PDS Biotechnology Corp 10-K

ITEM 9A. Controls and Procedures Limitations of Internal Control System Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures, (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), as of December 31, 2024. Based on that evaluation, management has concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. 107 Index Management's Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, our management has determined that our internal control over financial reporting was effective as of December 31, 2024. Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting in our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. Other Information During the three (3) months ended December 31, 2024, no director or officer adopted or terminated any contract, instruction or written plan for the purchase or sale of company securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act and/or any non-Rule 10b5-1 trading arrangement. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 108 Index PART III Certain information required by Part III is omitted from this Annual Report on Form 10-K because we intend to file a definitive Proxy Statement for the Annual Meeting of Stockholders pursuant to Regulation 14A of the Securities Exchange Act of 1934, not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and the applicable information included in the Proxy Statement is incorporated herein by reference. ITEM 10. Directors, Executive Officers and Corporate Governance The information required by this Item is incorporated herein by reference to the Proxy Statement. ITEM 11. Executive Compensation The information required by this Item is incorporated herein by reference to the Proxy Statement. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item is incorporated herein by reference to the Proxy Statement. ITEM 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item is incorporated herein by reference to the Proxy Statement. ITEM 14. Principal Accounting Fees and Services The information required by this Item is incorporated herein by reference to the Proxy Statement. PART IV ITEM 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this report: (1) Financial Statements: The information concerning our consolidated financial statements, and Report of Independent Registered Public Accounting Firm (PCAOB ID 185 ) required by this Item is incorporated by reference herein to the section of this Annual Report on Form 10-K in Item 8, entitled “Financial Statements and Supplementary Data”. (2) Financial Statement Schedules: All schedules have been omitted because the required information is not present or not present in amounts sufficient to require submission of the schedules, or because the information required is shown in the financial statements or the notes thereto. (3) Exhibits: The list of exhibits required by Item 601 of Regulation S-K is set forth in the Exhibit Index immediately preceding the signature page to this Annual Report on Form 10-K and is incorporated herein by reference. ITEM 16. Form 10-K Summary We may voluntarily include a summary of information required by Form 10-K under this Item 16. We have elected not to include such summary information. 109 Index Exhibit Number Exhibit Description 1.1 Placement Agency Agreement, dated February 26, 2025, between PDS Biotechnology Corporation and A,G,P./Alliance Global Partners (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 28, 2025, and incorporated by reference herein). 2.1 Agreement and Plan of Merger and Reorganization, dated November 23, 2018, by and among Edge Therapeutics, Inc., Echos Merger Sub, Inc. and PDS Biotechnology Corporation (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 26, 2018, and incorporated by reference herein). 2.2 Amendment No. 1 to Agreement and Plan of Merger and Reorganization, dated January 24, 2019, by and among Edge Therapeutics, Inc., Echos Merger Sub, Inc. and PDS Biotechnology Corporation (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 30, 2019, and incorporated by reference herein). 3.1 Eighth Amended and Restated Certificate of Incorporation of Edge Therapeutics, Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 6, 2015, and incorporated by reference herein). 3.2 Third Amended and Restated Bylaws of PDS Biotechnology Corporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 15, 2022, and incorporated by reference herein). 3.3 Certificate of Amendment to Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on March 18, 2019, and incorporated by reference herein). 3.4 Certificate of Amendment to Amended and Restated Certificate of Incorporation (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K on March 18, 2019, and incorporated by reference herein). 3.5 Certificate of Amendment to Amended and Restated Certificate of Incorporation (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on June 24, 2024, and incorporated by reference herein). 4.1 Form of Certificate of Common Stock (filed as Exhibit 4.1 to the Company’s Pre-Effective Amendment No. 1 to the registration statement on Form S-1 (File No. 333- 206416) filed on September 21, 2015, and incorporated by reference herein). 4.2 Description of Securities (filed as Exhibit 4.10 to the Company’s Annual Report on Form 10-K filed on March 27, 2020, and incorporated by reference herein). 4.3 Form of Indenture (filed as Exhibit 4.3 to the Company’s registration statement on Form S-3 (File No. 333-267041) on August 24, 2022, and incorporated by reference herein). 4.4 Form of Pre-Funded Warrant (February 2025 Offering) (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 28, 2025, and incorporated by reference herein). 4.5 Form of Common Warrant (February 2025 Offering) (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 28, 2025, and incorporated by reference herein). 10.1 Form of Warrant issued under the Venture Loan and Security Agreement, dated August 24, 2022 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q on November 14, 2022, and incorporated by reference herein). 10.2++ Venture Loan and Security Agreement, dated August 24, 2022, by and among Horizon Technology Finance Corporation, as a lender and collateral agent, Powerscourt Investments XXV, LP, as a lender, PDS Operating Corporation, as a guarantor, and PDS Biotechnology Corporation, as borrower (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q on November 14, 2022, and incorporated by reference herein). 110 Index 10.3 Clinical Trial Collaboration and Supply Agreement, dated May 19, 2017, by and between PDS Biotechnology Corporation and MSD International GmbH (filed as Exhibit 10.24 to the Company’s Registration Statement on Form S-4/A on January 25, 2019, and incorporated by reference herein). 10.4 Patent License Agreement, dated January 5, 2015, by and between PDS Biotechnology Corporation and National Institutes of Health, as amended by First Amendment, dated August 5, 2015 (filed as Exhibit 10.25 to the Company’s Registration Statement on Form S-4/A on January 25, 2019, and incorporated by reference herein). 10.5 Cost Reimbursement Agreement, dated November 1, 2015, by and between PDS Biotechnology Corporation and University of Kentucky Research Foundation (filed as Exhibit 10.27 to the Company’s Registration Statement on Form S-4/A on January 25, 2019, and incorporated by reference herein). 10.6 Public Health Service Cooperative Research & Development Agreement for Intramural-PHS Clinical Research, dated effective as of February 2, 2015, by and between the National Cancer Institute and PDS Biotechnology Corporation (filed as Exhibit 10.28 to the Company’s Registration Statement on Form S-4/A on January 25, 2019, and incorporated by reference herein). 10.7 DOTAP Chloride Enantiomer License Agreement effective November 1, 2008, between Merck Eprova AG and PDS Biotechnology Corporation (filed as Exhibit 10.29 to the Company’s Registration Statement on Form S-4/A on January 25, 2019, and incorporated by reference herein). 10.8++ License Agreement dated as of December 30, 2022 by and between Merck KGaA, Darmstadt, Germany and PDS Biotechnology Corporation (filed as Exhibit 10.9 to the Company’s Annual Report on Form 10-K on March 28, 2023, and incorporated by reference herein). 10.9 Share Transfer Agreement by and between PDS Biotechnology Corporation and Merck KGaA, Darmstadt, Germany. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on January 3, 2023, and incorporated by reference herein). 10.10+ PDS Biotechnology 2010 Equity Incentive Plan, and forms of agreement thereunder (filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-1/A on September 21, 2015, and incorporated by reference herein). 10.11+ Third Amended and Restated PDS Biotechnology Corporation 2014 Equity Incentive Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on July 17, 2023, and incorporated by reference herein). 10.12+ Employee Stock Option Agreement under the Third Amended and Restated PDS Biotechnology Corporation 2014 Equity Incentive Plan (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on December 9, 2020, and incorporated by reference herein). 10.13+ PDS Biotechnology Corporation 2009 Stock Option Plan, as amended (filed as Exhibit 99.1 to the Company’s Registration Statement on Form S-8 on June 4, 2019, and incorporated by reference herein). 10.14+ PDS Biotechnology Corporation 2018 Stock Option Plan (filed as Exhibit 99.2 to the Company’s Registration Statement on Form S-8 on June 4, 2019, and incorporated by reference herein). 10.15+ Form of PDS Biotechnology Corporation Option Agreement for the PDS Biotechnology Corporation 2009 Stock Option Plan, as amended (filed as Exhibit 99.3 to the Company’s Registration Statement on Form S-8 on June 4, 2019, and incorporated by reference herein). 10.16+ Form of PDS Biotechnology Corporation Option Agreement for the PDS Biotechnology Corporation 2018 Stock Incentive Plan (filed as Exhibit 99.4 to the Company’s Registration Statement on Form S-8 on June 4, 2019, and incorporated by reference herein). 111 Index 10.17+ PDS Biotechnology Corporation 2019 Inducement Plan, as amended (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 22, 2024, and incorporated by reference herein). 10.18+ Form of Stock Option Grant Notice and Stock Option Agreement under the 2019 Inducement Plan (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K on June 20, 2019, and incorporated by reference herein). 10.19+ Form of Indemnification Agreement for officers and directors (filed as Exhibit 10.9 to the Company’s Registration Statement on Form S-1 on August 14, 2015, and incorporated by reference herein). 10.20 Sublease Agreement, effective as of March 5, 2020, by and between PDS Biotechnology Corporation and COWI North America, Inc. (filed as Exhibit 10.37 to the Company’s Annual Report on Form 10-K filed on March 27, 2020, and incorporated by reference herein). 10.21++ Patent License Agreement dated as of November 5, 2021, by and between PDS Biotechnology Corporation and the U.S. Department of Health and Human Services, as represented by the National Cancer Institute (filed as Exhibit 10.19 to the Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated by reference herein). 10.22++ Option Agreement with University of Georgia Research Foundation, Inc. effective as of October 25, 2021 (filed as Exhibit 10.20 to the Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated by reference herein). 10.23+ PDS Biotechnology Corporation Change of Control Severance Plan effective as of March 14, 2022 (filed as Exhibit 10.21 to the Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated by reference herein) 10.24+++ Amended and Restated Executive Employment Agreement by and between Frank K. Bedu-Addo and PDS Biotechnology Corporation, effective as of March 14, 2022 (filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated by reference herein). 10.25+++ Executive Employment Agreement by and between Gregory Conn, Ph.D. and PDS Biotechnology Corporation, effective as of March 14, 2022 (filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K filed on March 31, 2022, and incorporated by reference herein). 10.26+++ Executive Employment Agreement by and between Lars Boesgaard and PDS Biotechnology Corporation, effective as of November 28, 2023 (filed as Exhibit 10.26 to the Company’s Annual Report on Form 10-K filed on March 28, 2024, and incorporated by reference herein). 10.27+++ Executive Employment Agreement by and between Kirk V. Shephard, M.D. and PDS Biotechnology Corporation, effective as of January 22, 2024 (filed as Exhibit 10.27 to the Company’s Annual Report on Form 10-K filed on March 28, 2024, and incorporated by reference herein). 10.28+++ Executive Employment Agreement by and between Spencer Brown and PDS Biotechnology Corporation, effective as of June 1, 2022 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 8, 2022, and incorporated herein by reference). 10.29+++ Executive Employment Agreement by and between Stephan F. Toutain and PDS Biotechnology Corporation, effective as of May 1, 2024 (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 15, 2024, and incorporated herein by reference). 10.30 Form of Securities Purchase Agreement, dated February 26, 2025, by and among PDS Biotechnology Corporation and the purchasers signatory thereto (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 28, 2025, and incorporated by reference herein). 112 Index 19 PDS Biotechnology Corporation Policy on Insider Trading (filed as Exhibit 19 to the Company’s Annual Report on Form 10-K filed on March 28, 2024, and incorporated by reference herein). 21.1 Subsidiary of PDS Biotechnology Corporation (filed as Exhibit 21.1 to the Company’s Annual Report on Form 10-K filed on March 28, 2024, and incorporated by reference herein). 23.1* Consent of KPMG LLP. 31.1* Principal Executive Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Principal Financial Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 32.2* Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 97 PDS Biotechnology Corporation Policy for Recovery of Erroneously Awarded Incentive Compensation (filed as Exhibit 97 to the Company’s Annual Report on Form 10-K filed on March 28, 2024, and incorporated by reference herein). 101.INS* Inline XBRL Instance Document (the 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 Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) + Indicates management contract or compensatory plan. * Filed herewith unless otherwise indicated as furnished herewith. ** Confidential Treatment has been requested with respect to certain portions of this Exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. ++ Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. 113 Index SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. PDS Biotechnology Corporation March 27, 2025 By: /s/ Frank Bedu-Addo Frank Bedu-Addo, Ph.D. President and Chief Executive Officer March 27, 2025 By: /s/ Lars Boesgaard Lars Boesgaard Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been signed by the following persons in the capacities indicated below and on the dates indicated: Signature Title Date /s/ Frank Bedu-Addo President and Chief Executive Officer and Director March 27, 2025 Frank Bedu-Addo, Ph.D. (Principal Executive Officer) /s/ Lars Boesgaard Chief Financial Officer March 27, 2025 Lars Boesgaard (Principal Financial and Accounting Officer) /s/ Gregory Freitag Director March 27, 2025 Gregory Freitag J.D., CPA /s/ Stephen Glover Director March 27, 2025 Stephen Glover /s/ Sir Richard Sykes Director March 27, 2025 Sir Richard Sykes /s/ Kamil Ali-Jackson Director March 27, 2025 Kamil Ali-Jackson /s/ Otis W. Brawley Director March 27, 2025 Otis W. Brawley /s/ Ilian Iliev Director March 27, 2025 Ilian Iliev 114 Index Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors PDS Biotechnology Corporation: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of PDS Biotechnology Corporation and subsidiary (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the years then ended, in conformity with U.S. generally accepted accounting principles. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has experienced net losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The 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 these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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 and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 audit, 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 audit 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 consolidated financial statements. Our audit 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 audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ KPMG LLP We have served as the Company’s auditor since 2019. Short Hills, New Jersey March 27, 2025 115 Index PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY Consolidated Balance Sheets December 31, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 41,689,591 $ 56,560,517 Prepaid expenses and other assets 3,364,852 2,494,558 Total current assets 45,054,443 59,055,075 Property and equipment, net 142,020 134,132 Financing lease right-of-use assets 162,194 200,873 Total assets $ 45,358,657 $ 59,390,080 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,684,868 $ 6,982,824 Accrued expenses 2,841,214 2,424,692 Notes payable - short term 12,500,000 4,166,667 Financing lease obligation - short term 61,119 55,794 Total current liabilities 17,087,201 13,629,977 Noncurrent liabilities: Note payable, net of debt discount 9,204,755 19,506,183 Financing lease obligation-long term 61,853 122,973 Total liabilities 26,353,809 33,259,133 Commitments and contingencies (Note 11) STOCKHOLDERS’ EQUITY Common stock, $ 0.00033 par value, 150,000,000 and 75,000,000 shares authorized at December 31, 2024 and December 31, 2023 , 37,987,380 shares and 33,094,521 shares issued and outstanding at December 31, 2024 and December 31, 2023 , respectively 12,536 10,921 Additional paid-in capital 201,103,311 170,620,641 Accumulated deficit ( 182,110,999 ) ( 144,500,615 ) Total stockholders’ equity 19,004,848 26,130,947 Total liabilities and stockholders’ equity $ 45,358,657 $ 59,390,080 See accompanying notes to the consolidated financial statements. 116 Index PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY Consolidated Statements of Operations and Comprehensive Loss Year Ended December 31, 2024 2023 Operating expenses: Research and development expenses $ 22,565,524 $ 27,762,784 General and administrative expenses 13,755,671 15,282,450 Total operating expenses 36,321,195 43,045,234 Loss from operations ( 36,321,195 ) ( 43,045,234 ) Interest income (expense), net Interest income 2,514,816 2,902,939 Interest expense ( 4,673,174 ) ( 4,205,922 ) Interest income (expense), net ( 2,158,358 ) ( 1,302,983 ) Loss before income taxes ( 38,479,553 ) ( 44,348,217 ) Benefit from income taxes 869,169 1,406,019 Net loss and comprehensive loss $ ( 37,610,384 ) $ ( 42,942,198 ) Per share information: Net loss per share, basic and diluted $ ( 1.03 ) $ ( 1.39 ) Weighted average common shares outstanding basic and diluted 36,452,707 30,952,060 See accompanying notes to the consolidated financial statements. 117 Index PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY Consolidated Statements of Changes in Stockholders’ Equity Common Stock Additional Accumulated Shares Issued Amount Paid-in Capital Deficit Total Equity January 1, 2023 30,170,317 $ 9,956 $ 145,550,491 $ ( 101,558,417 ) $ 44,002,030 Stock-based compensation expense – – 2,080,319 – 2,080,319 Issuances of common stock from the Sales Agreement, net 553,293 183 4,588,339 – 4,588,522 Net loss – – – ( 9,659,918 ) ( 9,659,918 ) Balance - March 31, 2023 30,723,610 $ 10,139 $ 152,219,149 $ ( 111,218,335 ) $ 41,010,953 Stock-based compensation expense – – 2,105,538 – 2,105,538 Issuances of common stock, from exercise of stock options 1,409 1 8,848 – 8,849 Issuance of common stock for consulting agreement 100,000 33 609,967 – 610,000 Issuances of common stock from the Sales Agreement, net 43,169 14 243,729 – 243,743 Net loss – – – ( 11,534,895 ) ( 11,534,895 ) Balance - June 30, 2023 30,868,188 $ 10,187 $ 155,187,231 $ ( 122,753,230 ) $ 32,444,188 Stock-based compensation expense – – 2,073,607 – 2,073,607 Issuances of common stock from the Sales Agreement, net 139,575 46 815,156 – 815,202 Net loss – – – ( 10,849,169 ) ( 10,849,169 ) Balance - September 30, 2023 31,007,763 $ 10,233 $ 158,075,994 $ ( 133,602,399 ) $ 24,483,828 Stock-based compensation expense – – 1,354,857 – 1,354,857 Issuances of common stock, from exercise of stock options 80,526 26 300,067 – 300,093 Issuance of common stock for consulting agreement 100,000 33 410,967 – 411,000 Issuances of common stock from the Sales Agreement, net 1,906,232 629 10,478,756 – 10,479,385 Net loss – – – ( 10,898,216 ) ( 10,898,216 ) December 31, 2023 33,094,521 $ 10,921 $ 170,620,641 $ ( 144,500,615 ) $ 26,130,947 Common Stock Additional Accumulated Shares Issued Amount Paid-in Capital Deficit Total Equity January 1, 2024 33,094,521 $ 10,921 $ 170,620,641 $ ( 144,500,615 ) $ 26,130,947 Stock-based compensation expense – – 1,630,011 – 1,630,011 Issuances of common stock from the Sales Agreement, net 3,428,681 1,131 19,493,342 – 19,494,473 Issuances of common stock, from exercise of stock options 156,073 52 531,039 – 531,091 Net loss – – – ( 10,603,477 ) ( 10,603,477 ) Balance - March 31, 2024 36,679,275 $ 12,104 $ 192,275,033 $ ( 155,104,092 ) $ 37,183,045 Stock-based compensation expense – – 1,795,722 – 1,795,722 Issuance of common stock for consulting agreement 100,000 33 266,967 – 267,000 Net loss – – – ( 8,327,897 ) ( 8,327,897 ) Balance - June 30, 2024 36,779,275 $ 12,137 $ 194,337,722 $ ( 163,431,989 ) $ 30,917,870 Stock-based compensation expense – – 1,778,272 – 1,778,272 Ammortization of issuance costs related to the Sales Agreement – – ( 67,179 ) – ( 67,179 ) Issuances of common stock, from exercise of stock options 40,535 13 98,487 – 98,500 Net loss – – – ( 10,726,658 ) ( 10,726,658 ) Balance - September 30, 2024 36,819,810 $ 12,150 $ 196,147,302 $ ( 174,158,647 ) $ 22,000,805 Stock-based compensation expense – – 1,644,188 – 1,644,188 Issuances of common stock, from exercise of stock options 59,465 20 144,480 – 144,500 Issuances of common stock from the Sales Agreement, net 1,108,105 366 3,167,341 – 3,167,707 Net loss – – – ( 7,952,352 ) ( 7,952,352 ) Balance - December 31, 2024 37,987,380 $ 12,536 $ 201,103,311 $ ( 182,110,999 ) $ 19,004,848 See accompanying notes to the financial statements. 118 Index PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY Consolidated Statements of Cash Flows Year Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 37,610,384 ) $ ( 42,942,198 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 6,848,193 7,614,321 Issuance of shares in consulting agreement 267,000 1,021,000 Amortization of debt discount 1,156,905 652,006 Depreciation expense 21,112 17,359 Operating lease expense - 160,685 Finance lease amortization expense 38,679 39,967 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 870,294 ) 165,672 Accounts payable ( 5,297,956 ) 5,763,537 Accrued expenses 416,522 ( 5,889,016 ) Operating lease liabilities - ( 239,469 ) Net cash used in operating activities ( 35,030,223 ) ( 33,636,136 ) Cash flows from investing activities: Purchase of equipment ( 29,000 ) - Net cash used in investing activities ( 29,000 ) - Cash flows from financing activities: Proceeds from exercise of stock options 774,091 308,942 Payments of finance lease obligations ( 55,795 ) ( 59,300 ) Payment of loan principal ( 3,125,000 ) - Proceeds from issuances of common stock, net of issuance costs 22,595,001 16,126,851 Net cash provided by financing activities 20,188,297 16,376,493 Net (decrease) increase in cash and cash equivalents ( 14,870,926 ) ( 17,259,643 ) Cash and cash equivalents at beginning of period 56,560,517 73,820,160 Cash and cash equivalents at end of period $ 41,689,591 $ 56,560,517 Supplemental information of cash and non-cash transactions: Cash paid for interest $ 3,556,662 $ 3,535,071 See accompanying notes to the consolidated financial statements. 119 Index PDS BIOTECHNOLOGY CORPORATION AND SUBSIDIARY Notes to Consolidated Financial Statements Note 1 – Nature of Operations PDS Biotechnology Corporation, a Delaware corporation (the “Company” or “PDS Biotech”), is a clinical-stage immunotherapy company developing a growing pipeline of molecularly targeted immunotherapies designed to overcome the limitations of current immunotherapy and vaccine technologies. The Company develops proprietary platforms designed to train and enable the immune system to attack and destroy disease; Versamune®, and Versamune® in combination with PDS01ADC for treatments in oncology and Infectimune® for treatments in infectious diseases. When paired with an antigen, which is a disease-related protein that is recognizable by the immune system, Versamune® and Infectimune® have both been shown to induce, in vivo , large quantities of high-quality, highly potent polyfunctional CD4 helper and CD8 killer T cells, a specific sub-type of T cell that is more effective at killing infected or target cells. PDS01ADC is a novel investigational tumor-targeting fusion protein of Interleukin 12 that enhances the proliferation, potency, infiltration and longevity of T cells in the tumor microenvironment and is therefore designed to overcome the limitations of cytokine therapy which today has resulted in high toxicity and limited therapeutic potential. Infectimune® is also designed to promote the induction of disease-specific neutralizing antibodies. The Company’s immuno-oncology product candidates are of potential interest for use as a component of combination product candidates (for example, in combination with other therapies such as immune checkpoint inhibitors) to provide more effective treatments across a range of advanced and/or refractory cancers. The Company is also evaluating its immunotherapies as monotherapies in early-stage disease. The Company is developing targeted product candidates to treat several cancers, including Human Papillomavirus (HPV) associated cancers, melanoma, colorectal, lung, breast and prostate cancers. The Company’s infectious disease candidate is of potential interest for use in universal influenza vaccines. The Company has received numerous patents, submitted patent applications and owns substantial know-how and trade secrets related to its Versamune® and PDS01ADC product platforms. As of March 1, 2025, the Company holds fourteen ( 14 ) U.S. patents with granted claims directed to its platform technology and twelve ( 12 ) pending U.S. patent applications. These issued patents will expire in 2026 to 2037. Should the more recently submitted patent applications currently in prosecution be issued, these will expire in 2033 through 2043 assuming no patent term extensions are granted. As of March 1, 2025, the Company holds seventy-seven ( 77 ) issued foreign patents and twenty-eight ( 28 ) pending or published foreign patent applications. Most of the Company’s international issued patents are issued in multiple countries including Europe, Japan and Australia, and all of which cover compositions of matter and methods of use related to its platform technology. These issued patents will expire in 2028-2038, or later if patent term extension applies. Included in the patents above is a patent protecting the use of Versamune® in combination wit h PDS01ADC. Licensed patents The Company has licensed patented antigens from the U.S. government for use in its cationic lipid immunotherapies. The Company has licensed T cell receptor gamma alternate reading frame protein (“TARP”) from the National Cancer Institute (“NCI”) to develop and commercialize TARP peptide-based therapies in combination with the Company’s Versamune® technology and any other of the Company’s proprietary technologies for prostate and breast cancers and acute myeloid leukemia. These patents are directed to immunogenic peptides and peptide derivatives for the treatment of prostate and breast cancer treatment and multi-epitope TARP peptide vaccine and uses thereof. These licensed antigens are incorporated in PDS0102 with Versamune®. The Company has licensed mucin-1 (“MUC1”) novel highly immunogenic agonist epitopes of MUC1 developed by the National Cancer Institute. MUC1 is highly expressed in multiple solid tumors and has been shown to be associated with drug resistance and poor disease prognosis in breast, colorectal, lung and ovarian cancers, for which PDS0103 is being developed. The Company has been granted patents and is pursuing additional patents that cover compositions and methods of use of cationic lipid immunotherapies with each of the licensed technologies. The Company entered into a non-exclusive agreement to license Computationally Optimized Broadly Reactive Antigen (COBRA) with the University of Georgia Research Foundation. These antigens are developed by Dr. Ted Ross at the University of Georgia. The Company believes the combination of these antigens along with its proprietary Versamune® technology has the potential to induce a broad immune response as a universal flu vaccine. Exclusive License Agreement On December 30, 2022, the Company entered into a License Agreement (the “License Agreement”) with Merck KGaA, Darmstadt, Germany, pursuant to which Merck KGaA, Darmstadt, Germany has granted the Company an exclusive (even as to Merck KGaA), worldwide, sublicensable, milestone and royalty-bearing right and license to certain patent rights and certain related data (the “Licensed Technology”) to develop, manufacture, use, commercialize and otherwise exploit any product containing NHS-IL12 fusion protein formerly known as M9241, now PDS01ADC. 120 Index In consideration for the rights granted by Merck KGaA, Darmstadt, Germany, the Company (i) agreed to make a one-time up-front cash payment of $ 5.0 million to Merck KGaA, Darmstadt, Germany, and (ii) entered into a Share Transfer Agreement dated December 30, 2022 (the “Share Transfer Agreement”), pursuant to which the Company issued 378,787 shares of its common stock to Merck KGaA, Darmstadt, Germany in a private placement for an aggregate value of $ 5.0 million, as measured by the closing price of the Company’s common stock on the Nasdaq Capital Market as of December 30, 2022. Pursuant to the License Agreement, the Company agreed to make certain commercial sales milestones and royalty payments. Note 2 – Summary of Significant Accounting Policies (A) Use of estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of expenses at the date of the consolidated financial statements and during the reporting periods, and to disclose contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates. The most significant estimate relates to the fair value of securities underlying stock-based compensation. (B) Significant risks and uncertainties: The Company’s operations are subject to a number of factors that may affect its operating results and financial condition. Such factors include, but are not limited to: the clinical and regulatory development of its products, the Company’s ability to preserve its cash resources, the Company’s ability to add product candidates to its pipeline, the Company’s intellectual property, the Company’s ability to complete clinical trials necessary to obtain regulatory product licenses, competition from products manufactured and sold or being developed by other companies, the price of, and demand for, Company products if approved for sale, the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, and the Company’s ability to raise capital. The Company currently has no commercially approved products. As such, there can be no assurance that the Company’s future research and development programs will be successfully commercialized. Developing and commercializing a product requires significant time and capital and is subject to regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and consultants and obtaining and protecting its intellectual property. (C) Cash equivalents and concentration of cash balance: The Company considers all highly liquid securities with a maturity of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. (D) Property and equipment: Property and equipment are recorded at cost. Depreciation is recorded for property and equipment using the straight-line method over the estimated useful life of five years . The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable. (E) Research and development: Costs incurred in connection with research and development activities are expensed as incurred. These costs include licensing fees to use certain technology in the Company’s research and development projects as well as fees paid to consultants and entities that perform certain research and testing on behalf of the Company. Under the terms of the License Agreement, the Company agreed to an initial payment of $ 5 million in cash and an additional $ 5 million in Company Stock, plus future milestone and royalty payments. The Company accounts for milestone payments as expenses in research and development and royalties are recorded as a reduction in revenues. (F) Patent costs: The Company expenses patent costs as incurred and classifies such costs as general and administrative expenses in the accompanying statements of operations and comprehensive loss. 121 Index (G) Stock-based compensation: The Company accounts for its stock-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees, directors and non-employees to be recognized as expense in the consolidated statements of operations and comprehensive loss based on their grant date fair values. In order to determine the fair value of stock options on the date of grant, the Company uses the Black-Scholes option-pricing model. Inherent in this model are assumptions related to expected stock-price volatility, option term, risk-free interest rate and dividend yield. While the risk-free interest rate and dividend yield are less subjective assumptions that are based on factual data derived from public sources, the expected stock-price volatility and option term assumptions require a greater level of judgment. The Company expenses the fair value of its stock-based compensation awards to employees and directors on a straight-line basis over the requisite service period, which is generally the vesting period. The Company recognizes forfeitures as they occur. (H) Net loss per common share: Basic net loss per common share is calculated by dividing the net loss by the weighted average number of common stock shares outstanding during the period. Diluted net loss per common share is the same as basic net loss per common share, because potentially dilutive securities would have an antidilutive effect as the Company incurred a net loss for the years ended December 31, 2024 and 2023. The potentially dilutive securities excluded from the determination of diluted loss per share as their effect is antidilutive, are as follows: Year Ended December 31, 2024 2023 Stock options to purchase common stock 5,373,063 5,029,345 Warrants to purchase common stock 426,913 466,112 Total 5,799,976 5,495,457 (I) Income taxes: The Company provides for deferred income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the future tax consequences attributable to net operating loss carryforwards and for differences between the financial statement carrying amounts and the respective tax bases of assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. (J) Fair value of financial instruments: ASC Topic 820, Fair Value Measurement Disclosures , specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: ● Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. ● Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies. ● Level 3 — Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. 122 Index (K) Leases: The Company determines if an arrangement is a lease at inception and recognizes the lease in accordance with ASC Topic 842, Leases. Both financing and operating leases are included in right-of-use (ROU) assets, lease obligations short-term and lease obligations long-term in the Company’s consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. The Company determines the portion of the lease liability that is current as the difference between the calculated lease liability at the end of the current period and the lease liability that is projected 12 months from the current period. (L) Subsequent events: Subsequent events have been evaluated through the date these financial statements were issued. See Note 15. (M) New accounting standards adopted: Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which improves the disclosures required for reportable segments in the Company’s annual and interim financial statements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this ASU for the annual period ended December 31, 2024 and the amendments have been applied retrospectively to all prior periods presented in these consolidated financial statements by expanding the disclosure of expenses included in segment measures of profitability. Refer to our segments disclosure in Note 14 – Segment Reporting for more information. Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosures of specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company has evaluated the impact that adopting this standard and does not believe it will have a material impact on the consolidated financial statements and disclosures. In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new guidance requires a public business entity to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the Statement of Operations and Comprehensive Loss. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that the new guidance will have on the Company’s consolidated financial statements. Note 3 – Liquidity and Capital Resources As of December 31, 2024, the Company had $ 41.7 million of cash and cash equivalents. The Company’s primary uses of cash are to fund operating expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted by the level of activities undertaken, as well as the timing of when the Company pays these expenses, as reflected in the change to the Company’s outstanding accounts payable and accrued expenses. Since inception, the Company has experienced net losses and negative cash flows from operations each fiscal year. The Company has no revenues and expects to continue to incur operating losses for the foreseeable future and may never become profitable. In addition, the Loan and Security Agreement allows for the lenders to call the outstanding balance of the term loans if the minimum cash balances outlined in the Loans and Security Agreement are not maintained. The Company has funded its operations through the sale of NOL’s, equity and/or debt financings such as the following: 123 Index In August 2022, the Company filed a shelf registration statement, or the 2022 Shelf Registration Statement, with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities, and units, which the Company refers to collectively as the Shelf-Securities, up to an aggregate amount of $ 150 million, $ 50 million of which covers the offer, issuance and sale by the Company of its common stock under the Sales Agreement (as discussed below). The 2022 Shelf Registration Statement was declared effective on September 2, 2022. In August 2022, the Company entered into an At Market Issuance Sales Agreement, or the Sales Agreement, with B. Riley Securities, Inc. and BTIG, LLC, each an Agent and collectively the Agents, with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, having an aggregate offering price of up to $ 50.0 million, or the Placement Shares, through or to the Agents, as sales agents or principals. Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, the Agents may sell the Placement Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended, including, without limitation, sales made through The Nasdaq Capital Market or on any other existing trading market for the Company’s common stock. The Agents will use commercially reasonable efforts to sell the Placement Shares from time to time, based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay the Agents a commission equal to three percent ( 3 %) of the gross sales proceeds of any Placement Shares sold through the Agents under the Sales Agreement, and the Company has also provided the Agents with customary indemnification and contribution rights. The Company is not obligated to make any sales of its common stock under the Sales Agreement. The offering of Placement Shares pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all Placement Shares subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms. In August 2024, the Company entered into an Amended and Restated At Market Issuance Sales Agreement, or the New Sales Agreement, with B. Riley Securities, Inc. and H.C. Wainwright & Co., LLC, with terms that are substantially consistent with those included in the original Sales Agreement. The New Sales Agreement superseded and replaced the Sales Agreement. For the year ended December 31, 2024, the Company sold 3,428,681 shares of common stock for a net value of $ 19.5 million pursuant to the Sales Agreement and 1,108,105 shares of common stock for a net value of $ 3.2 million pursuant to the New Sales Agreement. For the year ended December 31, 2023, the Company sold 2,642,269 shares of our common stock for a net value of $ 16.1 million pursuant to the Sales Agreement. As of the date of this Annual Report, in the first quarter of 2025, the Company sold 205,350 shares of common stock for a net value of $ 0.30 million pursuant to the New Sales Agreement. In August 2022, the Company entered into a venture loan and security agreement, or the Loan and Security Agreement, with Horizon Technology Finance Corporation, as lender and collateral agent for itself and the other lenders. The Loan and Security Agreement provides for the following 6 separate and independent term loans: (a) a term loan in the amount of $ 7,500,000 , or Loan A, (b) a term loan in the amount of $ 10,000,000 , or Loan B, (c) a term loan in the amount of $ 3,750,000 , or Loan C, (d) a term loan in the amount of $ 3,750,000 , or Loan D, (e) a term loan in the amount of $ 5,000,000 , or Loan E, and (f) a term loan in the amount of $ 5,000,000 , or Loan F, (with each of Loan A, Loan B, Loan C, Loan D, Loan E, and Loan F individually a Loan and collectively the Loans). Loan A, Loan B, Loan C, and Loan D were delivered to the Company on August 24, 2022. In total, the Company received $ 24.6 million in net proceeds. Loan E and Loan F were uncommitted Loans that could have been advanced by the lenders upon the parties agreement prior to July 31, 2023 upon the satisfaction of certain conditions. At this time the option to advance Loan E and Loan F has expired and Loan E and Loan F are no longer available to the Company under the Loan and Security Agreement. The Company may only use the proceeds of the Loans for working capital or general corporate purposes. Each Loan matures on the 48 -month anniversary following the applicable funding date unless accelerated pursuant to certain events of default. Payments on the principal balance began on October 1, 2024 and are paid monthly in the succeeding 24 months. The principal balance of each Loan bears a floating interest. The interest rate is calculated initially and, thereafter, each calendar month as the sum of (a) the per annum rate of interest from time to time published in The Wall Street Journal as contemplated by the Loan and Security Agreement, or any successor publication thereto, as the “ prime rate ” then in effect, plus (b) 5.75 %; provided that, in the event such rate of interest is less than 4.00 %, such rate shall be deemed to be 4.00 % for purposes of calculating the interest rate. Interest is payable on a monthly basis based on each Loan principal amount outstanding the preceding month. The Company, at its option upon at least ten ( 10 ) business days’ written notice to the lenders, may prepay all (and not less than all) of the outstanding Loan by simultaneously paying to each lender an amount equal to (i) any accrued and unpaid interest on the outstanding principal balance of the Loans; plus (ii) an amount equal to (A) if such Loan is prepaid on or before the Loan Amortization Date (as defined in the Loan and Security Agreement) applicable to such Loan, 3 % of the then outstanding principal balance of such Loan, (B) if such Loan is prepaid after the Loan Amortization Date applicable to such Loan, but on or before the date that is 12 months after such Loan Amortization Date, 2 % of the then outstanding principal balance of such Loan, or (C) if such Loan is prepaid more than 12 months after the Loan Amortization Date but prior to the stated maturity date applicable to such Loan, 1 % of the then outstanding principal balance of such Loan; plus (iii) the outstanding principal balance of such Loan; plus (iv) all other sums, if any, that shall have become due and payable thereunder. No prepayment premium will be applied to any outstanding balance of any Loan paid on the stated maturity date. 124 Index The Loan and Security Agreement contains customary representations, warranties and covenants, including maintenance of minimum cash balances as well as covenants by the Company limiting additional indebtedness, liens, including on intellectual property, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes. In April 2023, the Company received approximately $ 1.4 million from the net sale of tax benefits to an unrelated, profitable New Jersey corporation pursuant to the Company’s participation in the New Jersey Technology Business Tax Certificate Transfer NOL program for tax year 2021. In April 2024, the Company received approximately $ 0.9 million from the net sale of tax benefits to an unrelated, profitable New Jersey corporation pursuant to the Company’s participation in the New Jersey Technology Business Tax Certificate Transfer NOL program for tax year 2022. In February 2025, the Company entered into a Securities Purchase Agreement with certain purchasers, pursuant to which the Company agreed to sell an aggregate of 6,396,787 shares of common stock, pre-funded warrants to purchase up to an aggregate of 933,334 shares of common stock, and common stock warrants to purchase up to an aggregate of 7,330,121 shares of common stock at a combined purchase price of $ 1.50 per share and warrant (the “February 2025 Offering”). Two of the Company’s directors participated in the February 2025 Offering and purchased 30,121 shares of common stock in the aggregate at an offering price per share of $ 1.66 and common stock warrants to purchase 30,121 shares of common stock. The common stock warrants issued to the Company’s directors have an exercise price per share of $ 1.53 , but are otherwise identical to the common stock warrants issued to all other participants in the February 2025 Offering. Aggregate gross proceeds from the February 2025 Offering were approximately $ 11 million. Net proceeds to the Company from the offering, after deducting the placement agent fees and other estimated offering expenses payable by the Company, were approximately $ 10.05 million. The February 2025 Offering closed on February 28, 2025. Going Concern The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the filing of this Annual Report on Form 10-K in accordance with ASC Subtopic 205-40, Going Concern. Since inception, the Company has experienced net losses and negative cash flows from operations each fiscal year. The Company has no revenues and expects to continue to incur operating losses for the foreseeable future and may never become profitable. In addition, the Loan and Security Agreement allows for the lenders to call the outstanding balance of the term loans if the minimum cash balances outlined in the Loan and Security Agreement are not maintained. The Company’s budgeted cash requirements in 2025 and beyond include expenses related to continuin g development and clinical trials as well as payments on its debt . The Company plans to execute its operating plan by obtaining additional capital, principally through entering into collaborations, strategic alliances, or license agreements with third parties and/or additional public or private debt and equity financing. However, ther e is no assurance that additional capital and/or financing will be available to the Company, and even if available, whether it will be on terms acceptable to the Company or its existing shareholders or in the amounts required. The Company may also enter into government funding programs and consider selectively partnering for clinical development and commercialization. The sale of additional equity would result in additional dilution to the Company’s stockholders. Incurring debt financing would result in debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict its operations. If the Company is unsuccessful in securing sufficient financing, it may need to delay, reduce, or eliminate its research and development programs, which could adversely affect its business prospects, grant rights to third parties to develop and market immunotherapies that the Company would otherwise prefer to develop and market itself or cease operations. Any of these actions could harm its business, results of operations and prospects. Failure to obtain adequate financing also may adversely affect the Company’s ability to operate as a going concern. As a result of these uncertainties, and as its plans are outside of management’s control, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of the issuance of these audited consolidated financial statements. The audited consolidated financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities that would result if the Company was unable to continue as a going concern. 125 Index Note 4 – Fair Value of Financial Instruments There were no transfers between Levels 1, 2, or 3 during the years ended December 31, 2024 or 2023. Fair Value Measurements at Reporting Date Using Total Quoted Prices in Active Markets (Level 1) Quoted Prices in Inactive Markets (Level 2) Significant Unobservable Inputs (Level 3) As of December 31, 2024: Cash and cash equivalents $ 41,689,591 $ 41,689,591 $ – $ – As of December 31, 2023: Cash and cash equivalents $ 56,560,517 $ 56,560,517 $ – $ – The carrying value of the Loan and Security Agreement approximated its fair value at December 31, 2024 and December 31, 2023 due to its variable rate. The fair value of the Company ’ s long-term debt is based on Level 2 inputs. Note 5 – Property and Equipment Property and equipment is summarized as follows: December 31, 2024 2023 Furniture and equipment $ 14,964 $ 14,964 Computer and Telephone equipment 13,545 13,545 Lab equipment 267,402 238,402 Total furniture and equipment 295,911 266,911 Less accumulated depreciation ( 153,891 ) ( 132,779 ) Property and equipment, net $ 142,020 $ 134,132 Depreciation expense for the years ended December 31, 2024 and 2023 was $ 21,112 and $ 17,359 , respectively. Note 6 – Leases Operating and Financing Leases Effective March 5, 2020, the Company entered into a sublease for approximately 11,200 square feet of office space located at 25B Vreeland Road, Suite 300, Florham Park, New Jersey. The sublease commenced on May 1, 2020 with a term of forty ( 40 ) months and an option to renew through October 31, 2027. The sublease term expired on August 31, 2023, and was not renewed. Upon inception of the sublease, the Company recognized approximately $ 0.7 million of ROU assets and operating lease liabilities . The discount rate used to measure the operating lease liability as of May 1, 2020 was 9.15 %. Throughout the period described above, the Company has maintained, and continues to maintain, a month-to-month lease for its research facilities at the Princeton Innovation Center BioLabs located at 303A College Road E, Princeton New Jersey. Supplemental cash flow information related to operating leases is as follows: Year Ended December 31, 2024 2023 Cash paid for operating lease liabilities $ – $ 239,469 Financing Lease The Company has financed certain laboratory equipment as follows: Year Ended December 31, 2024 2023 Cash paid for finance lease liabilities $ 69,850 $ 78,146 126 Index Maturity of the Company’s financing lease liabilities is as follows: Year ended December 31, 2025 $ 69,850 2026 40,108 2027 26,723 2028 and after 1 Total future minimum lease payments 136,682 Less imputed interest ( 13,710 ) Remaining lease liability $ 122,972 The Company entered into four financing leases for laboratory equipment with a total cost of $ 251,959 with four to five-year terms and a capitalized interest rate of 9.15 %. Each of the lease agreements include a bargain purchase option to acquire the equipment at the end of the lease term. The aggregate monthly payments are approximately $ 6,000 . During the year ended December 31, 2023, the Company exercised a bargain purchase option, which resulted in recognition of property and equipment of $ 151,490 . Finance lease amortization expense for the years ended December 31, 2024 and 2023 was $ 38,679 and $ 39,967 , respectively. Note 7 – Accrued Expenses Accrued expenses consist of the following: December 31, 2024 2023 Accrued research and development costs $ 1,267,627 $ – Accrued professional fees 657,498 827,863 Accrued compensation 663,399 1,289,690 Accrued interest on debt 252,322 306,771 Accrued rent 368 368 Total $ 2,841,214 $ 2,424,692 Note 8 – Stock-Based Compensation In 2014, the Company’s stockholders approved the 2014 Equity Incentive Plan (the “Original Plan”) pursuant to which the Company may grant up to 91,367 shares as ISOs, NQs and restricted stock units (“RSUs”), subject to increases as hereafter described (the “Plan Limit”). In addition, on January 1, 2015, and each January 1 thereafter and prior to the termination of the 2014 Equity Incentive Plan, pursuant to the terms of the Original Plan, the Plan Limit was and shall be increased by the lesser of (x) 4 % of the number of shares of Common Stock outstanding as of the immediately preceding December 31 and (y) such lesser number as the Board of Directors may determine in its discretion. In March 2019, the Board adopted and the Company’s stockholders approved the Amended and Restated PDS Biotechnology Corporation 2014 Equity Incentive Plan (the “Prior Plan”) which amended and restated the Original Plan in order to remove the annual increase component and was limited to 826,292 shares. On December 8, 2020, the Board adopted and on June 17, 2021, the stockholders approved, the Second Amended and Restated PDS Biotechnology Corporation 2014 Equity Incentive Plan (the “Restated Plan”), which amended and restated the Prior Plan. The Restated Plan is identical to the Prior Plan in all material respects, except (a) the number of shares of Common Stock authorized for issuance under the Restated Plan was increased from 826,292 shares to 4,165,535 shares, plus the total number of shares that remained available for issuance, that were not covered by outstanding awards issued under the Prior Plan, immediately prior to December 8, 2020; and (b) the Restated Plan was amended to terminate on December 7, 2030, unless earlier terminated. On July 14, 2023, the Company’s stockholders approved an amendment to the Restated Plan, increasing the number of shares of common stock for issuance from 4,165,535 to 6,565,535 shares. As of December 31, 2024 , there were 2,301,167 shares available for grant under the Restated Plan. In 2018, the Company’s stockholders approved the 2018 Stock Incentive Plan pursuant to which the Company may grant up to 558,071 shares as (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Preferred Stock, (v) Stock Reload Options and/or (vi) Other Stock-Based Awards. As of December 31, 2024, there were 190,799 shares available for grant under the 2018 Stock Incentive Plan. 127 Index Pursuant to the terms of the Plans, ISOs have a term of ten years from the date of grant or such shorter term as may be provided in the option agreement. Unless specified otherwise in an individual option agreement, ISOs generally vest over a four-year period. Unless terminated by the Board, the Plans shall continue to remain effective for a term of ten years or until such time as no further awards may be granted and all awards granted under the Plans are no longer outstanding. On June 17, 2019, the Board adopted the 2019 Inducement Plan (the “Inducement Plan”). On December 8, 2020, the Company amended the Inducement Plan solely to increase the total number of shares of common stock reserved for issuance under the Inducement Plan from 200,000 shares to 500,000 shares. On May 17, 2022, the Company further amended the Inducement Plan solely to increase the total number of shares of Common Stock reserved for issuance under the Inducement Plan from 500,000 shares to 1,100,000 shares. On January 22, 2024, the Company further amended the Inducement Plan solely to increase the total number of shares of Common Stock reserved for issuance under the Inducement Plan from 1,100,000 shares to 2,100,000 shares. The Inducement Plan provides for the grant of non-qualified stock options. The Inducement Plan, and each amendment thereto, was recommended for approval by the Compensation Committee of the Board and subsequently approved and adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules . The Inducement Plan is administered by the Compensation Committee of the Board. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, non-qualified stock options under the Inducement Plan may only be made to an employee who has not previously been an employee of the Company or member of the Board of Directors of the Company (or any parent or subsidiary of the Company), if he or she is granted such non-qualified stock options in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. As of December 31, 2024, there were 962,407 shares available for grant under the Inducement Plan. The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Research and development $ 2,358,795 $ 3,013,326 General and administrative 4,489,397 4,600,995 Total $ 6,848,193 $ 7,614,321 The following table summarizes the stock option activity for the Company’s stock option plans for the year ended December 31, 2024: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Balance at January 1, 2024 5,029,345 $ 6.43 7.42 4,395,227 Granted 1,199,648 $ 5.11 9.20 – Exercised ( 256,073 ) $ 3.02 – – Forfeited ( 599,857 ) $ 8.40 – – Expired – – – – Options outstanding at December 31, 2024 5,373,063 $ 6.08 7.11 $ 50,439 Vested and expected to vest at December 31, 2024 5,373,063 $ 6.08 7.11 $ 50,439 Exercisable at December 31, 2024 3,296,498 $ 5.88 6.14 $ 50,439 As of December 31, 2024 there was approximately $ 10,633,050 of unamortized stock compensation expense, which is expected to be recognized over a remaining average vesting period of 2.54 years. The weighted-average grant date fair value of the stock options granted in 2024 was $ 4.70 per share. 128 Index The fair value of options granted during the year ended December 31, 2024 and 2023 were estimated using the Black-Scholes option valuation model utilizing the following assumptions: Year Ended December 31, 2024 2023 Weighted Average Volatility 136.89 % 142.84 % Risk-Free Interest Rate 4.04 % 4.14 % Expected Term in Years 6.06 6.06 Dividend Rate – – Fair Value of Option on Grant Date $ 4.70 $ 9.59 Expected volatility . The expected volatility assumption was changed on January 1, 2023 from using volatilities of a peer group of similar companies in the biotechnology industry whose share prices were publicly available, to using the volatility of the Company’s historical share price performance over the contractual term of the options. Risk-free interest rate . The risk-free interest rate assumption is based on observed interest rates appropriate for the expected term of the stock option grants. Expected term. The expected term represents the period options are expected to be outstanding. The expected term of the options is based on using the simplified method, which is the midpoint between the requisite service period and the contractual term of the option, since the Company has a limited history of being a public company to develop reasonable expectations about future exercise patterns and employment duration for the stock options grants. Expected dividend rate . The expected dividend yield assumption is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. During the year ended December 31, 2023, the Company entered into a Common Stock Purchase Agreement, dated October 11, 2023, with DC Consulting LLC (“DC”) and a Common Stock Purchase Agreement, dated April 12, 2023, with DC, pursuant to which the Company issued DC an aggregate of 200,000 shares of common stock as partial compensation for consulting services provided by DC to the Company pursuant to the Consulting Agreement, dated October 11, 2023, with DC and the Consulting Agreement, dated April 12, 2023, with DC. During the year ended December 31, 2024, the Company entered into a Common Stock Purchase Agreement, dated June 17, 2024, with DC, pursuant to which the Company issued DC 100,000 shares of common stock as partial consideration for consulting services provided by DC to the Company pursuant to the Consulting Agreement, dated June 17, 2024, with DC. On February 25, 2025, the Company entered into a Common Stock Purchase Agreement, with DC, pursuant to which the Company issued DC 100,000 shares of common stock as partial consideration for the consulting services provided by DC to the Company pursuant to the Consulting Agreement, dated February 25, 2025, with DC. Note 9 – Stockholders’ Equity Preferred Stock The Company currently has 5,000,000 shares of preferred stock authorized. Voting Shares of preferred stock may be issued in one or more series, from time to time, with each such series to consist of such number of shares and to have such voting powers relative to other classes or series of preferred stock, if any, or common stock, full or limited or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and such qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issuance of such series adopted by the Company’s Board of Directors. Common Stock The Company currently has 150,000,000 shares of common shares authorized. Voting Each holder of a share of common stock is entitled to one vote for each share of common stock. Dividends Dividends may be declared and paid as and when determined by the Board of Directors and subject to any preferential dividend rights of any then outstanding preferred stock. 129 Index Preemptive Rights. The holders of common stock shall have no preemptive rights to subscribe for any shares of any class of stock of the Company whether now or hereafter authorized. Liquidation Rights Upon the dissolution or liquidation of the Company, whether voluntary or involuntary, holders of the common stock will be entitled to receive all assets of the Company available for distribution to its stockholders, subject to any preferential rights of any then outstanding preferred stock. Note 10 – Income Taxes A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective tax rate is as follows: December 31, 2024 2023 Federal statutory rate 21.0 % 21.0 % State taxes 2.2 % 7.9 % Extraordinary gain 0.0 % 0.0 % Permanent differences ( 6.0 )% ( 0.9 )% Research and development 3.6 % 4.1 % State Taxes/Sale of NOL 2.3 % 3.2 % Valuation Allowance ( 20.8 )% ( 32.1 )% Other 0.0 % 0.0 % Effective tax rate 2.3 % 3.2 % The tax effects of temporary differences that give rise to significant portions of the deferred tax assets were as follows: December 31, 2024 2023 Federal net operating losses $ 33,122,997 $ 28,599,086 State net operating losses 4,575,782 4,648,978 Stock options 3,649,378 4,668,417 Federal tax credit 6,128,255 4,730,921 State tax credits 748,597 582,605 Research and Development Capitalization (IRC 174) 13,189,388 10,017,958 License Agreement 2,491,266 2,639,961 Amortization 17,571 23,131 Accrued expense 106 104 Depreciation 727,367 725,305 Lease liabilities 35,349 50,564 Other 15,623 15,374 Total gross deferred tax assets 64,701,679 56,702,404 Less valuation allowance ( 64,655,056 ) ( 56,645,587 ) Deferred tax assets, net $ 46,623 $ 56,817 Right of use asset $ ( 46,623 ) $ ( 56,817 ) Total gross deferred tax liabilities ( 46,623 ) ( 56,817 ) Deferred tax, net $ – $ – In assessing the realizability of the net deferred tax assets, the Company considers all relevant positive and negative evidence to determine whether it is more likely than not that some portion of the deferred income tax will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. At December 31, 2024 and 2023, the Company has recorded a full valuation allowance against its net deferred tax assets of approximately $ 64.7 and $ 56.6 million, respectively. The change in the valuation allowance during the year ended 2024 was approximately $ 8.0 million. 130 Index The Tax Cuts and Jobs Act of 2017 (TCJA) has modified the IRC 174 expenses related to research and development for the tax years beginning after December 31, 2021. Under the TCJA, the Company must now capitalize the expenditures related to research and development activities and amortize over five years for U.S. activities and 15 years for non-U.S. activities using a mid-year convention. Therefore, the capitalization of research and development costs in accordance with IRC 174 resulted in a deferred tax asset of $ 13.2 million and $ 10.0 million as of December 31, 2024 and 2023, respectively. At December 31, 2024, the Company had federal net operating loss (“NOL”) carryforwards of approximately $ 157.7 million. At December 31, 2024, the Company had federal research and development credit carryforwards of approximately $ 6.1 million. The federal net operating loss carryforwards begin to expire in 2028, losses generated in 2018 or later of $ 127.8 million will carry forward indefinitely. The federal credit carryforwards begin to expire in 2032 . Section 382 and 383 of the Internal Revenue Code of 1986 subject the future utilization of net operating losses and certain other tax attributes, such as research and experimental tax credits, to an annual limitation in the event certain ownership changes, as defined. The Company may be subject to the net operating loss utilization provisions of Section 382 of the Internal Revenue Code. The effect of an ownership change would be the imposition of an annual limitation on the use of NOL carryforwards attributable to periods before the change. The amount of the annual limitation depends upon the value of the Company immediately before the change, changes to the Company’s capital during a specified period prior to the change, and the federal published interest rate. Although the Company has not completed an analysis under Section 382 of the Code, it is likely that the utilization of the NOLs will be limited. At December 31, 2024, the Company had approximately $ 67.2 million of State of New Jersey NOLs which expire between 2029 and 2043 . At December 31, 2024, the Company had approximately $ 0.9 million of the State of New Jersey research development credits carryforwards. The State of New Jersey has enacted legislation permitting certain corporations located in New Jersey to sell state tax loss carryforwards and state research and development credits, or net loss carryforwards. The Technology Business Tax Certificate Transfer Program enables qualified, unprofitable NJ-based technology or biotechnology companies with fewer than 225 US employees (including the parent company and all subsidiaries) to sell a percentage of New Jersey NOLs and research and development (“R&D”) tax credits to unrelated profitable corporations. In 2024, the Company sold New Jersey NOL carryforwards and R&D Credits, resulting in the recognition of $ 0.9 million of income tax benefit, net of transaction costs. There is no certainty as to whether this program will continue. Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2024, there were no uncertain positions. The Company’s U.S. federal and state net operating losses have occurred since its inception in 2009 and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. The Company did no t have any unrecognized tax benefits and has no t accrued any interest or penalties for the years ended December 31, 2024 and 2023. Note 11 – Commitments and Contingencies Rent For the years ended December 31, 2024 and 2023, rent was $ 264,000 and $ 264,000 , respectively, for month-to-month arrangements not impacted by the adoption of ASC 842. Exclusive License Agreement Pursuant to the Merck KGaA License Agreement, the Company agreed to make (i) development and first commercial sales milestone payments totaling up to $ 11 million upon the achievement of certain milestones, including the dosing of the fifth patient in a Phase 3 clinical trial of the clinical candidate and first commercial sale of the product for a first and second indication in a major market, and (ii) up to $ 105 million upon achieving certain aggregate sales levels of the product. The Company also agreed to pay Merck KGaA, Darmstadt, Germany a royalty of 10 % on aggregate net sales of product as specified in the Merck KGaA License Agreement on a product-by-product and country-by-country basis until the later of: (i) ten years after the first commercial sale of a product in a given country; and (ii) the expiration or invalidation of the licensed patents covering the compound or product in such country. The royalty rate is subject to reduction in that event that a product is not covered by a valid patent claim, a biosimilar to the compound or the product comes on the market in a particular country, or if the Company obtains a license to any intellectual property owned or controlled by a third-party which but for such license would be infringed by making, using or selling the compound. 131 Index Legal Proceedings The Company may be involved, from time to time, in legal proceedings and claims arising in the ordinary course of its business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. While there can be no assurances as to the ultimate outcome of any legal proceeding or other loss contingency involving the Company, management does not believe any pending matter will be resolved in a manner that would have a material adverse effect on its financial position, results of operations or cash flows. Note 12 – Venture Loan and Security Agreement In August 2022, the Company entered into a Venture loan and security agreement (the “Loan and Security Agreement”) with Horizon Technology Finance Corporation, as a lender and collateral agent for itself and the other Lenders (in such capacity, the “Collateral Agent”), and the other persons party thereto from time to time as lenders (“Lenders”). Term loan Amounts . The Loan and Security Agreement provides for the following six ( 6 ) separate and independent term loans: (a) a term loan in the amount of $ 7,500,000 (“Loan A”), (b) a term loan in the amount of $ 10,000,000 (“Loan B”), (c) a term loan in the amount of $ 3,750,000 (“Loan C”), (d) a term loan in the amount of $ 3,750,000 (“Loan D”), (e) a term loan in the amount of $ 5,000,000 (“Loan E”), and (f) a term loan in the amount of $ 5,000,000 (“Loan F”) (with each of Loan A, Loan B, Loan C, Loan D, Loan E, and Loan F, individually a “Loan” and, collectively, the “Loans”). Loan A, Loan B, Loan C, and Loan D were delivered to the Company on August 24, 2022. Loan E and Loan F were uncommitted Loans that could have been advanced by the Lenders upon the parties agreement prior to July 31, 2023 upon the satisfaction of certain conditions. At this time the option to advance Loan E and Loan F has expired and Loan E and Loan F are no longer available to the Company under the Loan and Security Agreement. The Company may only use the proceeds of the Loans for working capital or general corporate purposes. Maturity . Each Loan matures on the 48-month anniversary following the applicable date on which a Loan is made to or on account of the Company under the Loan and Security Agreement (the “Maturity Date”) unless accelerated pursuant to agreed upon events of default. All amounts outstanding under each Loan will be due and payable upon the earlier of the Maturity Date or the acceleration of the loans and commitments upon an event of default. Payments on the principal balance began on October 1, 2024 and are paid monthly in the succeeding 24 months. Interest Rate . The principal balance of each Loan bears a floating interest. The interest rate is calculated initially and, thereafter, each calendar month as the sum of (a) the per annum rate of interest from time to time published in The Wall Street Journal as contemplated by the Loan and Security Agreement, or any successor publication thereto, as the “ prime rate ” then in effect, plus (b) 5.75 %; provided that, in the event such rate of interest is less than 4.00 %, such rate shall be deemed to be 4.00 % for purposes of calculating the interest rate. Interest is payable on a monthly basis based on each Loan principal amount outstanding the preceding month. Amortization. Each Loan shall commence amortization upon the date set forth on the promissory note executed in connection with the respective Loan, upon which the Company is required to commence making equal payments of principal plus accrued interest on the outstanding principal amount of the respective Loan (the “Loan Amortization Date”) and continuing thereafter on the first business day of each calendar month through the Maturity Date. Prepayment Premium. The Company may, at its option upon at least ten ( 10 ) business days’ written notice to the Lenders, prepay all (and not less than all) of the outstanding Loan by simultaneously paying to each Lender an amount equal to (i) any accrued and unpaid interest on the outstanding principal balance of the Loans; plus (ii) an amount equal to (A) if such Loan is prepaid on or before the Loan Amortization Date applicable to such Loan, three percent ( 3 %) of the then outstanding principal balance of such Loan, (B) if such Loan is prepaid after the Loan Amortization Date applicable to such Loan, but on or before the date that is twelve ( 12 ) months after such Loan Amortization Date, two percent ( 2 %) of the then outstanding principal balance of such Loan, or (C) if such Loan is prepaid more than twelve ( 12 ) months after the Loan Amortization Date but prior to the stated Maturity Date applicable to such Loan, one percent ( 1 %) of the then outstanding principal balance of such Loan; plus (iii) the outstanding principal balance of such Loan; plus (iv) all other sums, if any, that shall have become due and payable hereunder. No prepayment premium will be applied to any outstanding balance of any Loan paid on the stated Maturity Date. Security . The Company’s obligations are secured by a security interest in all of the assets of the Company, subject to limited exceptions and excluding the Company’s intellectual property. 132 Index Covenants; Representations and Warranties; Other Provisions . The Loan and Security Agreement contains customary representations, warranties and covenants, including maintenance of minimum cash balances as well as covenants by the Company limiting additional indebtedness, liens, including on intellectual property, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes. As of December 31, 2024, the Company is in compliance with all covenants in all material respects. Default Provisions . The Loan and Security Agreement provides for events of default customary for term loans of this type, including but not limited to non-payment, breaches or defaults in the performance of covenants, insolvency, and bankruptcy by and/or of the Company. Warrant and Debt Discount. In connection with the Loan and Security Agreement, the Company issued Horizon Technology Finance Corporation and Powerscourt Investments XXV, LP warrants to purchase an aggregate total of 381,625 shares of the Company’s common stock at an initial exercise price of $ 3.6685 per share. Each warrant is classified as equity and is exercisable at any time for a period beginning on the date of grant and ending on the earlier of (A) 10 years from the date of grant, and (B) the closing of (A) (i) the sale, lease, exchange, conveyance or other disposition of all or substantially all of the Company’s property or business, or (ii) its merger into or consolidation with any other corporation (other than a wholly-owned subsidiary of the Company), or any transaction (including a merger or other reorganization) or series of related transactions, in which more than 50 % of the voting power of the Company is disposed of, in each case, for cash or for marketable securities meeting certain requirements as described in the applicable warrants. The key assumptions used in Black-Scholes option pricing model were (i) expected term of 10 years , (ii) a risk-free rate of 3.11 %, (iii) expected volatility of 93.8 %, (iv) and no estimated dividend yield. In addition, the Company incurred third-party and lender fees of $ 449,329 . These proceeds were allocated on a basis that approximates the relative fair value method. The fair value of the warrant and fees incurred were recorded as a debt discount and are being recognized as interest expense over the life of the Loan and Security Agreement using the effective interest method. The unamortized debt discount was $ 1,107,745 as of December 31, 2024. For the year ended December 31, 2024 and 2023 the Company recognized interest expense of $ 4,659,118 and $ 4,187,075 , respectively, of which $ 1,156,905 and $ 652,006 , respectively was related to the amortization of the debt discount for each of the years. Note 13 – Retirement Plan The Company has a 401(k) defined contribution plan for the benefit for all employees and permits voluntary contributions by employees subject to IRS-imposed limitations. The Company’s 401(k) employer cash contribution match for the years ended December 31, 2024 and December 31, 2023 $ 178,817 and $ 181,439 , respectively. Note 14 – Segment Reporting In accordance with FASB ASC Topic 280, Segment Reporting , the Company has determined that it operates as a single reportable segment, developing a growing pipeline of targeted immunotherapies designed to overcome the limitations of current immunotherapy. The financial results of the Company’s operations are managed and reported to the Chief Executive Officer who is considered the Company’s chief operating decision maker (CODM), on a consolidated basis. The CODM assesses performance and allocates resources based on the Company’s consolidated statements of operations and key components and processes of the Company’s operations are managed centrally. Segment asset information is not used by the CODM to allocate resources. As a single reportable segment entity, the Company’s segment performance measure is net income / (loss) attributable to shareholders. Significant segment expenses, as provided to the CODM, are presented below: Year Ended December 31, 2024 2023 Segment expenses Salaries and benefits $ 15,282,537 $ 16,979,251 Professional fees 4,819,562 5,530,998 General administrative expenses 1,438,833 1,689,772 Clinical development expenses 8,299,589 12,055,623 Other development expenses 6,480,674 6,789,590 Total operating and segment expenses $ 36,321,195 $ 43,045,234 Interest income 2,514,816 2,902,939 Interest expense ( 4,673,174 ) ( 4,205,922 ) Benefit from income taxes 869,169 1,406,019 Segment and consolidated net loss $ ( 37,610,384 ) $ ( 42,942,198 ) 133 Index Note 15 – Subsequent Events As of the date of this Annual Report, during the first quarter of 2025, the Company sold 205,350 shares of common stock for net proceeds of $ 0.30 million pursuant to the New Sales Agreement . In February 2025, the Company entered into a Securities Purchase Agreement with certain purchasers, pursuant to which the Company agreed to sell an aggregate of 6,396,787 shares of common stock, pre-funded warrants to purchase up to an aggregate of 933,334 shares of common stock, and common stock warrants to purchase up to an aggregate of 7,330,121 shares of common stock at a combined purchase price of $ 1.50 per share and warrant (the “February 2025 Offering”). Two of the Company’s directors participated in the February 2025 Offering and purchased 30,121 shares of common stock in the aggregate at an offering price per share of $ 1.66 and common stock warrants to purchase 30,121 shares of common stock. The common stock warrants issued to the Company’s directors have an exercise price per share of $ 1.53 , but are otherwise identical to the common stock warrants issued to all other participants in the February 2025 Offering. Aggregate gross proceeds from the February 2025 Offering were approximately $ 11 million. Net proceeds to the Company from the offering, after deducting the placement agent fees and other estimated offering expenses payable by the Company, were approximately $ 10.05 million. The February 2025 Offering closed on February 28, 2025. 134