What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-10 · 206 added, 361 removed, 394 unchanged (59% of the section changed)

2 unchanged sentences

and Subsidiaries

Condensed Consolidated Balance Sheets

Consolidated Balance Sheets

(In thousands except share and par value amounts)

September 30, 2022

March 31, 2023

December 31, 2022

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Commitments and Contingencies

Temporary Equity

Series C convertible preferred stock, $ 0.001 par value;

10,000,000 authorized;

275,000 issued and outstanding

Series D convertible preferred stock, $ 0.001 par value;

10,000,000 authorized;

100,000 issued and outstanding

Stockholders’ Equity (Deficit):

Stockholders’ Equity:

Common stock, $ 0.001 par value;

20,000,000 shares authorized, 15,844,294 issued and 15,844,061 outstanding at September 30, 2022 and 13,204,487 issued and 13,204,254 outstanding at December 31, 2021

350,000,000 shares authorized, 15,844,294 issued and 15,124,061 outstanding at March 31, 2023 and 15,844,294 issued and 15,124,061 outstanding at December 31, 2022

Additional paid-in capital

Treasury stock at cost, 720,233 shares at March 31, 2023 and at December 31, 2022

Accumulated other comprehensive loss

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(In thousands, except share and per share amounts)

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

Operating Costs and Expenses:

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Loss from Operations

Other Expense:

Exchange loss

Other Income (Expense):

Exchange income (loss)

Interest income

Total Other Income (Expense)

Net Loss Attributable to Non-controlling Interest

Net Loss Attributable to Theriva Biologics, Inc.

and Subsidiaries

Effect of Warrant exercise price adjustment

Series A Preferred Stock Dividends

Effect of Series A Preferred Stock price adjustment

Series B Preferred Stock Dividends

Net Loss before income taxes

Income tax benefit

Net Loss Attributable to Common Stockholders

1 unchanged sentence

Weighted average number of shares outstanding during the period - Basic and Dilutive

Loss on foreign currency translation

Gain on foreign currency translation

Total comprehensive loss

Comprehensive loss attributable to non-controlling interest

Comprehensive loss attributable to Theriva Biologics, Inc.

and Subsidiaries

See accompanying notes to unaudited condensed consolidated financial statements.

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Common Stock $0.001 Par Value

Series B Preferred

Comprehensive

Stockholders’

Treasury Stock

Balance at December 31, 2022

Stock-based compensation

Issuance of Common Stock for VCN Acquisition

Translation gains (losses)

Translation gains

Balance at March 31, 2023

Stock-based compensation

Translation gains (losses)

Balance at June 30, 2022

Stock-based compensation

Translation gains (losses)

Balance at September 30, 2022

Common Stock $0.001 Par Value

Series B Preferred

Comprehensive

Stockholders’

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Stock-based compensation

Stock issued under “at-the-market“ offering

Warrants Exercised

Series A Preferred Stock Dividends

Effect of Series A Preferred Stock price adjustment

Conversion of Series A Preferred Stock to Common

Conversion of Series B Preferred Stock to Common

Non-controlling interest

Issuance of Common Stock for VCN Acquisition

Translation gains

Balance at March 31, 2022

Stock-based compensation

Balance at June 30, 2021

Stock-based compensation

Balance at September 30, 2021

See accompanying notes to unaudited condensed consolidated financial statements.

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(In thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash Flows From Operating Activities:

1 unchanged sentence

Stock-based compensation

Income tax benefit

Change in fair value of contingent consideration

Right of use asset

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

Right of use asset

Accounts payable

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Purchase of property and equipment

Cash paid for business combination;

net of cash acquired

Cash paid for business combination, net of cash acquired

Pre-acquisition loan to VCN

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Cash Flows from Financing Activities

Payment of VCN’s CDTI loan

Proceeds from sale of Series C Preferred Stock, net of issuance cost

Proceeds from sale of Series D Preferred Stock, net of issuance cost

Proceeds from “at the market“ stock issuance

Proceeds from issuance of common stock for warrant exercises

Payment of debt

Net Cash Provided by Financing Activities

Effects of FX on cash

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

Effects of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted at the beginning of this period

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Supplemental non-cash investing and financing activities:

Fair value of contingent consideration issued in a business combination

Right of use assets obtained in exchange for lease liabilities

Fair value of contingent consideration in a business combination

Fair value of equity issued as consideration in a business combination

Effective settlement of pre-closing VCN financing

Goodwill measurement period adjustment

In-process R&D measurement period adjustment

Deferred tax liability measurement period adjustment

Effect of Warrant exercise price adjustment

Effect of Series A Preferred Stock price adjustment

Right of use asset from operating lease

Conversion of Series B Preferred Stock

Deemed dividends for accretion of Series B Preferred Stock discount

In-kind dividends paid in preferred stock

See accompanying notes to unaudited condensed consolidated financial statements.

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(the “Company” or “Theriva Biologics”) is a diversified clinical-stage company developing therapeutics in areas of high unmet need.

As a result of the acquisition of VCN (the “Acquisition”), described in more detail below, the Company began transitioning its strategic focus to oncology through the development of VCN’s new oncolytic adenovirus platform designed for intravenous and intravitreal delivery to trigger tumor cell death, improve access of co-administered cancer therapies to the tumor, and promote a robust and sustained anti-tumor response by the patient’s immune system.

Prior to the Acquisition, the Company’s focus was on developing therapeutics designed to treat gastrointestinal (GI) diseases in areas which included our lead clinical development candidates:

(1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics within the GI tract to prevent microbiome damage, Clostridioides difficile infection (CDI), overgrowth of pathogenic organisms, the emergence of antimicrobial resistance (AMR), and acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic cell transplant (HCT) recipients, and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced under cGMP conditions and intended to treat both local GI and systemic diseases.

As a result of the acquisition of Theriva Biologics S.L.

(“VCN”, formerly known as VCN Biosciences, S.L.) (the “Acquisition”), described in more detail below, the Company transitioned its strategic focus to oncology through the development of VCN’s new oncolytic adenovirus platform designed for intravenous and intravitreal delivery to trigger tumor cell death, improve access of co-administered cancer therapies to the tumor, and promote a robust and sustained anti-tumor response by the patient’s immune system.

Prior to the Acquisition, the Company’s focus was on developing therapeutics designed to treat gastrointestinal (GI) diseases in areas which included our clinical development candidates:

(1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics within the GI tract to prevent microbiome damage thereby preventing overgrowth and infection by pathogenic organisms such as Clostridioides difficile infection (CDI), and vancomycin resistant Enterococci (VRE), and reducing the incidence and severity of acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic cell transplant (HCT) recipients, and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced under cGMP conditions and intended to treat both local GI and systemic diseases.

On October 12, 2022, the Company changed its name to Theriva Biologics, Inc.

In connection with the name change, its common stock began trading on the NYSE American LLC under the new ticker symbol “TOVX” effective as of the opening of trading hours on October 13, 2022.

Effective November 15, 2022, our acquired subsidiary VCN Biosciences, S.L.

rebranded to Theriva Biologics, S.L.

without other changes to its corporate structure.

Basis of Presentation

On July 11, 2022, the Board of Directors of the Company approved a reverse stock split of the Company’s authorized, issued and outstanding shares of common stock, par value $ 0.001 per share, at a ratio of one (1) share of common stock for every ten ( 10 ) shares of common stock (the “Reverse Stock Split”).

The Reverse Stock Split was effective on July 25, 2022 (the “Effective Time).

As a result of the Reverse Stock Split, each ten (10) pre-split shares of common stock outstanding automatically combined into one (1) new share of common stock without any action on the part of the holders, and the number of outstanding shares of common stock was reduced from 158,437,840 shares to 15,844,061 shares (subject to rounding of fractional shares) and the number of authorized shares of common stock was reduced from 200,000,000 share to 20,000,000 shares.

Stockholders who otherwise were entitled to receive fractional shares because they held a number of pre-reverse stock split shares of the Company’s common stock not evenly divisible by 10, received, in lieu of a fractional share, that number of shares rounded up to the nearest whole share.

The Reverse Stock Split did not alter the par value of the Company’s common stock or modify any voting rights or other terms of the common stock.

In addition, pursuant to their terms, a proportionate adjustment was made to the per share conversion exercise price and number of shares issuable under all of the Company’s outstanding shares of convertible preferred stock and stock options and warrants to purchase shares of common stock, and the number of shares authorized and reserved for issuance pursuant to the Company’s equity incentive plans was reduced proportionately.

All share amounts and exercise/conversion prices in the condensed consolidated financial statements and footnotes below have been adjusted retrospectively for the Reverse Stock Split.

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.

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These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2022 Form 10-K.

The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of results for the full year.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Organization, Nature of Operations and Basis of Presentation – (continued)

The interim results for the three months ended March 31, 2023 are not necessarily indicative of results for the full year.

The condensed consolidated financial statements are prepared in conformity with U.S.

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however, due to the inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods.

The Company has one operating segment (which includes the legacy Company business and the VCN business) and therefore one reporting segment which represents the consolidated entity.

As of March 31, 2023 the Company has one operating segment (which includes the legacy Company business and the VCN business) and therefore one reporting segment.

Business Combination

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Management’s estimates of fair value are based upon assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

As a result of the acquisition of VCN (see Note 2), the Company recorded two intangible assets, in-process research and development (“IPR&D”) and goodwill.

As a result of the acquisition of VCN (see Note 3), the Company recorded two intangible assets:

in-process research and development (“IPR&D”) and goodwill.

The IPR&D and goodwill are deemed to have indefinite lives and therefore not amortized.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Organization, Nature of Operations and Basis of Presentation – (continued)

IPR&D assets represent the fair value assigned to technologies that the Company acquired, which at the time of acquisition have not reached technological feasibility and have no alternative future use.

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If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value, and a charge is reported in impairment of goodwill in the Company’s consolidated statements of operations.

As of September 30, 2022, the Company has determined that it has one reporting unit.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Organization, Nature of Operations and Basis of Presentation – (continued)

Contingent Consideration

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Contingent consideration liabilities expected to be settled within 12 months after the balance sheet date are presented in current liabilities, with the non-current portion recorded under long term liabilities in the consolidated balance sheets.

Impairment of Long-Lived Assets

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Summary of Significant Accounting Policies

Long-Lived Assets

Long-lived assets include property, equipment and right-of-use assets.

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If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and the carrying value of the asset.

No impairment charges were recorded during the three and nine months ended September 30, 2022 and 2021.

No impairment charges were recorded during the three months ended March 31, 2023 and 2022.

Recent Accounting Pronouncements and Developments

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The Company has adopted ASU 2020-06 on January 1, 2022.

The ASU impacted the analysis of the accounting treatment for the issuance of Convertible Preferred Series C & D stock during the current quarter, specifically the cash conversion and beneficial conversion features.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

The ASU impacted the analysis of the accounting treatment for the issuance of Convertible Preferred Series C & D stock during the third quarter of 2022, specifically the cash conversion and beneficial conversion features.

BUSINESS COMBINATION

On March 10, 2022, the Company completed the acquisition of all the outstanding shares of VCN (the “VCN Shares”) from the shareholders of VCN.

On March 10, 2022, the Company completed the acquisition of all the outstanding shares of Theriva Biologics, S.L , which at the time was known as VCN Biosciences, S.L.(the “VCN Shares”) from the shareholders of VCN.

VCN is a clinical-stage biopharmaceutical company developing new oncolytic adenoviruses for the treatment of cancer.

VCN’s lead product candidate, VCN-01, is being studied by the Company in clinical trials for pancreatic cancer and retinoblastoma with additional investigator sponsored trials in indications including head and neck squamous cell carcinoma (HNSCC).

VCN-01 is designed to be administered systemically, intratumorally or intravitreally, either as a monotherapy or in combination with standard of care, to treat a wide variety of cancer indications.

Theriva’s lead product candidate, VCN-01, is being studied in a Company sponsored Phase 2 clinical trial for pancreatic cancer with additional investigator sponsored trials in indications including head and neck squamous cell carcinoma (HNSCC) , retinoblastoma, brain tumors and pancreatic and ovarian cancers.

VCN-01 is designed to be administered systemically, intratumorally or intravitreally, either as a monotherapy or in combination with standard of care chemotherapies or immunotherapies, to treat a wide variety of cancer indications.

VCN-01 is designed to replicate selectively and aggressively within tumor cells, and to degrade the tumor stroma barrier that serves as a significant physical and immunosuppressive barrier to cancer treatment.

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Importantly, degrading the stroma exposes tumor antigens, turning “cold” tumors “hot” and enabling a sustained anti-tumor immune response.

VCN has the rights to four exclusive patents for proprietary technologies, as well as technologies developed in collaboration with the Virotherapy Group of the Catalan Institute of Oncology (ICO-IDIBELL) and with Hospital Sant Joan de Deu (HSJD), with a number of additional patents pending.

As consideration for the purchase of the VCN Shares, the Company paid $ 4,700,000 to Grifols Innovation and New Technologies Limited, the owner of approximately 86 % of the equity of VCN, and issued to the remaining sellers and certain key VCN employees and consultants of VCN an aggregate of 2,639,530 shares of its common stock In addition to the consideration described above, under the terms of the Purchase Agreement, the Company assumed up to $ 2,390,000 of existing liabilities of VCN and has agreed to make cash payments of up to $ 70.2 million to Grifols upon the achievement of certain clinical and commercialization milestones.

In September 2022, the trial received “safe to proceed” from the FDA for its phase 2 clinical trial of VCN-01.

Due to this approval, the company will pay Grifols $ 3.0 million in Q4 2022.

Theriva has the exclusive rights to four patent families for proprietary technologies, as well as technologies developed in collaboration with the Virotherapy Group of the Catalan Institute of Oncology (ICO-IDIBELL) and with Hospital Sant Joan de Deu (HSJD), with a number of additional patents pending.

As consideration for the purchase of the VCN Shares and pursuant to the terms of a purchase agreement that the parties entered into (the “Purchase Agreement”), the Company paid $ 4,700,000 to Grifols Innovation and New Technologies Limited (“Grifols”), the owner of approximately 86 % of the equity of VCN, and issued to the remaining sellers and certain key VCN employees and consultants of VCN an aggregate of 2,639,530 shares of its common stock, $ 0.001 par value per share (the “Common Stock”).

In addition to the consideration described above, under the terms of the purchase agreement that the parties entered into, the Company assumed up to $ 2,390,000 of existing liabilities of VCN and has agreed to make cash payments of up to $ 70.2 million to Grifols upon the achievement of certain clinical and commercialization milestones.

In September 2022, the Company received approval from the FDA to proceed with the Phase 2 clinical trial of VCN-01 in PDAC.

Due to this approval, the Company paid Grifols $ 3.0 million in the fourth quarter of 2022.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

BUSINESS COMBINATION - (continued)

In anticipation of the Acquisition, prior to the Closing, the Company loaned VCN $ 417,000 to help finance the costs of certain of VCN’s research and development activities.

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As a post-Closing covenant, the Company has agreed to commit to fund VCN’s research and development programs, including but not limited to VCN-01 in a pancreatic ductal adenocarcinoma PDAC Phase 2 trial, VCN-01 in a retinoblastoma (RB) Phase 2/3 trial and necessary G&A within a budgetary plan of approximately $ 27.8 million.

Total purchase consideration including cash, restricted shares and contingent consideration was valued at approximately $ 23.9 million, as follows (in thousands):

Total purchase consideration including cash, common shares and contingent consideration was valued at approximately $ 22.8 million, as follows (in thousands):

Cash paid at Closing

Receivable from VCN “effectively settled”

FV of common shares issued

FV of contingent consideration

As of March 31, 2022, the fair value of the contingent consideration was approximately $ 12.2 million.

During the nine months ended September 30, 2022 the Company recognized a non-cash gain of $ 257,000 related to the decrease in the fair value of the contingent consideration.

This gain was recorded as a reduction of general and administrative expense in the accompanying condensed consolidated statement of operations.

The Company acquired VCN due to its track record of being a research and development engine capable of fueling sustainable growth, to expand the Company’s research and development pipeline, and to diversify the Company’s potential future revenue opportunities.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

BUSINESS COMBINATION - (continued)

The preliminary allocation of the fair value of the VCN acquisition is shown in the table below.

Fair value of common shares issued

Fair value of contingent consideration

As of March 31, 2023 and December 31, 2022, the fair value of the contingent consideration was approximately $ 10.3 million and 10.1 million, respectively.

During the three months ended March 31, 2023, the Company recognized in operating expense a $ 135,000 fair value adjustment increase to contingent consideration.

There was no fair value adjustment to contingent consideration for the three months ended March 31, 2022.

The allocation of the fair value of the VCN acquisition updated for measurement period and other adjustments is shown in the table below.

Estimated fair value

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Total purchase consideration

The above allocation of the purchase price is based upon certain preliminary valuations and other analyses that have not been finalized as of the date of this filing.

Any changes in the estimated fair values of the purchase consideration and of the net assets recorded for this business combination upon the finalization of more detailed analyses of the facts and circumstances that existed at the date of the transaction may change the amount and allocation of the purchase price.

As such, the purchase price amount and allocations for this transaction are preliminary estimates including in-process research and development, goodwill and contingent consideration, which may be subject to change within the measurement period.

The net assets were recorded at their estimated fair value.

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Goodwill of $ 5.7 million was established as a result of the Acquisition and is not tax deductible.

VCN operations recorded a net loss of $ 5.8 million from the date of acquisition through September 30, 2022.

During the three months ended June 30, 2022 the Company recognized a measurement period adjustment related to the estimate of acquired liabilities resulting in a $ 277,000 reduction in accrued expenses and goodwill and during the three months ended September 30, 2022 the Company recognized another measurement period adjustment related to the estimated fair value of its in-process R&D resulting in a $ 810,000 increase in in-process R&D, an increase of $ 202,000 in deferred tax liabilities and a decrease of $ 607,000 in goodwill.

The cumulative impact of the re-measurements as of the nine month ended September 30, 2022 was a reduction in accrued liabilities of $ 277,000 , an increase in in-process R&D of $ 810,000 ;

an increase in deferred tax liabilities of $ 202,000 and a decrease in goodwill of $ 884,000 .

Theriva Biologics, S.L.

operations recorded a net loss of $ 7.8 million from the date of Acquisition through March 31, 2023.

Theriva Biologics, Inc.

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Notes to Condensed Consolidated Financial Statements

BUSINESS COMBINATION - (continued)

During the year ended December 31, 2022, the Company recognized the following measurement period adjustments:

● estimate of acquired liabilities resulting in a $ 277,000 reduction in accrued expenses and goodwill,

● estimate in the receivable from the prior owner resulting in a $ 176,000 increase in other receivables and reduction in goodwill.

● estimated fair value of its in-process R&D resulting in a $ 810,000 increase in in-process R&D, an increase of $ 202,000 in deferred tax liabilities and a decrease of $ 607,000 in goodwill.

The cumulative impact of the re-measurements as of the year ended December 31, 2022, was a reduction in accrued liabilities of $ 277,000 , and increase in other receivables or $ 176,000 , an increase in in-process R&D of $ 810,000 ;

an increase in deferred tax liabilities of $ 202,000 and a decrease in goodwill of $ 1,061,000 .

Pro Forma Consolidated Financial Information (unaudited)

The following unaudited pro forma consolidated financial information summarizes the results of operations for the periods indicated as if the VCN Acquisition had been completed as of January 1, 2022 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three months Ended March 31

(in thousands)

BUSINESS COMBINATION - (continued)

Transaction Costs

In conjunction with the Acquisition, the Company incurred approximately $ 1.2 million and $ 0.2 million in 2021 and 2022, respectively, in transaction costs, which were expensed as general, and administrative expense in the consolidated statements of operations.

In conjunction with the Acquisition, the Company incurred approximately $ 0.2 million in transaction costs during the three months ended March 31, 2022, which were expensed as general, and administrative expense in the consolidated statements of operations.

There were no acquisition costs incurred during the three months ended March 31, 2023.

Goodwill and Intangibles

Goodwill of $ 5.8 million and in-process R&D of $ 21.7 million were recorded in connection with the Acquisition of VCN, as described in Note 2.

During the quarter ending September 30, 2022, the Company experienced a sustained decline in the quoted market price of the Company’s common stock and the Company deemed this to be a triggering event.

The Company performed an interim impairment analysis and concluded that the Goodwill and IPRD was not impaired as of September 30,2022.

The following table provides the Company’s goodwill as of September 30, 2022.

During the three months ended June 30, 2022 the Company recognized a measurement period adjustment related to the estimate of acquired expenses resulting in a $ 277,000 reduction in accrued liabilities and goodwill and during the three months ended September 30, 2022 the Company recognized another measurement period adjustment related to the estimated fair value of its in-process R&D resulting in an $ 810,000 increase in in-process R&D, an increase of $ 202,000 in deferred tax liabilities and a decrease of $ 607,000 in goodwill.

The cumulative impact of the re-measurements as of the nine month ended September 30, 2022 was a reduction in accrued liabilities of $ 277,000 , an increase in in-process R&D of $ 810,000 ;

an increase in deferred tax liabilities of $ 202,000 and a decrease in goodwill of $ 884,000 .

The following table provides the Company’s Goodwill as of March 31, 2023.

Goodwill (in thousands)

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Effects of exchange rates

Balance at September 30, 2022

The following table provides the Company’s in-process R&D as of September 30, 2022.

R&D (in thousands)

Balance at December 31, 2022

Acquired IPR&D

Measurement Period Adjustment

Effects of exchange rates

Balance at September 30, 2022

Balance at March 31, 2023

Theriva Biologics, Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Goodwill and Intangibles – (continued)

The following table provides the Company’s in-process R&D as of March 31, 2023.

R&D (in thousands)

Balance at December 31, 2021

Acquired IPR&D

Measurement Period Adjustments

Effects of exchange rates

Balance at December 31, 2022

Effects of exchange rates

Balance at March 31, 2023

During the quarter ending September 30, 2022, and the quarter ended December 31, 2022, the Company experienced a sustained decline in the quoted market price of the Company’s common stock and the Company deemed this to be a trigger event for impairment.

The Company performed an impairment analysis and concluded that the Goodwill and IPR&D was not impaired as of September 30, 2022, and December 31, 2022.

There was no trigger event during the three months ended March 31, 2023.

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement , defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Accounting Standards Codification (“ASC”) 820, Fair Value Measurement , defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability.

Fair value measurements are rated on a three-tier hierarchy as follows:

Fair value measurements are classified on a three-tier hierarchy as follows:

● Level 1 inputs:

Quoted prices (unadjusted) for identical assets or liabilities in active markets;

Fair Value of Financial Instruments – (continued)

● Level 2 inputs:

Inputs, other than quoted prices, included in Level 1 that are observable either directly or indirectly;

Inputs, other than quoted prices, that are observable either directly or indirectly;

● Level 3 inputs:

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The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

The carrying amounts of the Company’s short-term financial instruments, including cash and cash equivalents, other current assets, accounts payable and accrued liabilities approximate fair value due to the relatively short period to maturity for these instruments.

The carrying amounts of the Company’s short-term financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these instruments.

In connection with the Acquisition of VCN, the Company will be required pay up to $ 70.2 million in additional consideration upon the achievement of certain milestones, including regulatory filings completed noted in Note 3.

In September 2022 the trial received “safe to proceed” from the FDA for its phase 2 clinical trial of VCN-01.

Due to this approval the company will pay Grifols $ 3.0 million in Q4 2022.

In September 2022 the Company received approval from the FDA to proceed with the Phase 2 clinical trial of VCN-01 in PDAC.

Due to this approval the Company paid Grifols Innovation and New Technologies Limited (“Grifols”) $ 3.0 million in Q4 2022.

The discounted cash flow method used to value this contingent consideration includes inputs of not readily observable market data, which are Level 3 inputs.

As of the March 10, 2022 acquisition date, the contingent consideration had a fair value of $ 12.2 million.

The fair value of the contingent consideration was $ 11.9 million as of September 30, 2022 and is reflected as current accrued contingent consideration of $ 9.5 million and non-current contingent consideration liability of $ 2.4 million in the consolidated balance sheet.

During the three months ended September 30, 2022 the Company recognized in operating expense a $ 226,000 fair value adjustment increase to contingent consideration.

During the nine months ended September 30, 2022 the Company recognized in operating expense a $ 257,000 fair value adjustment decrease to contingent consideration.

The fair value of financial instruments measured on a recurring basis is as follows (in thousands):

As of March 10, 2022

Contingent consideration

As of September 30, 2022

Contingent consideration

The following table summarizes the change in fair value, as determined by Level 3 inputs, for all assets and liabilities using unobservable Level 3 inputs for the nine months ended September 30, 2022 (in thousands):

The fair value of the contingent consideration was $ 10.3 million as of March 31, 2023 and is reflected as current accrued contingent consideration of $ 4.9 million and non-current contingent consideration liability of $ 5.4 million in the consolidated balance sheet.

During the three months ended March 31, 2023 the Company recognized in operating expense a $ 135,000 fair value adjustment increase to contingent consideration.

There was no fair value adjustment during the three months ended March 31, 2022.

Theriva Biologics, Inc.

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Notes to Condensed Consolidated Financial Statements

Consideration

Balance at March 10, 2022

Change in fair value

Balance at September 30, 2022

Fair Value of Financial Instruments – (continued)

The fair value of financial instruments measured on a recurring basis is as follows:

As of March 31, 2023

Contingent consideration

As of December 31, 2022

Contingent consideration

The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs:

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Contingent Consideration

Probability weighted

Discounted Cash Flows

Milestone dates

income approach

Discount rate

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6.9 % to 95.0 %

As of September 30, 2022

As of December 31, 2022

Weighted Average

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Contingent Consideration

Probability weighted

Discounted Cash Flows

Milestone dates

income approach

Discount rate

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6.9 % to 95.0 %

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Selected Balance Sheet Information

Prepaid expenses and other current assets (in thousands)

September 30,

Prepaid clinical research organizations

Prepaid manufacturing expenses

VAT receivable

Prepaid insurance

Receivable from prior owner

Prepaid consulting, subscriptions and other expenses

Prepaid insurances

VAT receivable

Prepaid clinical research organizations (CROs) expense is classified as a current asset.

The Company makes payments to the CROs based on agreed upon terms that include payments in advance of study services.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Selected Balance Sheet Information – (continued)

Receivable from prior VCN owner includes amounts due related to research and development tax rebates, VAT and corporate taxes.

Property and equipment, net (in thousands)

September 30,

Computers and office equipment

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Accrued expenses (in thousands)

September 30,

Accrued manufacturing costs

Accrued clinical consulting services

Accrued vendor payments

Accrued manufacturing costs

Accrued employee benefits (in thousands)

September 30,

Accrued bonus expense

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Accrued compensation expense

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation

3 unchanged sentences

The exercise price of stock options under the 2007 Stock Plan was determined by the compensation committee of the Board of Directors and could be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted.

As of September 30, 2022, there were 515 options issued and outstanding under the 2007 Stock Plan.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation – (continued)

As of March 31, 2023, there were 372 options issued and outstanding under the 2007 Stock Plan.

On November 2, 2010, the Board of Directors and stockholders adopted the 2010 Stock Incentive Plan (“2010 Stock Plan”) for the issuance of up to 8,572 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries.

On October 22, 2013, the stockholders approved and adopted an amendment to the Company’s 2010 Stock Plan to increase the number of shares of Company’s common stock reserved for issuance under the Plan from 8,572 to 17,143 ;

on May 15, 2015, increased the number of shares from 17,143 to 22,858 ;

on August 25, 2016, increased the number of shares from 22,858 to 40,000 ;

on September 7, 2017, increased the number of shares from 40,000 to 50,000 ;

on September 24, 2018 increased the number of shares from 50,000 to 100,000 ;

and on September 5, 2019, increased the number of shares from 100,000 to 400,000 The exercise price of stock options under the 2010 Stock Plan is determined by the compensation committee of the Board of Directors and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted.

From time to time the number of shares authorized for options was increased such that 400,000 were authorized as of September 5, 2019.

The exercise price of stock options under the 2010 Stock Plan is determined by the compensation committee of the Board of Directors and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted.

Options become exercisable over various periods from the date of grant and expire between five and ten years after the grant date.

As of September 30, 2022, there were 238,853 options issued and outstanding under the 2010 Stock Plan.

As of March 31, 2023, there were 202,095 options issued and outstanding under the 2010 Stock Plan.

There are no shares available to be issued under this plan.

On September 17, 2020, the stockholders approved and adopted the 2020 Stock Incentive Plan (“2020 Stock Plan”) for the issuance of up to 400,000 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries.

On September 30, 2022, the stockholders approved and adopted an amendment to the Company’s 2010 Stock Plan to increase the number of shares of Company’s common stock reserved for issuance under the Plan from 400,000 to 7,000,000 .

As of September 30, 2022, there were 368,002 options issued and outstanding under the 2020 Stock Plan.

The number of shares authorized for options was increased such that 7,000,000 were authorized as of March 31, 2023.

As of March 31, 2023, there were 2,093,002 options issued and outstanding under the 2020 Stock Plan.

In the event of an employee’s termination, the Company will cease to recognize compensation expense for that employee.

Stock forfeitures are recognized as incurred.

There is no deferred compensation recorded upon initial grant date.

Instead, the fair value of the stock-based payment is recognized over the stated vesting period.

The fair value of the stock-based payment is recognized over the stated vesting period.

The Company has applied fair value accounting for all stock-based payment awards since inception.

The fair value of each option or warrant granted is estimated on the date of grant using the Black-Scholes option pricing model.

There were no options granted during the three and nine months ended September 30, 2021.

The assumptions used for the nine months ended September 30, 2022 are as follows:

Exercise price

Expected dividends

Expected volatility

Risk free interest rate

Expected life of option (years)

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model.

There were no options granted during the three months ended March 31, 2023 and 2022.

Expected dividends — The Company has never declared or paid dividends on its common stock and has no plans to do so in the foreseeable future.

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● monthly over three years.

During the nine months ended September 30, 2022, the Company granted 3,000 options to employees having an approximate fair value of $ 5,000 based upon the Black-Scholes option pricing model, respectively.

There were no options granted during the three and nine months ended September 30, 2021.

Theriva Biologics, Inc.

2 unchanged sentences

Stock-Based Compensation – (continued)

A summary of stock option activity for the nine months ended September 30, 2022 and the year ended December 31, 2021 is as follows:

A summary of stock option activity for the three months ended March 31, 2023 and the year ended December 31, 2022 is as follows:

Weighted Average

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Balance - December 31, 2022

Balance - September 30, 2022 - outstanding

Balance - September 30, 2022 - exercisable

Grant date fair value of options granted – nine months ended September 30, 2022

Weighted average grant date fair value – nine months ended September 30, 2022

Balance - March 31, 2023 - outstanding

Balance - March 31, 2023 - exercisable

Grant date fair value of options granted – three months ended March 31, 2023

Weighted average grant date fair value – three months ended March 31, 2023

Grant date fair value of options granted – year ended December 31, 2022

Weighted average grant date fair value – year ended December 31, 2022

Stock-based compensation expense included in general and administrative expenses relating to stock options issued to employees for the three and nine months ended September 30, 2022 was $ 46,000 and $ 124,000 , respectively, and $ 34,000 and $ 101,000 for the three and nine months ended September 30, 2021, respectively.

Stock-based compensation expense included in research and development expenses relating to stock options issued to employees for the three and nine months ended September 30, 2022 was $ 21,000 and $ 62,000 , respectively, and $ 16,000 and $ 47,000 for the three and nine months ended September 30, 2021, respectively.

Stock-based compensation expense included in general and administrative expenses relating to stock options issued to consultants for the three and nine months ended September 30, 2022 was $ 47,000 and $ 141,000 , respectively, and $ 49,000 and $ 147,000 for the three and nine months ended September 30, 2021, respectively.

Stock-based compensation expense included in research and development expenses relating to stock options issued to consultants for the three and nine months ended September 30, 2022 was $ 7,000 and $ 21,000 , respectively, and $ 3,000 and $ 10,000 for the three and nine months ended September 30, 2021.

As of September 30, 2022, total unrecognized stock-based compensation expense related to stock options was $ 395,000 , which is expected to be expensed through May 2024.

Stock-based compensation expense included in general and administrative expenses and research and development expenses relating to stock options issued to employees for the three months ended March 31, 2023 and 2022 was $ 83,000 and $ 59,000 , respectively.

Stock-based compensation expense included in general and administrative expenses and research and development expenses relating to stock options issued to consultants for the three months ended March 31, 2023 and 2022 were $ 43,000 and $ 53,000 , respectively.

As of March 31, 2023, total unrecognized stock-based compensation expense related to stock options was $ 841,000 , which is expected to be expensed through May 2025.

The FASB’s guidance for stock-based payments requires cash flows from excess tax benefits to be classified as a part of cash flows from operating activities.

Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options.

The Company did not record any excess tax benefits during the three months ended March 31, 2023 and 2022.

Theriva Biologics, Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation – (continued)

The FASB’s guidance for stock-based payments requires cash flows from excess tax benefits to be classified as a part of cash flows from operating activities.

Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options.

The Company did not record any excess tax benefits during the three and nine months ended September 30, 2022 and 2021.

Stock Warrants

On October 15, 2018, the Company closed its underwritten public offering pursuant to which it received gross proceeds of approximately $ 18.6 million before deducting underwriting discounts, commissions and other offering expenses payable by the Company and sold (i)Class A Units (the “Class A Units”), consisting of an aggregate of 252,000 shares of the Common Stock, and five-year warrant to purchase an aggregate of 252,000 shares of Common Stock at an exercise price of $ 13.80 per share, which subsequently was reduced to $ 6.90 per share (each a “Warrant” and collectively, the “Warrants”) and (ii) Class B Units (the “Class B Units”, and together with the Class A Units, the “Units”), consisting of an aggregate of 15,723 shares of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), with a stated value of $ 1,000 and convertible into shares of Common Stock at the stated value divided by a conversion price of $ 11.50 per share, with all shares of Series B Preferred Stock convertible into an aggregate of 1,367,218 shares of Common Stock, and issued with a warrant to purchase an aggregate of 1,367,218 shares of Common Stock.

On November 16, 2020, the exercise price of the Warrants was reduced from $ 13.80 per Warrant per full share of the Company’s common stock, $ 0.001 par value per share (the “Common Stock”), to $ 6.90 per Warrant per full share of Common Stock in accordance with the anti-dilution terms of the Warrant.

On October 15, 2018, the Company closed its underwritten public offering pursuant to which it received gross proceeds of approximately $ 18.6 million before deducting underwriting discounts, commissions and other offering expenses payable by the Company and sold (i)Class A Units (the “Class A Units”), consisting of an aggregate of 252,000 shares of the Common Stock, and five-year warrant to purchase an aggregate of 252,000 shares of Common Stock at an exercise price of $ 13.80 per share, which subsequently was reduced to $ 6.90 per share and then again to $ 1.22 (each a “Warrant” and collectively, the “Warrants”) and (ii) Class B Units (the “Class B Units”, and together with the Class A Units, the “Units”), consisting of an aggregate of 15,723 shares of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), with a stated value of $ 1,000 and convertible into shares of Common Stock at the stated value divided by a conversion price of $ 11.50 per share, with all shares of Series B Preferred Stock convertible into an aggregate of 1,367,218 shares of Common Stock, and issued with a warrant to purchase an aggregate of 1,367,218 shares of Common Stock.

On November 16, 2020, the exercise price of the Warrants was reduced from $ 13.80 per Warrant per full share of the Company’s Common Stock, to $ 6.90 per Warrant per full share of Common Stock in accordance with the antidilution terms of the Warrant.

The reduction was the result of the issuance of shares of Common Stock by the Company through its “at the market offering” facility.

8 unchanged sentences

During the three months ended March 31, 2021, 1,165,575 Warrants were exercised for cash proceeds of $ 8.0 million.

There were no warrants exercised during the three and nine months ended September 30, 2022.

On August 3, 2022 the Company announced the exercise price of warrants issued by the Company in October 2018 was reduced from $ 6.90 per Warrant per full share of the Company’s common stock, $ 0.001 par value per share to $ 1.22 per Warrant per full share of Common Stock.

The reduction was the result of the issuance of shares of Preferred Stock by the Company in a private placement.

The effect of the change in the exercise price of the warrants as a result of the triggering of the down round protection clause in the Warrants was recorded as a deemed dividend of $ 340,000 during the three and nine months ended September 30, 2022, which reduces the income available to common stockholders.

There were no Warrants exercised during the year ended December 31, 2022, or the three months ended March 31, 2023.

Theriva Biologics, Inc.

2 unchanged sentences

Stock Warrants – (continued)

A summary of all warrant activity for the Company for the quarter ended September 30, 2022 and the year ended December 31, 2021 is as follows:

On August 3, 2022, the Company announced the exercise price of Warrants issued by the Company in October 2018 was reduced from $ 6.90 per Warrant per full share of the Company’s common stock, $ 0.001 par value per share to $ 1.22 per Warrant per full share of Common Stock.

The reduction was the result of the issuance of shares of Preferred Stock by the Company in a private placement.

The effect of the change in the exercise price of the Warrants as a result of the triggering of the down round protection clause in the Warrants was recorded as a deemed dividend of $ 340,000 during the year ended December 31, 2022, which reduces the income available to common stockholders.

A summary of all warrant activity for the Company for the quarter ended March 31, 2023 and the year ended December 31, 2022 is as follows:

Weighted Average

Exercise Price

Contractual Life

Balance at December 31, 2021

( 1,165,575 )

Balance at December 31, 2022

Balance at September 30, 2022

Balance at March 31, 2023

On December 26, 2017, the Company entered into a consulting agreement for advisory services for a period of six months.

1 unchanged sentence

The warrant is equity classified and the fair value of the warrant approximated $ 9,000 and was measured using the Black-Scholes option pricing model.

A summary of all outstanding and exercisable common stock warrants as of September 30, 2022 is as follows:

Weighted Average

Exercise Price

Contractual Life

The warrant expired in December 2022.

Net Loss per Share

2 unchanged sentences

Diluted net loss per share assumes the issuance of potential dilutive common shares outstanding for the period and adjusts for any changes in income and the repurchase of common shares that would have occurred from the assumed issuance, unless such effect is anti-dilutive.

Net loss attributable to common stockholders for the three and nine months ended September 30, 2022 was approximately $ 5.2 million and $ 14.4 million, respectively.

Net loss attributable to common stockholders for the three and nine months ended September 30, 2022 includes the effect of the warrant exercise price adjustment of $ 340,000 .

Net loss attributable to common stockholders for the three and nine months ended September 30, 2021 was approximately $ 3.3 million and $ 17.9 million, respectively.

Net loss attributable to common stockholders for the nine months ended September 30, 2021 excludes net loss attributable to non-controlling interest of $ 0.1 million and includes the accretion of the Series B preferred discount of $ 1.5 million as a result of converted shares and Series A preferred stock accrued dividends of $ 0.1 million and the deemed dividend of $ 7.4 million resulting from the effect of the Series A preferred stock price adjustment during the first quarter of 2021.

There were no shares of common stock underlying Series B Preferred shares convertible to common stock that were excluded from the computations of net loss per common share for the three and nine months ended September 30, 2021 since all remaining Series B preferred stock were converted to common stock in 2021.

The number of options and warrants for the purchase of common stock that were excluded from the computations of net loss per common share and for the three and nine months ended September 30, 2022 were 607,370 and 634,497 , respectively and for the three and nine months ended September 30, 2021 were 399,742 and 634,497 , respectively, because their effect is anti-dilutive.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Non-controlling Interest and Related Party

On September 5, 2018, the Company entered into an agreement (the ‘Stock Purchase Agreement”) with Cedars-Sinai Medical Center (CSMC) for an investigator-sponsored Phase 2b clinical study of SYN-010 to be co-funded by the Company and CSMC (the “Study”).

The Study will provide further evaluation of the efficacy and safety of SYN-010, the Company’s modified-release reformulation of lovastatin lactone, which is exclusively licensed to the Company by CSMC.

SYN-010 is designed to reduce methane production by certain microorganisms (M.

smithii) in the gut to treat an underlying cause of irritable bowel syndrome with constipation (IBS-C).

In consideration of the support provided by CSMC for the Study, the Company paid $ 328,000 to support the Study and the Company entered into a Stock Purchase Agreement with CSMC pursuant to which the Company, upon the approval of the Study protocol by the Institutional Review Board (IRB):

(i) issued to CSMC five thousand ( 5,000 ) shares of common stock of the Company;

and (ii) transferred to CSMC an additional two million four hundred twenty thousand ( 2,420,000 ) shares of common stock of its subsidiary SYN Biomics, Inc.

(“Synbiomics”) owned by the Company, such that after such issuance CSMC owned an aggregate of seven million four hundred eighty thousand ( 7,480,000 ) shares of common stock of SYN Biomics, representing seventeen percent ( 17 %) of the issued and outstanding shares of SYN Biomics’ common stock.

The services rendered are recorded to research and development expense in proportion with the progress of the study and based overall on the fair value of the shares ($ 285,000 ) as determined at the date of IRB approval.

There was no expense recorded related to this transaction during the three and nine months ended September 30, 2022 and 2021.

The Agreement also provided CSMC with a right, commencing on the six month anniversary of issuance of the stock under certain circumstances in the event that the shares of stock of SYN Biomics are not then freely tradeable, and subject to NYSE American, LLC approval, to exchange its SYN Biomics shares for unregistered shares of the Company’s common stock, with the rate of exchange based upon the relative contribution of the valuation of SYN Biomics to the public market valuation of the Company at the time of each exchange.

The Stock Purchase Agreement also provided for tag-along rights in the event of the sale by the Company of its shares of SYN Biomics.

On September 30, 2020, CSMC MAST formally agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 following the results of a planned interim futility analysis.

Although it was concluded that SYN-010 was well tolerated, SYN-010 was unlikely to meet its primary endpoint by the time enrollment is completed.

On November 9, 2020, the Company and its subsidiary, Synthetic Biomics, Inc.

and CSMC mutually agreed to terminate the exclusive license agreement dated December 5, 2013 and all amendments thereto and the clinical trial agreement relating to SYN-010.

The determination to terminate the SYN-010 license agreement was agreed following the completion of a planned interim futility analysis of the Phase 2b investigator-sponsored clinical trial of SYN-010.

On September 30, 2020, CSMC (the Company’s SYN-010 clinical development partner) informed the Company that it discontinued the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 IBS-C patients.

During 2021, CSMC returned its shares of SYN Biomics to the Company.

The Company’s interest in SYN Biomics is now 100 %.

This is reflected in the Consolidated Statements of Equity (Deficit).

The Company’s non-controlling interest was accounted for under ASC 810, Consolidation and represents the minority stockholder’s ownership interest related to the Company’s subsidiary, SYN Biomics.

In accordance with ASC 810, the Company reports its non-controlling interest in subsidiaries as a separate component of equity in the Consolidated Balance Sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common stockholders in the face of the Consolidated Statements of Operations.

Net loss attributable to common stockholders for the three months ended March 31, 2023 was $ 4.5 million.

Net loss attributable to common stockholders for the three months ended March 31, 2022 was $ 4.3 million.

The number of options and warrants for the purchase of common stock that were excluded from the computations of net loss per common share and for the three months ended March 31, 2023 were 2,295,469 and 634,426 , respectively and for the three months ended March 31, 2022 were 610,772 and 634,426 , respectively, because their effect is anti-dilutive.

Theriva Biologics, Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Related Party

On December 15, 2022, the Company approved the retention of MaryAnn Shallcross, the wife of Steven Shallcross, as director of Clinical Operations, for compensation of $ 145,000 and the grant of an option to purchase 50,000 shares of common stock having a value of $ 20,000 .

Shallcross had been performing services for us during 2022 for total compensation of less than $ 120,000 .

Common and Preferred Stock

Series C and D Preferred Stock

On July 29, 2022, the Company closed a private placement offering pursuant to the terms of a Securities Purchase Agreement dated as of July 28, 2022 entered into with MSD Credit Opportunity Master Fund, L.P., pursuant to which the Company agreed to issue and sell 275,000 shares of the Company’s Series C Convertible Preferred Stock, par value $ 0.001 per share (the “Series C Preferred Stock”), and 100,000 shares of the Company’s Series D Convertible Preferred Stock, par value $ 0.001 per share (the “Series D Preferred Stock,” and together with the Series C Preferred Stock, the “Preferred Stock”), at an offering price of $ 8.00 per share, for gross proceeds of approximately $ 3.0 million in the aggregate, before the deduction of discounts, fees and offering expenses.

The shares of Preferred Stock will be convertible, at a conversion price (the “Conversion Price”) of $ 1.22 per share (subject in certain circumstances to adjustments), into an aggregate of 2,459,016 shares of the Company’s common stock, par value $ 0.001 per share (the “Common Stock”), at the option of the holders of the Preferred Stock and, in certain circumstances, by the Company.

The Purchase Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing.

The Company included certain proposals at its 2022 annual meeting of stockholders, including to consider (i) an amendment to the Company’s Articles of Incorporation, as amended (the “Charter”), to change the name of the Company to “Theriva Biologics, Inc.” (the “Name Change”), (ii) an amendment to the Charter to increase the number of authorized shares of Common Stock from 20,000,000 to 350,000,000 (the “Authorized Common Stock Increase”) and (iii) any proposal to adjourn any meeting of stockholders called for the purpose of voting on the Authorized Common Stock Increase (collectively, the “Stockholder Items”).

The Investor has agreed in the Purchase Agreement to (i) not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the shares of the Preferred Stock until the earlier of the date that the Authorized Common Stock Increase is effected or October 26, 2022 (which may be extended to December 31, 2022 if certain conditions are met), (ii) vote the shares of the Series C Preferred Stock purchased in the Offering in favor of the Stockholder Items and (iii) vote the shares of the Series D Preferred Stock purchased in the Offering in the same proportion as shares of Common Stock and any other shares of capital stock of the Company that are entitled to vote thereon (excluding any shares of Common Stock that are not voted) on the Stockholder Items.

Pursuant to the Purchase Agreement, the Company has filed certificates of designation (the “Certificates of Designation”) with the Secretary of the State of Nevada designating the rights, preferences and limitations of the shares of Series C Preferred Stock and Series D Preferred Stock.

On July 29, 2022, the Company closed a private placement offering pursuant to the terms of a Securities Purchase Agreement dated as of July 28, 2022 entered into with MSD Credit Opportunity Master Fund, L.P.(the “Securities Purchase Agreement”), pursuant to which the Company issued and sold 275,000 shares of the Company’s Series C Convertible Preferred Stock, par value $ 0.001 per share (the “Series C Preferred Stock”), and 100,000 shares of the Company’s Series D Convertible Preferred Stock, par value $ 0.001 per share (the “Series D Preferred Stock,” and together with the Series C Preferred Stock, the “Preferred Stock”), at an offering price of $ 8.00 per share, for gross proceeds of approximately $ 3.0 million in the aggregate, before the deduction of discounts, fees and offering expenses.

The shares of Preferred Stock are convertible, at a conversion price (the “Conversion Price”) of $ 1.22 per share (subject in certain circumstances to adjustments), into an aggregate of 2,459,016 shares of the Company’s Common Stock, at the option of the holders of the Preferred Stock and, in certain circumstances, by the Company.

The Securities Purchase Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing.

The Company included certain proposals at its 2022 annual meeting of stockholders, including to consider (i) an amendment to the Company’s Articles of Incorporation, as amended (the “Charter”), to change the name of the Company to “Theriva Biologics, Inc.” (the “Name Change”), (ii) an amendment to the Articles of Incorporation, as amended to increase the number of authorized shares of Common Stock from 20,000,000 to 350,000,000 (the “Authorized Common Stock Increase”) and (iii) any proposal to adjourn any meeting of stockholders called for the purpose of voting on the Authorized Common Stock Increase (collectively, the “Stockholder Items”).

The purchaser of the Preferred Stock agreed in the Purchase Agreement to (i) not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the shares of the Preferred Stock until the earlier of the date that the Authorized Common Stock Increase is effected or October 26, 2022 (which may be extended to December 31, 2022 if certain conditions are met), and (ii) vote the shares of the Series C Preferred Stock purchased in the Offering in favor of the Stockholder Items.

Pursuant to the Securities Purchase Agreement, the Company filed certificates of designation (the “Certificates of Designation”) with the Secretary of the State of Nevada designating the rights, preferences and limitations of the shares of Series C Preferred Stock and Series D Preferred Stock.

The Certificate of Designation for the Series C Preferred Stock provides, in particular, that the Series C Preferred Stock will have no voting rights other than the right to vote as a class on the Stockholder Items and the right to cast votes on an as converted to Common Stock basis on the Stockholder Items.

The Certificate of Designation for the Series D Preferred Stock provides, in particular, that the Series D Preferred Stock will have no voting rights other than the right to vote as a class on the Stockholder Items and the right to cast 20,000 votes per share of Series D Preferred Stock on the Stockholder Items and to vote the shares of the Series D Preferred Stock purchased in the Offering in the same proportion as shares of Common Stock and any other shares of capital stock of the Company that are entitled to vote thereon (excluding any shares of Common Stock that are not voted) on the Stockholder Items.

The holders of Preferred Stock will be entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares of Common Stock.

2 unchanged sentences

Transaction expenses paid to third parties will be charged to temporary equity and will not be accreted as deemed dividends until redemption becomes probable.

In order to comply with Section 122 of the NYSE American Company Guide, on August 9, 2022 the Company and the holder of the Company’s Series C preferred stock and Series D preferred stock amended the Securities Purchase Agreement entered into between them on July 28, 2022 to provide that the holder may only submit 1,549,295 of the votes relating to the Series C Preferred Stock that it would otherwise be entitled to vote.

Theriva Biologics, Inc.

2 unchanged sentences

Common and Preferred Stock – (continued)

Series B Preferred Stock

On October 15, 2018, the Company closed its underwritten public offering pursuant to which it received gross proceeds of approximately $ 18.6 million before deducting underwriting discounts, commissions and other offering expenses payable by the Company and sold (i) Class A Units (the “Class A Units”) consisting of an aggregate of 252,000 shares of the Common Stock, and five-year warrant to purchase an aggregate of 252,000 shares of Common Stock at an exercise price of $ 13.80 per share, which subsequently was reduced to $ 1.22 per share (each a “Warrant” and collectively, the “Warrants”), and (ii) Class B Units (the “Class B Units”, and together with the Class A Units, the “Units”), consisting of an aggregate of 15,723 share of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), with a stated value of $ 1,000 and convertible into shares of Common Stock at the stated value divided by a conversion price of $ 11.50 per share, with all shares of Series B Preferred Stock convertible into an aggregate of 1,367,218 shares of Common Stock, and issued with a warrant to purchase an aggregate of 1,367,218 shares of Common Stock..

Since the above units are equity instruments, the proceeds were allocated on a relative fair value basis which created the Series B Preferred Stock discount.

In addition, pursuant to the Underwriting Agreement that the Company entered into with the Underwriters on October 10, 2018, the Company granted the Underwriters a 45 day option (the “Over-allotment Option”) to purchase up to an additional 242,883 shares of Common Stock and/or additional warrants to purchase an additional 242,883 shares of Common Stock.

Each Warrant is exercisable for one share of common stock.

The Underwriters partially exercised the Over-allotment Option by electing to purchase from the Company additional Warrants to purchase 180,783 shares of Common Stock.

The conversion price of the Series B Preferred Stock and exercise price of the October 2018 Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Common Stock.

The exercise price of the Warrants is subject to adjustment in the event of certain dilutive issuances.

On November 16, 2020, the exercise price of the Warrants was reduced from $ 13.80 per Warrant per full share of Common Stock to $ 6.90 per Warrant per full share of common stock.

The reduction was the result of the issuance of shares of Common Stock by the Company through its “at the market offering” facility.

The effect of the change in the exercise price of the warrants as a result of the triggering of the down round protection clause in the Warrants was recorded as a deemed dividend in accumulated deficit of $ 880,000 , which reduces the income available to common stockholders for the year ended December 31, 2020.

The reduction was the result of the issuance of shares of Preferred Stock by the Company in a private placement.

Since the effective conversion price of the Series B Preferred Stock is less than the fair value of the underlying Common Stock at the date of issuance, there is a beneficial conversion feature (“BCF”) at the issuance date.

Because the Series B Preferred Stock has no stated maturity or redemption date and is immediately convertible at the option of the holder, the discount created by the BCF is immediately charged to accumulated deficit as a “deemed dividend” and impacts earnings per share.

During the three months ended March 31, 2021, 398 shares were converted resulting in the recognition of a deemed dividends of $ 1.5 million for the amortization of the Series B Preferred Stock discount upon conversion.

During the three and nine months ended September 30, 2022 there were no shares remaining outstanding as all shares were converted in 2021 and 2020.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Common and Preferred Stock – (continued)

Series A Preferred Stock

On September 11, 2017, the Company entered into a share purchase agreement (the “Purchase Agreement”) with an investor (the “Investor”), pursuant to which the Company offered and sold in a private placement 12,000 shares of its Series A Convertible Preferred Stock, par value $ 0.001 per share (the “Series A Preferred Stock”) for an aggregate purchase price of $ 12 million, or $ 10 per share.

The Series A Preferred Stock ranks senior to the shares of the Company’s common stock, and any other class or series of stock issued by the Company with respect to dividend rights, redemption rights and rights to the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

Holders of Series A Preferred Stock are entitled to a cumulative dividend at the rate of 2.0 % per annum, payable quarterly in arrears, as set forth in the Certificate of Designation of Series A Preferred Stock classifying the Series A Preferred Stock.

The Series A Preferred Stock is convertible at the option of the holders at any time into shares of common stock at an initial conversion price of $ 5.40 per share which was increased to $ 189.0 after taking into account the 2018 reverse stock split, subject to certain customary anti-dilution adjustments and was decreased to $ 15.0 on January 27, 2021, see below.

Any conversion of Series A Preferred Stock may be settled by the Company in shares of common stock only.

The holder’s ability to convert the Series A Preferred Stock into common stock is subject to (i) a 19.99% blocker provision to comply with NYSE American Listing Rules, (ii) if so elected by the Investor, a 4.99% blocker provision that will prohibit beneficial ownership of more than 4.99% of the outstanding shares of the Company’s common stock or voting power at any time, and (iii) applicable regulatory restrictions.

In the event of any liquidation, dissolution or winding-up of the Company, holders of the Series A Preferred Stock are entitled to a preference on liquidation equal to the greater of (i) an amount per share equal to the stated value plus any accrued and unpaid dividends on such share of Series A Preferred Stock (the “Accreted Value”), and (ii) the amount such holders would receive in such liquidation if they converted their shares of Series A Preferred Stock (based on the Accreted Value and without regard to any conversion limitation) into shares of the common stock immediately prior to any such liquidation, dissolution or winding-up (the greater of (i) and (ii), is referred to as the “Liquidation Value”).

Except as otherwise required by law, the holders of Series A Preferred Stock have no voting rights, other than customary protections against adverse amendments and issuance of pari passu or senior preferred stock.

Upon certain change of control events involving the Company, prior to the filing of the amendment to the Certificate of Designation for the Series A Preferred Stock described below, the Company will be required to repurchase all of the Series A Preferred Stock at a redemption price equal to the greater of (i) the Accreted Value and (ii) the amount that would be payable upon a change of control (as defined in the Certificate of Designation) in respect of common stock issuable upon conversion of such share of Series A Preferred Stock if all outstanding shares of Series A Preferred Stock were converted into common stock immediately prior to the change of control.

On or at any time after (i) the VWAP (as defined in the Certificate of Designation) for at least 20 trading days in any 30 trading day period is greater than $ 70.00 , subject to adjustment in the case of stock split, stock dividends or the like the Company has the right, after providing notice not less than 6 months prior to the redemption date, to redeem, in whole or in part, on a pro rata basis from all holders thereof based on the number of shares of Series A Preferred Stock then held, the outstanding Series A Preferred Stock, for cash, at a redemption price per share of Series A Preferred Stock of $ 7,875.00 , subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Convertible Preferred Stock or (ii) the five year anniversary of the issue date, the Company shall have the right to redeem, in whole or in part, on a pro rata basis from all holders thereof based on the number of shares of Series A Convertible Preferred Stock then held, the outstanding Series A Preferred Stock, for cash, at a redemption price per share equal to the Liquidation Value.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Common and Preferred Stock – (continued)

The Series A Preferred Stock was classified as temporary equity due to the shares being redeemable based on contingent events outside of the Company’s control.

Since the effective conversion price of the Series A Preferred Stock is less than the fair value of the underlying common stock at the date of issuance, there is a beneficial conversion feature (“BCF”) at the issuance date.

Because the Series A Preferred Stock has no stated maturity or redemption date and is immediately convertible at the option of the holder, the discount created by the BCF is immediately charged to accumulated deficit as a “deemed dividend” and impacts earnings per share.

During the year ended December 31, 2017, the Company recorded a discount of $ 6.9 million.

Because the Series A Preferred Stock is not currently redeemable, the discount arising from issuance costs was allocated to temporary equity and will not be accreted until such time that redemption becomes probable.

The stated dividend rate of 2 % per annum is cumulative and the Company accrues the dividend on a quarterly basis (in effect accreting the dividend regardless of declaration because the dividend is cumulative).

During the three months ended March 31,2021 and 2020, the Company accrued dividends of $ 24,000 and $ 62,000 , respectively.

Once the dividend is declared, the Company will reclassify the declared amount from temporary equity to a dividends payable liability.

When the redemption of the Series A Preferred Stock becomes probable, the temporary equity will be accreted to redemption value as a deemed dividend.

On January 27, 2021, the Company filed an amendment to the Certificate of Designation for the Series A Preferred Stock to (i) lower the stated Conversion Price through September 30, 2021 and (ii) remove their change in control put, as an inducement for the holder to fully convert its Series A Preferred Stock.

The Amendment to the Certificate of Designation for its Series A Convertible Preferred Stock (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada adjusted the conversion price from $ 189 per share to $ 15 per share and removed the redemption upon change of control.

The Company received notice from the holder of the Series A Preferred Stock that it was increasing the Maximum Percentage as defined in the “Certificate of Designation” from 4.99 % to 9.99 %, such increase to be effective 61 days from the date hereof.

During the three months ended March 31, 2021, all outstanding shares of Series A Convertible Preferred Stock were converted to approximately 0.9 million shares of the Company’s common stock.

There are no remaining shares of the Series A Convertible Preferred stock outstanding after these conversions.

During January and February 2021, the Company issued 899,677 shares of its common stock upon the conversion effected on such date by the holder of 12,000 shares of its Series A Convertible Preferred Stock.

The fair value of the consideration issued to the holder to induce conversion is accounted for as a deemed dividend and increased net loss available to common shareholders for purposes of calculating loss per share.

The Company estimated fair value of the inducement consideration of $ 7.4 million and as a result has recorded a corresponding deemed dividend of $ 7.4 million during the three months ended March 31, 2021.

Riley Securities Sales Agreement

On August 5, 2016, the Company entered into the B.

Riley FBR Sales Agreement with FBR Capital Markets & Co.

On August 5, 2016, the Company entered into the Sales Agreement (the “Original Sales Agreement”) with FBR Capital Markets & Co.

(now known as B.

Riley Securities), which enables the Company to offer and sell shares of common stock from time to time through B.

Riley Securities, Inc.

as the Company’s sales agent.

Sales of common stock under the B.

Riley Securities Sales Agreement are made in sales deemed to be “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities Act.

Riley Securities, Inc.

is entitled to receive a commission rate of up to 3.0 % of gross sales in connection with the sale of the Common Stock sold on the Company’s behalf.

On February 9, 2021, the Company entered into an amended and restated sales agreement with B.

Riley Securities, Inc.

Riley”) and A.G.P./Alliance Global Partners (“AGP”) in order to include AGP as an additional sales agent for the Company’s “at the market offering” program (the “Amended and Restated Sales Agreement”).

The Sales Agreement amended and restated the At Market Issuance Sales Agreement, dated August 5, 2016, with B.

Riley Securities) to act as a sales agent, which agreement was amended and restated on February 9, 2021 to add Alliance Global Partners as a sale agent.

The amended and restated Sales Agreement (the “Amended and Restated Sales Agreement”) enables the Company to offer and sell shares of common stock from time to time through B.

Riley Securities, Inc.

(formerly known as B.

Riley FBR, Inc.), as amended by amendment no.

1, dated May 7, 2018, to the At Market Issuance Sales Agreement.

During the three months ended March 31, 2021, the Company sold through the At Market Issuance Sales Agreement and the Amended and Restated Sales Agreement approximately 7.9 million shares of the Company’s common stock and received net proceeds of approximately $ 66.0 million.

During the three and nine months ended September 30, 2022, there were no sales of the Company’s common stock through the At Market Issuance Sales Agreement and the Amended and Restated Sales Agreement.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As a result of the acquisition of VCN the Company acquired interest-free or below-market interest rates loans ( 0 %- 1 %) extended by Spanish governmental institutions of Ministerio de Ciencia, Innovacion y Universidades and ACC10 Generalitat de Catalunya.

The maturities of these loans are between 2027 and 2028.

The Company is required to maintain a restricted cash collateral account of $ 90,000 relating to the RETOS 2015 loan, which is reflected as a non-current asset on the balance sheet.

September 30, 2022

and A.G.P./Alliance Global Partners as the Company’s sales agent.

Sales of common stock under the Sales Agreement are made in sales deemed to be “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities Act.

The sales agents are entitled to receive a commission rate of up to 3.0 % of gross sales in connection with the sale of the Common Stock sold on the Company’s behalf.

The Company did not sell any shares of common stock during the three months ended March 31, 2023 through the Amended and Restated Sales Agreement.

As a result of the acquisition of VCN the Company acquired interest-free or below-market interest rates loans ( 0 %- 1 %) extended by Spanish governmental institutions of Ministerio de Ciencia , Innovacion y Universidades and ACC10 Generalitat de Catalunya (CDIT loans) The maturities of these loans are between 2027 and 2028.

As a result of the VCN Acquisition, the Company maintains a restricted cash collateral account of $ 100,000 relating to the RETOS loan, which is reflected a non-current assets on the balance sheet.

March 31, 2023

December 31, 2022

The difference between the fair value of these liabilities (when relevant conditions associated with the grants are met) and the amount received is recognized as a government grant and classified as other operating income in the statement of profit and loss.

A maturity analysis of the debt as of September 30, 2022 is as follows (amounts in thousands of dollars) :

A maturity analysis of the debt as of March 31, 2023 is as follows (amounts in thousands of dollars) :

Theriva Biologics, Inc.

2 unchanged sentences

Commitments and Contingencies

The Company’s existing lease as of September 30, 2022 for its U.S.

The Company’s existing lease as of March 31, 2023 for its U.S.

location is classified as an operating lease.

As of September 30, 2022, the Company has two operating leases for facilities.

As of March 31, 2023, the Company has two operating leases for facilities.

During the quarter ended June 30, 2021, the Company renewed its Rockville MD facility lease by entering into a Second Lease Amendment which extends the lease term for 63 months beginning on September 1, 2022 and ending on December 31, 2027 at stated rental rates and including a 3-month rent abatement.

The Second Amendment also has options for a Tenant Improvement Allowance and a Second Extension Term.

The Second Amendment also gives the Company the right to expand their space by giving notice to the landlord before December 31, 2021.

The Second Amendment also gives the Company the right to expand its space by giving notice to the landlord before December 31, 2021.

The Company did not give notice to expand the space during 2021.

1 unchanged sentence

There is an option in this Second Amendment to Lease for the Company to borrow funds for tenant improvements subject to an 8.5 % interest rate.

The Company also leases research and office facilities in Barcelona Spain.

The Company also leases research and office facilities in Barcelona Spain for its 100 percent owned VCN subsidiary.

The current lease is short term agreement with a 90-day termination notice provision that can be exercised by either party.

On the closing date of the VCN Acquisition, a sublease was executed for the Company to lease research and office facilities at a new location in Parets del Valles (Barcelona) from the former owner of VCN.

On the closing date of the VCN acquisition, a sublease was executed for Theriva to lease research and office facilities at a new location in Parets del Valles (Barcelona) from the former owner of VCN.

This lease was executed for an initial term estimated to begin in January 2023 until October 2026, with an option to renew for an additional five years .

Operating lease costs are presented as part of general and administrative expenses in the condensed consolidated statements of operations, and for the three and nine months ended September 30, 2022 approximated $ 163,000 and $ 409,000 , respectively and for the three and nine months ended September 30, 2021 approximated $ 77,000 and $ 195,000 , respectively.

For the three and nine months ended September 30, 2022, operating cash flows used for operating leases approximated $ 142,000 and $ 399,000 , respectively.

For the three and nine months ended September 30, 2021, operating cash flows used for operating leases approximated $ 80,000 and $ 240,000 , respectively, and the right of use assets exchanged for operating the lease obligation was $ 1.3 million.

The day one non-cash addition of right of use assets due to adoption of ASC 842 was $ 538,000 .

A maturity analysis of our operating leases as of September 30, 2022 is as follows (amounts in thousands of dollars) :

Future undiscounted cash flow for the years ending September 30,

On January 15, 2023, the company moved into the facilities and the new lease commenced and the prior lease terminated.

Operating lease costs are presented as part of general and administrative expenses in the condensed consolidated statements of operations, and for the quarter ended March 31, 2023 and 2022 approximated $ 144,000 and $ 107,000 , respectively.

For the Barcelona lease, the day one non-cash addition of right of use assets due to adoption of ASC 842 was $ 937,000 .

A maturity analysis of our operating leases as of March 31, 2023 is as follows (amounts in thousands of dollars) :

Future undiscounted cash flow for the years ending March 31,

Discount factor

20 unchanged sentences

Subsequent Events

Effective October 12, 2022, the “Company, changed its name to Theriva Biologics, Inc.

by filing a Certificate of Amendment to its Articles of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada on October 11, 2022.

In addition, effective October 12, 2022, the Company amended and restated its Amended and Restated Bylaws (the “Bylaws”) to reflect the Name Change (the “Amended and Restated Bylaws”).

The Amended and Restated Bylaws contain no other changes.

In accordance with the Nevada Revised Statutes and the Bylaws, the Board approved the Amended and Restated Bylaws, and stockholder approval was not required for such amendment.

On October 11, 2022, the Company filed a Certificate of Change to its Articles of Incorporation (the “Certificate of Change”) with the Secretary of State of the State of Nevada that was effective on October 12, 2022 that increased the number of the Company’s authorized shares of common stock, $ 0.001 par value per share (the “Common Stock”), from 20,000,000 shares to 350,000,000 shares.

Effective May 10, 2023, The Company entered into a Separation Agreement and Release with Frank Tufaro (the “Separation Agreement”) and a consulting agreement with Mr.

Tufaro had entered into an employment agreement with the Company on March 22, 2022 (the “Employment Agreement”) to serve as our Chief Operating Officer.

In accordance with the terms of the Employment Agreement, the Separation Agreement provides for (i) the payment to Mr.

Tufaro of a total of $ 196,875 , paid in bi-monthly installments, less applicable withholding, for a period of six months, (ii) reimbursement of COBRA coverage for himself, his spouse and other eligible dependents for the lesser of:

six months or until he commences new employment or substantial self-employment, and (iii) acceleration of the vesting of his outstanding stock options (the “Option Awards”)and (iv) the extension of the period of time for which Mr.

Tufaro has the right to exercise any vested shares subject to options until the earlier of (i) the expiration date of the Option Awards, or (ii) six (6) months from the separation date.

The Separation Agreement contains mutual general releases of claims and non-disparagement provisions.

The Consulting Agreement has a term of six months unless sooner terminated.

Either party may terminate the Consulting Agreement without cause at any time upon thirty (days’ prior written notice or with cause immediately.

Tufaro will be compensated a set daily rate for each full day that he provides consulting services, pro-rated for any days services are provided less than eight hours.

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-Q

Item 1. Financial Statements