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Item 9A. Controls and Procedures

2023-04-14 compared with 2022-03-29 · 1510 added, 499 removed, 1123 unchanged (64% of the section changed)

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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 effective as of the end of the fiscal year covered by this Form 10-K.

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

This Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm as we determined that the Company is currently similarly situated to a newly public company due to the relatively recent closing of the Business Combination, which was accounted for as a reverse recapitalization transaction, in which SAB Biotherapeutics, Inc.

is treated as the acquirer for financial accounting purposes.

In making this determination, we have considered the timing and effects of the Business Combination, which closed on October 22, 2021, and after which, there was a complete change in the business, operations, accounting, board of directors and executive management of the Company and all of the business of the Company was that of SAB Biotherapeutics, Inc.

As a result, the internal controls related to the Company’s prior business no longer exist with respect to the Company’s current business.

Management was not in a position to conduct an assessment because of the Business Combination.

We plan to file our first assessment regarding internal control over financial reporting in the Form 10-K for the year ending December 31, 2022.

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”).

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.

An effective internal control system, no matter how well designed, has inherent limitations, including the possibility of human error or overriding of controls, and therefore can provide only reasonable assurance with respect to reliable financial reporting.

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect all misstatements, including the possibility of human error, the circumvention or overriding of controls, or fraud.

Effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.

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.

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. 

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.

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

We are committed to continuing to improve our internal control processes related to these matters and will continue to review our financial reporting controls and procedures.

As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address deficiencies or modify certain of the remediation measures described above.

Changes in Internal Control Over Financial Reporting

Other than what has been described above, there were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2021, that have 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 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 Information.

Sanford Lease Agreement

On March 28, 2022, we entered into a Third Amendment to the Amended and Restated Lease Agreement (the “Third Amendment”) with Sanford Health, a South Dakota non-profit corporation (“Sanford”) (as amended by the Third Amendment, the "Sanford Lease Agreement").

The Third Amendment, among other things, provides for the least by us from Sanford of an additional 4,035 square feet of storage, laboratory and office space.

The Third Amendment modifies the rent due under the Sanford Lease Agreement to $25.27 per square foot, or $841,061.41 due on an annual basis ($70,088.45 due on a monthly basis), until increased pursuant to the terms of the Sanford Lease Agreement.

The Third Amendment also clarifies the obligations of the respective parties as to installation and maintenance related to information technology infrastructure and other utilities.

The foregoing description of the Third Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Third Amendment, which is filed with this Form 10-K as Exhibit 10.13 and is incorporated herein by reference.

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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Class III Director, President and Chief Executive Officer

Mervyn Turner, PhD.

Class I Director

Class II Director

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Class II Director

Scott Giberson

Class I Director

Beyer, MBA, CMA

Chief Financial Officer

Thomas Luke, MD

Chief Medical Officer

Christoph Bausch, PhD

Chief Science Officer

Kipp Erickson, PhD

Chief Operating Officer

Rick Finnegan, MBA

Chief Business Officer

Melissa Ullerich

Chief Corporate Communications, Investor Relations Officer

Alexandra Kropotova, MD

Chief Medical Officer

Family Relationships

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Reich was the Executive Vice President of OPKO Ophthalmologics, a division of OPKO Health, Inc.

(Nasdaq:OPK) from March 2007 to November 2008, where Mr.

OPK) from March 2007 to November 2008, where Mr.

Reich served on the executive committee and lead the Ophthalmologics business division.

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Lawrence University.

Tom Luke, MD , has served as our Chief Medical Officer since 2018.

Luke joined the company following 30 years with the United States Navy and ten years as a Principal Investigator with the Henry Jackson Foundation at the Naval Medical Research Center—the last four working with our DiversitAb platform on several emerging infectious disease targets.

He has over 20 years of clinical studies experience and is a recognized and widely published expert.

Luke’s experience in public health and immunology includes his work as deputy director of Population Health and Preventive Medicine at the Bureau of Medicine and Surgery in Washington, DC.

An engineering graduate of the United States Naval Academy, with a graduate degree in business and management from Webster University, Luke received his MD and a Master of Tropical Medicine and Hygiene degree from the Uniformed Services University of Health Sciences.

Christoph Bausch, PhD, MBA , has served as our Chief Science Officer since March 2017.

Christoph Bausch is an experienced research scientist, biotech entrepreneur and business development executive who has led the successful discovery, development, and commercialization of platform technologies in the life sciences.

Since September 2011, he has been the Founder and Director of Nanopore Diagnostics, a molecular diagnostic company commercializing platform sensor technology for rapid microbial diagnostics.

Since October 2011, he has acted as President of Keion Group, LLC, a life science consulting firm.

Bausch held several science-based business development positions prior to joining SAB, most recently for multi-billion-dollar global biorefining leader POET, LLC, where he structured strategic partnerships, prospected, and vetted new technologies and streamlined research and development activities.

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

Prior to his role as COO, he served as Chief Science Officer since joining SAB in April 2017, providing leadership in all areas of Research & Development, and functioned as drug development lead for a Stage 3 clinically advanced drug product.

Bausch is an experienced research scientist, biotech entrepreneur and business development executive who has led the successful discovery, development, biomanufacturing, and commercialization of platform technologies in the life sciences.

Previously, Dr.

Bausch has served as founder and director of a molecular diagnostic company and has provided life science consulting for Keion Group, LLC.

Bausch held several science-based business development positions prior to joining SAB, most recently for multi-billion-dollar global industrial biomanufacturing leader POET, LLC, where he structured strategic partnerships, prospected, and vetted new technologies and streamlined research and development activities.

He also worked in both research and commercialization roles for Fortune 500 life science and high technology company Sigma-Aldrich, now MilliporeSigma.

Bausch is a microbiologist by training and received his Ph.D.

in Microbiology at The Ohio State University (Columbus, Ohio), completed Post-Doctoral Training at the Stowers Institute for Medical Research (Kansas City, Missouri).

He earned an M.B.A.

Bausch received his PhD in Microbiology at The Ohio State University, Columbus, Ohio, completed Post-Doctoral Training at the Stowers Institute for Medical Research, Kansas City, Missouri and earned an MBA from St.

Louis University, St.

Louis, Missouri) and a B.A.

in Biology from the University of Nebraska-Lincoln (Lincoln, Nebraska).

Kipp Erickson, PhD , has served as our Chief Operating Officer since March 2021.

Erickson has over 25 years of both human and veterinary pharmaceutical discovery and development experience across a range of therapeutic modalities focused on translational medicine and commercial development.

He has held both executive and operational leadership roles in product innovation, regulatory dossiers, and commercial development.

Most recently, Dr.

Erickson served as Chief Operating Officer of RTI, LLC from July 2018 through February 2021, a leading biomedical contract research organization which provides consulting services and development support to global clients in human and animal health, biopharma and advanced feed/nutrition industries.

From December 2016 to March 2021, Dr.

Erickson worked as a translational medicine and research consultant, and provided services ranging from drug discovery and candidate validation, to clinical development, market research and business case valuations, and commercial launch and product development.

He also has a multi-disciplinary background in human drug discovery, safety and development with roles at Pharmacia, Procter and Gamble Pharmaceuticals, and Pfizer, along with drug discovery and product development in animal health from Pfizer Animal Health, Zoetis and Intrexon.

Erickson is a cardiovascular and respiratory scientist by training and received his doctorate from the College of Veterinary Medicine at Kansas State University with his post-doctoral work at the Medical College of Wisconsin and University of California-San Diego, School of Medicine.

He received his B.S.

in Animal Science from University of Nebraska-Lincoln.

Rick Finnegan, MBA, has served as our Chief Business Officer since September 2018.

Finnegan is a veteran of the biopharma industry with experience at companies ranging in size and complexity from pre-IPO start-ups to Merck & Co., a Fortune 50 company.

Finnegan has launched multiple brands in the US and globally across a variety of therapeutic categories including orphan diseases and has managed brands at all stages of the product life cycle—from pre-clinical development to mature, multi- billion -dollar flagship franchises.

Prior to joining SAB Biotherapeutics, Mr.

Finnegan most recently served as SVP of Program Management for rEVO Biologics, an LFB Biotherapeutics Company, from 2014 to 2018.

As Executive Vice President for inVentiv Health, now Syneos Health, he expanded commercial operations in Japan, increasing revenues seven-fold, while launching entities in China, Korea  

and Australia.

He also led Prague-based Glenmark Therapeutics as General Manager and President of its European Specialty Pharmaceuticals division.

While in leadership roles with Merck, GTC Therapeutics, Critical Therapeutics and Genzyme , now Sanofi , Rick took multiple products from development through clinical trials and to market.

Finnegan holds a Master of Science in Management from Massachusetts Institute of Technology, Sloan School of Management, and a Bachelor of Science in Business Administration from the University of New Hampshire Whittemore School of Business and Economics.

Melissa Ullerich , has served as our Chief of Corporate Communications and Investor Relations Officer since March 2020.

Ullerich joined the Company in November 2018, and from that time until March 2020 served as SVP of Corporate Communications.

Ullerich is a communications executive with more than 20 years of experience in strategic leadership roles, specializing in transformational and disruptive emerging biotechnologies in corporate development, brand strategy and transactional communications, including mergers, acquisitions, and IPOs.

Prior to joining the Company, Ms.

Ullerich acted as a private marketing and communications strategist for emerging and established companies from July 2009 to November 2018.

Over the course of her career, Ms.

Ullerich has played a strategic role in more than investments and commercial transactions representing over $2 billion in aggregate value, working with C-suite executives to help companies achieve next-level growth.

During her career, Ms.

Ullerich has served in several strategic leadership roles as an executive and advisor in corporate communications, media relations, brand strategy, corporate development, corporate affairs, strategic partnerships, community relations and investor relations.

During her career, she has developed and implemented high-profile financial communications plans for the launch of public markets debuts, road shows, shareholder meetings, and other strategic events.

Ullerich holds a B.S.

in Journalism and a B.A.

in Visual Arts from South Dakota State University.

Louis, Missouri, in addition to a BA in Biology from the University of Nebraska-Lincoln, Lincoln, Nebraska.

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.

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 Teva, Dr.

Kropotova served in various roles at Sanofi, including Vice President, Strategy & Strategic Planning Head, North American Medical Affairs;

Associate Vice President and subsequently Vice President, Immuno-Inflammation, Global R&D Clinical Development;

and Senior Medical Director, Respiratory, Allergy & Anti-Infectives.

She also served in various roles at Pfizer Inc., most recently as Director & Head of Global Clinical Respiratory and Analgesics.

She continues to serve on the Board of Directors at iBio, a global leader in plant-based biologics manufacturing and development of novel biopharmaceuticals.

Kropotova received her MBA from Ohio University Graduate School of Business, Athens, Ohio;

in Internal Medicine from the Vladivostok State Medical University, Vladivostok, Russia.

Non-Employee Directors

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.

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

Hamilton is the co-owner and managing partner of Christiansen Land and Cattle, Ltd., a large diversified farming and ranching operation in central South Dakota, and is also the co-owner of Dakota Packing, Inc., a wholesale meat distribution business.

Hamilton is a director of Titan Machinery, a publicly-traded Farm and Construction Equipment Company, and a former director for the Federal Reserve Bank, Ninth District, located in Minneapolis, Minnesota.

Among other attributes, skills and qualifications, the Board believes that Ms.

Hamilton is uniquely qualified to serve as a director based on her extensive experience in the agri-business sector and in management roles and her knowledge of operating strategies and priorities and challenges in business decision-making.

Hamilton has an MBA in Entrepreneurship from the University of Arizona and an AB in Philosophy from Smith College.

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.

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.

Hamilton and her family formed the Matson Halverson Christiansen Hamilton Foundation (MHCH), a not-for-profit foundation with a mission to improve the quality of life and create opportunities for growth and enterprise development in South Dakota.

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.

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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.

Mervyn Turner, PhD , has served as a member of our board of directors since 2020.

Turner has nearly 35 years of experience in pharmaceutical drug discovery, research and development, licensing and business development, emerging markets strategy development and implementation.

He spent 27 years at Merck & Co.

Inc., holding positions of increasing responsibility in Merck Research Laboratories before joining the company’s Executive Committee as Chief Strategy Officer.

Upon his retirement from Merck & Co.

Turner founded a private consulting firm, through which he acts as an advisor to several institutions, including Bay City Capital, a San Francisco-based venture firm, Bridge Medicines, a commercial incubator for early-stage innovation based in New York City, and Adagene, a China-based therapeutic antibody company.

Turner is also a member of the Board of EnGeneIC (Sydney, Australia), and the chairman of the board of LUNAC.

He also serves on the scientific advisory boards of Blade Therapeutics and Spinogenix.

Turner is a senior healthcare advisor to Lazard, a leading financial services and investment banking firm.

He holds his Ph.D.

in Chemistry and his B.S.

in Chemistry from the University of Sheffield, and completed his post-doctoral training at Harvard University.

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.

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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.

Clients include senior leadership of multiple U.S.

and foreign government entities, the WHO, UN and private industry partners such as the Gates Foundation.

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).

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

RADM Giberson has authored numerous articles and delivered well over 100 keynote lectures on leadership, global health, and public health at numerous venues both domestically and internationally.

RADM Giberson has received many awards including the Presidential Unit Citation from President Obama in the Oval Office for leadership during the West African Ebola response.

The Military Officers Association of America selected him as on the of the "Top 100 Veterans in the Last 100 Years You Need to Know".

RADM Giberson is a graduate of Temple University and U.

of Massachusetts/Amherst, holds a Pharmacy degree and licensure, MPH, and graduate certificate in Health Emergencies in Large Populations from the International Committee of the Red Cross.

He has received three honorary Doctoral degrees (one for his pioneering work in interprofessional practice).

He is also a Fellow of Wharton Business School (U.

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.

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.

From 2017 to the present, Mr.

Lucera has served as a member of the Board of Directors and Audit Committee Chairman of Beyond Air, a publicly held commercial-stage medical device and biopharmaceutical company developing a platform of nitric oxide generators and delivery systems.

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.

From 2015 to 2016, Mr.

Lucera served as Chief Financial Officer, Treasurer and Secretary of VIVENTIA Bio, acquired by Eleven Biotherapeutics, Inc., now Sesen Bio, a biotechnology company focused on developing targeted protein therapeutics for the treatment of cancer.

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

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.

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.

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.

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.

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.

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.

Board Composition

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

Our board currently consists of seven (7) directors divided into three classes as follows:

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;

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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.

Polvino and Dr.

Turner currently serve as the Class I directors, Messrs.

Lucera and Mr.

Giberson currently serve as the Class I directors, Messrs.

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

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Board Meetings

During 2021, our board of directors held 10 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 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.

Committees of the Board of Directors

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

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

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.

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.

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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, William Polvino and Mervyn Turner serves as members of the compensation committee.

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

Christine Hamilton serves as the Chairman 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.

Turner and Ms.

Polvino and Ms.

Hamilton are independent.

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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 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.

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.

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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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

Nominating Committee

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

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

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.

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Hamilton, Mr.

Spragens and Dr.

Turner are independent.

Link and Mr.

Spragens are independent.

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, 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, diversity, 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

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.

Section 16 Reporting Compliance

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Code of Ethics

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:

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

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Option Awards (1)

Stock Awards (2)

Non-Equity Incentive Plan Compensation

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Executive Chairman of the Board of Directors

Melissa Ullerich

EVP, Chief of Corporate Communications, Investor Relations Officer

Alexandra Kropotova, MD

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 .

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, 2021 set forth in this Form 10-K.

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.

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.

Reich a stock option to purchase up to 350,000 shares of our common stock at an exercise price of $11.17 per share, the closing price of our common stock on November 17, 2021.

The shares subject to this stock option award will vest as to 33.3% of the shares on October 25, 2022, and vest as to the remainder of the shares in 24 equal monthly installments thereafter.

(3) We granted Melissa Ullerich a stock option to purchase up to 104,689 shares of our common stock at an exercise price of $4.04 per share, an estimate of the fair value of our common stock determined with the assistance of an independent third-party valuation firm.

The shares subject to this stock option award vested as to 33.3% of the shares on March 29, 2021, and vest as to the remainder of the shares in 24 equal monthly installments thereafter.

Outstanding Equity Awards at Fiscal 2021 Year-End

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.

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

The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2022.

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Option Exercise Price ($)

Option Expiration Date

Number of Shares or Units of Stock That Have Not Vested (#) Exercisable

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Sullivan, PhD.

Melissa Ullerich

(1) The shares subject to this stock option award will vest as to 33.3% of the shares on October 25, 2022, and vest as to the remainder of the shares in 24 equal monthly installments thereafter.

(2) The shares subject to this stock option award vested as to 33.3% of the shares on March 29, 2021, and vest as to the remainder of the shares in 24 equal monthly installments thereafter.

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.

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 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.

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.

Named Executive Officer Employment Arrangements

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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.

Melissa Ullerich

On June 6, 2021, we entered into an Executive Employment Agreement with Ms.

Ullerich to serve as EVP, Chief Communications & Investor Relations Officer.

The agreement provides Ms.

Ullerich an annual base salary of $275,000, and her eligibility to participate in the Company’s benefit plans generally.

The agreement also subjects Ms.

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

Ullerich'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, Ms.

Ullerich will receive (i) a severance payment equal to 1 year of her 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 Ms.

Ullerich was employed so long as she was employed by the Company as of April 1st 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).

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. 

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.

Summary Director Compensation Table

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Sullivan, PhD

Mervyn Turner, PhD.

William Polvino, MD

David Link, MBA

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.

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.

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.

Summary of the Incentive Plan

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stock options, including incentive stock options, or ISOs;

stock appreciation rights, or SARs;

restricted shares;

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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 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.

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.

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

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The accumulation periods under the ESPP will generally be a specified one-year period, or such other period, not to exceed twenty-seven (27) months, as determined by the Administrator.

The initial accumulation period is expected to commence on or about March 2022.

The first trading day of each accumulation period is the enrollment date, which is the date as of which eligible employees are granted contractual rights to purchase shares of Company stock under the ESPP.

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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.

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.

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Executive Chairman of the Board of Directors

Melissa Ullerich

EVP, Chief of Corporate Communications, Investor Relations Officer

Alexandra Kropotova, MD

EVP, Chief of Medical 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 February 28, 2022, by:

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

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 42,955,121 shares of common stock outstanding and does not take into account:

(i) The issuance of shares upon exercise of warrants to purchase 5,958,600 shares of common stock currently outstanding

(ii) The exercise of options to purchase 1,211,676 shares of common stock currently outstanding.

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.

Beneficial Owner

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Sullivan, PhD (2)

Big Cypress Holdings LLC (3)

Executive Officers and Directors

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Sullivan, PhD (2)

Mervyn Turner, PhD.

William Polvino, MD (5)

David Link, MBA (6)

Melissa Ullerich (8)

Scott Giberson (7)

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

(1) Consists of (i) 4,983,090 shares of common stock held by Mrs.

(ii) 91,261 shares of common stock held as a co-owner by Mrs.

Consists of (i) 4,993,090 shares of common stock held by Ms.

(ii) 174,248 shares of common stock held as a co-owner by Ms.

Hamilton with her spouse, Dr.

Edward Hamilton;

(iii) 4,911,822 shares of common stock held by Mrs.

Hamilton's spouse, Dr.

(iii) 2,909,022 shares of common stock held by Ms.

Hamilton’s spouse, Dr.

Edward Hamilton;

(iv) 25,000 shares held by Christiansen Investments;

(v) 120,197 shares of common stock underlying stock options held by Mrs.

Hamilton exercisable within 60 days of February 28, 2022;

(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.

Edward Hamilton, exercisable within 60 days of February 28, 2022.

Edward Hamilton, exercisable within 60 days of March 28, 2023.

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.

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

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

Consists of (i) 5,230,564 shares of common stock held by Dr.

and (ii) 488,549

shares of common stock underlying stock options held by Dr.

Sullivan exercisable within 60 days of February 28, 2022.

(3) Consists of (i) 1,000 shares of common stock acquired jointly by the Mr.

and (ii) 509,767 shares of common stock underlying stock options held by Dr.

Sullivan exercisable within 60 days of March 28, 2023.

Consists of (i) 207,001 shares of common stock held by Mr.

(ii) 1,000 shares of common stock held jointly by Mr.

Reich and Mr.

Reich's spouse in open market transactions;

(ii) 598,580 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 closing date of the Company's Business Combination;

(iii) and 2,449,245 shares of common stock held by Big Cypress Holdings, LLC;

and (iv) 208,600 shares of common stock underlying warrants that are currently exercisable.

Reich’s spouse;

(iii) 547,698 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;

(iv) 9,968 shares of common stock underlying warrants that are currently exercisable;

and (v) 191,721 shares of common stock underlying stock options held by Mr.

Reich exercisable within 60 days of March 28, 2023.

Reich is a managing member with voting and dispositive power over shares of Big Cypress Holdings, LLC and is deemed to have beneficial ownership of the shares held by Big Cypress Holdings, LLC.

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

(4) Consists of 29,080 shares of common stock underlying stock options held by Dr.

Turner exercisable within 60 days of February 28, 2022.

(5) Consists of 13,000 shares of common stock acquired by the Mr.

Spragens in open market transactions.

Consists of (i) 95,987 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.

Consists of 116,320 shares of common stock underlying stock options held by Dr.

Polvino exercisable within 60 days of February 28, 2022.

Polvino exercisable within 60 days of March 28, 2023.

Consists of (i) 57,313 shares of common stock held by Mr.

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

Link exercisable within 60 days of February 28, 2022.

Link exercisable within 60 days of March 28, 2023.

Link is a control person with voting and dispositive power over shares of Iron Horse Investments, LLC and is deemed to have beneficial ownership of the shares held by Iron Horse Investments, LLC.

Link disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein, directly or indirectly

(8) Consists of 137,840 shares of common stock underlying stock options held by Ms.

Ullerich exercisable within 60 days of February 28, 2022.

Consists of 6,944 shares of common stock underlying stock options held by Mr.

Giberson exercisable within 60 days of March 28, 2023. 

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 $120,000, 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 “

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 .”

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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.

Aggregate fees for professional services rendered for the Company by Marcum, its former independent registered public accounting firm, as of or for the fiscal years ended December 31, 2021 and 2020 were:

Audit-related fees

All other fees

Audit fees for the fiscal years ended December 31, 2021 and 2020 rendered by Marcum relate to professional services rendered for the audits of our predecessor's financial statements, quarterly reviews, issuance of consents, the Business Combination and review of documents filed with the SEC.

Pre-Approval Policies and Procedures

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Exhibits, Financial Statement Schedules.

(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.

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.

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

October 28, 2021

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

10.2¥ 

October 28, 2021

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

and Rick Finnegan.

Employment Agreement, dated June 6, 2021, by and between SAB Biotherapeutics, Inc.

and Melissa Ullerich.

Executive Employment Agreement, dated November 17, 2021, by and between SAB Biotherapeutics, Inc.

and Samuel J.

November 12, 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.

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Third Amendment to Amended and Restated Lease Agreement

Fourth Amendment to Amended and Restated Lease Agreement

October 13, 2022

Manufacturing Option Agreement, dated October 26, 2022

November 1, 2022

Right of First Refusal Agreement, dated October 26, 2022

November 1, 2022

Securities Purchase Agreement dated December 6, 2022, by and between the Company and the purchasers thereto

December 12, 2022

Letter to SEC from Marcum LLP

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List of Subsidiaries

October 28, 2021

Consent of Mayer Hoffman McCann P.C.

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

Press Release dated March 29, 2022

Inline XBRL Instance Document –

the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document

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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.

March 29, 2022

April 14, 2023

Chief Executive Officer

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.

Chief Executive Officer

March 29, 2022

Director and Chief Executive Officer

April 14, 2023

(Principal Executive Officer)

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Chief Financial Officer

March 29, 2022

April 14, 2023

Russell Beyer

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Director and Executive Chairman

March 29, 2022

April 14, 2023

/s/ Christine Hamilton, MBA

March 29, 2022

April 14, 2023

Christine Hamilton, MBA

/s/ David Link

March 29, 2022

/s/ David Charles Link

April 14, 2023

David Charles Link

/s/ William Polvino, MD, PhD

March 29, 2022

April 14, 2023

William Polvino, MD, PhD

/s/ Jeffrey G.

March 29, 2022

/s/ Mervyn Turner, PhD

March 29, 2022

Mervyn Turner, PhD

April 14, 2023

/s/ Scott Giberson

April 14, 2023

Scott Giberson

/s/ Erick Lucera

April 14, 2023

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2021 and 2020

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 Redeemable Preferred Stock and Stockholders’

Equity (Deficit) for the years ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020

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)

Notes to Consolidated Financial Statements

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

and Subsidiaries (“Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, changes in redeemable preferred stock and stockholders’

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.

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.

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

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San Diego, California

March 29, 2022

April 14, 2023

SAB Biotherapeutics, Inc.

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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  

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

Equipment, net

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’

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Accounts payable

$ 3,679,116  

$ 4,458,525  

Forward share purchase liability

Notes payable –

current portion

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

Notes payable, noncurrent

320,930  

10,720,130  

Convertible Debt

541,644  

Total liabilities

19,846,785  

42,591,018  

Commitments and contingencies (Note 18)

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$ 0.0001 par value;

10,000,000 shares authorized, 0 shares issued and

and outstanding at December 31, 2021 and 2020

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

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

490,000,000 shares authorized at December 31, 2022 and December 31, 2021;

50,940,920 and 43,487,279 shares issued, respectively, and 50,394,262 and 43,487,279 outstanding at December 31, 2022 and December 31, 2021, respectively

Treasury stock, at cost;

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

( 5,521,246 )  

Additional paid-in capital

84,444,049  

67,674,515  

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  

See accompanying notes to the consolidated financial statements

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Consolidated Statements of Operations

Year Ended December 31,

Grant revenue

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Total operating expenses

(Loss) income from operations

Loss from operations

Other income (expense)

Changes in fair value of warrant liabilities

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Interest income

Net (loss) income

Earnings (loss) per common share attributable to the Company’s shareholders

Basic (loss) earnings per common share

Diluted (loss) earnings per common share

Weighted-average common shares outstanding –

Total other income (expense)

Loss before income taxes

Income tax expense

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

See accompanying notes to the consolidated financial statements.

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and Subsidiaries

Consolidated Statements of Changes In Redeemable Preferred Stock and Stockholders’

Consolidated Statements of Changes In Stockholders ’

Equity (Deficit)

For the years ended December 31, 2022 and 2021

Preferred Stock

Stockholders’

Equity (Deficit)

Preferred Stock

Stockholders’

Equity (Deficit)

Balance at December 31, 2019 (as previously reported)

Retrospective application of

reverse recapitalization

Balance at December 31, 2019, after effect of Business Combination

Issuance of stock in

private offerings, net of

issuance cost of $ 87,949

Stock-based compensation

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 )  

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  

See accompanying notes to the consolidated financial statements.

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Consolidated Statements of Cash Flows

Year Ended December 31,

2021 (Restated)

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by

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

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Gain on sale of equipment

Gain on partial lease termination

Changes in fair value of warrant liabilities

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Prepaid expenses

Right-of-use assets –

operating lease

Operating lease right-of-use assets

Accounts payable

Deferred income

Due to related party

Deferred grant income

Accrued expense and other current liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

Proceeds from the sale of equipment

Purchases of equipment

Proceeds from the sale of property, plant and equipment

Purchases of property, plant and equipment

Net cash used in investing activities

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Proceeds from Business Combination, net of transaction costs

Proceeds from the sale of stock, net of issuance costs

Proceeds from Paycheck Protection Program SBA Loan

Payments on related party notes payable

Payments of notes payable

Proceeds from issuance of notes payable

Payments on notes payable

Payments related to the Forward Share Purchase Agreement

Principal payments on finance leases

Proceeds from exercise of stock options

Net cash provided by financing activities

Net increase in cash, cash equivalents, and restricted cash

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

Beginning of year

Supplemental disclosures:

Cash paid for interest

Supplemental information on non-cash investing and finance activities:

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

Warrant liabilities assumed related to the Business Combination

Liabilities assumed related to the Forward Share Purchase Agreement

Financing fee liabilities assumed related to the Business Combination included in accrued expense and other current liabilities

Unpaid financing fees included in accrued expense and other current liabilities

End of period

See accompanying notes to the consolidated financial statements.

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( 1 ) Nature of Business

On October 22, 2021 (the "Closing Date"), we 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”), SAB Biotherapeutics, Inc., a Delaware corporation (“SAB”

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, Big Cypress Acquisition Corp.

changed its name to “SAB Biotherapeutics, Inc.”.

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.

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.

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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.

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  

( 3 ) Summary of Significant Accounting Policies

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

Generally Accepted Accounting Principles ("GAAP") and include all adjustments necessary for the fair presentation of the Company’s financial position for the years presented.

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.

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the operations of SAB comprise the ongoing operations of the Company.

The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of SAB Biotherapeutics.

At the Closing Date, and subject to the terms and conditions of the Merger Agreement, each share of SAB Biotherapeutics common stock, par value $ 0.0001 per share, and each share of the SAB Biotherapeutics convertible preferred stock that was convertible into a share of SAB Biotherapeutics common stock at a one -to-one ratio, was converted into Common Stock equal to 0.4653 (the "Exchange Ratio").

The shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on shares reflecting the Exchange Ratio established in the Business Combination.

Emerging growth company status

The Company is an “emerging growth company,”

as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, 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.

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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.

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.

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.

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, 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, 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 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.

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.

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

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.

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 .

Cash, cash equivalents, and restricted cash

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Cash and cash equivalents

$ 15,046,894  

$ 33,206,712  

Restricted cash

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

6,338,306  

Total cash, cash equivalents, and restricted cash

$ 15,046,894  

$ 39,545,018  

Accounts receivable

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Exposure to credit risk is reduced by placing such deposits in high credit quality federally insured financial institutions.

The Company received 100 % and approximately 96 % of its total revenue through grants from government organizations during the years ended December 31, 2021 and 2020 , respectively, and 0 % and approximately 4 % o f its total revenue through a grant from a non-government organization during the years ended December 31, 2021 and 2020, respectively.

The Company received 100 % of its total revenue through grants from government organizations during the years ended December 31, 2022 and 2021 , respectively.

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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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 FASB ASC Topic 842, Leases (“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.

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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, 2021 and 2020, the Company had contracts with multiple contract research organizations (“CRO”) to complete studies as part of research grant agreements.

In the case of SAB-185, the CRO has been contracted and paid by the US government.

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 90 % of the contract has been paid as of December 31, 2021 .

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 methods over the following estimated useful lives:

Depreciation is calculated using straight-line method 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

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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 our post-merger common stock based on the closing market price at closing on the date of grant.

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.

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.

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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 (loss)

The Company had no items of comprehensive income (loss) other than its net income (loss).

Comprehensive income

The Company had no items of comprehensive income other than its net loss.

From time to time, the Company is involved in legal proceedings, investigations and claims generally incidental to its normal business activities.

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Earnings per share

On the Closing Date, the Company completed the Business Combination with BCYP, whereby the Company received 36,465,343 shares in exchange for all of its share capital.

The effect of the Business Combination was reflected retroactively to January 1, 2020 and will be utilized for the calculation of earnings per share in all prior periods.

The per share amounts have been updated to show the effect of the Exchange Ratio on earnings per share as if the exchange occurred at the beginning of both years for the consolidated financial statements of the Company.

The impact of the stock exchange is also shown on the Company’s statements of changes in redeemable preferred stock and stockholders' equity (deficit).

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.

4 unchanged sentences

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 our securities, our 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 our common stock.

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.

5 unchanged sentences

Recently-adopted standards

In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, Income Taxes (“ASC 740”) and by clarifying and amending existing ASC 740 guidance.

The guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2020.

Early adoption was permitted.

The Company adopted the guidance as of January 1, 2021 .

The adoption did not have a material impact on the Company’s consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies the accounting for convertible instruments by removing major separation models required under current U.S.

The guidance removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for such exception and simplifies the diluted earnings per share calculation in certain areas.

The guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted in annual reporting periods ending after December 15, 2020.

The Company early adopted the guidance as of January 1, 2021 .

The adoption did not have a material impact on the Company’s consolidated financial statements.

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.

The Company adopted ASU 2021 - 10 at January 1, 2022, and the adoption did not have a material impact on its consolidated financial statements.

( 5 ) Reverse Recapitalization and Business Combination

9 unchanged sentences

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 $ 15.00 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 $ 20.00 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 $ 25.00 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 $ 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”).

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.

2 unchanged sentences

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 our equity and meet the criteria for equity classification.

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.

We 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.

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”).

7 unchanged sentences

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.

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:

1 unchanged sentence

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

The following table reconciles the elements of the Business Combination to the consolidated statement of changes in redeemable preferred stock and stockholders' equity (deficit) for the year ended December 31, 2021:

( 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, reedeemable and outstanding prior to 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:

1 unchanged sentence

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

During the years ended December 31, 2022 and 2021 , the Company worked on the following grants:

Government grants

The total revenue for government grants was approximately $ 60.9 million and $ 52.8 million respectively, for the years ended December 31, 2021 and 2020.

National Institute of Health –

National Institute of Allergy and Infectious Disease (“NIH-NIAID”) (Federal Award #1R44AI117976-01A1) –

this grant was for $ 1.4 million and started in September 2019 through August 2021.

For the years ended December 31, 2021 and 2020 , there was approximately $ 518,000 and $ 228,000 , respectively, in grant income recognized.

The corporation applied for an extension on the grant funding, and the extension is pending approval.

If approved, there is approximately $ 203,000 in funding remaining for this grant as of December 31, 2021.

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.

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, 2021 and 2020, there was approximately $ 51,000 and $ 99,000 respectively, in grant income recognized.

There is approximately $ 823,000 in funding remaining for this grant as of December 31, 2021.

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.

For the years ended December 31, 2021 and 2020 , there was approximately $ 94,000 and $ 351,000 , respectively, in grant income recognized from this grant.

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 $ 1.5 million in funding remaining for this grant as of December 31, 2021.

Department of Defense, Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense Enabling Biotechnologies (“JPEO”) through Advanced Technology International –

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 $ 204 million.

For the years ended December 31, 2021 and 2020, there was approximately $ 60.2 million and $ 52.1 million, respectively, in grant income recognized from this grant.

There is approximately $ 89.2 million in funding remaining for this grant as of December 31, 2021.

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.

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 %).

However, a portion of the funding ($ 12 million in 2020) from this contract was for capacity building, including funding for equipment and facilities.

A majority of this was for a 200L purification suite and two production barns, which are in locations that are currently leased by the corporation.

While the government and the Company have agreed to negotiate in good faith to afford government access to this equipment, the Company is allowed to use this equipment for any project.

As a majority of the value is in leasehold improvements (and therefore cannot be returned to the government), the corporation is treating the assets as company owned, and recognized the proceeds from the reimbursement as revenue.

Therefore, revenue significantly exceeded research and development expenses, as there were no research and development expenses to offset the $ 12 million in revenu e.

Other grants (non-government)

The total revenue for other grants (non-government) was approximately $ 0 and $ 2.4 million for the years ended December 31, 2021 and 2020, respectively.

CSL Behring –

there were three contracts for a combined $ 2.4 million that were started and completed in 2020.

These contracts were related to research and development for a COVID-19 therapeutic ($ 2 million) and two other targets ($ 400,000 ).

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.

( 7 ) Earnings per share

On the Closing Date, the Company completed the Business Combination with BCYP, whereby the Company received 36,465,343 shares in exchange for all of its share capital.

The effect of the Business Combination was recast to reflect the Exchange Ratio to January 1, 2020, and will be utilized for the calculation of earnings per share in all prior periods.

The per share amounts have been updated to show the effect of the exchange on earnings per share as if the exchange occurred at the beginning of both years for the annual financial statements of the Company.

The impact of the stock exchange is also shown on the Company’s consolidated statements of changes in redeemable preferred stock and stockholders’

equity (deficit).

Since the Company reported a net loss for the year ended December 31, 2021, it was required by ASC 260 to use basic weighted-average shares outstanding when calculating diluted net loss per share for the year ended December 31, 2021, as the potential dilutive securities are anti-dilutive.

Calculation of basic and diluted EPS attributable to the Company’s shareholders

Since the Company reported a net loss for the years ended December 31, 2022 and 2021 , 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, 2022 and 2021 , 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 –

basic and diluted

Net loss per common share, 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:

Stock options

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) As the Earnout shares are subject to certain vesting requirements not satisfied as of the year ended December 31, 2021, the Earnout Shares held in escrow are excluded from calculating both basic and diluted earnings per share.

The following is a reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share for the year ended December 31, 2020:

Calculation of basic EPS attributable to the Company’s shareholders

Net income attributable to the Company’s shareholders

Weighted-average common shares outstanding –

Net earnings per share, basic

Calculation of diluted EPS attributable to the Company’s shareholders

Net income attributable to the Company’s shareholders

Weighted-average common shares outstanding –

Net earnings per share, diluted

The following table reconciles the weighted-average common shares outstanding used in the calculation of basic earnings per share (“EPS”) to the weighted-average common shares outstanding used in the calculation of diluted EPS for the year ended December 31, 2020:

Weighted-average common shares outstanding –

Stock options

(7) Equipment

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:

Laboratory equipment

$ 9,000,114  

$ 7,431,988  

Animal facility

8,357,667  

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  

accumulated depreciation and amortization

6,278,522  

3,220,016  

Property, plant and equipment, net

Depreciation and amortization expense for the years ended December 31, 2021 and 2020 was $ 1,488,614 and $ 383,142 , respectively.

$ 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.

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.

5 unchanged sentences

As of December 31, 2022 and 2021 , the Company’s construction-in-progress was as follows:

200L commercial facility

200L commercial facility equipment

New animal barn (#6)

New office space at Headquarters

$ 85,767  

$ 11,183  

Laboratory space at Headquarters

Lab equipment at Headquarters

IT equipment for new office space

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

The Bioreactors, the laboratory space and equipment at Headquarters were placed into service at the end of March 2022.

The Company has an operating lease for lab space from Sanford Health (a related party), 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 .

$ 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.

This lease can be terminated with one year advance written notice.

The lease is for $ 66,993 per month.

The operating lease does not include an option to extend beyond the life of the current term.

The lease does not provide an implicit rate, and, therefore, the Company used an IBR of 4.54 % 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 Company entered into a lease for office, laboratory, and warehouse space in November 2020 .

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 lease cost is $ 36,125 per month.

The Company used an IBR of 4.69 % as the discount rate when measuring the operating lease liability.

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.

5 unchanged sentences

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.

The Company has the following finance leases:

6 unchanged sentences

The lease is for five years, with an annual payment of $ 8,199 .

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 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.

1 unchanged sentence

The monthly payment for this lease is $ 807 .

The Company has the option to purchase the asset at the end of the lease for $ 1 .

The Company purchased the Ruby Cell Analyzer in December 2022. 

In March 2019, the Company entered into two lease agreements for laboratory equipment.

6 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

Weighted-average remaining lease term (in years)

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, 2022 :

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

Operating lease expense was approximately $ 1,083,000 and $ 710,000 , respectively, for the years ended December 31, 2021 and 2020.

$ 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 costs are included within research and development expenses on the consolidated statements of operations.

Finance lease costs for the years ended December 31, 2021 and 2020 included approximately $ 165,000 and $ 165,000 , respectively, in right-of-use asset amortization and approximately $ 296,000 and $ 445,000 , respectively, of interest expense.

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 are included within research and development expenses on the consolidated statements of operations.

Cash payments under operating and finance leases were approximately $ 1,147,000 and $ 491,000 , respectively, for the year ended December 31, 2021 .

Cash payments under operating and finance leases were approximately $ 564,000 and $ 491,000 , respectively, for the year ended December 31, 2020 .

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 .

( 10 ) 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  

( 11 ) Notes Payable

As of December 31, 2022 and 2021 , 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

On November 15, 2017, the Company entered into a loan agreement with a bank, for the financing of an ultrasound machine for $ 18,997 .

The agreement was for a four-year term, with monthly payments of $ 440 .

The note payable was paid off in full in September 2020.

$ 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 balance as of December 31, 2021 and 2020 was $ 25,013 and $ 49,156 , respectively.

The total amount of the remaining loan balance is due in full in 2022.

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).

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”).

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In March 2021, the SBA approved the forgiveness of the PPP Loan, plus accrued interest.

We 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.

Note payable, related party

On February 24, 2016, the Company entered into a loan agreement with Christiansen Land and Cattle, Ltd.

(“CLC”), a related party, for a $3.0 million revolving line of credit secured by a blanket security interest in the assets of the Company.

The Company borrowed $2.5 million from the line of credit in 2016, and $350,000 in 2017.

The line of credit bears a fixed rate per annum of 6% compounded annually.

The initial agreement was based upon repayment following a significant capital event –

closing of equity or debt financing with total proceeds to the Company of $15 million or more or one year from the agreement date, whichever occurred first.

The agreement was amended in August 2018 to extend the repayment timeframe to August 31, 2019.

The first payment to repay this loan was made on August 31, 2018 ($1.0 million payment).

Additional voluntary payments were being made at the rate of $30,000 per month.

In August 2019, the agreement was amended to extend the maturity date to the earlier of August 31, 2020 or the occurrence of a significant capital event, as defined above.

In July 2020, the note payable was paid in full.

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.

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

Insurance Financing

The Company obtained financing for certain Director & Officer liability insurance policy premiums.

The agreement assigns First Insurance Funding (Lender) a first priority lien on and security interest in the financed policies and any additional premium required in the financed policies including (a) all returned or unearned premiums, (b) all additional cash contributions or collateral amounts assessed by the insurance companies in relation to the financed policies and financed by Lender, (c) any credits generated by the financed policies, (d) dividend payments, and (e) loss payments which reduce unearned premiums.

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 %.

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.

The Company will pay the insurance financing through installment payments with the last payment for the current note being on September 22, 2023.

( 12 ) Preferred Stock

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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 as of December 31, 2020 was 1:1.

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:

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The preferred stock contained certain anti-dilution provisions, as defined.

In addition to the rights described above, series A-2A preferred stock was redeemable at a price equal to $5 per preferred share at the option of the investor at any time during the redemption period, which was scheduled to commence in August 2022 and end in August 2023.

As a result of the redemption feature, the Company classified the series A-2A preferred stock as mezzanine equity as of January 1, 2020.

However, the redemption feature was terminated during the year ended December 31, 2020, and the series A-2A preferred stock was reclassified from mezzanine equity to permanent equity.

( 13 ) Stock Option Plans

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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.

Vesting of the stock options is based upon years of service (employment).

As of December 31, 2021 and 2020, 3,724,957 and 3,202,354 stock options, respectively, were vested and exercisable.

During the year ended December 31, 2021, 12,500 of the vested options were exercised, while as of December 31, 2020 , no ne of the vested stock options were exercised.

As of December 31, 2021, the aggregate intrinsic value of stock options outstanding was $ 28.9 million , of which $ 4.1 million was unvested and $ 24.8 million was vested and exercisable.

The Company uses the Black Scholes model to estimate the fair value of the stock options granted.

For stock options granted during the years ended December 31, 2021 and 2020, the Company utilized the following weighted-average assumptions:

A risk free interest rate of 0.85 % and 0.13 % , respectively;

expected term of 6.25 years (both years);

expected dividend yield of 0 % (both years);

and a volatility factor of 92.8 % and 106.1 % , respectively.

There were 328,718 forfeitures and zero expirations during the year ended December 31, 2021 .

There were no forfeitures or expirations during the year ended December 31, 2020.

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”

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Therefore, the Company has assumed no dividend yield for purposes of estimating the fair value of the options.

Stock option activity for employees and non-employees under the Equity Compensation Plans for the years ended December 31, 2021 and 2020 was as follows:

Stock Options 

Stock option activity for employees and non-employees under the Equity Compensation Plans for the year ended December 31, 2022 :

Exercise Price

Balance, December 31, 2019

Balance, December 31, 2020

Balance, December 31, 2021

Unvested at December 31, 2021

Vested and exercisable at December 31, 2021

Total unrecognized compensation cost related to non-vested stock options as of December 31, 2021 was approximately $ 6.6 million and is expected to be recognized within future operating results over a weighted-average period of 2.31 years.

As of December 31, 2021, the weighted-average contractual term of the options outstanding was approximately 5.78 years.

As of December 31, 2021, the weighted-average contractual term of the vested options was approximately 4.46 years.

During the years ended December 31, 2021 and 2020, 461,701 shares and 400,632 shares, respectively, vested.

Weighted Average Remaining Contractual Life (years)

Aggregate Intrinsic Value

Outstanding options, December 31, 2021

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, 2022

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: 

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: 

Number of shares

Weighted Average Grant Date Fair Value

Unvested as of December 31, 2021

350,000  

$ 1.72  

Unvested as of December 31, 2022

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:

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

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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, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

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  

Public Warrants

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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 send the notice of redemption to the warrant holders.

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.”

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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, 2021 , 5,750,000 Public Warrants were outstanding.

As of December 31, 2022 , 5,750,000 Public Warrants classified as liabilities were outstanding.

Private Placement Warrants

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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, 2021 , 208,600 Private Placement Warrants were outstanding.

As of December 31, 2022 , 208,600 Private Placement Warrants classified as liabilities were outstanding.

PIPE Private Placement 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 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

The Warrants (both 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, 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 year ended 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 Monte Carlo Simulation (“MCS”) analysis.

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 .

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 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 following table provides a summary of the changes in our Level 3 fair value measurements:

Balance, December 31, 2020

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. 

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:

Risk-free interest rate

Expected term remaining (years)

Implied volatility

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).

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

The initial measurement on the Closing Date for the Public Warrant liability was approximately $ 6.3 million and the change in fair value of the Public Warrant liability was approximately $ 4.0 million for the year ended December 31, 2021.

The key inputs into the valuations as of the Closing Date and December 31, 2021 were as follows:

(Initial Measurement)

October 22, 2021

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,  

Risk-free interest rate

4.00 %  

Expected term remaining (years)

Implied volatility

82.0 %  

Closing common stock price on the measurement date

As of December 31, 2021 and 2020 , the Company did no t have any other assets or liabilities that are recorded at fair value on a recurring basis.

$ 0.59  

$ 7.81  

As of December 31, 2022 and 2021 , 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.

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Deferred tax assets:

Net operating loss carryforwards

Stock-based compensation

Vacation accrual

Lease liabilities

Other accrued expenses

Start-up costs

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

Total deferred tax assets after valuation allowance

( 12,330,481 )  

( 5,300,689 )

Total deferred tax assets

$ 3,491,655  

$ 3,073,418  

Deferred tax liabilities:

Operating lease right-of-use asset

Depreciation and amortization

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)

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Net (loss) income before tax

$ ( 18,715,175 )  

$ ( 17,144,531 )  

Federal income tax at statutory rate

State income tax

( 3,930,187 )  

21.00 %  

( 3,600,352 )  

Permanent items

( 2,207,588 )  

12.79 %  

1,029,874  

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.

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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 $ 2,980,000 and decreased by approximately $ 4,226,000 , respectively, for the years ended December 31, 2021 and 2020.

As of December 31, 2021, the Company had approximately $ 25,175,483 of federal net operating losses, which were generated after December 31, 2017 and can be carried forward indefinitely under the Tax Cuts and Jobs Act and may generally be used to offset up to 80 % of future taxable income.

The Company has historically experienced ownership change(s) pursuant to Section 382 of the Internal Revenue Code ("the Code") of 1986, as amended, as well as similar state provisions.

Utilization of the Company’s net operating loss carryforwards are subject to annual limitation(s) due to historical ownership change(s) that have occurred and may be further restricted in the event future ownership changes occur.

These ownership changes may limit the amount of the net operating loss carryover that can be utilized annually to offset future taxable income.

In general, an “ownership change”, as defined by Section 382 of the Code results from a transaction or series of transactions 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.

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.

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%.

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.

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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 2018 to present.

However, to the extent allowed by law, the taxing authorities may have the right to examine the period from 2015 through 2021 whe re 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 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 is not currently under examination by federal or state jurisdictions.

As discussed in Note 10, Notes Payable , on March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic.

It was determined the CARES Act did not materially impact the Company’s tax provision as of December 31, 2021 .

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.

( 16 ) Related Party Transactions

For the years ended December 31, 2021 and 2020, the Company paid consulting fees to a board member, Christine Hamilton, who is also an owner, of $ 25,000 and $ 25,000 , respectively.

As of December 31, 2021 and 2020, there was $ 6,250 (both years) in accrued board member fees for this related party.

For the year ended December 31, 2020 , the Company paid Network Plus, LLC (owner is the spouse of an employee) approximately $ 19,000 for IT assistance and computer setups.

The spouse became an employee of the Company in July 2020, and there was no further activity with this vendor.

For the years ended December 31, 2021 and 2020, the Company made lease payments to Dakota Ag Properties of $ 435,000 and $ 401,000 , respectively.

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.

For the years ended December 31, 2021 and 2020, not including lease payments, the Company made lab supply payments to Sanford Health (which is a shareholder of the Company) totaling approximately $ 108,000 and $ 152,000 , respectively.

The Company had no related party payables with Sanford Health as of December 31, 2021 , and $ 10,000 of related party payables with Sanford Health as of December 31, 2020.

As discussed in Note 10, Notes Payable , on February 24, 2016, the Company entered into a loan agreement with CLC for a $ 3.0 million revolving line of credit secured by a blanket security interest in the assets of the Company.

The principal owners of CLC are owners, members of the board of directors, and former employees of the Company.

In July 2020, the note payable was paid in full.

Please refer to Note 10, Notes Payable , for additional information.

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.

( 17 ) 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 Internal Revenue Code of 1986, as amended, and provides for Company matching contributions.

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, 2021 and 2020 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 $ 325,000 and $ 188,000 , re spectively, of matching contributions paid by the Company.

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.

( 18 ) Commitments and Contingencies

11 unchanged sentences

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.

Due to the work around SARS-2 and the JPEO contract (please refer to Note 5, Revenue , for additional information), this project is on hold as the Company focuses on development of our current internal manufacturing capabilities and completion of the JPEO contract work which will continue through the end of 2022.

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  

( 22 ) Subsequent Events

In January 2022, the Company received a final settlement notice related to the Forward Share Purchase Agreement.

In conjunction with the final settlement, the Company repurchased 546,658 shares of common stock from Radcliffe at the Market Sales Price.

The Company settled the repurchase with $ 5.5 million of the total $ 6.3 million held in restricted cash as of December 31, 2021 , with the remaining balance of $ 0.8 million released to the Company.

As a result of the final settlement transaction, the forward share purchase liability was reduced to zero .

On March 28, 2022, the Company entered into a Third Amendment to the Amended and Restated Lease Agreement with Sanford.

The Third Amendment, among other things, provides for the least by the Company from Sanford of an additional 4,035 square feet of storage, laboratory and office space.

The Third Amendment modifies the rent due under the Sanford Lease Agreement to $ 25.27 per square foot, or $ 841,061 due on an annual basis ($ 70,088 due on a monthly basis), until increased pursuant to the terms of the Sanford Lease Agreement.

The associated amendment was retroactively applied to October 2021, and accounted for under ASC 842 as a separate right-of-use asset.

The consolidated financial statements and Note 8, Leases , include the relevant adjustments for the Third Amendment.

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.

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