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Item 9A. Controls and Procedures

2024-03-29 compared with 2023-04-14 · 1107 added, 1794 removed, 839 unchanged (78% of the section changed)

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Our management, with the participation of our Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of our disclosure controls and procedures.

The term “disclosure controls and procedures,”

as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as of the end of the fiscal year covered by this Annual Report as a result of the material weaknesses in Internal Control over Financial Reporting described below. 

Management’s Report on Internal Control over Financial Reporting

Management, including our Chief Executive Officer and Chief Financial Officer, 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 and based upon the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“the COSO framework”).

Management’s Report on Internal Control over Financial Reporting

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S.

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Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of our internal control over financial reporting based on the COSO framework.

Based on evaluation under these criteria and based upon the existence of the material weakness described below, management determined, that we did not maintain effective internal control over financial reporting as of December 31, 2022.

Based on evaluation under these criteria and based upon the existence of the material weakness described below, management determined, that we did not maintain effective internal control over financial reporting as of December 31, 2023.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

We identified deficiencies in the control environment component of the COSO Framework that constitute a material weakness:

We lack sufficient appropriate accounting and reporting knowledge to effectively perform review controls surrounding technical accounting matters and significant and/or unusual transactions. 

We identified deficiencies in the control environment component of the COSO Framework that constitute a material weakness:

• We lack documentation of the formalized processes and procedures that are critical to the accomplishment of financial reporting objectives.

Management believes that the material weakness set forth above is the result of the scale of our operations, is intrinsic to our size, and intends to take remedial actions described below.

Plan for Remediation of Material Weakness

We continue to work to strengthen our internal control over financial reporting and are committed to ensuring that such controls are designed and operating effectively.

We are implementing process and control improvements to address the above material weakness as follows:

We have supplemented existing accounting resources with external advisors to assist with performing certain technical accounting activities.

We have hired an additional full-time employee with technical accounting expertise and public company experience. Management will continue to supplement existing internal resources as needed.

In addition, Management will continue to review the qualifications of our finance organization to ensure our personnel have the appropriate technical and SOX related expertise.

We have begun the process of implementing a contract management platform that will integrate functions governing the initiation, authorization, and execution of contracts with enhancements for our existing contract review control.

We continue to work to strengthen our internal control over financial reporting and are committed to ensuring that such controls are designed and operating effectively.

We are implementing process and control improvements to address the above material weakness as follows:

• We have engaged with a third party firm to perform a complete risk assessment and provide advisory services for our required documented control attributes and necessary remediation efforts.

• We will soon complete the process of implementing a contract management platform that will integrate functions governing the initiation, authorization, and execution of contracts with enhancements for our existing contract review control.

This tool will improve the ability of the finance organization to review new and renewed contracts for potential financial reporting implications.

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Changes in Internal Control Over Financial Reporting

Other than as described above, there have been no changes in our internal control over financial reporting in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Annual Report on Form 10-K that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than as described above, there have been no changes in our internal control over financial reporting in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fiscal quarter to which period covered by this Annual Report on Form 10-K relates that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information .

On March 21, 2023, the Company entered into a settlement agreement with Ladenburg (the “2023 Ladenburg Agreement”, and the action brought by Ladenburg, the “Ladenburg Action”), effective March 23, 2023.

In connection with the Ladenburg Agreement, on March 24, 2023, the Company (i) issued to Ladenburg a warrant to purchase up to 300,000 shares of common stock, exercisable for three years from the date of issuance at $0.5424 per share;

and (ii) furnished to Ladenburg a one-time cash payment of $500,000.

Pursuant to the terms and subject to the conditions set forth in the 2023 Ladenburg Agreement, the Company will (i) no later than June 30, 2023, pay $1.5 million to Ladenburg in cash or shares of common stock, at the Company’s option;

and (ii) no later than December 31, 2023, pay $1.1 million to Ladenburg in cash or shares of common stock, at the Company’s option.

Following the completion of the Company’s obligations under the Ladenburg Agreement, Ladenburg has agreed to dismiss the Ladenburg Action with prejudice and extinguish any and all obligations of the Company in connection therewith.

Any issuance of securities under the Ladenburg Agreement has been made or shall be made pursuant to exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering, and Rule 506 of Regulation D promulgated under the Securities Act.

The Company notes the consideration due to Ladenburg under the 2023 Ladenburg Agreement, excluding the warrants issuable thereunder, are contained within the 2021 and 2022 audited consolidated balance sheets within accrued expenses and other current liabilities.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections .

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The following persons are serving as our executive officers and directors:

Class III Director and Executive Chairman of the Board

Class III Director, Chairman of the Board and Chief Executive Officer

Christine Hamilton, MBA

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Sullivan, PhD

Class III Director, President and Chief Executive Officer

Class III Director and President

Class II Director

William Polvino, MD

Class I Director

David Link, MBA

Class II Director

William Polvino, MD

Class I Director

Scott Giberson

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Class I Director

Beyer, MBA, CMA

Chief Financial Officer

Christoph Bausch, PhD

Chief Science Officer

Chief Operating Officer

Alexandra Kropotova, MD

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There are no family relationships among any of our directors or executive officers.

Edward Hamilton, our former Executive Chairman, retired from such role as of the consummation of the Business Combination.

Edward Hamilton, our former Chairman, retired from such role as of the consummation of the Business Combination.

Hamilton was named as a board observer in October 2021.

Edward Hamilton is Christine Hamilton’s husband.

Executive Officers

Reich has served as a member of our board of directors from November 2020 and was named executive chairman of our board of directors in October 2021.

Reich has served as a member of our board of directors from November 2020 and our CEO since January 2024 and was named chairman of our board of directors in October 2021, and was named Chief Executive Officer in January 2024.

Reich served as our Chief Executive Officer and Chief Financial Officer from November 2020 until October 2020 prior to the closing of our Business Combination.

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with High Honors in Biochemistry from Clark University, cum laude, Phi Beta Kappa.

Sullivan, PhD , is our co-founder and has served as our president and CEO since 2014.

Sullivan, PhD , is our co-founder and has served as our president since 2014 and our past CEO from 2014 until January 2024.

Sullivan has served in biopharma leadership positions for more than 25 years.

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He has worked with industry committees and discussion groups that have focused on animal biotechnology, regulatory framework, human immunotherapies, and global health threats.

Sullivan was governor-appointed to South Dakota’s Research Commercialization Council and is Chairman of the state’s National Science Foundation-EPSCoR committee.

He also founded, served as president, and remains an advisor to the state affiliate of BIO, South Dakota Biotech, and in 2014 was honored for his leadership, innovation, vision, and entrepreneurship with the inaugural LIVE award.

Sullivan was governor-appointed to South Dakota’s Research Commercialization Council and is Chairman of the state’s National Science Foundation-EPSCoR committee.

also founded, served as president, and remains an advisor to the state affiliate of BIO, South Dakota Biotech, and in 2014 was honored for his leadership, innovation, vision, and entrepreneurship with the inaugural LIVE award.

He holds an undergraduate degree from the University of Arizona and graduate degrees from Brigham Young University, Kennedy-Western University, and Utah State University in both reproduction and business.

Beyer, MBA, CMA , has served as our Chief Financial Officer since September 2021.

Beyer is a global strategic business leader, bringing more than 20 years of experience working with Fortune 100 companies in the pharmaceutical industry, such as Teva, AstraZeneca, and IPR Pharmaceuticals.

In addition to working in the pharmaceutical industry, Russell also served in strategic financial leadership roles for World Fuel Services and Hewlett-Packard.

His professional background encompasses extensive experience in fostering a team-based approach to leading merger and post-merger integration activities, developing shared services operations, implementing global ERP platforms, and delivering strong profitability for the companies he served.

He received his MBA from Simon School of Business at the University of Rochester, and his BA from St.

Lawrence University.

Michael G King, Jr.

, is our Chief Financial Officer as of October 2023.

King is an award-winning biotechnology industry research analyst with over 25 years of experience advising investors and issuers.

From June 2022 to May 2023, Mr.

King was Co-Head of Healthcare Research at EF Hutton Group., where he provided coverage on 15 healthcare and biotechnology companies across a range of market capitalizations.

From January 2021 to May 2022, he was Managing Director and Senior Biotechnology Analyst with H.C.

Wainwright & Co., where he provided coverage on 21 healthcare and biotechnology companies From May 2018 to December 2020, Mr.

King acted as Entrepreneur in Residence at Fortress Biotech, Inc., where he was responsible for identifying promising therapeutic molecules, securing rights to their development and commercialization, and forming and capitalization new companies around these molecules.

King has previously held senior roles with prominent companies including JMP Securities LLC, Rodman and Renshaw LLC, Ziopharm Oncology, Inc.

Wedbush PacGrow Life Sciences, Bank of America, Robertson Stephens, and Vector Securities.

King’s extensive investment banking and public company advisory experience includes equity research, capital markets, corporate finance, and M&A advisory.

He received his BA in Finance from the Bernard M.

Baruch College of the City University of New York.

Christoph Bausch, PhD, MBA , is our Chief Operating Officer as of May 2022, overseeing all Research & Manufacturing operations of the company.

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Alexandra Kropotova, M.D.

, is our Executive Vice President & Chief Medical Officer, joining SAB in June, 2022 to lead the strategy, direction, and execution of the company’s clinical development for the entire portfolio.

, is our Executive Vice President & Chief Medical Officer as of June, 2022, leading the strategy, direction, and execution of the company’s clinical development for the entire portfolio.

Kropotova is a biopharmaceutical executive with expertise in all phases of global clinical development, translational medicine and medical affairs.

Prior to joining SAB Biotherapeutics, as a Therapeutic Area Head of Global Specialty R&D at Teva Pharmaceuticals, Alexandra led innovative drug development focused on delivering a broad portfolio of immunology, respiratory, and immuno-oncology assets spanning from pre-IND to BLA/NDA filing of biologics and complex drug-device combination products.

Prior to joining SAB Biotherapeutics, as a Therapeutic Area Head of Global Specialty R&D at Teva Pharmaceuticals from April 2016 to June 2022, Alexandra led innovative drug development focused on delivering a broad portfolio of immunology, respiratory, and immuno-oncology assets spanning from pre-IND to BLA/NDA filing of biologics and complex drug-device combination products.

Prior to Teva, Dr.

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Biographical information for Eddie J.

Sullivan, our President, Chief Executive Officer and Class III director, and Samuel J.

Reich, our Executive Chairman of the Board and Class III director, is set forth above in “Item 10.

Executive Officers”.

Spragens has served as a member of our board of directors since November 2020.

From 2005 through 2013, Mr.

Spragens was a Co-Founder and the CEO of SafeStitch Medical, Inc., a medical device company that pioneered incisionless surgery techniques that helps to relieve GERD and obesity.

In 2013, SafeStitch merged with TransEnterix, Inc.

In addition, Mr.

Spragens was one of the three founding board members of North American Vaccine, which became a publicly traded company in 1990.

At North American Vaccine, Mr.

Spragens was responsible for securing initial financing and building a commercial manufacturing facility.

Spragens was instrumental in North American Vaccine’s acquisition by Baxter International (NYSE:

BAX) in 1999.

Spragens has also been a successful real estate developer and entrepreneur.

Spragens was President of FCH services from 1973 until 1986.

FCH developed and managed units of coop and condo housing financed with HUD financing with offices in several major cities.

Spragens converted to condo ownership 1,000 apartment units in San Mateo, California, resulting in one of the largest residential projects in California at that time.

Spragens was Managing Partner of Gateway Associates, Inc.

from 1990 to 2000.

In addition, Mr.

Spragens is President and 50% owner of Mint Management Company, a residential property management company he co-founded in 1987, which develops, owns and operates apartment units in New Jersey, Michigan and Kansas.

Spragens developed and continues to own and operate Inman Grove Shopping Center in Edison, New Jersey.

Spragens is also a well-known and respected philanthropist.

Spragens is a Founding Board Member and Treasurer of Foundation for Peace.

Foundation for Peace provides healthcare, education, and clean water to those in need in Dominican Republic and Haiti.

He is also a member of the Board of Directors and Finance Committee of Hernia Help, which provides free hernia surgery to underserved children and adults in developing countries.

Spragens has a BA from the University of Cincinnati, a Law Degree from George Washington University, and an MA from American University.

Spragens is well qualified to serve on our board of directors because of his extensive public company management and multi-sector investment experience, and his public company board experience.

Sullivan PhD, our President and Class III director, and Samuel J.

Reich, our Chairman of the Board, Chief Executive Officer and Class III director, is set forth above in “Item 10.

Executive Officers”.

Christine Hamilton, MBA , is our co-founder and has served as a member of our board of directors since 2014.

Hamilton is the owner and managing partner of Christiansen Land and Cattle, Ltd., a fourth-generation diversified farming and ranching enterprise.

She also owns Dakota Packing, Inc., a wholesale company based in Las Vegas that provides high-end, "center-of-the-plate" protein products to a national customer base.

Hamilton is the owner and managing partner of Christiansen Land and Cattle, Ltd., a fourth-generation diversified farming and ranching enterprise.

She also owns Dakota Packing, Inc., a wholesale company based in Las Vegas that provides high-end, “center-of-the-plate” protein products to a national customer base.

Hamilton has served on the board of directors for several financial and public companies including HF Financial Corporation, Home Federal Bank (now Great Western Bancorp, NYSE:

GWB) and, in 2018, was recognized for her exemplary service as a board member of the Federal Reserve Bank (Ninth District) after a four-year term.

She currently serves as a board member for publicly traded Titan Machinery, Padlock Ranch, and Meadowlark Institute.

She currently serves as a board member for publicly traded Titan Machinery,

Padlock Ranch, and Meadowlark Institute.

Hamilton was a governor-appointed commissioner for South Dakota Game Fish & Parks and is a 2016 inductee to the South Dakota Hall of Fame for her contributions to the state and agribusiness.

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Hamilton holds a philosophy degree from Smith College in Northampton, Massachusetts, and an MBA in entrepreneurship from the University of Arizona.

Hamilton is well qualified to serve on our board of directors because of her extensive public company board experience. 

Polvino, MD , has served as a member of our board of directors since 2019, after having served as our business advisor for several years.

Polvino is pharmaceutical entrepreneur with more than 25 years of experience in the healthcare arena.

He is currently chief executive officer of Bridge Medicines, a pioneering drug discovery company focused on advancing promising early technologies from concept to clinic.

Prior to Bridge Medicines, Dr.

Polvino was president and chief executive officer of Veloxis Pharmaceuticals A/S (NASDAQ-OMX:

VELO), a public biotechnology company that deployed proprietary formulation technology to develop and commercialize an innovative oral drug product for transplant patients.

He also served as president and CEO of Helsinn Therapeutics (formerly Sapphire Therapeutics) and has held executive and senior-level positions in drug development at Merck, Wyeth and Theravance.

Polvino earned his medical degree from Rutgers Medical School and a B.S.

in Biology from Boston College.

He trained in internal medicine at Massachusetts General Hospital and was a fellow in clinical pharmacology at the National Institutes of Health prior to entering the pharmaceutical and biotechnology industry.

Polvino is well qualified to serve on our board of directors because of his extensive experience in the biotechnology industry and his extensive public company management experience. 

David Link, MBA , has served as a member of our board of directors since 2018 and is currently Vice-Chairman.

Link is the former executive vice president and chief strategy office at Sanford Health with more than three decades of experience in strategy, planning and financial operations.

During his tenure, Mr.

Link contributed significantly to growing the organization from a regional health system into one of the nation’s largest non-profit, integrated health care delivery systems.

He was also charged with overseeing Sanford Health Plan, Sanford Foundation and research and development, including Sanford Research.

Under his leadership, the initial Sanford Clinic was created as well as the development of Sanford World Clinics, an initiative designed to provide communities around the world with permanent, sustainable health care infrastructure.

Currently, Dave serves as an appointed program director in the President’s Office at Dakota State University, one of the nation’s leading programs in cyber security.

Dave holds board or committee positions with Enterprise 605, the South Dakota REACH Committee, South Dakota Research and Commercialization Council and Sanford Research.

In 2019, he was honored for his exemplary leadership and support of the state’s bioscience industry with the LIVE Award at the South Dakota Biotech.

Dave holds a bachelor’s degree in data processing and computer science, an MBA from the University of South Dakota and a master’s in healthcare administration from the University of Minnesota.

Link is well qualified to serve on our board of directors because of his extensive experience in the biotechnology industry and his extensive public company board experience. 

Scott Giberson, RPh, MPH, D.Sc., Rear Admiral (retired),  joined the SAB board of directors in July 2022.

He is currently the President of AMI Expeditionary Healthcare, a private global healthcare solutions company where he fosters global client relations at the highest levels.

Hamilton is well qualified to serve on our board of directors because of her extensive public company board experience.

Katie Ellias, joined the SAB board of directors in November 2023.

Ellias serves as a Managing Director at the JDRF T1D Fund LLC, a venture philanthropy fund with approximately $200 million in assets (the “T1D Fund”), including an investment in the Company.

Ellias joined the T1D Fund in 2018 where she has led a number of investments in companies developing T1D-oriented therapies, and served as a director on the board of several including, DiogenX, Veralox Therapeutics, i2O Therapeutics, and Capillary Biomedical.

Ellias joined the T1D Fund from Endeavour Vision, a Geneva-based growth stage venture fund.

She was previously Principal at Sofinnova Partners, Paris, a leading early-stage life sciences fund.

Ellias has also held roles in business development with Medtronic and started her career at McKinsey & Company.

She holds an M.B.A.

in Healthcare Management from the Wharton School at the University of Pennsylvania and a B.A.

in International Relations and Political Science from Yale University.

Scott Giberson, RPh, MPH, D.Sc., Rear Admiral (retired), joined the SAB board of directors in July 2022.

He is currently the President of AMI Expeditionary Healthcare, a private global healthcare solutions company where he has fostered global client relations at the highest levels, since March 2021.

Clients include senior leadership of multiple U.S.

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RADM Giberson retired after 27 years as two-star admiral and as an Assistant U.S.

Surgeon General.

RADM (ret.) Giberson served as the acting Deputy Surgeon General of the United States (2013-2014), he was the Surgeon General's principal liaison with health leadership in multiple U.S.

He also held executive positions as the Senior Advisor to the Office of Surgeon General, Director of Commissioned Corps Headquarters, Chief Pharmacist of the USPHS (2010-2014), Director of the IHS National HIV/AIDS Program and Senior Public Health Advisor for Pacific Command's Center of Excellence in Disaster Management and Humanitarian Assistance (2003-2006).

Surgeon General, serving in a variety of senior roles with the U.S.

Department of Health and Human Services from March 2010 to March 2021.

RADM (rert.) Giberson served as the acting Deputy Surgeon General of the United States (2013-2014), he was the Surgeon General's principal liaison with health leadership in multiple U.S.

He served as overall Commander of the Commissioned Corps' Ebola Response in West Africa.

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of Pennsylvania) Executive Leadership Program.

Giberson is well qualified to serve on our board of directors because of his extensive experience in the medical industry. 

Erick Lucera , joined the SAB board of directors in April 2023. From 2020 to February 2023, Mr.

Giberson is well qualified to serve on our board of directors because of his extensive experience in the medical industry.

David Link, MBA , has served as a member of our board of directors since 2018 and is currently Vice-Chairman.

Link is the former executive vice president and chief strategy office at Sanford Health with more than three decades of experience in strategy, planning and financial operations.

During his tenure, Mr.

Link contributed significantly to growing the organization from a regional health system into one of the nation’s largest non-profit, integrated health care delivery systems.

He was also charged with overseeing Sanford Health Plan, Sanford Foundation and research and development, including Sanford Research.

Currently, Dave serves as an appointed program director in the President’s Office at Dakota State University, one of the nation’s leading programs in cyber security.

Dave holds board or committee positions with Enterprise 605, the South Dakota REACH Committee, South Dakota Research and Commercialization Council and Sanford Research.

In 2019, he was honored for his exemplary leadership and support of the state’s bioscience industry with the LIVE Award at the South Dakota Biotech.

Dave holds a bachelor’s degree in data processing and computer science, an MBA from the University of South Dakota and a master’s in healthcare administration from the University of Minnesota.

Link is well qualified to serve on our board of directors because of his extensive experience in the biotechnology industry and his extensive public company board experience.

Erick Lucera , joined the SAB board of directors in April 2023.

From 2020 to February 2023, Mr.

Lucera served as Chief Financial Officer of AVEO Oncology, a public biotech company, and subsequent to the close of its acquisition, worked on integration with LG Chem, Ltd.

From 2016 to 2020, Mr.

Lucera served as Chief Financial Officer, Treasurer and Secretary of VALERITAS, a publicly traded commercial-stage medical technology company where he led multiple successful public offerings.

Lucera served as Chief Financial Officer, Treasurer and Secretary of VALERITAS, a publicly traded commercial-stage medical technology company where he led multiple successful public

From 2017 to the present, Mr.

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From 2021 to the present, Mr.

Lucera has served as a member of the Board of Directors and Audit Committee Chairman of Bone Biologics Corporation, a publicly held company focusing on regenerative medicine therapies to treat bone disorders.

Lucera has served as a member of the Board of Directors and Audit Committee Chairman of Bone Biologics Corporation, a publicly held company focusing on regenerative medicine therapies to treat bone disorders.

From 2015 to 2016, Mr.

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Early in his career, Mr.

Lucera spent more than 15 years covering healthcare and the life sciences in investment management. Given Mr.

Lucera’s extensive experience in strategic planning and finance, we believe that Mr.

Lucera spent more than 15 years covering healthcare and the life sciences in investment management.

Lucera’s extensive experience in strategic planning and finance, we believe that Mr.

Lucera is well qualified to serve as a member of the Board of Directors.

Andrew Moin, joined the SAB board of directors in October 2023.

Moin is a Partner and Analyst at Sessa Capital, a New York based investment advisor registered with the SEC.

Moin has been with Sessa since 2012, where he works on idea generation, research, and investment implementation.

Prior to Sessa, from 2008-2012, Mr.

Moin was in the Tax Group at Sullivan & Cromwell LLP, where he advised corporate and other clients on a variety of transactions.

In the non-profit realm, Andrew has served on the Young Leadership Committee of the New York City Chapter of the JDRF and was Chair of the Board of Trustees at the Great Neck Community School.

Andrew received a B.A.

in Economics, with distinction, from Amherst College and a J D., magna cum laude, from Harvard Law School.

Polvino, MD , has served as a member of our board of directors since 2019, after having served as our business advisor for several years.

Polvino is pharmaceutical entrepreneur with more than 25 years of experience in the healthcare arena.

He is currently chief executive officer of Bridge Medicines, a pioneering drug discovery company focused on advancing promising early technologies from concept to clinic.

Prior to Bridge Medicines, Dr.

Polvino was president and chief executive officer of Veloxis Pharmaceuticals A/S (NASDAQ-OMX:

VELO), a public biotechnology company that deployed proprietary formulation technology to develop and commercialize an innovative oral drug product for transplant patients.

He also served as president and CEO of Helsinn Therapeutics (formerly Sapphire Therapeutics) and has held executive and senior-level positions in drug development at Merck, Wyeth and Theravance.

Polvino earned his medical degree from Rutgers Medical School and a B.S.

in Biology from Boston College.

Polvino is well qualified to serve on our board of directors because of his extensive experience in the biotechnology industry and his extensive public company management experience.

Spragens has served as a member of our board of directors since November 2020.

From 2005 through 2013, Mr.

Spragens was a Co-Founder and the CEO of SafeStitch Medical, Inc., a medical device company that pioneered incisionless surgery techniques that helps to relieve GERD and obesity.

In 2013, SafeStitch merged with TransEnterix, Inc.

In addition, Mr.

Spragens was one of the three founding board members of North American Vaccine, which became a publicly traded company in 1990.

At North American Vaccine, Mr.

Spragens was responsible for securing initial financing and building a commercial manufacturing facility.

Spragens was instrumental in North American Vaccine’s acquisition by Baxter International (NYSE:

BAX) in 1999.

Spragens has also been a successful real estate developer and entrepreneur.

Spragens was President of FCH services from 1973 until 1986.

FCH developed and managed units of coop and condo housing financed with HUD financing with offices in several major cities.

Spragens converted to condo ownership 1,000 apartment units in San Mateo, California, resulting in one of the largest residential projects in California at that time.

Spragens was Managing Partner of Gateway Associates, Inc.

from 1990 to 2000.

In addition, Mr.

Spragens developed and continues to own and operate Inman Grove Shopping Center in Edison, New Jersey.

Spragens is also a well-known and respected philanthropist.

Spragens is a Founding Board Member and Treasurer of Foundation for Peace.

Foundation for Peace provides healthcare, education, and clean water to those in need in Dominican Republic and Haiti.

He is also a member of the Board of Directors and Finance Committee of Hernia Help, which provides free hernia surgery to underserved children and adults in developing countries.

Spragens has a BA from the University of Cincinnati, a Law Degree from George Washington University, and an MA from American University.

Spragens is well qualified to serve on our board of directors because of his extensive public company management and multi-sector investment experience, and his public company board experience.

Director Independence

The listing rules of Nasdaq require us to maintain a board of directors comprised of a majority of independent directors, as determined affirmatively by our board of directors.

In addition, the Nasdaq listing rules require that, subject to specified exceptions, each member of our audit, compensation and nominating and corporate governance committees must be independent.

In addition, the Nasdaq listing rules require that, subject to specified exceptions, each member of our audit, compensation and nominating and corporate governance committees must be

Audit committee members and compensation committee members must also satisfy the independence criteria set forth in Rule 10A-3 and Rule 10C-1, respectively, under the Exchange Act.

Under the Nasdaq listing rules, a director will only qualify as an “independent director”

if, in the opinion of our board of directors, the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out his or her responsibilities.

Under the Nasdaq listing rules, a director will only qualify as an “independent director” if, in the opinion of our board of directors, the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out his or her responsibilities.

Our board of directors has undertaken a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities.

and Erick Lucera (representing six of our eight directors), has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that they each are an “independent director”

as that term is defined under the Nasdaq listing rules.

Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that none of Christine Hamilton, Jeffrey Spragens, William Polvino, David Link, Scott Giberson, Erick Lucera, Katie Ellias, and Andrew Moin (representing eight of our ten directors), has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that they each are an “independent director” as that term is defined under the Nasdaq listing rules.

In making these determinations, our board of directors considered the relationships that each nonemployee director has with us and all other facts and circumstances our board of directors deemed relevant in determining their independence, including consulting relationships, family relationships and the beneficial ownership of our capital stock by each non-employee director.

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Our business and affairs are organized under the direction of our board of directors.

Our board currently consists of eight (8) directors divided into three classes as follows:

each Class I director having a term that expires immediately following our first annual meeting of stockholders following the closing of the Business Combination, which shall be the annual meeting of stockholder for the calendar year ended December 31, 2025;

Our board currently consists of ten (10) directors divided into three classes as follows:

• each Class I director having a term that expires immediately following our annual meeting of stockholders for the calendar year ended December 31, 2025;

• each Class II director having a term that expires immediately following our annual meeting of stockholders for the calendar year ended December 31, 2026;

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or, in each case, until their respective successor is duly elected and qualified, or until their earlier resignation, removal or death.

Lucera and Mr.

Giberson currently serve as the Class I directors, Messrs.

Link and Spragens currently serve as the Class II directors, and Mrs.

Lucera, Giberson, and Dr.

Polvino currently serve as the Class I directors, Ms.

Ellias, Messrs.

Link, Spragens and Moin currently serve as the Class II directors, and Ms.

Hamilton, and Messrs.

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Board Meetings

During 2022, our board of directors held 6 meetings, and each director attended at least 75% of the aggregate of (i) the total number of meetings of our board of directors held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our board of directors on which he or she served during the periods that he or she served.

During 2023, our board of directors held six meetings, and each director attended at least 75% of the aggregate of (i) the total number of meetings of our board of directors held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our board of directors on which he or she served during the periods that he or she served.

Committees of the Board of Directors

Our board of directors has three standing committees:

an audit committee, a nominating and corporate governance committee (“nominating committee”) and a compensation committee.

Subject to phase-in rules and a limited exception, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and Nasdaq rules require that the compensation committee and nominating committee of a listed company be comprised solely of independent directors.

an audit committee, a nominating and corporate governance committee (“nominating committee”) and a compensation committee.

company be comprised solely of independent directors.

Each of our committees is comprised entirely of independent directors .

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On October 22, 2021, we established an audit committee of the board of directors.

Jeffrey Spragens, William Polvino, David Link, and Erick Lucera serve as members of the audit committee, with Jeffrey Spragens serving as the Chairman of the audit committee.

Erick Lucera, William Polvino, and Jeffrey Spragens serve as members of the audit committee, with Erick Lucera serving as the Chairman of the audit committee.

Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent.

Polvino and Messrs.

Spragens and Link meet the independent director standard under Nasdaq listing standards and under Rule 10A-3(b)(1) of the Exchange Act.

Each member of the audit committee is financially literate, and our board of directors has determined that Mr.

Spragens qualifies as an “audit committee financial expert”

as defined in applicable SEC rules.

Polvino, and Mr.

Spragens meet the independent director standard under Nasdaq listing standards and under Rule 10A-3(b)(1) of the Exchange Act.

The Audit Committee held five meetings during 2023.

Each member of the audit committee is financially literate, and our board of directors has determined that each Mr.

Lucera and Mr.

Spragens qualifies as an “audit committee financial expert” as defined in applicable SEC rules.

We adopted a restated audit committee charter on October 22, 2021 which details the principal functions of the audit committee, including:

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• setting clear policies for audit partner rotation in compliance with applicable laws and regulations;

obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii)all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence;

• obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii)all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence;

• reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction;

• reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the FASB, the SEC or other regulatory authorities.

The audit committee charter is available on the corporate governance section of our website, which is located at https://ir.sab.bio/static-files/a6bd0fd3-9f6f-4927-9a79-806338ec0ee9

Compensation Committee

On October 22, 2021, we established a compensation committee of the board of directors.

Christine Hamilton, Scott Giberson and William Polvino serve as members of the compensation committee.

Christine Hamilton serves as the Chairman of the compensation committee.

Christine Hamilton, Eric Lucera and Katie Ellias serve as members of the compensation committee.

Christine Hamilton serves as the Chairwoman of the compensation committee.

Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent.

Polvino and Ms.

Ellias and Ms.

Hamilton are independent.

The Compensation Committee held two meetings during 2023.

We adopted a restated compensation committee charter on October 22, 2021, which details the principal functions of the compensation committee, including:

reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance considering such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;

• reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance considering such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;

• reviewing and approving on an annual basis the compensation, if any is paid by us, of all our other officers;

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• reviewing, evaluating, and recommending changes, if appropriate, to the remuneration for directors.

Notwithstanding the foregoing, other than as indicated in this Annual Report, no compensation of any kind, including finders, consulting, or other similar fees, will be paid to any of our existing stockholders, officers, directors, or any of their respective affiliates, prior to, or for any services they render to effectuate the offering.

Notwithstanding the foregoing, other than as indicated in this Form 10-K, no compensation of any kind, including finders, consulting, or other similar fees, will be paid to any of our existing stockholders, officers, directors, or any of their respective affiliates, prior to, or for any services they render to effectuate the offering.

The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser.

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No person who served as a member of the compensation committee during the fiscal year ended December 31, 2023 was a current or former officer or employee of the Company or engaged in certain transactions with the Company required to be disclosed by regulations of the SEC.

Additionally, there were no compensation committee “interlocks”

during the fiscal year ended December 31, 2022, which generally means that no executive officer of the Company served as a director or member of the compensation committee of another entity, one of whose executive officers served as a director or member of the compensation committee of the Company.

The compensation committee charter is available on the corporate governance section of our website, which is located at https://ir.sab.bio/static-files/3f29e14f-e5da-45b5-9844-20a98ba5f4cd

Additionally, there were no compensation committee “interlocks” during the fiscal year ended December 31, 2023, which generally means that no executive officer of the Company served as a director or member of the compensation committee of another entity, one of whose executive officers served as a director or member of the compensation committee of the Company.

Nominating Committee

On October 22, 2021, we established a nominating committee of the board of directors.

David Link, Christine Hamilton, Scott Giberson and Jeff Spragens serve as members of the Nominating and Governance Committee.

David Link serves as the Chairman of the Nominating and Governance Committee.

David Link, Scott Giberson, and Andrew Moin currently serve as members of the Nominating and Governance Committee.

David Link serves as the Chairman of the nominating committee.

Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the nominating committee, all of whom must be independent.

Hamilton, Mr.

Link and Mr.

Spragens are independent.

Giberson, and Mr.

Moin are independent .

The Nominating Committee held two meetings during 2023.

We adopted a restated nominating committee charter on October 22, 2021, which details the purpose and responsibilities of the nominating committee, including:

screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the board, and recommending to the board of directors’ candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;

• screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the board, and recommending to the board of directors’ candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;

• developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines;

• reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.

The nominating committee will consider several qualifications relating to management and leadership experience, diversity, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors.

The nominating committee will consider several qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors.

The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members.

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In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.

The nominating committee charter is available on the corporate governance section of our website, which is located at https://ir.sab.bio/static-files/3f29e14f-e5da-45b5-9844-20a98ba5f4cd

Executive Sessions of Independent Directors

Independent directors are required to meet regularly without management participation.

During 2023, there were six meetings of independent directors.

Director Nominations

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Our stockholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our bylaws.

Board Diversity

Effective corporate governance is critical for both our long-term performance and maintaining stockholder trust.

Our board of directors is responsible for overseeing the governance, strategy and operation of the Company.

Our eight directors come from diverse backgrounds, drawing on their substantial experience across industries and professional designations, including experience related to:

biotechnology and pharmaceutical;

finance, including investment management and capital markets;

healthcare and medical services and operations;

philanthropy;

public accounting;

and higher education.

Board Leadership Structure

Our board of directors is currently chaired by Samuel Reich.

Our board of directors believes that we and our stockholders are currently best served by this leadership structure.

As Executive Chairman, Mr.

Reich promotes unified leadership and direction for our board of directors and management and provides the critical leadership necessary for carrying out our strategic initiatives.

Reich, together with our board of director’s strong committee system and independent directors, allows our board of directors to maintain effective oversight of our business operations, including independent oversight of our financial statements, executive compensation, selection of director candidates, and corporate governance programs.

We believe our current board of director’s leadership structure enhances its ability to effectively carry out its roles and responsibilities on behalf of our stockholders.

Role of Board in Risk Oversight Process

Our board of directors has an active role, as a whole and also at the committee level, in overseeing risk management.

Our board of directors is responsible for general oversight and regular review of risk management, including financial, strategic, and operational risks.

The compensation committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements, and whether our compensation policies and programs have the potential to encourage excessive risk taking.

The audit committee is responsible for overseeing the management of risks relating to accounting matters and financial reporting.

The nominating committee is responsible for overseeing our corporate governance practices and the management of risks associated with board of director independence and potential conflicts of interest.

Although each committee is responsible for evaluating and overseeing the management of certain risks, the entire board of directors is regularly informed through discussions from committee members about such risks.

The board of directors believes its leadership structure is consistent with and supports the administration of its risk oversight function.

In 2023, there were no material changes have been made to the procedures by which security holders may recommend nominees to our board of directors.

Section 16 Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires certain of our officers and our directors, and persons who own more than 10 percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC.

Section 16(a) of the Exchange Act requires certain of our officers and our directors, and persons who own more than 10 percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC.

Officers, directors, and greater than 10 percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

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Code of Ethics

We adopted a restated Code of Conduct and Ethics (the "Code of Ethics") applicable to our directors, officers, and employees.

A copy of our Code of Ethics is available on our website at https://ir.sab.bio/static-files/cf6414d7-b1d5-40d6-83f9-f7598094d99.

In addition, a copy of the Code of Ethics will be provided without charge by making a written request and mailing it to our corporate headquarters offices to the attention of the Investor Relations Department.

We adopted a restated Code of Ethics applicable to our directors, officers, and employees.

A copy of our Code of Ethics and copies of our audit, nominating and compensation committee charters are available on our website at https://www.sabbiotherapeutics.com/.

In addition, a copy of the Code of Ethics will be provided without charge upon written request, addressed to:

SAB Biotherapeutics, Inc.

2100 East 54th Street North

Sioux Falls, South Dakota 57104

Corporate Secretary

We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.

Please see “

Where You Can Find Additional Information ”

for additional information.

Please see “ Where You Can Find Additional Information ” for additional information.

Board Oversight of Risk

The Board’s Role

The Board’s role in the Company’s risk oversight process includes receipt and review of scheduled and ad hoc reports from members of the executive management team which relate to areas of actual or potential material risk to the Company, including but not limited to, operational, financial, legal, regulatory, strategic, transactional and reputational risks.

The full Board receives these reports from the appropriate “risk owner” within the organization to enable each member of the Board to understand our risk identification, risk management and risk mitigation strategies.

Risk Assessment in Compensation Policies and Practices for Employees

The Compensation Committee reviewed the elements of our compensation policies and practices for all of our employees, including our named executive officers, to evaluate whether risks that may arise from such compensation policies and practices are reasonably likely to have a material adverse effect on our Company.

The Compensation Committee has concluded that the following current features of our compensation programs guard against excessive risk-taking:

• compensation programs provide a balanced mix of short-term and longer-term incentives;

• base salaries are consistent with employees’ duties and responsibilities;

• cash incentive awards are capped by the Compensation Committee;

• cash incentive awards are tied to corporate performance goals, as well as individual performance goals;

• vesting periods for equity awards encourage executives to focus on sustained stock price appreciation;

• our clawback policy provides our Board the ability to recoup any erroneously awarded performance-based compensation from executive officers on account of intentional misconduct;

• our robust stock ownership guidelines for executive officers provide alignment with stockholder interests.

The Compensation Committee believes that, for all of our employees, including our named executive officers, our compensation programs do not lead to excessive risk-taking and instead encourage behavior that supports sustainable value creation.

We believe that risks that may arise from our compensation policies and practices for our employees, including our named executive officers, are not reasonably likely to have a material adverse effect on our Company.

Executive Compensation.

The following is a discussion and analysis of compensation arrangements of the Company’s named executive officers.

This discussion may contain forward-looking statements that are based on the Company’s current plans, considerations, expectations and determinations regarding future compensation programs.

The following is a discussion and analysis of compensation arrangements of the Company’s named executive officers.

This discussion may contain forward-looking statements that are based on the Company’s current plans, considerations, expectations and determinations regarding future compensation programs.

The actual compensation programs that the Company adopts may differ materially from the currently planned programs that are summarized in this discussion.

As an “emerging growth company”

as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.

As an “emerging growth company” as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.

Summary Executive Compensation Table

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Name and Principal Position

Chairman of the Board of Directors and Chief Executive Officer

Sullivan, PhD.

President and Chief Executive Officer

Executive Chairman of the Board of Directors

Alexandra Kropotova, MD (5)

EVP, Chief of Medical Officer

Represents the aggregate grant date fair value of stock option awards granted in the respective fiscal year as computed in accordance with FASB ASC Topic 718, Compensation —

 Stock Compensation .

EVP, Chief Medical Officer

EVP, Chief Financial Officer

Christoph Bausch, PhD (7)

EVP, Chief Operating Officer

(1) Represents the aggregate grant date fair value of stock option awards granted in the respective fiscal year as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation .

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model.

A discussion of the assumptions used in calculating the amounts in this column may be found in the Notes to our audited consolidated financial statements for the year ended December 31, 2022 set forth in this Annual Report.

A discussion of the assumptions used in calculating the amounts in this column may be found in the Notes to our consolidated financial statements for the year ended December 31, 2023 set forth in this Annual Report.

These amounts do not represent the actual amounts paid to or realized by the executives during the fiscal years presented .

Represents the aggregate grant date fair value of restricted stock units granted in the respective fiscal year as computed in accordance with FASB ASC Topic 718, Compensation —

Stock Compensation.

Restricted stock units are valued at market price of the Company’s common stock at the closing price at the date of grant.

(2) Represents the aggregate grant date fair value of restricted stock units granted in the respective fiscal year as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation.

Restricted stock units are valued at market price of the Company’s common stock at the closing price at the date of grant.

These amounts do not represent the actual amounts paid to or realized by the executives during the fiscal years presented .

We granted Eddie Sullivan a stock option to purchase up to 21,218 shares of our common stock at an exercise price of $1.78 per share, the closing price of our common stock on March 16, 2022.

The shares subject to this stock option award will vest 100% of the shares on the one-year anniversary of the grant date and We granted Eddie Sullivan a stock option to purchase up to 35,000 shares of our common stock at an exercise price of $0.71 per share, the closing price of our common stock on September 13, 2022.

The shares subject to this stock option will vest as to 25% of the shares one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

We granted Samuel J.

(3) We granted Mr.

Reich a stock option to purchase up to 7,000 shares of our common stock at an exercise price of $1.78 per share, the closing price of our common stock on March 16, 2022.

The shares subject to this stock option award will vest 100% of the shares on the one-year anniversary of the grant date and We granted Samuel J.

The shares subject to this stock option award

vested 100% of the shares on the one-year anniversary of the grant date and We granted Mr.

Reich a stock option to purchase up to 525,000 shares of our common stock at an exercise price of $0.71 per share, the closing price of our common stock on September 13, 2022.

We granted Alexandra Kropotova 300,000 restricted shares of our common stock under our 2021 Equity Incentive Plan.

The shares subject to this stock award will vest as to 25% of the RSU’s on the one-year anniversary of the grant date, and the remainder of the RSU’s in 36 equal monthly installments thereafter.

Outstanding Equity Awards at Fiscal 2022 Year-End

We granted Mr.

Reich a stock option to purchase up to 525,000 shares of our common stock at an exercise price of $0.54 per share, the closing price of our common stock on March 14, 2023.

“All Other Compensation” includes only employer matching contributions under our 401(k) plan.

(4) We granted Dr.

Sullivan a stock option to purchase up to 21,218 shares of our common stock at an exercise price of $1.78 per share, the closing price of our common stock on March 16, 2022.

The shares subject to this stock option award vested 100% on the one-year anniversary of the grant date.

We granted Dr.

Sullivan a stock option to purchase up to 35,000 shares of our common stock at an exercise price of $0.71 per share, the closing price of our common stock on September 13, 2022.

The shares subject to this stock option vest 25% one the one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

We granted Dr.

Sullivan a stock option to purchase up to 525,000 shares of common stock at an exercise price of $0.54 per share, the closing price of our common stock on March 14, 2023.

The shares subject to this stock option vest 25% one the one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

“All Other Compensation” includes (a) $13,173 representing payment for a lease to occupy an apartment in Sioux Falls, South Dakota, and (b) $12,187 representing employer matching contributions under our 401(k) plan.

(5) On June 6, 2022 we granted Alexandra Kropotova 300,000 restricted shares of our common stock (“RSUs”).

The shares subject to this stock award will vest as to 25% of the RSU’s on the one-year anniversary of the grant date, and the remainder of the RSU’s vest in 36 equal monthly installments thereafter.

On March 14, 2023 we granted Dr.

Kropotova 275,000 (27,500 shares following the Reverse Stock Split) restricted shares of our common stock (“RSUs”).

The shares subject to this stock award will vest as to 25% of the RSU’s on the one-year anniversary of the grant date, and the remainder of the RSU’s vest 36 equal monthly installments thereafter.

“All Other Compensation” includes only employer matching contributions under our 401(k) plan.

(6) We granted Mr.

King a stock option to purchase up to 850,000 shares of our common stock at an exercise price of $0.798 per share, the closing price of our common stock on October 19, 2023.

The award was contingent upon the Mr.

King's commencement of service as Chief Financial Officer of the Registrant, which occurred on October 30, 2023.

The shares subject to this stock option vest 25% one the one-year anniversary of Mr.

King’s commencement of service as Chief Financial Officer , and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

(7) We granted Dr.

Bausch a stock option to purchase up to 24,972 shares of our common stock at an exercise price of $1.78 per share, the closing price of our common stock on March 16, 2022.

The shares subject to this stock option award vested 100% on the one-year anniversary of the grant date.

We granted Dr.

Bausch a stock option to purchase up to 274,875 shares of our common stock at an exercise price of $0.71 per share, the closing price of our common stock on September 13, 2022.

The shares subject to this stock option vest 25% one the one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

We granted Dr.

Bausch a stock option to purchase up to 275,000 shares of common stock at an exercise price of $0.54 per share, the closing price of our common stock on March 14, 2023.

The shares subject to this stock option vest 25% one the one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

“All Other Compensation” includes only employer matching contributions under our 401(k) plan.

Outstanding Equity Awards at Fiscal 2023 Year-End

The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2023.

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Alexandra Kropotova, MD

The shares subject to this stock option award will vest 100% of the shares on the one-year anniversary of the grant date.

Christoph Bausch, PhD

(1) The shares subject to this stock option award will vest as to 33% of the shares on one-year anniversary of the grant date, and vest as to the remainder of the shares in 24 equal monthly installments thereafter.

The shares subject to this stock option award will vest in 22 equal monthly installments.

The shares subject to this stock option award will vest 100% of the shares on the one-year anniversary of the grant date.

(2) The shares subject to this stock option award will vest as to 25% of the shares on one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

(3) The shares subject to this stock option award will vest as to 25% of the shares on one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

The shares subject to this stock award will vest as to 25% of the RSU’s on the one-year anniversary of the grant date, and the remainder of the RSU’s in 36 equal monthly installments thereafter.

(4) The shares subject to this stock option award will vest as to 25% of the shares on one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

(5) The shares subject to this stock option award will vest as to 25% of the shares on one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

(6) The shares subject to this stock option award will vest as to 25% of the shares on one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

(7) Shares subject to these stock awards vest as to 25% of the RSU’s on the one-year anniversary of the grant date, and the remainder of the RSU’s in 36 equal monthly installments thereafter.

(8) The shares subject to this stock option award will vest as to 25% of the shares on one-year anniversary of Mr.

King’s commencement of service as Chief Financial Officer of the Registrant, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

(9) The shares subject to this stock option award will vest as to 25% of the shares on one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

(10) The shares subject to this stock option award will vest as to 25% of the shares on one-year anniversary of the grant date, and vest as to the remainder of the shares in 36 equal monthly installments thereafter.

Named Executive Officer Employment Arrangements

Below are descriptions of the current employment agreements with our named executive officers.

On March 1, 2021, we entered into an Executive Employment Agreement with Dr.

Sullivan to continue to serve as our President & Chief Executive Officer.

The agreement provides Dr.

Sullivan an annual base salary of $377,200, and his eligibility to participate in the Company’s benefit plans generally.

The agreement also subjects Dr.

Sullivan to standard nondisclosure, invention assignment, and arbitration provisions.

Sullivan’s employment is terminated by the Company without Cause (as defined in the employment agreement) (other than for death or disability) or the term of his employment is not renewed, Dr.

Sullivan will receive (i) a severance payment equal to 1 year of his then base salary, payable either in a lump sum or in accordance with the Company’s then-current payroll practices and (ii) the applicable bonus amounts prorated for the portion of the calendar year Dr.

Sullivan was employed so long as he was employed by the Company as of April 1 st of the year of termination and the board of directors has approved a bonus plan for that year (such bonus amount payable by the end of the Company’s fiscal year following the termination).

On November 17, 2021, we entered into an Executive Employment Agreement with Mr.

Reich to serve as our Executive Chairman of the Board of Directors.

Reich to serve as our Chairman of the Board of Directors.

The agreement provides Mr.

Reich an annual base salary of $350,000, and his eligibility to participate in the Company’s benefit plans generally.

The agreement also subjects Mr.

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Reich's employment is terminated by the Company without Cause (as defined in the employment agreement) (other than for death or disability) or the term of his employment is not renewed, Mr.

Reich will receive (i) a severance payment equal to 1 year of his then base salary, payable in a lump sum five business days after his release becomes final, (ii) the applicable accrued but unpaid annual bonus, if any, for the fiscal year ended prior to his date of termination, payable at the same time annual bonuses for such fiscal year are paid to other key executives of the Company, (iii) one hundred percent of his outstanding unvested equity awards as of the date of termination will be fully vested and exercisable, and (iv) reimbursement of the COBRA premiums, if any, for continuation coverage for Mr.

Reich, his spouse and dependents under the Company’s group health, dental and vision plans for a twelve month period from the date of termination.

Reich will receive (i) a severance payment equal to one year of his then base salary, payable in a lump sum five business days after his release becomes final, (ii) the applicable accrued but unpaid annual bonus, if any, for the fiscal year ended prior to his date of termination, payable at the same time annual bonuses for such fiscal year are paid to other key executives of the Company, (iii) one hundred percent of his outstanding unvested equity awards as of the date of termination will be fully vested and exercisable, and (iv) reimbursement of the COBRA premiums, if any, for continuation coverage for Mr.

Reich, his spouse and dependents under the Company’s group health, dental and vision plans for a twelve month period from the date of termination .

On March 5, 2024, we entered into an Executive Employment Agreement with Dr.

Sullivan to continue to serve as our President.

The agreement provides Dr.

Sullivan an annual base salary of $485,000, and his eligibility to participate in the Company’s benefit plans generally.

The agreement also subjects Dr.

Sullivan to standard nondisclosure, invention assignment, and arbitration provisions.

Sullivan’s employment is terminated by the Company without Cause (as defined in the employment agreement) (other than for death or disability) or the term of his employment is not renewed, Dr.

Sullivan will receive:

(i) a severance payment equal to one year of his then base salary, payable in a lump sum five business days after his release becomes final, (ii) the applicable accrued but unpaid annual bonus, if any, for the fiscal year ended prior to his date of termination, payable at the same time annual bonuses for such fiscal year are paid to other key executives of the Company, (iii) one hundred percent of his outstanding unvested equity awards as of the date of termination will be fully vested and exercisable, and (iv) reimbursement of the COBRA premiums, if any, for continuation coverage for Dr.

Sullivan, his spouse and dependents under the Company’s group health, dental and vision plans for a twelve month period from the date of termination.

Alexandra Kropotova

On May 20, 2022, we entered into an Executive Employment Agreement with Dr.

Kropotova to serve as our Executive Vice President –

Chief Medical Officer. 

Kropotova to serve as our Executive Vice President – Chief Medical Officer.

The agreement provides Dr.

Kropotova an annual base salary of $525,000, and her eligibility to participate in the Company’s benefit plans generally. 

The agreement also subjects Dr.

Kropotova to standard nondisclosure, invention assignment, and arbitration provisions. 

Kropotova’s employment is terminated by the Company without Cause (as defined in the employment agreement) (other than for death or disability) or the term of her employment is not renewed, Dr.

Kropotova will receive (i) the applicable accrued but unpaid Annual Bonus, if any, for the calendar year ended prior to her Date of Termination payable at the same time annual bonuses for such calendar year are paid to other key Employees of the Company pursuant to the terms of the Bonus Plan (ii) one hundred percent (100%) of the Employee’s outstanding unvested Equity Awards as of the Date of Termination will be fully vested and exercisable (iii) a severance payment payable in a single lump sum within five (5) business days after the Employee’s Release becomes final, binding and irrevocable in accordance with Section 10 of the Employment Agreement, in an amount equal to twelve (12) months of Base Salary (iv) Reimbursement of the COBRA premiums, if any, paid by the Employee for continuation coverage for the Employee, her spouse and dependents under the Company’s group health, dental and vision plans for six (6) month period from the Date of Termination.

Kropotova to standard nondisclosure, invention assignment, and arbitration provisions.

Kropotova’s employment is terminated by the Company without Cause (as defined in the employment agreement) (other than for death or disability) or the term of her employment is not renewed, Dr.

Kropotova will receive:

(i) a severance payment equal to one year of her then base salary, payable in a lump sum five business days after his release becomes final, (ii) the applicable accrued but unpaid annual bonus, if any, for the fiscal year ended prior to her date of termination, payable at the same time annual bonuses for such fiscal year are paid to other key executives of the Company, (iii) one hundred percent of her outstanding unvested equity awards as of the date of termination will be fully vested and exercisable, and (iv) reimbursement of the COBRA premiums, if any, for continuation coverage for Dr.

Kropotova, her spouse and dependents under the Company’s group health, dental and vision plans for a six month period from the date of termination.

On October 23, 2023, we entered into an Executive Employment Agreement with Mr.

King to serve as our Executive Vice President – Chief Financial Officer.

The agreement provides Mr.

King an annual base salary of $450,000, and his eligibility to participate in the Company’s benefit plans generally.

The agreement also subjects Mr.

King to standard nondisclosure, invention assignment, and arbitration provisions.

King’s employment is terminated by the Company without Cause (as defined in the employment agreement) (other than for death or disability) or the term of his employment is not renewed, Mr.

King will receive:

(i) a severance payment equal to one year of his then base salary, payable in a lump sum five business days after his release becomes final, (ii) the applicable accrued but unpaid annual bonus, if any, for the fiscal year ended prior to her date of termination, payable at the same time annual bonuses for such fiscal year are paid to other key executives of the Company, (iii) fifty percent of his outstanding unvested equity awards as of the date of termination will be fully vested and

exercisable, and (iv) reimbursement of the COBRA premiums, if any, for continuation coverage for Mr.

King, his spouse and dependents under the Company’s group health, dental and vision plans for a six month period from the date of termination.

Christoph Bausch

On March 5, 2024, we entered into an Executive Employment Agreement with Dr.

Bausch to continue to serve as our Chief Operating Officer.

The agreement provides Dr.

Bausch an annual base salary of $425,000, and his eligibility to participate in the Company’s benefit plans generally.

The agreement also subjects Dr.

Bausch to standard nondisclosure, invention assignment, and arbitration provisions.

Bausch’s employment is terminated by the Company without Cause (as defined in the employment agreement) (other than for death or disability) or the term of his employment is not renewed, Dr.

Bausch will receive:

Bausch, his spouse and dependents under the Company’s group health, dental and vision plans for a twelve month period from the date of termination.

Summary Director Compensation Table

The following table sets forth information regarding the compensation awarded to, earned by or paid to our directors for the fiscal year ended December 31, 2023.

or Paid in Cash

Fees Earned or Paid in Cash

Option Awards (1)

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Sullivan, PhD

William Polvino, MD

David Link, MBA

William Polvino, MD

Scott Giberson

Represents the aggregate grant date fair value of stock option awards granted in the respective fiscal year as computed in accordance with FASB ASC Topic 718, Compensation —

 Stock Compensation .

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model.

These amounts do not represent the actual amounts paid to or realized by the executives during the fiscal years presented.

Represents the aggregate grant date fair value of restricted stock units granted in the respective fiscal year as computed in accordance with FASB ASC Topic 718, Compensation —

Stock Compensation.

Restricted stock units are valued at market price of the Company’s common stock at the closing price at the date of grant.

These amounts do not represent the actual amounts paid to or realized by the executives during the fiscal years presented.

SAB Biotherapeutics, Inc. 2021 Omnibus Equity Incentive Plan

The SAB Biotherapeutics, Inc.

2021 Omnibus Equity Incentive Plan (the “Incentive Plan”) was adopted in connection with, and become effective at the closing of, the Business Combination.

Narrative to Director Compensation Table

Our director compensation policy is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders.

Annual Cash Compensation

The annual retainers payable to non-employee directors for service on the Board and its committees are $25,000 for service on the Board.

Inaugural Equity Grants

Each non-employee director who joins the board receives an equity award of an option to purchase 25,000 shares of our common stock, which vests monthly over a three-year period beginning one month from the date of grant.

SAB Biotherapeutics 2021 Equity Incentive Plan

The SAB Biotherapeutics 2021 Equity Incentive Plan (the “Incentive Plan”) was adopted in connection with, and become effective at the closing of, the Business Combination.

Summary of the Incentive Plan

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The full Board must approve all decisions regarding awards to non-employee directors.

Up to a maximum of 11,000,000 shares of our common stock may be delivered in settlement of awards granted under the Incentive Plan initially.

The number of shares authorized for issuance will increase each fiscal year, beginning this fiscal year 2022 and occurring each year thereafter through 2031, by 2.0% of the number of our shares of common stock issued and outstanding on a fully-diluted basis as of the last day of the preceding fiscal year (such lesser number of shares as determined by our board of directors in its sole discretion).

Up to a maximum of 1,600,000 shares of our common stock (as adjusted following the Reverse Stock Split) may be delivered in settlement of awards granted under the Incentive Plan initially.

The number of shares authorized for issuance will increase each fiscal year, beginning fiscal year 2022 and occurring each year thereafter through 2031, by 2.0% of the number of our shares of common stock issued and outstanding on a fully-diluted basis as of the last day of the preceding fiscal year (such lesser number of shares as determined by our board of directors in its sole discretion).

In no event, however, shall the aggregate number of shares that may be issued pursuant to this annual increase under the Incentive Plan exceed 500,000.

Up to a maximum of 11,000,000 shares of our common stock may be issued under the Incentive Plan pursuant to the exercise of incentive stock options.

Up to a maximum of 1,600,000 shares of our common stock (as adjusted following the Reverse Stock Split) may be issued under the Incentive Plan pursuant to the exercise of incentive stock options.

The stock delivered to settle awards made under the Incentive Plan may be authorized and unissued shares or treasury shares, including shares repurchased by us for purposes of the Incentive Plan.

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However, any shares that are withheld or applied as payment for shares issued upon exercise of an award or for the withholding or payment of taxes due upon exercise of an award will continue to be treated as having been delivered under the Incentive Plan and will not again be available for grant under the Incentive Plan.

Upon settlement of any stock appreciation rights (“SARs”), the number of shares underlying the portion of the SARs that is exercised will be treated as having been delivered for purposes of determining the maximum number of shares available for grant under the Incentive Plan and shall not again be treated as available for issuance under the Incentive Plan.

If a dividend or other distribution (whether in cash, shares of common stock or other property), recapitalization, forward or reverse stock split, subdivision, consolidation or reduction of capital, reorganization, merger, consolidation, scheme of arrangement, split-up, spin-off or combination involving us or repurchase or exchange of our shares or other securities, or other rights to purchase shares of our securities or other similar transaction or event affects our common stock such that the compensation committee determines that an adjustment is appropriate in order to prevent dilution or enlargement of the benefits (potential benefits) provided to grantees under the Incentive Plan, the compensation committee will make an equitable change or adjustment as it deems appropriate to the number of type of securities with respect to which awards may be granted, (ii) the number and type of securities subject to outstanding awards, (iii) the exercise price with respect to any option or SAR or, if deemed appropriate, make provision for a cash payment to the holder of such outstanding award, and (iv) the number and kind of outstanding restricted shares, or the shares underlying any other form of award.

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• stock options, including incentive stock options, or ISOs;

• stock appreciation rights, or SARs;

• restricted shares;

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The committee is authorized to grant SARs and stock options (including incentive stock options (ISOs) except that an ISO may only be granted to an employee of ours or one of our subsidiary corporations).

A stock option allows a grantee to purchase a specified number of shares of our common stock at a predetermined price per share (the “exercise price”) during a fixed period measured from the date of grant.

An SAR entitles the grantee to receive the excess of the fair market value of a specified number of shares on the date of exercise over a predetermined exercise price per share.

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A grantee receiving restricted shares will have all of the rights of a stockholder, including the right to vote the shares and the right to receive any dividends, except as otherwise provided in the applicable award agreement.

Upon termination of the grantee’s affiliation with us during the restriction period (or, if applicable, upon the failure to satisfy the specified performance objectives during the restriction period), the restricted shares will be forfeited as provided in the applicable award agreement.

Deferred Stock and Restricted Stock Units

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Restricted stock units and deferred stock awards carry no voting or other rights associated with stock ownership until the shares underlying the award are delivered in settlement of the award.

Unless otherwise determined by the compensation committee, grantees will have the rights to receive dividend equivalents in respect of deferred stock and/or restricted stock units, which dividend equivalents shall be deemed reinvested in additional shares of deferred stock or restricted stock units, as applicable, which shall remain subject to the same forfeiture conditions applicable to the deferred stock or restricted stock units to which such dividend equivalents relate.

as applicable, which shall remain subject to the same forfeiture conditions applicable to the deferred stock or restricted stock units to which such dividend equivalents relate.

Performance Units

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Business Combination, Consolidation or Similar Corporate Transaction

If there is a merger or consolidation of us with or into another corporation or a sale of substantially all of our stock (a “Corporate Transaction”), and the outstanding awards are not assumed by surviving company (its parent company) or replaced with equivalent awards granted by the surviving company(its parent company),the committee will cancel any outstanding awards that are not vested and nonforfeitable as of the consummation of such Corporate Transaction (unless the committee accelerates the vesting of any such awards) and with respect to any vested and nonforfeitable awards, the committee may either (i) allow all grantees to exercise options and SARs within a reasonable period prior to the consummation of the Corporate Transaction and cancel any outstanding options or SARs that remain unexercised upon consummation of the Corporate Transaction, or (ii) cancel any or all of such outstanding awards (including options and SARs) in exchange for a payment (in cash, or in securities or other property) in an amount equal to the amount that the grantee would have received (net of the exercise price with respect to any options or SARs) if the vested awards were settled or distributed or such vested options and SARs were exercised immediately prior to the consummation of the Corporate Transaction.

If an exercise price of an option or SAR exceeds the fair market value of our common stock and the option or SAR is not assumed or replaced by the surviving company(its parent company),such options and SARs will be cancelled without any payment to the grantee.

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Unless earlier terminated by our board of directors, the Incentive Plan will terminate when no shares remain reserved and available for issuance or, if earlier, on the tenth anniversary of the effective date of the Incentive Plan.

SAB Biotherapeutics, Inc. 2021 Employee Stock Purchase Plan

The SAB Biotherapeutics, Inc. 2021 Employee Stock Purchase Plan, (the “ESPP”) was adopted in connection with, and became effective at the closing of, the Business Combination.

SAB Biotherapeutics 2021 Employee Stock Purchase Plan

The SAB Biotherapeutics 2021 Employee Stock Purchase Plan, (the “ESPP”) was adopted in connection with, and became effective at the closing of, the Business Combination.

The ESPP provides eligible employees an opportunity to purchase shares of common stock at a discount through accumulated contributions of their earned compensation.

The ESPP’s initial share reserve is one million shares of SAB Biotherapeutics common stock.

Offering periods will not commence under the ESPP until determined by the board of directors or compensation committee.

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Administration

The ESPP will be administered by the board of directors, or a committee appointed by the board of directors, which may be the compensation committee.

The ESPP is administered by the board of directors, or a committee appointed by the board of directors, which may be the compensation committee.

The board of directors or committee administering the ESPP (the “Administrator”) has authority to construe and interpret the ESPP and to establish rules and regulations for the administration of the ESPP.

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An eligible employee may become a participant in the ESPP by submitting an enrollment form, and payroll deductions for such employee will begin as soon as administratively feasible after such form is received in good order, subject to compliance with such policies, rules and procedures as we may establish in connection therewith.

As of each purchase date (which is the last trading day of an accumulation period as stated above), an employee’s payroll deductions made during the accumulation period and not withdrawn by the employee or otherwise paid to the employee are used to buy shares of Company stock.

The per share purchase price on the purchase date is 85% of the lower of (1) the fair market value of a share of Company stock on the purchase date, or (2) the fair market value of a share of Company stock on the first trading day of the accumulation period.

The per share purchase price on the purchase date is 85% of the lower of (1) the fair

market value of a share of Company stock on the purchase date, or (2) the fair market value of a share of Company stock on the first trading day of the accumulation period.

An employee will not be permitted to purchase more than 25,000 shares of Company stock on any purchase date, or such lower maximum number as may be determined by the Administrator.

An employee’s right to purchase shares under the ESPP in any calendar year cannot exceed $25,000, as measured by the fair market value of such shares (determined for each accumulation period as of the first trading day of the accumulation period).

An employee can invest any amount from 1% to 15% of his or her base earnings in Company stock through payroll deductions under the ESPP.

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An employee may withdraw from the ESPP in full (but not in part) during any accumulation period by delivering a notice of withdrawal to us (in a manner prescribed by the Administrator) at any time prior to the first day of the last calendar month immediately preceding the purchase date for such accumulation period, or at such shorter time in advance of the purchase date as the Administrator may permit.

If notice of withdrawal is timely received, all funds then accumulated in the employee’s account will not be used to purchase shares, but will instead be distributed to the employee as soon as administratively practical, and the employee’s payroll deductions will cease as soon as administratively practical.

An employee also may cease payroll deductions as of the last day of any month during an accumulation period by delivering a notice of cessation to us at the time and in the manner prescribed by the Administrator.

Unless the employee also withdraws from the ESPP as described in the preceding paragraph, the employee’s accumulated payroll deductions will be applied to purchase shares of Company stock on the purchase date as described above.

Participation in the ESPP immediately terminates when an employee ceases to be an eligible employee for any reason, including voluntary or involuntary termination of employment.

Upon the termination of an employee’s participation in the ESPP, all accumulated payroll deductions of the employee will be returned to the employee.

Amendment and Termination

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Under certain circumstances, an amendment to the ESPP may require the approval of our stockholders.

In addition, if the ESPP is amended to change the aggregate number of shares issuable thereunder or the provisions regarding eligible employees, certain tax advantages under the Code as discussed below (see “Certain Federal Income Tax Consequences Relating to the ESPP”) will only continue if we obtain stockholder approval of such amendment.

Certain amendments to the ESPP may be made by the Administrator without stockholder approval.

In the event of any Company reorganization, recapitalization, stock split, reverse stock split, stock dividend, combination of shares, merger, consolidation, acquisition of property or shares, separation, asset spin-off, stock rights offering, liquidation or other similar change in the capital structure of the Company, the shares subject to an employee’s election to purchase Company stock during an accumulation period will be adjusted and the aggregate number and kind of shares available under the ESPP and the purchase price of shares will also be adjusted, in each case to the extent deemed appropriate by the Administrator.

Generally, if a dissolution or liquidation of the Company occurs during an accumulation period, any rights an employee has to acquire Company stock under the ESPP will be terminated, but an employee will have the right to acquire Company stock before the dissolution or liquidation.

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Enrollment or Purchase of Company Stock under the ESPP .

No federal income tax consequences arise at the time of an employee’s enrollment in the ESPP or upon the purchase of Company stock under the ESPP.

However, as discussed below, if an employee disposes of Company stock acquired under the ESPP, such employee will have the federal income tax consequences described below in the year such employee disposes of the stock.

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Early Dispositions .

If an employee disposes of Company stock purchased under the ESPP within two years after the first trading day of an accumulation period or within one year after the shares of Company stock are transferred to such employee or to an account in such employee’s name (the “Tax Holding Period”), such employee will recognize compensation income in the year of disposition in an amount equal to the excess of (A) the lesser of the fair market value of the Company stock on the purchase date or the proceeds from the sale or exchange of the shares over (B) the price such employee paid for the Company stock.

The Company must report such compensation as taxable ordinary income to the Internal Revenue Service on such employee’s annual Form W-2.

The amount, if any, that is taxable as ordinary income is added to the purchase price and becomes part of the cost basis for that Company stock for federal income tax purposes.

If the disposition of the Company stock involves a sale or exchange, such employee generally may also realize a short-term capital gain or loss equal to the difference between such employee’s cost basis (calculated pursuant to the preceding sentence) and the proceeds from the sale or exchange of the shares.

or to an account in such employee’s name (the “Tax Holding Period”), such employee will recognize compensation income in the year of disposition in an amount equal to the excess of (A) the lesser of the fair market value of the Company stock on the purchase date or the proceeds from the sale or exchange of the shares over (B) the price such employee paid for the Company stock.

The Company must report such compensation as taxable ordinary income to the Internal Revenue Service on such employee’s annual Form W-2.The amount, if any, that is taxable as ordinary income is added to the purchase price and becomes part of the cost basis for that Company stock for federal income tax purposes.

If the disposition of the Company stock involves a sale or exchange, such employee generally may also realize a short-term capital gain or loss equal to the difference between such employee’s cost basis (calculated pursuant to the preceding sentence)and the proceeds from the sale or exchange of the shares.

Later Dispositions .

If an employee disposes of Company stock purchased under the ESPP on a date after the Tax Holding Period, or if such employee dies at any time while owning Company stock, such employee (such employee’s estate) will have included in such employee’s compensation as taxable ordinary income in the year of disposition or death, an amount equal to the lesser of

the excess of the fair market value of the Company stock on the first trading day of the accumulation period over the purchase price paid by such employee (the employee’s estate) for the shares, or

(1) the excess of the fair market value of the Company stock on the first trading day of the accumulation period over the purchase price paid by such employee (the employee’s estate) for the shares, or

(2) the excess of the fair market value of the Company stock on the date of disposition or death over the purchase price paid by such employee (the estate) for the shares.

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The cost basis is therefore the sum of the purchase price of the Company stock and the ordinary income recognized from the formula above.

If the disposition of the Company stock involves a sale or exchange, such employee will also realize a long-term capital gain or loss equal to the difference between such employee’s cost basis (calculated pursuant to the preceding sentence) and the proceeds from the sale or exchange of the shares.

The Company is not entitled to a deduction for amounts taxed as ordinary income or capital gain to an employee except to the extent of ordinary income recognized upon a sale or disposition during the Tax Holding Period (an early disposition).

SAB Biotherapeutics 2014 Equity Incentive Plan

The SAB Biotherapeutics 2014 Equity Incentive Plan (the “2014 Incentive Plan”) was adopted on June 27, 2014.

Summary of the 2014 Incentive Plan

The 2014 Incentive Plan covers the grant of awards to our employees (including officers), non-employee consultants and non-employee directors and those of our affiliates.

For purposes of the 2014 Incentive Plan, our affiliates include any “parent” or “majority-owned subsidiary” of the Company, as such terms are defined in Rule 405 of the Securities Act.

The compensation committee administers the 2014 Incentive Plan.

The full Board must approve all decisions regarding awards to non-employee directors.

Up to a maximum of 800,000 shares of our common stock (as adjusted following the Reverse Stock Split) may be delivered in settlement of awards granted under the 2014 Incentive Plan.

Types of Awards

The Incentive Plan permits the granting of any or all of the following types of awards to all grantees:

• stock options, including incentive stock options, and non-statutory Stock Options;

• stock appreciation rights, or SARs;

• restricted shares;

• restricted stock units.

For a description of each of these types of awards, see “SAB Biotherapeutics 2021 Equity Incentive Plan”.

Business Combination, Consolidation or Similar Corporate Transaction

Amendment to and Termination of the 2014 Incentive Plan

The 2014 Incentive Plan may be amended, altered, suspended, discontinued or terminated by our board of directors without further stockholder approval, unless such approval is required by law or regulation or under the rules of any stock exchange or automated quotation system on which our common stock is then listed or quoted.

Thus, stockholder approval will not necessarily be required for amendments which might increase the cost of the 2014 Incentive Plan or broaden eligibility.

Stockholder approval will not be deemed to be required under laws or regulations that condition favorable treatment of grantees on such approval, although our board of directors may, in its discretion, seek stockholder approval in any circumstance in which it deems such approval advisable.

In addition, subject to the terms of the 2014 Incentive Plan, no amendment or termination of the 2014 Incentive Plan may materially and adversely affect the right of a grantee under any award granted under the 2014 Incentive Plan.

Unless earlier terminated by our board of directors, the 2014 Incentive Plan will terminate when no shares remain reserved and available for issuance or, if earlier, on the tenth anniversary of the effective date of the 2014 Incentive Plan, which is June 27, 2024.

Indemnification Agreements

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For more information, see “ Certain Relationships and Related Transactions, and Director Independence - Indemnification Agreements.”

Agreements Related to the Business Combination

We have entered into certain agreements with certain of our named executive officers and directors in connection with the Business Combination.

For more information, see (a) "Certain Relationships and Related Transactions, and Director Independence - Indemnification Agreements" and " - Amended and Restated Registration Rights Agreement," and (b) "Certain Relationships and Related Transactions, and Director Independence - Indemnification Agreements - Pre-Business Combination Related Party Transactions –

Potential Payments upon Termination or Change in Control

The table below reflects, as applicable, amounts payable to our current named executive officers in connection with a termination by the Company without cause.

The table below reflects, as applicable, amounts payable to our current named executive officers in connection with a termination by the Company without cause, by the executive for good reason, or upon non-renewal by the Company in the event of a change in control.

For purposes of our agreements with our named executive officers, “cause” means, in the judgement of the Company:

(i) executive engages in any act or omission which is in bad faith and to the detriment of the Company;

(ii) executive willfully and materially violates any of the Company’s then-current policies and procedures;

(iii) executive’s willful failure to perform his or her duties under the employment agreement;

(ii) executive willfully and materially violates any of the Company’s then-current policies and procedures;

(iii) executive’s willful failure to perform his or her duties under the employment agreement;

(iv) executive exhibits unfitness for service, dishonesty, habitual neglect, persistent and serious deficiencies in performance, or incompetence;

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Name and Principal Position

Chairman of the Board of Directors and Chief Executive Officer

Sullivan, PhD.

President and Chief Executive Officer

Executive Chairman of the Board of Directors

Alexandra Kropotova, MD

EVP, Chief of Medical Officer

EVP, Chief Medical Officer

EVP, Chief Financial Officer

Christoph Bausch, PhD

EVP, Chief Operating Officer

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth information regarding the beneficial ownership of our common stock as of March 28.

The following table sets forth information regarding the beneficial ownership of our common stock as of March 18, 2024 , by:

• each person known to be the beneficial owner of more than 5% of our outstanding common stock;

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Unless otherwise noted, the business address of each of the directors and executive officers of the Company is 2100 East 54th Street North, Sioux Falls, SD 57104.

The percentage of beneficial ownership of the Company is calculated based on 50,397,762 shares of common stock outstanding as of March 28, 2023.

Shares of common stock subject to warrants, options or rights currently exercisable, or exercisable within 60 days of March 28, 2023 are counted as beneficially owned by the selling stockholder.

The percentage of beneficial ownership of the Company is calculated based on 9,225,494 shares of common stock outstanding as of March 18, 2024.

Shares of common stock subject to warrants, options or rights currently exercisable, or exercisable within 60 days of March 18, 2024 are counted as beneficially owned.

Shares Beneficially Owned (1)

Beneficial Owner

Number of Shares Beneficially Owned

Percentage of Common Stock Beneficially Owned

Five Percent Stockholders

Christine Hamilton, MBA (1)

Sullivan, PhD (2)

Executive Officers and Directors

Christine Hamilton, MBA (1)

Christine Hamilton (2)

Sullivan, PhD (3)

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Scott Giberson (8)

All current executive officers and directors as a group (11)

Erick Lucera (9)

Andrew Moin (10)

Katie Ellias (11)

Alexandra Kropotova (12)

Christoph Bausch (14)

All directors and executive officers

as a group (13 persons)

Other 5% Stockholders

Entities affiliated with BVF

Partners (15)

Entities Managed by RTW

Investments, LP (16)

* Represents beneficial ownership of less than one percent (1%).

(1) Except as indicated in these footnotes:

(i) each person named in this table has sole voting and investment power with respect to all shares of Common Stock and Series A Preferred Stock beneficially owned by such person;

(ii) the number of shares beneficially owned by each person includes any restricted shares of Common Stock, shares of Common Stock that may be acquired through the exercise of options and warrants that such person has the right to acquire as of, or within 60 days of March 18, 2024, and after giving effect to any applicable limitations on beneficial ownership described in the footnotes below;

and (iii) the beneficial ownership percentages shown above are based on a total of 15,929,620 eligible voting shares outstanding as of March 18, 2024, being comprised of (a) 9,225,494 shares of Common Stock and (b) 6,704,126 shares of Common Stock assuming conversion of 42,236 shares of Series A-2 Preferred Stock.

(2) Consists of (i) 499,308 shares of common stock held by Ms.

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(iii) 290,901 shares of common stock held by Ms.

Hamilton’s spouse, Dr.

Edward Hamilton;

(iv) 2,500 shares held by Christiansen Investments;

(v) 151,216 shares of common stock underlying stock options held by Ms. Hamilton exercisable within 60 days of March 28, 2023;

and (vi) 465,285 shares of common stock underlying stock options held by her spouse, Dr.

(v) 8,298 shares of common stock underlying warrants that are exercisable within 60 days of March 18, 2024;

(vi) 16,283 shares of common stock underlying stock options held by Ms.

Hamilton exercisable within 60 days of March 18, 2024;

and (vii) 46,528 shares of common stock underlying stock options held by her spouse, Dr.

Edward Hamilton, exercisable within 60 days of March 18, 2024.

Hamilton is a control person with voting and dispositive power over shares of Christiansen Investments and is deemed to have beneficial ownership of the shares held by Christiansen Investments.

Ms. Hamilton disclaims beneficial ownership of such securities except to the extent of her pecuniary interest therein, directly or indirectly.

Hamilton disclaims beneficial ownership of such securities except to the extent of her pecuniary interest therein, directly or indirectly.

(3) Consists of (i) 523,230 shares of common stock held by Dr.

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Reich and Mr.

Reich’s spouse;

(iii) 54,769 of shares of common stock held by Big Cypress Holdings, LLC that are subject to vesting during a period of up to five years after October 22, 2021, which is the Business Combination Closing Date;

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(5) Consists of (i) 39,498 shares of common stock held by Mr.

(ii) 299,002 shares of common stock distributed to Mr.

Spragens as a member of Big Cypress Holdings, LLC;

and (iii) 19,936 shares of common stock underlying warrants that are currently exercisable.

and (ii) 10,291 shares of common stock underlying warrants that are currently exercisable.

(6) Consists of 13,958 shares of common stock underlying stock options held by Dr.

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(ii) 1,209 of shares of common stock held by Iron Horse Investments, LLC;

and (iii) 81,424 shares of common stock underlying stock options held by Mr.

(iii) 4,149 shares of common stock underlying warrants that are currently exercisable;

and (iv) 9,305 shares of common stock underlying stock options held by Mr.

Link exercisable within 60 days of March 18, 2024.

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(8) Consists of 1,534 shares of common stock underlying stock options held by Mr.

Giberson exercisable within 60 days of March 28, 2023. 

Giberson exercisable within 60 days of March 18, 2024.

(9) Consists of 902 shares of common stock underlying stock options held by Mr.

Lucera exercisable within 60 days of March 18, 2024.

(10) Andrew Moin, an Analyst and Partner with Sessa Capital, is a member of the board of directors of the Company.

Sessa Capital (Master), L.P.

and its affiliates beneficially own the securities listed in the table above, and Mr.

Moin disclaims beneficial ownership of such securities.

Sessa is subject to a 4.99% blocker.

(11) Based on information provided on a Form 4 filed with the SEC on November 28, 2023.

Represents an aggregate of 285,714 shares of Common Stock.

These securities are beneficially owned by JDRF T1D Fund, LLC (“JDRF”), directly.

Helen Katherine Ellias, a Managing Director with JDRF, is a member of the board of directors of the Company.

JDRF is a non-profit organization and Ms.

Ellias is an employee of such organization.

Ellias disclaims beneficial ownership of any securities held by JDRF.

(12) Consists of (i) 764 shares of common stock underlying stock options held by Ms.

Kropotova exercisable within 60 days of March 18, 2024;

and (ii) 22,397 shares of common stock underlying restricted stock units that will vest within 60 days of March 18, 2024.

(13) Consists of 500 shares of common stock held by Mr.

King as of March 18, 2024.

(14) Consists of 48,722 shares of common stock underlying stock options held by Mr.

Bausch exercisable within 60 days of March 18, 2024.

(15) Based partially on a Schedule 13G filed with the SEC on December 4, 2023.

Represents an aggregate of (i) 917,826 shares of Common Stock and (ii) 12,217 shares of the Company’s Series A-2 Preferred Stock which are convertible into an aggregate of 1,939,204 shares of Common Stock.

These securities are beneficially owned by Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS LP, and MSI BVF SPV, LLC (collectively, the “BVF Funds”).

The BVF Funds are subject to a 9.99% blocker.

The address of the BVF Funds is 44 Montgomery St., 40th Floor San Francisco, California 94104.

(16) Based partially on a Schedule 13G/A filed with the SEC on February 14, 2024.

Represents an aggregate of (i) 917,827 shares of Common Stock and (ii) 217 shares of the Company’s Series A-2 Preferred Stock which are convertible into an aggregate of 34,443 shares of Common Stock.

These securities are beneficially owned by RTW Master Fund, Ltd., RTW Innovation Master Fund, Ltd., and RTW Biotech Opportunities Ltd (collectively, the “RTW Funds”).

RTW Investments, LP (“RTW”), in its capacity as the investment manager of the RTW Funds, has the power to vote and the power to direct the disposition of the shares held by the RTW Funds.

Accordingly, RTW may be deemed to be the beneficial owner of such securities.

Roderick Wong, M.D., as the Managing Partner of RTW, has the power to direct the vote and disposition of the securities held by RTW.

Wong disclaims beneficial ownership of the shares held by the RTW Funds, except to the extent of his pecuniary interest therein.

The address and principal office of RTW Investments, LP is 40 10th Avenue, Floor 7, New York, NY 10014, and the address of Dr.

Wong and each of the RTW Funds is c/o RTW Investments, LP, 40 10th Avenue, Floor 7, New York, NY 10014.

The RTW Funds are subject to a 9.99% blocker.

Equity Compensation Plan Information

We currently maintain the following equity compensation plans that provide for the issuance of shares of our common stock to our officers and other employees, directors and consultants, each of which has been approved by our stockholders:

the Incentive Plan;

and the ESPP.

We also maintain the 2014 Incentive Plan, which was not approved by our securityholders and was in place prior to us being a public company.

The following table presents information as of December 31, 2023 with respect to compensation plans under which shares of our common stock may be issued:

Number of Securities

to be Issued Upon

Options and Awards

Weighted-average exercise price of outstanding securities

Number of securities remaining available for future issuance under equity compensation plans

Equity compensation plans approved by security holders (2)

Equity compensation plans not approved by security holders (3)

(1) Excluding securities reflected in column (a).

(2) Consists of our 2021 Plan and our ESPP.

(3) Consists of our 2014 Plan.

Certain Relationships and Related Transactions, and Director Independence.

The following includes a summary of transactions since January 1, 2021 to which we have been a party, in which the amount involved in the transaction exceeded the lesser of $120,000 and one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described under “

Executive Compensation .”

Amended and Restated Registration Rights Agreement

In connection with the completion of the Business Combination, we entered into an amended and restated registration rights agreement with the Sponsor, certain of our stockholders, certain stockholders of Legacy SAB and Ladenburg Thalmann & Co.

(Ladenburg), pursuant to which, among other things, Sponsor, certain of our stockholders and certain stockholders of Legacy SAB (i) agreed not to effect any sale or distribution of our common stock held by any of them during the specified lock-up period of 180 days after the closing of the Business Combination and (ii) were granted certain registration rights with respect to their shares of our common stock.

We also agreed that Edward Hamilton will be entitled to have a board observer attend meetings of our board of directors (and any committee thereof) for so long as certain of his affiliates continue to own at least 75% of the shares held by such affiliates on the closing date of the Business Combination.

The amended and restated registration rights agreement will terminate on the earlier of (i) the date that all registrable securities covered by the amended and restated registration rights agreement have sold pursuant to a registration statement effected pursuant to the terms of the amended and restated registration rights agreement or (ii) the date that all registrable securities covered by the amended and restated registration rights agreement are permitted to be sold under Rule 144 promulgated by the SEC under the Securities Act.

The following includes a summary of transactions since January 1, 2023 to which we have been a party, in which the amount involved in the transaction exceeded the lesser of (i) $120,000 and (ii) 1% of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described under “ Executive Compensation .”

October 2023 Private Placement

On September 29, 2023, we entered into a securities purchase agreement with certain accredited investors (the “September 2023 Purchase Agreement”), pursuant to which the Company agreed to issue and sell shares of preferred stock and warrants, in a private placement which provides for up to $110 million in proceeds across multiple tranches.

Between October 2023 and November 2023, we received an aggregate of approximately $67.1 million for shares of preferred stock issued in this private placement offering.

On September 29, 2023, we entered into a Board Designation Agreement, dated as of September 29, 2023, with Sessa Capital (Master), L.P.

(“Sessa Capital”), pursuant to which Andrew Moin, who is a partner of Sessa Capital, was appointed as a member of the Board.

Indemnification Agreements

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Each indemnification agreement provides for indemnification and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from his or her service to us or, at our request, service to other entities, as officers or directors to the maximum extent permitted by applicable law.

Sponsor Support Agreement

Concurrently with the execution of the Business Combination Agreement, we entered into a sponsor support agreement with Sponsor, Ladenburg and certain of our stockholders, pursuant to which Sponsor, Ladenburg and certain of our stockholders agreed to, among other things, (i) vote in favor of the Business Combination Agreement and the transactions contemplated thereby (including the Business Combination) and against any competing transaction, (ii) waive any anti-dilution or similar protection that could be triggered in connection with the Business Combination, (iii) be bound by certain transfer restrictions with respect to our shares of common stock prior to the closing of the Business Combination and (iv) agree to certain forfeiture provisions with respect to up to 598,580 of the shares owned by them (Restricted Shares) during a period of up to five years from the closing of the Business Combination (Vesting Period) as follows:

149,645 of the Restricted Shares will become fully vested and unrestricted if, within the Vesting Period, the volume weighted share price of the Company’s common stock equals or exceeds $15.00 during at least 20 trading days within a 30-day trading period;

149,645 of the Restricted Shares will become fully vested and unrestricted if, within the Vesting Period, the volume weighted share price of the Company’s common stock equals or exceeds $20.00 during at least 20 trading days within a 30-day trading period;

149,645 of the Restricted Shares will become fully vested and unrestricted if, within the Vesting Period, the volume weighted share price of the Company’s common stock equals or exceeds $25.00 during at least 20 trading days within a 30-day trading period;

149,645 of the Restricted Shares will become fully vested and unrestricted if, within the Vesting Period, the volume weighted share price of the Company’s common stock equals or exceeds $30.00 during at least 20 trading days within a 30-day trading period.

Each tranche of Restricted Shares will also become fully vested and unrestricted in the event of a change in control of the Company during the Vesting Period that results in the holders of the Company’s common stock receiving a per-share aggregate consideration equal to or in excess of the applicable tranche of Restricted Shares.

The sponsor support agreement terminated upon the closing of the Business Combination, other than with respect to the Restricted Shares, which will continue to become vested and unrestricted as described above.

Pre-Business Combination Related Party Transactions –

Founder Shares

On January 3, 2021, our legal predecessor, BCYP, effected a stock dividend of 1/3 of a share of common stock for every share of common stock outstanding, resulting in an aggregate of 2,875,000 founder shares outstanding (including up to 375,000 shares subject to forfeiture to the extent that the underwriters’

over-allotment was not exercised in full or in part).

As a result of the underwriters’

election to fully exercise their over-allotment option on January 14, 2021, the 375,000 shares were no longer subject to forfeiture.

As discussed further below, on January 4, 2021, Sponsor forfeited 28,750 founder shares to BCYP and Ladenburg and certain of its employees purchased an aggregate of 28,750 shares from BCYP at an average purchase price of approximately $0.008 per share, for an aggregate purchase price of $230.

Private Placement

Simultaneously with the closing of our initial public offering of units, consisting of one share of common stock and one-half of a detachable warrant (the "Public Warrants") to purchase shares of common stock, on January 14, 2021, Sponsor purchased an aggregate of 417,200 private placement units, at a price of $10.00 per private placement unit, for an aggregate purchase price of $4,172,000, in a private placement.

Each private placement unit was identical to the units sold in our legal predecessor's initial public offering, except that the detachable private warrants (the "Private Placement Warrants") are exercisable on a cashless so long as they are held by the initial purchasers or their permitted transferees.

Promissory Note

On November 19, 2020, Sponsor agreed to loan BCYP an aggregate of up to $250,000 to cover expenses related to the initial public offering pursuant to a promissory note (the "Sponsor Note").

This loan was non-interest bearing and payable on the earlier of December 31, 2021 or the completion of the initial public offering.

Sponsor paid an aggregate of approximately $150,000 to cover for expenses on our behalf under the Note.

On January 14, 2021, we repaid the Sponsor Note in full.

Administrative Services

BCYP agreed to pay an affiliate of Sponsor a monthly fee of an aggregate of $10,000 for office space, utilities and secretarial and administrative support.

Upon completion of the Business Combination, the Company ceased paying these monthly fees.

Policies and Procedures for Transactions with Related Parties

The Company has adopted a written Related Party Transaction Policy that set forth its procedures for the identification, review, consideration and approval or ratification of related person transactions.

A related person includes directors, executive officers, beneficial owners of 5% or more of any class of the Company’s voting securities, immediate family members of any of the foregoing persons, and any entities in which any of the foregoing is an executive officer or is an owner of 5% or more ownership interest.

Under the Related Party Transaction Policy, if a transaction involving an amount in excess of $120,000 has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, information regarding the related person transaction must be reviewed and approved by the Company’s audit committee

In considering related person transactions, the Company’s audit committee will take into account the relevant available facts and circumstances including, but not limited to:

the related person’s interest in the related person transaction;

of 5% or more ownership interest.

In considering related person transactions, the Company’s audit committee will take into account the relevant available facts and circumstances including, but not limited to:

• the related person’s interest in the related person transaction;

• the approximate dollar value of the amount involved in the related person transaction;

the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;

• the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;

• whether the transaction was undertaken in the ordinary course of business of the Company;

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Principal Accounting Fees and Services.

The following table represents aggregate fees billed to the Company for the fiscal years ended December 31, 2022 and 2021 by Mayer Hoffman McCann P.C.

(“MHM”), the Company’s independent registered public accounting firm.

Substantially all of MHM’s personnel, who work under the control of MHM shareholders, are employees of wholly-owned subsidiaries of CBIZ, Inc., which provides personnel and various services to MHM in an alternative practice structure.

The following table represents aggregate fees billed to the Company for the fiscal year ended December 31, 2023 by EisnerAmper LLP (“EisnerAmper”), the Company’s independent registered public accounting firm.

Audit-related fees

All other fees

Audit fees for the fiscal years ended December 31, 2022 and 2021 rendered by MHM relate to professional services rendered for the audits of our financial statements, quarterly reviews, issuance of consents, the Business Combination and review of documents filed with the SEC.

Audit fees for the fiscal years ended December 31, 2023 rendered by EisnerAmper relate to professional services rendered for the audit of our financial statements, quarterly reviews, issuance of consents, and review of documents filed with the SEC.

The following table represents aggregate fees for professional services rendered for the Company by Mayer Hoffman McCann P.C.

(“MHM”), its former independent registered public accounting firm for the years ended December 31, 2023 and 2022.

Audit-related fees

All other fees

Audit fees for the fiscal years ended December 31, 2023 and 2022 rendered by MHM relate to professional services rendered for the audits of our fiscal year 2022 financial statements, quarterly reviews prior to the Company’s change in independent registered public accounting firm, issuance of consents, and review of documents filed with the SEC.

Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by the independent auditor may be pre-approved.

The policy generally provides that we will not engage MHM to render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee (“specific pre-approval”) or (ii) entered into pursuant to the pre-approval policies and procedures described in the policy (“general pre-approval”).

Unless a type of service to be provided by MHM has received general pre-approval under the policy, it requires specific pre-approval by the Audit Committee or by a designated member of the Audit Committee to whom the committee has delegated the authority to grant pre-approvals.

The policy generally provides that we will not engage our independent registered public accounting firm (EisnerAmper) to render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee (“specific pre-approval”) or (ii) entered into pursuant to the pre-approval policies and procedures described in the policy (“general pre-approval”).

Unless a type of service to be provided by our independent registered public accounting firm has received general pre-approval under the policy, it requires specific pre-approval by the Audit Committee or by a designated member of the Audit Committee to whom the committee has delegated the authority to grant pre-approvals.

Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval.

For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the SEC’s rules on auditor independence.

Exhibits, Financial Statement Schedules.

For a list of the financial statements included herein, see Index to the Consolidated Financial Statements on page F-1 of this Annual Report, incorporated into this Item by reference.

(1) For a list of the financial statements included herein, see Index to the Consolidated Financial Statements on page F-1 of this Form 10-K, incorporated into this Item by reference.

(2) Financial statement schedules have been omitted because they are either not required or not applicable or the information is included in the consolidated financial statements or the notes thereto.

(3) Exhibits:

Exhibit Number

Agreement and Plan of Merger, dated as of June 21, 2021, by and among Big Cypress Acquisition Corp., Big Cypress Merger Sub Inc, SAB Biotherapeutics, Inc., and Shareholder Representative Services LLC as the Stockholders’ Representative

Controlled Equity Offering℠ Sales Agreement, dated as of January 26, 2024 by and between Cantor Fitzgerald & Co.

and SAB Biotherapeutics, Inc.

January 26, 2024

October 28, 2021

6 unchanged sentences

October 28, 2021

Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Voting Preferred Stock

October 2, 2023

Certificate of Amendment to the Amended and Restated Certificate of Incorporation

November 22, 2023

Certificate of Amendment to the Certificate of Incorporation, as amended and restated, dated January 2, 2024

January 3, 2024

Specimen common stock Certificate of Registrant.

4 unchanged sentences

January 4, 2021

Description of Registrant’s Securities

Form of Preferred Tranche A Warrant

October 2, 2023

Form of Preferred Tranche B Warrant

October 2, 2023

Form of Preferred Tranche C Warrant

October 2, 2023

Amended and Restated Registration Rights Agreement.

1 unchanged sentence

Employment Agreement, dated March 1, 2021, by and between SAB Biotherapeutics, Inc.

10.2¥ 

October 28, 2021

2 unchanged sentences

November 19, 2021

Employment Agreement, dated September 15, 2021, by and between SAB Biotherapeutics, Inc.

and Russell Beyer. 

October 28, 2021

Kropotova Agreement.

Form of Indemnification Agreement.

17 unchanged sentences

September 22, 2021

Executive Employment Agreement, dated May 20, 2022, by and between SAB Biotherapeutics, Inc.

and Alexandra Kropotova

April 14, 2023

Third Amendment to Amended and Restated Lease Agreement

April 14, 2023

Fourth Amendment to Amended and Restated Lease Agreement

6 unchanged sentences

December 12, 2022

Letter to SEC from Marcum LLP

Form of Securities Purchase Agreement, dated September 29, 2023 by and among SAB Biotherapeutics, Inc.

and the purchasers named therein

October 2, 2023

Executive Employment Agreement between SAB Biotherapeutics, Inc.

and Michael G.

King, dated October 23, 2023

October 27, 2023

Legacy SAB Biotherapeutics, Inc.

2014 Equity Incentive Plan

February 23, 2024

Executive Employment Agreement between SAB Biotherapeutics, Inc.

Sullivan, dated March 5, 2024

March 8, 2024

Executive Employment Agreement between SAB Biotherapeutics, Inc.

and Christoph Bausch, dated March 5, 2024

March 8, 2024

Letter from Mayer Hoffman McCann P.C.

to the Securities and Exchange Commission dated July 31, 2023

July 31, 2023

List of Subsidiaries

 October 28, 2021

Consent of Mayer Hoffman McCann P.C.

Consent of EisnerAmper LLP

Power of Attorney (included on a signature page of the initial filing of this Annual Report)

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Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SAB Biotherapeutics, Inc.

Clawback Policy

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* Filed herewith.

**In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No.

33-8238 and 34-47986, Final Rule:

Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-K and will not be deemed “filed”

for purposes of Section 18 of the Exchange Act.

Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

**** Certain portions of this exhibit (indicated by “[***]”) have been redacted pursuant to Regulation S-K, Item 601(b)(10)(iv).

+ Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

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SAB BIOTHERAPEUTICS, INC.

April 14, 2023

Chief Executive Officer

March 28, 2024

/s/ Samuel J.

Chair and Chief Executive Officer

The undersigned officers and directors of SAB Biotherapeutics, Inc., hereby severally constitute and appoint Samuel J.

Reich and Eddie J.

Sullivan, and each of them individually, with full power of substitution and resubstitution, as their true and lawful attorneys and agents, to do any and all acts and things in their name and behalf in their capacities as directors and officers and to execute any and all instruments for them and in their names in the capacities indicated below, which said attorneys and agents, may deem necessary or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Annual Report on Form 10-K, including specifically but without limitation, power and authority to sign for them or any of them in their names in the capacities indicated below, any and all amendments hereto, and they do hereby ratify and confirm all that said attorneys and agents, or either of them, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Director and Chief Executive Officer

April 14, 2023

/s/ Samuel J.

Chair and Chief Executive Officer

March 28, 2024

(Principal Executive Officer)

/s/ Russell Beyer

/s/ Michael G.

Chief Financial Officer

April 14, 2023

Russell Beyer

March 28, 2024

Michael G King, Jr.

(Principal Financial Officer and Principal Accounting Officer)

/s/ Samuel J.

Director and Executive Chairman

April 14, 2023

Sullivan, PhD

President and Director

March 28, 2024

Sullivan, PhD

/s/ Katie Ellias

March 28, 2024

/s/ Christine Hamilton, MBA

April 14, 2023

March 28, 2024

Christine Hamilton, MBA

/s/ David Charles Link

April 14, 2023

David Charles Link

/s/ William Polvino, MD, PhD

April 14, 2023

William Polvino, MD, PhD

/s/ Jeffrey G.

April 14, 2023

/s/ Scott Giberson

April 14, 2023

Scott Giberson

/s/ Scott Giberson, RPh, MPH, D.Sc.

March 28, 2024

Scott Giberson, RPh, MPH, D.Sc.

/s/ David Link, MBA

March 28, 2024

David Link, MBA

/s/ Erick Lucera

April 14, 2023

March 28, 2024

/s/ Andrew Moin

March 28, 2024

/s/ William Polvino, MD

March 28, 2024

William Polvino, MD

/s/ Jeffrey G.

March 28, 2024

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2022 and 2021 (Restated)

Consolidated Statements of Operations for the years ended December 31, 2022 and 2021

Consolidated Statements of Changes In Stockholders’ Equity (Deficit) for the years ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 (Restated)

Report of Independent Registered Public Accounting Firm (PCAOB ID 274)

Report of Independent Registered Public Accounting Firm (PCAOB ID 199)

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements

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SAb Biotherapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of SAB Biotherapeutics, Inc.

and Subsidiaries (the “Company”) as of December 31, 2023, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s 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 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 financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We also have audited the adjustments to the 2022 financial statements to retrospectively reflect the reverse stock split, as described in Note 2.

In our opinion, such adjustments are appropriate and have been properly applied.

We were not engaged to audit, review, or apply any procedures to the 2022 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2022 financial statements taken as a whole.

/s/ EisnerAmper LLP

We have served as the Company’s auditor since 2023.

EISNERAMPER LLP

Iselin, New Jersey

March 28, 2024

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

SAB Biotherapeutics, Inc.

and Subsidiaries

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of SAB Biotherapeutics, Inc.

and Subsidiaries (“Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, changes in stockholders’

equity (deficit), and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have audited, before the effects of the adjustments to retrospectively apply the reverse stock split described in Note 2, the accompanying consolidated balance sheet of SAB Biotherapeutics, Inc.

and Subsidiaries (“Company”) as of December 31, 2022, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).

The 2022 financial statements before the effects of the adjustments discussed in Note 2 are not presented herein.

In our opinion, the financial statements, before the effects of the adjustments to retrospectively apply the reverse stock split described in Note 2, present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the reverse stock split described in Note 2 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied.

Those adjustments were audited by EisnerAmper L.L.P.

Going Concern Uncertainty

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company does not generate sufficient cash flows from operations to maintain operations and, therefore, is dependent on additional financing to fund operations. 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1 to the financial statements.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1 to the financial statements.

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Restatement of 2021 Financial Statements

As discussed in Note 2 to the financial statements, the 2021 financial statements have been restated to correct certain misstatements.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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 financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

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 audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company's auditor since 2019.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Mayer Hoffman McCann P.C.

We served as the Company's auditor from 2019 to 2023

San Diego, California

3 unchanged sentences

Consolidated Balance Sheets

December 31, 2022

December 31, 2021 (Restated)

Current assets

Cash and cash equivalents

$ 15,046,894  

$ 33,206,712  

Restricted cash

6,338,306  

Accounts receivable, net

5,556,577  

8,010,708  

Prepaid expenses

1,493,982  

2,636,224  

Prepaid expenses and other current assets

Total current assets

22,097,453  

50,191,950  

Long-term prepaid insurance

467,694  

Operating lease right-of-use assets

1,192,054  

2,615,204  

Financing lease right-of-use assets

3,896,873  

4,019,322  

Property, plant and equipment, net

23,250,853  

24,314,455  

$ 50,904,927  

$ 81,140,931  

Liabilities and Stockholders’

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$ 3,679,116  

$ 4,458,525  

Forward share purchase liability

6,338,306  

Notes payable

772,665  

1,796,724  

Operating lease liabilities, current portion

490,794  

1,142,413  

Finance lease liabilities, current portion

132,788  

161,050  

Due to related party

Deferred grant income

100,000  

Accrued expenses and other current liabilities

9,917,981  

12,455,888  

Total current liabilities

14,993,344  

26,455,273  

Operating lease liabilities, noncurrent

361,225  

1,653,185  

Finance lease liabilities, noncurrent

3,629,642  

3,762,430  

Warrant liabilities

320,930  

10,720,130  

Convertible Debt

541,644  

Notes payable, noncurrent

Total liabilities

19,846,785  

42,591,018  

Commitments and contingencies (Note 17)

Stockholders’

Stockholders’ equity

Preferred stock;

$ 0.0001 par value;

10,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

10,000,000 shares authorized, 42,236 shares issued and outstanding at December 31, 2023 and 0 shares issued and outstanding at December 31, 2022, respectively

Common stock;

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Treasury stock, at cost;

546,658 and 0 shares held at December 31, 2022 and December 31, 2021, respectively

( 5,521,246 )  

54,665 shares held at December 31, 2023 and 2022

Additional paid-in capital

84,444,049  

67,674,515  

Accumulated other comprehensive income

Accumulated deficit

( 47,869,755 )  

( 29,128,951 )

Total stockholders’

31,058,142  

38,549,913  

Total liabilities and stockholders’

$ 50,904,927  

$ 81,140,931  

Total stockholders’ equity

Total liabilities and stockholders’ equity

* The consolidated balance sheets' common stock share amounts have been retroactively adjusted to account for the Company's 1:10 Reverse Stock Split, effective January 5, 2024.

See accompanying notes to the consolidated financial statements.

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and Subsidiaries

Consolidated Statements of Operations

Year Ended December 31,

Consolidated Statements of Operations and Comprehensive Loss

For The Year Ended December 31,

Grant revenue

7 unchanged sentences

Changes in fair value of warrant liabilities

Gain on debt extinguishment of Paycheck Protection Program SBA Loan

Interest expense

2 unchanged sentences

Loss before income taxes

Income tax expense

Loss per common share attributable to the Company’s shareholders

Income tax expense (benefit)

Other comprehensive loss:

Foreign currency translation

Total comprehensive loss

Loss per common share attributable to the Company’s shareholders

Basic and diluted loss per common share

Weighted-average common shares outstanding –

basic and diluted

Weighted-average common shares outstanding – basic and diluted

*The consolidated statements of operations and comprehensive loss's share and per share amounts have been retroactively adjusted to account for the Company's 1:10 Reverse Stock Split, effective January 5, 2024.

See accompanying notes to the consolidated financial statements.

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and Subsidiaries

Consolidated Statements of Changes In Stockholders ’

Equity (Deficit)

Consolidated Statements of Changes In Stockholders’ Equity

For the years ended December 31, 2023 and 2022

Preferred Stock

Treasury Stock

Additional Paid-In Capital

Accumulated Deficit

Total Stockholders’

Balance at December 31, 2020

25,973,406  

$ 2,598  

$ 50,989,657  

$ ( 11,984,420 )  

$ 39,007,835  

Effect of Business Combination and recapitalization, net of redemptions and issuance costs of $ 3,294,096

7,009,436  

7,603,133  

7,603,834  

Issuance of restricted stock, subject to forfeiture

10,491,937  

Forward Share Purchase Agreement, partial settlement

6,760,294  

Stock-based compensation

2,314,682  

Issuance of common stock for exercise of stock options

12,500  

( 17,144,531 )  

Paid-In Capital

Accumulated Other Comprehensive Income

Total Stockholders’

Balance at December 31, 2021

43,487,279  

$ 4,349  

$ 67,674,515  

$ ( 29,128,951 )  

$ 38,549,913  

Forward Share Purchase Agreement, final settlement

817,060  

Repurchase of common stock pursuant to the Forward Share Purchase Agreement

5,521,246  

( 546,658 )  

( 5,521,246 )  

Stock-based compensation

2,674,204  

Issuance of common stock for exercise of stock options

90,264  

76,962  

76,971  

Issuance of common stock and warrants under private placement offering, net of issuance costs of $ 0.3 million

7,363,377  

7,680,062  

7,680,798  

( 18,740,804 )  

Balance at December 31, 2022

50,940,920  

$ 5,094  

$ 84,444,049  

( 546,658 )  

$ ( 5,521,246 )  

$ ( 47,869,755 )  

$ 31,058,142  

Issuance of common stock for exercise of stock options

Issuance of common stock for settlement of accrued liabilities and professional fees

Professional fees settled with warrants

Professional fees settled with shares

Issuance of Series A Preferred Stock and warrants under private placement offering

Series A Preferred Stock warrant exercise

Conversion of Series A Preferred Stock into common shares

Stock-based compensation

Foreign currency translation

Balance at December 31, 2023

*The consolidated statements of stockholder's equity share amounts have been retroactively adjusted to account for the Company's 1:10 Reverse Stock Split, effective January 5, 2024.

See accompanying notes to the consolidated financial statements.

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Year Ended December 31,

2021 (Restated)

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Gain on debt extinguishment of Paycheck Protection Program SBA Loan

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Amortization of right-of-use assets

Amortization of finance right-of-use assets

Stock-based compensation expense

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Gain on partial lease termination

Loss on private placement issuance

Gain from private placement warrant termination

Changes in fair value of warrant liabilities

Professional fees settled with equity instruments

Changes in operating assets and liabilities

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Accrued expense and other current liabilities

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash flows from investing activities:

Proceeds from the sale of property, plant and equipment

Purchases of property, plant and equipment

Proceeds from the sale of equipment

Purchases of equipment

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from Business Combination, net of transaction costs

Proceeds from issuance of notes payable

Payments on notes payable

Proceeds from issuance of common stock

Proceeds from private placement issuance of preferred stock and warrants

Proceeds from exercise of private placement preferred warrants

Payments related to the Forward Share Purchase Agreement

Proceeds from issuance of notes payable

Payments of notes payable

Principal payments on finance leases

Proceeds from exercise of stock options

Proceeds from issuance of common stock

Net cash used in financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents

Beginning of year

End of period

Supplemental cash flow information:

Cash paid for interest

Cash paid for income taxes

Supplemental information on non-cash investing and finance activities:

Right-of-use assets obtained in exchange for operating lease liabilities

Right-of-use assets forfeited due to partial lease terminations

Operating lease liabilities eliminated due to partial lease terminations

Note payable issued in consideration for abated lease payments

Settlement of accrued liabilities through the issuance of common stock

Issuance of common stock for prepaid marketing and investor related consulting services

Fair value of private placement preferred warrant liability associated with warrant exercise

See accompanying notes to the consolidated financial statements.

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and subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Notes to con SOLIDATED financial statements

(1) Nature of Business

On October 22, 2021 ( the "Closing Date"), the Company consummated the business combination contemplated by the agreement and plan of merger, dated as of June 21, 2021, as amended on August 12, 2021, made by and among BCYP, Big Cypress Merger Sub Inc., a Delaware corporation (“Merger Sub”), SAB Biotherapeutics, Inc., a Delaware corporation (“SAB”

or the “Company”), and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative, agent and attorney-in-fact of the SAB Stockholders.

Upon closing of the Business combination, Big Cypress Merger Sub merged with SAB Biotherapeutics, with SAB Biotherapeutics as the surviving company of the merger.

Upon closing of the business combination, BCYP changed its name to “SAB Biotherapeutics, Inc.”.

SAB Biotherapeutics, Inc.

is a clinical-stage biopharmaceutical company focused on the development and commercialization of a portfolio of products from its proprietary immunotherapy platform to produce fully targeted human polyclonal antibodies, without using human plasma or serum.

SAB’s novel DiversitAb platform enables the rapid production of large amounts of targeted human polyclonal antibodies, leveraging transchromosomic cattle (Tc Bovine™) that have been genetically designed to produce human antibodies (immunoglobulin G) rather than bovine in response to an antigen.

Animal antibodies have been made in rabbits, sheep and horses.

However, SAB's platform is the first to produce fully human antibodies in large animals.

The COVID- 19 pandemic continues to evolve, and the extent to which it may impact the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the U.S.

and other countries, business closures or business disruptions, and the effectiveness of actions taken in the U.S.

and other countries to contain and treat the disease.

The Company is following, and will continue to follow, recommendations from the U.S.

Centers for Disease Control and Prevention, as well as federal, state, and local governments.

To date, the Company has not experienced material business disruptions, but it cannot be certain of the future impact of the COVID- 19 pandemic on its business and consolidated financial statements.

Going Concern

As of December 31, 2022 , the Company has experienced net losses, negative cash flows from operations and had an accumulated deficit of $ 47.9  million.

The Company anticipates to continue to generate losses for the foreseeable future, and expects the losses to increase as the Company continues the development of, and seek regulatory approvals for, product candidates, and begin commercialization of products.

As a result, the Company will require additional capital to fund operations in order to support long-term plans, in particular, following the JPEO Rapid Response Contract Termination.

These factors raise substantial doubt about the Company’s ability to continue as a going concern for the one -year period following the date that these financial statements were issued.

To continue as a going concern, the Company will need, among other things, to raise additional capital resources.

SAB Biotherapeutics, Inc., a Delaware corporation (“SAB” or “SAB Biotherapeutics”, and together with its subsidiaries, the “Company”), is a clinical-stage biopharmaceutical company focused on the development and commercialization of a portfolio of products from its proprietary immunotherapy platform to produce fully targeted human polyclonal antibodies, without using human plasma or serum.

SAB’s novel immunotherapy platform that is developing fully-human hIgC for delaying onset or progression of T1D.

Australian Research and Development Tax Credit

In June 2023, the Company formed a new subsidiary in Australia, SAB BIO PTY LTD, a proprietary limited company (“SAB Australia”), primarily to conduct preclinical and clinical activities for product candidates.

SAB Australia’s research and development activities qualify for the Australian government’s tax credit program, which provides a 39.5 % credit for qualifying research and development expenses.

The Company started Phase 1 trials in the fourth quarter of 2023.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

The Company has experienced net losses, negative cash flows from operations and, as of December 31, 2023, had an accumulated deficit of $ 90.1 million .

The Company anticipates to continue to generate losses for the foreseeable future and expects the losses to increase as the Company continues the development of, or seeks regulatory approvals for product candidates, and begins commercialization of products.

As a result, the Company will require additional capital to fund operations in order to support long-term plans.

On September 29, 2023, the Company entered into a securities purchase agreement with certain accredited investors (the “September 2023 Purchase Agreement”), pursuant to which the Company agreed to issue and sell shares of preferred stock and warrants, in a private placement which provides for up to $ 110 million in proceeds across multiple tranches.

Between October 2023 and November 2023, the Company received an aggregate of approximately $ 67.1 million for shares of preferred stock issued in this private placement offering.

See Note 12, Warrants for further information about the private placement offering.

Based on the Company’s current level of operating expenses, existing resources will be sufficient to cover operating cash needs through the twelve months following the date these financials are issued.

The Company plans to seek additional funding through a combination of equity or debt financings, or other third-party financing, collaborative or other funding arrangements.

Should the Company seek additional financing from outside sources, the Company may not be able to raise such financing on terms acceptable to the Company or at all.

If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required to scale back or discontinue the advancement of product candidates, reduce headcount, liquidate the Company's assets, file for bankruptcy, reorganize, merge with another entity, or cease operations.

The consolidated financial statements as of December 31, 2022 , have been prepared on the basis that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for the Company to continue as a going concern.

( 2 ) Restatement of Financial Statements

In March 2023, the Audit Committee of the Company’s Board of Directors and the Company’s management concluded that the Company’s previously issued audited financial statements contained within the Annual Report on Form 10 -K for the year ended December 31, 2021 ( the “Prior Year Financial Statements”), and the Company's previously issued interim financial statements included in the Company's Quarterly Reports on Forms 10 -Q for the three months ended March 31, 2022, the six months ended June 30, 2022, and nine months ended September 30, 2022 ( the “Prior Period Interim Financial Statements”), should no longer be relied upon as a result of the following accounting errors:

The Company concluded that it did not correctly account for a financed insurance premium whereby a third -party lender prepaid the Company's annual insurance premiums to our insurance companies in exchange for a short-term interest bearing note (the “Insurance Financing Agreement”).

The Company previously recognized, on its consolidated balance sheet, a current prepaid asset for the amount paid by the Company under the Insurance Financing Agreement in excess of the total amortized value of the prepaid insurance policy. The Company reassessed its accounting for the Insurance Financing Agreement and determined that the Insurance Financing Agreement should be classified as a current note payable with the full amount of the insurance premium recognized as current prepaid asset at the time the Company entered into the Insurance Financing Agreement. 

The Company concluded that the Insurance Financing Agreement and corresponding payment to the third -party lender constitutes a constructive receipt and disbursement of cash.

As a result, the Company determined the cash flows from financing activities contained within the Prior Year Financial Statements is understated—this error is accompanied by a corresponding overstatement in cash flows from operating activities due to an understated prepaid asset.

Similar to the above assessment, the Company concluded that the cash payments to the third -party lender should be presented within cash flows from financing activities.

As a result, the Company determined the cash flows from financing activities contained within the Prior Period Interim Financial Statements are overstated—this error is accompanied by a corresponding understatement in cash flows from operating activities due to the derecognition of the previously unrecognized prepaid asset.

Impact of the Restatement

The Company has restated herein its audited financial statements at December 31, 2022 for the year ended December 31, 2021.

We have also restated interim financial statement periods for the 

three months ended March 31, 2022, the six months ended June 30, 2022, and nine months ended September 30, 2022, See Note 21, Quarterly Financial Information (Unaudited) .

December 31, 2021

As Previously Reported

Current assets

Cash and cash equivalents

$ 33,206,712  

Restricted cash

6,338,306  

Accounts receivable, net

8,010,708  

Prepaid expenses

864,513  

1,771,711  

2,636,224  

Total current assets

48,420,239  

1,771,711  

50,191,950  

Operating lease right-of-use assets

2,615,204  

Financing lease right-of-use assets

4,019,322  

Equipment, net

24,314,455  

$ 79,369,220  

$ 1,771,711  

$ 81,140,931  

Liabilities and Stockholders’

Current liabilities

Accounts payable

$ 4,458,525  

Forward share purchase liability

6,338,306  

Notes payable –

current portion

25,013  

1,771,711  

1,796,724  

Operating lease liabilities, current portion

1,142,413  

Finance lease liabilities, current portion

161,050  

Due to related party

Deferred grant income

100,000  

Accrued expenses and other current liabilities

12,455,888  

Total current liabilities

24,683,562  

1,771,711  

26,455,273  

Operating lease liabilities, noncurrent

1,653,185  

Finance lease liabilities, noncurrent

3,762,430  

Warrant liabilities

10,720,130  

Notes payable, noncurrent

Total liabilities

40,819,307  

1,771,711  

42,591,018  

Commitments and contingencies (Note 17)

Stockholders’

Preferred stock;

$ 0.0001 par value;

10,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2021 and 2020

Common stock;

$ 0.0001 par value;

490,000,000 shares authorized at December 31, 2021 and 2020;

43,487,279 and 25,973,406 shares issued and outstanding at December 31, 2021 and 2020, respectively

Additional paid-in capital

67,674,515  

Accumulated deficit

( 29,128,951 )  

Total stockholders’

38,549,913  

Total liabilities and stockholders’

$ 79,369,220  

$ 1,771,711  

$ 81,140,931  

Year Ended December 31, 2021

As Previously Reported

Cash flows from operating activities:

Net (loss) income

$ ( 17,144,531 )  

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Gain on debt extinguishment of Paycheck Protection Program SBA Loan

( 665,596 )  

Depreciation and amortization

1,488,614  

Amortization of right-of-use assets

164,983  

Stock-based compensation expense

2,314,682  

Gain on sale of equipment

( 5,488 )  

Changes in fair value of warrant liabilities

4,151,068  

Changes in operating assets and liabilities

Accounts receivable

12,558,790  

Prepaid expenses

513,363  

( 1,771,711 )  

( 1,258,348 )

Right-of-use assets –

operating lease

( 63,626 )  

Accounts payable

( 2,935,521 )  

Deferred income

Due to related party

( 2,727 )  

Accrued expense and other current liabilities

3,384,573  

Net cash provided by operating activities

3,758,584  

( 1,771,711 )  

1,986,873  

Cash flows from investing activities:

Proceeds from the sale of equipment

Purchases of equipment

( 10,943,657 )  

Net cash used in investing activities

( 10,943,657 )  

Cash flows from financing activities:

Proceeds from Business Combination, net of transaction costs

34,340,225  

Proceeds from issuance of notes payable

2,840,619  

Payments of notes payable

( 24,143 )  

( 1,068,908 )  

( 1,093,051 )

Principal payments on finance leases

( 203,124 )  

Proceeds from exercise of stock options

Net cash provided by financing activities

34,119,708  

1,771,711  

35,891,419  

Net increase in cash, cash equivalents, and restricted cash

26,934,635  

Cash, cash equivalents, and restricted cash

Beginning of year

12,610,383  

$ 39,545,018  

If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required to scale back or discontinue the advancement of product candidates, reduce headcount, liquidate assets, file for bankruptcy, reorganize, merge with another entity, or cease operations.

(2) Summary of Significant Accounting Policies

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Basis of presentation

The financial statements have been prepared in conformity with U.S.

GAAP and include all adjustments necessary for the fair presentation of the Company’s financial position for the years presented.

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S.

GAAP (the “Reverse Recapitalization”).

Under this method of accounting, BCYP is treated as the “acquired”

company and SAB Biotherapeutics is treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of SAB Biotherapeutics issuing stock for the net assets of BCYP, accompanied by a recapitalization.

The net assets of BCYP are stated at historical cost, with no goodwill or other intangible assets recorded.

SAB Biotherapeutics was determined to be the accounting acquirer based on the following predominant factors:

SAB Biotherapeutics’

shareholders have the largest portion of voting rights in the Company;

the Board and Management are primarily composed of individuals associated with SAB Biotherapeutics;

the operations of SAB comprise the ongoing operations of the Company.

The financial statements have been prepared in conformity with GAAP and include all adjustments necessary for the fair presentation of the Company’s financial position for the years presented.

Emerging growth company status

Section 102 (b)( 1 ) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new

or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Principles of consolidation

The accompanying consolidated financial statements include the results of the Company and its wholly owned subsidiaries, SAB Capra, LLC and Aurochs, LLC.

The accompanying consolidated financial statements include the results of the Company and its wholly owned subsidiaries, SAB Sciences, Inc., SAB LLC, SAB Capra, LLC, Aurochs, LLC, and SAB Australia.

Intercompany balances and transactions have been eliminated in consolidation .

Significant risks and uncertainties

The Company’s operations are subject to a number of factors that can affect its operating results and financial condition.

Such factors include, but are not limited to, the results of research and development efforts, clinical trial activities of the Company’s product candidates, the Company’s ability to obtain regulatory approval to market its product candidates, competition from products manufactured and sold or being developed by other companies, and the Company’s ability to raise capital.

The Company currently has no commercially approved products and there can be no assurance that the Company’s research and development will be successfully commercialized.

The Company’s operations are subject to a number of factors that can affect its operating results and financial condition.

The Company currently has no commercially approved products and there can be no assurance that the Company’s research and development 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 obtaining and protecting intellectual property.

Additional funding may be needed to cover operational costs as the Company moves forward with the Company's efforts to develop a commercially approved product.

Funding from government grants is not guaranteed to cover all costs, and additional funding may be needed to cover operational costs as the Company moves forward to with our efforts to develop a commercially approved product.

Use of estimates

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the financial statements.

The Company has used significant estimates in its determination of stock-based compensation assumptions, determination of the fair value of the Company’s common stock prior to becoming a public company, determination of the fair value of the Company's warrants, determination of the incremental borrowing rate (“IBR”) used in the calculation of the Company’s right of use assets and lease liabilities, and the valuation allowance on deferred tax assets.

The Company has used significant estimates in its determination of stock-based compensation assumptions, determination of the fair value of the Private Placement Warrant liabilities, determination of the incremental borrowing rate (“IBR”) used in the calculation of the Company’s right of use assets and lease liabilities, estimation of clinical and other accruals and the valuation allowance on deferred tax assets.

Actual amounts realized may differ from these estimates.

Fair Value Measurements 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

3 unchanged sentences

These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Unobservable inputs that reflect the reporting entity’s own assumptions

Certain of the Company's financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to the short-term nature of their maturities, such as cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. 

The Company accounts for warrants to purchase its common stock pursuant to ASC Topic 470, Debt , and ASC Topic 480, Distinguishing Liabilities from Equity , and classifies warrants for common stock as liabilities or equity.

The warrants classified as liabilities are reported at their estimated fair value (see Note 14  -  Fair Value Measurements ) and any changes in fair value are reflected in other income and expense.

Unobservable inputs that reflect the reporting entity’s own assumptions.

Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to the short-term nature of their maturities, such as cash and cash equivalents, accounts receivable, accounts payable and accrued expenses.

The Company accounts for warrants to purchase its preferred and common stock pursuant to ASC Topic 470, Debt , and ASC Topic 480, Distinguishing Liabilities from Equity , and classifies warrants for preferred and common stock as liabilities or equity.

The warrants classified as liabilities are reported at their estimated fair value (see Note 13, Fair Value Measurements ) and any changes in fair value are reflected in other income and expense.

The warrants classified as equity are reported at their estimated relative fair value with no subsequent remeasurement.

The Company’s outstanding warrants are discussed in more detail in Note 14  - 

Fair Value Measurements .

The Company’s outstanding warrants are discussed in more detail in Note 13, Fair Value Measurements .

Cash, cash equivalents, and restricted cash

Cash equivalents include short-term, highly liquid instruments, consisting of money market accounts and short-term investments with original maturities at the date of purchase of 90 days or less.

Amounts held in escrow by the Company pursuant to the Forward Share Purchase Agreement were reported as restricted cash on the consolidated balance sheet as of December 31, 2021.

The reconciliation of cash, cash equivalents, and restricted cash as of the years ended December 31, 2022 and 2021 was as follows:

Cash and cash equivalents

$ 15,046,894  

$ 33,206,712  

Restricted cash

6,338,306  

Total cash, cash equivalents, and restricted cash

$ 15,046,894  

$ 39,545,018  

Accounts receivable

Accounts receivable are carried at original invoice amount, less an allowance for doubtful accounts.

The Company estimates an allowance for doubtful accounts for potential credit losses that are expected to be incurred, based on management’s assessment of the collectability of specific accounts, the aging of the accounts receivable, historical information and other currently available evidence.

Receivables are written off when deemed uncollectible.

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The Company maintains its cash and cash equivalent balances in the form of business checking accounts and money market accounts, the balances of which, at times, may exceed federally insured limits.

Exposure to credit risk is reduced by placing such deposits in high credit quality federally insured financial institutions.

The Company received 100 % of its total revenue through grants from government organizations during the years ended December 31, 2022 and 2021 , respectively.

Although the Company currently believes that the financial institutions with whom it does business will be able to fulfill their commitments to the Company, there is no assurance that those institutions will be able to continue to do so.

The Company has not experienced any credit losses associated with its balances in such accounts for the year ended December 31, 2023 and 2022 .

Lease liabilities and right-of-use assets

The Company is party to certain contractual arrangements for equipment, lab space, and an animal facility, which meet the definition of leases under FASB ASC Topic 842, Leases (“ASC 842”

The Company is party to certain contractual arrangements for equipment, lab space, and an animal facility, which meet the definition of leases under ASC 842.

In accordance with ASC 842, the Company recorded right-of-use assets and related lease liabilities for the present value of the lease payments over the lease terms.

The Company’s IBR was used in the calculation of its right-of-use assets and lease liabilities.

The Company elected not to apply the recognition requirements of ASC 842 to short-term leases, which are deemed to be leases with a lease term of twelve months or less.

Instead, the Company recognized lease payments in the Consolidated Statements of Operations on a straight-line basis over the lease term and variable payments in the period in which the obligation for these payments was incurred.

The Company elected this policy for all classes of underlying assets.

Research and development expenses

Expenses incurred in connection with research and development activities are expensed as incurred.

These include licensing fees to use certain technology in the Company’s research and development projects, fees paid to consultants and various entities that perform certain research and testing on behalf of the Company, and expenses related to salaries, benefits, and stock-based compensation granted to employees in research and development functions.

During the years ended December 31, 2022 and 2021 , the Company had contracts with multiple CRO to complete studies as part of research grant agreements.

In the case of SAB- 185, the CRO was contracted and paid by the US government - as of December 31, 2022, there is no active CRO engaged by the Company in work on the SAB- 185.

For SAB- 176, PPD Development, LP acting as the CRO oversaw the Phase 1 safety study.

The terms of that agreement are subject to confidentiality, and the status of the agreement is that it is current, in good standing and approximately 95 % of the contract has been paid as of 

December 31, 2022 .

SAB has also contracted with hVIVO Services Limited to conduct the Phase 2a influenza study on SAB- 176.

The terms of that agreement are subject to confidentiality, and the status of the agreement is that it is current, in good standing and approximately 95 % of the contract has been paid as of December 31, 2022 .

Property, plant and equipment, net

The Company records equipment at cost less depreciation.

Depreciation is calculated using straight-line method over the following estimated useful lives:

These include licensing fees to use certain technology in the Company’s research and development projects, fees paid to consultants and various entities that perform certain research and testing on behalf of the Company, and expenses related to animal care, research-use equipment depreciation, salaries, benefits, and stock-based compensation granted to employees in research and development functions.

During the years ended December 31, 2023 and 2022, the Company had contracts with multiple CROs to complete studies as part of research grant agreements.

These costs include upfront, milestone and monthly expenses as well as reimbursement for pass through costs.

All research and development costs are expensed as incurred except when the Company is accounting for nonrefundable advance payments for goods or services to be used in future research and development activities.

In these cases, these payments are capitalized at the time of payment and expensed in the period the research and development activity is performed.

As actual costs become known, the Company will adjust the accrual;

such changes in estimate may be a material change in the Company’s clinical study accrual, which could also materially affect reported results of operations.

For the years ended December 31, 2023 and 2022 , there were no material adjustments to the Company’s prior period estimates of accrued expenses for clinical trial.

Property, Plant and Equipment

The Company records property, plant, and equipment at cost less depreciation and amortization.

Depreciation is calculated using straight-line methods over the following estimated useful lives:

Animal facility equipment

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Leasehold improvements

Shorter of asset life or lease term  

Office furniture & equipment

Shorter of asset life or lease term

Office furniture and equipment

Repairs and maintenance expenses are expensed as incurred.

1 unchanged sentence

The Company reviews the recoverability of long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable.

If necessary, the Company compares the estimated undiscounted future net cash flows to the related asset’s carrying value to determine whether there has been an impairment.

If an asset is considered impaired, the asset is written down to fair value, which is based either on discounted cash flows or appraised values in the period the impairment becomes known.

1 unchanged sentence

Stock-based compensation

FASB ASC Topic 718, Compensation –

Stock Compensation , prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired.

FASB ASC Topic 718, Compensation – Stock Compensation , prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired.

The Company recognizes compensation cost relating to stock-based payment transactions using a fair-value measurement method, which requires all stock-based payments to employees, directors, and non-employee consultants, including grants of stock options, to be recognized in operating results as compensation expense based on fair value over the requisite service period of the awards.

Prior to the Business Combination, the grant date fair value of the Company's common stock was typically be determined by the Company's board of directors with the assistance of management and a third -party valuation specialist.

Subsequent to the Business Combination, the board of directors elected to determine the fair value of the Company's post-merger common stock based on the closing market price at closing on the date of grant.

The Company determines the fair value of common stock based on the closing market price at closing on the date of the grant.

In determining the fair value of stock-based awards, the Company utilizes the Black-Scholes option-pricing model, which uses both historical and current market data to estimate fair value.

4 unchanged sentences

Stock-based compensation expense is classified in the consolidated statements of operations based on the function to which the related services are provided.

The Company recognizes stock-based compensation expense over the expected term.

Deferred income taxes reflect future tax effects of temporary differences between the tax and financial reporting basis of the Company’s assets and liabilities measured using enacted tax laws and statutory tax rates applicable to the periods when the temporary differences will affect taxable income.

The Company recognizes stock-based compensation expense over the vesting period .

When necessary, deferred tax assets are reduced by a valuation allowance, to reflect realizable value, and all deferred tax balances are reported as long-term on the consolidated balance sheet.

1 unchanged sentence

The Company uses a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return.

The Company has elected to treat interest and penalties related to income taxes, to the extent they arise, as a component of income taxes.

The Company has elected to treat interest and penalties related to income taxes, to the extent they arise, as a component of income taxe s.

Revenue recognition

The Company’s revenue is primarily generated through grants from government and other (non-government) organizations.

Grant revenue is recognized during the period that the research and development services occur, as qualifying expenses are incurred or conditions of the grants are met.

The Company concluded that payments received under these grants represent conditional, nonreciprocal contributions, as described in ASC 958, Not -for-Profit Entities , and that the grants are not within the scope of ASC 606, Revenue from Contracts with Customers , as the organizations providing the grants do not meet the definition of a customer.

Deferred grant income represents grant proceeds received by the Company prior to the period in which the underlying research and development services have not yet been performed.

The Company concluded that payments received under these grants represent conditional, nonreciprocal contributions, as described in ASC

958, Not-for-Profit Entities , and that the grants are not within the scope of ASC 606, Revenue from Contracts with Customers , as the organizations providing the grants do not meet the definition of a customer.

Expenses for grants are tracked by using a project code specific to the grant, and the employees also track hours worked by using the project code .

Comprehensive income

The Company had no items of comprehensive income other than its net loss.

Foreign Currency Translations and Transactions

Assets and liabilities of the Company's foreign subsidiary are translated at the year-end exchange rate.

Operating results of the Company's foreign subsidiary are translated at average exchange rates during the period.

Translation adjustments have no effect on net income and are included in “Accumulated other comprehensive income, net” in the accompanying Consolidated Balance Sheets .

Comprehensive income (loss)

Foreign currency translation adjustments of $ 26 thousand represent the difference between net loss and comprehensive loss for the year ended December 31, 2023.

The Company had no items of comprehensive loss other than its net loss for the year ended December 31, 2022 .

From time to time, the Company is involved in legal proceedings, investigations and claims generally incidental to its normal business activities.

3 unchanged sentences

Earnings per share

In accordance with ASC 260, Earnings per Share (“ASC 260”

), basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding during the period.

In accordance with ASC 260, Earnings per Share (“ASC 260”), basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding during the period.

Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding for the period including potential dilutive common shares such as stock options.

Segment reporting

In accordance with ASC 280, Segment Reporting , the Company’s business activities are organized into one reportable segment, as only the Company’s operating results in their entirety are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated and to assess performance.

Common stock valuations

Prior to the Business Combination, the Company was required to periodically estimate the fair value of its common stock with the assistance of an independent third -party valuation firm, as discussed above, when issuing stock options and computing estimated stock-based compensation expense.

The assumptions underlying these valuations represented the Company's best estimates, which involved inherent uncertainties and the application of significant levels of judgment.

In order to determine the fair value of its common stock, the Company considered, among other items, previous transactions involving the sale of the Company's securities, the Company's business, financial condition and results of operations, economic and industry trends, the market performance of comparable publicly traded companies, and the lack of marketability of the Company's common stock.

Subsequent to the Business Combination, the Company now determines the fair value of common stock based on the closing market price at closing on the date of grant.

Compensation expense related to stock-based transactions is measured and recognized in the financial statements at fair value of the post-merger common stock based on the closing market price at closing on the date of grant.

Stock-based compensation expense is measured at the grant date based on the fair value of the equity award and is recognized as expense over the requisite service period, which is generally the vesting period, on the straight-line method.

The Company estimates the fair value of each stock option award on the date of grant using the Black-Scholes option-pricing model.

Determining the fair value of stock option awards at the grant date requires judgment, including estimating the expected volatility, expected term, risk-free interest rate, and expected dividends.

Australian Research and Development Tax Credit

The Company recognizes other income from Australian research and development incentives when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured.

The research and development incentive is one of the key elements of the Australian Government’s support for Australia’s innovation system and is supported by legislative law primarily in the form of the Australian Income Tax Assessment Act 1997, as long as eligibility criteria are met.

Under the program, a percentage of eligible research and development expenses incurred by the Company through its subsidiary in Australia are reimbursed.

Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive regime described above.

At each period end, management estimates the refundable tax offset available to the Company based on available information at the time and it is included in other income in the consolidated statements of operations.

Retroactive Adjustments for Common Stock Reverse Split

On January 5, 2024, the Company completed a 1-for-10 reverse stock split of the Company’s Common Stock.

As a result of the Reverse Stock Split, every ten of the Company’s issued shares of Common Stock were automatically combined into one

issued share of Common Stock, without any change to the par value per share.

All share and per share numbers in this Annual Report on Form 10-K have been adjusted to reflect the Reverse Stock Split.

(3) New accounting standards

Recently-adopted standards

In May 2021, FASB issued Accounting Standards Update ("ASU") 2021 - 04, Earnings Per Share (Topic 260 ), Debt —

Modifications and Extinguishments (Subtopic 470 - 50 ), Compensation —

Stock Compensation (Topic 718 ), and Derivatives and Hedging —

Contracts in Entity ’

s Own Equity (Subtopic 815 - 40 ):

Issuer ’

s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options .

The amendments in ASU 2021 - 04 provide guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange.

The amendments in this ASU 2021 - 04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years.

The Company adopted ASU 2021 - 04 at January 1, 2022, and the adoption did not have a material impact on its consolidated financial statements.

In November 2021, the FASB issued ASU 2021 - 10, Government Assistance (Topic 832 ):

Disclosures by Business Entities about Government Assistance .

This ASU increases the transparency of government assistance to include the disclosure of ( 1 ) the types of assistance, ( 2 ) an entity's accounting for the assistance, and ( 3 ) the effect of the assistance on an entity's financial statements.

The guidance in ASU 2021 - 10 is effective for financial statements of all entities, including private companies, for annual periods beginning after December 15, 2021, with early application permitted.

Entities are required to provide the new disclosures prospectively for all transactions with a government entity that are accounted for under either a grant or a contribution accounting model and are reflected in the financial statements at the date of initially applying the new amendments, and to new transactions entered into after that date.

In July 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement of all expected credit losses of financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.

In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

ASU 2016-13 is effective for periods beginning after December 15, 2022, and interim periods within those fiscal years.

The Company adopted ASU 2016-13 at January 1, 2023 , and the adoption did not have a material impact on its consolidated financial statements.

( 5 ) Reverse Recapitalization and Business Combination

On the Closing Date, BCYP closed the Business Combination with SAB Biotherapeutics, as a result of which SAB Biotherapeutics became a wholly-owned subsidiary of BCYP.

While BCYP was the legal acquirer of SAB Biotherapeutics in the Business Combination, for accounting purposes, the Business Combination is treated as a Reverse Recapitalization.

SAB Biotherapeutics is treated as the accounting acquirer with historical financial statements of SAB Biotherapeutics becoming the historic financial statements of BCYP (renamed SAB Biotherapeutics, Inc.) upon consummation of the Business Combination.

Under this method of accounting, BCYP is treated as the "acquired" company and SAB Biotherapeutics is treated as the acquirer for financial reporting purposes.

For accounting reporting purposes, the Business Combination was treated as the equivalent of SAB Biotherapeutics issuing stock for the net assets of BCYP, accompanied by a recapitalization.

The net assets of BCYP were stated at historical cost, with no goodwill or other intangible assets recorded.

Pursuant to the Business Combination Agreement, the aggregate consideration payable to stockholders of SAB Biotherapeutics at the Closing Date consisted of 36,465,343 shares of New SAB Biotherapeutics common stock, par value $ 0.0001 per share ("Common Stock").

Each option of SAB Biotherapeutics that was outstanding and unexercised immediately prior to the Effective Time (whether vested or unvested) was assumed by BCYP and converted into an option to acquire an adjusted number of shares of Common Stock at an adjusted exercise price per share, in each case, pursuant to the terms of the Business Combination Agreement (the "Rollover Options").

Additionally, the Business Combination Agreement included an earnout provision whereby the shareholders of SAB Biotherapeutics shall be entitled to receive additional consideration (“Earnout Shares”) if the Company meets certain Volume Weighted Average Price (“VWAP") thresholds, or a change in control with a per share price exceeding the VWAP thresholds within a five -year period immediately following the Closing.

The Earnout Shares shall be released in four equal increments as follows:

25 % of the Earnout Shares shall be released if, at any time during the five ( 5 )-year period immediately following the Closing Date, the VWAP of the Company's publicly traded common stock is greater than or equal to $ 15.00 for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days (the “First Earnout”).

25 % of the Earnout Shares shall be released if, at any time during the five ( 5 )-year period immediately following the Closing Date, the VWAP of the Company's publicly traded common stock is greater than or equal to $ 20.00 for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days (the “Second Earnout”).

25 % of the Earnout Shares shall be released if, at any time during the five ( 5 )-year period immediately following the Closing Date, the VWAP of the Company's publicly traded common stock is greater than or equal to $ 25.00 for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days (the “Third Earnout”).

25 % of the Earnout Shares shall be released if, at any time during the five ( 5 )-year period immediately following the Closing Date, the VWAP of the Company's publicly traded common stock is greater than or equal to $ 30.00 for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days (the “Fourth Earnout” and together with the First Earnout, the Second Earnout and the Third Earnout, the “Earnouts”).

At the Effective Time, each outstanding share of SAB Biotherapeutics common stock, including shares of SAB Biotherapeutics common stock resulting from the conversion of outstanding shares of SAB Biotherapeutics preferred stock (as calculated pursuant to the SAB Biotherapeutics certificate of incorporation), immediately prior to the Effective Time, was converted into the right to receive a pro rata portion of the total consideration and the contingent right to receive a pro rata portion of the Earnout Shares.

Pursuant to the terms of the Business Combination Agreement, SAB Biotherapeutics’

securityholders (including vested option holders) who own SAB Biotherapeutics securities immediately prior to the Closing Date will have the contingent right to receive their pro rata portion of (i) an aggregate of 12,000,000 shares of Common Stock (“Earnout Shares”), of which 1,508,063 are contingently issuable based upon future satisfaction of the aforementioned VWAP thresholds.

The remaining 10,491,937 are legally issued and outstanding, if the Company does not meet the above VWAP thresholds, or a change in control with a per share price below the VWAP thresholds occurs within a five -year period immediately following the Closing Date, the shares will be returned to the Company.

The Earnout Shares are indexed to the Company's equity and meet the criteria for equity classification.

On the Closing Date, the fair value of the 12,000,000 Earnout Shares was $ 101.3 million.

The Company reflected the Earnout Shares in the consolidated balance sheet at 

December 31, 2021 

as a stock dividend by reducing additional paid-in capital, which was offset by the increase in additional paid-in capital associated with the Business Combination.

Preceding the Business Combination, on October 12, 2021, BCYP entered into a Forward Share Purchase Agreement (the “Forward Share Purchase Agreement”) with Radcliffe SPAC Master Fund, L.P., a Cayman Islands exempted limited partnership (“Radcliffe”).

Under the Forward Share Purchase Agreement, Radcliffe shall sell and transfer to BCYP, and BCYP shall purchase from Radcliffe, up to 1,390,000 shares of common stock owned by Radcliffe at the closing of the Business Combination at a per Share price (the “Purchase Price”) equal to $ 10.10 per share (the "Market Sales Price").

Further, BCYP shall purchase the remaining shares held by Radcliffe not sold in the open market in excess of the Market Sales Price at the later of (a) the 90 th day after the closing of the Business Combination, or (b) the first business day following the 95 th day after the closing of the Business Combination if BCYP directs Radcliffe to sell shares at a mutually agreed upon price other than the Market Sales Price.

As of the Closing Date, 1,296,891 shares of common stock were held by Radcliffe under the Forward Share Purchase Agreement.

Pursuant to the treatment of the Business Combination as a reverse recapitalization, SAB Biotherapeutics assumed the liability position as it existed as of the Effective Time.

The net assets of the acquired entity were adjusted to include a forward share purchase liability of $ 13,098,599 .

In connection with the Business Combination, an amount matching the assumed forward share purchase liability was transferred into escrow, pending final settlement of the Forward Share Purchase Agreement in January 2022.

Given the short-term nature of the Forward Share Purchase Agreement, the Company did not present value the forward share purchase liability.

Subsequent settlements whereby Radcliffe sold shares in the open market in excess of the Market Sales Price were treated as a reduction in the assumed forward share purchase liability, with an offsetting increase in equity of the Company.

Prior to December 

31, 2021, a portion of the forward share purchase liability was settled.

As of December 31, 2021, the forward share purchase liability balance was $ 6,338,306  on the consolidated balance sheet.

The forward share purchase liability was fully settled during the year ended December 31, 2022.

The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows for the year ended December 31, 2021:

Recapitalization

Cash - BCYP trust and cash, net of redemptions

$ 22,535,723  

restricted cash - Forward Share Purchase Agreement

13,098,599  

cash transaction costs allocated to the Company's equity

( 1,294,097 )

$ 34,340,225  

The following table reconciles the elements of the Business Combination to the consolidated statement of changes in redeemable preferred stock and stockholders' equity for the year ended December 31, 2021:

Recapitalization

Cash - BCYP trust and cash, net of redemptions

$ 22,535,723  

restricted cash - Forward Share Purchase Agreement

13,098,599  

non-cash net working capital assumed from BCYP

( 5,067,682 )

forward share purchase liability assumed from BCYP

( 13,098,599 )

fair value of redeemable warrants

( 6,569,062 )

transaction costs allocated to the Company's equity

( 3,294,096 )

$ 7,604,883  

The following table details the number of shares of common stock issued immediately following the consummation of the Business Combination:

Common stock, redeemable and outstanding prior to Business Combination

11,500,000  

redemption of BCYP shares

( 8,030,289 )

Common stock of BCYP

3,469,711  

BCYP Founder and private shares

3,292,200  

Shares issued for services

247,525  

Total BCYP shares

7,009,436  

SAB Biotherapeutics, Inc and subsidiaries shareholders

36,465,343  

Total shares of common stock immediately after Business Combination

43,474,779  

The following table details the allocated assets acquired and liabilities assumed as follows:

Assets Acquired

BCYP trust and cash, net of redemptions

$ 22,535,723  

Restricted cash - Forward Share Purchase Agreement

13,098,599  

102,742  

Assets acquired

$ 35,737,064  

Liabilities Assumed

Forward share purchase liability

$ 13,098,599  

Fair value of redeemable warrants

6,569,062  

Other liabilities and accrued expenses

5,170,424  

Liabilities assumed

24,838,085  

Net Assets Acquired

$ 10,898,979  

( 6 ) Revenue

Recently Issued Accounting Standards

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The amendments require (i) enhanced disclosures in connection with an entity's effective tax rate reconciliation and (ii) income taxes paid disaggregated by jurisdiction.

The amendments are effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

During the years ended December 31, 2023 and 2022, the Company worked on the following grants:

Government grants

The total revenue for government grants was approximately $ 23.9  million and $ 60.9  million respectively, for the years ended December 31, 2022 and 2021 .

NIH-NIAID (Federal Award #1R44AI117976 - 01A1 ) –

this grant was for $ 1.4  million and started in September 2019 through August 2021. 

The grant was subsequently amended to extend the date through August 

For the years ended December 31, 2022 and 2021 , there was approximately $ 182,000  and $ 518,000 , respectively, in grant income recognized. This grant was completed in 2022.

NIH-NIAID (Federal Award #1R41AI131823 - 02 ) –

this grant was for approximately $ 1.5  million and started in April 2019 through March 2021.

The total revenue for government grants was approximately $ 2.2 million and $ 23.9 million respectively, for the years ended December 31, 2023 and 2022.

NIH-NIAID (Federal Award #1R44AI117976-01A1) – this grant was for $ 1.4 million and started in September 2019 through August 2021.

This grant was subsequently amended to extend the end date to August 2022.

No grant income was recognized for the year ended December 31, 2023.

For the year ended December 31, 2022, there was approximately $ 182 thousand in grant income recognized from this grant.

This grant was completed in 2022.

NIH-NIAID (Federal Award #1R41AI131823-02) – this grant was for approximately $ 1.5 million and started in April 2019 through March 2021.

The grant was subsequently amended to extend the date through March 2023.

For the years ended December 31, 2022 and 2021 , there was approximately $ 328,000  and $ 51,000  respectively, in grant income recognized.

There is approximately $ 429,000  in funding remaining for this grant as of December 31, 2022 .

NIH-NIAID through Geneva Foundation (Federal Award #1R01AI132313 - 01, Subaward #S- 10511 - 01 ) –

this grant was for approximately $ 2.7  million and started in August 2017 through July 2021.

This grant was subsequently amended to extend the date through July 2023.

For the years ended December 31, 2022 and 2021 , there was approximately $ 1,052,000  and $ 94,000 , respectively, in grant income recognized from this grant.

The corporation applied for an extension on the grant funding, and the extension is pending approval.

If approved, there is approximately $ 0.4  million in funding remaining for this grant as of December 31, 2022 .

DoD, JPEO through Advanced Technology International –

this grant was for a potential of $ 25 million, awarded in stages starting in August 2019 and with potential stages running through February 2023.

Additional contract modifications were added to this contract in 2020 and 2021 for work on a COVID therapeutic, bringing the contract total to $ 203.6  million.

For the years ended December 31, 2022 and 2021 , there was approximately $ 22.2  million and $ 60.2  million, respectively, in grant income recognized from this grant.

For the years ended December 31, 2023 and 2022, approximately $ 192 thousand and $ 328 thousand , respectively, in grant income was recognized from this grant.

This grant was completed as of June 30, 2023.

NIH-NIAID through Geneva Foundation (Federal Award #1R01AI132313-01, Subaward #S-10511-01) – this grant was for approximately $ 2.7 million and started in August 2017 through July 2021.

The grant was subsequently amended to extend the end date to July 2023.

For the years ended December 31, 2023 and 2022, there was approximately $ 273 thousand and $ 1.1 million , respectively, in grant income recognized from this grant.

This grant was completed as of June 30, 2023.

DoD, JPEO through Advanced Technology International – this grant was for a potential of $ 25 million, awarded in stages starting in Aug ust 2019 and with potential stages running through February 2023.

Additional contract modifications were added to this contract in 2020 and 2021 for work on a COVID therapeutic, bringing the contract total to $ 203.6 million.

For the years ended December 31, 2023 and 2022, there was approximately $ 1.8 million and $ 22.2 million , respectively, in grant income recognized from this grant.

This grant was terminated in 2022.

The grants for the JPEO contract are cost reimbursement agreements, with reimbursement of our direct research and development expense (labor and consumables) with an overhead charge (based on actual, reviewed quarterly) and a fixed fee ( 9 %).

On August 3, 2022, the Company received noticed from the DoD to terminate the JPEO Rapid Response contract, dated as of August 7, 2019 with the DoD most recently amended as of September 14, 2021, relating to a prototype research and development of Rapid Response Antibody Program and advanced clinical development through licensure and commercial manufacturing for SAB- 185 (the “JPEO Rapid Response Contract Termination”). 

The Company engaged in negotiations with the DoD to compensate the Company for services provided prior to the JPEO Rapid Response Contract Termination and costs the Company would be expected to bear in future periods.

The grants for the JPE O Rapid Response contract are cost reimbursement agreements, with reimbursement of qualified direct research and development expense (labor and consumables) with an overhead charge (based on actual, reviewed quarterly) and a fixed fee ( 9 %).

On August 3, 2022, the Company received notice from the DoD terminating the JPEO Rapid Response contract.

The Company engaged in negotiations with the DoD to compensate the Company for services provided prior to the JPEO Rapid

Response Contract Termination and costs the Company would be expected to bear in future periods.

A termination and settlement proposal was submitted the DoD on September 9, 2022;

the Company submitted a final invoice on December 15, 2022;

and received payment from the DoD on or about January 12, 2023.

The terms of the arrangement provide for a cost-reimbursable structure, and state that the parties will work in good faith equitable reimbursement for work performed toward accomplishment of the tasks provided in the agreement.

At this time, other than certain deferred obligations (presented within deferred grant income within the Company's consolidated balance sheet) potentially payable to the DoD solely due to subsequent negotiations with third-party vendors, the Company believes and has been advised there is a reasonable, good faith basis for the position that no present or future obligations exist.

Revenue recognized subsequent to the JPEO Rapid Response Contract Termination relates to satisfaction of residual obligations under the termination and settlement agreement—see Note 2, Summary of Significant Accounting Policies in the Company's consolidated financial statements for further information about the Company's established revenue recognition process.

(5) Earnings per share

Since the Company reported a net loss for the years ended December 31, 2023 and 2022, it was required by ASC 260 to use basic weighted-average shares outstanding when calculating diluted net loss per share for the years ended December 31, 2023 and 2022 , as the potential dilutive securities are anti-dilutive.

Calculation of basic and diluted loss per share attributable to the Company’s shareholders

Net loss attributable to the Company’s shareholders

$ ( 18,740,804 )  

$ ( 17,144,531 )

Weighted-average common shares outstanding –

For The Year Ended December 31,

Calculation of basic and diluted loss per share

attributable to the Company’s shareholders

Net loss attributable to the Company’s shareholders

Weighted-average common shares outstanding –

basic and diluted

43,524,971  

27,339,180  

Net loss per share, basic and diluted

$ ( 0.43 )  

The shares in the table below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

Year Ended December 31,

The Company’s potentially dilutive securities, which include stock options, restricted stock awards, common stock warrants, earnout shares, and contingently issuable earnout shares have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

For The Year Ended December 31,

Stock options and awards

2,193,365  

3,724,957  

Convertible Debt

368,298  

Common Stock Warrants (1)

5,958,600  

Earnout Shares (2)

10,491,937  

Contingently issuable Earnout Shares from unexercised Rollover Options

1,508,063  

20,520,263  

21,683,557  

 The PIPE Warrants and Placement Agent Warrants to purchase 7,363,377 and 210,193 shares of common stock, respectively, are excluded from the calculation of diluted earnings per share as they are not exercisable until June 7, 2023.

 As the Earnout shares are subject to certain vesting requirements not satisfied as of the year ended December 31, 2022 , the Earnout Shares held in escrow are excluded from calculating both basic and diluted earnings per share.

( 8 ) Property, plant and equipment, net

As of December 31, 2022 and 2021 , the Company’s equipment was as follows:

Series A Preferred Stock (3)

Preferred Stock Warrants (4)

Contingently issuable Earnout Shares from unexercised Rollover

(1) Contained within Common Stock Warrants are the 575,000 the Public Warrants, 20,860 warrants held by assignees of Big Cypress Holdings, LLC (the “Private Placement Warrants”), 30,000 warrants held by Ladenburg Thalmann & Co.

(the “Ladenburg Warrants”), 736,337 warrants issued to the investors in the December 2022 Private Placement (the “the PIPE Warrants”), 21,091 warrants issued to the placement agent in the December 2022 Private Placement (the “PIPE Placement Agent Warrants”), and 850,119 warrants issued to the placement agent in the October 2023 Private Placement.

See Note 12, Warrants for further details on the Company’s outstanding warrants.

(2) The Earnout Shares are subject to certain vesting requirements not satisfied as of the years ended December 31, 2023 and 2022.

The Earnout Shares held in escrow are excluded from calculating both basic and diluted earnings

See Note 10, Stockholders’ Equity for further details on the Company’s outstanding equity instruments.

(3) Represents shares of common stock underlying 42,236 issued, outstanding, and convertible Series A-2 Preferred shares.

(4) Represents 6,800,953 and 17,002,381 common shares underlying 42,846 outstanding Tranche B Warrants and 107,115 outstanding Tranche C Warrants, respectively.

(6) Property, Plant and Equipment

As of December 31, 2023 and 2022, the Company’s equipment was as follows:

Laboratory equipment

$ 9,000,114  

$ 7,431,988  

Animal facility

8,357,667  

Animal facility leasehold improvements

Animal facility equipment

1,141,213  

1,253,879  

Construction-in-progress

308,317  

4,608,778  

Leasehold improvements

9,296,343  

5,700,364  

192,683  

135,593  

Office furniture and equipment

1,233,038  

46,202  

Total Property, plant and equipment, gross

accumulated depreciation and amortization

6,278,522  

3,220,016  

Property, plant and equipment, net

$ 23,250,853  

$ 24,314,455  

Depreciation and amortization expense for the years ended December 31, 2022 and 2021 was $ 3,169,429  and $ 1,488,614 , respectively.

Depreciation and amortization expense for the years ended December 31, 2023 and 2022 was $ 3.7 million and $ 3.2 million , respectively.

All tangible personal property with a useful life of at least three years and a unit acquisition cost of $ 5,000 or more will be capitalized and depreciated over its useful life using the straight-line method of depreciation.

3 unchanged sentences

Depreciation commences when the assets are placed in service.

The Company has several ongoing construction projects related to the expansion of its operating capacity.

As of December 31, 2022 and 2021 , the Company’s construction-in-progress was as follows:

As of December 31, 2023 and 2022, the Company’s construction-in-progress was as follows:

New office space at Headquarters

$ 85,767  

$ 11,183  

Laboratory space at Headquarters

2,506,482  

Laboratory equipment at Headquarters

246,801  

IT equipment at Headquarters

84,739  

212,209  

137,811  

1,280,728  

213,564  

Total construction-in-progress

$ 308,317  

$ 4,608,778  

The Company has an operating lease for lab space from Sanford Health, under a lease that started in June 2014 and ran through June 2019, at which time the lease was amended to run through August 2024.

The Company has an operating lease for lab space from Sanford Health, under a lease that started in June 2014 and initially ended in June 2019, at which time the lease was extended through August 2024.

This lease can be terminated with one-year advance written notice.

This lease was amended again in October 2022 to reduce the Company's leased area to 21,014 square feet.  Additionally, pursuant to the amendment in October 2022, the Company and Sanford Health agreed for the period of October 2022 to September 2023, the Company's obligation to pay the Annual Rent shall be abated and not required to be paid when normally due (the "Abated Rent").

In exchange for the Abated Rent, effective October 1, 2022, the Company issued Sanford Health an 8 % unsecured, convertible promissory note (see Note 11, Notes Payable for further discussion). The October 2022 amendment was accounted for as a lease modification under ASC 842 - Leases and the right-of-use asset and lease liability were remeasured at the modification date of October 1, 2022.

The re-measurement of the lease resulted in a $ 480,000 decrease in the noncurrent portion of the operating lease liability, a $ 448,000 decrease in the operating right-of-use asset and a $ 32,000 gain reflected in other income.

The October 2022 lease amendment reduced the lease payment to $ 44,252 per month. The lease does not provide an implicit rate, and, therefore, the Company used an IBR of 6.92 % as the discount rate when measuring the operating lease liability. The operating lease does not include an option to extend beyond the life of the current term. The Company estimated the incremental borrowing rate based upon comparing interest rates available in the market for similar borrowings and the credit quality of the Company.

The Company entered into a lease for office, laboratory, and warehouse space in November 2020, the lease was amended in July 2022 to add additional administrative and lab space.

This amended lease has a 3 -year term, with options to extend for 3 additional periods of 3 years each.

The options were not included in the right of use calculation as it is unclear as to whether or not the location will meet the Company’s requirements beyond the next three years. The July 2022 amendment was accounted for as a separate contract under ASC 842 –

The lease costs are $ 36,125 and $ 2,747 per month for the original leased space on November 2020 and the amendment on July 2022, respectively.

The Company used an IBR of 4.69 % and 6.60 % as the discount rate when measuring the operating lease liability for the original leased space on November 2022 and the amended on July 2022, respectively.

The Company estimated the incremental borrowing rate based upon comparing interest rates available in the market for similar borrowings and the credit quality of the Company.

The Company entered into a lease for barn space for the housing of goats in April 2020.

This lease has a 2 -year term, with automatic renewals for a one -year period after the initial term expires until either party terminates.

The options were not included in the right of use calculation, as the goat project is mostly funded by government grants, and those grants do not currently extend beyond the initial lease term.

The lease cost is $ 665 per month for the first year, then $ 678 per month for the second year.

The Company used an IBR of 4.08 % as the discount rate when measuring the operating lease liability.

The Company estimated the incremental borrowing rate based upon comparing interest rates available in the market for similar borrowings and the credit quality of the Company.

The operating lease ended in 2022 and is now classified as a short-term lease with a one -year annual renewal.

This lease was amended again in October 2022 to reduce the Company’s leased area to 21,014 square feet.

Additionally, pursuant to the amendment in October 2022, the Company and Sanford Health agreed for the period of October 2022 to September 2023, the Company’s obligation to pay the Annual Rent shall be abated and not required to be paid when normally due (the “Abated Rent”).

In exchange for the Abated Rent, effective October 1, 2022, the Company issued Sanford Health an 8 % unsecured, convertible promissory note (see Note 9, Notes Payable for further discussion).

The October 2022 amendment was accounted for as a lease modification under ASC 842 - Leases and the right-of-use asset and

lease liability were remeasured at the modification date of October 1, 2022.

The October 2022 lease amendment reduced the lease payment to approximately $ 45 thousand per month for the remainder of 2023 and approximately $ 46 thousand per month through 2024.

The lease does not provide an implicit rate, and, therefore, the Company used an IBR of 6.92 % as the discount rate when measuring the operating lease liability.

The operating lease does not include an option to extend beyond the life of the current term.

The Company estimated the IBR based upon comparing interest rates available in the market for similar borrowings and the credit quality of the Company.

The Company entered into a lease for office, laboratory, and warehouse space in November 2020, which the Company amended in July 2022.

This lease has a 3 -year term, with options to extend for 3 additional periods of 3 years each.

The options were not included in the right of use calculation as it is unclear as to whether or not the location will meet the Company’s requirements beyond the next three years.

The July 2022 amendment was accounted for as a separate contract under ASC 842 – Leases .

This lease was renewed in November 2023.

The lease costs are $ 36 thousand , $ 3 thousand , and $ 31 thousand per month for the November 2020 lease agreement, the July 2022 amended lease agreement, and the November 2023 lease renewal, respectively.

The Company used an IBR of 4.69 % , 6.60 % , and 8.14 % as the discount rate when measuring the operating lease liability for the November 2020 lease agreement, the July 2022 amended lease agreement, and the November 2023 lease renewal, respectively.

The Company estimated the IBR based upon comparing interest rates available in the market for similar borrowings and the credit quality of the Company.

The Company has the following finance leases:

1 unchanged sentence

The facility and the land have been accounted for as separate lease components.

The lease is based upon payback of $ 4,000,000 in construction costs, with a 20 -year term at an interest rate of 8 %.

The monthly payment for this lease is $ 33,458 .

The lease is based upon payback of $ 4 million in construction costs, with a 20-year term at an interest rate of 8 %.

The monthly payment for this lease is $ 34 thousand.

The Company has the option to purchase the asset at any time during the term of the lease for the balance of the unamortized lease payments.

In December 2018, the Company entered into an equipment lease for a 12,000 -gallon propane tank that is located on the Company’s animal facility.

The lease is for five years, with an annual payment of $ 8,199 .

The Company purchased the propane tank in November 2022. 

In July 2018, the Company entered into a lease agreement with a bank, for a Ruby Cell Analyzer.

The lease agreement is for a five -year term.

The monthly payment for this lease is $ 807 .

The Company purchased the Ruby Cell Analyzer in December 2022. 

In March 2019, the Company entered into two lease agreements for laboratory equipment.

The leases are each for a 3 -year term and a combined monthly payment of $ 5,956 .

Both leases have a $ 1 purchase option at the end of the lease term.

• In December 2018, the Company entered into an equipment lease for a 12,000 -gallon propane tank that is located on the Company’s animal facility.

The lease is for five years , with an annual payment of $ 8 thousand.

The Company has the option to purchase the asset at any time during the term of the lease for the balance of the unamortized lease payments.

The lease agreements do not require material variable lease payments, residual value guarantees or restrictive covenants.

3 unchanged sentences

Animal Facility

3 –7  

The Company’s weighted-average remaining lease term and weighted-average discount rate for operating and finance leases as of December 31, 2022 are:

Weighted-average remaining lease term (in years)

The Company’s weighted-average remaining lease term and weighted-average discount rate for operating and finance leases as of December 31, 2023 are:

Weighted-average remaining lease term

Weighted-average discount rate

6.00 %  

The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases with terms of more than one year to the total lease liabilities recognized on the consolidated balance sheet as of December 31, 2023:

2023 - remaining

$ 528,520  

$ 406,339  

368,318  

401,496  

4,382,998  

Undiscounted future minimum lease payments

896,838  

6,395,321  

Amount representing interest payments

( 44,819 )  

( 2,632,891 )

Total lease liabilities

852,019  

3,762,430  

Less current portion

( 490,794 )  

Noncurrent lease liabilities

$ 361,225  

$ 3,629,642  

Operating lease expense was approximately $ 1.2  million and $ 1.1  million, respectively, for the years ended December 31, 2022 and 2021 .

Operating lease expense was approximately $ 1.0 million and $ 1.2 million , respectively, for the years ended December 31, 2023 and 2022.

Operating lease costs are included within research and development expenses on the consolidated statements of operations.

Finance lease costs for the years ended December 31, 2022 and 2021 included approximately $ 122,000  and $ 165,000 , respectively, in right-of-use asset amortization and approximately $ 284,000  and $ 296,000 , respectively, of interest expense.

Finance lease costs for the years ended December 31, 2023 and 2022 included approximately $ 0.1 million and $ 0.1 million respectively, in right-of-use asset amortization and approximately $ 0.3 million and $ 0.3 million , respectively, of interest expense.

Finance lease costs are included within research and development expenses on the consolidated statements of operations.

Cash payments under operating and finance leases were approximately $ 1.2  million and $ 0.4  million, respectively, for the year ended December 31, 2022 .

Cash payments under operating and finance leases were approximately $ 1.1  million and $ 0.5  million, respectively, for the year ended December 31, 2021 .

Cash payments under operating and finance leases were approximately $ 0.6 million and $ 0.4 million , respectively, for the year ended December 31, 2023.

Cash payments under operating and finance leases were approximately $ 1.2 million and $ 0.4 million , respectively, for the year ended December 31, 2022 .

(8) Accrued Expenses and Other Current Liabilities

1 unchanged sentence

Accrued vacation

$ 511,849  

$ 552,629  

Accrued payroll

357,390  

674,858  

Accrued construction-in-progress

85,767  

548,988  

Accrued supplies

709,027  

Accrued consulting

186,833  

179,082  

Accrued clinical trial expense

355,479  

423,634  

Accrued outside laboratory services

1,106,903  

128,752  

Accrued bonus & severance

950,324  

1,804,288  

Accrued contract manufacturing

25,129  

1,000,824  

Accrued legal

856,505  

833,646  

Accrued financing fees payable

4,910,500  

5,100,000  

Accrued franchise tax payable

50,000  

216,251  

Accrued interest

Other accrued expenses

513,110  

283,909  

$ 9,917,981  

$ 12,455,888  

(9 ) Notes Payable

As of December 31, 2023 and 2022, notes payable was as follows:

$ 25,013  

Insurance financing note payable

772,665  

1,771,711  

8% Unsecured Convertible Note

541,644  

Total notes payable

1,314,309  

1,796,724  

notes payable - current portion

772,665  

1,796,724  

Notes payable, noncurrent

$ 541,644  

In December 2017, the Company entered into a loan agreement for the purchase of a tractor for $ 116,661 at a 3.6 % interest rate.

The loan included annual payments of $ 25,913 for the next five years starting in December 2018.

The tractor loan was paid off in full in November 2022. 

On March 27, 2020, President Trump signed into law the CARES Act.

In April 2020, the Company entered into a loan agreement (the “PPP Loan”) with First Premier Bank under the Paycheck Protection Program (the “PPP”), which is part of the CARES Act administered by the United States Small Business Administration (“SBA”).

As part of the application for these funds, the Company, in good faith, certified that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company.

The certification further requires the Company to take into account its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business.

Under the PPP, the Company received proceeds of approximately $ 661,612 .

In accordance with the requirements of the PPP, the Company utilized the proceeds from the PPP Loan primarily for payroll costs.

The PPP Loan has a 1.00 % interest rate per annum, matures in April 2022 and is subject to the terms and conditions applicable to loans administered by the SBA under the PPP.

Under the terms of PPP, all or certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses, as described in the CARES Act.

The Company recorded the entire amount of the PPP Loan as debt.

In February 2021, the Company submitted a forgiveness application related to its PPP Loan.

In March 2021, the SBA approved the forgiveness of the PPP Loan, plus accrued interest.

The Company recorded a gain on extinguishment of PPP Loan of $ 665,596 for the forgiveness of the PPP Loan and accrued interest within gain on debt extinguishment of Paycheck Protection Program SBA Loan on the consolidated statement of operations for the year ended December 31, 2021. 

8% Unsecured Convertible Note

Additionally, pursuant to the Fourth Amendment to the Company's lease with Sanford Health, the Company and Sanford Health agreed to a period of Abated Rent from 

October 1, 2022 to September 30, 2023.

Pursuant to the Fourth Amendment to the Company’s lease with Sanford Health, the Company and Sanford Health agreed to a period of Abated Rent from October 1, 2022 to September 30, 2023.

In exchange for the Abated Rent, effective as of October 1, 2022, the Company issued to Sanford Health an 8 % unsecured, convertible promissory note (the “8% Unsecured Convertible Note”).

Pursuant to the October Note, the Company shall pay the sum of $ 541,644 (the “Principal”) plus accrued and unpaid interest thereon on September 31, 2024 (the “Maturity Date”).

Simple interest shall accrue on the outstanding Principal from and after the date of the October Note, and shall be payable on the Maturity Date.

Sanford Health shall have the right, but not the obligation, to convert all or any part of the outstanding Principal of the October Note, together with any accrued and unpaid interest thereon to the date of such conversion, into such number of fully paid and non-assessable shares of the Company’s common stock, at any time and from time to time, prior to the later of the Maturity Date and the date on which the October Note is paid in full, subject to certain restrictions, at a conversion price per share of Common Stock equal to greater of ( x ) $ 1.50 and (y) the price at which the Company sells shares of common stock in any bona fide private or public equity financing prior to the Maturity Date.

The Company evaluated the treatment of the 

8% Unsecured Convertible Note under ASC 470 and ASU 2020 - 06 (early adopted by the Company as of January 1, 2021) and determined the Note in its entirety would be allocated to debt without separating the nonconvertible debt.

The Company's consolidated balance sheet as of 

December 31, 2022  includes accrued interest of approximately $ 8,000

Pursuant to the 8% Unsecured Convertible Note, the Company shall pay the sum of approximately $ 542 thousand (the “Principal”) plus accrued and unpaid interest thereon on September 30, 2024 (the “Maturity Date”).

Simple interest shall accrue on the outstanding Principal from and after the date of the 8% Unsecured Convertible Note and shall be payable on the Maturity Date.

Sanford Health shall have the right, but not the obligation, to convert all or any part of the outstanding Principal of the 8% Unsecured Convertible Note, together with any accrued and unpaid interest thereon to the date of such conversion, into such number of fully paid and non-assessable shares of the Company’s common stock, at any time and from time to time, prior to the later of the Maturity Date and the date on which the 8% Unsecured Convertible Note is paid in full, subject to certain restrictions, at a conversion price per share of common stock equal to greater of (x) $ 15.00 and (y) the price at which the Company sells shares of common stock in any bona fide private or public equity financing prior to the Maturity Date.

The Company evaluated the treatment of the 8% Unsecured Convertible Note under ASC 470 and determined the Principal in its entirety would be allocated to debt.

The Company’s consolidated balance sheet as of December 31, 2023, includes accrued interest relating to the 8% Unsecured Convertible Note of approximately $ 43 thousand .

Insurance Financing

2 unchanged sentences

If any circumstances exist in which premiums related to any Financed Policy could become fully earned in the event of loss, Lender shall be named a loss-payee with respect to such policy.

The total premiums, taxes and fees financed is approximately $ 1,236,000 with an annual interest rate of 5.47 %.

The total premiums, taxes and fees financed is approximately $ 765 thousand with an annual interest rate of 7.96 %.

In consideration of the premium payment by Lender to the insurance companies or the agent or broker, the Company unconditionally promises to pay Lender the amount financed plus interest and other charges permitted under the agreement.

At December 31, 2022 and 2021 the Company recognized approximately $ 773,000 and $ 1,772,000 , respectively, as an insurance financing note payable in its consolidated balance sheets.

At December 31, 2023 and 2022, the Company recognized approximately $ 509 thousand and $ 773 thousand , respectively, as an insurance financing note payable in its consolidated balance sheets.

The Company will pay the insurance financing through installment payments with the last payment for the current note being on September 22, 2024.

( 12 ) Preferred Stock

On the Closing Date, pursuant to the Business Combination (as described in Note 5 ), 17,750,882 outstanding shares of Preferred Stock were automatically converted into 8,259,505 shares of common stock pursuant to the Exchange Ratio.

In addition, upon the closing of the Business Combination, pursuant to the terms of the Second Amended and Restated Certificate of Incorporation, the Company authorized 10,000,000 shares of preferred stock with a par value $ 0.0001 .

Prior to the Business Combination, in August 2019, the Company’s Certificate of Incorporation was amended to authorize the Company to issue 50,000,000 shares of preferred stock, of which 6,615,000 shares were designated as Series A preferred stock, 2,525,800 shares were designated as series A- 1 preferred stock, 4,039,963 shares were designated as series A- 2 preferred stock, 3,333,333 shares were designated as series A- 2A preferred stock, and 8,571,429 shares were designated as series B preferred stock.

The carrying value of Series A preferred stock was $ 1 per share, Series A- 1 $ 1.88 per share, Series A- 2 & A- 2A $ 3.00 per share, and Series B $ 3.50 per share.

The preferred stock was entitled to receive noncumulative dividends in preference to any dividend on the common stock when, as, and if declared by the Company’s board of directors.

The holders of the preferred stock also were entitled to participate pro rata in any dividends paid on the common stock on an as-if-converted basis.

Each holder of preferred stock was entitled to the number of votes equal to the number of shares of common stock that it could be converted into.

As long as there were 8,000,000 shares of preferred stock outstanding, the vote or written consent of the holder of the majority of the outstanding preferred stock (all series voting as a single class) was required to approve any amendment of the certificate of incorporation that changes voting, preferences or privileges or restrictions of the preferred stock.

In the event of liquidation or winding up of the Company, the preferred stockholders also were entitled to receive in preference to the holders of the common stock the greater of:

a) a per share amount equal to their respective original purchase price plus any declared but unpaid dividends (the “Liquidation Preference”);

or b) the amount to be paid on the common stock on an as-if-converted basis.

The remaining assets would be distributed to the common stockholders.

The holders of preferred stock had the right to convert the preferred stock into common stock, at any time, utilizing the then- effective conversion rate.

The effective conversion rate prior to the Business Combination was 1:1.

All preferred shares were automatically converted into common shares utilizing the then effective preferred conversion rate upon:

a) the closing of the Company’s sale of its common stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act of 1933, covering the sale of the Company’s common stock if gross proceeds are at least $ 20,000,000 and the Company’s shares have been listed on a stock exchange, as defined;

or b) the election of the holders of a majority of the outstanding shares of preferred stock.

With any change of control of the Company or financing, the preferred stockholders were to approve through majority vote any such change in control or financing event approved by the board of directors or the majority of the common stockholders.

The preferred stock contained certain anti-dilution provisions, as defined.

( 13 ) Stock Option Plans

On August 5, 2014, the Company approved a stock option grant plan (the “2014 Equity Incentive Plan”) for employees, directors, and non-employee consultants, which provides for the issuance of options to purchase common stock.

The total shares authorized under the plan was originally 8,000,000;

however, during 2019, the Plan was amended to increase the total shares authorized under the plan to 16,000,000 .

As a result of the Business Combination, the 2014 Equity Incentive Plan was amended to reduce the shares authorized to 7,444,800 based upon the impact of the Exchange Ratio.

As a result of the Business Combination, the Company adopted the 2021 Omnibus Equity Incentive Plan (hereinafter collectively with the 2014 Equity Incentive Plan referred to as the "Equity Compensation Plans"), representing 11,000,000 shares of common stock reserved for issuance upon exercise of stock options.

As of the beginning of the 2022 calendar year, the shares reserved for future issuance increased by, 869,746 , or two percent ( 2 %) of the total number of shares of Common Stock issued and outstanding, to a total of 11,869,746 shares of common stock reserved for issuance under the 2021 Omnibus Equity Incentive Plan

The expected term of the stock options was estimated using the “simplified”

method, as defined by the SEC’s Staff Accounting Bulletin No.

(10) Stockholder's Equity

Authorized Capital Stock

The total number of shares of the Company’s authorized capital stock is 810,000,000 .

The total amount of authorized capital stock consists of 800,000,000 shares of common stock and 10,000,000 shares of preferred stock.

Series A Preferred Stock

On September 29, 2023, the Company entered into a securities purchase agreement (the “September 2023 Purchase Agreement”) with certain accredited investors, pursuant to which the Company agreed to issue and sell, in a private placement (the “September 2023 Offering”), (i) 7,500 shares of Series A-1 Convertible Preferred Stock, par value $ 0.0001 per share, for an aggregate offering price of $ 7.5 million (the “Series A-1 Preferred Stock”), (ii) tranche A warrants (the “Preferred Tranche A Warrants”) to acquire shares of Series A-1 Preferred Stock or Series A-3 Preferred Stock, par value $ 0.0001 per share, for an aggregate exercise price of $ 70.5 million (the “Series A-3 Preferred Stock”), (iii) tranche B warrants to acquire shares of Series A-3 Preferred Stock, par value $ 0.0001 per share, for an aggregate exercise price of $ 52.0 million (the “Preferred Tranche B Warrants”), and (iv) tranche C warrants to purchase Series A-3 Preferred Stock, par value $ 0.0001 per share, for an aggregate exercise price of $ 130.0 million (the “Preferred Tranche C Warrants” and together with the Preferred Tranche A Warrants, and Preferred Tranche B Warrants, the “Preferred Warrants” and the shares underlying the Preferred Warrants, the “Preferred Warrant Shares”).

On October 3, 2023, the Company closed on the issuance of the 7,500 shares of Series A-1 Preferred Stock (the “Initial Issuance Date”).

In connection with the issuance of the 7,500 shares of Series A-1 Preferred Stock, gross proceeds were $ 7.5 million, before deducting fees to be paid to the placement agent and financial advisors of the Company and other offering expenses payable by the Company.

The Company intends to use the net proceeds from the September 2023 Offering for working capital purposes and other general corporate purposes and to advance its SAB-142-101 clinical trial.

The Company recorded $ 7.5 million in gross proceeds associated with the initial issuance of the 2023 Private Placement transaction whereby the Company issued 7,500 shares of Series A-1 Convertible preferred stock and warrants to purchase common stock in the combined company.

The Company estimated the initial value of the warrants to be $ 10.9 million.

Since the warrants are classified as liabilities, the initial amount recorded as the warrant liability was equal to the estimated fair value of the warrants.

Since the fair value of these warrants exceeded the equity proceeds, the entire amount of proceeds were allocated to the warrants and the remaining value allocated to the warrants resulted in a $ 3.4 million loss on the issuance of the Series A Preferred Stock.

Subject to the terms and limitations contained in the Certificate of Designation:

• The Series A-1 Preferred Stock issued in the September 2023 Offering will not become convertible until the Company’s stockholders approve (i) the issuance of all common stock issuable upon conversion of the Issued Preferred Stock and the Preferred Warrant Shares, (ii) the issuance of the Preferred Warrant Shares upon exercise of the Preferred Warrants and (iii) an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock from 490,000,000 to 800,000,000 (collectively, the “Stockholder Approval”).

• On the first trading day following the announcement of the Stockholder Approval, each share of Series A-1 Preferred Stock will automatically convert into common stock, at the conversion price of $ 6.30 per share (the “Conversion Price”), provided that to the extent such conversion would cause a holder of Series A-1 Preferred Stock to exceed the applicable beneficial ownership limitation, such holder will receive shares of Series A-2 Preferred Stock in lieu of common stock.

• At the option of the holder, each share of Series A-2 Preferred Stock and Series A-3 Preferred Stock will be convertible into common stock, at the Conversion Price (which is subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization).

The Preferred Tranche A Warrants were exercisable beginning on October 2, 2023, (the “Issuance Date”) (as defined in the Form of Preferred Tranche A Warrant) until the earlier of (i) fifteen (15) trading days following the date of the public announcement of the fulsome data set from the Sanofi S.A.

Protect trial or (ii) December 15, 2023.

If any purchaser in the September 2023 Offering failed to exercise their Preferred Tranche A Warrant in full prior to its expiration date, such purchaser forfeited all Preferred Tranche A Warrants, Preferred Tranche B Warrants, and Preferred Tranche C Warrants issued to them.

The Preferred Tranche B Warrants are exercisable commencing on the Exercisability Date (as defined in the Form of Preferred Tranche B Warrant) until the later of (i) 15 days following the Company’s announcement of data from its SAB-142-101 clinical trial and (ii) March 31, 2025.

The Preferred Tranche C Warrants are exercisable commencing on the Exercisability Date (as defined in the Form of Preferred Tranche C Warrant) until the five (5) year anniversary of the Exercisability Date.

Prior to the extended mandatory exercise time, certain investors informed the Company that they would not exercise their mandatorily exercisable Preferred Tranche A Warrants.

Certain of the investors agreed to assume and exercise 16,269 of the 27,115 unexercised Preferred Tranche A Warrants and received 10,846 of the Preferred Tranche B Warrants and 27,115 of the Preferred Tranche C Warrants from the transferring Investors.

The balance of the unexercised Preferred Tranche A

Warrants and the remaining Tranche B Warrants and Tranche C Warrants issued to the Investors who failed to exercise their Tranche B Warrants were cancelled.

Following these updates to the offering, the Company issued 59,654 shares of Series A-1 Preferred Stock for aggregate proceeds of approximately $ 59.65 million upon the exercise of the Tranche A Warrants.

Pursuant to the Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Voting Preferred Stock, (the “Certificate of Designation”), all shares of Series A-1 Preferred Stock, subject to the Stockholder Approval obtained in November 2023, were automatically converted into an aggregate of 3,954,674 shares of common stock, par value $ 0.0001 per share and 42,236 shares of Series A-2 Preferred Stock, par value $ 0.0001 per share, of the Company (the “Series A-2 Preferred Stock”).

Following Shareholder Approval of the September 2023 Private Placement on November 22, 2023, the Company issued 67,154 shares of Series A-1 Convertible Preferred Stock.

Following shareholder approval of the Company's 2023 Private Placement transaction, 24,918 shares of Series A-1 Convertible Preferred Stock were converted into 3,954,674 common shares, with the remaining 42,236 shares of Series A-1 Convertible Preferred Stock being converted into Series A-2 Convertible preferred stock.

For information pertaining to the Company’s outstanding warrants to purchase shares of the Company’s preferred stock, see Note 12, Warrants .

Earnout Shares

On October 22, 2021 (the “Closing Date”), the Company consummated the business combination contemplated by the agreement and plan of merger, dated as of June 21, 2021, as amended on August 12, 2021, made by and among Big Cypress Acquisition Corp., a Delaware corporation (“BCYP”), Big Cypress Merger Sub Inc., a Delaware corporation (“Merger Sub”), the Company, and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative, agent and attorney-in-fact of the SAB Stockholders (the “Business Combination”).

Upon closing of the Business Combination, Merger Sub merged with SAB Biotherapeutics, with SAB Biotherapeutics as the surviving company of the merger.

Upon closing of the Business Combination, BCYP changed its name to “SAB Biotherapeutics, Inc.”.

The Earnout Shares shall be released in four equal increments as follows:

(i) 25 % of the Earnout Shares shall be released if, at any time during the five ( 5 )-year period immediately following the Closing Date, the VWAP of the Company’s publicly traded common stock is greater than or equal to $ 150.00 for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days (the “First Earnout”).

(ii) 25 % of the Earnout Shares shall be released if, at any time during the five ( 5 )-year period immediately following the Closing Date, the VWAP of the Company’s publicly traded common stock is greater than or equal to $ 200.00 for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days (the “Second Earnout”).

(iii) 25 % of the Earnout Shares shall be released if, at any time during the five ( 5 )-year period immediately following the Closing Date, the VWAP of the Company’s publicly traded common stock is greater than or equal to $ 250.00 for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days (the “Third Earnout”).

(iv) 25 % of the Earnout Shares shall be released if, at any time during the five ( 5 )-year period immediately following the Closing Date, the VWAP of the Company’s publicly traded common stock is greater than or equal to $ 300.00 for any twenty ( 20 ) trading days within a period of thirty ( 30 ) consecutive trading days (the “Fourth Earnout” and together with the First Earnout, the Second Earnout and the Third Earnout, the “Earnouts”).

Pursuant to the terms of the Business Combination Agreement, SAB Biotherapeutics’ securityholders (including vested option holders) who own SAB Biotherapeutics securities immediately prior to the Closing Date will have the contingent right to receive their pro rata portion of (i) an aggregate of 1,200,000 shares of common stock (“Earnout Shares”), of which 150,806 are contingently issuable based upon future satisfaction of the aforementioned VWAP thresholds.

The remaining 1,049,194 are legally issued and outstanding, if the Company does not meet the above VWAP thresholds, or a change in control with a per share price below the VWAP thresholds occurs within a five-year period immediately following the Closing Date, the shares will be returned to the Company.

The Earnout Shares are indexed to the Company’s equity and meet the criteria for equity classification.

On the Closing Date, the fair value of the 1,200,000 Earnout Shares was $ 101.3 million.

The Company recorded the Earnout Shares as a stock

dividend by reducing additional paid-in capital, which was offset by the increase in additional paid-in capital associated with the Business Combination.

For information pertaining to the Company’s outstanding warrants to purchase shares of the Company’s common stock, see Note 12, Warrants .

(11) Stock Option Pla ns

As of December 31, 2023 , there were 732,430 shares of common stock reserved for issuance under the 2014 Equity Incentive Plan, with 323,755 shares of common stock available for grant and 408,675 shares of common stock underlying outstanding grants.

The Company adopted the 2021 Omnibus Equity Incentive Plan (the “2021 Equity Incentive Plan”, and collectively with the 2014 Equity Incentive Plan, the “Equity Compensation Plans”), which reserved 1,100,000 shares of common stock for issuance.

At of the beginning of each calendar year, the shares reserved for future issuance shall increase by two percent ( 2 %) of the total number of Shares of Common Stock issued and outstanding on a fully-diluted basis as of the end of the Company’s immediately preceding fiscal year (or such lesser number of shares, including no shares, determined by the Board in its sole discretion);

provided, however, that the aggregate number of additional Shares available for issuance pursuant to this paragraph (b) shall not exceed a total of 500,000 Shares.

As of December 31, 2023 , there were 1,287,762 shares of common stock reserved for issuance under the 2021 Equity Incentive Plan, with 620,031 shares of common stock available for grant an d 667,731 share s of common stock underlying outstanding grants.

The expected term of the stock options was estimated using the “simplified” method, as defined by the SEC’s Staff Accounting Bulletin No.

107, Share-Based Payment .

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Treasury instruments whose term was consistent with the expected term of the options.

The dividend assumption is based on the Company’s history and expectation of dividend payouts.

The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future.

Therefore, the Company has assumed no dividend yield for purposes of estimating the fair value of the options.

Stock Options 

Stock option activity for employees and non-employees under the Equity Compensation Plans for the year ended December 31, 2022 :

Stock Options

Stock option activity for employees and non-employees under the Equity Compensation Plans for the years ended December 31, 2023 and 2022 was as follows:

Exercise Price

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Outstanding options, December 31, 2022

5,107,672  

$ 2.44  

$ 28,948,535  

2,934,051  

$ 1.54  

( 855,007 )  

$ 3.32  

( 90,264 )  

$ 0.85  

( 990 )  

$ 4.97  

Outstanding options, December 31, 2023

7,095,462  

$ 1.99  

$ 109,891  

Options vested and exercisable at December 31, 2022

4,269,351  

$ 1.84  

$ 109,891  

Total unrecognized compensation cost related to non-vested stock options as of 

December 31, 2022  was approximately $ 4.2  million and is expected to be recognized within future operating results over a weighted-average period of 

3.17  years.  

The weighted average grant date fair value of options granted during the year ended December 31, 2022 and 2021 , was $ 0.78  and $ 5.36 per share, respectively.

During the year ended December 31, 2022 and 2021, 634,658 shares with a fair value totaling $ 3.1 million, and 461,701 shares with a fair value totaling $ 1.7 million, respectively, vested.

The estimated fair value of stock options granted during to employees and consultants for the years ended December 31, 2022 and 2021 , were calculated using the Black-Scholes option-pricing model using the following assumptions: 

Options vested and exercisable, December 31, 2023

Total unrecognized compensation cost related to non-vested stock options as of December 31, 2023 was approximately $ 3.1 million and is expected to be recognized within future operating results over a weighted-average period of 3.11 years.

The weighted average grant date fair value of options granted during the years ended December 31, 2023 and 2022, was $ 4.93 and $ 7.80 per share, respectively.

During the years ended December 31, 2023 and 2022, 124,530 options vested with a fair value totaling $ 2.5 million and 63,466 options vested with a fair value totaling $ 3.1 million , respectively.

The estimated fair value of stock options granted during to employees and consultants for the years ended December 31, 2023 and 2022, were calculated using the Black-Scholes option-pricing model using the following assumptions:

For The Year Ended December 31,

Expected volatility

78.0 - 97.4 %  

75.9 - 104.3 %

Weighted-average volatility

94.1 %  

Expected dividends

Expected term (in years)

5.50 - 6.08  

Risk-free rate

1.38 - 3.56 %  

0.14 - 1.38 %

Restricted Stock

Restricted stock unit activity for employees and non-employees under the Equity Compensation Plans for the year ended December 31, 2022 was as follows: 

Stock award activity for employees and non-employees under the Equity Compensation Plans for the year ended December 31, 2023 was as follows:

Number of shares

Weighted Average Grant Date Fair Value

Unvested as of December 31, 2022

350,000  

$ 1.72  

Unvested as of December 31, 2023

350,000  

$ 1.72  

At December 31, 2022 , the Company had an aggregate of $ 519,000  of unrecognized equity-based compensation related to restricted stock units outstanding.

The unrecognized expense for restricted stock units is expected to be recognized over a weighted average period of 3.46 years.

Stock-based compensation expense for the years ended December 31, 2022 and 2021 was as follows:

At December 31, 2023, the Company had an aggregate of $ 0.5 million of unrecognized equity-based compensation related to restricted stock units outstanding.

During the year ended December 31, 2023, 12,816 shares with a fair value of $ 0.2 million vested.

At December 31, 2023, the Company had 12,816 restricted stock units vested but not issued.

The unrecognized expense for restricted stock units is expected to be recognized within future operating results over a weighted average period of 2.87 years.

Stock-based compensation expense

Stock-based compensation expense for the December 31, 2023 and 2022 was as follows:

For The Year Ended December 31,

Research and development

$ 857,331  

$ 964,926  

General and administrative

1,816,873  

1,349,756  

$ 2,674,204  

$ 2,314,682  

( 14 ) Fair Value Measurements

The following fair value hierarchy classifies the inputs to valuation techniques that would be used to measure fair value into one of three levels:

Unadjusted quoted prices in active markets for identical assets or liabilities.

Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Unobservable inputs that reflect the reporting entity’s own assumptions.

The following tables present information about the Company's assets and liabilities that are measured at fair value on a recurring basis at December 31, 2022  and 

2021 , and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair values:

As of December 31, 2022  

Quoted Prices In Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Other Unobservable Inputs (Level 3)

Public Warrant liability

$ 310,500  

Private Placement Warrant liability

$ 10,430  

10,430  

$ 320,930  

$ 310,500  

$ 10,430  

As of December 31, 2021

Quoted Prices In Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Other Unobservable Inputs (Level 3)

Public Warrant liability

$ 10,292,500  

Private Placement Warrant liability

$ 427,630  

427,630  

$ 10,720,130  

$ 10,292,500  

$ 427,630  

(12) Warrants

Public Warrants

Each whole Public Warrant entitles the holder to purchase one share of the Company's common stock at a price of $ 115.00 per share, subject to adjustment as discussed herein.

The Public Warrants became exercisable 30 days after the Closing Date of the Business Combination, and will expire five years after the Closing Date of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

Once the warrants become exercisable, the Company may call the warrants for redemption:

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• at a price of $ 0.01 per warrant;

upon not less than 30 days’

prior written notice of redemption (the “30 -day redemption period”) to each warrant holder;

if, and only if, the reported last sale price of the common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 

30 -trading day period ending three business days before the Company sends the notice of redemption to the warrant holders.

If the Company calls the warrants for redemption as described above, the management will have the option to require any holder that wishes to exercise its warrant to do so on a “cashless basis.”

If the management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of common stock equal to the quotient obtained by dividing ( x ) the product of the number of shares of common stock underlying the warrants, multiplied by the excess of the “fair market value”

(defined below) over the exercise price of the warrants by (y) the fair market value.

The “fair market value”

shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.

As of December 31, 2022 , 5,750,000 Public Warrants classified as liabilities were outstanding.

upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder;

• if, and only if, the reported last sale price of the common stock equals or exceeds $ 180.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before the Company send the notice of redemption to the warrant holders.

If the Company calls the warrants for redemption as described above, management will have the option to require any holder that wishes to exercise its warrant to do so on a “cashless basis.” If management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value.

The “fair market value” shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.

Private Placement Warrants

The Private Placement Warrants and the common stock issuable upon the exercise of the Private Placement Warrants were not transferable, assignable or saleable until after the completion of the Company's Business Combination.

Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees.

Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable as long as they are held by the initial purchasers or their permitted transferees.

If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

As of December 31, 2023 , 20,860 Private Placement Warrants classified as liabilities were outstanding.

PIPE Private Placement Warrants and 

PIPE Warrants and PIPE Placement Agent Warrants

In December 2022, the Company entered into a securities purchase agreement with certain institutional and accredited investors for the sale by the Company of 736,337 shares of common stock and warrants to purchase up to 736,337 shares of common stock (the “PIPE Warrants”), in a private placement offering.

The combined purchase price each share and accompanying PIPE Warrant was $ 10.80 (the “December 2022 Private Placement”).

Three directors of the Company participated in the December 2022 Private Placement, each paying a $ 1.25 premium per share and accompanying PIPE Warrant.

The PIPE Warrants, including those purchased by the participating directors of the Company, are exercisable beginning six months from the date of issuance at an exercise price equal to $ 10.80 per share, and are exercisable for five years from the date of issuance.

The Company received gross proceeds of approximately $ 8.0 million before deducting transaction related fees and expenses.

The Company paid Brookline Capital Markets, the placement agent, a cash fee equal to seven percent of the gross proceeds received by the Company in the December 2022 Private Placement.

The Company also issued Brookline Capital Markets a warrant to purchase up to an aggregate of 21,091 shares of common stock (the “PIPE Placement Agent Warrants”), equal to 7 % of the number of shares purchased by investors introduced to the Company by Brookline Capital Markets.

The PIPE Placement Agent Warrants have an exercise price equal to $ 13.50 per share and are exercisable six months from the date of issuance and expire five years from the date of issuance.

2023 Ladenburg Agreement Warrants

On March 21, 2023, the Company entered into a settlement agreement with Ladenburg Thalmann & Co.

(“Ladenburg”), effective March 23, 2023 (the “2023 Ladenburg Agreement”, regarding the action brought by Ladenburg, the “Ladenburg Action”).

In connection with the 2023 Ladenburg Agreement, on March 24, 2023, the Company (i) issued the Ladenburg Warrants to purchase up to 30,000 shares of common stock, exercisable for three years from the date of issuance at $ 5.424 per share;

and (ii) furnished to Ladenburg a one-time cash payment of $ 500 thousand.

Pursuant to the terms and subject to the conditions set forth in the 2023 Ladenburg Agreement, the Company will (i) no later than June 30, 2023, pay $ 1.5 million to Ladenburg in cash or shares of common stock, at the Company’s option;

and (ii) no later than December 31, 2023, pay $ 1.1 million to Ladenburg in cash or shares of common stock, at the Company’s option.

Following the completion of the Company’s obligations under the 2023 Ladenburg Agreement, Ladenburg has agreed to dismiss the Ladenburg Action with prejudice and extinguish any and all obligations of the Company in connection therewith.

All consideration contemplated by the 2023 Ladenburg Agreement are contained within accrued expenses and other current liabilities within the Company’s consolidated balance sheet as of December 31, 2022.

On June 30, 2023, in accord with the terms of the agreement, the Company issued 191,689 shares of common stock to satisfy a portion of its obligations under the 2023 Ladenburg Agreement.

Following the completion of the 2023 Private Placement, the Company settled the remaining $ 1.1 million due to Ladenburg in cash.

September 2023 Purchase Agreement Warrants

As of December 31, 2023 , the Company now has outstanding 42,846 Tranche B Warrants to acquire shares of Series A-3 Preferred Stock for an aggregate exercise price of approximately $ 42.85 million, and 107,115 Tranche C Warrants to purchase shares of Series A-3 Preferred Stock for an aggregate exercise price of approximately $ 107.1 million.

Both the Tranche B Warrants and Tranche C Warrants were classified as derivative liabilities because they are redeemable for cash upon occurrence of a Fundamental Transaction, as defined in the Forms for such warrants, which may be outside the control of the Company.

Preferred Placement Agent Warrant

On November 21, 2023 the Company issued to Chardan Capital Markets LLC, the placement agent for the Preferred Warrants, a warrant to purchase 850,119 shares ( as adjusted following the Reverse Stock Split) of the Company’s common stock (“the Preferred PIPE Placement Agent Warrants”) The Preferred PIPE Placement Agent Warrants have an exercise price equal to $ 6.30 per share (subject to adjustment for stock dividends and splits) and are exercisable in whole or in part, at any time or times on or after the issuance date and on or before October 2, 2028.

The Preferred Placement Agent Warrant was classified in equity in additional paid-in capital.

The following table summarizes warrant activity for the year ended December 31, 2023:

Warrants Issued

Warrants Exercised

Warrants Forfeited

Business Combination Public Warrants

Private Placement Warrants

PIPE Warrants

PIPE Placement Agent Warrants

In December 2022, the Company entered into a Securities Purchase Agreement with certain institutional and accredited investors for the sale by SAB of 7,363,377 Shares, 7,363,377 Warrants, and in a private placement offering.

The combined purchase price per Share and accompanying warrant was $ 1.08 .

Three directors of the Company participated in the Private Placement, each paying a $ 0.125 premium per Share and accompanying warrants, (the “PIPE Private Placement Warrants”).

The PIPE Private Placement Warrants, including those purchased by the participating directors of SAB are exercisable beginning six months from the date of issuance at an exercise price equal to $ 1.08 per Share, and are exercisable for five years from the date of issuance.

SAB received gross proceeds of approximately $ 8.0 million before deducting transaction related fees and expenses.

SAB paid Brookline Capital Markets, the placement agent, a cash fee equal to seven percent of the gross proceeds received by SAB in the Private Placement.

SAB also issued Brookline Capital Markets a warrant to purchase up to an aggregate of 210,913 shares of Common Stock (the “PIPE Placement Agent Warrants”), equal to seven percent of the number of Shares purchased by Investors introduced to the Company by Brookline Capital Markets.

The Placement Agent Warrants have an exercise price equal to $ 1.35 per share and are exercisable six months from the date of issuance and expires five years from the date of issuance.

December 31, 2022 , 7,363,377 PIPE Private Placement Warrants and 210,913 PIPE Placement Agent Warrants classified as equity were outstanding.

Presentation and Valuation of the Warrants

Liability Classified Warrants

The Public Warrants and Private Placement Warrants are accounted for as liabilities in accordance with ASC 815 - 40, Derivatives and Hedging —

Contracts in Entity ’

s Own Equity and were presented within warrant liabilities on the consolidated balance sheet as of December 31, 2022  and December 31, 2021 .

The initial fair value of the warrant liabilities were measured at fair value at the Closing Date, and changes in the fair value of the warrant liabilities were presented within changes in fair value of warrant liabilities in the consolidated statement of operations for the years ended December 31, 2022  and December 31, 2021 .

On the Closing Date, the Company established the fair value of the Private Placement Warrants utilizing both the Black-Scholes Merton formula and a MCS analysis.

Ladenburg Warrants

Tranche A Warrants

Tranche B Warrants

Tranche C Warrants

Preferred PIPE Placement Agent Warrants

Presentation and Valuation of the Warrants — Liability Classified Warrants

Public Warrants and Private Placement Warrants

The Public Warrants and Private Placement Warrants are accounted for as liabilities in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity ’ s Own Equity and were presented within warrant liabilities on the consolidated balance sheets as of December 31, 2023 and 2022.

The initial fair value of the warrant liabilities was measured at fair value at the Closing Date, and changes in the fair value of the warrant liabilities were presented within changes in fair value of warrant liabilities in the consolidated statements of operations for the years ended December 31, 2023 and 2022.

On the Closing Date, the Company established the fair value of the Private Placement Warrants utilizing both the Black-Scholes Merton formula and a MCS analysis.

Specifically, the Company considered an MCS to derive the implied volatility in the publicly-listed price of the Public Warrants.

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The Company determined the fair value of the Public Warrants by reference to the quoted market price.

The Public Warrants were classified as a Level 1 fair value measurement, due to the use of the quoted market price, and the Private Placement Warrants held privately by Big Cypress Holdings LLC, a Delaware limited liability company which acted as the Company’s sponsor in connection with the IPO (the "Sponsor"), were classified as a Level 3 fair value measurement, due to the use of unobservable inputs.

The Public Warrants were classified as a Level 1 fair value measurement, due to the use of the quoted market price, and the Private Placement Warrants held privately by assignees of Big Cypress Holdings LLC, were classified as a Level 3 fair value measurement, due to the use of unobservable inputs.

See Note 13, Fair Value Measurements, for changes in fair value of the Private Placement Warrants.

The key inputs into the valuations as of the December 31, 2023 and 2022 were as follows:

Risk-free interest rate

Expected term remaining (years)

Implied volatility

Closing common stock price on the measurement date

Preferred Warrants

Should the Company enter into or be party to a fundamental transaction, the Company will be required to purchase all outstanding Warrants from the holders by paying cash in an amount equal to the Black Scholes Value of the unexercised portion of each Preferred Warrant.

As a result, the Preferred Warrants are accounted for as derivative liabilities in accordance with ASC 480 and ASC 815-40, Derivatives and Hedging — Contracts in Entity ’ s Own Equity and were presented within warrant liabilities on the consolidated balance sheet as of December 31, 2023.

The initial fair value of the warrant liabilities was measured at fair value at the Closing Date, and changes in the fair value of the warrant liabilities were presented within changes in fair value of warrant liabilities in the consolidated statement of operations for the year ended December 31, 2023.

On the Initial Issuance Date, the Company established the fair value of the Preferred Warrants utilizing the Black-Scholes Merton formula.

All tranches of the Preferred Warrants were classified as Level 3 fair value measurements, due to the use of unobservable inputs.

See Note 13, Fair Value Measurements, for changes in fair value of the Preferred Warrants.

The key inputs utilized in determining the fair value of each Tranche A Warrant as of the Initial Issuance Date was as follows:

October 3, 2023

Initial Measurement

Risk-free interest rate (1)

Expected term remaining (years) (1)

Implied volatility

Underlying Stock Price (Preferred Series A)

Reflects a probability-weighted input derived from multiple Black-Scholes calculations.

These calculations account for various potential dates for the public announcement of the comprehensive data set from the Sanofi S.A.

Protect trial, spanning from mid-October to December 15, 2023.

The key inputs utilized in determining the fair value of each Tranche B Warrants as of the Initial Issuance Date and December 31, 2023 were as follows:

October 3, 2023

Initial Measurement

Risk-free interest rate (1)

Expected term remaining (years) (1)

Implied volatility

Underlying Stock Price (Preferred Series A)

(1) Reflects a probability-weighted input derived from multiple Black-Scholes calculations.

These calculations take into account the various potential dates for the announcement of the SAB-142-101 data.

Specifically, the Company assumed a 50.0 % probability of no data release on the Initial Measurement Date.

This probability was later adjusted to 45.0 % as of December 31, 2023.

(2) Reflects a 5 % discount for lack of marketability.

The key inputs utilized in determining the fair value of each Tranche C Warrants as of the Initial Issuance Date and December 31, 2023 were as follows:

October 3, 2023

Initial Measurement

Risk-free interest rate (1)

Expected term remaining (years) (1)

Implied volatility

Underlying Stock Price (Preferred Series A)

(1) Reflects a probability-weighted input derived from multiple Black-Scholes calculations.

These calculations incorporate the company's estimated probability of dissolution, should SABS’ intellectual property fail to yield positive results in forthcoming clinical trials, potentially leading to the company's dissolution before 2028.

Initially, the company estimated a 20.0 % probability of continuing operations through the expected remaining term.

This probability was later adjusted to 25.0 % as of December 31, 2023.

(2) Reflects a 5 % discount for lack of marketability.

Equity Classified Warrants

The Company determined the PIPE Private Placement Warrants and PIPE Placement Agent Warrants met all necessary criteria to be accounted for as equity in accordance with ASC

Derivatives and Hedging —

Contracts in Entity ’

s Own Equity. 

As such, they are presented within additional paid-in capital within Company's

Consolidated Statements of Changes In Stockholders’

Equity (deficit) and consolidated balance sheets. 

Warrants classified as equity are initially measured at fair value.

Subsequent changes in fair value are

not recognized as long as the warrants continue to be classified as equity. 

The Company determined the Ladenburg Warrants, PIPE Warrants, PIPE Placement Agent Warrants, and Preferred PIPE Placement Agent Warrants met all necessary criteria to be accounted for as equity in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity ’ s Own Equity.

As such, they are presented within additional paid-in capital within Company’s consolidated statements of changes in stockholders’ equity and consolidated balance sheets.

Warrants classified as equity are initially measured at fair value.

Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity. The initial fair value of each PIPE Private Placement Warrant and PIPE Placement Agent Warrant issued has been determined using the Black-Scholes option-pricing model.

All relevant terms and conditions for the PIPE Private Placement Warrant and PIPE Placement Agent Warrant are identical with the exception of the exercise prices of $ 1.08 and $ 1.35 , respectively;

the key inputs into the valuations as of the initial measurement date were as follows:

Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity.

The initial fair value of each PIPE Warrant and PIPE Placement Agent Warrant issued was determined using the Black-Scholes option-pricing model.

All relevant terms and conditions for the PIPE Warrant and PIPE Placement Agent Warrant are identical with the exception of the exercise prices of $ 10.80 and $ 13.50 , respectively.

The key inputs into the valuations as of the initial measurement date, December 7, 2022, were as follows:

Initial Measurement

Risk-free interest rate

2 unchanged sentences

Closing common stock price on the measurement date, less discount for lack of marketability (1)

$ 0.66  

( 1 ) As the underlying shares are restricted from sale for a period of 180 days from the date of the 2022 Private Placement, the fair value of the warrants were estimated using the Black-Scholes option pricing model that uses several inputs, including market price of the Company's common shares at the end of each reporting period (a level one input), less a discount for lack of marketability (a level two input).

As the underlying shares are restricted from sale for a period of 180 days from the date of the 2022 Private Placement, the fair value of the warrants was estimated using the Black-Scholes option pricing model that uses several inputs, including market price of the Company’s common shares at the end of each reporting period (a level one input), less a discount for lack of marketability (a level two input).

The discount for lack of marketability was estimated upon consideration of volatility and the length of the lock-up period.

Upon initial measurement, the fair value of the PIPE Private Placement Warrants and PIPE Placement Agent Warrants were determined to be $ 0.42 and $ 0.39 , respectively, per warrant for aggregate values of approximately $ 3,072,000 and $ 82,000 , respectively.

In the Private Placement, the Company recognized the PIPE Private Placement Warrants and PIPE Placement Agent Warrants on a relative fair value basis with approximately $ 2.2 million and $ 58,000  being allocated to each as a component of additional paid-in capital within the Company's consolidated statements of changes in stockholders’

equity (deficit) and consolidated balance sheets.

The following table provides a summary of the changes in the Company's Level 3 fair value measurements:

Initial measurement on the Closing Date

$ 244,062  

Change in fair value of Private Placement Warrant liability

183,568  

Balance, December 31, 2021

427,630  

Change in fair value of Private Placement Warrant liability

Balance, December 31, 2022

$ 10,430  

The measurement as of 

December 31, 2021  for the Public Warrant liability was approximately $ 428,000  and the change in fair value of the Public Warrant liability was approximately $ 417,000  for the year ended December 31, 2022 .

The key inputs into the valuations as of December 31, 2022  and 2021  were as follows:

December 31,  

Upon initial measurement, the fair value of the PIPE Warrants and PIPE Placement Agent Warrants were determined to be $ 0.42 and $ 0.39 per warrant, respectively, for aggregate fair values of approximately $ 3.1 million and $ 82 thousand , respectively.

In the Private Placement, the Company recognized the PIPE Warrants and PIPE Placement Agent Warrants on a relative fair value basis with approximately $ 2.2 million and $ 58 thousand being allocated to each as a component of additional paid-in capital within the Company’s consolidated statements of changes in stockholders’ equity and consolidated balance sheets as of December 31, 2023 and 2022.

The initial fair value of each Ladenburg Warrant issued and exercisable at $ 5.424 has been determined using the Black-Scholes option-pricing model.

The key inputs into the valuations as of the 2023 Ladenburg Agreement initial measurement date, March 21, 2023, were as follows:

Initial Measurement

Risk-free interest rate

4.00 %  

Expected term remaining (years)

Implied volatility

82.0 %  

Closing common stock price on the measurement date

$ 0.59  

$ 7.81  

Upon initial measurement, the fair value of each Ladenburg Warrant was determined to be $ 3.10 , per warrant for a value of approximately $ 93 thousand .

The total fair value of the Ladenburg Warrants was recognized by the company as a non-cash expense and allocated to additional paid-in capital within the Company’s consolidated statement of changes in stockholders’ equity and consolidated balance sheet.

The initial fair value of each Preferred Placement Agent Warrant issued and exercisable at $ 6.30 has been determined using the Black-Scholes option-pricing model.

The key inputs into the valuations as of the October 3, 2023 initial measurement date were as follows:

Initial Measurement

Risk-free interest rate

Expected term remaining (years)

Implied volatility

Closing common stock price on the measurement date

Upon initial measurement, the fair value of each Preferred Placement Agent Warrant was determined to be $ 4.40 , per warrant for a value of approximately $ 3.7 million .

The total fair value of the Preferred PIPE Placement Agent Warrants was recognized by the Company as a non-cash expense and allocated to additional paid-in capital within the Company’s consolidated statement of changes in stockholders’ equity and consolidated balance sheet.

(13) Fair Value Measurements

The following fair value hierarchy classifies the inputs to valuation techniques that would be used to measure fair value into one of three levels:

Unadjusted quoted prices in active markets for identical assets or liabilities.

Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Unobservable inputs that reflect the reporting entity’s own assumptions.

The following table presents information about the Company's assets and liabilities that are measured at fair value on a recurring basis at December 31, 2023 and 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

As of December 31, 2023

Public Warrant liability

Private Placement Warrant liability

Preferred Warrants

As of December 31, 2022

Public Warrant liability

Private Placement Warrant liability

The following table provides a summary of changes in Level 3 fair value measurements for the Private Placement Warrant Liability:

Balance, December 31, 2022

Change in fair value of Private Placement Warrant liability

Balance, December 31, 2023

The following table provides a summary of the changes in Level 3 fair value measurements for the Preferred Warrant liabilities:

Fair Value as of October 3, 2023

Change in fair value (1)

Fair Value as of December 31, 2023

Includes the impact of a $ 3.6 million non-cash gain on termination of private placement warrants consisting of 10,486 Tranche A Warrants with a value of $ 0.1 million, 9,154 forfeited Tranche B Warrants with a value of $ 1.1 million and 22,885 forfeited Tranche C Warrants with a value of $ 2.4 million;

the final liability value of the Tranche A Warrants prior to exercise of $ 0.7 million;

and the increase in the fair value of the outstanding Preferred Warrants between measurement dates of $ 5.0 million.

As of December 31, 2023 and 2022, the Company did not have any other assets or liabilities that are recorded at fair value on a recurring basis.

The Company believes that the carrying amounts of its cash and cash equivalents, accounts receivable, and notes payable approximate their fair values due to their near-term maturities.

The Company believes that the carrying amounts of its cash and cash equivalents, accounts receivable, accounts payable, notes payable, accrued expenses and other current liabilities approximate their fair values due to their near-term maturities.

(14) Income Taxes

2 unchanged sentences

Tax Carryforwards

$ 5,576,496  

$ 5,078,429  

Compensation Accruals

1,781,746  

1,255,535  

Amortizable R&D Intangibles

7,243,110  

Other Deferred Tax Assets

1,220,784  

2,040,143  

Total deferred tax assets

15,822,136  

8,374,107  

Less valuation allowance

( 12,330,481 )  

( 5,300,689 )

Total deferred tax assets

$ 3,491,655  

$ 3,073,418  

Deferred tax liabilities:

3,240,489  

2,521,871  

Other Deferred Tax Liabilities

251,166  

551,547  

Total deferred tax liabilities

3,491,655  

3,073,418  

Net deferred tax asset (liability)

The reconciliation between the Company’s effective tax rate and the statutory tax rate of 21 % includes the following significant items:

changes in the valuation allowance and permanent items including meals and entertainment.

The reconciliation between the Company’s effective tax rate and the statutory tax rate of 21 % includes the following significant items:

changes in the valuation allowance and permanent items including the change in fair value of warrant liabilities and equity issuance costs.

The rate reconciliation was as follows:

Rate reconciliation:

Net (loss) income before tax

$ ( 18,715,175 )  

$ ( 17,144,531 )  

Federal income tax at statutory rate

( 3,930,187 )  

21.00 %  

( 3,600,352 )  

Permanent items

( 2,207,588 )  

12.79 %  

1,029,874  

Federal income tax at statutory

Research and development credit RTP

Other permanent items

Valuation allowance

7,029,790  

( 39.04 )%  

2,679,238  

( 866,386 )  

5.05 %  

( 108,760 )  

$ 25,629  

( 0.20 )%  

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

2 unchanged sentences

Based upon the level of historical losses and the uncertainty of future taxable income over the periods which the Company will realize the benefits of its net deferred tax assets, management believes it is more likely than not that the Company will not fully realize the benefits on the balance of its net deferred tax asset and, accordingly, the Company has established a valuation allowance on its net deferred tax assets.

The valuation allowance increased by approximately $ 7.0  million and approximately $ 3.0  million, respectively, for the years ended December 31, 2022 and 2021 .

As of December 31, 2022 , the Company had approximately $ 22.0  million of federal net operating losses, which were generated after December 31, 2017 and can be carried forward indefinitely under the Tax Act and may generally be used to offset up to 80% of future taxable income.

In addition, the Company had federal tax credit carryforwards of approximately $ 938,000 and approximately $ 0 , respectively for years ended 

December 31, 2022 and 2021  which are available to reduce future federal income taxes through 2042.

The valuation allowance increased by approximately $ 6.9 million and increased by approximately $ 7.0 million , respectively, for the years ended December 31, 2023 and 2022.

As of December 31, 2023, the Company had approximately $ 40.8 million of federal net operating losses, which were generated after December 31, 2017 and can be carried forward indefinitely under the Tax Act and may generally be used to offset up to 80 % of future taxable income.

In addition, the Company had federal tax credit carryforwards of approximately $ 1.7 million and approximately $ 0.9 million , respectively for years ended December 31, 2023 and 2022 which are available to reduce future federal income taxes through 2043.

Utilization of the Company’s net operating loss (and tax credit carryforwards) are subject to annual limitation(s) due to an ownership change that occurred as a result of the October 2023 Private Placement.

In general, an “ownership change”, as defined by Section 382 of the Internal Revenue Code of 1986, as amended, results from a transaction or series of transaction over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders.

However, because the Company was already in a full valuation allowance position, the effect of the ownership was insignificant.

Prior to 2022, taxpayers had the option under Section 174 of the Internal Revenue Code to either deduct their research and development costs or capitalize and amortize such costs over a period of not less than 60 months.

As part of the tax law changes in the Tax Act enacted in 2017, starting with tax years beginning after December 31, 2021, Congress requires taxpayers to capitalize expenditures that qualify as Section 174 research and development costs and recover them over 5 years for expenditures attributed to domestic research and 15 years for expenditures attributed to foreign research.

The 2022 effective income tax rate was impacted by the Section 174 capitalization requirement combined with the restriction on net operating losses to only reduce taxable income by 80%.

effective income tax rate was impacted by the Section 174 capitalization requirement combined with the restriction on net operating losses to only reduce taxable income by 80%.

GAAP provides that the tax effects from uncertain tax positions can be recognized in the consolidated financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position.

3 unchanged sentences

In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable.

The Company’s tax years are still open under the statute from 2019  to present.

However, to the extent allowed by law, the taxing authorities may have the right to examine the period from 2016  through 2022  where net operating losses were generated and carried forward and make adjustments to the amount of the net operating loss carryforward amount.

The Company’s tax years are still open under the statute from 2020 to present.

However, to the extent allowed by law, the taxing authorities may have the right to examine the period from 2016 through 2023 where net operating losses were generated and carried forward and make adjustments to the amount of the net operating loss carryforward amount.

The Company is not currently under examination by federal or state jurisdictions.

On August 16, 2022, the President of the United States signed and enacted into law the Inflation Reduction Act  

Among other provisions, the IRA directs new federal spending toward reducing carbon emissions, lowering healthcare costs, funding the Internal Revenue Service, and improving taxpayer compliance. 

The IRA did not have a material impact on the Company’s tax provision as of December 31, 2022.

(15) Related Party Transactions

For the year-ended December 31, 2022, under the Related Party Transaction Policy the Company adopted in the fourth quarter of 2021, there were no related party transactions with beneficial ownership of 5 % or more of any class of the Company's voting securities, immediate family members of any of the foregoing persons, and any entities in which any of the foregoing is an executive officer or is an owner of 5 % or more ownership interest. 

For the year-ended December 31, 2021, preceding the Company's Merger and adoption of the aforementioned Related Party Transaction Policy, the Company had related party transactions as follows: 

The Company paid consulting fees to a board member, Christine Hamilton, who is also a shareholder, of $ 25,000 .

The Company made lease and insurance payments to Dakota Ag Properties of approximately $ 401,000 .

Dakota Ag Investments (part of Dakota Ag Properties) is a shareholder and owner of the Company.

The Company made lab supply payments to Sandford Health totaling approximately $ 108,000 .

The Company had no related party payables with Sanford Health as of December 31, 2021.

For the years ended December 31, 2023 and 2022 , there were no related party transactions with directors, executive officers, or beneficial owners of 5 % or more of any class of the Company's voting securities, immediate family members of any of the foregoing persons, and any entities in which any of the foregoing is an executive officer or is an owner of 5 % or more ownership interest.

(16) Employee Benefit Plan

The Company sponsors a defined contribution retirement plan.

All the Company’s employees are eligible to be enrolled in the employer-sponsored contributory retirement savings plan, which include features under Section 401 (k) of the Code, as amended, and provides for Company matching contributions.

The Company’s contributions to the plan are determined by its Board of Directors, subject to certain minimum requirements specified in the plan.

For the years ended December 31, 2022 and 2021 the Company made matching contributions of 100 % on 3 % of the employee contributions, with an additional 50 % match on the next 2 % of employee contributions, resulting in approximately $ 410,000  and $ 325,000 , respectively, of matching contributions paid by the Company.

All the Company’s employees are eligible to be enrolled in the employer-sponsored contributory retirement savings plan, which include features under Section 401(k) of the Internal Revenue Code of 1986, as amended, and provides for Company matching contributions.

The Company’s contributions to the plan are determined by its Board of Directors, subject to certain minimum requirements specified in the plan.

The Company has historically made matching contributions of 100 % on 3 % of the employee contributions, with an additional 50 % match on the next 2 % of employee contributions.

The Company made contributions of approximately $ 278 thousand and $ 410 thousand , for the years ended December 31, 2023 and 2022 , respectively.

(17) Commitments and Contingencies

The Company is not a party to any litigation, and, to its best knowledge, no action, suit or proceeding has been threatened against the Company which are expected to have a material adverse effect on its financial condition, results of operations or liquidity.

( 19 ) Joint Development Agreement

In June 2019, the Company entered into a joint development agreement with the University of South Dakota Research Park, Inc.

(“USDRP”) for the construction of a multi-tenant office building and a manufacturing building.

Pursuant to the agreement, the Company also entered into a lease agreement for 41,195 square feet of leasable area located in the building.

The lease will commence upon completion of the building for an initial term of 12 years at a monthly payment of approximately $ 118,000 .

Aurochs, LLC, a wholly owned subsidiary, was founded to manage the construction funds for this project.

All pre-construction costs up to a budgeted $ 2.7 million were paid directly by the Company and reimbursed by USDRP.

As of December 31, 2022 and 2021 , USDRP has spent approximately $ 2.12 million in design costs for this facility, with approximately $ 580,000 of the $ 2.7 million budget remaining.

There were no receivables or payables for this project as of December 31, 2022 and 2021 .

USDRP and the Company intend to secure outside funding for all expenses incurred after the pre-construction phase.

If funding cannot be secured to finance the construction of this facility, the Company will not be required to refund any of the design costs incurred to date.

This project is on hold given the Company's choice to engage Emergent to provide contract development and manufacturing (CDMO) services to produce the Company's fully-human polyclonal antibody products.

( 20 ) Supplemental Disclosures

Supplemental cash flow information and non-cash investing and financing activities are as follows for the years ended December 31, 2022  and 2021 :

Supplemental cash flow information:

Cash paid for interest

$ 293,392  

$ 294,459  

Cash paid for income taxes

$ 25,629  

Non-cash investing and finance activities:

Right-of-use assets obtained in exchange for operating lease liabilities

$ 65,088  

$ 505,187  

Right-of-use assets forfeited due to partial lease terminations

$ 447,810  

Operating lease liabilities eliminated due to partial lease terminations

$ 480,035  

Warrant liabilities assumed related to the Business Combination

$ 6,569,062  

Liabilities assumed related to the Forward Share Purchase Agreement

$ 6,338,306  

Financing fee liabilities assumed related to the Business Combination included in accrued expense and other current liabilities

$ 3,100,000  

Unpaid financing fees included in the accrued expense and other current liabilities

$ 2,000,000  

( 21 ) Quarterly Financial Information (Unaudited)

As further described in Note 2, Restatement of Financial Statements , the previously reported balance sheets as of 

March 31, 2022, and June 30, 2022, as well as, the statement of cash flows for the three months ended March 31, 2022, six months ended June 30, 2022 and nine months ended September 30, 2022, have been restated.

Relevant restated financial information for each relevant period is included in this Annual Report on Form 10 -K in the tables that follow.

As part of the restatement, the Company recorded adjustments to correct the misstatements in the impacted periods.

Descriptions of the restatement can be found in Note 2, Restatement of Financial Statements .

The unaudited interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.

Balance sheets

March 31, 2022 (unaudited)

June 30, 2022 (unaudited)

As Previously Reported

Current assets

Cash and cash equivalents

$ 22,408,409  

$ 16,616,493  

Accounts receivable, net

11,786,420  

9,612,672  

Prepaid expenses

1,974,908  

1,014,754  

2,989,662  

1,521,376  

253,428  

1,774,804  

Total current assets

36,169,737  

1,014,754  

37,184,491  

27,750,541  

253,428  

28,003,969  

Long-term prepaid insurance

535,082  

Operating lease right-of-use assets

2,351,193  

2,085,923  

Financing lease right-of-use assets

3,978,116  

3,946,306  

Property, plant and equipment, net

24,973,432  

24,837,073  

$ 67,472,478  

$ 1,014,754  

$ 68,487,232  

$ 59,154,925  

$ 253,428  

$ 59,408,353  

Liabilities and Stockholders’

Current liabilities

Accounts payable

$ 4,981,385  

$ 4,943,581  

Notes payable

25,013  

1,014,754  

1,039,767  

25,013  

253,428  

278,441  

Operating lease liabilities, current portion

1,154,680  

1,169,139  

Finance lease liabilities, current portion

145,898  

140,767  

Income tax payable

92,281  

Accrued expenses and other current liabilities

11,856,627  

9,858,719  

Total current liabilities

18,255,884  

1,014,754  

19,270,638  

16,137,219  

253,428  

16,390,647  

Operating lease liabilities, noncurrent

1,358,829  

1,061,122  

Finance lease liabilities, noncurrent

3,728,941  

3,694,834  

Warrant liabilities

2,870,558  

1,140,478  

Notes payable, noncurrent

Total liabilities

26,214,212  

1,014,754  

27,228,966  

22,033,653  

253,428  

22,287,081  

Commitments and contingencies (Note 18)

Stockholders’

Preferred stock;

$ 0.0001 par value;

10,000,000 shares authorized, 10,000,000 shares issued and outstanding at June 30, 2022, and March 31, 2022, respectively

Common stock;

$ 0.0001 par value;

490,000,000 shares authorized at June 30, 2022, and March 31, 2022;

43,501,779 and 43,577543 shares issued, respectively, and 42,955,121 and 43,030,885 outstanding at March 31, 2022 and June 30, 2022, respectively

Treasury stock, at cost;

546,658 shares held at March 31, 2022 and June 30, 2022

( 5,521,246 )  

Additional paid-in capital

74,918,250  

75,557,244  

Accumulated deficit

( 28,143,088 )  

( 32,919,084 )  

Total stockholders’

41,258,266  

37,121,272  

Total liabilities and stockholders’

$ 67,472,478  

$ 1,014,754  

$ 68,487,232  

$ 59,154,925  

$ 253,428  

$ 59,408,353  

Statements of Cash Flows

Three Months Ended March 31, 2022 (unaudited)

Six Months Ended June 30, 2022 (unaudited)

Nine Months Ended September 30, 2022 (unaudited)

As Previously Reported

Cash flows from operating activities:

$ 985,863  

$ ( 3,790,132 )  

$ ( 10,866,209 )  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

636,235  

1,385,427  

2,270,621  

Amortization of right-of-use assets

41,207  

73,016  

97,733  

Stock-based compensation expense

897,600  

1,467,461  

2,045,664  

Gain on sale of equipment

( 14,278 )  

( 15,793 )  

Changes in fair value of warrant liabilities

( 7,849,572 )  

( 9,579,652 )  

( 10,362,614 )  

Changes in operating assets and liabilities

Accounts receivable

( 3,775,713 )  

( 1,601,964 )  

( 4,931,330 )  

Prepaid expenses

( 1,110,395 )  

755,783  

( 354,612 )  

( 1,191,944 )  

1,516,833  

324,889  

( 544,737 )  

1,771,746  

1,227,009  

Operating lease right-of-use assets

( 18,080 )  

( 36,056 )  

( 75,276 )  

Accounts payable

522,816  

485,058  

1,025,751  

Due to related party

( 2,367 )  

Deferred grant income

( 100,000 )  

Income tax payable

92,281  

Accrued expense and other current liabilities

( 599,105 )  

( 2,597,169 )  

( 2,217,676 )  

Net cash (used in) provided by operating activities

( 10,293,508 )  

755,783  

( 9,537,725 )  

( 15,502,600 )  

1,516,833  

( 13,985,767 )  

( 23,676,233 )  

1,771,746  

( 21,904,487 )

Cash flows from investing activities:

Proceeds from the sale of equipment

76,390  

Purchases of equipment

( 1,357,324 )  

( 1,970,156 )  

( 2,048,660 )  

Net cash used in investing activities

( 1,280,934 )  

( 1,893,766 )  

( 1,972,270 )  

Cash flows from financing activities:

Payments of notes payable

( 755,783 )  

( 1,516,833 )  

( 1,771,746 )  

Payments related to the Forward Share Purchase Agreement

( 5,521,246 )  

Principal payments on finance leases

( 48,751 )  

( 87,884 )  

( 120,053 )  

Proceeds from exercise of stock options

76,971  

76,972  

Net cash used in financing activities

( 5,562,167 )  

( 755,783 )  

( 6,317,950 )  

( 5,532,159 )  

( 1,516,833 )  

( 7,048,992 )  

( 5,564,327 )  

( 1,771,746 )  

( 7,336,073 )

Net (decrease) increase in cash, cash equivalents, and restricted cash

( 17,136,609 )  

( 22,928,525 )  

( 31,212,830 )  

Cash, cash equivalents, and restricted cash

Beginning of year

39,545,018  

End of period

$ 22,408,409  

$ 16,616,493  

$ 8,332,188  

(18) Subsequent Events

and (ii) furnished to Ladenburg a one -time cash payment of $ 500,000 .

Pursuant to the terms and subject to the conditions set forth in the 2023 Ladenburg Agreement, the Company will (i) no later than June 30, 2023, pay $ 1.5 million to Ladenburg in cash or shares of common stock, at the Company’s option;

and (ii) no later than December 31, 2023, pay $ 1.1 million to Ladenburg in cash or shares of common stock, at the Company’s option.

Any issuance of securities under the Ladenburg Agreement has been made or shall be made pursuant to exemptions provided by Section 4 (a)( 2 ) of the Securities Act as transactions not involving a public offering, and Rule 506 of Regulation D promulgated under the Securities Act.

The Company notes the consideration due to Ladenburg under the 2023 Ladenburg Agreement, excluding the warrants issuable thereunder, are contained within the 2021 and 2022  consolidated balance sheets within accrued expenses and other current liabilities.

Effective January 5, 2024, the Company filed articles of amendment to the Company’s articles of incorporation to affect a one-for-ten reverse split of the Company’s issued and outstanding shares of Common Stock.

All references to common stock, warrants and options to purchase common stock, including per share data and related information contained in the accompanying Consolidated Financial Statements have been retroactively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.

On January 26, 2024, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co.

(“Cantor”), relating to shares of our common stock.

In accordance with the terms of the Sales Agreement, the Company may offer and sell shares of our common stock having an aggregate offering price of up to $ 20,000,000 from time to time through Cantor, acting as the Company’s sales agent.

As of the date hereof, the Company has no t offered or sold any shares of common stock pursuant to the Sales Agreement.

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 9A. Controls and Procedures