV, and HBV with the intent to manufacture said products. On February 13, 2024, Renovaro Inc. acquired Renovaro Cube Intl Ltd and its subsidiaries (“Renovaro Cube”), as a wholly owned subsidiary pursuant to a stock purchase agreement. Basis of Presentation – The Company prepares consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and follows the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying financial statements are unaudited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2024, and 2023 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s June 30, 2023, audited financial statements. The results of operations for the period ended March 31, 2024 are not necessarily indicative of the operating results for the full year. Consolidation – For the three and nine months ended March 31, 2024, and 2023, the condensed consolidated financial statements include the accounts and operations of the Company and its subsidiaries. All material inter-company transactions and accounts have been eliminated in the consolidation. Accounting Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimated. Significant estimates include the fair value of assets acquired in a business acquisition, contingent consideration, and equity instruments issued for goods or services. Functional Currency & Foreign Currency Translation – The functional currency of Renovaro Denmark is the Danish Kroner (“DKK”) and the functional currency of Renovaro Cube is the Euro (“EUR”). The Company’s reporting currency is the U.S. Dollar for the purpose of these financial statements. The Company’s balance sheet accounts are translated into U.S. dollars at the period-end exchange rates and all revenue and expenses are translated into U.S. dollars at the average exchange rates prevailing during the periods ended March 31, 2024, and 2023. Translation gains and losses are deferred and accumulated as a component of other comprehensive income in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the statement of operations as incurred. Cash and Cash Equivalents – The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Concentration of Credit Risk – Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in financial institutions, which, at times, exceed the amount of deposit insurance provided within the relevant jurisdiction where the deposits are held. As of March 31, 2024 and June 30, 2023, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. 8 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Equipment – Property and equipment are stated at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized and depreciated upon being placed in service. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is computed for financial statement purposes on a straight-line basis over the estimated useful lives of the assets, which range from four to ten years (see Note 4.) Intangible Assets – The Company has both definite and indefinite life intangible assets. Definite life intangible assets include patents. The Company accounts for definite life intangible assets in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, “Goodwill and Other Intangible Assets”. Definite life intangible assets are recorded at cost. Patent costs consist of costs incurred to acquire the underlying patent. If it is determined that a patent will not be issued, the related remaining capitalized patent costs are charged to expense. Definite life intangible assets are amortized on a straight-line basis over their estimated useful life. The estimated useful life of patents is twenty years from the date of application. Indefinite life intangible assets include in-process research and development (“IPR&D”) and goodwill. The Company accounts for indefinite life intangible assets in accordance with ASC 350, “Goodwill and Other Intangible Assets”. IPR&D represents the fair value of the technology on the date acquired and is tested annually for impairment, as well as whenever events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill – Goodwill is not amortized but is evaluated for impairment annually as of June 30 th of each fiscal year or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Impairment of Goodwill and Indefinite Lived Intangible Assets – We test for goodwill impairment at the reporting unit level, which is one level below the operating segment level. Our detailed impairment testing involves comparing the fair value of each reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit and is based on discounted cash flows or relative market-based approaches. If the carrying value of the reporting unit exceeds its fair value, we record an impairment loss for such excess. The Company has elected to perform its annual analysis on June 30th. The annual fair value analysis performed on goodwill supported that goodwill was not impaired as of June 30, 2023. There have been no events which have caused the Company to conduct an interim evaluation of its goodwill through March 31, 2024 (see Note 5.) For indefinite-lived intangible assets, such as IPR&D, on an annual basis on June 30th we determine the fair value of the asset and record an impairment loss, if any, for the excess of the carrying value of the asset over its fair value. For the year ended June 30, 2023, the carrying value of the IPR&D exceeded its fair value. Therefore, the Company recorded an impairment loss of $18,960,000 during the year ended June 30, 2023. During the quarter ended March 31, 2024, the Company recorded an impairment loss of $8,421,000 related to the termination of the HV-01 license (see Note 5.) Impairment of Long-Lived Assets – Long-lived assets, such as property and equipment, definite and indefinite life intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectations that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and would no longer be depreciated. The depreciable basis of assets that are impaired and continue in use are their respective fair values. 9 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Leases – In accordance with ASC Topic 842, the Company determined the initial classification and measurement of its right-of-use assets and lease liabilities at the lease commencement date and thereafter. The lease terms include any renewal options and termination options that the Company is reasonably assured to exercise, if applicable. The present value of lease payments is determined by using the implicit interest rate in the lease, if that rate is readily determinable; otherwise, the Company develops an incremental borrowing rate based on the information available at the commencement date in determining the present value of the future payments. Rent expense for operating leases is recognized on a straight-line basis, unless the operating lease right of use assets have been impaired, over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the condensed consolidated statements of operations. For operating leases that reflect impairment, the Company will recognize the amortization of the operating lease right-of-use assets on a straight-line basis over the remaining lease term with rent expense still included in general and administrative expenses in the unaudited condensed consolidated statements of operations. The Company has elected the practical expedient to not separate lease and non-lease components. The Company’s non-lease components are primarily related to property maintenance, insurance, and taxes, which vary based on future outcomes, and thus are recognized in general and administrative expenses when incurred (see Note 6.) Research and Development Expenses – The Company expenses research and development costs incurred in formulating, improving, validating, and creating alternative or modified processes related to and expanding the use of the Oncology, HIV and HBV therapies and technologies for use in the prevention, treatment, amelioration of and/or therapy for Oncology, HIV and HBV. Research and development expenses for the three and nine months ended March 31, 2024, amounted to $ 1,087,156 , and $ 2,274,321 , respectively. Research and development expenses for the three and nine months ended March 31, 2023, amounted to $ 239,137 , and $ 3,170,471 , respectively. Income Taxes – The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Accounting for Income Taxes”, which requires an asset and liability approach for accounting for income taxes. Loss Per Share – The Company calculates earnings/ (loss) per share in accordance with FASB ASC Topic 260, “Earnings Per Share”. Basic earnings per common share (EPS) are based on the weighted average number of shares of Common Stock outstanding during each period. Diluted earnings per common share are based on shares outstanding (computed as under basic EPS) and potentially dilutive shares of Common Stock. Potential shares of Common Stock included in the diluted earnings per share calculation include in-the-money stock options that have been granted but have not been exercised and shares issuable upon conversion of convertible preferred stock and convertible notes. Because of the net loss for the three and nine months ended March 31, 2024, and 2023, the dilutive shares for all periods were excluded from the Diluted EPS calculation as the effect of these potential shares of Common Stock is anti-dilutive. The Company had 9,522,967 and 5,410,460 potential shares of Common Stock excluded from the Diluted EPS calculation as of March 31, 2024, and March 31, 2023, respectively. Fair Value of Financial Instruments – The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic 820, “Fair Value Measurements”. The authoritative guidance, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. There were no Level 1, 2, or 3 assets, nor any Level 1, or 2 liabilities measured at fair value on a recurring basis as of March 31, 2024 and 2023, respectively. Level 3 liabilities held as of March 31, 2024, consisted of a contingent consideration liability related to the February 13, 2024, acquisition of Renovaro Cube (see Note 3.) 10 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)   Stock Options and Restricted Share Units – The Company has granted stock options, restricted share units (“RSUs”) and warrants. The Company accounts for stock-based awards in accordance with the provisions of FASB ASC Topic 718, “Compensation - Stock Compensation”. Stock-Based Compensation – The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation - Stock Compensation”. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to consultants and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the required service period, which is generally the vesting period. Stock based compensation costs for the vesting of options and RSUs granted for the three and nine months ended March 31, 2024 were $ 1,861,601 and $ 3,844,658 , respectively. Stock based compensation costs for the vesting of options and RSUs granted for the three and nine months ended March 31, 2023 were $ 1,076,203 and $ 2,922,166 , respectively (See Note 8.) Recently Adopted Accounting Pronouncements – Recent accounting pronouncements issued by the FASB do not or are not believed by management to have a material impact on the Company’s present or future financial statements. NOTE 2 — GOING CONCERN The Company’s consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has incurred substantial recurring losses from continuing operations, has used cash in the Company’s continuing operations, and is dependent on additional financing to fund operations. The Company incurred a net loss of $ 17,024,414 and $ 30,728,563 for the three and nine months ended March 31, 2024, respectively. As of March 31, 2024, the Company had cash and cash equivalents of $ 312,697 and an accumulated deficit of $ 274,757,816 and a working capital deficit of $ 19,654,098 . These conditions raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements are issued. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. Management has reduced overhead and administrative costs by streamlining the organization to focus around two of its therapies (oncology and a HIV therapeutic vaccine) and investment in the development and validation of its AI driven cancer diagnostics platform. The Company has tailored its workforce to focus on these therapies. In addition, the Company intends to attempt to secure additional required funding through equity or debt financing. However, there can be no assurance that the Company will be able to obtain any sources of funding. Such additional funding may not be available or may not be available on reasonable terms, and, in the case of equity financing transactions, could result in significant additional dilution to our stockholders. If we do not obtain required additional equity or debt funding, our cash resources will be depleted and we could be required to materially reduce or suspend operations, which would likely have a material adverse effect on our business, stock price and our relationships with third parties with whom we have business relationships, at least until additional funding is obtained. If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that could result in our stockholders losing some or all of their investment in us. Funding that we may receive during the fiscal year 2024 is expected to be used to satisfy existing and future obligations and liabilities and working capital needs, to support commercialization of our products, to conduct the clinical and regulatory work to develop our product candidates, and to begin building working capital reserves. 11 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 — FAIR VALUE MEASUREMENTS The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic 820, “Fair Value Measurements”. The authoritative guidance among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair val ue hierarchy, which prioritizes the inputs used in measuring fair value as follows: ● Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and ● Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. There we re no Level 1, 2 or 3 assets, nor any Level 1 or 2 liabilities as of March 31, 2024. Level 3 liabilities held as of March 31, 2024, consisted of a contingent consideration liability related to the February 13, 2014, acquisition of Renovaro Cube, (the “Acquisition”). As consideration for the Acquisition, the stockholders of Renovaro Cube received (i) 70,834,183 shares of Common Stock, and (ii) the right to receive contingent shares pro rata upon the exercise of convertible notes, options, and warrants, which were outstanding at closing. The contingent consideration liability was recorded at fair value of $ 20,557,500 at the time of acquisition and is subsequently remeasured to fair value at the end of each reporting period. At March 31, 2024, there were 8,474,146 contingent shares issuable in connection with the Acquisition of Renovaro Cube. The fair value of the contingent consideration liability is estimated using a Black-Scholes option-pricing model and a Monte-Carlo option pricing model. The key inputs to the model are all contractual or observable with the exception being volatility, which is computed, based on the volatility of the Company’s underlying stock. The key inputs to valuing the contingent consideration liability as of March 31, 2024, were: Schedule of fair value contingent consideration Stock Price $ 2.65 Exercise Price $ 0.46 - $ 4.50 Volatility 109 % - 140 % Risk Free Rate 4.11 % - 5.26 % Expected Dividends 0 % Discount Rate (Monte-Carlo model only) 12 % Expected Term (years) 0.43 – 9.75 At initial recognition of the contingent consideration, the inputs were: Stock Price $ 1.92 Exercise Price $ 0.46 - $ 4.50 Volatility 107 % - 133 % Risk Free Rate 4.22 % - 5.14 % Expected Dividends 0 % Discount Rate (Monte-Carlo model only) 12 % Expected Term (years) 0.56 – 9.88 12 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 — FAIR VALUE MEASUREMENTS (Continued) Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, accounts payable, accrued expenses, lease obligations and notes payable approximate their recorded values due to their short-term maturities. The following table sets forth the Level 3 liability at March 31, 2024, which is recorded on the consolidated balance sheet at fair value on a recurring basis. As required, this liability is classified based on the lowest level of input that is significant to the fair value measurement: Schedule of consolidated balance sheet at fair value on a recurring basis Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Inputs Significant Other Observable Inputs Significant Other Unobservable Inputs (Level 1) (Level 2) (Level 3) The roll forward of the contingent consideration liability is as follows: Balance June 30, 2023 — — $ — Contingent consideration in Acquisition — — 20,557,500 Fair value adjustment — — ( 486,500 ) Contingent Consideration Liability at March 31, 2024 — — $ 20,071,000 NOTE 4 — PROPERTY AND EQUIPMENT Property and equipment consisted of the following: Schedule of property and equipment Useful Life March 31, 2024 June 30, 2023 Lab Equipment and Instruments 4 - 7 $ 617,882 $ 576,298 Leasehold Improvements 10 224,629 224,629 Furniture, Fixtures and Equipment 4 - 7 194,398 172,861 Total 1,036,909 973,788 Less Accumulated Depreciation ( 547,994 ) ( 464,799 ) Net Property and Equipment $ 488,915 $ 508,989 Depreciation expense amounted to $ 29,526 and $ 83,203 for the three and nine months ended March 31, 2024, respectively, and $ 26,662 and $ 80,915 for the three and nine months ended March 31, 2023, respectively. 13 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 — INTANGIBLE ASSETS AND GOODWILL At March 31, 2024, and June 30, 2023, definite-life intangible assets, net of accumulated amortization, consisted of patents on the Company’s products and processes of $ 31,042 and $ 39,676 , respectively. The patents are recorded at cost and amortized over twenty years from the date of application. Amortization expense for the three and nine months ended March 31, 2024, was $ 779 and $ 7,524 , respectively. Amortization expense for the three and nine months ended March 31, 2023, was $ 1,580 and $ 4,572 , respectively. At March 31, 2024, and 2023, indefinite life intangible assets consisted of In-Process Research and Development (“IPR&D”), which is not amortizable until the intangible asset provides economic benefit. At March 31, 2024, and June 30, 2023, definite and indefinite-life intangible assets consisted of the following: Schedule of intangible assets Useful Life June 30, 2023 Additions Amortization Impairment Translation Adjustment March 31, 2024 Definite Life Intangible Assets Patents 20 Years $ 290,936 $ — $ — $ — $ ( 3,856 ) $ 287,080 Less Accumulated Amortization ( 251,260 ) — ( 7,524 ) — 2,746 256,038 Net Definite-Life Intangible Assets $ 39,676 $ — $ ( 7,524 ) $ — $ ( 1,110 ) $ 31,042 Indefinite Life Intangible Assets and Goodwill Goodwill 11,640,000 151,536,444 — — 1,010,408 164,186,852 IPR&D $ 42,611,000 10,684,091 — ( 8,421,000 ) 71,164 44,945,255 Total Indefinite Life Intangible Assets and Goodwill $ 54,251,000 $ 162,220,535 $ — $ ( 8,421,000 ) $ 1,081,572 $ 209,132,107 Expected future amortization expense is as follows: Schedule of expected future amortization expense Year ending June 30, 2024 $ 1,942 2025 9,700 2026 9,700 2027 9,700 Total $ 31,042 During February 2018, the Company acquired IPR&D related to a License Agreement (as licensee) to an HIV therapy which consists of a perpetual, fully paid-up, royalty-free, sub-licensable, and sole and exclusive worldwide license to research, develop, use, sell, have sold, make, have made, offer for sale, import and otherwise commercialize certain intellectual property in cellular therapies for the prevention, treatment, amelioration of and/or therapy exclusively for HIV in humans, and research and development exclusively relating to HIV in humans. The IPR&D intangible asset is classified as an indefinite life asset that is tested annually for impairment. On February 13, 2024, the Company acquired Renovaro Cube as a wholly owned subsidiary pursuant to a stock purchase agreement. As part of the acquisition of Renovaro Cube, the Company acquired IPR&D assets valued at $10,684,091. Impairment – On March 1, 2024, the Company received a notice from the sole manager of Weird Science LLC terminating the License Agreement by and between Weird Science LLC and Enochian Biopharma, Inc. (now known as Renovaro Biosciences, Inc.), a wholly owned subsidiary of the Company, dated February 16, 2018. Due to the termination of the license agreement, the Company abandoned the development of a technology included in its IPR&D and recorded an impairment of $8,421,000 in the period ended March 31, 2024. 14 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 — LEASES Operating Leases — On November 13, 2017, Renovaro entered into a Lease Agreement for a term of five years and two months from November 1, 2017, with Plaza Medical Office Building, LLC, a California limited liability company, as landlord, (the “Landlord”) pursuant to which the Company agreed to lease from the Landlord approximately 2,325 rentable square feet. The base rent increased by 3% each year and ranged from approximately $8,719 per month for the first year to $10,107 per month for the two months of the sixth year. The lease was terminated early without penalties or additional costs as of September 30, 2022, that released an accrual of $70,800 related to leasehold improvements that was not utilized. On June 19, 2018, Renovaro entered into a Lease Agreement for a term of ten years from September 1, 2018, with Century City Medical Plaza Land Co., Inc., pursuant to which the Company agreed to lease approximately 2,453 rentable square feet. On February 20, 2019, Renovaro entered into an Addendum to the original Lease Agreement with an effective date of December 1, 2019, where it expanded the lease area to include another 1,101 square feet for a total rentable 3,554 square feet. The base rent increases by 3% each year, and ranges from $17,770 per month for the first year to $23,186 per month for the tenth year. The equalized monthly lease payment for the term of the lease is $20,050. Renovaro subleased the space as of June 25, 2022 through April 30, 2023. (See subsection below “ Sublease Agreement ” for details.) Renovaro Cube leases an office facility in Amsterdam, Netherlands, under a 30-month operating lease agreement commencing on September 1, 2023, with a maturity date of February 28, 2026. In determining lease asset values, the Company considers fixed and variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. The Company identified and assessed the following significant assumptions in recognizing the right-of-use asset and corresponding liabilities: Expected lease term — The expected lease term includes both contractual lease periods and, when applicable, cancelable option periods when it is reasonably certain that the Company would exercise such options. The Company’s leases have a remaining lease term of 41 and 23 months. As of March 31, 2024, the weighted-average remaining term is 2.77 years. Incremental borrowing rate — The Company’s lease agreements do not provide an implicit rate. As the Company does not have any external borrowings for comparable terms of its leases, the Company estimated the incremental borrowing rate based on the U.S. Treasury Yield Curve rate that corresponds to the length of each lease. This rate is an estimate of what the Company would have to pay if borrowing on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. As of March 31, 2024, the weighted-average discount rate is 5.16 %. Lease and non-lease components — In certain cases the Company is required to pay for certain additional charges for operating costs, including insurance, maintenance, taxes, and other costs incurred, which are billed based on both usage and as a percentage of the Company’s share of total square footage. The Company determined that these costs are non-lease components, and they are not included in the calculation of the lease liabilities because they are variable. Payments for these variable, non-lease components are considered variable lease costs and are recognized in the period in which the costs are incurred. Below are the lease commitments for the next 5 years: Schedule of lease commitments Year Ending June 30 th Lease Expense 2024 286,252 2025 557,851 2026 349,204 2027 309,491 2028 59,439 Sub-total 1,562,237 Less imputed interest ( 108,658 ) Total $ 1,453,579 15 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 — LEASES (Continued) Sublease Agreement On June 20, 2022, the Company entered into a sublease Agreement with One Health Labs (the “Subtenant”), whereby the Subtenant agreed to lease 3,554 square feet of space currently rented by the Company in Century City Medical Plaza as of June 25, 2022, for a period of 3.5 years with an option to renew for the remaining term of the lease that ends as of June 19, 2028. The base rent was $17,770 per month plus $750 towards utility fees that are part of the original lease agreement and would increase by 3% each year over the term of the sublease. The Company received a total of $57,022 on July 1, 2022 after execution of the sublease to cover the first month rent, utility fee and deposit. The first sublease payment began on August 1, 2022. In accordance with ASC Topic 842, the Company treated the sublease as a separate lease, as the Company was not relieved of the primary obligation under the original lease. The Company continues to account for the Century City Medical Plaza lease as a lessee and in the same manner as prior to the commencement date of the sublease. The Company accounted for the sublease as a lessor of the lease. The sublease was classified as an operating lease, as it did not meet the criteria of a sales-type or direct financing lease. On April 18, 2023, the Company entered into a sublease termination agreement with the Subtenant, whereby the Subtenant and the Company agreed to terminate the sublease effective as of April 30, 2023. The Subtenant agreed to pay the Company $ 139,460 along with the security deposit of $ 35,540 for a total termination fee of $ 175,000 , to permit early termination of the sublease. The Company recognized operating income from the sublease on a straight-line basis in its statements of operations over the sublease term. During the three and nine months ended March 31, 2024 and 2023, the net operating lease expenses were as follows: Schedule of net operating lease expenses For the Three Months Ended For the Nine Months Ended March 31, March 31, 2024 2023 2024 2023 Operating Lease Expense $ 106,790 $ 99,099 $ 236,455 $ 239,759 Sub lease Income — ( 53,310 ) — ( 159,930 ) Total Net Lease Expense $ 106,790 $ 45,789 $ 236,455 $ 79,829 Lease expense charged to general and administrative expenses for the three and nine months ended March 31, 2024, amounted to $ 106,790 and $ 236,455 , respectively. Lease expense charged to general and administrative expenses for the three and nine months ended March 31, 2023, amounted to $ 45,789 and $ 79,829 , respectively. During the three and nine months ended March 31, 2024, the Company paid $ 108,441 and $ 232,237 under operating leases, respectively. During the three and nine months ended March 31, 2023, the Company paid $ 98,950 and $ 339,993 under operating leases, respectively. The difference between the operating lease expense for the nine months ended March 31, 2023 in the amount of $ 79,829 and the cash paid of $ 339,993 , is primarily made up of the release of an accrual of $ 77,242 related to the termination of the Plaza Medical Office Building, LLC lease. 16 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 — DEBT Convertible Notes Payable — March 2024 Note — On March 14, 2024, the Company entered into a Subscription Agreement with an investor to issue a Convertible Promissory Note in the amount of $ 500,000 (the “March 2024 Note”). The March 2024 Note bears an interest rate of 10 % per annum and shall mature on March 15, 2025 . The Company is required to pay interest quarterly, in arrears, in cash, on the first day of each quarter of each year following the issue date prior to the maturity of the March 2024 Note. Notwithstanding the immediately foregoing, at the option of the holder, interest may accrue on this Note on a quarterly basis. The March 2024 Note is convertible either at the option of the holder after a qualified offering. If no qualified offering occurs prior to the maturity date, the March 2024 Note is to be repaid in cash. The 2024 Notes — On January 11, 2024, the Company entered into a Subscription Agreement with an investor to issue a Convertible Promissory Note (the “January 2024 Note I”) in the amount of $ 460,000 . The January 2024 Note I bears an interest rate of 12 % per annum and shall mature on January 11, 2025 . The Company is required to pay interest quarterly, in arrears, in cash, on the first day of each quarter of each year following the Issue Date prior to the maturity of the Notes. Notwithstanding the immediately foregoing, at the option of the Holder, interest may accrue on this Note on a quarterly basis. The January 2024 Note I is convertible either at the option of the Holder or automatically upon maturity into shares of the Company’s Common Stock at the conversion price of $ 3.38 . On January 12, 2024, the Company entered into Subscription Agreements with an investor (the “Investor”) to issue a Convertible Promissory Note for an aggregate principal amount of $ 125,000 (the “January 2024 Note II”, and collectively with the January 2024 Note I, the “January 2024 Notes”). The Company received a total of $125,000 in gross proceeds. The January 2024 Note II bears an interest rate of 12 % per annum and shall mature on December 29, 2024 (the “Maturity Date”). The Company is required to pay interest quarterly, in arrears, in cash, on the first day of each quarter of each year following the issue date prior to the maturity of the 2024 Notes. The January 2024 Note II is convertible either at the option of the Holder or automatically upon maturity into shares of the Company’s Common Stock at the Note Conversion Price of $ 3.38 . The January 2024 Notes principal balance at March 31, 2024, is $ 585,000 . December 2023 Notes — Between December 1, 2023, and December 29, 2023, the Company entered into Subscription Agreements with two investors to purchase Convertible Promissory Notes for an aggregate principal amount of $ 560,000 (the “December Notes”). The Company received a total of $ 560,000 in gross proceeds from the private placement prior to the end of the quarter ending December 31, 2023, and it subsequently received $ 20,000 in January 2024. The December Notes bear an interest rate of 12 % per annum and shall mature one year after their respective dates of issuance (the “Maturity Date”). The Company is required to pay interest quarterly, in arrears, in cash, on the first day of each quarter of each year following the Issue Date prior to the maturity of the December Notes. Notwithstanding the immediate foregoing, at the option of the Holder, interest may accrue on the December Notes on a quarterly basis. The December Notes are convertible into shares of the Company’s Common Stock in whole or in part at any time and from time to time, after the Original Issue Date and prior to the Maturity Date, at a conversion price of $ 3.38 per share. The December Notes will be accounted for under ASC 470-20, and all proceeds received from the issuance will be recognized as a liability on the balance sheet. The December Notes principal balance at March 31, 2024, is $ 560,000 . As of March 31, 2024, the Company accrued interest expense of $ 37,463 related to the 2024 Notes and December 2023 Notes. The 2024 Notes and December 2023 Notes balance at March 31, 2024 was $ 1,645,000 . The 2023 Notes — Between September 5, 2023, and October 5, 2023, the Company entered into Subscription Agreements with five investors to purchase 5 % Original Issue Discount Convertible Promissory Notes (the “2023 Notes”) for an aggregate principal amount of $ 2,105,263 . The Company received a total of $ 2,000,000 in gross proceeds from the private placement, after taking into account the 5 % original issue discount. The discount of $ 105,263 will be accreted over the life of the 2023 Notes. The 2023 Notes bear an interest rate of 12 % per annum and shall mature on September 5, 2024 (the “Maturity Date”). The Company is required to pay interest quarterly, in arrears, in cash, on the first day of each quarter of each year following the Issue Date prior to the maturity of the 2023 Notes. Notwithstanding the immediately foregoing, at the option of the Holder, interest may accrue on the Notes on a quarterly basis. The 2023 Notes are convertible into shares of the Company’s Common Stock upon the occurrence of a Qualified Offering (as defined below) or upon the Maturity Date. 17 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 — DEBT (Continued) The 2023 Notes are subject to mandatory conversion (“Mandatory Conversion”) in the event the Company closes an offering of its Common Stock and receives gross proceeds of not less than $ 10,000,000 (“Qualified Offering”). The conversion price per share of Common Stock in the case of a Mandatory Conversion shall be 95 % of the offering price per share in the Qualified Offering, subject to a floor of $ 4.50 per share. In addition, if no Qualified Offering occurs prior to the Maturity Date, the 2023 Notes shall automatically convert into shares of Common Stock on the Maturity Date at a conversion price per share equal to the closing sale price of the Common Stock on the Maturity Date, subject to a floor of $ 4.50 per share. On January 11, 2024, the Company entered into an amendment with one of the investors of the 2023 Notes whereas the conversion terms were amended to provide for optional conversion at a conversion price of $ 3.38 per share. All other terms of the Promissory Note remained the same. The Company treated this as a modification for accounting purposes. For the three and nine months ended March 31, 2024, discount amortization of $ 26,316 and $ 55,694 was charged to interest expense, respectively. As of March 31, 2024, the Company accrued interest expense of $ 134,719 . The 2023 Notes balance, net of discount at March 31, 2024 is $ 2,055,694 . The Convertible Notes — On February 6, 2020, the Company issued two Convertible Notes (the “Convertible Notes”) to Paseco ApS (the “Holder”), a Danish limited company and an existing stockholder of the Company, each with a face value amount of $ 600,000 , convertible into shares of Common Stock. The outstanding principal amount of the Convertible Notes was due and payable on February 6, 2023. Interest on the Convertible Notes commenced accruing on the date of issuance at six percent ( 6 %) per annum, computed on the basis of twelve 30-day months, and was compounded monthly on the final day of each calendar month based upon the principal and all accrued and unpaid interest outstanding as of such compound date. The interest was payable in cash on a semi-annual basis. The conversion price was equal to $12.00 per share of Common Stock. The Holder did not exercise its conversion feature that expired on February 6, 2021. The Company evaluated the Convertible Notes in accordance with ASC 470-20 and identified that they each contain an embedded conversion feature that shall not be bifurcated from the host document (i.e., the Convertible Notes) as they are not deemed to be readily convertible into cash. All proceeds received from the issuance were recognized as a liability on the balance sheet. Effective December 30, 2022 (the “Effective Date”), the Company amended and restated the Convertible Notes (the “Amended and Restated Secured Notes”). Pursuant to the Amended and Restated Secured Notes, the due date was extended to February 28, 2024 . The Amended and Restated Secured Notes are convertible by the Holder if the Company consummates a public offering or private placement of Common Stock or securities convertible into Common Stock. The conversion price shall be the price being paid by the investors in such offering. The interest rate was increased to twelve percent ( 12 %) per annum, which was prepaid by the Company in full on the date of amendment through the issuance of 198,439 shares of the Company’s Common Stock: 29,419 shares for accrued interest up to the Effective Date and 169,020 shares related to the prepayment of interest through the extension date of the Amended and Restated Secured Notes using the closing market price on the Effective Date, of $ 1.03 . The obligations of the Company under the Amended and Restated Secured Notes were secured by a security agreement (the “Security Agreement”). The Company evaluated the Amended and Restated Secured Notes and conversion feature to determine the appropriate accounting treatment based on the terms of the agreement. In accordance with ASC 480- Distinguishing Liabilities from Equity, the Company determined that the Amended and Restated Secured Notes embody an obligation that may require the Company to settle with the issuance of a variable number of shares, where the monetary value of the obligation is based predominantly on a fixed monetary amount of $ 1,200,000 known at inception. Accordingly, the Company recorded the Amended and Restated Secured Notes as share settled debt. The total value of the shares issued was $ 204,392 which included $ 174,090 of prepaid interest and $ 30,302 for accrued interest as of December 30, 2022. On June 26, 2023, the Holder notified the Company that it wished to elect to exercise its conversion right triggered by a private placement. Therefore, all outstanding $ 1,200,000 Amended and Restated Secured Notes were converted into 2,264,150 shares of Common Stock and 1,132,075 warrants. There were no Amended and Restated Secured Notes outstanding after the foregoing conversion. 18 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 — DEBT (Continued) Notes Payable — Bridge Loans — On March 26, 2024, the Company issued Paseco ApS a Promissory Note in the principal amount of $160,000. The Note bears an interest rate of 10% per annum and was to mature on May 1, 2024. On May 1, 2024, the Company and Paseco ApS entered into an amendment to the Promissory Note to extend the maturity date to July 1, 2024 (the “Maturity Date”). The Company is required to pay interest on the maturity date. The Notes Payable will be accounted for under ASC 470-20, and all proceeds received from the issuance will be recognized as a liability on the balance sheet. As of March 31, 2024, the Company accrued $215 of interest expense that is included in accrued expenses on the balance sheet. The Note balance at March 31, 2024 is $160,000. On February 5, 2024, the Company entered into an agreement with RS Bio ApS, a Danish entity controlled by our Chairman, Rene Sindlev (“RS Bio”) to issue a 5 % Original Issue Discount Secured Promissory Note for the principal amount of $ 105,263 . The Company received $ 100,000 in gross proceeds after taking into account the 5 % original issue discount. The Note bears an interest rate of 12 % per annum and matured on March 1, 2024 (the “Maturity Date”). The obligations under this Note are secured by the Amended and Restated Security Agreement (discussed below). The Company is required to pay interest on the maturity date. The Notes Payable will be accounted for under ASC 470-20, and all proceeds received from the issuance will be recognized as a liability on the balance sheet net of discount. For the three and nine months ended March 31, 2024, discount amortization of $ 5,263 was charged to interest expense, respectively. As of March 31, 2024, the Company accrued $ 3,158 of interest expense that is included in accrued expenses on the balance sheet. The Note balance, net of discount at March 31, 2024 was $ 105,263 . On January 2, 2024, the Company entered into an agreement with RS Bio to issue a 5 % Original Issue Discount Secured Promissory Note for the principal amount of $ 526,315 (the “January 2024 Note”). The Company received a total of $ 500,000 in gross proceeds after taking into account the 5 % original issue discount. The January 2024 Note bears an interest rate of 12 % per annum and matured on March 1, 2024 (the “Maturity Date”). The Company is required to pay interest on the maturity date. The Notes Payable will be accounted for under ASC 470-20, and all proceeds received from the issuance will be recognized as a liability on the balance sheet net of discount. For the three and nine months ended March 31, 2024, discount amortization of $ 26,315 was charged to interest expense, respectively. As of March 31, 2024, the Company accrued $ 15,789 of interest expense that is included in accrued expenses on the balance sheet. The Note balance, net of discount at March 31, 2024 was $ 526,315 . In connection with the entry into the January 2024 Note, the Company and Paseco ApS agreed to amend and restate the Security Agreement (see Note 7) to add the Company’s obligations under the November 2023 Note and the January 2024 Note to the Secured Obligations (as defined in the Amended and Restated Security Agreement). On November 22, 2023, Renovaro Cube entered into a loan agreement where the holder agreed to loan the Company up to £500,000 (approximately $624,000 USD). The note has a repayment date occurring the first business day after the first anniversary of the draw down of the loan. The first draw down of £250,000 occurred on November 27, 2023, and the second draw down of £249,994 occurred on December 13, 2023. The Company will pay interest on the loan at the rate of 10 % per annum. Interest is accrued quarterly in arrears on the last business day of March, June, September, and December and is payable on the repayment date. As of March 31, 2024, the Company accrued $ 10,545 of interest expense that is included in accrued expenses on the balance sheet. The total amount of the note at March 31, 2024, is $ 639,544 . On November 3, 2023, the Company entered into an agreement with RS Bio to issue a 5 % Original Issue Discount Promissory Note for the principal amount of $ 1,000,000 (the “November 2023 Note”). The Company received a total of $ 950,000 in gross proceeds after taking into account the 5 % original issue discount. The discount of $ 50,000 will be accreted over the life of the Note. The November 2023 Note bears an interest rate of 12 % per annum and was due to mature on January 1, 2024 (the “Maturity Date”). On January 1, 2024, the Company entered into an amendment with RS Bio for the November 3, 2023, $ 1,000,000 Note Payable bridge loan to extend the maturity date until March 1, 2024 . The Company is required to pay interest on the maturity date. The Notes Payable will be accounted for under ASC 470-20, and all proceeds received from the issuance will be recognized as a liability on the balance sheet net of discount. On February 16, 2024, the Company received notice from the holder to exercise 471,699 warrants outstanding at $ 0.53 per share and apply $ 250,000 of the note balance to the exercise price of the warrants. For the three and nine months ended March 31, 2024, discount amortization of zero 0 and $ 50,000 was charged to interest expense, respectively. As of March 31, 2024, the Company accrued $ 46,583 of interest expense that is included in accrued expenses on the balance sheet. The Note balance, net of discount at March 31, 2024 is $ 750,000 . 19 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 — DEBT (Continued) Promissory Note — On March 30, 2020 (the “Issuance Date”), the Company issued a Promissory Note in the principal amount of $ 5,000,000 (the “Promissory Note”) to the Holder. The principal amount of the Promissory Note was originally payable on November 30, 2021 (the “Maturity Date”). The Promissory Note bore interest at a fixed rate of 6 % per annum, computed based on the number of days between the Issuance Date and the Maturity Date, and the interest was prepaid by the Company in full on the Issuance Date through the issuance of 188,485 shares of the Company’s Common Stock based on the closing market price on that date for a total value of $ 501,370 . The Company evaluated the Promissory Note and PIK interest in accordance with ASC 470-Debt and ASC 835-Interest, respectively. Pursuant to ASC 470-20, proceeds received from the issuance are to be recognized at their relative fair value, thus the liability is shown net of the corresponding discount of $ 493,192 , which is the relative fair value of the shares issued for the PIK interest on the closing date using the effective interest method. The discount of $ 493,192 will be accreted over the life of the Promissory Note. On February 11, 2021, the Company entered into an amendment to the Promissory Note that extended the Maturity Date to November 30, 2022. All other terms of the Promissory Note remained the same. The change in Maturity Date required an additional year of interest at the fixed rate of 6 % per annum, which was prepaid by the Company in full on the date of the amendment through the issuance of 74,054 shares of the Company’s Common Stock based on the closing market price on that date for a total value of $ 298,178 . On May 17, 2022, the Company entered into a second amendment to the Promissory Note that extended the Maturity Date to November 30, 2023 and increased the interest rate from 6 % to 12 % per annum. All other terms of the Promissory Note remained the same. The change in Maturity Date required an additional year of interest at the fixed rate of 12% per annum. Pursuant to the amendment, the Company prepaid interest for the period November 30, 2022 until May 30, 2023 on the date of the amendment through the issuance of 47,115 shares of the Company’s Common Stock based on the closing market price on that date for a total value of $ 299,178 . All other accrued interest payable from May 30, 2023 to the Maturity Date was required to be paid by the Company on May 30, 2023, at the option of the Holder in either (i) cash or (ii) shares of the Company’s Common Stock, valued at the closing sale price of the Common Stock on the Nasdaq Capital Market on May 30, 2023. The Holder elected the interest be paid in cash (the “Interest Payment”). Effective December 30, 2022, the Company entered into a third amendment to the Promissory Note. Pursuant to the third amendment, the Company’s obligations under the Promissory Note were secured by the Security Agreement. To secure the Company’s obligations under each of the Amended and Restated Secured Notes and the Promissory Note, the Company entered into a Security Agreement with the Holder, pursuant to which the Company granted a lien on all assets of the Company (the “Collateral”) for the benefit of the Holder. Upon an Event of Default (as defined in the Amended and Restated Secured Notes and Promissory Note, respectively) the Holder may, among other things, collect or take possession of the Collateral, proceed with the foreclosure of the security interest in the Collateral or sell, lease, or dispose of the Collateral. On June 12, 2023, the Holder notified the Company that it wanted to apply the Interest Payment due to it towards the Company’s next private placement. Therefore, on June 26, 2023, in conjunction with the Company’s private placement, the Company issued (i) 567,588 shares of its Common Stock, par value $ 0.0001 per share and (ii) warrants to purchase 283,794 shares of Common Stock at a purchase price of $ 0.53 per share and applied the Interest Payment of $ 300,822 it owed to the Holder. 20 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 — DEBT (Continued) On July 31, 2023, the Company and the Holder agreed to amend the Promissory Note (the “Fourth Amendment”) to provide the Holder with limited conversion rights in connection with the Company’s next private placement. Per the terms of the Fourth Amendment, the Holder could elect to convert $2 million of the outstanding principal balance of the Promissory Note into the Units being offered in a private placement at the price per Unit being paid by the investors in the private placement (the “Conversion Right”). On August 1, 2023, the Holder notified the Company of its election to exercise the Conversion Right. As a result, $2 million of the outstanding principal balance of the Promissory Note was converted into 280,505 Units at $7.13 per unit, comprised of an aggregate of (i) 280,505 shares of Series A Convertible Preferred Stock of the Company and (ii) Warrants to purchase an aggregate of 1,402,525 shares of Common Stock with an exercise price of $0.65 per share. The Series A Convertible Preferred Stock acquired by the Holder was initially convertible into 2,805,050 shares of Common Stock. A $3 million principal balance remains outstanding under the Promissory Note after the foregoing conversion. The Company concluded that in accordance with ASC 470-20-40-4, the difference between the fair value of the Preferred Shares and warrants and the carrying value of the portion of the Note being converted should be recognized as an extinguishment. The extinguishment loss of $120,018 is recorded in Other Income/Loss in the Statement of Operations. On November 30, 2023, the Company and the Holder agreed to amend the Promissory Note (the “Fifth Amendment”) to where the Company and the Holder extended the maturity of the Original Note until February 29, 2024. In addition, all interest payable from November 30, 2023 to the Maturity Date was payable and is currently payable by the Company as of November 30, 2023. On February 16, 2024, the Company received notice from the holder to exercise 2,953,700 warrants outstanding ranging from $0.53 to $0.65 per share and apply $1,750,000 of the note balance to the exercise price of the warrants. On February 29, 2024, the Company and the Holder agreed to amend the Promissory Note (the “Sixth Amendment”) to where the Company and the Holder extended the maturity of the Original Note until May 1, 2024. On May 1, 2024, the Company and the Holder agreed to amend the Promissory Note (the “Seventh Amendment”) to extend the maturity of the Original Note until May 1, 2024. For the three and nine months ended March 31, 2024, discount amortization of $ 72,500 and $ 357,536 was charged to interest expense. For the three and nine months ended March 31, 2023, discount amortization of $ 74,621 and $ 223,863 was charged to interest expense. The Promissory Note balance, net of discount at March 31, 2024 is $ 1,237,500 . Finance Agreement — On November 30, 2023, the Company entered into a premium finance agreement (the “Agreement”) related to insurance, which resulted in the recognition of a liability and prepaid expense with a principal amount of $ 906,834 at 7.90 % interest per annum, which is reflected on the consolidated balance sheet under “other current liabilities” and “prepaid assets and other assets”, respectively. The repayment of the Agreement will be made in nine equal monthly installments of $ 77,127 after a down payment of $ 235,000 . For the three and nine months ended March 31, 2024 the Company made payments of $ 223,945 and $ 646,128 , respectively. For the three and nine months ended March 31, 2023, under a similar arrangement, the Company made payments of $ 374,367 and $ 840,992 , respectively. For the three and nine months ended March 31, 2024, the Company recorded total interest expense in the amount of 7,436 and $ 12,692 related to the Agreement. This amount is reflected in other income and expenses. Total interest expense recorded for the three and nine months ended March 31, 2024, was $ 303,802 and $ 758,057 , respectively. Interest expense recorded for the three and nine months ended March 31, 2023, was $ 122,289 and $ 310,766 , respectively. 21 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 — STOCKHOLDERS’ EQUITY Preferred Stock — The Company has 10,000,000 authorized shares of Preferred Stock, par value $ 0.0001 per share, of which 1,000,000 shares have been designated as Series A Convertible Preferred Stock. At March 31, 2024, and June 30, 2023, there were zero 0 shares of Series A Convertible Preferred Stock issued and outstanding. Voting — Holders of Series A Preferred Stock shall be permitted to vote on all matters required or permitted to be voted on by the holders of Common Stock of the Company and shall be entitled to that number of votes equal to ten votes for the number of shares of Common Stock into which such Holder’s shares of Preferred Stock could then be converted in accordance with conversion rights. Dividends — The Company shall pay dividends on shares of Series A Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of Preferred Stock. Liquidation Rights — In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of Shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount in cash equal to the aggregate liquidation value of all Shares held by such holder. The Series A Preferred Stock is not participating preferred. Conversion Rights — On or after the date of issuance, any holder of Series A Preferred Stock shall have the right by written election (a “Series A Election Notice”) to the Company to convert all or any portion of the outstanding Shares of Series A Preferred Stock held by such holder into an aggregate number of shares of Common Stock as is determined by multiplying the number of Shares to be converted by ten (10) (the “Conversion Ratio”). Common Stock —During the period ended March 31, 2024, the Company increased its authorized shares of Common Stock. The Company has 350,000,000 authorized shares of Common Stock, par value $ 0.0001 per share. At March 31, 2024, and June 30, 2023, there were 147,488,598 and 63,698,144 shares issued and outstanding, respectively. Voting — Holders of Common Stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do not have any right to cumulate votes in the election of directors. Dividends — Holders of Common Stock are entitled to receive ratably such dividends as the Board from time to time may declare out of funds legally available. Liquidation Rights — In the event of any liquidation, dissolution, or winding up of affairs of the Company, after payment of all debts and liabilities and preferences to holders of preferred stock, the holders of Common Stock will be entitled to share ratably in the distribution of any of the remaining assets. Purchase Agreement with Lincoln Park Capital On June 20, 2023, the Company entered into a purchase agreement (the “2023 Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company may sell and issue to Lincoln Park, and Lincoln Park is obligated to purchase, up to $ 20,000,000 of shares of Common Stock over the 36-month term of the 2023 Purchase Agreement. Concurrently with entering into the 2023 Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park, pursuant to which it agreed to provide Lincoln Park with certain registration rights related to the shares issued under the 2023 Purchase Agreement. 22 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 — STOCKHOLDERS’ EQUITY (Continued) In consideration for entering into the 2023 Purchase Agreement, the Company issued 696,021 shares of Common Stock to Lincoln Park as a commitment fee on June 20, 2023. During the three and nine months ended March 31, 2024, no shares of Common Stock to Lincoln Park were sold under the Purchase Agreement. Preferred Stock Issuances On August 1, 2023, the Company closed a private placement of 280,505 units (the “ Units ”), each consisting of (i) one share of the Company’s Series A Convertible Preferred Stock, (the “ Preferred Stock ”) and (ii) one Common Stock purchase warrant (each, a “ Warrant ”, and together with the Units and the shares of Preferred Stock, the “ Securities ”) to purchase five shares of the Company’s Common Stock, at a price per Unit equal to $ 7.13 for aggregate proceeds to the Company of $ 2,000,000 in cash. In addition, the Company issued 280,505 Units in connection with the conversion of $ 2,000,000 of the Promissory Note (see Note 7.) The Company issued an aggregate of 561,010 shares of Preferred Stock, which are initially convertible into an aggregate of 5,610,100 shares of Common Stock. In connection with the Private Placement, the Company sold Warrants to purchase an aggregate of 2,805,050 shares of Common Stock. The Warrants are exercisable for five years from the date of issuance and have an exercise price of $ 0.65 per share, payable in cash. On February 13, 2024 pursuant to the acquisition of Renovaro Cube, the 561,010 shares of Preferred Stock were converted into an aggregate of 5,610,100 shares of Common Stock. As of March 31, 2024 there were zero shares of 0 Preferred Stock outstanding. Common Stock Issuances Between July 28, 2023 and September 28, 2023, the Company issued 2,000,000 shares of Common Stock for consulting services. On October 23, 2023 the Company issued 1,000,000 shares of Common Stock for advisory services to Avram Miller, a member of the Company’s board of directors. On December 4, 2023 the Company issued 525,945 shares of Common Stock pursuant to warrants exercised for cash proceeds of $ 341,865 . On February 13, 2024 the Company issued 70,834,183 shares of Common Stock pursuant to the Stock Purchase Agreement of Renovaro Cube. On February 13, 2024 pursuant to the acquisition of Renovaro Cube, the 561,010 shares of Preferred Stock were converted into an aggregate of 5,610,100 shares of Common Stock. On February 15, 2024 the Company closed a private placement of 344,827 shares of Common Stock, $ 0.0001 par value, at $2.90 per share for aggregate proceeds to the Company of $ 1,000,000 in cash. On February 15, 2024 the Company issued 50,000 shares of Common Stock for consulting services. 23 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 — STOCKHOLDERS’ EQUITY (Continued) On February 20, 2024, 2,953,700 warrants outstanding were exercised ranging from $ 0.53 to $ 0.65 per share and the aggregate $ 1,750,000 of a promissory note held by the holder was applied to the exercise price of the warrants (see Note 7). On February 20, 2024, 471,699 warrants outstanding were exercised ranging at $ 0.53 per share and $ 250,000 of a promissory note held by the holder was applied to the exercise price of the warrants (see Note 7). Acquisition of Renovaro Denmark — At March 31, 2024, and June 30, 2023, the Company maintained a reserve of 17,414 shares of Common Stock of the Registrant held in escrow according to Danish law (the “Escrow Shares”), all of which are reflected as issued and outstanding in the accompanying consolidated financial statements. The Escrow Shares are reserved to acquire the shares of Renovaro Denmark held by non-consenting shareholders of Renovaro Denmark on both March 31, 2024, and June 30, 2023, in accordance with Section 70 of the Danish Companies Act and the Articles of Association of DanDrit Denmark. There have been 167,639 shares of Common Stock issued to non-consenting shareholders of Renovaro Denmark as of March 31, 2024. During the three and nine months ended March 31, 2024, the Company issued zero 0 shares of Common Stock to such non-consenting shareholders of Renovaro Denmark. There is no impact on outstanding shares as these shares are reflected as issued and outstanding. Stock-based Compensation The Company recognizes compensation costs for stock option awards to employees and directors based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted-average assumptions used to estimate the fair values of the stock options granted using the Black-Scholes option-pricing model are as follows in the three months ended March 31, 2024: Schedule of weighted-average assumptions used to estimate the fair values of the stock options granted Renovaro Inc. Expected term (in years) 5.0 – 6.5 Volatility 84.33 % – 108.79 % Risk free interest rate 3.12 % – 4.83 % Dividend yield 0 % On February 13, 2024, the Company repriced 3,849,931 eligible employee and consultant options from the original issued exercise price to $1.92 per share, the closing price of the Company’s Common Stock on February 13, 2024. The Company recognized stock-based compensation expense related to the repricing of options of $ 886,849 for the period ended March 31, 2024. In total, the Company recognized stock-based compensation expense related to options of $ 1,326,592 and $ 2,775,793 for the three and nine months ended March 31, 2024, respectively. The Company recognized stock-based compensation expense related to options of $ 1,076,203 and $ 2,922,166 for the three and nine months ended March 31, 2023, respectively. At March 31, 2024, the Company had approximately $ 579,305 of unrecognized compensation cost related to non-vested options. Plan Options On February 6, 2014, the Board adopted the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), and the Company had reserved 1,206,000 shares of Common Stock for issuance in accordance with the terms of the 2014 Plan. 24 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 — STOCKHOLDERS’ EQUITY (Continued) On October 30, 2019, the Board approved and on October 31, 2019, the Company’s stockholders adopted its 2019 Equity Incentive Plan (the “2019 Plan”), which replaced the 2014 Plan. The 2019 Plan provided that the maximum aggregate number of shares of the Company’s Common Stock reserved and available for issuance under the 2019 Plan was the sum of (1) 6,000,000 new shares, and (2) the number of shares available for the grant of awards as of the effective date under the 2014 Plan plus any options related to awards that expire, are terminated, surrendered, or forfeited for any reason without issuance of shares under the 2014 Plan after the effective date of the 2019 Plan. Effective July 21, 2023, the Company adopted the Renovaro Biosciences Inc. 2023 Equity Incentive Plan (the “2023 Plan”). The 2023 Plan replaced the 2019 Plan. Any awards outstanding under the 2019 Plan as of the date of adoption of the 2023 Plan remain subject to and will be available under the 2019 Plan, and any shares subject to outstanding awards under the 2019 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares automatically become available for issuance under the 2023 Plan. The Company granted options to purchase zero 0 and 366,500 shares of Common Stock to employees with a three-year vesting period during the three and nine months ended March 31, 2024, respectively under the 2019 and 2023 Plan. The Company granted options to purchase 15,000 and 193,000 shares of Common Stock to employees with a three-year vesting period during the three and nine months ended March 31, 2023, respectively under the 2019 Plan. During the three and nine months ended March 31, 2024, respectively, the Company granted options to purchase zero 0 shares of Common Stock to employees with a six-month vesting period under the 2023 Plan. During the three and nine months ended March 31, 2023, the Company granted options to purchase zero 0 and 184,800 issued and 0 18,960 forfeited shares of Common Stock to employees with a six-month vesting period, respectively under the 2019 Plan. During the three and nine months ended March 31, 2024, respectively, the Company granted options to purchase zero 0 shares of Common Stock to employees with a one-year vesting period under the 2023 Plan. During the three and nine months ended March 31, 2023, the Company granted options to purchase zero 0 and 73,200 issued and 0 12,640 forfeited shares of Common Stock to employees with a one-year vesting period, respectively under the 2019 Plan. During the three and nine months ended March 31, 2024, the Company granted options to purchase 28,196 and 371,595 shares of Common Stock, to the Board of Directors and Scientific Advisory Board Members with a one-year vesting period under the 2023 Plan and the 2019 Plan, respectively. During the three and nine months ended March 31, 2023, the Company granted options to purchase 64,655 and 275,572 shares of Common Stock, to the Board of Directors and Scientific Advisory Board Members with a one-year vesting period under the 2019 Plan, respectively. During the three and nine months ended March 31, 2024, the Company granted options to purchase zero and 26,000 shares, respectively of Common Stock for Scientific Advisory Board members with immediate vesting under the 2023 Plan. During the three and nine months ended March 31, 2023, the Company did not grant options to Scientific Advisory Board members to purchase shares of Common Stock with immediate vesting. During the three and nine months ended March 31, 2024, the Company granted options to purchase 10,000 shares of Common Stock to a consultant with ten months vesting. During the three and nine months ended March 31, 2024, the Company forfeited zero and 7,000 options, respectively, to purchase shares of Common Stock to a consultant with immediate vesting. 25 = RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 — STOCKHOLDERS’ EQUITY (Continued) All of the above options are exercisable at the market price of the Company’s Common Stock on the date of the grant. On February 13, 2024, the Company repriced 3,849,931 eligible employee and consultant options from the original issued exercise price to $1.92 per share, the closing price of the Company’s Common Stock on February 13, 2024. The Company recognized stock-based compensation expense related to the repricing of options of $886,849 for the period ended March 31, 2024. To date the Company has granted options under the 2014, 2019 and 2023 Plans (“Plan Options”) to purchase 6,306,275 shares of Common Stock. At March 31, 2024, the Company has 4,875,419 options available to be issued under the 2023 Plan. A summary of the status of the Plan Options outstanding at March 31, 2024, is presented below: Schedule of stock options outstanding Options Outstanding Options Exercisable Exercise Price Ranges Number Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price $ 0.45 – 4.50 4,885,441 7.43 $ 1.91 3,410,589 7.10 $ 1.98 $ 4.51 – 6.50 167,634 6.73 $ 5.33 135,376 6.06 $ 5.49 $ 6.51 – 12.00 115,231 4.91 $ 7.63 111,585 4.82 $ 7.61 Total 5,168,306 7.35 $ 2.15 3,657,550 6.99 $ 2.28 A summary of the status of the Plan Options at March 31, 2024, and changes since July 1, 2023, are presented below: Schedule of stock option activity Shares Weighted Average Exercise Price Average Remaining Life Weighted Average Intrinsic Value Outstanding at beginning of period 4,401,211 $ 4.78 7.82 $ — Granted 4,624,026 $ 1.97 Exercised — $ — Forfeited — $ — Expired/Canceled ( 3,856,931 ) $ 4.94 Outstanding at end of period 5,168,306 $ 2.15 7.35 $ — Exercisable at end of period 3,657,550 $ 2.28 6.99 $ 3,839,725 At March 31, 2024, the Company had Plan Options to purchase 3,657,550 shares of common stock that were exercisable. The total intrinsic value of options exercisable at March 31, 2024, was $3,839,725. Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) and at March 31, 2024 (for outstanding options), less the applicable exercise price. 26 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 — STOCKHOLDERS’ EQUITY (Continued) Common Stock Purchase Warrants A summary of the status of the Common Stock Purchase Warrants outstanding at March 31, 2024, is presented below: Schedule of common stock purchase warrants outstanding Warrants Outstanding Warrants Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price $ 0.53 471,698 1.41 471,698 1.41 $ 0.65 741,274 3.25 741,274 3.25 $ 1.14 1,189,036 3.98 1,189,036 3.98 Total 2,402,008 3.25 $ 0.87 2,402,008 3.25 $ 0.87 A summary of the warrants outstanding at March 31, 2024, and changes since July 1, 2023, are presented below: Schedule of warrants outstanding Shares Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at beginning of period 3,548,302 $ 0.73 4.80 Granted 2,805,050 $ 0.65 3.25 Exercised ( 3,951,344 ) $ 0.59 — Cancelled/Expired — $ — — Outstanding and exercisable at end of period 2,402,008 $ 0.87 3.25 At March 31, 2024, the Company had 2,402,008 exercisable Common Stock Purchase Warrants outstanding. The total intrinsic value of warrants exercisable at March 31, 2024, was $ 4,277,992 . Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) and at March 31, 2024 (for outstanding warrants), less the applicable exercise price. Restricted Stock Awards (RSA) The Company recognized stock-based compensation expense related to RSAs of $ 535,009 and $ 1,068,865 for the three and nine months ended March 31, 2024, respectively. The restricted stock awards are related to a grant of 1,000,000 shares of restricted stock with a 3 -year vesting period made to a director as consideration for advisory services, with a total value of $2,760,000. At March 31, 2024, the Company had $ 1,691,135 of unrecognized stock-based compensation expense remaining to be amortized. 27 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 — COMMITMENTS AND CONTINGENCIES Commitments On July 9, 2018, the Company entered into a consulting agreement with G-Tech Bio, LLC, a California limited liability company (“G-Tech”) to assist the Company with the development of the gene therapy and cell therapy modalities for the prevention, treatment, and amelioration of HIV in humans, and with the development of a genetically enhanced Dendritic Cell for use as a wide spectrum platform for various diseases (including but not limited to cancers and infectious diseases) (the “G-Tech Agreement”). G-Tech was entitled to consulting fees for 20 months, with a monthly consulting fee of not greater than $ 130,000 per month. Upon the completion of the 20 months, the monthly consulting fee of $ 25,000 continued for scientific consulting and knowledge transfer on existing HIV experiments until the services were no longer being rendered or the G-Tech Agreement is terminated. As of May 25, 2022, the consultant was no longer able to render services; therefore, no expense was incurred for the three and nine months ended March 31, 2024 and 2023. On January 31, 2020, the Company entered into a Statement of Work and License Agreement (the “HBV License Agreement”) by and among the Company, G-Tech, and G Health Research Foundation, a not for profit entity organized under the laws of California doing business as Seraph Research Institute (“SRI”) (collectively the “Licensors”), whereby the Company acquired a perpetual, sublicensable, exclusive license (the “HBV License”) for a treatment under development (the “Treatment”) aimed to treat Hepatitis B Virus (HBV) infections. The HBV License Agreement states that in consideration for the HBV License, the Company shall provide cash funding for research costs and equipment and certain other in-kind funding related to the Treatment over a 24 month period, and provides for an up-front payment of $ 1.2 million within 7 days of January 31, 2020, along with additional payments upon the occurrence of certain benchmarks in the development of the technology set forth in the HBV License Agreement, in each case subject to the terms of the HBV License Agreement. Additionally, the HBV License Agreement provides for cooperation related to the development of intellectual property related to the Treatment and for a 2 % royalty to G-Tech on any net sales that may occur under the HBV License. On February 6, 2020, the Company paid the $ 1.2 million up-front payment. The HBV License Agreement contains customary representations, warranties, and covenants of the parties with respect to the development of the Treatment and the HBV License. The cash funding for research costs pursuant to the HBV License Agreement consisted of monthly payments amounting to $144,500 that covered scientific staffing resources to complete the project as well as periodic payments for materials and equipment needed to complete the project. There were no payments made after January 31, 2022. The Company paid zero under the HBV License Agreement in the three and nine months ended March 31, 2024, and 2023. The Company has filed a claim against the Licensors, which includes certain payments it made related to this license (see Contingencies sub-section below). On April 18, 2021, the Company entered into a Statement of Work and License Agreement (the “License Development Agreement”), by and among the Company, G-Tech and SRI (collectively, the “Licensors”), whereby the Company acquired a perpetual sublicensable, exclusive license (the “Development License”) to research, develop, and commercialize certain formulations which were aimed at preventing and treating pan-coronavirus or the potential combination of the pan-coronavirus and pan-influenza, including the SARS-coronavirus that causes COVID-19 and pan-influenza (the “Prevention and Treatment”). 28 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 — COMMITMENTS AND CONTINGENCIES (Continued) The Development License Agreement was entered into pursuant to the existing Framework Agreement between the parties dated November 15, 2019. The Development License Agreement states that in consideration for the Development License, the Company shall provide cash funding for research costs and equipment and certain other in-kind funding related to the Prevention and Treatment over a 24-month period. Additionally, the License Agreement provides for an up-front payment of $ 10,000,000 and a $ 760,000 payment for expenditures to date prior to the effective date related to research towards the Prevention and Treatment within 60 days of April 18, 2021. The Development License Agreement provides for additional payments upon the occurrence of certain benchmarks in the development of the technology set forth in the Development License Agreement, in each case subject to the terms of the Development License Agreement. The Development License Agreement provides for cooperation related to the development of intellectual property related to the Prevention and Treatment and for a 3% royalty to G-Tech on any net sales that may occur under the Development License Agreement. The Company is no longer pursuing any product candidates that relate to this license. The Company has filed a claim against the Licensors to recover all monies it paid related to this license (see Contingencies sub-section below). On August 25, 2021, the Company entered into an ALC Patent License and Research Funding Agreement in the HIV Field (the “ALC License Agreement”) with Serhat Gümrükcü and SRI (collectively, the “Licensors”) whereby the Licensors granted the Company an exclusive, worldwide, perpetual, fully paid-up, royalty-free license, with the right to sublicense, proprietary technology subject to a U.S. patent application, to make, use, offer to sell, sell or import products for use solely for the prevention, treatment, amelioration of or therapy exclusively for HIV in humans, and research and development exclusively relating to HIV in humans; provided the Licensors retained the right to conduct HIV research in the field. Pursuant to the ALC License Agreement, the Company granted a non-exclusive license back to the Licensors, under any patents or other intellectual property owned or controlled by the Company, to the extent arising from the ALC License, to make, use, offer to sell, sell or import products for use in the diagnosis, prevention, treatment, amelioration or therapy of any (i) HIV Comorbidities and (ii) any other diseases or conditions outside the HIV Field. The Company made an initial payment to SRI of $ 600,000 and agreed to fund future HIV research conducted by the Licensors, as mutually agreed to by the parties. On September 10, 2021, pursuant to the ALC License Agreement, the Company paid the initial payment of $ 600,000 . G-Tech and SRI are controlled by Anderson Wittekind, a stockholder of the Company. Shares held for non-consenting shareholders – The 17,414 remaining shares of Common Stock related to the Acquisition of Renovaro Denmark have been reflected as issued and outstanding in the accompanying financial statements. There were zero shares of Common Stock issued to such non-consenting stockholders during the three and nine months ended March 31, 2024 (see Note 8.) Service Agreements – The Company maintains employment agreements with certain senior staff in the ordinary course of business. Contingencies Securities Class Action Litigation . On July 26, 2022 and July 28, 2022, securities class action complaints (the former, the “Chow Action” and the latter, the “Manici Action”) were filed by purported stockholders of the Company in the United States District Court for the Central District of California against the Company and certain of the Company’s current and former officers and directors. The complaints allege, among other things, that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, by making false and misleading statements and omissions of material fact in connection with the Company’s relationship with Serhat Gümrükcü and its commercial prospects. The complaints seek unspecified damages, interest, fees, and costs. On November 22, 2022, the Manici Action was voluntarily dismissed without prejudice, but the Chow action remains pending. On October 22, 2023, the Court appointed a lead plaintiff in the Chow Action. The lead plaintiff filed an amended complaint on December 15, 2023. The Company has filed a motion to dismiss the amended complaint, but expresses no opinion as to the likelihood of a favorable outcome. 29 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 — COMMITMENTS AND CONTINGENCIES (Continued) Federal Derivative Litigation . On September 22, 2022, Samuel E. Koenig filed a shareholder derivative action in the United States District Court for the Central District of California. On January 19, 2023, John Solak filed a substantially similar shareholder derivative action in the United States District Court for the District of Delaware. Both derivative actions recite similar underlying facts as those alleged in the Securities Class Action Litigation. The actions, filed on behalf of the Company, name Serhat Gümrükcü and certain of the Company’s current and former directors as defendants. The actions also name the Company as a nominal defendant. The actions allege violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and also set out claims for breach of fiduciary duty, contribution and indemnification, aiding and abetting, and gross mismanagement. Plaintiffs do not quantify any alleged injury, but seek damages, disgorgement, restitution, and other costs and expenses. On January 24, 2023, the United States District Court for the Central District of California stayed the Koenig matter pending resolution of the defendants’ anticipated motion to dismiss in the Securities Class Action Litigation. On April 6, 2023, the United States District Court for the District of Delaware stayed the Solak matter pending resolution of the defendants’ anticipated motion to dismiss in the Securities Class Action Litigation. The defendants have not yet responded to either complaint. The Company intends to contest these matters but expresses no opinion as to the likelihood of favorable outcomes. State Derivative Litigation . On October 20, 2022, Susan Midler filed a shareholder derivative action in the Superior Court of California, Los Angeles County, reciting similar underlying facts as those alleged in the Securities Class Action Litigation. The action, filed on behalf of the Company, names Serhat Gümrükcü and certain of the Company’s current and former directors as defendants. The action also names the Company as a nominal defendant. The action sets out claims for breaches of fiduciary duty, contribution and indemnification, aiding and abetting, and gross mismanagement. Plaintiff does not quantify any alleged injury, but seeks damages, disgorgement, restitution, and other costs and expenses. On January 20, 2023, the Court stayed the Midler matter pending resolution of the defendants’ anticipated motion to dismiss in the Securities Class Action Litigation. The defendants have not yet responded to the complaint. The Company intends to contest this matter but expresses no opinion as to the likelihood of a favorable outcome. On October 21, 2022, the Company filed a Complaint in the Superior Court of the State of California for the County of Los Angeles against Serhat Gümrükcü, William Anderson Wittekind (“Wittekind”), G Tech Bio LLC (“G Tech”), SG & AW Holdings, LLC, and Seraph Research Institute (“SRI”) (collectively, the “Defendants”). The Complaint alleges that the Defendants engaged in a “concerted, deliberate scheme to alter, falsify, and misrepresent to the Company the results of multiple studies supporting its Hepatitis B and SARS-CoV-2/influenza pipelines.” Specifically, “Defendants manipulated negative results to reflect positive outcomes from various studies, and even fabricated studies out of whole cloth.” As a result of the Defendants’ conduct, the Company claims that it “paid approximately $25 million to Defendants and third-parties that it would not otherwise have paid.” On April 21, 2023, defendants Wittekind, G Tech, SG & AW Holdings, LLC, and SRI filed a demurrer with respect to some, but not all, of the Company’s claims, as well as a motion to strike. On September 6, 2023, the court denied in part and granted in part the pending motions. On September 7, 2023, the court entered a case management order setting the final status conference, trial, and other intervening deadlines. On December 4, 2023, the Defendants answered the Company’s First Amended Complaint and G Tech and SRI filed a Cross-Complaint. In the Cross-Complaint, G Tech and SRI seek declaratory and injunctive relief related to certain agreements between G Tech, SRI, and the Company, including, inter alia , a declaration that the Framework Agreement, effective as of November 15, 2019, the Statement of Work & License Agreement, effective as of January 31, 2020, and the Statement of Work and License Agreement for Influenza and Coronavirus Indications, effective as of April 18, 2021, have been terminated and the Company has no rights to any license under such agreements. Trial is currently scheduled to begin on March 3, 2025. The Company denies these allegations and intends to vigorously defend against the cross claims while pursuing its claims against the Defendants. 30 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 — COMMITMENTS AND CONTINGENCIES (Continued) On March 1, 2021, the Company’s former Chief Financial Officer, Robert Wolfe and his company, Crossfield, Inc., filed a Complaint in the U.S. District Court for the District of Vermont against the Company, Renovaro Biosciences Denmark ApS, and certain directors and officers. In the Complaint, Mr. Wolfe and Crossfield, Inc. asserted claims for abuse of process and malicious prosecution, alleging, inter alia, that the Company lacked probable cause to file and prosecute an earlier action, and sought millions of dollars of compensatory damages, as well as punitive damages. The allegations in the Complaint relate to an earlier action filed by the Company and Renovaro Biosciences Denmark ApS in the Vermont Superior Court, Orange Civil Division. On March 3, 2022, the Court partially granted the Company’s motion to dismiss, dismissing the abuse of process claim against all defendants and all claims against Mark Dybul and Henrik Grønfeldt-Sørensen. On November 29, 2022, the Company filed a motion for summary judgment with respect to the sole remaining claim of malicious prosecution. On August 24, 2023, the Court denied the motion for summary judgment. Trial is currently scheduled to begin on July 15, 2024. The Company denies the allegations set forth in the Complaint and will continue to vigorously defend against the remaining claim. On June 7, 2023, Weird Science LLC (“Weird Science”), Wittekind, the William Anderson Wittekind 2020 Annuity Trust, the William Anderson Wittekind 2021 Annuity Trust, the Dybul 2020 Angel Annuity Trust, and the Ty Mabry 2021 Annuity Trust (collectively, the “Trusts”) (collectively, “Plaintiffs”) filed a Verified Complaint against the Company in the Court of Chancery of Delaware. In the Verified Complaint, Plaintiffs alleged that the Company breached the February 16, 2018 Investor Rights Agreement between the Company, Weird Science, and RS Group ApS (the “Investor Rights Agreement”). According to the Verified Complaint, the Investor Rights Agreement required the Company to (i) notify all “Holders” of “Registrable Securities” at least 30 days prior to filing a registration statement and (ii) afford such Holders an opportunity to have their Registrable Securities included in such registration statement. Plaintiffs alleged that the Company breached these registration rights by failing to provide the required notice in connection with S-3 registration statements filed by the Company on July 13, 2020 and February 11, 2022. The Company moved to dismiss the Verified Complaint on September 15, 2023. On December 4, 2023, in lieu of opposing the motion to dismiss, Plaintiffs filed a Verified First Amended Complaint (“FAC”). In the FAC, Plaintiffs assert claims against the Company and others for purported breaches of the Investor Rights Agreement, fraud, tortious interference with a contract, and several other torts. Plaintiffs seek compensatory, exemplary, and punitive damages, as well as certain declaratory relief, specific performance, and pre- and post-judgment interest, costs, and attorneys’ fees. The Company filed a motion to dismiss the FAC on December 18, 2023. The Company denies Plaintiffs’ allegations and intends to vigorously defend against the claims. On August 24, 2023, counsel on behalf of Weird Science, Wittekind, individually, and Wittekind, as trustee of the Trusts served a demand to inspect the Company’s books and records (the “Demand”) pursuant to Delaware General Corporation Law, § 220 (“Section 220”). The Demand seeks the Company’s books and records in connection with various issues identified in the Demand. The Company takes its obligations under Section 220 seriously and, to the extent that the requests are proper under Section 220, intends to comply with those obligations. On January 23, 2024, Weird Science and Wittekind filed a shareholder derivative action in the United States District Court for the Central District of California against certain officers, directors, and investors of the Company, as well as other defendants. The Verified Stockholder Derivative Complaint (“Derivative Complaint”) alleges, among other claims, violations of Section 13(d) and 14(a) and Rules 10b-5(a), 10b-5(c) and 14a-9 of the Exchange Act of 1934. The Derivative Complaint also includes claims of breach of fiduciary duty, corporate waste, unjust enrichment, and contribution/indemnification. Weird Science and Wittekind seek unspecified compensatory, exemplary and punitive damages and certain injunctive relief. Simultaneously with the Derivative Complaint, Weird Science and Wittekind filed an emergency Ex Parte Application for Temporary Restraining Order (“Application”) asking the Court to enjoin a special meeting of the Company’s stockholders noticed for January 25, 2024. As the basis for the Application, Weird Science and Wittekind recited many of the same allegations as in the Derivative Complaint. The Court denied the Application on January 24, 2024. The defendants have not yet responded to the Derivative Complaint. The Company denies the allegations in the Derivative Complaint and intends to vigorously defend against the claims asserted therein. 31 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 — RELATED PARTY TRANSACTIONS As of March 31, 2024, the Company has accrued $ 111,750 of compensation related expenses for the Company’s Chief Executive Officer, Mark Dybul, related to budget constraints. On March 26, 2024, the Company issued a Promissory Note to Paseco ApS, a Danish entity and greater than 5% shareholder, in the principal amount of $ 160,000 . The Note bears an interest rate of 10 % per annum and was to mature on May 1, 2024 . On May 1, 2024, the Company and Paseco ApS entered into an amendment to the Promissory Note to extend that maturity to July 1, 2024 (the “Maturity Date”). The Company is required to pay interest on the maturity date. As of March 31, 2024, the Company accrued $ 215 of interest expense that is included in accrued expenses on the balance sheet. The Note balance at March 31, 2024 is $ 160,000 (see Note 7.) On February 16, 2024, the Company received an exercise notice from RS Bio to exercise 471,699 warrants outstanding at an exercise price of $ 0.53 per share. The holder applied $ 250,000 of one of its outstanding note payable balance to the exercise price (see Note 7.) On February 16, 2024, the Company received an exercise notice from Paseco ApS to exercise 2,953,700 warrants outstanding with exercise prices ranging from $ 0.53 to $ 0.65 per share. The proceeds of $ 1,750,000 were immediately applied to the outstanding note payable balance (see Note 7.) On February 5, 2024, the Company entered into an agreement with RS Bio to issue a 5 % Original Issue Discount Secured Promissory Note for the principal amount of $ 105,263 . The Company received $ 100,000 in gross proceeds after taking into account the 5 % original issue discount. The Note bears an interest rate of 12 % per annum and matured on March 1, 2024 (the “Maturity Date”). The obligations under this Note are secured by the Amended and Restated Security Agreement (discussed below). The Company is required to pay interest on the maturity date. For the three and nine months ended March 31, 2024, discount amortization of $ 5,263 was charged to interest expense. As of March 31, 2024, the Company accrued $ 3,158 of interest expense that is included in accrued expenses on the balance sheet. The Note balance, net of discount at March 31, 2024 is $ 105,263 (see Note 7.) On January 2, 2024, the Company entered into an agreement with RS Bio to issue a 5 % Original Issue Discount Secured Promissory Note for the principal amount of $ 526,315 (the “January 2024 Note”). The Company received a total of $ 500,000 in gross proceeds after taking into account the 5 % original issue discount. The January 2024 Note bears an interest rate of 12 % per annum and shall mature on March 1, 2024 (the “Maturity Date”). The Company is required to pay interest on the maturity date. For the three and nine months ended March 31, 2024, discount amortization of $ 26,315 was charged to interest expense. As of March 31, 2024, the Company accrued $ 15,789 of interest expense that is included in accrued expenses on the balance sheet. The January 2024 Note balance, net of discount at March 31, 2024 is $ 526,315 (see Note 7.) In connection with the entry into the January 2024 Note, the Company and Paseco ApS agreed to amend and restate the Security Agreement (see Note 7) to add the Company’s obligations under the November 2023 Note and the January 2024 Note to the Secured Obligations (as defined in the Amended and Restated Security Agreement). On November 3, 2023, the Company entered into an agreement with RS Bio to issue a 5 % Original Issue Discount Promissory Note for the principal amount of $ 1,000,000 (the “November 2023 Note”). The Company received a total of $ 950,000 in gross proceeds after taking into account the 5 % original issue discount. The discount of $ 50,000 will be accreted over the life of the Note. The Note bears an interest rate of 12 % per annum and shall mature on January 1, 2024 (the “Maturity Date”). The Company is required to pay interest on the maturity date (see Note 7.) 32 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 — RELATED PARTY TRANSACTIONS (Continued) On October 10, 2023, the Board of Directors of the Company (the “Board”) appointed Avram Miller to the Board, effective October 11, 2023, to fill a vacancy. Mr. Miller will serve until the Company’s 2024 Annual Meeting of Stockholders subject to this re-election or until his successor has been duly elected and qualified. In addition to Mr. Miller’s appointment to the Board, Mr. Miller, the co-founder of Intel Capital, entered into an advisory agreement with the Company (the “Advisory Agreement”), pursuant to which Mr. Miller will provide advice to the Board and the Company on various matters including strategic opportunities, capital allocation, business development, minority investments and licensing arrangements, among others. As compensation for these services, the Company will issue Mr. Miller 1,000,000 shares of restricted stock, 166,667 of which will vest in 2024, 444,444 will vest in 2025, and 388,889 will vest in 2026, subject to Mr. Miller’s continued service through each applicable vesting date. On August 1, 2023, RS Bio, purchased in a Private Placement 70,126 of the Company’s Units at a price per Unit equal to $7.13 for aggregate proceeds to the Company of $500,000. Mr. Rene Sindlev, the Chairman of the Company’s Board of Directors, holds the sole voting and disposition power of the shares owned by RS Bio. The Board of Directors (excluding Mr. Sindlev) approved the participation of certain officers and directors of the Company in the Private Placement on identical terms as the other investors of the Private Placement (see Note 8.) On August 1, 2023, Paseco ApS, in connection with the Private Placement, converted $2,000,000 of its Promissory Note into 280,505 of the Company’s Units at a price per Unit equal to $7.13. In addition, Paseco ApS purchased in the Private Placement 63,114 of the Company’s Units at a price per Unit equal to $7.13 for aggregate proceeds to the Company of $450,000. As a result of participation in the Private Placement, Paseco ApS was deemed to be an affiliate of the Company (see Note 7.) The Company currently has a consulting agreement with Paseco ApS for business advisory services since December of 2019. For the three and nine months ended March 31, 2024 the Company issued zero and 1,000,000 restricted common shares as payment for services rendered thereunder. The Company currently has a consulting agreement with Paseco for business advisory services that commenced in December of 2019. For the three and nine months ended March 31, 2024 the Company issued zero and 1,000,000 restricted common shares, respectively, for services provided. The information set forth above in Note 7—Debt—Notes Payable—Promissory Note relating to the Promissory Note issued to Paseco ApS is incorporated herein by reference. NOTE 11 — ACQUISITION On September 28, 2023, the Company, entered into a Stock Purchase Agreement (the “ Purchase Agreement ”) with GEDi Cube Intl Ltd., a private company formed under the laws of England and Wales (“ GEDi Cube ”) to acquire 100% of the equity interests of GEDi Cube from its equity holders (the “ Sellers ”). On September 28, 2023, the Board of Directors of the Company, and the board of managers of GEDi Cube unanimously approved the Purchase Agreement and on January 25, 2024, the shareholders of the Company approved the issuance of the shares of Common Stock pursuant to the Purchase Agreement. The acquisition adds complementary product candidates and technologies from GEDi Cube and may accelerate the Company's product development and therapeutic approaches for cancer and other diseases. 33 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 — ACQUISITION (Continued) On February 13, 2024 (the “Closing Date”), the Company consummated the previously announced acquisition of GEDi Cube and the other transactions contemplated by the Stock Purchase Agreement (collectively, the “Transaction”). As a result of the Transaction, GEDi Cube became a wholly-owned subsidiary of the Company. Pursuant to the Stock Purchase Agreement, as of the Closing Date, the Company acquired all the issued and outstanding equity interests of GEDi Cube owned by the Sellers as of the Closing Date (each, a “GEDi Cube Share” and, collectively, the “GEDi Cube Shares”) in exchange for which each Seller was entitled to receive (i) as of the Closing Date, such Seller’s pro rata percentage of an aggregate of 70,834,183 shares of common stock, par value $0.0001 per share, of the Company (“Common Stock”), which represents the 67,224,089 shares of Common Stock issued and outstanding as of the Closing Date (minus (a) 1 million shares of Common Stock previously issued to a consultant assisting with the Transaction and (b) 1 million shares of Common Stock previously issued to Avram Miller, a director of the Company, pursuant to his Advisory Agreement, dated October 11, 2023, by and between Mr. Miller and the Company) (the “Closing Consideration”) plus 5,610,100 shares of Common Stock representing the Seller’s Earnout Shares (defined below) resulting from the automatic conversion of the Company’s Series A Convertible Preferred and, (ii) following the Closing Date, such Seller’s pro rata percentage of the shares of Common Stock (the “Earnout Shares” and, together with the Closing Consideration, the “Exchange Consideration”) to be issued to the Sellers upon the exercise or conversion of any of the Company’s derivative securities (subject to certain exceptions) that are outstanding at the Closing Date (the “Closing Derivative Securities”). Each Seller’s pro rata percentage of the Exchange Consideration is equal to the ratio of the aggregate number of GEDi Cube Shares owned by such Seller divided by the aggregate number of GEDi Cube Shares issued and outstanding, in each case, as of the Closing Date. The transaction was accounted for in accordance with the provisions of ASC 805-10 - Business Combinations . As a result of the issuance of the Closing Consideration on the Closing Date and based on the number of shares of Common Stock outstanding as of the Closing Date, the Sellers held approximately 49% of the issued and outstanding shares of Common Stock immediately following the closing of the Transaction and the conversion of the Series A Convertible Preferred Stock. The assets acquired and liabilities assumed are recognized provisionally in the accompanying condensed consolidated balance sheets at their estimated fair values as of the acquisition date. The initial accounting for the business combination is not complete as the Company is in the process of obtaining additional information for the valuation of acquired intangible assets and deferred tax liabilities. The provisional amounts are subject to change to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. Under U.S. GAAP, the measurement period shall not exceed one year from the acquisition date and the Company will finalize these amounts no later than February 13, 2025. The estimated fair values as of the acquisition date are based on information that existed as of the acquisition date. During the measurement period the Company may adjust provisional amounts recorded for assets acquired and liabilities assumed to reflect new information that the Company has subsequently obtained regarding facts and circumstances that existed as of the acquisition date. The acquisition-date fair value of the consideration transferred totaled approximately $156 156,559,131 million, which consisted of the following: Schedule of acquisition date fair value Common stock $ 136,001,631 Contingent consideration 20,557,500 Total consideration transferred $ 156,559,131 34 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 — ACQUISITION (Continued) The fair value of the Company’s common shares issued as consideration was based on the closing price of the Company’s common stock as of the Acquisition Date. The fair value determination of the contingent consideration is further detailed in Note 3 to these condensed consolidated financial statements. The following table details the provisional fair values of the assets acquired and liabilities assumed at the acquisition date: Schedule of fair values of the assets acquired and liabilities assumed Cash $ 65,851 Prepaid & Other Assets 151,544 Fixed Assets 16,243 Operating lease ROU 624,366 In-process research and development 10,684,091 Total Assets Acquired: 11,542,095 Accounts Payable 583,577 Accrued Expenses 722,509 Operating Lease liability 624,367 Notes Payable 1,832,460 Deferred tax liabilities 2,756,495 Total Liabilities Assumed 6,519,408 Net Assets Acquired 5,022,687 Goodwill 151,536,444 Total Consideration $ 156,559,131 The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of Gedi Cube. None of the goodwill is expected to be deductible for income tax purposes. The fair values of the acquired tangible and intangible assets were determined using variations of the income approach. The income approach valuation methodology used for the intangible assets acquired makes use of Level 3 inputs. The in-process research and development acquired represents know-how and intellectual property being developed by GEDi Cube pertaining to its diagnostic platform currently being developed. The fair value of this asset was determined based on a cash flow model with forecasted revenues and expenses specifically tied to the diagnostic platform. Those cash flows were then discounted at 19.2% over the life of the projections. The discount rate was determined by the use of a weighted average return on assets analysis. The Company recognized approximately $ 1.2 million of acquisition related costs that were expensed during the period ended March 31, 2024. These costs are included in “selling, general and administrative expenses” in the accompanying condensed consolidated statements of operations. The amounts of revenue and loss of GEDi Cube, included in the Company’s consolidated statements of operations from the Closing Date through March 31, 2024 are as follows: Schedule of consolidated statements of operations Revenues $ — Net loss $ ( 398,597 ) 35 RENOVARO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 — ACQUISITION (Continued) Consolidated unaudited pro forma information: The following consolidated pro forma information assumes that the acquisition of Renovaro Cube took place on July 1, 2023 for the statement of operations for the nine-month period ended March 31, 2024. These amounts have been estimated after applying the Company’s accounting policies: Schedule of consolidated proforma information Revenues $ — Net loss $ ( 33,622,997 ) NOTE 12 — SUBSEQUENT EVENTS On April 5, 2024, the Company issued 33,760 shares of common stock for consulting services valued at $ 94,190 . On April 9, 2024, the Company issued a Promissory Note to Paseco ApS in the principal amount of $ 150,000 . The Note bears an interest rate of 10 % per annum and shall mature on June 1, 2024 (the “Maturity Date”). The Company is required to pay interest on the Maturity Date. From April 15, 2024, to May 7, 2024, the Company issued Promissory Notes to Paseco ApS in the aggregate principal amount of $ 855,149 . The Company received $ 855,149 in proceeds. The Notes bear an interest rate of 10 % per annum and shall mature on July 1, 2024 (the “Maturity Date”). The Company is required to pay interest on the Maturity Date. 36