What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-03-22 compared with 2020-03-27 · 224 added, 209 removed, 104 unchanged (81% of the section changed)

1 unchanged sentence

Management’s Discussion and Analysis of Financial Condition and Results of Operations or MD&A, is provided in addition

to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition

and cash flows.

to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial

condition and cash flows.

Our MD&A is organized as follows:

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Critical Accounting Policies — Accounting policies that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

Results of Operations— Analysis of our

financial results comparing the:

Results of Operations — Analysis of our financial results comparing the:

(i) year ended December 31, 2020 to the year ended December 31, 2019.

Liquidity and Capital Resources —Analysis of cash flows and discussion of our financial condition and future liquidity needs.

Historically, we have been primarily focused

on the research and development of nervous system therapies based on our proprietary human neural stem cells and our small molecule

compounds with the ultimate goal of gaining approval from the United States Food and Drug Administration (“FDA”), and

its international counterparts, to market and commercialize such therapies.

In early 2019, we also began an in-licensing and acquisition

strategy by which we are evaluating novel therapeutics with the potential to be complimentary to our current technologies or that

could benefit from our development experience with the goal of developing such technologies for commercialization.

Our patented technology platform has three

core components:

Over 300 lines of human, regionally specific neural stem cells, some of which have

the potential to be used to treat serious or life-threatening diseases through direct transplantation into the central nervous

Proprietary screening capability – our ability to generate human neural stem

cell lines provides a platform for chemical screening and discovery of novel compounds against nervous system disorders;

Small molecules that resulted from Seneca’s neurogenesis screening platform

that may have the potential to treat wide variety of nervous system conditions.

To date, our technology platform has produced

two lead assets in clinical development:

Historically, we have been primarily focused on the research and

development of nervous system therapies based on our proprietary human neural stem cells and our small molecule compounds with

the ultimate goal of gaining approval from the United States Food and Drug Administration (“FDA”), and its international

counterparts, to market and commercialize such therapies.

In early 2019, we also began an in-licensing and acquisition strategy

by which we are evaluating novel therapeutics with the potential to be complimentary to our current technologies or that could

benefit from our development experience with the goal of developing such technologies for commercialization.

Our patented technology platform has three core components:

300 lines of human, regionally specific neural stem cells, some of which have the potential to be used to treat serious or life-threatening

diseases through direct transplantation into the central nervous system;

screening capability – our ability to generate human neural stem cell lines provides a platform for chemical screening and

discovery of novel compounds against nervous system disorders;

molecules that resulted from Seneca’s neurogenesis screening platform that may have the potential to treat wide variety

of nervous system conditions.

To date, our technology platform has produced two lead assets in

clinical development:

our NSI-566 stem cell therapy program and our NSI-189 small molecule program.

of our current strategy is out-licensing and we have recently initiated a formal out- licensing initiative aimed at securing partners

to advance the clinical development of these two programs.

We believe this technology, in partnership

with an established biopharmaceutical company with the appropriate development expertise and financial resources, could facilitate

the development and commercialization of products for use in the treatment of a wide array of nervous system disorders including

neurodegenerative conditions and regenerative repair of acute and chronic disease.

We intend to maintain these programs with the

goal of finding suitable development partners.

We are also seeking to in-license and acquire

other novel therapeutics.

On October 31, 2019, the Company announced it had entered into a non-binding term sheet with Jiangsu

QYuns Therapeutics Co., Ltd., (“QYuns”) for an exclusive license agreement for certain of QYuns Therapeutics’

assets, a pipeline of cytokine-targeted monoclonal antibodies for the treatment of a range of auto-immune disease.

Subsequently,

on January 10, 2020, the Company filed a form 8-K disclosing that it was not able to reach an agreement on the exclusive license

agreement and no longer expected to complete this transaction.

A component of our current

strategy is out-licensing and we have recently initiated a formal out- licensing initiative aimed at securing partners to advance

the clinical development of these two programs.

We believe this technology, in partnership with an established biopharmaceutical

company with the appropriate development expertise and financial resources, could facilitate the development and commercialization

of products for use in the treatment of a wide array of nervous system disorders including neurodegenerative conditions and regenerative

repair of acute and chronic disease.

We intend to maintain these programs with the goal of finding suitable development partners.

We are also seeking to in-license and acquire other novel therapeutics.

On October 31, 2019, the Company announced it had entered into a non-binding term sheet with Jiangsu QYuns Therapeutics Co., Ltd.,

(“QYuns”) for an exclusive license agreement for certain of QYuns Therapeutics’ assets, a pipeline of cytokine-targeted

monoclonal antibodies for the treatment of a range of auto-immune disease.

Subsequently, on January 10, 2020, the Company filed

a form 8-K disclosing that it was not able to reach an agreement on the exclusive license agreement and no longer expected to complete

this transaction.

However, we continue to seek other products to in-license or acquire.

Trends & Outlook

generated no revenues from the sale of our proposed therapies for any of the periods presented.

have historically generated minimal revenue from the licensing of our intellectual property to third parties as well as payments

under a settlement agreement.

a long-term basis, we anticipate that our revenue will be derived primarily from licensing fees and sales of our products.

we are at such an early stage in the clinical trials process, we are not yet able to accurately predict when we will have a product

ready for commercialization, if ever.

We generated no revenues from

the sale of our proposed therapies for any of the periods presented.

We have historically generated

minimal revenue from the licensing of our intellectual property to third parties as well as payments under a settlement agreement.

On a long-term basis, we anticipate

that our revenue will be derived primarily from licensing fees and sales of our products.

Because we are at such an early stage

in the clinical trials process, we are not yet able to accurately predict when we will have a product ready for commercialization,

Research and Development Expenses

research and development expenses consist primarily of clinical trial expenses, including payments to clinical trial sites that

perform our clinical trials and clinical research organizations (CROs) that help us manage our clinical trials, manufacturing of

small molecule drugs and stem cells for both human clinical trials and for pre-clinical studies and research, personnel costs for

research and clinical personnel, and other costs including research supplies and facilities.

Our research and development

expenses reflect the costs of the technical evaluation of our internal programs as well as the evaluation of certain potential

assets we considered for acquisition.

focus on the development of therapies with potential uses in multiple indications and use employee and infrastructure resources

across several projects.

Accordingly, many of our costs are not attributable to a specifically identified product and we do not

account for internal research and development costs on a project-by-project basis.

expect that research and development expenses, which include expenses related to our ongoing ischemic stroke clinical trial, will

decrease in the future as we seek partners to further the clinical development of our therapeutic programs.

This could change if

we are successful in our in-licensing and acquisition strategy in which we are evaluating novel therapeutics, our research and

development expenditures will be primarily devoted to advancing the acquired programs towards or through later stage clinical trials.

have a wholly owned subsidiary in the People’s Republic of China that primarily oversees our current clinical trial to treat

motor deficits due to ischemic stroke.

August 2017, we were awarded a Small

Business Innovation Research (“SBIR”) grant by the National Institutes of Health (“NIH”) to evaluate in

preclinical studies the potential of NSI-189, a novel small molecule compound, for the prevention and treatment of diabetic neuropathy.

expenses consist primarily of clinical trial expenses, including payments to clinical trial sites that perform our clinical trials

and clinical research organizations (CROs) that help us manage our clinical trials, manufacturing of small molecule drugs and stem

cells for both human clinical trials and for pre-clinical studies and research, personnel costs for research and clinical personnel,

and other costs including research supplies and facilities.

Our research and development expenses reflect the costs of the technical

evaluation of our internal programs as well as the evaluation of certain potential assets we considered for acquisition.

We focus on the development

of therapies with potential uses in multiple indications and use employee and infrastructure resources across several projects.

Accordingly, many of our costs are not attributable to a specifically identified product and we do not account for internal research

and development costs on a project-by-project basis.

We expect that research and

development expenses, which include expenses related to our ongoing ischemic stroke clinical trial, will decrease in the future

as we seek partners to further the clinical development of our therapeutic programs.

This could change if we are successful in

our in-licensing and acquisition strategy in which we are evaluating novel therapeutics, our research and development expenditures

will be primarily devoted to advancing the acquired programs towards or through later stage clinical trials.

We have a wholly owned subsidiary

in the People’s Republic of China that primarily oversees our current clinical trial to treat motor deficits due to ischemic

In August 2017, we were awarded

a Small Business Innovation Research (“SBIR”) grant by the National Institutes of Health (“NIH”) to evaluate

in preclinical studies the potential of NSI-189, a novel small molecule compound, for the prevention and treatment of diabetic

The award of approximately $1 million will be paid over a two-year period, if certain conditions are met as mid-term.

performance period was extended through 7/31/2020 to complete the data collection and report writing.

The grant balance was approximately

$109,000 at 12/31/19, we anticipate receiving this amount over the extended performance period.

In June 2018, we were awarded a

Department of Defense grant related to our efforts involving stem cell therapy for severe traumatic brain injury.

approximately $150,000 was received in 2019.

The proceeds from the awards are recorded as a reduction of our gross research and

development expenses, based on the terms and conditions of the grants.

The award performance period was extended through July 31, 2020 to complete the data collection and report writing.

In June 2018,

we were awarded a Department of Defense grant related to our efforts involving stem cell therapy for severe traumatic brain injury.

The award of approximately $150,000 was received in 2019.

The proceeds from the awards are recorded as a reduction of our gross

research and development expenses, based on the terms and conditions of the grants.

Proposed Merger.

O n December 17, 2020,

we announced the signing of the Merger Agreement with LBS.

Upon the terms and subject to the satisfaction of the conditions described

in the Merger Agreement, including approval of the transaction by our stockholders, a wholly-owned subsidiary of Seneca will consummate

Upon the closing of the Merger, we will adopt the business and operating plan of LBS.

In the event the Merger is not

consummated, our Board will be required to develop a new business plan.

At this time, we cannot ascertain such plan or the financial

impact on Seneca.

General and Administrative Expenses

and administrative expenses are primarily comprised of salaries, benefits and other costs associated with our operations including,

finance, human resources, information technology, public relations and costs associated with maintaining a public company listing,

legal, audit and compliance fees, facilities and other external general and administrative services.

General and administrative

expenses are primarily comprised of salaries, benefits and other costs associated with our operations including, finance, human

resources, information technology, public relations and costs associated with maintaining a public company listing, legal, audit

and compliance fees, facilities and other external general and administrative services.

Critical Accounting Policies

consolidated financial

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

The preparation of these financial statements requires management to make estimates and assumptions that affect the

reported amounts of assets, liabilities, revenues and expenses.

Note 2 of the Notes to Consolidated Financial Statements included

elsewhere herein describes the significant accounting policies used in the preparation of the financial statements.

these significant accounting policies are considered to be critical accounting policies, as defined below.

consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United

States of America (“U.S.

The preparation of these financial statements requires management to make estimates

and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

Note 2 of the Notes to Consolidated

Financial Statements included elsewhere herein describes the significant accounting policies used in the preparation of the financial

Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires

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During the years ended December 31, 2020 and 2019, no significant impairment losses were recognized.

Fair Value Measurements -

The fair value of our short-term financial instruments, which primarily include cash and cash equivalents, other short-term investments,

accounts payable and accrued expenses, approximate their carrying values due to their short maturities.

The fair value of our long-term

indebtedness was estimated based on the quoted prices for the same or similar issues or on the current rates offered to the Company

for debt of the same remaining maturities which approximates the carrying value.

The fair values of our liability classified warrants

are estimated using Level 3 unobservable inputs.

Compensation - We account for share-based compensation at fair value;

accordingly, we expense the estimated fair

value of share-based awards over the requisite service period.

Share-based compensation cost for stock options and warrants issued

to employees and board members is determined at the grant date while awards granted to non-employee consultants are generally valued

at the vesting date using an option pricing model.

Option pricing models require us to make assumptions, including expected volatility

and expected term of the options.

If any of the assumptions we use in the model were to significantly change, share-based compensation

expense may be materially different.

Share-based compensation cost for restricted stock and restricted stock units issued to employees

and board members is determined at the grant date based on the closing price of our common stock on that date.

The value of the

award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service period.

Comparison of Our Results of Operations for the Years Ended

December 31, 2019 and 2018

Fair Value Measurements - The fair value of our short-term

financial instruments, which primarily include cash and cash equivalents, other short-term investments, accounts payable and accrued

expenses, approximate their carrying values due to their short maturities.

The fair value of our long-term indebtedness was estimated

based on the quoted prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining

maturities which approximates the carrying value.

The fair values of our liability classified warrants are estimated using Level

3 unobservable inputs.

Share-Based Compensation

- We account for share-based compensation at fair value;

accordingly, we expense the estimated fair value of share-based

awards over the requisite service period.

Share-based compensation cost for stock options and warrants issued to employees, board

members and non-employee consultants is generally determined at the grant date using an option pricing model.

Option pricing models

require us to make assumptions, including expected volatility and expected term of the options.

If any of the assumptions we use

in the model were to significantly change, share-based compensation expense may be materially different.

Share-based compensation

cost for restricted stock and restricted stock units issued to employees and board members is determined at the grant date based

on the closing price of our common stock on that date.

The value of the award that is ultimately expected to vest is recognized

as expense on a straight-line basis over the requisite service period.

Comparison of Our Results of Operations for the Years Ended December 31, 2020 and

each of the years ended December 31, 2020 and 2019, we recognized revenue of $10,000 related

to ongoing fees pursuant to certain licenses of our intellectual property to third parties.

In addition, d uring the year

ended December 31, 2018, we recognized $250,000 of milestone-based royalties related to a

settlement of a prior patent infringement case.

Operating Expenses

In addition, d uring the years

ended December 31, 2020 and 2019, we recognized $3,500 and $5,400 of royalty revenue related

to a settlement of a prior patent infringement case.

Operating Expenses

for 2019 and 2018 were as follows:

5 Operating expenses for 2020 and 2019 were as follows:

Year Ended December 31,

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Research & development costs

$ (2,042,996 )

General & administrative expenses

1 unchanged sentence

Research and Development Expenses

increase of approximately $101,000 or 3% in research and development expenses was primarily attributable to an increase in external

consulting services engaged in the technical evaluation of our internal programs as well as the evaluation of certain potential

assets we considered for acquisition.

These costs were partially offset by lower clinical trial expenditures as we wind down clinical

activities related to the stem cell assets.

We expect that research and development expenses, which include expenses related to

our ongoing stroke clinical trial, will decrease in the future as we seek partners to further the clinical development.

change if we are successful in our in-licensing and acquisition strategy in which we are evaluating novel therapeutics, our research

and development expenditures will be primarily devoted to advancing the acquired programs towards or through later stage clinical

and Administrative Expenses

The decrease of approximately

$2,043,000 or 50% in research and development expenses was primarily attributable to the continued wind down of clinical activities

for our stem cell and small molecule programs in 2020.

In 2019, we incurred expenses related to external consulting services engaged

in the technical evaluation of our internal programs as well as the evaluation of certain potential assets we considered for acquisition.

If we are successful in the Merger, we will adopt the business and operating plan of LBS.

General and Administrative

G&A expenses increased approximately

$4,085,000 or 89%.

As noted above we have shifted the Company strategy and focus from the development of the stem cell assets and initiated

an out-licensing effort to partner these programs while seeking to in license or acquire novel therapeutics with the potential

to be complimentary to our current technologies or that could benefit from our development experience with the goal of developing

such technologies for commercialization.

Associated with this shift in strategic focus our G&A expenses in 2019 reflect an

enhanced internal management structure including individual consultants in key roles.

As noted above, we have shifted the Company’s strategy and focus from the development of the stem cell

assets and initiated an out-licensing effort to partner these programs while seeking to in license or acquire novel therapeutics

with the potential to be complimentary to our current technologies or that could benefit from our development experience with the

goal of developing such technologies for commercialization.

Associated with this shift in strategic focus our G&A expenses

in the 2020 period reflect an enhanced internal management structure including individual consultants in key roles as well as the

engagement of two executive officers in the second quarter of 2020.

Other income (expense)

Other income,

net totaled approximately $280,000 and $3,335,000 for the years ended December 31, 2019 and 2018, respectively.

expense, net in 2020 consisted primarily of a non-cash warrant inducement charge of approximately $5,620,000 partially offset by

$20,000 of net interest income and $9,000 of non-cash gains related to the fair value adjustment of our liability classified warrants.

income, net in 2019 consisted of approximately $499,000 of non-cash gains related to the change in the fair value of our liability

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related to the write-off of a related party receivable.

income, net in 2018 consisted of approximately $3,269,000 of non-cash gains related to the change in the fair value of our liability

classified stock purchase warrants and $79,000 of interest income.

and Capital Resources

Since our inception, we have

financed our operations through the sales of our securities, issuance of long-term debt, the exercise of investor warrants, and

to a lesser degree from grants and research contracts as well as the licensing of our intellectual property to third parties.

We had cash and

cash equivalents of approximately $5.1 million at December 31, 2019.

On July 30, 2019, we completed a firm commitment underwritten

public offering of our securities which resulted in approximately $6.6 million of net proceeds.

In addition, in January 2020, we

raised approximately $6.8 million of net proceeds from the exercise of certain common stock purchase warrants pursuant to an inducement

Based on our expected operating

cash requirements, we anticipate our current cash and investments on hand will be sufficient to fund our operations, for more than

12 months after this filing.

As explained in Note 1 to our financial statements, management has determined that there is substantial

doubt about our ability to continue as a going concern.

We will require additional capital

to pursue our acquisition and in-licensing strategy and continue our pre-clinical and clinical development plans.

To continue to

fund our operations and the development of our product candidates we anticipate raising additional cash through the private and

public sales of equity or debt securities, collaborative arrangements, licensing agreements, asset sales or a combination thereof.

Although management believes that such funding sources will be available, there can be no assurance that any such collaborative

arrangement will be entered into or that financing will be available to us when needed in order to allow us to continue our operations,

or if available, on terms acceptable to us.

If we do not raise sufficient funds in a timely manner, we may be forced to curtail

operations, delay or stop our ongoing clinical trials, cease operations altogether, or file for bankruptcy.

We currently do not

have commitments for future funding from any source.

We cannot assure you that we will be able to secure additional capital or

that the expected income will materialize.

Several factors will affect our ability to raise additional funding, including, but

not limited to market conditions, interest rates and, more specifically, our progress in our exploratory, preclinical and future

clinical development programs.

Cash Flows – 2019 compared

Since our inception, we have financed our operations through

the sales of our securities, issuance of long-term debt, the exercise of investor warrants, and to a lesser degree from grants

and research contracts as well as the licensing of our intellectual property to third parties.

We had cash and cash equivalents of approximately

$10.5 million at December 31, 2021.

In January 2020, we raised approximately $6.7 million of net proceeds from the exercise of

certain common stock purchase warrants pursuant to an inducement offer and in May 2020, we raised approximately $4.4 million of

net proceeds through the sale of our common stock as well as approximately $3.5 million from the exercise of warrants issued in

the January inducement offer.

Based on our expected operating cash requirements, and

assuming the Merger is not consummated, we anticipate our current cash and investments on hand will be sufficient to fund our operations,

at least 12 months after this filing.

However, we will require additional capital to execute

our acquisition and/or in-licensing strategy as well as out-licensing initiatives and to fund our operations.

ability to secure capital in the past, there can be no assurance that additional equity or debt financing will be available to

us when needed or that we may be able to secure funding from any other sources.

Consequently, as explained in Note 1 to our condensed

consolidated financial statements, management has determined that there is substantial doubt about our ability to continue as a

going concern.

We will require additional capital to pursue our acquisition

and in-licensing strategy and continue our pre-clinical and clinical development plans.

To continue to fund our operations and

the development of our product candidates we anticipate raising additional cash through the private and public sales of equity

or debt securities, collaborative arrangements, licensing agreements, asset sales or a combination thereof.

Although management

believes that such funding sources will be available, there can be no assurance that any such collaborative arrangement will be

entered into or that financing will be available to us when needed in order to allow us to continue our operations, or if available,

on terms acceptable to us.

If we do not raise sufficient funds in a timely manner, we may be forced to curtail operations, delay

or stop our ongoing clinical trials, cease operations altogether, or file for bankruptcy.

We currently do not have commitments

for future funding from any source.

We cannot assure you that we will be able to secure additional capital or that the expected

income will materialize.

Several factors will affect our ability to raise additional funding, including, but not limited to market

conditions, interest rates and, more specifically, our progress in our exploratory, preclinical and future clinical development

Cash Flows – 2020 compared to 2019

Year Ended December 31,

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$ (7,255,680 )

Net cash provided by investing

$ (1,769,449 )

Net cash provided by investing

Net cash provided by financing activities

Cash Used in Operating Activities

used in operating activities for the year ended December 31, 2019, of approximately $7,256,000 reflects our $8,352,000 loss

for the period adjusted for certain non-cash items including:

(i) $881,000 of share-based compensation, (ii) a ($499,000)

gain related to the change in fair value of our liability classified warrants, (iii) $362,000 of write-off of related party

receivable, (iv) $208,000 of net cash inflows related to changes in operating assets and liabilities and (v) $144,000

adjustment for amortization and depreciation.

used in operating activities for the year ended December 31, 2018, of approximately $7,692,000 reflects our $4,925,000 loss for

the period adjusted for certain non-cash items including:

(i) $634,000 of share-based compensation (ii) ($3,269,000) related to

the change in fair value of our liability classified warrants, (iii) ($337,000) of net cash outflows related to changes in our

operating assets and liabilities and (iv) $186,000 adjustment for amortization and depreciation.

Cash Used in Investing Activities

were no investing activities in the year ended December 31, 2019.

the year ended December 31, 2018 cash provided by investing activities was comprised primarily of proceeds from the maturity of

our short-term investments.

Cash Provided by Financing Activities

Net Cash Used in Operating

used in operating activities for the year ended December 31, 2020, reflects our $16,267,000 loss for the period adjusted for certain

non-cash items including:

(a) $5,620,000 of expense related to our warrant inducement transaction, (ii) $954,000 of net cash inflows,

including those resulting from increases in our prepaid expenses and accrued severance, related to changes in operating assets

and liabilities, and (iii) $585,000 of share-based compensation.

Cash used in operating activities for the year

ended December 31, 2019, of approximately $7,256,000 reflects our $8,352,000 loss for the period adjusted for certain non-cash

items including:

(i) $881,000 of share-based compensation, (ii) a ($499,000) gain related to the change in fair value of our liability

classified warrants, (iii) $362,000 of write-off of related party receivable, (iv) $208,000 of net cash inflows related to changes

in operating assets and liabilities and (v) $144,000 adjustment for amortization and depreciation.

Net Cash Used in Investing

were no investing activities in either of the years ended December 31, 2020 or 2019.

Net Cash Provided

by Financing Activities

the year ended December 31, 2020, cash provided by financing activities consisted of $11.2 million of net proceeds generated from

the sale of our common stock and $3.5 million of net proceeds from the exercise of warrants partially offset by payments under

our short-term debt used to finance insurance premiums.

the year ended December 31, 2019, cash provided by financing activities consisted primarily of $6.6 million of net proceeds generated

from the sale of our common stock and warrants coupled with borrowings and payments under our short-term debt used to finance insurance

the year ended December 31, 2018, cash provided by financing activities consisted primarily of approximately $1.8 million of net

proceeds from our October financing transaction.

Future Liquidity

Future Liquidity and Needs

have incurred significant operating losses and negative cash flows since inception.

12 unchanged sentences

addition to financing in the future through the sale of our securities and additional research grants.

On June 23, 2017, our shelf

registration statement (Registration No.

333-218608), which replaced our prior expiring shelf registration statement, was declared

effective by the SEC.

Under such replacement shelf registration statement, we can offer and sell up to $100 million of our securities.

Through December 31, 2019 we have sold approximately $12.6 million of securities under our shelf registration statement.

on our current market capitalization, we are limited to the use of our shelf registration statement by Item I.B.6 of Form S-3.

On July 30, 2019, we completed a firm commitment

underwritten public offering of our securities.

The offering resulted in net proceeds of approximately $6.6 million, after deducting

underwriting discounts and commissions and offering expenses.

The securities in this offering were sold pursuant to a registration

statement on Form S-1 (file no.

On September 23, 2020, our

shelf registration statement (Registration No.

333-248848), which replaced our prior expiring shelf registration statement, was

declared effective by the SEC.

Under such replacement shelf registration statement, we can offer and sell up to $100 million of

our securities.

Through September 30, 2020 we have not sold any securities under this registration statement.

Based on our current

market capitalization, we are limited to the use of our shelf registration statement by Item I.B.6 of Form S-3.

In July 2019, we completed a firm commitment underwritten public

offering of our securities.

The offering resulted in net proceeds of approximately $6.6 million, after deducting underwriting discounts

and commissions and offering expenses.

The securities in this offering were sold pursuant to a registration statement on Form S-1

333- 232273).

In January 2020, pursuant to the terms

of an inducement offer, certain holders of 5,555,554 of our common stock purchase warrants exercised their warrants at an exercise

price of $1.36 per share generating approximately $7.6 million of gross proceeds.

explained in the notes to our financial statements, if we are not able to raise additional funds when needed, there would continue

to be substantial doubt as to our ability to continue as a going concern.

The source, timing and availability of any future financing

will depend principally upon market conditions, interest rates and, more specifically, current and future progress in our exploratory,

preclinical and clinical development programs.

In January 2020, pursuant to the terms of an inducement offer, certain

holders of 5,555,554 of our common stock purchase warrants exercised their warrants at an exercise price of $1.36 per share generating

approximately $6.7 million of net proceeds.

In May 2020, we completed an offering 5,000,000 shares of our common

The offering resulted in net proceeds of approximately $4.4 million, after deducting placement agent discounts and commissions

and offering expenses.

The common stock was offered and sold pursuant to our shelf registration statement on Form S-3 (file no.

In May 2020, we received approximately $3.5 million from the exercise

of 2,871,296 outstanding common stock warrants at an exercise price of $1.23 per share.

explained in the notes to our condensed consolidated financial statements, there continues to be substantial doubt as to our ability

to continue as a going concern.

The source, timing and availability of any future financing will depend principally upon market

conditions, interest rates and, more specifically, current and future progress in our exploratory, preclinical and clinical development

Funding may not be available when needed, at all, or on terms acceptable to us.

Lack of necessary funds may require us, among other things, to delay, scale back or eliminate some or all of our research and product

development programs, planned clinical trials, and/or our capital expenditures or to license our potential products or technologies

to third parties.

Lack of necessary funds may require us,

among other things, to delay, scale back or eliminate some or all of our research and product development programs, planned clinical

trials, and/or our capital expenditures or to license our potential products or technologies to third parties.

Off-balance Sheet Arrangements

QUANTITATIVE AND QUALITATIVE DISCLOSURE

ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not Applicable.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis