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Item 7. Management’s Discussion and Analysis

2024-08-13 compared with 2023-07-31 · 251 added, 142 removed, 132 unchanged (75% of the section changed)

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We are a biotechnology company focused on developing

and preparing to commercialize cellular therapies for cancer, diabetes and malignant ascites based upon our proprietary cellulose-based

live cell encapsulation technology we refer to as Cell-in-a-Box ® .

We are working to advance clinical research and development

of new cellular-based therapies in oncology and diabetes.

We are actively engaged preparing for a clinical

trial in LAPC using encapsulated live cells like those used in the previous Phase 1/2 and Phase 2 clinical trials discussed above.

and preparing to commercialize cellular therapies for cancer based upon our proprietary cellulose-based live cell encapsulation technology

we refer to as Cell-in-a-Box ® .

We are working to advance clinical research and development of new cellular-based therapies

We are engaged preparing for a clinical trial

in LAPC using encapsulated live cells.

On September 1, 2020, we submitted an IND to the

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must do to have the clinical hold lifted.

To address our clinical hold, we assembled a team

of regulatory and scientific experts to respond to the items requested by the FDA.

That team has been working to complete the list of

items requested by the FDA.

For a complete discussion of what the FDA requires of us and the efforts we have undertaken to lift the clinical

hold, see Item 1.

To address our clinical hold, we assembled a

team of regulatory and scientific experts to respond to the items requested by the FDA.

That team has been working to complete the list

of items requested by the FDA.

For a complete discussion of what the FDA requires of us and the efforts we have undertaken to lift the

clinical hold, see Item 1.

Business under the Section entitled, “Clinical Hold” of this Report.

We are also developing a way to delay the production

and accumulation of malignant ascites that results from many types of abdominal cancerous tumors.

Our therapy for malignant ascites involves

using the same encapsulated cells we employ for pancreatic cancer but placing the encapsulated cells in the peritoneal cavity of a patient

and administering ifosfamide intravenously.

In addition to these cancer programs, we have

also been considering ways to exploit the benefits of the Cell-in-a-Box ® technology to develop therapies for cancer that

involve prodrugs based upon certain constituents of the Cannabis plant.

However, until the FDA allows us to commence our clinical

trial in LAPC and we are able to validate our Cell-in-a-Box ® encapsulation technology in a clinical trial, we are not spending

any further resources developing our Cannabis Program.

Finally, we have been developing a potential therapy

for Type 1 diabetes and insulin-dependent Type 2 diabetes Our product candidate for the treatment of diabetes consists of encapsulated

genetically modified insulin-producing cells.

The encapsulation will be done using the Cell-in-a-Box ® technology.

these encapsulated cells in the body is designed to function as a bio-artificial pancreas for purposes of insulin production.

Reverse Stock Split

Effective July 12, 2021, we filed a Certificate

of Change to our Articles of Incorporation, as amended (the “Articles of Incorporation”) with the Nevada Secretary of State

that authorized a 1:1500 reverse stock split of our common stock.

The reverse stock split resulted in reducing the authorized number of

shares of our common stock from 50 billion to thirty-three million three hundred thirty-three thousand three hundred thirty-four with

a par value of $0.0001 per share.

Any fractional shares resulting from the reverse stock split were rounded up to the next whole share.

All warrants, option, share and per share information in this Report gives retroactive effect to such 1:1500 reverse stock split.

Private Placement

On May 9, 2023, we entered

into a securities purchase agreement with certain accredited investors, pursuant to which we issued and sold, in a private placement (the

“PIPE”), an aggregate of (i) 35,000 Series B Preferred Shares, initially convertible into up to 8,750,000 shares of common

stock at a conversion price of $4.00 per share, and (ii) warrants (the “PIPE Warrants”) to acquire up to 8,750,000 shares

of common stock at an exercise price of $4.00 per share.

Each Series B Preferred Share and accompanying PIPE Warrants were sold together

at a combined offering price of $1,000.

The terms of the Preferred Shares are as set forth in the Certificate of Designations of Series

B Convertible Preferred Stock of PharmaCyte Biotech, Inc.

(the “Certificate of Designations”), which was filed and became

effective with the Secretary of State of the State of Nevada on May 10, 2023.

The PIPE Warrants are immediately exercisable and expire

5 years from issuance.

In connection with the

PIPE, we entered into a registration rights agreement, pursuant to which we filed a Registration Statement on Form S-3 (File No.

to register the resale of the shares underlying the Series B Preferred Shares and the PIPE Warrants.

Such Registration Statement was declared

effective by the Commission on September 29, 2023.

For descriptions of the

Series B Preferred Shares and the PIPE Warrants, see “Note 12 – Preferred Stock” and Note 6 – Stock Options and

Warrants,” respectively.

Femasys Transaction

On November 14, 2023,

we entered into a securities purchase agreement (the “Femasys Purchase Agreement”) with Femasys Inc.

pursuant to which we purchased from Femasys (i) senior unsecured convertible notes (the “Notes”) in an aggregate principal

amount of $5,000,000, convertible into shares of Femasys common stock, par value $0.001 per share (the “Femasys Shares”) at

a conversion price of $1.18 per share, (ii) Series A Warrants (the “Series A Warrants”) to purchase up to an aggregate of

4,237,288 Femasys Shares at an exercise price of $1.18 per share, and (iii) Series B Warrants (the “Series B Warrants” and,

together with the Series A Warrants, the “Femasys Warrants”) to purchase up to an aggregate of 4,237,288 Femasys Shares at

an exercise price of $1.475 per share (collectively, the “Femasys Transaction”).

The Femasys Purchase

Agreement contains certain representations and warranties, covenants and indemnities customary for similar transactions.

Pursuant to the

Femasys Purchase Agreement, we have the right to nominate one individual to serve on Femasys’ board of directors (the “Femasys

Board”) until the earlier of (a) when the Company beneficially owns less than 4.99% of the number of Femasys Shares outstanding

and (b) the repayment of the Notes in full (such time, the “Investor Board Seat Fall-Away”).

In addition, we agreed to a standstill

until the later of (a) our nominee remaining on the Femasys Board and (b) 12 months after the Investor Board Seat Fall-Away, during which

period we may not, among other things, acquire additional securities of Femasys other than pursuant to the Notes or Femasys Warrants.

The Notes are senior

unsecured obligations of Femasys and accrue interest at a rate of 6.00% per annum, payable annually, in cash or Femasys Shares at Femasys’

option, and mature two years after the date of issuance.

The Notes are convertible into Femasys Shares at our election at any time at

an initial conversion price of $1.18.

The conversion price is subject to customary adjustments for stock dividends, stock splits, reclassifications

and similar corporate events.

Femasys agreed in the Femasys Purchase Agreement and the Notes not to issue or sell any of its equity securities

at a price below the then-current conversion price for a period of 18 months after closing, subject to certain exceptions.

Beginning six months

after issuance, Femasys may require us to convert our Notes into Femasys Shares if the closing price of the Femasys Shares exceeds $2.36

per share (subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events) for

10 consecutive trading days and the daily dollar trading volume of the Femasys Shares exceeds one million dollars ($1,000,000) per day

during the same period and certain equity conditions described in the Notes are satisfied.

The Notes provide for

certain events of default, including, among other things, Femasys’ failure to file and maintain an effective registration statement

covering the sale of the securities registrable pursuant to a registration rights agreement and Femasys’ failure to pay any amounts

due to us when due.

In connection with an event of default, we will be able to require Femasys to redeem in cash any or all of our Notes

at a premium of 115%.

Under the terms of the Notes, Femasys is subject

to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition and investment transactions, the existence

of liens, the repayment of indebtedness, the payment of cash in respect of dividends, distributions or redemptions, and the transfer of

assets, among other matters.

The Series A Warrants

are exercisable for Femasys Shares immediately at an exercise price of $1.18 per share and expire five years from the date of issuance.

Femasys has the right to call the exercise of the Series A Warrants if the closing price of the Femasys Shares exceeds 200% of the exercise

price for 10 consecutive trading days and the daily dollar trading volume of the Femasys Shares exceeds one million dollars ($1,000,000)

per day during the same period and certain equity conditions are satisfied.

The Series B Warrants are exercisable for Femasys Shares immediately

at an exercise price of $1.475 per share and expire one year from the date of issuance.

Femasys has the right to call the exercise of

the Series B Warrants if the closing price of the Femasys Shares exceeds 200% of the exercise price for 10 consecutive trading days and

the daily dollar trading volume of the Femasys Shares exceeds one million dollars ($1,000,000) per day during the same period and certain

equity conditions are satisfied.

In connection with the

Femasys Transaction, we entered into a registration rights agreement with Femasys, pursuant to which Femasys was required to file a resale

registration statement with the Commission, registering 100% of the shares issuable pursuant to the Notes and the Femasys Warrants.

In connection with the

Femasys Transaction, we entered into a collaboration agreement with Femasys, dated November 14, 2023, whereby, if the Company and Femasys

agree to conduct research activities or enter into a research plan in connection with discussing, evaluating and seeking technology that

may be available to in-license or acquire with a view to enhancing the existing products of Femasys or adding new complementary products,

we will establish a joint research committee with two representatives of Femasys and one representative of the Company to oversee the

execution of the research plan and coordinate research activities.

TNF Transaction

On May 20, 2024, we entered

into a securities purchase agreement (the “TNF Purchase Agreement”) with TNF Pharmaceuticals, Inc.

(f/k/a MyMD Pharmaceuticals,

Inc.) (“TNF”), pursuant to which we purchased from TNF (i) shares of TNF’s Series G Convertible Preferred Stock (the

“TNF Preferred Shares”), convertible into 3,854,626 shares of TNF’s common stock, par value $0.001 per share (the “TNF

Common Shares”), (ii) warrants to purchase up to 3,854,626 TNF Common Shares with a five-year term (the “Long-Term Warrants”)

and (iii) warrants to purchase up to 3,854,626 TNF Common Shares with an 18-month term (the “Short-Term Warrants” and, together

with the Long-Term Warrants, the “TNF Warrants”) for an aggregate purchase price of $7,000,000 (the purchase of the TNF Preferred

Shares, the Long-Term Warrants and the Short-Term Warrants, the “TNF Transaction”).

Pursuant to the TNF Purchase

Agreement, we have the right to participate in future sales of TNF’s equity and equity-linked securities until the second anniversary

of the closing or the date on which no TNF Preferred Shares remain outstanding, whichever is earlier.

Additionally, we have the right

to nominate one individual to serve on TNF’s board of directors until the Company no longer beneficially owns 20% of the TNF Common

Shares on an as-converted basis.

The terms of the TNF

Preferred Shares are as set forth a certificate of designations (the “TNF Certificate of Designations”), which TNF filed with

the Secretary of State for the State of Delaware on May 21, 2024.

The TNF Preferred Shares are convertible into TNF Common Shares at our

election at any time at an initial conversion price of $1.816.

The conversion price is subject to customary adjustments for stock dividends,

stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of TNF Common Shares,

or securities convertible, exercisable or exchangeable for TNF Common Shares, at a price below the then-applicable conversion price (subject

to certain exceptions).

At any time after the issuance date of the TNF Preferred Shares, TNF has the option to redeem in cash all or any

portion of the outstanding TNF Preferred Shares then outstanding at a premium upon notice to the Company.

Pursuant to the TNF Certificate

of Designations, we will be entitled to dividends of 10% per annum, compounded monthly, which will be payable in cash or in TNF Common

Shares at our option.

Upon the occurrence and during the continuance of a Triggering Event (as defined in the TNF Certificate of Designations),

the TNF Preferred Shares will accrue dividends at the rate of 15% per annum.

Upon conversion or redemption, we are entitled to receive

a dividend make-whole payment.

We will be entitled to vote with holders of the TNF Common Shares on as as-converted basis, with the number

of votes to which we are entitled to be calculated assuming a conversion price of $2.253 per share.

TNF’s ability to settle conversions

and make dividend make-whole payments by issuing TNF Common Shares is subject to certain limitations set forth in the TNF Certificate

of Designations.

The TNF Certificate of

Designations includes certain triggering events, including, among other things, the failure by TNF to file and maintain an effective registration

statement covering the sale of the securities registrable pursuant to a registration rights agreement and the failure by TNF to pay any

amounts to us when due.

In connection with a triggering event, we will be able to require TNF to redeem in cash any or all of its TNF

Preferred Shares at a premium set forth in the TNF Certificate of Designations.

TNF is subject to certain

affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness, the

payment of cash in respect of dividends (other than dividends pursuant to the TNF Certificate of Designations), distributions or redemptions,

and the transfer of assets, among other matters.

The Long-Term Warrants

are exercisable for TNF Common Shares immediately, at an exercise price of $1.816 per share and expire five years from the date of issuance.

The Short-Term Warrants are exercisable for TNF Common Shares immediately, at an exercise price of $1.816 per share and expire 18 months

from the date of issuance.

The exercise price of each TNF Warrant is subject to customary adjustments for stock dividends, stock splits,

reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances

of TNF Common Shares or securities convertible, exercisable or exchangeable for TNF Common Shares at a price below the then-applicable

exercise price (subject to certain exceptions).

In connection with the

TNF Transaction, we entered into a registration rights agreement with TNF, pursuant to which TNF was required to file a resale registration

statement with the Commission, registering 200% of the shares issuable pursuant to the TNF Preferred Shares and the TNF Warrants.

Increase in Authorized Shares

On March 14, 2023, we filed a Certificate of Change

with the State of Nevada, Secretary of State, to increase the number of authorized shares of our common stock to 133,333,334 shares effective

The par value remained $0.0001 per share.

COVID-19 Impact on Our Financial Condition

and Results of Operations

We face the ongoing risk that the coronavirus

pandemic may slow our operations, our preclinical studies or the eventual enrollment of our planned clinical trial.

In order to prioritize

patient health and that of the investigators at clinical trial sites, we may need monitor enrollment of patients in our clinical study.

In addition, some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines

or travel restrictions impede patient movement or interrupt healthcare services.

These and other factors outside of our control could

delay our ability to conduct clinical trials or release clinical trial results.

In addition, the effects of the ongoing coronavirus pandemic

may also increase non-trial costs such as insurance premiums, increase the demand for and cost of capital, increase loss of work time

from key personnel, and negatively impact our key clinical trial vendors.

On September 6, 2023, pursuant to stockholder

approval received at a special meeting of stockholders, we filed with the Secretary of State of the State of Nevada a Certificate of Change

to our Articles of Incorporation, as amended, to increase the number of authorized shares of common stock from 133,333,334 to 200,000,000.

The Certificate of Change had no impact on the number of authorized shares of preferred stock, which remains at 10,000,000.

Performance Indicators

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of our common stock pursuant to the Repurchase Programs, recorded as treasury stock and an increase in our operating expenses.

2021 Underwritten Offering

On August 9, 2021, we entered into an underwriting

agreement with H.C.

Wainwright & Co.

(“Wainwright”), pursuant to which we offered and sold an aggregate of 2,630,385 shares

of common stock, and 899,027 pre-funded warrants to purchase common stock, and common warrants to purchase 4,028,528 shares of common

stock (the “First 2021 Offering”).

The common warrants sold in the First 2021 Offering have an exercise price of $4.25 per

share, were exercisable immediately upon issuance, and expire five years following the date of issuance.

The pre-funded warrants sold

in the First 2021 Offering have an exercise price of $0.001 per share, were exercisable immediately upon issuance, and do not have an

expiration date.

The gross proceeds of the First 2021 Offering were $15 million, before deduction of underwriting discounts, commissions,

and estimated offering expenses.

Wainwright acted as the exclusive placement agent

for the Second 2021 Offering pursuant to an engagement letter with the Company dated April 26, 2021 (the “Wainwright Engagement

Pursuant to the Wainwright Engagement Letter and in connection with the First 2021 Offering, we paid Wainwright a placement

agent fee equal to 7.5% of the aggregate gross proceeds and a management fee equal to 1.0% of the gross proceeds, and we issued Wainwright

warrants to purchase up to [ ] shares of common stock (the “Placement Agent Warrants”).

The Placement Agent Warrants have

an exercise price of $6.25 per share, were exercisable immediately upon issuance, and expire five years following the date of issuance.

In August 2021, we received twenty-seven (27)

exercise notices from holders of the common warrants issued in the First 2021 Offering, pursuant to which we received approximately $10,720,000

and issued 2,522,387 shares of common stock (the “2021 Warrant Exercises”).

2021 Registered Direct Offering and Concurrent

Private Placement

On August 19, 2021, we entered into a securities

purchase agreement with certain institutional investors, pursuant to which we sold (i) 8,430,000 shares of common stock and pre-funded

warrants to purchase up to 5,570,000 shares of common stock in a registered direct offering and (ii) unregistered warrants to purchase

up to 7,000,000 shares of common stock (the “Series A Warrants”) in a concurrent private placement (collectively, the “Second

2021 Offering”).

The pre-funded warrants sold in the Second 2021 Offering have an exercise price of $0.001 per share, were exercisable

immediately upon issuance, and do not have an expiration date.

The Series A Warrants have an exercise price of $5.00 per share, were exercisable

immediately upon issuance, and expire five years following the date of issuance.

Wainwright acted as the exclusive placement agent

for the Second 2021 Offering pursuant to the Wainwright Engagement Letter.

Pursuant to such engagement letter and in connection with the

Second 2021 Offering, we paid Wainwright a placement agent fee equal to 7.5% of the aggregate gross proceeds and a management fee equal

to 1.0% of the gross proceeds, and we issued Wainwright an additional 1,050,000 Placement Agent Warrants.

We received gross proceeds from

the Second 2021 Offering, before deducting placement agent fees and other estimated offering expenses payable by the Company, of approximately

On November 17, 2021, our Registration Statement on Form S-3 registering the resale of the shares of common stock underlying

the Series A Warrants and the Placement Agent Warrants was declared effective by the U.S.

Securities and Exchange Commission (“Commission”).

During the year ended April 30, 2022, we received

approximately $87.4 million from the First 2021 Offering, the Second 2021 Offering and the 2021 Warrant Exercises.

Repurchase Programs

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applicable securities laws.

For more information on the Repurchase Programs, see “Note 12 – Treasury Stock.”

For more information on the Second Repurchase Program, see “Note 13 – Treasury Stock.”

Other Liquidity Matters

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The increase is mainly

attributable to increases in director fees and legal and professional expenses, net of decreases in R&D costs and compensation expense.

attributable to increases in compensation expenses, director fees and general and administrative expenses, net of decreases in R&D

and legal and professional expenses.

Operating expenses:

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Director fees

Impairment of asset

General and administrative, legal and professional

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The increase is mainly attributable to increases

in director fees and legal and professional expenses, and consulting expenses in 2023 from 2022, net of decreases in R&D costs and

compensation expense.

in compensation expenses, director fees and general and administrative expense, impairment of asset, net of decreases in R&D and legal

and professional expenses.

See the table under “ Operating Expenses ” above for more detail.

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2024, was $8,853,771, as compared to other income, net of $2,139,501 in the year ended April 30, 2023.

Other income, net for the year ended

April 30, 2023 is attributable to interest income of $1,937,499 net settlement of accounts payable of $152,976 and net of other income

and expense of $49,026.

Other income, net for the year ended April 30, 2022 is attributable to interest income of $157,645 net of interest

expense and other expenses of $4,792.

Other income, net for the year

ended April 30, 2024 is attributable to interest income of $3,398,819, changes in fair values of warrant liability of $3,343,000, derivative

liability of $586,000, convertible note receivable of $1,089,000 and warrant asset of $1,818,000, less loss on write-off of long term

asset of $1,572,193 net of other income of $191,145.

Other income is attributable to recovery of accrued expenses of $195,000 less income

taxes and foreign exchange loss.

Other income, net for the year ended April 30, 2023 is attributable to interest income of $1,937,499

net settlement of accounts payable of $152,976 and net of other income and expense of $49,026.

Loss on write-off of long-term asset

For the year ended April 30, 2024, the Company

recorded an asset loss of $1,572,193, related to the Company’s investment in SG Austria, reducing the carrying value of such investment

See Note 2 of the Consolidated Financial Statements to this Report for more information.

Discussion of Operating, Investing and Financing

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Net cash used in operating activities:

$ (2,151,457 )

$ (3,793,731 )

Net cash used in investing activities:

Net cash provided by (used in) financing activities:

$ (5,000,000 )

Net cash used in financing activities:

$ (10,708,003 )

$ (13,559,743 )

Effect of currency rate exchange

Increase (decrease) in cash

$ (17,859,968 )

$ (17,360,720 )

Operating Activities:

The cash used in operating activities for the

years ended April 30, 2023 and 2022 is a result of our net losses offset by securities issued for services and compensation, changes to

prepaid expenses, accounts payable and accrued expenses.

The cash and cash equivalents used in operating

activities for the years ended April 30, 2024 and 2023 is a result of our net losses from operations offset by securities issued, assets

impaired, changes in fair values of warrant liability, derivative liability, note receivable, warrant asset, changes to prepaid expenses,

accounts payable and accrued expenses.

Investing Activities:

We had no investing activities for the years ended

April 30, 2023, and 2022.

On November 14, 2023, we entered into a securities

purchase agreement, pursuant to which agreed to purchase a convertible note receivable in the amount of $5 million, convertible into common

stock and warrants (Series A and B) to purchase additional common stock.

See Note 3 – Investment in Debt and Equity Securities.

We had no investing activities for the year ended April 30, 2023.

Financing Activities:

The cash used in financing activities for the

year ended April 30, 2023 was mainly attributable to the Repurchase Programs, and the cash provided for the year ended April 30, 2022,

is mainly attributable to the proceeds from the First 2021 Offering and the Second 2021 Offering.

Critical Accounting Estimates and Policies

The cash and cash equivalents used in financing

activities for the year ended April 30, 2024 was mainly attributable to the Repurchase Programs of approximately $28,198,000, redemption

of preferred stock of approximately $16,161,000, and the cash provided by proceeds from the issuance of preferred stock of approximately

$33,650,000, net of transaction costs.

For the year ended April 30, 2023, the cash and cash equivalents used is mainly attributable to

the Repurchase Programs of approximately $13,561,000.

Critical Accounting Estimates

Our Consolidated Financial Statements are prepared

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and related disclosures with our Board.

Research and Development Expenses

R&D expenses consist of costs incurred for

direct and overhead-related research expenses and are expensed as incurred.

Costs to acquire technologies, including licenses, which are

utilized in R&D and that have no alternative future use are expensed when incurred.

Technology developed for use in our product candidates

is expensed as incurred until technological feasibility has been established.

Stock-Based Compensation

Our stock-based compensation plans are described

in Note 4 and 5 of the Notes of the Consolidated Financial Statements to this Report.

We follow the provisions of ASC 718, Compensation

- Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based

awards made to employees.

Net Income (Loss) Per Share

Basic net income (loss) per share of common stock

is computed using the weighted-average number of shares of common stock outstanding.

Diluted net income (loss) per share of common stock

is computed using the weighted-average number of shares of common stock and shares of common stock equivalents outstanding.

dilutive stock options and warrants to purchase 10,172,116 and 10,813,635 post reverse stock split shares of common stock at April 30,

2023 and 2022, respectively, were excluded from the computation of diluted net income (loss) per share because the effect would be anti-dilutive.

New Accounting Pronouncements

During the current and prior year, there were

no new accounting pronouncements that need to be disclosed in the Company’s consolidated financial statements.

Fair Value of Financial Instruments

Fair value measurements

are based upon certain market assumptions and pertinent information available as of and during the year ended April 30, 2024.

value of the bifurcated embedded derivative related to the convertible preferred stock was estimated using a Monte Carlo simulation model,

which uses as inputs the fair value of our common stock and estimates for the equity volatility and traded volume volatility of our common

stock, the time to maturity of the convertible preferred stock, the risk-free interest rate for a period that approximates the time to

maturity, dividend rate, a penalty dividend rate, and our probability of default.

The fair value

of the warrant liability was estimated using the Black Scholes Model which uses as inputs the following weighted average assumptions:

dividend yield, expected term in years;

equity volatility;

and risk-free interest rate.

In addition, the Company elects to account for

its convertible note receivable, which meets the required criteria, at fair value at inception and at each subsequent reporting date.

Subsequent changes in fair value, including interest, are recorded as a component of non-operating income (loss) in the consolidated statements

of operations.

The Company estimates the fair value of the convertible note receivable using the income approach, which uses as inputs

the fair value of debtor’s common stock and estimates for the equity volatility and volume volatility of debtor’s common stock,

the time to expiration of the convertible note, the discount rate, the stated interest rate compared to the current market rate, the risk-free

interest rate for a period that approximates the time to expiration, and probability of default.

Therefore, the estimate of expected future

volatility is based on the actual volatility of debtor’s common stock and historical volatility of debtor’s common stock utilizing

a lookback period consistent with the time to expiration.

The time to expiration is based on the contractual maturity date.

The risk-free

interest rate is determined by reference to the U.S.

Treasury yield curve in effect at the time of measurement for time periods approximately

equal to the time to expiration.

The probability of default is estimated using the S&P Global default rate for companies with a similar

credit rating to debtors.

The fair value in our warrant asset investment is estimated using a Monte Carlo simulation model, which uses

as inputs the fair value of the underlying common stock, and estimates for the equity volatility and traded volume volatility of the investee’s

common stock, the risk-free interest rate for a period that approximates the expected life of the warrants, and the expected life of the

Impairment of Assets

We determined that the diabetes licensed asset

technology would likely not prove to be a viable technique for the production of insulin producing cells and the treatment of diabetes.

We believe that a buyer of this technology would ascribe a de minimis value to this asset.

Therefore, we determined that there should

be a full impairment of the $2 million carrying value.

We determined that research in the treatment of diabetes would no longer be pursued

until the Cell-in-a-Box® use in pancreatic cancer treatment can be substantiated in a clinical trial and a viable cell line is acquired.

We determined that due to the SG Austria financial

position, negative book value and viability make for an inconclusive determination of a specific value range of our minority interest

in SG Austria and the value as of the present time is likely minimal.

Therefore, we determined that there should be a full impairment

of the approximately $1.6 million carrying value.

New Accounting Pronouncements Effective in Future Periods

For a discussion

of new accounting pronouncements effective in future periods, see “Recent Accounting Pronouncements” in Note 2 of our Notes

to our Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this Report.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

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

What changed 10-K

Item 7. Management’s Discussion and Analysis