NOMAD POWER SOLUTIONS, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that is designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer(s) and principal financial officer(s), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the fiscal year ended December 31, 2022, the end of the most recent fiscal year covered by this report. Based on that evaluation, the Company’s management concluded that the Company’s disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”). - 75 - Management’s Annual Report on Internal Control Over Financial Reporting The Company’s management, including its Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process, including policies and procedures, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting is designed to ensure that material information regarding the Company’s operations is made available to management and the Board of Directors to provide them reasonable assurance that the published financial statements are fairly presented. The Company’s management assessed the Company’s internal control over financial reporting based on the Internal Control—Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it more difficult to properly segregate duties. Smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or deterred on a timely basis. Based on the Company’s evaluation under the framework in COSO, the Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022. Management believes that the consolidated financial statements included in this report fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows as of and for the period ended December 31, 2022. Auditor’s Report on Internal Control Over Financing Reporting This report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this report. Changes in Internal Control Over Financial Reporting The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has determined that no change in the Company’s internal control over financial reporting (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Securities Exchange Act of 1934) occurred during or subsequent to the period ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. - 76 - PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and Executive Officers The following table and text set forth the names of all of our directors and executive officers as of March 1, 2023. The Board of Directors is comprised of only one class. All of the directors will serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. The brief descriptions of the business experience of each director and executive officers and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws are provided herein below. Also provided are the biographies of the members of the Scientific Advisory Committee and our consultants. Our directors and executive officers are as follows: Name Age Position(s) Held with the Company Dr. John S. Kovach 86 President, Chief Executive Officer, Chief Scientific Officer, and Chairman of the Board of Directors Dr. James S. Miser 75 Chief Medical Officer Robert N. Weingarten 70 Vice President and Chief Financial Officer Eric J. Forman 42 Vice President and Chief Operating Officer Dr. Stephen J. Forman 74 Director Regina Brown 59 Director Dr. Yun Yen 68 Director Dr. René Bernards 70 Director Bas van der Baan 51 Director Biographies of Directors and Executive Officers Dr. John S. Kovach Dr. John S. Kovach founded the Company in August 2005 and is our President, Chief Executive Officer, Chief Scientific Officer and Chairman of our Board of Directors. He received a B.A. (cum laude) from Princeton University and an M.D. (AOA) from the College of Physicians & Surgeons, Columbia University. Dr. Kovach trained in Internal Medicine and Hematology at Presbyterian Hospital, Columbia University, and spent six years in the laboratory of Chemical Biology at the National Institute of Arthritis and Metabolic Diseases studying control of gene expression in bacterial systems. Dr. Kovach was recruited to the State University of New York at Stony Brook (“SUNY – Stony Brook”) in Stony Brook, New York in 2000 to found the Long Island Cancer Center (now named the Stony Brook University Cancer Center). From 1994 to 2000, Dr. Kovach was Executive Vice President for Medical and Scientific Affairs at the City of Hope National Medical Center in Los Angeles, California. His responsibilities included oversight of all basic and clinical research initiatives at the City of Hope. During that time, Dr. Kovach was also Director of the Beckman Research Center at City of Hope and a member of the Arnold and Mabel Beckman Scientific Advisory Board in Newport Beach, California. From 1976 to 1994, Dr. Kovach was a consultant in oncology and director of the Cancer Pharmacology Division at the Mayo Clinic in Rochester, Minnesota. During this time, he directed the early clinical trials program for evaluation of new anti-cancer drugs as principal investigator of contracts from the National Cancer Institute. From 1986 to 1994, he was also Chair of the Department of Oncology and Director of the NCI-designated Mayo Comprehensive Cancer Center. During that time, Dr. Kovach, working with a molecular geneticist, Steve Sommer, M.D., Ph.D., published extensively on patterns of acquired mutations in human cancer cells as markers of environmental mutagens and as potential indicators of breast cancer patient prognosis. Dr. Kovach has published over 100 articles on the pharmacology, toxicity and effectiveness of anti-cancer treatments and on the molecular epidemiology of breast cancer. Effective February 23, 2017, Dr. Kovach retired from his part-time (50%) academic position at SUNY – Stony Brook, as a result of which he has been devoting 100% of his time to our business activities since that date. Dr. James S. Miser James S. Miser, M.D., was appointed as Chief Medical Officer effective August 1, 2020. Dr. Miser is a pediatric hematologist/oncologist, internationally recognized as an expert in the study and treatment of childhood cancers. His outstanding career includes leadership positions as Clinical Director, Department of Pediatrics, Division of Pediatric Hematology/Oncology, Children’s Hospital and Medical Center and Associate Member, Fred Hutchinson Cancer Research Center, Seattle, Washington; Chairman, Division of Pediatrics, Director, Department of Pediatric Hematology/Oncology, President and Chief Executive Officer, and Chief Medical Officer, all at City of Hope National Medical Center, Duarte, California. Since 2009, he has been a member of the Active Staff, Department of Pediatrics at City of Hope, most recently part-time, and Chair Professor, College of Medical Sciences and Technology, Taipei Medical University, Taipei, Taiwan. Dr. Miser has extensive experience in the clinical development of new anti-cancer drugs for pediatric malignancies, leading many clinical trials at institutional and national cancer study groups. He is expert in the design and monitoring of clinical cancer trials and was a member of the Soft Tissue Sarcoma Strategy Group, and Member of the New Agents Executive and Steering Committee, Phase II Coordinator Children’s Cancer Group and Chairman, Data Monitoring Committee, National Wilms Tumor Society. He has authored more than a 100 peer-reviewed articles dealing primarily with pediatric clinical cancer studies. - 77 - Robert N. Weingarten Mr. Weingarten was appointed to serve as our Vice President and Chief Financial Officer effective August 12, 2020. Mr. Weingarten is an experienced business consultant and advisor with a consulting practice focusing on accounting and SEC compliance issues. Mr. Weingarten was familiar with the financial and business operations of the Company, as he had provided accounting and financial consulting services to the Company for a number of years prior to his appointment as Vice President and Chief Financial Officer with respect to the preparation of the Company’s consolidated financial statements and certain other financial and compliance matters. Since 1979, Mr. Weingarten has provided such financial consulting and advisory services, has acted as chief financial officer, and has served on the boards of directors of numerous public companies in various stages of development, operation or reorganization. Mr. Weingarten has experience in a variety of industries, including the pharmaceutical industry. Mr. Weingarten has been a Director of Guardion Health Sciences, Inc. since June 2015 and Chairman of its Board of Directors since July 2020. Mr. Weingarten also serves on the audit, compensation, and nominating and corporate governance committees of Guardion Health Sciences, Inc. Previously, Mr. Weingarten served as Lead Director on Guardion’s Board of Directors from January 2017 to March 2020. From July 2017 to June 2018, Mr. Weingarten was the Chief Financial Officer of Alltemp, Inc. From April 2013 to February 2017, Mr. Weingarten served on the Board of Directors of RespireRx Pharmaceuticals Inc. and also served as its Vice President and Chief Financial Officer. Mr. Weingarten received a B.A. in Accounting from the University of Washington in 1974, an M.B.A. in Finance from the University of Southern California in 1975, and is a Certified Public Accountant (inactive) in the State of California. Eric J. Forman, J.D. Mr. Forman has led our business development efforts since 2013. Effective as of October 1, 2020, Mr. Forman was appointed as our Chief Administrative Officer, and effective as of November 6, 2022, Mr. Forman was promoted to Vice President and Chief Operating Officer. In his roles as Chief Administrative Officer and Chief Operating Officer, his responsibilities include overseeing all internal operations, the development of science/business collaborations, and the management of our growing intellectual property portfolio. Prior to his involvement with our company, he served as Counsel and Senior Project Manager at Shore Group Associates managing in-house legal, tax, and regulatory affairs and supervising client relations for financial software and mobile application development teams. As an attorney, Mr. Forman has represented and advised both technology and biotechnology companies, entrepreneurs, non-profits, and start-ups with a focus on intellectual property, licensing, corporate structure and transactions. Mr. Forman earned a B.A. degree Cum Laude from Loyola Marymount University and a J.D. from the Benjamin N. Cardozo School of Law. He has an active law license and is a member of the New York State Bar Association. Dr. Stephen J. Forman Stephen J. Forman, M.D., is an internationally recognized expert in hematologic malignancies and bone marrow transplantation, and is a leader in pre-clinical and clinical cancer research. Dr. Forman was appointed to our Board of Directors on May 13, 2016. He is co-editor of Thomas’ Hematopoietic Cell Transplantation, a definitive textbook for clinicians, scientists and health care professionals. Dr. Forman is the Francis and Kathleen McNamara Distinguished Chair in Hematology and Hematopoietic Cell Transplantation at the City of Hope Comprehensive Cancer Center, a position he has held since 1987. In nearly 40 years at City of Hope, Dr. Forman has been instrumental in advancing the survival rates for patients suffering from cancers of the blood and immune system such as leukemia, lymphoma and myeloma. As Director of the T Cell Immunotherapy Research Laboratory, his current research is focused on cancer immunotherapy, using the body’s own immune system to attack cancer. Pharmacological enhancement of patients’ immune responses to their cancers is of special interest to the Company, as the enzyme target of its lead clinical compound, LB-100, has been reported recently to be critical to immune function. Much of Dr. Forman’s current work centers on T cells and their cancer-fighting potential. - 78 - Dr. Yun Yen Yun Yen, M.D., Ph.D., F.A.C.P., is a physician, scientist, innovator, and philanthropist. Dr. Yen was appointed to our Board of Directors on August 4, 2018. He is widely regarded as an expert in ribonucleotide reductase, a critical target in cancer therapy and diagnostics. He is President Emeritus of Taipei Medical University (TMU) and Chair Professor of the Ph.D. Program for Cancer Biology and Drug Discovery. Prior to TMU, Dr. Yen was the Allen and Lee Chao Endowed Chair in Developmental Cancer Therapeutics, Chair of Molecular Pharmacology Department, Associate Director for Translational Research, and Co-Director of the Developmental Cancer Therapeutics Program at the City of Hope NCI-designated Comprehensive Cancer Center, Duarte California. He has published more than 300 peer-reviewed articles, holds over 60 patents, and has commercialized multiple methodologies involving nanoparticles, small and large molecule drugs, biomarkers, stem cells, and medical devices. Dr. Yen also founded philanthropic organizations aimed at serving the global cancer community and holds membership in numerous professional societies. He serves on the boards of Fulgent Genetics and Tanvex BioPharma Inc. Regina Brown, CPA Regina Brown was appointed to our Board of Directors effective May 11, 2021. Ms. Brown has been a practicing accountant for over thirty years. Currently, her practice has a wide range of clients, varying in size, industry and geographic locations. They include large national corporations listed on the New York Stock Exchange, as well as Southern California businesses. Other clients consist of professionals, wholesalers and high net worth individuals. Many of her clients have international and cross-border operations. As a consequence of her depth of experience, she regularly assists other professionals with their client’s issues and performs tax research and analysis in connection with litigation and other matters including marital dissolution, tax and accounting with respect to mergers and acquisitions, implementation of internal controls, and extensive work in the area of trusts and estates. In addition, international tax matters and compliance are also a significant part of her practice. Ms. Brown is a member in good standing of the California Society of CPAs and the American Institute of Certified Public Accountants and has appeared as a speaker before both organizations. Dr. René Bernards Dr. René Bernards was appointed to our Board of Directors effective June 15, 2022. Dr. Bernards is a leader in the field of molecular carcinogenesis, working at the Netherlands Cancer Institute in Amsterdam. His research focuses on identifying effective new drug combinations, new drug targets, and mechanisms of resistance to anti-cancer drugs. He has also co-founded four biotechnology companies to bring his scientific discoveries to clinical oncology practice. He is a member of the Royal Netherlands Academy of Sciences, an International Honorary Member of the American Academy of Arts and Sciences and an International Member of the National Academy of Sciences (USA). Additionally, he is a fellow of the American Association for Cancer Research (AACR), and has received the Princess Takamatsu Memorial Lectureship at this year’s AACR annual meeting where he presented new data on the unexpected effectiveness of the Company’s lead compound, LB-100, when given with a variety of standard and investigational anti-cancer compounds that have only modest activity on their own. Bas van der Baan Bas van der Baan was appointed to our Board of Directors effective June 17, 2022. Mr. van der Baan has over 20 years of experience in the biotechnology industry, with a key focus on oncology and diagnostics. He has extensive knowhow in the process of managing a compound from clinical development to reimbursement and commercialization, as well as the establishment of partnerships with the pharmaceutical industry, academic collaborators, distributors, insurance companies and governments to successfully launch new oncology products. Mr. van der Baan is currently under contract as the Chief Clinical Officer of Agendia, an oncology molecular diagnostic company, through July 15, 2023. Mr. Van der Baan is an independent director of Tethis S.p.A. in Milan, Italy. Mr. Van der Baan was co-founder of ThromboDx, a liquid biopsy company that was acquired in 2016, Qameleon Therapeutics, a company developing synthetic lethal drug combinations for cancer treatment, and Oncosence, an oncology drug development company using senescence as target for drug development. Mr. van der Baan started his career in 1997 at a specialty chemicals division of Unilever that got acquired by ICI. In 2002, Mr. van der Baan joined Kreatech, a biotechnology company acquired by Leica that specialized in life science reagents for gene expression, DNA and protein analysis. Mr. van der Baan holds a Master’s Degree in Molecular Sciences from the Wageningen University in The Netherlands. - 79 - SCIENTIFIC ADVISORY COMMITTEE The Scientific Advisory Committee was established to advise our management in three areas: human molecular pathology; the clinical management of human brain tumors; and medicinal chemistry. Our objective is to meet with the committee as a group annually. The committee has been apprised of our general objectives and several of the specific challenges and leads for developing improved therapies for human brain tumors. Members of the committee do not serve in any management capacity with us. The committee currently consists of the following member: Dr. Daniel D. Von Hoff Dr. Daniel D. Von Hoff, M.D., is currently Physician in Chief, Distinguished Professor and Director of the Clinical Translational Research Division at the Translational Genomics Research Institute in Phoenix, Arizona. He is also Chief Scientific Officer for US Oncology and for Scottsdale Healthcare’s Clinical Research Institute. He holds an appointment as Professor of Medicine, Mayo Clinic, Scottsdale, Arizona. Dr. Von Hoff is a Fellow of the American College of Physicians. Dr. Von Hoff’s major interest is in the development of new anticancer agents, both in the clinic and in the laboratory. He and his colleagues were involved in the beginning of the development of many of the agents that are now used routinely, including mitoxantrone, fludarabine, paclitaxel, docetaxel, gemcitabine, irinotecan, nelarabine, capecitabine and lapatinib. At present, he and his colleagues are concentrating on the development of molecularly targeted therapies, particularly for patients with advanced pancreatic cancer. Dr. Von Hoff has published more than 620 papers, 137 book chapters and over 1,050 abstracts. Dr. Von Hoff received the 2010 David A. Karnofsky Memorial Award from the American Society of Clinical Oncology for his outstanding contributions to cancer research leading to significant improvement in patient care. Dr. Von Hoff was appointed to President Bush’s National Cancer Advisory Board from 2004 to 2010. Dr. Von Hoff is the past President of the American Association for Cancer Research (the world’s largest cancer research organization), a Fellow of the American College of Physicians, and a member and past board member of the American Society of Clinical Oncology. He is a founder of ILEX™ Oncology, Inc. (acquired by Genzyme in 2004 after Ilex had two agents, alemtuzumab and clofarabine, approved by the FDA for patients with leukemia). Dr. Von Hoff is founder and the Editor Emeritus of Investigational New Drugs – The Journal of New Anticancer Agents; and, Editor-in-Chief of Molecular Cancer Therapeutics. He is a co-founder of the AACR/ASCO Methods in Clinical Cancer Research Workshop. Family Relationships Eric Forman, our Chief Administrative Officer, is the son of board member Dr. Stephen Forman and son-in-law of former board member Gil Schwartzberg. Julie Forman, the wife of Eric Forman and the daughter of the late Gil Schwartzberg, is Vice President of Morgan Stanley Wealth Management, where the Company’s cash is deposited and the Company maintains a continuing banking relationship. Director Independence Our Board of Directors undertook a review of the independence of our directors and considered whether any director has a relationship with us that could compromise that director’s ability to exercise independent judgment in carrying out that director’s responsibilities. Our Board of Directors has affirmatively determined that Dr. Stephen Forman, Dr. Yun Yen, Regina Brown, Dr. René Bernards and Bas van der Baan are each an “independent director,” as defined under Nasdaq rules. - 80 - Committees of Our Board of Directors Our Board of Directors directs the management of our business and affairs, as provided by Delaware law, and conducts its business through meetings of the Board of Directors and its standing committees. We have a standing audit committee and compensation committee. The Board of Directors serves in place of a nominating and corporate governance committee. In addition, from time to time, special committees may be established under the direction of the Board of Directors when necessary to address specific issues. Audit Committee Our audit committee is responsible for, among other things: ● approving and retaining the independent auditors to conduct the annual audit of our financial statements; ● reviewing the proposed scope and results of the audit; ● reviewing and pre-approving audit and non-audit fees and services; ● reviewing accounting and financial controls with the independent auditors and our financial and accounting staff; ● reviewing and approving transactions between us and our directors, officers and affiliates; ● establishing procedures for complaints received by us regarding accounting matters; ● overseeing internal audit functions, if any; and ● preparing the report of the audit committee that the rules of the SEC require to be included in our annual meeting proxy statement. Our audit committee consists of Regina Brown, Dr. Yun Yen, and Bas van der Baan, with Ms. Brown serving as chair. Our Board of Directors has affirmatively determined that each of the committee members meet the definition of “independent director” under the Nasdaq rules, and that they meet the independence standards under Rule 10A-3. Each member of our audit committee meets the financial literacy requirements of the Nasdaq rules. In addition, our Board of Directors has determined that Ms. Brown qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. Our Board of Directors has adopted a written charter for the audit committee, which is available on our principal corporate website at www.lixte.com . Compensation Committee Our compensation committee is responsible for, among other things: ● reviewing and recommending the compensation arrangements for executive management; ● establishing and reviewing general compensation policies with the objective to attract and retain superior talent, to reward individual performance and to achieve our financial goals; ● administering our stock incentive plans; and ● preparing the report of the compensation committee that the rules of the SEC require to be included in our annual meeting proxy statement. - 81 - Our compensation committee consists of Dr. Yun Yen, Dr. Stephen Forman and Dr. René Bernards, with Dr. Yen serving as chair. Our Board of Directors has determined that all three committee members are independent directors under Nasdaq rules. Our Board of Directors has adopted a written charter for the compensation committee, which is available on our principal corporate website at www.lixte.com . Nominating and Corporate Governance Although our Board of Directors serves in place of a nominating and corporate governance committee, our independent directors on the board are responsible for, among other things: ● nominating members of the Board of Directors; ● developing a set of corporate governance principles applicable to our company; and ● overseeing the evaluation of our Board of Directors. Our Board of Directors may adopt resolutions addressing, among other things, the nomination process, as may be necessary in the future. Code of Ethics Our Board of Directors has adopted a code of ethics covering all of our executive officers and key employees. A copy of our code of ethics will be furnished without charge to any person upon written request. Requests should be sent to: Secretary, Lixte Biotechnology Holdings, Inc., 680 East Colorado Boulevard, Suite 180, Pasadena, California 91101. Limitations on Liability and Indemnification Matters Our Certificate of Incorporation contains provisions that limit the liability of our current and former directors for monetary damages to the fullest extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for any breach of fiduciary duties as directors, except liability for: ● any breach of the director’s duty of loyalty to the corporation or its stockholders; ● any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; ● unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or ● any transaction from which the director derived an improper personal benefit. This limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission. Our Certificate of Incorporation provides that we are authorized to indemnify our directors and officers to the fullest extent permitted by Delaware law. Our Amended and Restated Bylaws provide that we are required to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. Our Amended and Restated Bylaws also provide that, upon satisfaction of certain conditions, we are required to advance expenses incurred by a director or executive officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. Our Amended and Restated Bylaws also provide our Board of Directors with discretion to indemnify our other officers and employees when determined appropriate by our Board of Directors. We have entered into agreements to indemnify our directors, executive officers and other employees as determined by the Board of Directors. With certain exceptions, these agreements provide for indemnification for related expenses, including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers. We have obtained customary directors’ and officers’ liability insurance. - 82 - The limitation of liability and indemnification provisions in our Certificate of Incorporation and Amended and Restated Bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification. Compliance with Section 16(a) of the Securities Exchange Act of 1934, as Amended Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers and persons who own more than 10% of a registered class of the Company’s equity securities to file various reports with the Securities and Exchange Commission concerning their holdings of, and transactions in, securities of the Company. Copies of these filings must be furnished to the Company. To the Company’s knowledge, based solely on its review of the copies of the Section 16(a) reports furnished to the Company and any written representations to the Company, that no other reports were required, the Company believes that all individual filing requirements applicable to a director, officer, or beneficial owner of more than 10% of the Company’s common stock were complied with under Section 16(a) of the Exchange Act during the year ended December 31, 202s, except as follows: Bas van der Baan was late in filing his Form 3 in connection with his appointment to the Board of Directors on June 17, 2022. ITEM 11. EXECUTIVE COMPENSATION EXECUTIVE AND DIRECTOR COMPENSATION Summary Compensation Table The table set forth below presents the compensation awarded to, earned by or paid to our named executive officers for the years ended December 31, 2022, 2021 and 2020. OFFICER COMPENSATION TABLE Executive Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($)(1) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) John S. Kovach (2) 2022 250,000 - - 65,640 - - - 315,640 2021 250,000 - - - - - - 250,000 2020 107,500 - - - - - - 107,500 James S. Miser (3) 2022 175,000 - - 65,640 - - - 240,640 2021 166,667 - - - - - - 166,667 2020 62,500 - - 572,650 - - - 635,150 Robert N. Weingarten (4) 2022 175,000 - - 65,640 - - - 240,640 2021 156,667 - - - - - - 156,667 2020 46,451 - - 400,855 - - - 447,306 Eric J. Forman (5) 2022 178,819 - - 65,640 - - - 244,459 2021 156,667 - - - - - - 156,667 2020 30,000 - - 400,855 - - - 430,855 (1) Consists of grant date fair value of option award calculated pursuant to the Black-Scholes option-pricing model. - 83 - (2) John S. Kovach has been the Company’s President and Chief Executive Officer since inception and entered into an employment agreement with the Company effective July 15, 2020. On November 6, 2022, Dr. Kovach was awarded an option grant for 200,000 shares of the Company’s common stock valued at $0.3282 per share. (3) James S. Miser has been the Company’s Chief Medical Officer since August 1, 2020. In connection with his employment agreement, Dr. Miser was awarded an option grant for 83,333 shares of the Company’s common stock valued at $6.8718 per share. On November 6, 2022, Dr. Miser was awarded an option grant for 200,000 shares of the Company’s common stock valued at $0.3282 per share. (4) Robert N. Weingarten has been the Company’s Vice President and Chief Financial Officer since August 12, 2020. In connection with his employment agreement, Mr. Weingarten was awarded an option grant for 58,333 shares of the Company’s common stock valued at $6.8718 per share. On November 6, 2022, Mr. Weingarten was awarded an option grant for 200,000 shares of the Company’s common stock valued at $0.3282 per share. (5) Eric J. Forman had been the Company’s Chief Administrative Officer from July 15, 2020 to November 6, 2020. In connection with his employment agreement, Mr. Forman was awarded an option grant for 58,333 shares of the Company’s common stock valued at $6.8718 per share. Effective November 6, 2022, Mr. Forman was promoted to the Company’s Vice President and Chief Operating Officer. On November 6, 2022, Mr. Forman was awarded an option grant for 200,000 shares of the Company’s common stock valued at $0.3282 per share. There were no officer option exercises during the years ended December 31, 2022, 2021 or 2020. Outstanding Equity Awards at December 31, 2022 The table set forth below presents information regarding outstanding stock options held by our named executive officers as of December 31, 2022. NAME GRANT DATE VESTING COMMENCEMENT DATE NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS EXERCISABLE (#) NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS UNEXERCISABLE (#) OPTION EXERCISE PRICE ($) OPTION EXPIRATION DATE Dr. John S. Kovach November 6, 2022 November 6, 2022 50,000 150,000 2.00 November 6, 2027 Dr. James S. Miser August 1, 2020 August 1, 2020 41,667 41,666 7.14 August 1, 2025 November 6, 2022 November 6, 2022 50,000 150,000 2.00 November 6, 2027 Robert N. Weingarten August 12, 2020 August 12, 2020 29,167 29,166 7.14 August 12, 2025 November 6, 2022 November 6, 2022 50,000 150,000 2.00 November 6, 2027 Eric J. Forman June 7, 2016 June 7, 2016 16,667 - 0.90 June 7, 2021 October 16, 2017 October 16, 2017 16,667 - 0.90 October 16, 2022 May 22, 2019 May 22, 2019 16,667 - 6.60 May 22, 2024 August 12, 2020 August 12, 2020 29,167 29,166 7.14 August 12, 2025 November 6, 2022 November 6, 2022 50,000 150,000 2.00 November 6, 2027 - 84 - There was no intrinsic value of exercisable but unexercised in-the-money stock options held by our named executive officers at December 31, 2022, based on a fair market value of $0.51 per share on December 31, 2022. Employment Agreements; Compensation During July and August 2020, the Company entered into one-year employment agreements with its executive officers, consisting of Dr. John S. Kovach, Eric J. Forman, Dr. James S. Miser, and Robert N. Weingarten, payable monthly, as described below. The employment agreements are automatically renewable for additional one-year periods unless terminated by either party upon 60 days written notice prior to the end of the applicable one-year period, or by death, or by termination for cause. These employment agreements were automatically renewed for additional one-year periods in July and August 2021 and 2022. Dr. John Kovach . On July 15, 2020, the Company entered into an employment agreement with Dr. John Kovach to continue to act as the Company’s President, Chief Executive Officer and Chief Scientific Officer, with an annual salary of $250,000, payable monthly. His responsibilities include the oversight of the Company’s entire operations and strategic planning, and he will act as the primary contact between the Company’s executive team and the Board of Directors, to whom he shall report. Dr. Kovach shall supervise all scientific endeavors, providing guidance to the Chief Medical Officer. He shall be the principal spokesperson for the Company. The effective date of the agreement was October 1, 2020 and shall remain in effect until the earlier of (i) one year from the effective date, automatically renewable for additional one-year periods unless terminated by either party upon 60 days written notice prior to the end of the applicable one-year period, (ii) his death, or (iii) termination for cause. Eric Forman. On July 15, 2020, as amended on August 12, 2020, the Company entered into an employment agreement with Eric Forman, to act as the Company’s Chief Administrative Officer reporting directly to the Company’s Chief Executive Officer, with an annual salary of $120,000, payable monthly. Effective May 1, 2021, Mr. Forman’s annual salary was increased to $175,000. Effective November 6, 2022, Mr. Forman was promoted to Vice President and Chief Operating Officer with an annual salary of $200,000. Mr. Forman’s primary function is to oversee the Company’s internal operations, including IT, licensing, legal, personnel, marketing, and corporate governance. Mr. Forman was also granted stock options to acquire 350,000 shares of the Company’s common stock. The effective date of the agreement was October 1, 2020 and shall remain in effect until the earlier of (i) one year from the effective date, automatically renewable for additional one-year periods unless terminated by either party upon 60 days written notice prior to the end of the applicable one-year period, (ii) his death, or (iii) termination for cause. Dr. James Miser . On August 1, 2020, the Company entered into an employment agreement with Dr. James Miser, M.D., pursuant to which Dr. Miser was appointed as the Company’s Chief Medical Officer, with an annual salary of $150,000. Effective May 1, 2021, Dr. Miser’s annual salary was increased to $175,000. Under the employment agreement, Dr. Miser will play a leadership role in planning, implementation and oversight of clinical trials. Dr. Miser will be responsible for assisting and developing strategic clinical goals and the implementation and safety monitoring of investigational studies. Dr. Miser will be the primary medical monitor for all clinical investigational studies and for the oversight of third party CRO monitors. Dr. Miser will work closely with the Company’s Chief Executive Officer on the development of specific goals needed to ensure the timely implementation of appropriate clinical studies needed for successful registration of therapeutic products and new drug development. Dr. Miser will be required to devote at least 50% of his business time to the Company’s activities. Dr. Miser was also granted stock options to acquire 500,000 shares of the Company’s common stock. The effective date of the agreement was August 1, 2020. The agreement shall remain in effect until the earlier of (i) one year from the effective date, automatically renewable for additional one-year periods unless terminated by either party upon 60 days written notice prior to the end of the applicable one-year period, (ii) his death, or (iii) termination for cause. - 85 - Robert N. Weingarten . On August 12, 2020, the Company entered into an employment agreement with Robert N. Weingarten pursuant to which Mr. Weingarten was appointed as the Company’s Vice-President and Chief Financial Officer, with an annual salary of $120,000. Effective May 1, 2021, Mr. Weingarten’s annual salary was increased to $175,000. Mr. Weingarten was also granted stock options to acquire 350,000 shares of the Company’s common stock. The effective date of the agreement was August 12, 2020. The agreement shall remain in effect until the earlier of (i) one year from the effective date, automatically renewable for additional one-year periods unless terminated by either party upon 60 days written notice prior to the end of the applicable one-year period, (ii) his death, or (iii) termination for cause. Consulting Agreements On September 12, 2007, the Company entered into a consulting agreement with Gil N Schwartzberg for Mr. Schwartzberg to provide financial advisory and consulting services to the Company with respect to financing matters, capital structure and strategic development, and to assist management in communications with investors and stockholders. Mr. Schwartzberg is currently a significant stockholder and director of the Company. Consideration under this consulting agreement, including amendments thereto, was paid exclusively in the form of stock options. On August 2, 2018, the Company entered into a third amendment to the consulting agreement to extend it to January 28, 2024, as well as to extend the exercise date of previously issued, fully-vested stock options for 666,667 shares of common stock, exercisable at $3.00 per share, from January 28, 2019 to January 28, 2024. Mr. Schwartzberg, who was appointed as a director of the Company effective April 9, 2021, died on October 30, 2022. Accordingly, Mr. Schwartzberg’s unvested stock options ceased vesting effective as of the date of his death, and the expiration date of all vested stock options owned by Mr. Schwartzberg are contractually scheduled to expire one year from the date that his service on the Company’s Board of Directors terminated. Board of Directors Compensation Effective January 6, 2021, in recognition of their service as directors of the Company over the past year, the Company granted stock options to purchase 50,000 shares of common stock to each of Dr. Winson Sze Chun Ho, Dr. Yun Yen, Dr. Stephen Forman, and Dr. Philip Palmedo (an aggregate of 200,000 shares), which were fully vested upon issuance and exercisable for a period of five years at $3.21 per share, which was the approximate fair market value of the Company’s common stock on such date. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $571,312 ($2.8566 per share) and was charged to general and administrative costs in the consolidated statement of operations on the grant date. On April 9, 2021, Winson Sze Chun Ho resigned from the Company’s Board of Directors to focus on clinical and pre-clinical cancer research in academic medicine. Concurrent with his resignation, the Board of Directors appointed Gil Schwartzberg to fill the vacancy created by Dr. Ho’s resignation. In connection with his appointment to the Board of Directors, and in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, Mr. Schwartzberg was granted stock options to purchase 250,000 shares of the Company’s common stock, exercisable for a period of five years at an exercise price of $3.20 per share (the closing market price on the grant date), vesting 50% on the grant date and the remainder vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $753,611 ($3.0144 per share), of which $376,800 was attributable to the portion of the stock options fully vested on April 9, 2021 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options was being charged to operations ratably from April 9, 2021 through June 30, 2023, although vesting terminated on October 30, 2022, the date that Mr. Schwartzberg died. During the years ended December 31, 2022 and 2021, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $126,684 and $500,235, respectively, with respect to these stock options. - 86 - On May 11, 2021, the Board of Directors appointed Regina Brown to the Board of Directors. In connection with her appointment to the Board of Directors, and in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, Ms. Brown was granted stock options to purchase 250,000 shares of the Company’s common stock, exercisable for a period of five years at an exercise price of $2.80 per share (the closing market price on the grant date), vesting 50% on the grant date and the remainder vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $658,363 ($2.6335 per share), of which $329,188 was attributable to the portion of the stock options fully vested on May 11, 2021 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options is being charged to operations ratably from May 11, 2021 through June 30, 2023. During the years ended December 31, 2022 and 2021, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $154,042 and $427,944, respectively, with respect to these stock options. On June 30, 2021, the Board of Directors, in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, granted to each of the five non-officer directors of the Company stock options to purchase 100,000 shares (a total of 500,000 shares) of the Company’s common stock, exercisable for a period of five years at an exercise price of $3.03 per share (the closing market price on the grant date), vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $1,421,095 ($2.84225 per share), which is being charged to operations ratably from July 1, 2021 through June 30, 2023. During the years ended December 31, 2022 and 2021, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $638,915 and $358,200, respectively, with respect to these stock options. Effective as of June 15, 2022, Dr. René Bernards was appointed to the Company’s Board of Directors. As a new director, in lieu of a grant of stock options, Dr. Bernards received a one-time cash board fee of $100,000, payable immediately, and an annual cash board fee of $40,000, payable quarterly. During the year ended December 31, 2022, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $133,873 with respect to his cash board compensation. On June 17, 2022, the Board of Directors appointed Bas van der Baan to the Board of Directors. In connection with his appointment to the Board of Directors, and in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, Mr. Baan was granted stock options to purchase 250,000 shares of the Company’s common stock, exercisable for a period of five years at an exercise price of $0.74 per share (the closing market price on the grant date), vesting 50% on the grant date and the remainder vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $158,525 ($0.6341 per share), of which $79,263 was attributable to the portion of the stock options fully vested on June 17, 2022 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options is being charged to operations ratably from June 17, 2022 through June 30, 2024. During the year ended December 31, 2022, the Company recorded a total charge to general and administrative costs in the consolidated statement of operations of $100,249 with respect to these stock options. On June 30, 2022, the Board of Directors, in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, granted to each of the five non-officer directors of the Company stock options to purchase 100,000 shares (a total of 500,000 shares) of the Company’s common stock, exercisable for a period of five years at an exercise price of $0.74 per share (the closing market price on the grant date), vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $316,700 ($0.6334 per share), which is being charged to operations ratably from July 1, 2022 through June 30, 2024. During the year ended December 31, 2022, the Company recorded a total charge to general and administrative costs in the consolidated statement of operations of $63,777 with respect to these stock options. - 87 - On November 6, 2022, the Board of Directors granted to each of the four officers of the Company stock options to purchase 200,000 shares (a total of 800,000 shares) of the Company’s common stock, exercisable for a period of five years at an exercise price of $2.00 per share, vesting 25% on issuance and 25% on each anniversary date thereafter until fully vested, subject to continued service. The total fair value of the 800,000 stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $262,560 ($0.3282 per share), which is being charged to operations ratably from November 6, 2022 through November 6, 2025. During the year ended December 31, 2022, the Company recorded a total charge to general and administrative costs in the consolidated statement of operations of $75,520 with respect to these stock options. Summary Compensation Table The table set forth below presents the compensation awarded to, earned by or paid to our named directors for the years ended December 31, 2022, 2021 and 2020. DIRECTOR COMPENSATION TABLE Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($)(1) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) John S. Kovach 2022 - - - - - - - - Director (2) 2021 - - - - - - - - 2020 - - - - - - - - Philip F. Palmedo 2022 - - - 63,340 - - 21,148 84,488 Director (8) 2021 - - - 427,047 - - 20,458 447,505 2020 - - - - - - - - Stephen J. Forman 2022 - - - 63,340 - - 22,500 85,840 Director 2021 - - - 427,047 - - 16,819 443,866 2020 - - - - - - - - Winson Sze Chun Ho 2022 - - - - - - - - Director (3) 2021 - - - 142,828 - - - 142,828 2020 - - - - - - - - Yun Yen 2022 - - - 63,340 - - 30,000 93,340 Director 2021 - - - 427,047 - - 21,833 448,880 2020 - - - - - - - - Gil Schwartzberg 2022 - - - 63,340 - - 16,630 79,970 Director (4) 2021 - - - 1,037,830 - - 14,556 1,052,386 2020 - - - - - - - - Regina Brown 2022 - - - 63,340 - - 30,000 93,340 Director (5) 2021 - - - 942,582 - - 19,167 961,749 2020 - - - - - - - - René Bernards 2022 - - - - - - 133,873 133,873 Director (6) 2021 - - - - - - - - 2020 - - - - - - - - Bas van der Baan 2022 - - - 158,525 - - 11,869 170,394 Director (7) 2021 - - - - - - - - 2020 - - - - - - - - (1) Consists of grant date fair value of option award calculated pursuant to the Black-Scholes option-pricing model. - 88 - (2) Dr. Kovach is also the Company’s President, Chief Executive Officer and Chief Scientific Officer. (3) Resigned as a director of the Company effective April 9, 2021. (4) Appointed as a director of the Company effective April 9, 2021 and died on October 30, 2022. (5) Appointed as a director of the Company effective May 11, 2021. (6) Appointed as a director of the Company effective June 15, 2022. Dr. Bernards received all of his compensation in 2022 in the form of cash. (7) Appointed as a director of the Company effective June 17, 2022. (8) Did not stand for re-election at the annual meeting of stockholders. Accordingly, his term as a director of the Company ended effective October 7, 2022. Scientific Advisory Committee Compensation On December 24, 2013, the Company entered into an agreement with NDA Consulting Corp. for consultation and advice in the field of oncology research and drug development. As part of the agreement, NDA also agreed to cause its president, Dr. Daniel D. Von Hoff, M.D., to become a member of the Company’s Scientific Advisory Committee. The term of the agreement was for one year and provided for a quarterly cash fee of $4,000. The agreement has been automatically renewed for additional one-year terms on its anniversary date since 2014. Consulting and advisory fees charged to operations pursuant to this agreement were $16,000 and $16,000 for the years ended December 31, 2022 and 2021, respectively, which were included in research and development costs in the consolidated statements of operations. 2020 Stock Incentive Plan Summary On July 14, 2020, the Board of Directors of the Company adopted the 2020 Stock Incentive Plan (the “2020 Plan”), which was subsequently approved by the stockholders of the Company. The 2020 Plan provides for the granting of equity-based awards, consisting of stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock-based awards to employees, officers, directors and consultants of the Company and its affiliates, initially for a total of 2,333,333 shares of the Company’s common stock, under terms and conditions as determined by the Company’s Board of Directors. On October 7, 2022, the stockholders of the Company approved an amendment to the 2020 Plan to increase the number of common shares issuable thereunder by 1,800,000 shares, to a total of 4,133,333 shares. As of December 31, 2022, unexpired stock options for 2,603,125 shares were issued and outstanding under the 2020 Plan and 1,530,208 shares were available for issuance under the 2020 Plan. Having an adequate number of shares available for future equity compensation grants is necessary to promote our long-term success and the creation of stockholder value by: ● Enabling us to continue to attract and retain the services of key service providers who would be eligible to receive grants; ● Aligning participants’ interests with stockholders’ interests through incentives that are based upon the performance of our common stock; ● Motivating participants, through equity incentive awards, to achieve long-term growth in our business, in addition to short-term financial performance; and ● Providing a long-term equity incentive program that is competitive as compared to other companies with whom we compete for talent. - 89 - The 2020 Plan permits the discretionary award of incentive stock options (“ISOs”), non-statutory stock options (“NQSOs”), restricted stock, restricted stock units (“RSUs”), stock appreciation rights (“SARs”), other equity awards and/or cash awards to selected participants. The 2020 Plan will remain in effect until July 14, 2030. The 2020 Plan provides for the reservation of 4,133,333 shares of common stock for issuance thereunder (the “Share Limit”), and provides that the maximum number of shares that may be issued pursuant to the exercise of ISOs is 4,133,333 (the “ISO Limit”). Key Features of the 2020 Plan Certain key features of the 2020 Plan are summarized as follows: ● If not terminated earlier by our Board of Directors, the 2020 Plan will terminate on July 14, 2030. ● Up to a maximum aggregate of 4,133,333 shares of common stock may be issued under the 2020 Plan. The maximum number of shares that may be issued pursuant to the exercise of ISOs is also 4,133,333. ● The 2020 Plan is administered by the Compensation Committee, which is comprised solely of independent members of our Board of Directors. The Board of Directors may designate a separate committee to make awards to employees who are not officers subject to the reporting requirements of Section 16 of the Exchange Act. ● Employees, consultants and board members are eligible to receive awards, provided that the Compensation Committee has the discretion to determine (i) who shall receive any awards, and (ii) the terms and conditions of such awards. ● Awards may consist of ISOs, NQSOs, restricted stock, RSUs, SARs, other equity awards and/or cash awards. ● Stock options and SARs may not be granted at a per share exercise price below the fair market value of a share of our common stock on the date of grant. ● Stock options and SARs may not be repriced or exchanged without stockholder approval. ● The maximum exercisable term of stock options and SARs may not exceed ten years. ● Awards are subject to recoupment of compensation policies adopted by us. Eligibility to Receive Awards . Employees, consultants and members of our Board of Directors are eligible to receive awards under the 2020 Plan. The Compensation Committee determines, in its discretion, the selected participants who will be granted awards under the 2020 Plan. Shares Subject to the 2020 Plan . The maximum number of shares of common stock that can be issued under the 2020 Plan is 4,133,333 shares. The shares underlying forfeited or terminated awards (without payment of consideration), or unexercised awards become available again for issuance under the 2020 Plan. No fractional shares may be issued under the 2020 Plan. No shares will be issued with respect to a participant’s award unless applicable tax withholding obligations have been satisfied by the participant. - 90 - Administration of the 2020 Plan . The 2020 Plan is administered by the Compensation Committee of the Board of Directors, which consists of independent board members. With respect to certain awards issued under the 2020 Plan, the members of the Compensation Committee also must be “Non-Employee Directors” under Rule 16b-3 of the Exchange Act. Subject to the terms of the 2020 Plan, the Compensation Committee has the sole discretion, among other things, to: ● Select the individuals who will receive awards; ● Determine the terms and conditions of awards (for example, performance conditions, if any, and vesting schedule); ● Correct any defect, supply any omission, or reconcile any inconsistency in the 2020 Plan or any award agreement; ● Accelerate the vesting, extend the post-termination exercise term or waive restrictions of any awards at any time and under such terms and conditions as it deems appropriate, subject to the limitations set forth in the 2020 Plan; ● Permit a participant to defer compensation to be provided by an award; and ● Interpret the provisions of the 2020 Plan and outstanding awards. The Compensation Committee may suspend vesting, settlement, or exercise of awards pending a determination of whether a selected participant’s service should be terminated for cause (in which case outstanding awards would be forfeited). Awards may be subject to any policy that the Board of Directors may implement on the recoupment of compensation (referred to as a “clawback” policy). The members of the Board of Directors, the Compensation Committee and their delegates shall be indemnified by us to the maximum extent permitted by applicable law for actions taken or not taken regarding the 2020 Plan. Types of Awards . Stock Options . A stock option is the right to acquire shares at a fixed exercise price over a fixed period of time. The Compensation Committee determines, among other terms and conditions, the number of shares covered by each stock option and the exercise price of the shares subject to each stock option, but such per share exercise price cannot be less than the fair market value of a share of our common stock on the date of grant of the stock option. The exercise price of each stock option granted under the 2020 Plan must be paid in full at the time of exercise, either with cash, or through a broker-assisted “cashless” exercise and sale program, or net exercise, or through another method approved by the Compensation Committee. Stock options granted under the 2020 Plan may be either ISOs or NQSOs. In order to comply with Treasury Regulation Section 1.422-2(b), the 2020 Plan provides that no more than 4,133,333 shares may be issued pursuant to the exercise of ISOs. SARs . A SAR is the right to receive, upon exercise, an amount equal to the difference between the fair market value of the shares on the date of the SAR’s exercise and the aggregate exercise price of the shares covered by the exercised portion of the SAR. The Compensation Committee determines the terms of SARs, including the exercise price (provided that such per share exercise price cannot be less than the fair market value of a share of our common stock on the date of grant), the vesting and the term of the SAR. Settlement of a SAR may be in shares of common stock or in cash, or any combination thereof, as the Compensation Committee may determine. SARs may not be repriced or exchanged without stockholder approval. Restricted Stock . A restricted stock award is the grant of shares of our common stock to a selected participant and such shares may be subject to a substantial risk of forfeiture until specific conditions or goals are met. The restricted shares may be issued with or without cash consideration being paid by the selected participant as determined by the Compensation Committee. The Compensation Committee also will determine any other terms and conditions of an award of restricted stock. - 91 - RSUs . RSUs are the right to receive an amount equal to the fair market value of the shares covered by the RSU at some future date after the grant. The Compensation Committee will determine all of the terms and conditions of an award of RSUs. Payment for vested RSUs may be in shares of common stock or in cash, or any combination thereof, as the Compensation Committee may determine. RSUs represent an unfunded and unsecured obligation for us, and a holder of a stock unit has no rights other than those of a general creditor. Other Awards . The 2020 Plan also provides that other equity awards, which derive their value from the value of our shares or from increases in the value of our shares, may be granted. In addition, cash awards may also be issued. Substitute awards may be issued under the 2020 Plan in assumption of or substitution for or exchange for awards previously granted by an entity which we may acquire. Limited Transferability of Awards . Awards granted under the 2020 Plan generally are not transferrable other than by will or by the laws of descent and distribution. However, the Compensation Committee may in its discretion permit the transfer of awards other than ISOs. Change in Control . In the event that we are a party to a merger or other reorganization or similar transaction, outstanding 2020 Plan awards will be subject to the agreement pertaining to such merger or reorganization. Such agreement may provide for (i) the continuation of the outstanding awards by us if we are a surviving corporation, (ii) the assumption or substitution of the outstanding awards by the surviving entity or its parent, (iii) full exercisability and/or full vesting of outstanding awards, or (iv) cancellation of outstanding awards either with or without consideration, in all cases with or without consent of the selected participant. The Compensation Committee will decide the effect of a change in control of us on outstanding awards. Amendment and Termination of the 2020 Plan . The Board of Directors generally may amend or terminate the 2020 Plan at any time and for any reason, except that it must obtain stockholder approval of material amendments to the extent required by applicable laws, regulations or rules. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The table set forth below presents certain information regarding beneficial ownership of our common stock (the only class of our voting equity securities issued and outstanding) as of March 10, 2023 by (i) each person or entity who is known by us to own beneficially more than 5% of our outstanding shares of common stock, (ii) each of our directors, and (iii) all of our directors and executive officers as a group. As of March 10, 2023, there were 16,659,093 shares of our common stock issued and outstanding. In computing the number and percentage of shares beneficially owned by a person, shares of common stock that a person has a right to acquire within sixty (60) days of March 10, 2023 pursuant to stock options, warrants, convertible preferred stock or other rights are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person. This table is based upon information supplied by our directors, officers and principal stockholders and reports filed with the Securities and Exchange Commission. Except as noted, the Company’s executive office is reflected as the address of all officers, directors and other stockholders owning more than 5%. - 92 - Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class Officers and Directors Dr. John S. Kovach 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 1,611,284 (1) 9.6 % Bas van der Baan Hogeweg 4-H Amsterdam P7 1098CP 181,875 (2) 1.1 % Dr. Stephen J. Forman 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 279,191 (3) 1.7 % Dr. Yun Yen 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 321,930 (12) 1.9 % Dr. René Bernards Koningsvaren 37 Abcoude P7 1391AD 150,000 (6) 0.9 % Regina Brown 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 334,425 (11) 2.0 % Robert N. Weingarten 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 93,749 (13) 0.6 % Eric J. Forman 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 195,390 (5) 1.2 % Dr. James S. Miser 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 112,500 (14) 0.7 % All officers and directors as a group (nine persons) 3,280,344 18.2 % Other Stockholders Owning More Than 5% John and Barbara Kovach 2015 Trust Glenn L. Krinsky, Trustee 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 1,333,333 (4) 8.0 % Julie Forman 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 1,146,029 (7) 6.7 % David N. Sterling 16204 Andalucia Lane Delray Beach, Florida 33446 1,000,950 (17) 5.8 % Arthur and Jane Riggs 1990 Irrevocable Trust Jane Riggs, Trustee 4852 Saint Andres Avenue La Verne, California 91750 1,747,500 (8) 10.0 % Robert and Susan Greenberg 228 Manhattan Beach Boulevard Manhattan Beach, California 90266 1,046,931 (9) 6.3 % Lalit R. Bahl and Kavit K. Kinra 3 Pheasant Run Setauket, New York 11733 833,333 (15) 5.0 % Hung Tak Ho Mayfair by the Sea II Tower T8, 1/F, Unit A 21 Fo Chun Road Pak ShekKok Taipo NT, Hong Kong SAR 1,084,210 (10) 6.5 % Glenn L. Krinsky 608 East Colorado Boulevard, Suite 180 Pasadena, California 91101 1,474,988 (16) 8.9 % - 93 - (1) Includes 1,540,184 shares of common stock and stock warrants to purchase 21,100 shares of common stock owned of record by the John S. Kovach Trust. Dr. Kovach is a co-trustee of the Trust and has the exclusive right to control the investment of the assets of the Trust. Also includes stock options to purchase 50,000 shares of common stock owned by Dr. John S. Kovach. All stock options are immediately exercisable or within 60 days. (2) Includes 10,000 shares of common stock and stock options to purchase 171,875 shares of common stock owned by Bas van der Baan. All stock options are immediately exercisable or within 60 days. (3) Includes 3,751 shares of common stock and stock options to purchase 183,333 shares of common stock which are immediately exercisable or within 60 days, owned by Dr. Stephen Forman. Also includes 71,054 shares of common stock and stock warrants to purchase 21,053 shares of common stock owned by the Stephen Forman Living Trust dated 12/16/98. Stephen Forman is trustee of the trust and holds voting and dispositive power over the common stock and common stock warrants owned by the trust. (4) Includes 1,333,333 shares of common stock transferred by John Kovach and his wife, Barbara C.H. Kovach, as grantors, to the John and Barbara Kovach 2015 Trust, an irrevocable trust dated July 6, 2015. The primary beneficiaries of the trust are the two adult daughters of John and Barbara Kovach. Glen L. Krinsky is the trustee of the John and Barbara Kovach 2015 Trust. (5) Includes stock options to purchase 110,416 shares of common stock owned by Eric J. Forman. All stock options and common stock warrants are immediately exercisable or within 60 days. Eric Forman is the husband of Julie (Schwartzberg) Forman, and the son-in-law of Gil and Debbie Schwartzberg. Also includes the following: - 79,710 shares of common stock and stock warrants to purchase 5,264 shares of common stock owned by the Eric Forman Revocable Trust. All stock options and common stock warrants are immediately exercisable or within 60 days. Excludes the following, as to which Eric Forman disclaims beneficial ownership or control: - 461,279 shares of common stock and stock options to purchase 472,396 shares of common stock owned by the Julie Schwartzberg Trust, as to which Julie (Schwartzberg) Forman is the trustee and beneficiary. - 69,721 shares of common stock and common stock warrants to purchase 52,632 shares of common stock owned by the Julie Forman Inherited IRA. - 87,081 shares of common stock owned by the Julie Forman 2015 Trust, an irrevocable trust, the beneficiaries of which are the minor children of Eric and Julie Forman, as to which Scott Forman, brother of Eric Forman, as trustee, has voting, dispositive and investment control. - 90,001 shares of common stock owned by each of the Savannah Sterling Trust, Amanda Sterling Trust, Daniel Sterling Trust and Charles Sterling Trust, as to which Julie Forman is the trustee. (6) Consists of 150,000 shares of common stock. - 94 - (7) Includes 318,415 shares of common stock and stock options to purchase 472,396 shares of common stock owned by the Julie Schwartzberg Trust, as to which Julie (Schwartzberg) Forman is the trustee and beneficiary. Also includes the following: - 69,721 shares of common stock and common stock warrants to purchase 52,632 shares of common stock owned by the Julie Forman Inherited IRA. - 90,001 shares of common stock owned by each of the Savannah Sterling Trust, Amanda Sterling Trust, Daniel Sterling Trust and Charles Sterling Trust, as to which Julie Forman is the trustee. - 142,864 shares of common stock owned by the Schwartzberg Trust fbo Julie Forman, dtd 3/3/23, as to which Julie Forman is the trustee. Excludes the following, as to which Julie Forman disclaims beneficial ownership or control: - Stock options to purchase 110,416 shares of common stock owned by Eric J. Forman. All stock options and common stock warrants are immediately exercisable or within 60 days. - 87,081 shares of common stock owned by the Julie Forman 2015 Trust, an irrevocable trust, the beneficiaries of which are the minor children of Eric and Julie Forman, as to which Scott Forman, brother of Eric Forman, as trustee, has voting, dispositive and investment control. - 79,710 shares of common stock and stock warrants to purchase 5,264 shares of common stock owned by the Eric Forman Revocable Trust. All stock options and common stock warrants are immediately exercisable or within 60 days. (8) Includes 1,018,333 shares of common stock and 729,167 shares of common stock issuable upon conversion of 350,000 shares of Series A Convertible Preferred Stock owned by the Arthur and Jane Riggs 1990 Irrevocable Trust dated November 18, 1990. Jane Riggs is the trustee of the Arthur and Jane Riggs 1990 Irrevocable Trust. The shares of Series A Convertible Preferred Stock were acquired on March 17, 2015 and January 15, 2016, are non-voting, and are immediately convertible into common stock. (9) Consists of 994,299 shares of common stock and common stock warrants to purchase 385,966 shares of common stock owned by the Greenberg Family Trust dated May 3, 1988. The trust is a revocable trust, and Arthur Greenberg and his wife, Susan Greenberg, are co-trustees of the trust and share voting and dispositive power over the shares of common stock. (10) Includes 1,042,105 shares of common stock and stock warrants to purchase 42,105 shares of common stock. (11) Includes 6,300 shares of common stock and stock options to purchase 328,125 shares of common stock. (12) Includes 52,632 shares of common stock, stock warrants to purchase 52,632 shares of common stock and stock options to purchase 216,666 shares of common stock which are immediately exercisable or within 60 days. (13) Consists of stock options to purchase 93,749 shares of common stock which are immediately exercisable or within 60 days. (14) Consists of stock options to purchase 112,500 shares of common stock which are immediately exercisable or within 60 days. (15) Consists of 833,333 shares of common stock. (16) Includes 141,655 shares of common stock owned by Glenn L. Krinsky. Also includes 1,333,333 shares of common stock owned by the John and Barbara Kovach 2015 Trust, as to which Glenn L. Krinsky, as trustee, has voting, dispositive and investment control. - 95 - (17) Includes 142,864 shares of common stock owned by the Schwartzberg Trust fbo David Sterling, dtd 3/3/23, as to which David Sterling is the trustee. Also includes the following: - 69,722 shares of common stock and common stock warrants to purchase 52,632 shares of common stock owned by the David Sterling Inherited IRA. - 263,336 shares of common stock owned by the David N. Sterling Trust, as to which Debbie Schwartzberg is the trustee. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE (a) Related Party Transactions During the years ended December 31, 2022, 2021 and 2020, there have been no transactions, whether directly or indirectly, between the Company and any of its officers, directors or affiliates, including their family members, except as described herein or elsewhere in this document, other than as disclosed below. Dr. John S. Kovach has been the Company’s President, Chief Executive Officer and Chief Scientific Officer since inception. Dr. Kovach entered into an employment agreement with the Company effective October 1, 2020 that increased his annual salary from $60,000 to $250,000. Dr. Kovach was paid $107,500 for the year ended December 31, 2020 for his services as the Company’s President, Chief Executive Officer and Chief Scientific Officer. Eric J. Forman was appointed as the Company’s Chief Administrative Officer effective July 15, 2020. Mr. Forman was paid $30,000 from July 15, 2022 through December 31, 2022 for his services as the Company’s Chief Administrative Officer. During the year ended December 31, 2020 (prior to Mr. Forman’s appointment as Chief Administrative Officer), the Company paid the Eric Forman Law Office a total of $38,000 for legal and consulting services rendered with respect to various corporate and administrative matters. Dr. James S. Miser was appointed as the Company’s Chief Medical Officer effective August 1, 2020. Dr. Miser was paid $62,500 from August 1, 2020 through December 31, 2020 for his services as the Company’s Chief Medical Officer. Robert N. Weingarten was appointed as the Company’s Vice President and Chief Financial Officer effective August 12, 2020. Mr. Weingarten was paid $46,451 from August 12, 2020 through December 31, 2020 for his services as the Company’s Vice President and Chief Financial Officer. During the year ended December 31, 2020 (prior to Mr. Weingarten’s appointment as Vice President and Chief Financial Officer), the Company paid Mr. Weingarten a total of $79,995 for accounting and financial consulting services rendered with respect to the preparation of the Company’s consolidated financial statements and certain other financial and compliance matters. (b) Director Independence The Company considers Dr. Stephen Forman, Dr. Yun Yen, Regina Brown, Dr. René Bernards, and Bas van der Baan to each be an “independent director”, as defined under Nasdaq rules and by Rule 10-A-3 of the Exchange Act. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Weinberg & Company, P.A. acted as our independent registered public accounting firm for the fiscal years ended December 31, 2022 and 2021 and for the interim periods in such fiscal years. The following table shows the fees that were incurred by us for audit and other services provided by Weinberg & Company, P.A. for the years ended December 31, 2022 and 2021. - 96 - Years Ended December 31, 2022 2021 Audit Fees (1) $ 111,806 $ 93,681 Audit-Related Fees (2) — — Tax Fees (3) 28,553 28,140 Other Fees (4) — 25,200 Total $ 140,359 $ 147,021 (1) Audit fees represent fees for professional services provided in connection with the audit of our annual financial statements included in our Annual Reports on Form 10-K and the review of our interim financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided in connection with statutory or regulatory filings, excluding those fees included in Other Fees. (2) Audit-related fees represent fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and not reported above under Audit Fees. (3) Tax fees represent fees for professional services related to tax compliance, tax advice and tax planning. (4) Other fees represent fees incurred with respect to our Registration Statements on Forms S-3 and S-8 declared effective by the SEC during the year ended December 31, 2021. All audit and audit-related services, tax services and other services rendered by Weinberg & Company, P.A. during the fiscal years ended December 31, 2022 and 2021 were pre-approved by either our Audit Committee or by our Board of Directors. The Board of Directors has adopted a pre-approval policy that provides for the pre-approval of all services performed for us by our independent registered public accounting firm. - 97 - PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) List of documents filed as part of this report: (1) Financial Statements Reference is made to the Index to Consolidated Financial Statements on page F-1, where these documents are listed. (2) Financial Statement Schedules The financial statement schedules have been omitted because the required information is not applicable, or not present in amounts sufficient to require submission of the schedules, or because the information is included in the financial statements or notes thereto. (3) Exhibits See (b) below. (b) Exhibits: A list of exhibits required to be filed as part of this Annual Report on Form 10-K is set forth in the Index to Exhibits, which is presented elsewhere in this document, and is incorporated herein by reference. ITEM 16. FORM 10-K SUMMARY None - 98 - INDEX TO EXHIBITS Exhibit Number Description of Document 1.1 Form of Underwriter Agreement 22 2.1 Share Exchange Agreement dated as of June 8, 2006 among the Company, John S. Kovach and Lixte Biotechnology, Inc. 1 3.1 Certificate of Incorporation, as filed with the Delaware Secretary of State on May 24, 2005 2 3.2 Certificate of Amendment of Certificate of Incorporation 3 3.3 Certificate of Designations for the Company’s Series A Convertible Preferred Stock 6 3.4 Certificate of Amendment of Certificate of Designations of the Series A Convertible Preferred Stock .8 3.6 Amended and Restated Bylaws 15 3.7 Certificate of Amendment of Certificate of Incorporation 23 4.1 Form of Warrant included in Unit 22 4.2 Form of Warrant Agent Agreement 22 4.3 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended 21 10.1 Master Agreement between Lixte Biotechnology Holdings, Inc. and Theradex Systems, Inc. dated January 12, 2010 4 10.2 Materials Cooperative Research and Development Agreement between Lixte Biotechnology Holdings, Inc. and the National Institute of Neurological Disorders and Stroke dated October 18, 2013 5 10.3 Scientific Advisory Board Agreement between Lixte Biotechnology Holdings, Inc. and NDA Consulting Corp. dated December 24, 2013 5 10.4 Collaboration Agreement between Lixte Biotechnology Holdings, Inc. and BioPharmaWorks LLC effective September 14, 2015 7 10.5 Form of First Warrant to purchase common stock issued to BioPharmaWorks LLC dated September 14, 2015 7 10.6 Form of Second Warrant to purchase common stock issued to BioPharmaWorks LLC dated September 14, 2015 7 10.7 Clinical Trial Research Agreement between H. Lee Moffitt Cancer Center and Research Institute Hospital, Inc. and Lixte Biotechnology Holdings, Inc. dated and effective as of August 20, 2018 9 10.8 Exclusive License Agreement between H. Lee Moffitt Cancer Center and Research Institute Hospital, Inc. and Lixte Biotechnology Holdings, Inc. dated and effective as of August 20, 2018 (certain portions of this exhibit have been omitted based on a request for confidential treatment filed by the Company with the Securities and Exchange Commission that was granted on September 17, 2018) 9 10.9 Form of Warrant to Purchase Common Stock of Llxte Biotechnology Holdings, Inc. (issued in connection with common stock unit rights offering that closed on November 30, 2018) 10 10.10 Collaboration Agreement for an Investigator-Initiated Clinical Trial between Lixte Biotechnology Holdings, Inc. and the Spanish Sarcoma Group as of July 31, 2019 (certain portions of this exhibit have been omitted based on a request for confidential treatment filed by the Company with the Securities and Exchange Commission that was granted on September 19, 2019) 11 10.11 Employment Agreement Between the Company and Dr. James Miser 13+ 10.12 Employment Agreement Between the Company and Robert N. Weingarten 17+ 10.13 Employment Agreement Between the Company and Dr. John Kovach 14+ 10.14 Employment Agreement Between the Company and Eric Forman 15+ 10.15 Second Amendment to Employment Agreement Between the Company and Eric Forman*+ 10.16 2020 Stock Incentive Plan 16+ 10.17 Master Services Agreement between Foundation for Angelman Syndrome Therapeutics (“FAST”) and Lixte Biotechnology Holdings, Inc. dated as of August 12, 2020 17 10.18 Clinical Trial Research Agreement between the Company and the City of Hope National Medical Center 18 10.19 Amendment to Employment Agreement between the Company and Eric Forman 22+ 10.20 Development Collaboration Agreement by and between Lixte Biotechnology Holdings, Inc. and the Netherlands Cancer Institute, Amsterdam, and Oncode Institute, Utrecht, entered into on October 8, 2021 (certain portions of this Exhibit have been omitted based on a pending request for confidential treatment being filed with the Securities and Exchange Commission). 23 10.21 Insider Trading Policy* 21.1 Subsidiaries of the Registrant* 23.1 Consent of Weinberg & Company, P.A., Independent Registered Public Accounting Firm* 31.1 Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 31.2 Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 32.1 Officer’s Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* 32.2 Officer’s Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* 101.INS Inline XBRL Instance Document (does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) 101.SCH Inline XBRL Taxonomy Extension Scheme Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL document and included in Exhibit 101.INS) 1 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on July 7, 2006 and incorporated herein by reference. 2 Filed as an Exhibit to the Company’s Registration Statement on Form 10-SB, as filed with the Securities and Exchange Commission on August 3, 2005 and incorporated herein by reference. 3 Filed as Appendix A to the Company’s Information Statement, as filed with the Securities and Exchange Commission on September 20, 2006 and incorporated herein by reference. 4 Filed as an Exhibit to the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 15, 2013 and incorporated herein by reference. - 99 - 5 Filed as an Exhibit to the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 21, 2014 and incorporated herein by reference. 6 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on March 18, 2015 and incorporated herein by reference. 7 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on September 18, 2015 and incorporated herein by reference. 8 Filed as an Exhibit to the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 28, 2016 and incorporated herein by reference. 9 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 23, 2018 and incorporated herein by reference. 10 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on December 5, 2018 and incorporated herein by reference. 11 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 6, 2019 and incorporated herein by reference. 12 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on July 17, 2020 and incorporated herein by reference. 13 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on July 17, 2020 and incorporated herein by reference. 14 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on July 17, 2020 and incorporated herein by reference. 15 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on July 17, 2020 and incorporated herein by reference. 16 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on July 17, 2020 and incorporated herein by reference. 17 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on August 18, 2020 and incorporated herein by reference. 18 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 22, 2021 and incorporated herein by reference. 19 Filed as an Exhibit to the Company’s Registration Statement on Form S-1/A, as filed with the Securities and Exchange Commission on November 16, 2020. 20 Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on November 27, 2020 and incorporated herein by reference. 21 Filed as an Exhibit to the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 25, 2020 and incorporated herein by reference. 22 Filed as an Exhibit to the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 26, 2021 and incorporated herein by reference. 23 Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on November 10, 2021 and incorporated herein by reference. * Filed herewith. + Indicates a management contract or any compensatory plan, contract or arrangement. - 100 - SIGNATURES In accordance with Section 13 and 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: March 29, 2023 LIXTE BIOTECHNOLOGY HOLDINGS, INC. (Registrant) By: /s/ JOHN S. KOVACH Name: John S. Kovach Title: President and Chief Executive Officer In accordance with the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant in the capacity and on the dates indicated. Signature Title Date /s/ JOHN S. KOVACH President and Chief Executive Officer March 29, 2023 John S. Kovach /s/ ROBERT N. WEINGARTEN Vice President and Chief Financial Officer March 29, 2023 Robert N. Weingarten /s/ BAS VAN DER BAAN Director March 29, 2023 Bas van der Baan /s/ STEPHEN J. FORMAN Director March 29, 2023 Stephen J. Forman /s/ RENE BERNARDS Director March 29, 2023 René Bernards /s/ YUN YEN Director March 29, 2023 Yun Yen /s/ REGINA BROWN Director March 29, 2023 Regina Brown - 101 - LIXTE BIOTECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM) Years Ended December 31, 2022 and 2021 Page Number Report of Independent Registered Public Accounting Firm (PCAOB ID NO. 572 ) F-2 Consolidated Balance Sheets – December 31, 2022 and 2021 F-4 Consolidated Statements of Operations – Years Ended December 31, 2022 and 2021 F-5 Consolidated Statements of Stockholders’ Equity – Years Ended December 31, 2022 and 2021 F-6 Consolidated Statements of Cash Flows – Years Ended December 31, 2022 and 2021 F-7 Notes to Consolidated Financial Statements – Years Ended December 31, 2022 and 2021 F-8 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Lixte Biotechnology Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Lixte Biotechnology Holdings, Inc. and subsidiary (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has no recurring source of revenue and has experienced negative operating cash flows since inception. The Company has financed its working capital requirements through the recurring sale of its equity securities. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 to the consolidated financial statements. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter Description The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates. F- 2 Valuation of Stock-Based Compensation As discussed in Note 6 to the consolidated financial statements, the Company recognized $1,546,040 of compensation expense to certain officers, employees and consultants related to stock-based awards. The Company accounts for stock-based compensation for all stock-based awards made to officers, employees and consultants based on estimated fair values. We identified the valuation of stock-based compensation as a critical audit matter because of the subjectivity of the inputs and assumptions that management utilized in determining the fair value of the stock-based awards. This required a high degree of effort and judgement in selecting auditor procedures to evaluate management’s estimates and assumptions as it relates to the determination of the fair values of stock-based compensation. Our audit procedures related to the of the stock-based awards, including the valuation methodology and related assumptions such as the risk-free interest rate, volatility, and dividend yield, consisted of the following, among others: ● We obtained and read the stock-based award agreements, evaluated the reasonableness of management’s significant valuation assumptions, and tested the mathematical accuracy of managements valuation analyses. ● We developed independent estimates for the fair values of the stock-based awards. We have served as the Company’s auditor since 2008. /s/ Weinberg & Company, P.A . Los Angeles, California March 29, 2023 F- 3 LIXTE BIOTECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS 2022 2021 December 31, 2022 2021 ASSETS Current assets: Cash $ 5,353,392 $ 4,823,745 Advances on research and development contract services 147,017 150,241 Prepaid insurance 49,224 109,029 Other prepaid expenses and current assets 10,380 10,249 Total current assets 5,560,013 5,093,264 Total assets $ 5,560,013 $ 5,093,264 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses, including $ 46,982 and $ 32,500 to related parties at December 31, 2022 and 2021, respectively $ 229,764 $ 225,965 Research and development contract liabilities 165,022 76,961 Total current liabilities 394,786 302,926 Commitments and contingencies - - Stockholders’ equity: Preferred Stock, $ 0.0001 par value; authorized – 10,000,000 shares; issued and outstanding – 350,000 shares of Series A Convertible Preferred Stock, $ 10.00 per share stated value, liquidation preference based on assumed conversion into common shares – 729,167 shares 3,500,000 3,500,000 Common stock, $ 0.0001 par value; authorized – 100,000,000 shares; issued and outstanding – 16,646,593 shares and 13,746,593 shares at December 31, 2022 and 2021, respectively 1,664 1,374 Additional paid-in capital 45,058,262 38,371,128 Accumulated deficit ( 43,394,699 ) ( 37,082,164 ) Total stockholders’ equity 5,165,227 4,790,338 Total liabilities and stockholders’ equity $ 5,560,013 $ 5,093,264 See accompanying notes to consolidated financial statements. F- 4 LIXTE BIOTECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS 2022 2021 Years Ended December 31, 2022 2021 Revenues $ — $ — Costs and expenses: General and administrative costs: Compensation to related parties, including stock-based compensation of $ 1,502,776 and $ 2,201,280 for the years ended December 31, 2022 and 2021, respectively 2,547,615 3,024,113 Patent and licensing legal and filing fees and costs 1,268,308 729,171 Other costs and expenses 1,146,289 1,230,385 Research and development costs, including $ 43,264 and $ 397,642 of stock-based compensation costs to a consultant for the years ended December 31, 2022 and 2021, respectively 1,349,269 1,736,776 Total costs and expenses 6,311,481 6,720,445 Loss from operations ( 6,311,481 ) ( 6,720,445 ) Interest income 11,195 626 Interest expense ( 8,875 ) ( 7,414 ) Foreign currency loss ( 3,374 ) ( 1,163 ) Net loss $ ( 6,312,535 ) $ ( 6,728,396 ) Net loss per common share – basic and diluted $ ( 0.40 ) $ ( 0.50 ) Weighted average common shares outstanding – basic and diluted 15,820,292 13,473,839 See accompanying notes to consolidated financial statements. F- 5 LIXTE BIOTECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended December 31, 2022 and 2021 Shares Amount Shares Par Value Capital Deficit Equity Series A Convertible Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Amount Shares Par Value Capital Deficit Equity Balance, December 31, 2020 350,000 $ 3,500,000 12,402,157 $ 1,240 $ 31,864,479 $ ( 30,353,768 ) $ 5,011,951 Proceeds from sale of common stock in direct equity offering, net of offering costs — — 1,133,102 113 3,689,648 — 3,689,761 Exercise of warrants — — 3,000 1 17,099 — 17,100 Exercise of options — — 208,334 20 200,980 — 201,000 Stock-based compensation expense — — — — 2,598,922 — 2,598,922 Net loss — — — — — ( 6,728,396 ) ( 6,728,396 ) Balance, December 31, 2021 350,000 3,500,000 13,746,593 1,374 38,371,128 ( 37,082,164 ) 4,790,338 Balance, value 350,000 3,500,000 13,746,593 1,374 38,371,128 ( 37,082,164 ) 4,790,338 Proceeds from sale of common stock in direct equity offering, net of offering costs — — 2,900,000 290 5,141,094 — 5,141,384 Stock-based compensation expense — — — — 1,546,040 — 1,546,040 Net loss — — — — — ( 6,312,535 ) ( 6,312,535 ) Balance, December 31, 2022 350,000 $ 3,500,000 16,646,593 $ 1,664 $ 45,058,262 $ ( 43,394,699 ) $ 5,165,227 Balance, value 350,000 $ 3,500,000 16,646,593 $ 1,664 $ 45,058,262 $ ( 43,394,699 ) $ 5,165,227 See accompanying notes to consolidated financial statements. F- 6 LIXTE BIOTECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS 2022 2021 Years Ended December 31, 2022 2021 Cash flows from operating activities: Net loss $ ( 6,312,535 ) $ ( 6,728,396 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense included in - General and administrative costs 1,502,776 2,201,280 Research and development costs 43,264 397,642 Changes in operating assets and liabilities: (Increase) decrease in - Advances on research and development contract services 3,224 ( 73,343 ) Prepaid insurance 59,805 ( 41,718 ) Other prepaid expenses and current assets ( 131 ) 4,751 Increase in - Accounts payable and accrued expenses 3,799 35,673 Research and development contract liabilities 88,061 61,196 Net cash used in operating activities ( 4,611,737 ) ( 4,142,915 ) Cash flows from financing activities: Proceeds from sale of common stock in direct equity offerings, net of offering costs 5,141,384 3,689,761 Exercise of common stock warrants — 17,100 Exercise of common stock options — 201,000 Payment of costs incurred in connection with sale of common stock units in November 2020 — ( 10,467 ) Net cash provided by financing activities 5,141,384 3,897,394 Cash: Net increase (decrease) 529,647 ( 245,521 ) Balance at beginning of period 4,823,745 5,069,266 Balance at end of period $ 5,353,392 $ 4,823,745 Supplemental disclosures of cash flow information: Cash paid for - Interest $ 8,875 $ 7,414 Income taxes $ — $ — See accompanying notes to consolidated financial statements. F- 7 LIXTE BIOTECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2022 and 2021 1. Organization and Basis of Presentation Lixte Biotechnology Holdings, Inc., a Delaware corporation, including its wholly-owned Delaware subsidiary, Lixte Biotechnology, Inc. (collectively, the “Company”), is a drug discovery company that uses biomarker technology to identify enzyme targets associated with serious common diseases and then designs novel compounds to attack those targets. The Company’s corporate office is located in Pasadena, California. The Company’s product pipeline is primarily focused on inhibitors of protein phosphatases, used alone and in combination with cytotoxic agents and/or x-ray and immune checkpoint blockers. The Company believes that inhibitors of protein phosphatases have broad therapeutic potential not only for cancer but also for other debilitating and life-threatening diseases. The Company is directing its efforts on clinical development of a specific protein phosphatase inhibitor, referred to as LB-100, which has been shown to have clinical anti-cancer activity at doses that produce little or no toxicity. The Company’s activities are subject to significant risks and uncertainties, including the need for additional capital. The Company has not yet commenced any revenue-generating operations, does not have positive cash flows from operations, relies on stock-based compensation for a substantial portion of employee and consultant compensation, and is dependent on periodic infusions of equity capital to fund its operating requirements. Nasdaq Notification of Failure to Satisfy a Continued Listing Rule The Company’s common stock and the warrants are traded on The Nasdaq Capital Market under the symbols “LIXT” and “LIXTW”, respectively. On June 24, 2022, the Company received a written notice (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) that the Company had not been in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for a period of 30 consecutive business days. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum closing bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum closing bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Notice had no immediate effect on the listing of the Company’s common stock on The Nasdaq Capital Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided a compliance period of 180 calendar days from the date of the Notice, or until December 21, 2022, to regain compliance with the minimum closing bid price requirement. On December 22, 2022, the Company received a written notice from Nasdaq that the Company was eligible for a second 180 calendar day compliance period, or until June 19, 2023, in order to regain compliance with the $1.00 minimum bid price requirement. Nasdaq’s determination to grant the second compliance period was based on the Company meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on The Nasdaq Capital Market, with the exception of the minimum bid price requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. The Company can generally achieve compliance with the minimum closing bid price requirement if the minimum closing bid price per share of the Company’s common stock is at least $1.00 for a minimum of 10 consecutive business days during the 180-day compliance period. However, under certain circumstances, Nasdaq can extend this 10-day trading period to a maximum of 20 days. The Company anticipates that its shares of common stock and warrants will continue to be listed and traded on The Nasdaq Capital Market during the compliance period ending June 19, 2023. F- 8 In order to achieve compliance with the minimum closing bid price per share requirement, the Company intends to file a proxy statement to hold a special meeting of stockholders to seek approval to effect a reverse stock split of its issued and outstanding shares of common stock. However, there can be no assurance that the Company will be successful in this regard and will be able to regain compliance with the minimum closing bid price requirement by June 19, 2023, in which case the Company anticipates Nasdaq would provide a notice to the Company that its shares of common stock and warrants are subject to delisting, and the Company’s common shares and warrants would then be delisted. Going Concern At December 31, 2022, the Company had cash of $ 5,353,392 available to fund its operations. Because the Company is currently engaged in Phase 2 clinical trials, it is expected that it will take a significant amount of time and resources to develop any product or intellectual property capable of generating sustainable revenues. Accordingly, the Company’s business is unlikely to generate any sustainable operating revenues in the next several years and may never do so. Even if the Company is able to generate revenues through licensing its technology, product sales or other commercial activities, there can be no assurance that the Company will be able to achieve and maintain positive earnings and operating cash flows. The Company’s consolidated financial statements have been presented on the basis that it will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has no recurring source of revenue and has experienced negative operating cash flows since inception. The Company has financed its working capital requirements through the recurring sale of its equity securities. As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional equity capital to fund its research and development activities and to ultimately achieve sustainable operating revenues and profitability. The amount and timing of future cash requirements depends on the pace, design and results of the Company’s clinical trial program, which, in turn, depends on the availability of operating capital to fund such activities. Based on current operating plans, the Company estimates that existing cash resources will provide sufficient working capital to fund the current clinical trial program with respect to the development of the Company’s lead anti-cancer clinical compound LB-100 through approximately December 31, 2023. However, existing cash resources will not be sufficient to complete the development of and obtain regulatory approval for the Company’s product candidate, as a result of which the Company will need to raise significant additional capital to do so. The Company estimates that it will need to raise additional capital to fund its operations, including its various clinical trial commitments, during the latter part of the fiscal year ending December 31, 2023. In addition, the Company’s operating plans may change as a result of many factors that are currently unknown and/or outside of the control of the Company, and additional funds may be needed sooner than planned. As market conditions present uncertainty as to the Company’s ability to secure additional funds, there can be no assurance that the Company will be able to secure additional financing on acceptable terms, as and when necessary, to continue to conduct operations. If cash resources are insufficient to satisfy the Company’s ongoing cash requirements, the Company would be required to scale back or discontinue its clinical trial program, as well as its licensing and patent prosecution efforts and its technology and product development efforts, or obtain funds, if available, through strategic alliances or joint ventures that could require the Company to relinquish rights to and/or control of LB-100, or to discontinue operations entirely. F- 9 Reverse Stock Split On November 18, 2020, the Company effected a 1-for-6 reverse split of its outstanding shares of common stock. No fractional shares were issued in connection with the reverse split, with any fractional shares resulting from the reverse split being rounded up to the nearest whole share. All share and per share amounts and information presented herein has been retroactively adjusted to reflect the reverse stock split for all periods presented. 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and include the financial statements of Lixte Biotechnology Holdings, Inc. and its wholly-owned subsidiary, Lixte Biotechnology, Inc.. Intercompany balances and transactions have been eliminated in consolidation. Segment Information The Company operates and reports in one segment, which focuses on the utilization of biomarker technology to identify enzyme targets associated with serious common diseases and then designing novel compounds to attack those targets. The Company’s operating segment is reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker, which is the Company’s President, Chief Executive Officer and Chief Scientific Officer. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken, as a whole, under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Significant estimates include those related to assumptions used in the calculation of accruals for clinical trial costs and other potential liabilities, valuing equity instruments issued for services, and the realization of deferred tax assets. Cash Cash is held in a cash bank deposit program maintained by Morgan Stanley Wealth Management, a division of Morgan Stanley Smith Barney LLC (“Morgan Stanley”). Morgan Stanley is a FINRA-regulated broker-dealer. The Company’s policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”) and/or by the Securities Investor Protection Corporation (the “SIPC”). The Company periodically has cash balances in financial institutions in excess of the FDIC and SIPC insurance limits of $ 250,000 and $ 500,000 , respectively. Morgan Stanley Wealth Management also maintains supplemental insurance coverage for the cash balances of its customers. The Company has not experienced any losses to date resulting from this policy. F- 10 Research and Development Research and development costs consist primarily of fees paid to consultants and contractors, and other expenses relating to the acquisition, design, development and clinical trials with respect to the Company’s clinical compound and product candidate. Research and development costs also include the costs to manufacture the compounds used in research and clinical trials, which are charged to operations as incurred. The Company’s inventory of LB-100 for clinical use has been manufactured separately in the United States and in the European Union in accordance with the laws and regulations of such jurisdictions. Research and development costs are generally charged to operations ratably over the life of the underlying contracts, unless the achievement of milestones, the completion of contracted work, the termination of an agreement, or other information indicates that a different expensing schedule is more appropriate. However, payments for research and development costs that are contractually defined as non-refundable are charged to operations as incurred. Obligations incurred with respect to mandatory scheduled payments under agreements with milestone provisions are recognized as charges to research and development costs in the Company’s consolidated statement of operations based on the achievement of such milestones, as specified in the respective agreement. Obligations incurred with respect to mandatory scheduled payments under agreements without milestone provisions are accounted for when due, are recognized ratably over the appropriate period, as specified in the respective agreement, and are recorded as liabilities in the Company’s consolidated balance sheet, with a corresponding charge to research and development costs in the Company’s consolidated statement of operations. Payments made pursuant to contracts are initially recorded as advances on research and development contract services in the Company’s consolidated balance sheet and are then charged to research and development costs in the Company’s consolidated statement of operations as those contract services are performed. Expenses incurred under contracts in excess of amounts advanced are recorded as research and development contract liabilities in the Company’s consolidated balance sheet, with a corresponding charge to research and development costs in the Company’s consolidated statement of operations. The Company reviews the status of its various clinical trial and research and development contracts on a quarterly basis. Prepaid Insurance Prepaid insurance represents the premiums paid for directors and officers insurance coverage and for general liability insurance coverage in excess of the amortization of the total policy premium charged to operations at each balance sheet date. Such amount is determined by amortizing the total policy premium charged on a straight-line basis over the respective policy period. As the policy premiums incurred are generally amortizable over the ensuing twelve-month period, they are recorded as a current asset in the Company’s consolidated balance sheet at each reporting date and appropriately amortized to the Company’s consolidated statement of operations for each reporting period. Patent and Licensing Legal and Filing Fees and Costs Due to the significant uncertainty associated with the successful development of one or more commercially viable products based on the Company’s research efforts and related patent applications, all patent and licensing legal and filing fees and costs related to the development and protection of the Company’s intellectual property are charged to operations as incurred. Patent and licensing legal and filing fees and costs were $ 1,268,308 and $ 729,171 for the years ended December 31, 2022 and 2021, respectively. Patent and licensing legal and filing fees and costs are included in general and administrative costs in the Company’s consolidated statements of operations. Concentration of Risk The Company periodically contracts with vendors and consultants to provide services related to the Company’s operations. Charges incurred for these services can be for a specific time period (typically one year) or for a specific project or task. Costs and expenses incurred that represented 10 % or more of general and administrative costs or research and development costs for the years ended December 31, 2022 and 2021 are described as follows. General and administrative costs for the years ended December 31, 2022 and 2021 included charges from legal firms and other vendors for general licensing and patent prosecution costs relating to the Company’s intellectual properties representing 26.5 % and 14.6 % of total general and administrative costs, respectively. General and administrative costs for the years ended December 31, 2022 and 2021 also included charges for the fair value of stock options granted to directors and corporate officers representing 30.3 % and 44.2 %, respectively, of total general and administrative costs. F- 11 Research and development costs for the year ended December 30, 2022 included charges from four vendors and consultants representing 21.0 %, 19.3 %, 15.1 % and 12.1 %, respectively, of total research and development costs. Research and development costs for the year ended December 31, 2021 included charges from three vendors and consultants representing 30.3 %, 21.8 % and 14.4 %, respectively. Income Taxes The Company accounts for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. In the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Should the Company determine that it would not be able to realize all or part of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made. The Company is subject to U.S. federal income taxes and income taxes of various state tax jurisdictions. As the Company’s net operating losses have yet to be utilized, all previous tax years remain open to examination by Federal authorities and other jurisdictions in which the Company currently operates or has operated in the past. The Company had no unrecognized tax benefits as of December 31, 2022 or 2021 and does not anticipate any material amount of unrecognized tax benefits through December 31, 2023. The Company accounts for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. The tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. The Company had not recorded any liability for uncertain tax positions as of December 31, 2022 or 2021. Subsequent to December 31, 2022, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense. Stock-Based Compensation The Company periodically issues common stock and stock options to officers, directors, employees, Scientific Advisory Committee members, contractors and consultants for services rendered. Options vest and expire according to terms established at the issuance date of each grant. Stock grants, which are generally time vested, are measured at the grant date fair value and charged to operations ratably over the vesting period. The Company accounts for stock-based payments to officers, directors, employees, Scientific Advisory Committee members, contractors and consultants by measuring the cost of services received in exchange for equity awards utilizing the grant date fair value of the awards, with the cost recognized as compensation expense on the straight-line basis in the Company’s financial statements over the vesting period of the awards. The fair value of stock options granted as stock-based compensation is determined utilizing the Black-Scholes option-pricing model, and is affected by several variables, the most significant of which are the expected life of the stock option, the exercise price of the stock option as compared to the fair market value of the common stock on the grant date, and the estimated volatility of the common stock. Unless sufficient historical exercise data is available, the expected life of the stock option is calculated as the mid-point between the vesting period and the contractual term (the “simplified method”). The estimated volatility is based on the historical volatility of the Company’s common stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair market value of the common stock is determined by reference to the quoted market price of the Company’s common stock on the grant date. The expected dividend yield is based on the Company’s expectation of dividend payouts and is assumed to be zero. F- 12 The Company recognizes the fair value of stock-based compensation awards in general and administrative costs and in research and development costs, as appropriate, in the Company’s consolidated statements of operations. The Company issues new shares of common stock to satisfy stock option exercises. Earnings (Loss) Per Share The Company’s computation of earnings (loss) per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) attributable to common stockholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS, but presents the dilutive effect on a per share basis of potential common shares (e.g., preferred shares, warrants and stock options) as if they had been converted at the beginning of the respective periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the respective periods. Basic and diluted loss per common share was the same for all periods presented because all preferred shares, warrants and stock options outstanding were anti-dilutive. At December 31, 2022 and 2021, the Company excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive. Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share 2022 2021 December 31, 2022 2021 Series A Convertible Preferred Stock 729,167 729,167 Common stock warrants 1,900,310 3,110,310 Common stock options, including options issued in the form of warrants 3,894,792 2,666,667 Total 6,524,269 6,506,144 Fair Value of Financial Instruments The authoritative guidance with respect to fair value established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required. Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives. Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges. Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently traded non-exchange-based derivatives and commingled investment funds and are measured using present value pricing models. F- 13 The Company determines the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities at each reporting period end. The carrying value of financial instruments (consisting of accounts payable and accrued expenses) is considered to be representative of their respective fair values due to the short-term nature of those instruments. Recent Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. The Company adopted ASU 2019-12 effective January 1, 2021. The adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation or disclosures. In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models. Upon adoption of ASU 2020-06, convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature that is not clearly and closely related to the host contract, will no longer be allocated between debt and equity components. This modification will reduce the issue discount and result in less non-cash interest expense in financial statements. ASU 2020-06 also updates the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. For contracts in an entity’s own equity, the type of contracts primarily affected by ASU 2020-06 are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and only if adopted as of the beginning of such fiscal year. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not have any impact on the Company’s consolidated financial statement presentation or disclosures. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted ASU 2021-04 effective January 1, 2022. The adoption of ASU 2021-04 did not have any impact on the Company’s consolidated financial statement presentation or disclosures. Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures. F- 14 3. Research and Development Costs Research and development costs, including costs associated with clinical trials involving the Company’s lead clinical compound LB-100, are summarized below based on the respective geographical regions where such costs are incurred. Schedule of Research and Development Costs 2022 2021 Years Ended December 31, 2022 2021 United States $ 418,221 $ 1,109,058 Spain 559,438 269,532 France 91,532 248,908 China 75,920 54,030 Netherlands 204,158 55,248 Total $ 1,349,269 $ 1,736,776 4. Stockholders’ Equity Preferred Stock The Company is authorized to issue a total of 10,000,000 shares of preferred stock, par value $ 0.0001 per share. On March 17, 2015, the Company filed a Certificate of Designations, Preferences, Rights and Limitations of its Series A Convertible Preferred Stock with the Delaware Secretary of State to amend the Company’s certificate of incorporation. The Company has designated a total of 350,000 shares as Series A Convertible Preferred Stock, which are non-voting and are not subject to increase without the written consent of a majority of the holders of the Series A Convertible Preferred Stock or as otherwise set forth in the Preferences, Rights and Limitations. The holders of each tranche of 175,000 shares of the Series A Convertible Preferred Stock are entitled to receive a per share dividend equal to 1 % of the annual net revenue of the Company divided by 175,000 , until converted or redeemed. As of December 31, 2022 and 2021, the Company had 9,650,000 shares of undesignated preferred stock which may be issued with such rights and powers as the Board of Directors may designate. Each share of Series A Convertible Preferred Stock may be converted, at the option of the holder, into 2.0833 shares of common stock (subject to customary anti-dilution provisions) and the Series A Convertible Preferred Stock is subject to mandatory conversion at the conversion rate in the event of a merger or sale transaction resulting in gross proceeds to the Company of at least $ 21,875,000 . The Series A Convertible Preferred Stock has a liquidation preference based on its assumed conversion into shares of common stock. The Series A Convertible Preferred Stock does not have a cash liquidation preference. If fully converted, the 350,000 outstanding shares of Series A Convertible Preferred Stock would convert into 729,167 shares of common stock at December 31, 2022 and 2021. The Series A Convertible Preferred Stock has no right to cash, except with respect to the payment of the aforementioned dividend based on the generation of revenues by the Company. The shares of Series A Convertible Preferred Stock do not have any registration rights. Based on the attributes of the Series A Convertible Preferred Stock as previously described, the Company has accounted for the Series A Convertible Preferred Stock as a permanent component of stockholders’ equity. Common Stock The Company is authorized to issue a total of 100,000,000 shares of common stock, par value $ 0.0001 per share. As of December 31, 2022 and 2021, the Company had 16,646,593 shares and 13,746,593 shares, respectively, of common stock issued, issuable and outstanding. F- 15 Effective November 30, 2020, the Company raised gross proceeds of $ 5,700,000 through a public offering of 1,200,000 units at a sale price of $ 4.75 per unit. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock. Additionally, on December 7, 2020, the Company sold an additional 180,000 warrants for $ 1,800 as part of the overallotment option granted to the underwriters of the public offering. The warrants sold represented the right to purchase one share of common stock and are exercisable for a period of five years at an exercise price of $ 5.70 per share. The total cash costs of the public offering were $ 1,110,451 , resulting in net cash proceeds of $ 4,591,349 . Pursuant to the underwriting agreement, the Company also issued warrants to the underwriters of the public offering to purchase 120,000 shares of common stock exercisable at $ 5.70 per share through November 24, 2025. Effective March 2, 2021, the Company completed the sale of 1,133,102 shares of common stock at a price of $ 3.70 per share in a registered direct equity offering, generating gross proceeds of $ 4,192,478 . The total cash costs of this offering were $ 502,717 , resulting in net proceeds of $ 3,689,761 . Pursuant to the placement agents’ agreement, the Company granted warrants to the placement agents to purchase 113,310 shares of common stock at an exercise price of $ 3.70 per share exercisable through March 2, 2026. During February and March 2021, the Company issued 3,000 shares of common stock upon the exercise of warrants for 3,000 shares exercisable at $ 5.70 per share for total cash proceeds of $ 17,100 . On April 22, 2021, the Company issued 125,001 shares of common stock upon the exercise of various stock options for total cash proceeds of $ 101,000 as follows: options held by an officer and two directors of the Company for 75,000 shares exercisable at $ 0.72 per share, options for 16,667 shares exercisable at $ 0.90 per share, and options for 33,334 shares exercisable at $ 0.96 per share. Effective July 14, 2021, the Company issued 83,333 shares of common stock upon the exercise of a stock option held by a consultant to the Company for 83,333 shares at $ 1.20 per share for total cash proceeds of $ 100,000 . Effective April 12, 2022, the Company completed the sale of 2,900,000 shares of common stock at a price of $ 2.00 per share in a registered direct equity offering, generating gross proceeds of $ 5,800,000 . The total cash costs of this offering were $ 658,616 , resulting in net proceeds of $ 5,141,384 . Pursuant to the placement agents’ agreement, the Company granted warrants to the placement agents to purchase 290,000 shares of common stock at an exercise price of $ 2.00 per share exercisable through April 14, 2027. Common Stock Warrants A summary of common stock warrant activity, including warrants to purchase common stock that were issued in conjunction with the Company’s November 2020 public offering of its securities, during the years ended December 31, 2022 and 2021 is presented below. Schedule of Warrants Outstanding Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years) Warrants outstanding at December 31, 2020 3,000,000 $ 5.850 Issued 113,310 3.700 Exercised ( 3,000 ) 5.700 Expired — — Warrants outstanding at December 31, 2021 3,110,310 $ 5.772 Issued 290,000 2.000 Exercised — — Expired ( 1,500,000 ) 6.000 Warrants outstanding at December 31, 2022 1,900,310 $ 5.016 3.14 Warrants exercisable at December 31, 2021 3,110,310 $ 5.772 Warrants exercisable at December 31, 2022 1,900,310 $ 5.016 3.14 F- 16 At December 31, 2022, the outstanding warrants are exercisable at the following prices per common share: Schedule of Warrants Outstanding and Exercisable Exercise Prices Warrants Outstanding (Shares) $ 2.000 290,000 $ 3.700 113,310 $ 5.700 1,497,000 1,900,310 Based on a fair market value of $ 0.50 per share on December 31, 2022, there was no intrinsic value attributed to exercisable but unexercised common stock warrants at December 31, 2022. Information with respect to the issuance of common stock in connection with various stock-based compensation arrangements is provided at Note 6. 5. Related Party Transactions Related party transactions include transactions with the Company’s officers, directors and affiliates. Employment Agreements with Officers During July and August 2020, the Company entered into one-year employment agreements with its executive officers, consisting of Dr. John S. Kovach, Eric J. Forman, Dr. James S. Miser, and Robert N. Weingarten, payable monthly, as described below. The employment agreements are automatically renewable for additional one-year periods unless terminated by either party upon 60 days written notice prior to the end of the applicable one-year period, or by death, or by termination for cause. These employment agreements were automatically renewed for additional one-year periods in July and August 2021 and 2022. The Company entered into an employment agreement with Dr. Kovach dated July 15, 2020, effective October 1, 2020, for Dr. Kovach to continue to act as the Company’s President, Chief Executive Officer and Chief Scientific Officer, with an annual salary of $ 250,000 . During the years ended December 31, 2022 and 2021, the Company paid $ 250,000 and $ 250,000 , respectively, to Dr. Kovach under this employment agreement, which costs are included in general and administrative costs in the Company’s consolidated statements of operations. The Company entered into an employment agreement with Dr. James S. Miser, M.D., effective August 1, 2020 to act as the Company’s Chief Medical Officer, with an annual salary of $ 150,000 . Effective May 1, 2021, Dr. Miser’s annual salary was increased to $ 175,000 . Dr. Miser is required to devote at least 50% of his business time to the Company’s activities. During the years ended December 31, 2022 and 2021, the Company paid $ 175,000 and $ 166,667 , respectively, to Dr. Miser under this employment agreement, which costs are included in general and administrative costs in the Company’s consolidated statements of operations. The Company entered into an employment agreement with Eric J. Forman effective July 15, 2020, as amended on August 12, 2020, to act as the Company’s Chief Administrative Officer, with an annual salary of $ 120,000 . Mr. Forman is the son-in-law of Gil Schwartzberg, a former member of the Company’s Board of Directors who died on October 30, 2022 and a significant stockholder of and consultant to the Company, and is the son of Dr. Stephen Forman, a member of the Company’s Board of Directors. Julie Forman, the wife of Mr. Forman and the daughter of Gil Schwartzberg, is Vice President of Morgan Stanley Wealth Management, at which firm the Company’s cash is on deposit and with which the Company maintains a continuing banking relationship. Effective May 1, 2021, Mr. Forman’s annual salary was increased to $ 175,000 . Additionally, effective November 6, 2022, Mr. Forman was promoted to Vice President and Chief Operating Officer with an annual salary of $ 200,000 . During the years ended December 31, 2022 and 2021, the Company paid $ 178,819 and $ 156,667 , respectively, to Mr. Forman under this employment agreement, which costs are included in general and administrative costs in the Company’s consolidated statements of operations. F- 17 The Company entered into an employment agreement with Robert N. Weingarten effective August 12, 2020 to act as the Company’s Vice President and Chief Financial Officer, with an annual salary of $ 120,000 . Effective May 1, 2021, Mr. Weingarten’s annual salary was increased to $ 175,000 . During the years ended December 31, 2022 and 2021, the Company paid $ 175,000 and $ 156,667 , respectively, to Mr. Weingarten under this employment agreement, which costs are included in general and administrative costs in the Company’s consolidated statements of operations. Appointment of Dr. René Bernards to the Board of Directors Effective as of June 15, 2022, Dr. René Bernards was appointed to the Company’s Board of Directors as an independent director. Dr. Bernards is a leader in the field of molecular carcinogenesis and is employed by the Netherlands Cancer Institute in Amsterdam. As a new director, in lieu of a grant of stock options, Dr. Bernards received a one-time cash board fee of $ 100,000 , payable immediately, and an annual cash board fee of $ 40,000 , payable quarterly. On October 8, 2021, the Company entered into a Development Collaboration Agreement with the Netherlands Cancer Institute, Amsterdam, one of the world’s leading comprehensive cancer centers, and Oncode Institute, Utrecht, a major independent cancer research center, to identify the most promising drugs to be combined with LB-100, and potentially LB-100 analogues, to be used to treat a range of cancers, as well as to identify the specific molecular mechanisms underlying the identified combinations, as described at Note 8. Compensatory Arrangements for Members of the Board of Directors Effective April 9, 2021, the Board of Directors approved a comprehensive cash and equity compensation program for the independent members of the Board of Directors and committee members. Effective May 25, 2022, the Board of Directors approved an amendment to the program. Officers who also serve on the Board of Directors are not compensated separately for their service on the Board of Directors. Cash compensation for independent directors, payable quarterly, is as follows: Base director compensation - $ 20,000 per year Chairman of audit committee - additional $ 10,000 per year Chairman of any other committees - additional $ 5,000 per year Member of audit committee - additional $ 5,000 per year Member of any other committees - additional $ 2,500 per year Equity compensation for independent directors is as follows: Appointment of new independent directors - The Company will grant options to purchase 250,000 shares of common stock, exercisable for a period of five years, at the closing market price on the date of grant, vesting 50 % on the grant date and the remaining 50 % vesting 12.5 % on the last day of each calendar quarter beginning in the quarter immediately subsequent to the date of the grant until fully vested, subject to continued service. At the discretion of the Board of Directors, for a nominee to the Board of Directors who is restricted by their respective institution or employer from receiving equity-based compensation, in lieu of the grant of such stock options, the Company may elect to pay a one-time cash fee of $ 100,000 to such director, payable upfront. Annual grant of options to independent directors - Effective on the last business day of the month of June, the Company will grant options to purchase 100,000 shares of common stock, exercisable for a period of five years, at the closing market price on the date of grant, vesting 12.5 % on the last day of each calendar quarter beginning in the quarter immediately subsequent to the date of grant until fully vested, subject to continued service. If any director has served for less than 12 full calendar months at the grant date, the amount of such stock option grant shall be prorated based on the length of service of such director. At the discretion of the Board of Directors, for a nominee to the Board of Directors who is restricted by their respective institution or employer from receiving equity-based compensation, in lieu of the grant of such stock options, the Company may elect to pay an annual cash fee of $ 40,000 to such director, payable quarterly. F- 18 Total cash compensation paid to independent directors was $ 266,020 and $ 92,833 , respectively, for the years ended December 31, 2022 and 2021. Stock-based compensation granted to members of the Company’s Board of Directors, officers and affiliates is described at Note 6. A summary of related party costs, including compensation under employment and consulting agreements and fees paid to non-officer directors for their services on the Board of Directors, for the years ended December 31, 2022 and 2021 is as follows: Summary of Related Party Costs Years Ended December 31, 2022 2021 Related party costs: Cash-based $ 1,044,839 $ 822,833 Stock-based 1,502,776 2,201,280 Total $ 2,547,615 $ 3,024,113 6. Stock-Based Compensation The Company periodically issues common stock and stock options as incentive compensation to directors and as compensation for the services of employees, contractors, and consultants of the Company. On July 14, 2020, the Board of Directors of the Company adopted the 2020 Stock Incentive Plan (the “2020 Plan”), which was subsequently approved by the stockholders of the Company. The 2020 Plan provides for the granting of equity-based awards, consisting of stock options, restricted stock, restricted stock units, stock appreciation rights, and other stock-based awards to employees, officers, directors and consultants of the Company and its affiliates, initially for a total of 2,333,333 shares of the Company’s common stock, under terms and conditions as determined by the Company’s Board of Directors. On October 7, 2022, the stockholders of the Company approved an amendment to the 2020 Plan to increase the number of common shares issuable thereunder by 1,800,000 shares, to a total of 4,133,333 shares. As of December 31, 2022, unexpired stock options for 2,603,125 shares were issued and outstanding under the 2020 Plan and 1,530,208 shares were available for issuance under the 2020 Plan. The fair value of a stock option award is calculated on the grant date using the Black-Scholes option-pricing model. The risk-free interest rate is based on the U.S. Treasury yield curve in effect as of the grant date. The expected dividend yield assumption is based on the Company’s expectation of dividend payouts and is assumed to be zero. The estimated volatility is based on the historical volatility of the Company’s common stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. Unless sufficient historical exercise data is available, the expected life of the stock option is calculated as the mid-point between the vesting period and the contractual term (the “simplified method”). The fair market value of the common stock is determined by reference to the quoted market price of the common stock on the grant date. For stock options requiring an assessment of value during the year ended December 31, 2022, the fair value of each stock option award was estimated using the Black-Scholes option-pricing model utilizing the following assumptions: Schedule of Fair Value of Each Option Award Estimated Assumption Risk-free interest rate 3.03 % to 3.63 % Expected dividend yield 0 % Expected volatility 128.03 % to 153.17 % Expected life 3.5 to 5 years F- 19 For stock options requiring an assessment of value during the year ended December 31, 2021, the fair value of each stock option award was estimated using the Black-Scholes option-pricing model utilizing the following assumptions: Risk-free interest rate 0.89 % to 1.13 % Expected dividend yield 0 % Expected volatility 187.7 % to 198.79 % Expected life 3.5 to 5 years On July 15, 2020, as amended on August 12, 2020, in connection with the employment agreement entered into with Eric J. Forman, Mr. Forman was granted stock options to purchase 58,333 shares of the Company’s common stock. The options can be exercised on a cashless basis. The options are exercisable for a period of five years at an exercise price of $ 7.14 per share, which was equal to the closing market price of the Company’s common stock on the grant date. The options vested 25% on August 12, 2020, 2021 and 2022, respectively, with the final 25% vesting on August 12, 2023, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 400,855 ($ 6.8718 per share), of which $ 100,214 was attributable to the portion of the stock options fully vested on August 12, 2020 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options is being charged to operations ratably from August 12, 2020 through August 12, 2023. During the years ended December 31, 2022 and 2021, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $ 100,213 and $ 100,213 , respectively, with respect to these stock options . On August 1, 2020, in connection with an employment agreement entered into with Dr. James S. Miser, M.D., Dr. Miser was granted stock options to purchase 83,334 shares of the Company’s common stock. The options can be exercised on a cashless basis. The options are exercisable for a period of five years at an exercise price of $ 7.14 per share, which was equal to the closing market price of the Company’s common stock on the effective date of the employment agreement. The options vested 25% on August 1, 2020, 2021 and 2022, respectively, with the final 25% vesting on August 1, 2023, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 572,650 ($ 6.8718 per share), of which $ 143,163 was attributable to the portion of the stock options fully vested on August 1, 2020 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options is being charged to operations ratably from August 1, 2020 through August 1, 2023. During the years ended December 31, 2022 and 2021, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $ 143,163 and $ 143,163 , respectively, with respect to these stock options . On August 12, 2020, in connection with the employment agreement entered into with Robert N. Weingarten, Mr. Weingarten was granted stock options to purchase 58,333 shares of the Company’s common stock. The options can be exercised on a cashless basis. The options are exercisable for a period of five years at an exercise price of $ 7.14 per share, which was equal to the closing market price of the Company’s common stock on the grant date. The options vested 25% on August 12, 2020, 2021 and 2022, respectively, with the final 25% vesting on August 12, 2023, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 400,855 ($ 6.8718 per share), of which $ 100,214 was attributable to the portion of the stock options fully vested on August 12, 2020 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options is being charged to operations ratably from August 12, 2020 through August 12, 2023. During the years ended December 31, 2022 and 2021, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $ 100,213 and $ 100,213 , respectively, with respect to these stock options . Effective January 6, 2021, in recognition of their service as directors of the Company over the past year, the Company granted stock options to purchase 50,000 shares of common stock to each of Dr. Winson Sze Chun Ho, Dr. Yun Yen, Dr. Stephen Forman, and Dr. Philip Palmedo (an aggregate of 200,000 shares), which were fully vested upon issuance and exercisable for a period of five years at $ 3.21 per share, which was the approximate fair market value of the Company’s common stock on such date. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 571,312 ($ 2.8566 per share) and was charged to general and administrative costs in the consolidated statement of operations on the grant date. F- 20 On April 9, 2021, Winson Sze Chun Ho resigned from the Company’s Board of Directors to focus on clinical and pre-clinical cancer research in academic medicine. Concurrent with his resignation, the Board of Directors appointed Gil Schwartzberg to fill the vacancy created by Dr. Ho’s resignation. In connection with his appointment to the Board of Directors, and in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, Mr. Schwartzberg was granted stock options to purchase 250,000 shares of the Company’s common stock, exercisable for a period of five years at an exercise price of $ 3.20 per share (the closing market price on the grant date), vesting 50% on the grant date and the remainder vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 753,611 ($ 3.0144 per share), of which $ 376,800 was attributable to the portion of the stock options fully vested on April 9, 2021 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options was being charged to operations ratably from April 9, 2021 through June 30, 2023, although vesting terminated on October 30, 2022, the date that Mr. Schwartzberg died. During the years ended December 31, 2022 and 2021, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $ 126,684 and $ 500,235 , respectively, with respect to these stock options . On May 11, 2021, the Board of Directors appointed Regina Brown to the Board of Directors. In connection with her appointment to the Board of Directors, and in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, Ms. Brown was granted stock options to purchase 250,000 shares of the Company’s common stock, exercisable for a period of five years at an exercise price of $ 2.80 per share (the closing market price on the grant date), vesting 50% on the grant date and the remainder vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 658,363 ($ 2.6335 per share), of which $ 329,188 was attributable to the portion of the stock options fully vested on May 11, 2021 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options is being charged to operations ratably from May 11, 2021 through June 30, 2023. During the years ended December 31, 2022 and 2021, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $ 154,042 and $ 427,944 , respectively, with respect to these stock options . On June 30, 2021, the Board of Directors, in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, granted to each of the five non-officer directors of the Company stock options to purchase 100,000 shares (a total of 500,000 shares) of the Company’s common stock, exercisable for a period of five years at an exercise price of $ 3.03 per share (the closing market price on the grant date), vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 1,421,095 ($ 2.84225 per share), which is being charged to operations ratably from July 1, 2021 through June 30, 2023. During the years ended December 31, 2022 and 2021, the Company recorded charges to general and administrative costs in the consolidated statement of operations of $ 638,915 and $ 358,200 , respectively, with respect to these stock options . On November 8, 2021, the Company issued a stock option, in the form of a warrant, to BioPharmaWorks to purchase 200,000 shares of the Company’s common stock, which was fully vested upon issuance and is exercisable for a period of five years at $ 2.06 per share (the closing market price on the issue date). The fair value of the warrant, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 397,642 ($ 1.9882 per share) and was charged to general and administrative costs in the consolidated statement of operations on that date. On June 17, 2022, the Board of Directors appointed Bas van der Baan to the Board of Directors. In connection with his appointment to the Board of Directors, and in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, Mr. Baan was granted stock options to purchase 250,000 shares of the Company’s common stock, exercisable for a period of five years at an exercise price of $ 0.74 per share (the closing market price on the grant date), vesting 50% on the grant date and the remainder vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 158,525 ($ 0.6341 per share), of which $ 79,263 was attributable to the portion of the stock options fully vested on June 17, 2022 and was therefore charged to operations on that date. The remaining unvested portion of the fair value of the stock options is being charged to operations ratably from June 17, 2022 through June 30, 2024. During the year ended December 31, 2022, the Company recorded a total charge to general and administrative costs in the consolidated statement of operations of $ 100,249 with respect to these stock options . F- 21 On June 30, 2022, the Board of Directors, in accordance with the Company’s cash and equity compensation package for members of the Board of Directors, granted to each of the five non-officer directors of the Company stock options to purchase 100,000 shares (a total of 500,000 shares) of the Company’s common stock, exercisable for a period of five years at an exercise price of $ 0.74 per share (the closing market price on the grant date), vesting 12.5% on the last day of each subsequent calendar quarter-end until fully vested, subject to continued service. The fair value of these stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 316,700 ($ 0.6334 per share), which is being charged to operations ratably from July 1, 2022 through June 30, 2024. During the year ended December 31, 2022, the Company recorded a total charge to general and administrative costs in the consolidated statement of operations of $ 63,777 with respect to these stock options . On November 6, 2022, the Board of Directors granted to each of the four officers of the Company stock options to purchase 200,000 shares (a total of 800,000 shares) of the Company’s common stock, exercisable for a period of five years at an exercise price of $ 2.00 per share, vesting 25 % on issuance and 25 % on each anniversary date thereafter until fully vested, subject to continued service. The total fair value of the 800,000 stock options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 262,560 ($ 0.3282 per share), which is being charged to operations ratably from November 6, 2022 through November 6, 2025. During the year ended December 31, 2022, the Company recorded a total charge to general and administrative costs in the consolidated statement of operations of $ 75,520 with respect to these stock options. On November 6, 2022, the Company issued a stock option, in the form of a warrant, to BioPharmaWorks to purchase 100,000 shares of the Company’s common stock, which was fully vested upon issuance and is exercisable for a period of five years at $ 0.5025 per share (the closing market price on the issue date). The fair value of the warrant, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $ 43,264 ($ 0.4326 per share) and was charged to general and administrative costs in the consolidated statement of operations on that date. Dr. Philip Palmedo, a director of the Company since 2006, did not stand for re-election to the Company’s Board of Directors at the Company’s Annual Meeting of Stockholders held on October 7, 2022, and Gil Schwartzberg, a director of the Company, died on October 30, 2022. Accordingly, the unvested stock options for each such person ceased vesting effective as of the respective dates that their service on the Company’s Board of Directors terminated. Furthermore, the expiration date of all vested stock options owned by such persons are contractually scheduled to expire one year from the respective dates that their service on the Company’s Board of Directors terminated. A summary of stock-based compensation costs for the years ended December 31, 2022 and 2021 is as follows: Summary of Stock-based Compensation Costs Years Ended December 31, 2022 2021 Related parties $ 1,502,776 $ 2,201,280 Non-related parties 43,264 397,642 Total stock-based compensation costs $ 1,546,040 $ 2,598,922 F- 22 A summary of stock option activity, including options issued in the form of warrants, during the years ended December 31, 2022 and 2021 is as follows: Summary of Stock Option Activity Including Options Form of Warrants Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years) Stock options outstanding at December 31, 2020 1,475,000 $ 4.136 Granted 1,400,000 2.906 Exercised ( 208,334 ) 0.965 Expired — — Rounding adjustment attributable to reverse stock split 1 — Stock options outstanding at December 31, 2021 2,666,667 3.738 Granted 1,650,000 1.337 Exercised — — Expired ( 421,875 ) 1.916 Stock options outstanding at December 31, 2022 3,894,792 $ 2.918 3.04 Stock options exercisable at December 31, 2021 2,004,167 $ 3.777 Stock options exercisable at December 31, 2022 2,819,792 $ 3.283 2.49 Total deferred compensation expense for the outstanding value of unvested stock options was approximately $ 882,000 at December 31, 2022, which will be recognized subsequent to December 31, 2022 over a weighted-average period of approximately 15 months. The exercise prices of common stock options outstanding and exercisable, including options issued in the form of warrants, at December 31, 2022 are as follows: Schedule of Exercise Prices of Common Stock Options Outstanding and Exercisable Including Options Form of Warrants Exercise Prices Options Outstanding (Shares) Options Exercisable (Shares) $ 0.5025 100,000 100,000 $ 0.7400 575,000 256,250 $ 1.6800 33,333 33,333 $ 2.0000 800,000 200,000 $ 2.0600 200,000 200,000 $ 2.8000 250,000 218,750 $ 3.0000 666,667 666,667 $ 3.0300 425,000 350,000 $ 3.2000 203,125 203,125 $ 3.2100 150,000 150,000 $ 6.0000 166,667 166,667 $ 6.6000 41,667 41,667 $ 7.1400 200,000 150,000 $ 12.0000 83,333 83,333 3,894,792 2,819,792 The intrinsic value of exercisable but unexercised in-the-money stock options at December 31, 2022 was approximately $ 750 , based on a fair market value of $ 0.51 per share on December 31, 2022. Outstanding stock options to acquire 1,075,000 shares of the Company’s common stock had not vested at December 31, 2022. The Company expects to satisfy such stock obligations through the issuance of authorized but unissued shares of common stock. F- 23 7. Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of December 31, 2022 and 2021 are as follows: Schedule of Components of Deferred Tax Assets 2022 2021 December 31, 2022 2021 Research credits $ 574,000 $ 451,000 Stock-based compensation 2,137,000 1,821,000 Net operating loss carryforwards 8,135,000 6,723,000 Total deferred tax assets 10,846,000 8,995,000 Valuation allowance ( 10,846,000 ) ( 8,995,000 ) Net deferred tax assets $ — $ — In assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2022 and 2021, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates. No federal tax provision has been provided for the years ended December 31, 2022 and 2021 due to the losses incurred during such periods. The reconciliation below presents the difference between the income tax rate computed by applying the U.S. federal statutory rate and the effective tax rate for the years ended December 31, 2022 and 2021. Schedule of Effective Income Tax Rate Years Ended December 31, 2022 2021 U. S. federal statutory tax rate ( 21.0 )% ( 21.0 )% State income taxes, net of federal tax benefit ( 6.0 )% ( 6.0 )% Expirations related to stock-based compensation 1.7 % 0.6 % Adjustment to deferred tax asset ( 1.5 )% ( 0.4 )% Change in valuation allowance 26.8 % 26.8 % Effective tax rate 0.0 % 0.0 % At December 31, 2022, the Company has available net operating loss carryforwards for federal and state income tax purposes of approximately $ 27,803,000 and $ 28,040,000 , respectively. Federal net operating losses from tax years preceding 2018, if not utilized earlier, expire through 2038 . Federal net operating losses generated in a tax year beginning after 2017 have an indefinite carryforward period. The utilization of federal net operating loss carryforwards is subject to various limitations. The state net operating loss carryovers include approximately $ 19,141,000 that were incurred in the State of New York. New York tax law requires New York net operating loss carryovers from years prior to 2015 to be converted, by applying a formula, into a Prior Net Operating Loss Conversion (PNOLC) subtraction pool. The Company may utilize up to 1/10 of the PNOLC subtraction pool, or $ 928,313 , each year. Unutilized PNOLC amounts carry forward to succeeding years until they expire in 2035. In addition, the full New York net operating losses incurred in post-2015 tax years may be utilized in future tax years. Post-2015 New York net operating losses expire through 2040 . The state net operating loss carryovers also include approximately $ 8,899,000 that was incurred in the State of California. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and certain corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in the ownership of its equity over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income might be limited. As the Company’s net operating losses have yet to be utilized, all previous tax years since 2006 remain subject to adjustment by Federal authorities and other jurisdictions in which the Company currently operates or has operated in the past. F- 24 8. Commitments and Contingencies Legal Claims The Company may be subject to legal claims and actions from time to time as part of its business activities. As of December 31, 2022 and 2021, the Company was not subject to any pending or threatened legal claims or actions. Principal Commitments Clinical Trial Agreements At December 31, 2022, the Company’s unpaid remaining contractual commitments pursuant to clinical trial agreements, and clinical trial monitoring agreements, as described below, aggregated $ 7,892,000 , which are currently scheduled to be incurred through December 31, 2025. The Company’s ability to conduct and fund these contractual commitments is subject to the timely availability of sufficient capital to fund such expenditures, as well as any changes in the allocation or reallocation of such funds to the Company’s current or future clinical trial programs. The Company expects that the full amount of these expenditures will be incurred only if such clinical trial programs are conducted as originally designed and their respective enrollments and duration are not modified or reduced. Clinical trial programs, such as the types that the Company is engaged in, can be highly variable and can frequently involve a series of changes and modifications over time as clinical data is obtained and analyzed, and are frequently modified, suspended or terminated before the clinical trial endpoint. Accordingly, such contractual commitments as discussed herein should be considered as estimates only based on current clinical assumptions and conditions, and are typically subject to significant revisions over time. Moffitt. Effective August 20, 2018, the Company entered into a Clinical Trial Research Agreement with the Moffitt Cancer Center and Research Institute Hospital Inc., Tampa, Florida, effective for a term of five years, unless terminated earlier by the Company pursuant to 30 days written notice. Pursuant to the Clinical Trial Research Agreement, Moffitt agreed to conduct and manage a Phase 1b/2 clinical trial to evaluate the therapeutic benefit of the Company’s lead anti-cancer clinical compound LB-100 to be administered intravenously in patients with low or intermediate-1 risk myelodysplastic syndrome (MDS). In November 2018, the Company received approval from the U.S. Food and Drug Administration for its Investigational New Drug Application (“IND”) to conduct a Phase 1b/2 clinical trial to evaluate the therapeutic benefit of LB-100 in patients with low and intermediate-1 risk MDS who have failed or are intolerant of standard treatment. Patients with MDS, although usually older, are generally well except for severe anemia requiring frequent blood transfusions. This Phase 1b/2 clinical trial utilizes LB-100 as a single agent in the treatment of patients with low and intermediate-1 risk MDS, including patients with del(5q) myelodysplastic syndrome (del5qMDS) failing first line therapy. The bone marrow cells of patients with del5qMDS are deficient in PP2A by virtue of an acquired mutation and are especially vulnerable to further inhibition of PP2A by LB-100. The clinical trial began at a single site in April 2019 and the first patient was entered into the clinical trial in July 2019. A total enrollment of 41 patients is planned. An interim analysis will be done after the first 21 patients are entered. If there are 3 or more responders but fewer than 7, an additional 20 patients will be entered. If at any point there are 7 or more responders, this will be sufficient evidence to support continued development of LB-100 for the treatment of low and intermediate-1 risk MDS. Recruitment has been slow and the Covid-19 pandemic has further reduced recruitment of patients into the protocol. At the current rate of accrual, the clinical trial is expected to be completed by June 30, 2025. However, with additional funds, the Company would consider adding two additional MDS centers to the Phase 2 portion of the study to accelerate patient accrual. During the years ended December 31, 2022 and 2021, the Company incurred costs of $ 26,397 and $ 18,443 , respectively, pursuant to this agreement, which have been included in research and development costs in the Company’s consolidated statements of operations. As of December 31, 2022, total costs of $ 131,074 have been incurred pursuant to this agreement. The Company’s aggregate commitment pursuant to this agreement, less amounts previously paid to date, totaled approximately $ 590,000 as of December 31, 2022, which is expected to be incurred through December 31, 2025 . F- 25 GEIS. Effective July 31, 2019, the Company entered into a Collaboration Agreement for an Investigator-Initiated Clinical Trial with the Spanish Sarcoma Group (Grupo Español de Investigación en Sarcomas or “GEIS”), Madrid, Spain, to carry out a study entitled “Randomized phase I/II trial of LB-100 plus doxorubicin vs. doxorubicin alone in first line of advanced soft tissue sarcoma”. The purpose of this clinical trial is to obtain information with respect to the efficacy and safety of LB-100 combined with doxorubicin in soft tissue sarcomas. Doxorubicin is the global standard for initial treatment of advanced soft tissue sarcomas (“ASTS”). Doxorubicin alone has been the mainstay of first line treatment of ASTS for over 40 years, with little therapeutic gain from adding cytotoxic compounds to or substituting other cytotoxic compounds for doxorubicin. In animal models, LB-100 consistently enhances the anti-tumor activity of doxorubicin without apparent increases in toxicity. GEIS has a network of referral centers in Spain and across Europe that have an impressive track record of efficiently conducting innovative studies in ASTS. The Company agreed to provide GEIS with a supply of LB-100 to be utilized in the conduct of this clinical trial, as well as to provide funding for the clinical trial. The goal is to enter approximately 150 patients in this clinical trial over a period of two years. As advanced sarcoma is a very aggressive disease, the design of the study assumes a median progression free survival (PFS, no evidence of disease progression or death from any cause) of 4.5 months in the doxorubicin arm and an alternative median PFS of 7.5 months in the doxorubicin plus LB-100 arm to demonstrate a statistically significant decrease in relative risk of progression or death by adding LB-100. There is a planned interim analysis of the primary endpoint when approximately 50% of the 102 events required for final analysis is reached. The Company had previously expected that this clinical trial would commence during the quarter ended June 30, 2020. However, during July 2020, the Spanish regulatory authority advised the Company that although it had approved the scientific and ethical basis of the protocol, it required that the Company manufacture new inventory of LB-100 under current Spanish pharmaceutical manufacturing standards. These standards were adopted subsequent to the production of the Company’s existing LB-100 inventory. In order to manufacture a new inventory supply of LB-100 for the GEIS clinical trial, the Company engaged a number of vendors to carry out the multiple tasks needed to make and gain approval of a new clinical product for investigational study in Spain. These tasks included the synthesis under good manufacturing practices (GMP) of the active pharmacologic ingredient (API), with documentation of each of the steps involved by an independent auditor. The API was then transferred to a vendor that prepares the clinical drug product, also under GMP conditions documented by an independent auditor. The clinical drug product was then sent to a vendor to test for purity and sterility, provide appropriate labels, store the drug, and distribute the drug to the clinical centers for use in the clinical trials. A formal application documenting all steps taken to prepare the clinical drug product for clinical use must be submitted to the appropriate regulatory authorities for review and approval before being used in a clinical trial. As of December 31, 2022, this program to provide new inventory of the clinical drug product for the Spanish Sarcoma Group study, and potentially for subsequent multiple trials within the European Union, had cost $ 1,144,169 . While the production of new inventory has been completed, nominal amounts of trailing costs are expected to be incurred during the year ending December 31, 2023. On October 13, 2022, the Company announced that the Spanish Agency for Medicines and Health Products (Agencia Española de Medicamentos y Productos Sanitarios or “AEMPS”) had authorized a Phase 1b/randomized Phase 2 study of LB-100, the Company’s lead clinical compound, plus doxorubicin, versus doxorubicin alone, the global standard for initial treatment of advanced soft tissue sarcomas (ASTS). Consequently, the GEIS clinical trial is currently scheduled to commence during the quarter ending June 30, 2023 and to be completed by December 31, 2025. Up to 170 patents will be entered into the clinical trial. The Phase 1b section of the protocol is expected to be completed by June 30, 2024, at which time the Company expects to have data on both response and toxicity from this portion of the clinical trial. The interim analysis of this clinical trial will be done before full accrual of patients is completed to determine whether the study has the possibility of showing superiority of the combination of LB-100 plus doxorubicin compared to doxorubicin alone. A positive study would have the potential to change the standard therapy for this disease after four decades of failure to improve the marginal benefit of doxorubicin alone. F- 26 The Company’s agreement with GEIS provides for various payments based on achieving specific milestones over the term of the agreement. Through December 31, 2022, the Company has paid GEIS an aggregate of $ 415,823 for work done under this agreement through the third milestone. During the years ended December 31, 2022 and 2021, the Company incurred costs of $ 260,770 and $ 24,171 , respectively, pursuant to this agreement, which have been included in research and development costs in the Company’s consolidated statements of operations. As of December 31, 2022, total costs of $ 415,823 have been incurred pursuant to this agreement. The Company’s aggregate commitment pursuant to this agreement, less amounts previously paid to date, totaled approximately $ 3,743,000 as of December 31, 2022, which is expected to be incurred through December 31, 2025. As the work is being conducted in Europe and is paid for in Euros, final costs are subject to foreign currency fluctuations between the United States Dollar and the Euro. Such fluctuations are recorded in the consolidated statements of operations as foreign currency gain or loss, as appropriate. City of Hope. Effective January 18, 2021, the Company executed a Clinical Research Support Agreement with the City of Hope National Medical Center, an NCI-designated comprehensive cancer center, and City of Hope Medical Foundation (collectively, “City of Hope”), to carry out a Phase 1b clinical trial of LB-100, the Company’s first-in-class protein phosphatase inhibitor, combined with a standard regimen for treatment of untreated extensive- stage disease small cell lung cancer (ED-SCLC). LB-100 will be given in combination with carboplatin, etoposide and atezolizumab, an FDA-approved but marginally effective regimen, to previously untreated ED-SCLC patients. The dose of LB-100 will be escalated with the standard fixed doses of the 3-drug regimen to reach a recommended Phase 2 dose (RP2D). Patient entry will be expanded so that a total of 12 patients will be evaluable at the RP2D to confirm the safety of the LB-100 combination and to look for potential therapeutic activity as assessed by objective response rate, duration of overall response, progression-free-survival and overall survival. The clinical trial was initiated on March 9, 2021, with patient accrual expected to take approximately two years to complete. However, as patient accrual has been slower than expected, the Company is currently seeking to add two additional sites to increase the rate of patient accrual, with at least one major site expected to be added by June 30, 2023. With the additional sites, the Company expects that this clinical trial will be completed by December 31, 2024. Without the additional sites, the Company expects that this clinical trial will be completed no sooner than December 31, 2025. Effective March 6, 2023, Sarah Cannon Research Institute (SCRI), Nashville, Tennessee, joined the City of Hope’s ongoing Phase 1b clinical trial to assess the combination of the Company’s first-in-class protein phosphatase 2A (PP2A) inhibitor, LB-100, with a standard regimen for previously untreated, extensive stage small cell lung cancer disease. SCRI, one of the largest community-based cancer trial centers in the United States, is expected to expedite and expand the accrual of patients to this clinical trial, thus reducing the time required to demonstrate the feasibility, tolerability and efficacy of adding LB-100 to the current standard treatment regimen. During the years ended December 31, 2022 and 2021, the Company incurred costs of $ 0 and $ 378,511 , respectively, pursuant to this agreement. The Company’s aggregate commitment pursuant to this agreement, less amounts previously paid to date, totaled approximately $ 2,433,000 as of December 31, 2022, which is expected to be incurred through December 31, 2024, based upon a target of 42 enrollees. If a significant number of patients fail during the dose-escalation process, an increase of up to 12 patients would likely be necessary, at an estimated additional cost of approximately $ 800,000 . The Company currently expects that enrollment in this clinical trial will range from approximately 18 to 30 enrollees, with 24 enrollees as the most likely number. Should fewer than 42 enrollees be required, the Company has agreed to compensate City of Hope on a per enrollee basis. If a significant improvement in outcome is seen with the addition of LB-100, this would be an important advance in the treatment of a very aggressive disease. National Cancer Institute Pharmacologic Clinical Trial. In May 2019, the National Cancer Institute (NCI) initiated a glioblastoma (GBM) pharmacologic clinical trial. This study is being conducted and funded by the NCI under a Cooperative Research and Development Agreement, with the Company being required to provide the LB-100 clinical compound. F- 27 Primary malignant brain tumors (gliomas) are very challenging to treat. Radiation combined with the chemotherapeutic drug temozolomide has been the mainstay of therapy of the most aggressive gliomas (glioblastoma multiforme or GBM) for decades, with some further benefit gained by the addition of one or more anti-cancer drugs, but without major advances in overall survival for the majority of patients. In animal models of GBM, the Company’s novel protein phosphatase inhibitor, LB-100, has been found to enhance the effectiveness of radiation, temozolomide chemotherapy treatments and immunotherapy, raising the possibility that LB-100 may improve outcomes of standard GBM treatment in the clinic. Although LB-100 has proven safe in patients at doses associated with apparent anti-tumor activity against several human cancers arising outside the brain, the ability of LB-100 to penetrate tumor tissue arising in the brain is not known. Unfortunately, many drugs potentially useful for GBM treatment do not enter the brain in amounts necessary for anti-cancer action. The NCI study is designed to determine the extent to which LB-100 enters recurrent malignant gliomas. Patients having surgery to remove one or more tumors will receive one dose of LB-100 prior to surgery and have blood and tumor tissue analyzed to determine the amount of LB-100 present and to determine whether the cells in the tumors show the biochemical changes expected to be present if LB-100 reaches its molecular target. As a result of the innovative design of the NCI study, data from a few patients should be sufficient to provide a sound rationale for conducting a larger clinical trial to determine the effectiveness of adding LB-100 to the standard treatment regimen for GBMs. Five patients have been entered and analysis of the blood and tissue will now proceed. If there is evidence in at least two of the patients of penetration of LB 100 into tumor tissue, the study will be deemed as successful. The results of this study are expected during 2023. Clinical Trial Monitoring Agreements Moffitt. On September 12, 2018, the Company finalized a work order agreement with Theradex Systems, Inc. (“Theradex”), an international contract research organization (“CRO”), to monitor the Phase 1b/2 clinical trial being managed and conducted by Moffitt. The clinical trial began in April 2019 and the first patient was entered into the clinical trial in July 2019. At the current rate of accrual, the clinical trial is expected to be completed by June 30, 2025. Costs under this work order agreement are estimated to be approximately $ 954,000 , with such payments expected to be allocated approximately 94% to Theradex for services and approximately 6% for payments for pass-through costs. The costs of the Phase 1b/2 clinical trial being paid to or through Theradex are being recorded and charged to operations based on periodic documentation provided by the CRO. During the years ended December 31, 2022 and 2021, the Company incurred costs of $ 35,403 and $ 9,730 , respectively, and as of December 31, 2022, total costs of $ 127,288 have been incurred. The Company’s aggregate commitment pursuant to this agreement, less amounts previously paid to date, totaled approximately $ 842,000 as of December 31, 2022, which is expected to be incurred through June 30, 2025. City of Hope. On February 5, 2021, the Company signed a new work order agreement with Theradex to monitor the City of Hope investigator-initiated clinical trial in small cell lung cancer in accordance with FDA requirements for oversight by the sponsoring party. Costs under this work order agreement are estimated to be approximately $ 335,000 . During the years ended December 31, 2022 and 2021, the Company incurred costs of $ 33,815 and $ 24,626 , respectively, and as of December 31, 2022, total costs of $ 58,441 have been incurred. The Company’s aggregate commitment pursuant to this agreement, less amounts previously paid to date, totaled approximately $ 284,000 as of December 31, 2022, which is expected to be incurred through June 30, 2025. Patent and License Agreements Moffitt. Effective August 20, 2018, the Company entered into an Exclusive License Agreement with Moffitt. Pursuant to the License Agreement, Moffitt granted the Company an exclusive license under certain patents owned by Moffitt (the “Licensed Patents”) relating to the treatment of MDS and a non-exclusive license under inventions, concepts, processes, information, data, know-how, research results, clinical data, and the like (other than the Licensed Patents) necessary or useful for the practice of any claim under the Licensed Patents or the use, development, manufacture or sale of any product for the treatment of MDS which would otherwise infringe a valid claim under the Licensed Patents. The Company was obligated to pay Moffitt a non-refundable license issue fee of $ 25,000 after the first patient was entered into a Phase 1b/2 clinical trial to be managed and conducted by Moffitt. The clinical trial began at a single site in April 2019 and the first patient was entered into the clinical trial in July 2019. The Company is also obligated to pay Moffitt an annual license maintenance fee of $ 25,000 commencing on the first anniversary of the Effective Date and every anniversary thereafter until the Company commences payment of minimum royalty payments. The Company has also agreed to pay non-refundable milestone payments to Moffitt, which cannot be credited against earned royalties payable by the Company, based on reaching various clinical and commercial milestones aggregating $ 1,897,000 , subject to reduction by 40% under certain circumstances relating to the status of Valid Claims, as such term is defined in the License Agreement. During the years ended December 31, 2022 and 2021, the Company recorded charges to operations of $ 25,000 and $ 25,000 , respectively, in connection with its obligations under the License Agreement. As of December 31, 2022, no milestones had yet been attained. F- 28 The Company will be obligated to pay Moffitt earned royalties of 4% on worldwide cumulative net sales of royalty-bearing products, subject to reduction to 2% under certain circumstances, on a quarterly basis, with a minimum royalty payment of $ 50,000 in the first four years after sales commence, and $ 100,000 in year five and each year thereafter, subject to reduction by 40% under certain circumstances relating to the status of Valid Claims, as such term is defined in the License Agreement. The Company’s obligation to pay earned royalties under the License Agreement commences on the date of the first sale of a royalty-bearing product, and shall automatically expire on a country-by-country basis on the date on which the last valid claim of the Licensed Patents expires, lapses or is declared invalid, and the obligation to pay any earned royalties under the License Agreement shall terminate on the date on which the last valid claim of the Licensed Patents expires, lapses, or is declared to be invalid in all countries. Employment Agreements with Officers During July and August 2020, the Company entered into one-year employment agreements with its executive officers, consisting of Dr. John S. Kovach, Eric J. Forman, Dr. James S. Miser, and Robert N. Weingarten, which provided for aggregate annual compensation of $ 640,000 , payable monthly (see Note 5). The employment agreements are automatically renewable for additional one-year periods unless terminated by either party upon 60 days written notice prior to the end of the applicable one-year period, or by death, or by termination for cause. These employment agreements were automatically renewed for additional one-year periods in July and August 2021 and 2022. On April 9, 2021, the Board of Directors increased the annual compensation of Eric J. Forman, Dr. James S. Miser, and Robert N. Weingarten under the employment agreements, such that the total aggregate annual compensation of all officers increased to $ 775,000 , effective May 1, 2021. Effective November 6, 2022, Mr. Forman was promoted to Vice President and Chief Operating Officer, with an annual salary of $ 200,000 . Accordingly, the total aggregate annual compensation of all officers increased to $ 800,000 , effective November 6, 2022. In addition, effective October 1, 2022, Mr. Forman is being paid an office rent allowance of $ 600 per month. The total aggregate annual compensation of all officers increased to $ 800,000 , effective November 6, 2022. Other Significant Agreements and Contracts NDA Consulting Corp. On December 24, 2013, the Company entered into an agreement with NDA Consulting Corp. for consultation and advice in the field of oncology research and drug development. As part of the agreement, NDA also agreed to cause its president, Dr. Daniel D. Von Hoff, M.D., to become a member of the Company’s Scientific Advisory Committee. The term of the agreement was for one year and provided for a quarterly cash fee of $ 4,000 . The agreement has been automatically renewed for additional one-year terms on its anniversary date since 2014. Consulting and advisory fees charged to operations pursuant to this agreement were $ 16,000 and $ 16,000 for the years ended December 31, 2022 and 2021, respectively, which were included in research and development costs in the consolidated statements of operations. BioPharmaWorks . Effective September 14, 2015, the Company entered into a Collaboration Agreement with BioPharmaWorks, pursuant to which the Company engaged BioPharmaWorks to perform certain services for the Company. Those services included, among other things, assisting the Company to commercialize its products and strengthen its patent portfolio; identifying large pharmaceutical companies with a potential interest in the Company’s product pipeline; assisting in preparing technical presentations concerning the Company’s products; consultation in drug discovery and development; and identifying providers and overseeing tasks relating to clinical development of new compounds. F- 29 BioPharmaWorks was founded in 2015 by former Pfizer scientists with extensive multi-disciplinary research and development and drug development experience. The Collaboration Agreement was for an initial term of two years and automatically renews for subsequent annual periods unless terminated by a party not less than 60 days prior to the expiration of the applicable period. In connection with the Collaboration Agreement, the Company agreed to pay BioPharmaWorks a monthly fee of $ 10,000 , subject to the right of the Company to pay a negotiated hourly rate in lieu of the monthly payment, and agreed to issue to BioPharmaWorks certain equity-based compensation (see Note 6). The Company recorded charges to operations pursuant to this agreement of $ 120,000 and $ 120,000 for the years ended December 31, 2022 and 2021, respectively, which were included in research and development costs in the consolidated statements of operations. Foundation for Angelman Syndrome Therapy. Effective August 12, 2020, the Company entered into a Master Service Agreement with the Foundation for Angelman Syndrome Therapy (FAST) to collaborate in supporting pre-clinical studies of the potential benefit of LB-100 in a mouse model of Angelman Syndrome (AS) as reported in The Proceedings of The National Academy of Science (Wang et al, June 3, 2019). The pre-clinical studies were to be conducted at The University of California - Davis under the direction of Dr. David Segal, an internationally recognized leader in AS research. If the pre-clinical studies confirm that LB-100 reduces AS signs in rodent models, the Company has agreed to enter into discussions with FAST with respect to possible collaborations to most efficiently assess the benefit of LB-100 in patients with AS, which is a rare disease affecting an estimated one out of 12,000 to one out of 20,000 persons in the United States. The genetic cause of AS, reduced function of a specific maternal gene called Ube3, has been understood for some time, but the molecular abnormality resulting from the genetic lesion has now been shown to be increased concentrations of protein phosphatase 2A (PP2A), a molecular target of the Company’s investigational compound, LB-100. The Company has agreed to provide FAST with a supply of LB-100 to be utilized in the conduct of this study, which was initially expected to be completed within three years. Conditioned on FAST’s completion of this study, the Company has agreed to pay FAST five percent ( 5 %) of all proceeds, as defined in the Master Service Agreement, received by the Company, up to a maximum of $ 250,000 , from the exploitation of the study results. The research team at the University of California - Davis recently completed their pre-clinical study of the potential benefit of LB-100 in a mouse model of AS. The preliminary analysis indicates that the positive results previously reported by Chinese investigators were not confirmed in the US model. The Company is currently awaiting input from FAST as to whether it intends to continue to pursue pre-clinical studies of LB 100. To date, FAST has not indicated whether it desires to pursue further studies of LB-100, but in light of the failure to confirm the Chinese study results, the Company does not plan to pursue further studies of AS. Netherlands Cancer Institute . On October 8, 2021, the Company entered into a Development Collaboration Agreement with the Netherlands Cancer Institute, Amsterdam (see Note 5), one of the world’s leading comprehensive cancer centers, and Oncode Institute, Utrecht, a major independent cancer research center, to identify the most promising drugs to be combined with LB-100, and potentially LB-100 analogues, to be used to treat a range of cancers, as well as to identify the specific molecular mechanisms underlying the identified combinations. The Company has agreed to fund the study and provide a sufficient supply of LB-100 to conduct the study. The study is expected to take approximately two years to conduct. During the years ended December 31, 2022 and 2021, the Company incurred charges in the amount of $ 204,158 and $ 55,248 , respectively, with respect to this agreement, which amounts are included in research and development costs in the Company’s consolidated statements of operations. As of December 31, 2022, total costs of $ 259,406 have been incurred pursuant to this agreement. The Company’s aggregate commitment pursuant to this agreement, less amounts previously paid to date, totaled approximately $ 262,000 as of December 31, 2022, which is expected to be incurred through June 30, 2025. As the work is being conducted in Europe and is paid for in Euros, final costs are subject to foreign currency fluctuations between the United States Dollar and the Euro. MRI Global. The Company has contracted with MRI Global for stability analysis, storage and distribution of LB-100 for clinical trials in the United States. On June 10, 2022, the contract was amended to reflect a new total contract price of $ 273,980 and an estimated completion date of April 30, 2023. During the years ended December 31, 2022 and 2021, the Company incurred costs of $ 27,702 and $ 17,782 , respectively, pursuant to this agreement. As of December 31, 2022, total costs of $ 219,611 have been incurred pursuant to this agreement. The Company’s aggregate commitment pursuant to this agreement, less amounts previously paid to date, totaled approximately $ 55,000 as of December 31, 2022. F- 30 External Risks Associated with the Company’s Business Activities Covid-19 Virus . The global outbreak of the novel coronavirus (Covid-19) in early 2020 led to disruptions in general economic activities throughout the world as businesses and governments implemented broad actions to mitigate this public health crisis. The extent to which the coronavirus pandemic may impact the Company’s business activities and capital raising efforts will depend on future developments, which are uncertain and cannot be predicted. The Company is continuing to monitor this situation and will adjust its current business plans to the extent additional information and guidance become available. The coronavirus pandemic has also presented a challenge to medical facilities worldwide. Although the Company’s clinical trials are conducted on an outpatient basis, the coronavirus pandemic appears to have caused some delays in the Company’s clinical trials, but the impact of the coronavirus pandemic appears to be subsiding. Inflation Risk. The Company does not believe that inflation has had a material effect on its operations to date, other than its impact on the general economy. However, there is a risk that the Company’s operating costs could become subject to inflationary and interest rate pressures in the future, which would have the effect of increasing the Company’s operating costs (including, specifically, clinical trial costs), and which would put additional stress on the Company’s working capital resources. Supply Chain Issues. The Company does not currently expect that supply chain issues will have a significant impact on its business activities, including its ongoing clinical trials. Potential Recession. There are various indications that the United States economy may be entering a recessionary period. Although unclear at this time, an economic recession would likely impact the general business environment and the capital markets, which could, in turn, affect the Company. The Company is continuing to monitor these matters and will adjust its current business and financing plans as more information and guidance become available. 9. Subsequent Events The Company performed an evaluation of subsequent events through the date of filing of these consolidated financial statements with the SEC. Other than the matter noted below, there were no material subsequent events which affected, or could affect, the amounts or disclosures in the consolidated financial statements. Effective March 10, 2023, the Company issued 12,500 shares of common stock upon the exercise of a stock option in the form of a warrant held by a consultant to the Company for 12,500 shares exercisable at $ 0.5025 per share for total cash proceeds of $ 6,281 . F- 31