What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-06 compared with 2024-03-25 · 311 added, 360 removed, 840 unchanged (44% of the section changed)

39 unchanged sentences

Contingent Consideration – Fair value measurement

As discussed in Notes 3 and 5 to the consolidated financial statements, during 2022 the Company completed the acquisition of VCN Biosciences (“VCN”).

The purchase consideration transferred included contingent consideration of up to $70.25 million based on the

achievement of certain clinical and commercialization milestones of an acquired product, VCN-01, and was initially recorded at its estimated fair value as of the date of acquisition.

As discussed in Note 3 to the consolidated financial statements, during 2022 the Company completed the acquisition of VCN Biosciences (“VCN”).

The purchase consideration transferred included contingent consideration of up to $70.2 million based on the achievement of certain clinical and commercialization milestones of an acquired product, VCN-01, and was initially recorded at its estimated fair value as of the date of acquisition.

Subsequent to the date of acquisition, the Company reassesses the fair value at each balance sheet date and the contingent consideration liability was recorded at an estimated fair value of $7.0 million as of December 31, 2024 utilizing the discounted cash flow method.

We identified the determination of the fair value of the contingent consideration liability as a critical audit matter.

Under the discounted cash flow method, the key estimates and assumptions used in the valuation of the contingent consideration liability included management’s determination of the probability weighted estimates of future earn-out payments based on successful achievement of certain clinical and commercialization milestones, and the estimated discount rate applicable to the future payment periods.

Changes to these key estimates and assumptions could have a significant impact on the fair value of the contingent consideration liability.

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- Utilizing personnel with specialized knowledge and skills in valuation to assist in:

o evaluating the appropriateness of the valuation method;

o testing the mathematical accuracy of the Company’s calculations;

o evaluating the discount rate applied to future milestone payment periods.

(i) evaluating the appropriateness of the valuation method;

and (ii) evaluating the discount rate applied to future milestone payment periods.

In-Process Research and Development and Goodwill Impairment Assessment

As described in Notes 3 and 6 to the consolidated financial statements, the Company’s consolidated balances of In-process Research and Development (“IPR&D”) indefinite-lived intangible asset and Goodwill were $19.8 million and $5.7 million, respectively, as of December 31, 3023.

The Company reviews goodwill for impairment at least annually and or more frequently if events or circumstances indicate the carrying value at the reporting unit level might exceed its fair value.

As described in Notes 3 and 4 to the consolidated financial statements, the Company’s consolidated balances of In-process Research and Development (“IPR&D”) indefinite-lived intangible asset and Goodwill were $17.4 million and $0, respectively, as of December 31, 2024.

The Company reviews goodwill for impairment at least annually or more frequently if events or circumstances indicate the carrying value at the reporting unit level might exceed its fair value.

The IPR&D indefinite-lived intangibles are tested annually for impairment, or more frequently if events or circumstances indicate it is more likely than not the fair value is less than their carrying value.

The Company estimates the fair value of its reporting unit and certain IPR&D using an income approach.

The Company identified a triggering event during 2023 and performed an impairment analysis for Goodwill and certain IPR&D resulting in no impairment charges being recorded.

The Company identified triggering events during 2024 and performed impairment analyses for Goodwill and certain IPR&D resulting in total impairment charges recorded of $5.6 million and $1.3 million, respectively.

We identified the determination of the fair value of the Company’s reporting unit and certain IPR&D as a critical audit matter.

Under the income approach, the key assumptions used in the determination of the fair value of the reporting unit include estimates of future cash flows, the discount rate applicable to those future cash flow periods, and the implied control premium.

Under the income approach, the key assumptions used in the determination of the fair value of the reporting unit include estimates of future cash flows and the discount rate applicable to those future cash flow periods.

The key assumptions used in the determination of the fair value of certain IPR&D assets using the income approach include estimates of future cash flows and the discount rate applicable to those future cash flow periods.

Changes to these key assumptions could have a significant impact on the measurement of the fair value of the reporting unit and certain IPR&D.

Auditing management’s valuation methods and these assumptions involve especially challenging and subjective auditor judgment due to the nature and extent of auditor effort required to address these matters, including the specialized knowledge and skill needed.

Auditing management’s valuation methods and these assumptions involve especially challenging and

subjective auditor judgment due to the nature and extent of auditor effort required to address these matters, including the specialized knowledge and skill needed.

The primary procedures we performed to address this critical audit matter included:

- Evaluating reasonableness of estimated future cash flows by comparing forecasts to historical results.

- Evaluating the reasonableness of estimated future cash flows by comparing management’s assumptions to comparable external market and industry data.

- Utilizing personnel with specialized knowledge and skills in valuation to assist in:

o evaluating the reasonableness of valuation methods;

o testing the mathematical accuracy of the Company’s calculations;

o evaluating the reasonableness of assumptions for goodwill, including the discount rate applied to future cash flows, and implied control premium;

o evaluating the reasonableness of assumptions for IPR&D, including the discount rate applied to future cash flow assumptions;

o evaluating the reasonableness of the implied control premium by comparing the market capitalization of the Company to the fair value determined for the Company’s reporting unit.

(i) evaluating the reasonableness of valuation methods;

(ii) testing the mathematical accuracy of the Company’s calculations;

(iii) evaluating the reasonableness of the implied control premium;

and (iv) evaluating the reasonableness of the discount rate applied to future cash flows.

/s/ BDO USA, P.C .

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Accrued employee benefits

Contingent consideration, current portion

Deferred research and development tax credit-current portion

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Loan Payable - non-current

Deferred tax liabilities, net

Non-current deferred research and development tax credit

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Temporary Equity;

10,000,000 authorized

Series C convertible preferred stock, $ 0.001 par value;

10,000,000 authorized;

275,000 issued and outstanding

0 issued and outstanding at December 31, 2024, and 275,000 issued and outstanding at December 31, 2023

Series D convertible preferred stock, $ 0.001 par value;

10,000,000 authorized;

100,000 issued and outstanding

0 issued and outstanding at December 31, 2024 and 100,000 issued and outstanding at December 31, 2023

Stockholders’ Equity:

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Treasury stock at cost, 28,809 shares at December 31, 2024 and at December 31, 2023

Accumulated other comprehensive income (loss)

Accumulated other comprehensive (loss) income

Accumulated deficit

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Total Liabilities and Stockholders’ Equity

All share numbers have been retrospectively adjusted for the one to twenty-five reverse stock split effective August 26, 2024

See accompanying notes to consolidated financial statements

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Research and development

In-process research and development impairment

Goodwill impairment

Total Operating Costs and Expenses

1 unchanged sentence

Other Income:

Foreign currency exhange gain (loss)

Foreign currency exchange (loss) gain

Interest income

2 unchanged sentences

Income tax benefit

Net Loss Attributable to Theriva Biologics, Inc.

and Subsidiaries

Effect of Warrant exercise price adjustment

Net Loss Attributable to Common Stockholders

1 unchanged sentence

Weighted average number of shares outstanding during the period - basic and dilutive

Gain (loss) on foreign currency translation

(Loss) gain (loss) on foreign currency translation

Total comprehensive loss

All share numbers have been retrospectively adjusted for the one to twenty-five reverse stock split effective August 26, 2024

See accompanying notes to consolidated financial statements

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Stock-based compensation

Issuance of Common Stock for VCN Acquisition

Foreign currency exhange loss

Treasury Stock

Stock issued under “at-the-market” offering

Foreign currency exchange gains

Balance at December 31, 2023

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Stock issued under “at-the-market” offering

Foreign currency exhange gains

Issuance of Common Stock and Warrants, net of issuance costs

Series C Preferred Stock conversion to Common

Series D Preferred Stock conversion to Common

Conversion of Pre-Funded Warrants to Common

Foreign currency exchange loss

Balance at December 31, 2024

All share numbers have been retrospectively adjusted for the one to twenty-five reverse stock split effective August 26, 2024

See accompanying notes to consolidated financial statements

8 unchanged sentences

Income tax benefit

In-process research and development impairment

Goodwill impairment

Change in fair value of contingent consideration

1 unchanged sentence

Non - cash lease expense

Deferred research and development tax credit

Changes in operating assets and liabilities:

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Purchases of property and equipment

Cash paid for business combination;

net of cash acquired

Pre-acquisition loan to VCN

Net Cash Used In Investing Activities

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Proceeds from issuance under at - the - market offering, net of issuance cost

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

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

Payment of contingent consideration

Purchase of treasury stock

Net Cash Provided By (Used In) Financing Activities

Effects of foreign currency on cash

Proceeds from issuance Common Stock and Warrants offering, net of issuance costs

Net Cash Provided By Financing Activities

Effects of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents and restricted cash

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

Reconciliation of cash, cash equivalents, and restricted cash reported in the statement of financial position

Reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet

Cash and cash equivalents

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Supplemental non-cash investing and financing activities:

Conversion of Series C Preferred Stock to Common Shares

Conversion of Series D Preferred Stock to Common Shares

Right of use assets obtained in exchange for lease liabilities

Fair value of contingent consideration issued 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

All share numbers have been retrospectively adjusted for the one to twenty-five reverse stock split effective August 26, 2024

See accompanying notes to 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 Theriva Biologics S.L.

As a result of the acquisition in March 2022 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, to improve access of co-administered cancer therapies to the tumor, and to promote a robust and sustained anti-tumor response by the patient’s immune system.

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(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, the Company’s acquired subsidiary VCN Biosciences, S.L.

rebranded to Theriva Biologics, S.L.

without other changes to its corporate structure.

Corporate Structure and 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 and then increased to 350,000,000 after obtaining approval of the Company’s shareolders at the 2022 annual meeting of stockholders.

On August 15, 2024, 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 twenty - five (25) shares of common stock (the “Reverse Stock Split”).

The Reverse Stock Split was effective on August 26, 2024 (the “Effective Time).

As a result of the Reverse Stock Split, each twenty - five (25) pre-split shares of common stock outstanding will automatically combine into one (1) new share of common stock without any action on the part of the holders, and the number of outstanding shares common stock will be reduced from 25,131,230 shares to 1,005,249 shares (subject to rounding of fractional shares) and the number of authorized shares of common stock was reduced from 350,000,000 share to 14,000,000 shares and then increased to 350,000,000 after obtaining approval of the Company’s shareholders at the 2024 annual meeting of stockholders.

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 25, received, in lieu of a fractional share, that number of shares rounded up to the nearest whole share.

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All subsidiaries were formed under the laws of the State of Delaware on January 8, 2001, except for EPI, which was incorporated in Delaware on December 12, 2000, Epitope which was incorporated in Delaware in January 2002, Putney which was incorporated in Delaware in November 2006, Healthmine which was incorporated in Delaware in December 2007 and SYN Biomics which was incorporated in Nevada in December 2013.

As of December 31, 2023, the Company had a significant accumulated deficit of $ 309,318 , and the Company has experienced significant losses and incurred negative cash flows since inception.

As of December 31, 2024, the Company had a significant accumulated deficit of $ 335 million, and the Company has experienced significant losses and incurred negative cash flows since inception.

The Company expects to continue incurring losses for the foreseeable future, with the recognition of revenue being contingent on successful phase 3 clinical trials and requisite approvals by the FDA or foreign equivalents.

3 unchanged sentences

During the year ended December 31, 2024, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $ 25.7 million.

The Company believes it will be able to fund its operations through the fourth quarter of 2024 and into the first quarter of 2025.

The Company believes it will be able to fund its operations into the third quarter of 2025.

However, the actual amount of additional capital needed by the Company will also depend upon the costs to advance its VCN-01 clinical programs and whether it continues to develop SYN-004 internally, or out-licenses or partners such development.

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At December 31, 2024 the Company had cash and cash equivalents of approximately $ 11.6 million.

Based upon the Company’s current business plans, management believes that the Company’s current cash on hand will be sufficient to fully execute its plans through December 31, 2024.

Based upon the Company’s current business plans, management believes that the Company’s current cash on hand will be sufficient to fully execute its plans into the third quarter of 2025.

Commencement of planned future clinical trials is subject to the Company’s successful pursuit of opportunities that will allow it to establish the clinical infrastructure and financial resources necessary to successfully initiate and complete its plan.

The Company anticipates its current cash will allow it to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research efforts, including completing its funding requirements for its ongoing current trials for VCN-01 and the on-going testing of SYN-004 (ribaxamase).

The Company anticipates its current cash will allow it to cover overhead costs, manufacturing costs for near - term clinical supply and limited research efforts, including completing its funding requirements for its ongoing current trials for VCN-01.

The Company will be required to obtain additional funding in order to continue the development of its current product candidates within the anticipated time periods (including initiation of its planned future clinical trials), if at all, and to continue to fund operations at the current cash expenditure levels.

Currently, the Company does not have commitments from any third parties to provide it with capital.

Potential sources of financing include strategic relationships, public or private sales of equity (including through the ATM sales agreement) or debt and other sources.

The Company cannot assure that it will meet the requirements for use of the ATM Sales Agreement or that additional funding will be available on favorable terms, or at all.

Current cash is expected to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research efforts.

Potential sources of financing include strategic relationships, public or private sales of equity (including through its at the market offering sales agreement (the "ATM Sales Agreement")) or debt and other sources.

The Company cannot assure that it will meet the requirements for use of the ATM Sales Agreement or that additional funding will be available on favorable terms at all.

If the Company fails to obtain additional funding for its clinical trials, whether through the sale of securities or a partner or collaborator, and otherwise when needed, it will not be able to execute its business plan as planned and will be forced to cease certain development activities (including initiation of planned clinical trials) until funding is received and its business will suffer, which would have a material adverse effect on its financial position, results of operations and cash flows.

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Such estimates and assumptions impact, among others, the following:

the estimated useful lives for property and equipment, research and development costs, business combinations, contingent consideration, fair value of long-lived assets, warrants, preferred stock and stock options granted for services or compensation, respectively, and the valuation allowance for deferred tax assets due to continuing and expected future operating losses.

the estimated useful lives for property and equipment, research and development costs, valuation of Goodwill and IPRD, contingent consideration, and impairment of long-lived assets.

Making estimates requires management to exercise significant judgment.

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Lesser of estimated useful life or lease term

Depreciation and amortization expense was approximately $ 135,000 and $ 85,000 for the years ended December 31, 2023 and 2022, respectively.

Depreciation expense was approximately $ 137,000 and $ 135,000 for the years ended December 31, 2024 and 2023, respectively.

When assets are disposed of, the cost and accumulated depreciation are removed from the accounts with any gain or loss reported in the consolidated statement of operations.

6 unchanged sentences

Summary of Significant Accounting Policies – (continued)

Business Combination

The Company accounts for acquisitions using the acquisition method of accounting, which requires that all identifiable assets acquired, and liabilities assumed be recorded at their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of identifiable assets and liabilities is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions.

Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired patented technology.

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 5), 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.

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.

6 unchanged sentences

The key assumptions used to value IPR&D include estimates of future cash flows and to the discount rate applicable to the future cash flow periods.

During the quarter ended September 30, 2023, 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 for impairment.

As a result the Company performed an impairment analysis and concluded that there was no impairment as of September 30, 2023.

During the quarters ended June 30, 2024 and September 30, 2024, 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 for impairment.

The Company performed an interim impairment analysis using both the replacement cost method and the "Income approach" that requires significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post - launch cash flows and a risk - adjusted weighted average cost of capital.

For the quarter ended June 30, 2024, the Company concluded that the IPR&D was not impaired, however for the quarter ended September 30, 2024, the Company concluded that the in-process R&D with a carrying value of $ 19.8 million was impaired and was written down to its estimated fair value of $ 18.6 million and an impairment charge of $ 1.3 million was recorded.

This interim analysis satisfied the requirements of the annual impairment test as the same information would be required for both measurement dates.

There were no impairment charges recorded during 2023 and 2022.

There were no impairment charges recorded for the year ended December 31, 2023.

The Company tests the carrying amounts of goodwill for recoverability on an annual basis on October 1 or more frequently if events or changes in circumstances indicate that the asset might be impaired.

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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.

The key assumptions used to value the reporting unit include estimates of future cash flows, the discount rate applicable and those future cash flow periods, and the implied control premium.

The key assumptions used to value the reporting unit include estimates of future cash flows, the discount rate applicable and those future cash flow periods.

Our estimates of fair value give consideration to the level of implied control premium which is the amount a buyer is willing to pay over the current market price of a company (i.e.

market capitalization) to acquire a controlling interest.

The Company performed an interim impairment analysis using both the "Income approach" that requires significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post - launch cash flows and a risk - adjusted weighted average cost of capital.

For the quarter ended June 30, 2024, the Company concluded that goodwill with a carrying value of $ 5.6 million was written down to its estimated fair value of $ 1.5 million and an impairment charge of $ 4.1 million was recorded during the quarter ended June 30, 2024.

For the quarter ended September 30, 2024 the Company concluded that goodwill with a carrying value of $ 1.5 million was impaired and was written down to its estimated fair value of zero and an impairment charge of $ 1.5 million was recorded.

This interim analysis satisfied the requirements of the annual impairment test as the same information would be required for both measurement dates.

There were no impairment charges recorded for the year ended December 31, 2023.

Theriva Biologics, Inc.

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Summary of Significant Accounting Policies – (continued)

As a result the Company performed an impairment analysis and concluded that there was no impairment as of September 30, 2023.

This interim analysis satisfied the requirements of the annual impairment test as the same information would be required for both measurement dates.

There were no impairment charges as of December 31, 2023 and 2022.

Contingent Consideration

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Subsequent to the date of acquisition, the Company reassesses the actual consideration earned and the probability-weighted future earn-out payments at each balance sheet date.

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

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

Any adjustment to the contingent consideration liability will be recorded in the consolidated statements of operations.

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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 year ended December 31, 2022 includes the effect of the Series C and D preferred stock price adjustment of $ 0.3 million.

The number of shares of common stock underlying Series C and D Preferred shares convertible to common stock that were excluded from the computation of the net loss per common share for the year ended December 31, 2023 and 2022 was 2,459,016 .

The number of eligible options and warrants for the purchase of common stock that were excluded from the computations of net loss per common share for the year ended December 31, 2023 were 4,375,781 and zero , respectively, and for the year ended December 31, 2022 were 2,295,898 and 634,426 , respectively, because their effect is anti-dilutive.

There were no shares of common stock underlying Series C and D Preferred shares excluded from the computation of net loss per common share for the year ended December 31, 2024, all were exercised in 2024.

The number of eligible options and warrants for the purchase of common stock that were excluded from the computations of net loss per common share for the year ended December 31, 2024 were 175,034 and 1,428,600 , respectively, and for the year ended December 31, 2023 were 175,049 and zero , respectively, because their effect is anti-dilutive.

Theriva Biologics, Inc.

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At December 31, 2024 and 2023, the Company has accrued CRO expenses of $ 2.4 million and $ 1.7 million, respectively, that are included in accrued expenses.

As of December 31, 2023, and 2022, the Company has prepaid CRO costs of $ 1.1 million and $ 2.3 million, respectively, that are included in prepaid expenses.

As of December 31, 2024, and 2023, the Company has prepaid CRO costs of $ 365,000 and $ 1.1 million, respectively, that are included in prepaid expenses.

The Company assesses all contracts at inception to determine whether a lease exists.

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The Company, through its Theriva S.L.

subsidiary, participates in a Research and Development program sponsored by the Spanish government.

subsidiary, participates in a Research and Development incentive program sponsored by the Spanish government.

The program provides for reimbursement of certain expenses incurred in research and development efforts the Company incurs in Spain.

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The carrying value of the loans payable approximate fair value and are classified under level 2.

In connection with the Acquisition of VCN, the Company was required to pay up to $ 70.2 million in additional consideration upon the achievement of certain milestones, including regulatory filings completed noted in Note 5.

In connection with the Acquisition of VCN, the Company was required to pay up to $ 70.2 million in additional consideration upon the achievement of certain milestones, including regulatory filings.

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

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

The fair value of the contingent consideration was $ 6.3 million as of December 31, 2023 and is all reflected as non-current contingent consideration liability.

There were no transfers in or out of the level 3 liabilities during the years ended December 31, 2023 and 2022 , with the exception of the reclassification of $ 3.25 million related to the milestone that was met in the current year and reclassified to accrued expenses and paid prior to year end.

The fair value of the contingent consideration was $ 7.0 million as of December 31, 2024 and is reflected as non-current contingent consideration liability.

There were no transfers in or out of the level 3 liabilities during the years ended December 31, 2024 and 2023.

During the year ended December 31, 2024 and 2023, the Company recognized in operating expense a $ 699,000 increase and $ 660,000 decrease, respectfully, fair value adjustment to contingent consideration.

Theriva Biologics, Inc.

4 unchanged sentences

(in thousands)

Balance at March 10, 2022

Balance at December 31, 2022

Payment of contingent consideration

6 unchanged sentences

Balance at December 31, 2023

Payment of contingent consideration

Change in fair value

43 unchanged sentences

5.3 % to 48.8

The Company measures certain non - financial assets on a non - recurring basis, including goodwill and in - process R&D.

As a result of those measurements, during the year ended December 31, 2024 in - process R&D with a carrying value of $ 19.8 million was written down to its estimated fair value of $ 18.6 million and an impairment charge of $ 1.3 million was recorded, and goodwill with a carrying value of $ 5.6 million was written down to its estimated fair value of zero and an impairment charge of $ 5.6 million was recorded.

This analysis requires significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post - launch cash flows and a risk - adjusted weighted average cost of capital.

The fair value of the Company's reporting unit was determined using an income approach that utilizes a discounted cash flow model.

The discounted cash flow models are dependent upon the Company's estimates of future cash flows and other factors.

The Company's estimates of future cash flows are based on a comprehensive product by product forecast over a period which covers Phase 1 to approval and 15 years of commercialized revenue and involve assumptions concerning (i) future operating performance, including research and development costs through approval of the drug, the future addressable market, future sales, long - term growth rates, operating margins, allocation and timing of cash flows and the probability of achieving the estimated cash flows and (ii) future economic conditions, all which may differ from actual future cash flows.

Assumptions related to future operating performance are based on management's annual and ongoing budgeting, forecasting and planning processes and represent the Company's best estimate of the future results of its operations as of a point in time.

These estimates are subject to many assumptions, such as the economic environments in which it operates, demand for the products and competitor actions.

Estimated future cash flows are discounted to present value using a market participant, weighted average cost of capital, which considers the risk inherent in the probability adjusted future cash flows from each product.

The financial and credit market volatility directly impacts certain inputs and assumptions used to develop the weighted average cost of capital such as the risk - free interest rate, industry beta, debt interest rate and the Company's market capital structure.

These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.

The use of different inputs and assumptions could increase or decrease the Company's estimated discounted future cash flows, the resulting estimated fair values and the amounts of related goodwill impairments, if any.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies – (continued)

Stock-Based Payment Arrangements

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Segment information

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Company operates in one operating segment engaged in the research, development and commercialization of therapeutic drugs in which revenues are derived from product, license, and contract revenues.

Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by the chief operating decision maker (CODM), the chief executive officer, in deciding how to allocate resources and assessing performance.

The Company’s CODM allocates resources and assesses performance based upon discrete financial information at the consolidated level.

The Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer.

The CODM is assisted in his responsibilities of making decisions regarding resource allocation and performance assessment by the leadership team, consisting of the General Director and Head of Corporate and Product Development.

The Company views its operations and manages its business as one operating segment, focused on the discovery and development of oncolytic viruses intended to overcome the protective barrier surrounding solid tumors and selectively kill tumor cells.

The segment-level financial statement information is the same as the financial information presented in the statement of operations and comprehensive loss.

The Company monitors its cash and cash equivalents as reported on the Company’s Balance Sheets to determine funding for its research and development.

As the Company does not currently generate revenue, the CODM assesses Company performance through the achievement of pre-clinical and clinical research goals.

In addition to the Company’s Statement of Operations and Comprehensive Loss, the CODM is regularly provided with budgeted and forecasted expense information which is used to determine the Company’s liquidity needs and cash allocation.

Foreign Currencies

1 unchanged sentence

subsidiary is the Euro.

VCN’s Assets and liabilities are translated to U.S.

Theriva S.L.'s Assets and liabilities are translated to U.S.

dollars based on exchange rates at the end of each reporting period.

2 unchanged sentences

Transaction gains and losses are classified as other income (expense) net in the accompanying consolidated statements of operations.

Summary of Significant Accounting Policies – (continued)

The Company accounts for income taxes under the liability method;

5 unchanged sentences

The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies – (continued)

Recent Accounting Pronouncements and Developments

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 .

This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related earnings per share guidance for both Subtopics.

The ASU is effective for annual reporting periods after December 15, 2023 and interim periods within those annual periods and early adoption is permitted in annual reporting periods ending after December 15, 2020.

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 third quarter, specifically the cash conversion and beneficial conversion features.

On November 2024, the FASB issued ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The ASU requires more detailed disclosures about the types of expenses in commonly presented expense captions such as cost of sales, selling, general and administrative expenses and research and development expenses.

This includes separate footnote disclosure for expenses such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization.

Public business entities are required to apply the guidance prospectively and may apply it retrospectively.

The ASU's amendments are effective for public business entities for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Public business entities are required to apply the guidance prospectively and may apply it retrospectively.

The Company is currently evaluating the effect of adopting this ASU.

In December 2023, the FASB issued final guidance in ASU No.

2 unchanged sentences

For public business entities, the guidance is effective for annual periods beginning after December 15, 2024.

The Company is not early adopting, and therefore, this ASU is not adopted in the current period.

The Company is not early adopting this ASU, and therefore, this ASU is not adopted in the current period.

The Company does not expect this ASU to have a material impact on the consolidated financial statements.

4 unchanged sentences

For public business entities, the guidance is effective for annual periods beginning after December 15, 2024.

The Company is not early adopting, and therefore is not adopted in the current period.

The Company does not expect this ASU to have a material impact on the consolidated financial statements.

The Company adopted this standard for the Company’s fiscal year 2024 annual reporting period.

Goodwill and Intangibles

The following table provides the Company’s Goodwill as of December 31, 2024.

Goodwill (in thousands)

Balance at December 31, 2023

Goodwill impairment

Effects of exchange rates

Balance at September December 31, 2024

The following table provides the Company’s in-process R&D as of December 31, 2024.

R&D (in thousands)

Balance at December 31, 2023

In-process R&D impairment

Effects of exchange rates

Balance at December 31, 2024

During the quarters ended June 30, 2024 and September 30, 2024, 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 for impairment.

The Company performed an interim impairment analysis using both the replacement cost method and the “Income approach” that requires significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post-launch cash flows and a risk-adjusted weighted average cost of capital.

Theriva Biologics, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

Goodwill and Intangibles – (continued)

This interim analysis satisfied the requirements of the annual impairment test as the same information would be required for both measurement dates.

There were no impairment charges recorded for the year ended December 31, 2023.

For the quarter ended June 30, 2024 the Company concluded that the IPR&D was not impaired however, for the quarter ended September 30, 2024, the Company concluded that the in-process R&D with a carrying value of $ 19.8 million was impaired and was written down to its estimated fair value of $ 18.6 million and an impairment charge of $ 1.3 million was recorded.

This interim analysis satisfied the requirements of the annual impairment test as the same information would be required for both measurement dates.

There were no impairment charges recorded for the year ended December 31, 2023.

Research and Development Tax Credits

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The reimbursements can be through either tax credits or direct refunds.

The program provides for certain limits on the types and amounts of expenses and requires participants to complete a certification and apply for the refund annually.

The program provides for certain limits on the types and amounts of expenses for which reimbursement may be sought and requires participants to complete a certification and apply for the refund annually.

Subsequent to the period in which expenses are incurred, the program requires participants to maintain certain workforce levels and research and development expenditures over a 24 -month period.

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The Company received approvals from the Spanish government in September and October 2023.

Research and Development Tax Credits – (continued)

During the quarter ended June 30, 2024, the Company completed the certification and applied for direct reimbursement for its qualifying research and development expenses incurred in the year ended December 31, 2023.

The Company received approvals from the Spanish government in December 31, 2024.

The Company evaluated the program and concluded that it qualified to be accounted for as government assistance.

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GAAP, elected to account for the grant by analogizing to the guidance provided by International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance.

Accordingly, the Company recognized a tax credit receivable related to amounts that had been approved by the Spanish government prior to September 30, 2023 and a corresponding deferred research and development tax credit as it was determined that amounts became probable of being recognized in future periods.

Additionally, the Company has elected to account for the tax credit as a contra-expense as this most appropriately reflects the nature of the transaction and will reduce future research and development expenditures over a 24-month period beginning January 1, 2024

Business Combination

On March 10, 2022 (the “Closing”), 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.

The Company’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 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.

Degrading the tumor stroma has been shown to improve access to the tumor by the virus and additional therapies such as chemo and immunotherapies.

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

VCN 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 metastatic pancreatic ductal adenocarcinoma (“PDAC”).

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

In August 2023, the Company initiated patient dosing in the U.S.

in its Phase 2 clinical trial of VCN-01 in PDAC.

As a result, the Company paid Grifols $ 3.25 million in the fourth quarter of 2023.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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.

At the Closing, VCN and Grifols entered into a sublease agreement for laboratory and office space which didn’t commence until January 2023 as well as a transitional services agreement.

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 general and administrative expenses within a budgetary plan of approximately $ 27.8 million.

Business Combination – (continued)

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

Cash paid at Closing

Receivable from VCN “effectively settled“

Fair value of common shares issued

Fair value of contingent consideration

As of December 31, 2023 and December 31, 2022, the fair value of the contingent consideration was approximately $ 6.3 million and $ 10.2 million, respectively.

During the year ended December 31, 2023, the Company recognized in operating expense a $ 0.7 million, decrease in the fair value of the contingent consideration.

Upon initiation of patient dosing in the U.S.

during the three months ended September 30, 2023, $ 3.25 million that had previously been included as contingent consideration, was paid to Grifols during the quarter ending December 31, 2023.

During the year ended December 31, 2022, the Company recognized in operating expense a $ 2.1 million increase in the fair value of the contingent consideration.

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

($in thousands)

Cash and cash equivalents

Property and equipment

In-process research and development intangible asset

Deferred tax liabilities, net

Accounts payable

Accrued expenses

Accrued employee benefits

Loans payable-current

Other long-term liabilities

Total purchase consideration

The net assets were recorded at their estimated fair value.

In valuing acquired assets and liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates.

In connection with the Acquisition, the Company recognized $ 19.7 million of indefinite-lived in-process research and development intangible assets.

Working capital balances were recorded at their carrying value as they approximated fair value due to nature of the assets and short term duration of the liabilities.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Goodwill is considered an indefinite-lived asset and relates primarily to intangible assets that do not qualify for separate recognition, such as the assembled workforce and synergies between the entities.

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

Business Combination – (continued)

VCN operations recorded a net loss of $ 5.8 million from the date of Acquisition through December 31, 2022 and $ 11.4 million for the year ended December 31, 2023.

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 during the measurement period, was a reduction in accrued liabilities of $ 277,000 , an increase in other receivables of $ 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):

(in thousands)

Transaction Costs

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

There were no acquisition costs incurred during the year ended December 31, 2023.

Goodwill and Intangibles

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

Goodwill (in thousands)

Balance at December 31, 2022

Effects of exchange rates

Balance at December 31, 2023

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

R&D (in thousands)

Balance at December 31, 2022

Effects of exchange rates

Balance at December 31, 2023

Accordingly, the Company recognized a tax credit receivable of $ 3.2 million related to amounts that had been approved by the Spanish government and a corresponding deferred research and development tax credit current portion of $ 1.6 million and a deferred research and development tax credit non-current portion of $ 762,000 as it was determined that amounts became probable of being received upon the receipt of the approval.

During the year ending December 31, 2024 the Company recorded $ 888,000 , as a reduction in research and development expense.

Theriva Biologics, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

During the quarters ended September 30, 2023 and 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 triggering event for impairment.

The Company performed an interim impairment analysis and concluded that the Goodwill and IPR&D were not impaired as of September 30, 2023.

This interim analysis also satisfied the requirements of the annual impairment test.

There were no impairment charges recorded during 2023 and 2022.

Selected Balance Sheet Information

PREPAID EXPENSES AND OTHER CURRENT ASSETS (in thousands):

Prepaid clinical research organizations

Prepaid insurance

Prepaid manufacturing expenses

Prepaid insurance

Prepaid clinical research organizations

Prepaid consulting, subscriptions and other expenses

VAT receivable

Receivable from Grifols

Total prepaid expsnese and other current assets

Total prepaid expenses and other current assets

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.

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

PROPERTY AND EQUIPMENT (in thousands)

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Accrued vendor payments

Total accrued expesnes

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Selected Balance Sheet Information – (continued)

Total accrued expenses

ACCRUED EMPLOYEE BENEFITS (in thousands)

3 unchanged sentences

Total accrued employee benefits

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Stock-Based Compensation

Stock Incentive Plan

On March 20, 2007, the Company’s Board of Directors approved the 2007 Stock Incentive Plan (the “2007 Stock Plan”) for the issuance of up to 7,143 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.

This plan was approved by the stockholders on November 2, 2007.

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 December 31, 2023, there were 86 options issued and outstanding under the 2007 Stock Plan.

Only options were issued under the 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 343 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.

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.

From time to time the number of shares authorized for awards was increased such that 16,000 were authorized as of September 5, 2019.

The exercise price of stock options under the 2010 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 was granted.

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

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On September 17, 2020, the stockholders approved and adopted the 2020 Stock Incentive Plan ("2020 Stock Plan") for the issuance of up to 16,000 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.

The number of shares authorized for options was increased such that 7,000,000 were authorized as of December 31, 2022.

The number of shares authorized for awards under the 2020 Stock Plan was increased such that 2,500,000 shares were authorized as of December 31, 2024.

As of December 31, 2024, there were 167,364 options issued and outstanding under the 2020 Stock Plan.

Only options were issued under the plan.

Only options have been issued under the plan.

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

1 unchanged sentence

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

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Stock-Based Compensation – (continued)

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

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The Company estimates the expected life of the option term based on the weighted average life between the dates that options become fully vested and the maximum life of options granted.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Stock-Based Compensation – (continued)

The Company records stock-based compensation based upon the stated vesting provisions in the related agreements.

11 unchanged sentences

● monthly over three years.

During the years ended December 31, 2024 and 2023, the Company granted 420 and 87,800 , respectively, options to purchase shares of common stock to employees and directors having an approximate fair value of $ 1,500 and $ 0.9 million, respectively, based upon the Black-Scholes option pricing model, respectively.

Stock-based compensation expense included in general and administrative expenses and research and development expenses relating to stock options issued to employees for the years ended December 31, 2024 and 2023 was $ 462,000 and $ 373,000 , 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 years ended December 31, 2024 and 2023 was $ 209,000 and $ 179,000 , respectively.

Theriva Biologics, Inc.

2 unchanged sentences

Stock-Based Compensation – (continued)

During the years ended December 31, 2023 and 2022, the Company granted 2,195,000 and 1,728,000 options to employees and directors having an approximate fair value of $ 0.9 million and $ 0.7 million based upon the Black-Scholes option pricing model, respectively.

Stock-based compensation expense included in general and administrative expenses and research and development expenses relating to stock options issued to employees for the years ended December 31, 2023 and 2022 was $ 373,000 and $ 260,000 , 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 years ended December 31, 2023 and 2022 was $ 179,000 and $ 215,000 , respectively.

A summary of stock option activity for the years ended December 31, 2024 and 2023 is as follows:

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Weighted average grant date fair value - December 31, 2024

Grant date fair value of options granted - December 31, 2022

Weighted average grant date fair value - December 31, 2022

Grant date fair value of options granted - year ended December 31, 2023

Weighted average grant date fair value - year ended December 31, 2023

The options outstanding and exercisable at December 31, 2024 are as follows:

9 unchanged sentences

Stock-Based Compensation – (continued)

As of December 31, 2023, total unrecognized stock-based compensation expense related to stock options was $ 1.3 million which is expected to be expensed through December 2026.

As of December 31, 2024, total unrecognized stock-based compensation expense related to stock options was $ 596,000 which is expected to be expensed through September 2026.

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.

3 unchanged sentences

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, warrants 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 ATM 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 of $ 0.9 million during the year ended December 31, 2020, which reduces the income available to common stockholders.

In addition, pursuant to the underwriting agreement that the Company had entered into with A.G.P./Alliance Global Partners (the “Underwriters”), as representative of the underwriters, 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.

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.

If, at the time of exercise, there is no effective registration statement registering, or no current prospectus available for the issuance of the shares of Common Stock to the holder, then the Warrants may only be exercised through a cashless exercise.

No fractional shares of Common Stock will be issued in connection with the exercise of a Warrant.

In lieu of fractional shares, the holder will receive an amount in cash equal to the fractional amount multiplied by the fair market value of any such fractional shares.

The Company has concluded that the Warrants are required to be equity classified.

The Warrants were valued on the date of grant using Monte Carlo simulations.

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 years ended December 31, 2023 and 2022.

The Warrants have expired in October 2023 and are no longer outstanding.

Upon expiration, the balance in additional paid-in capital related to the warrants was transferred to the additional paid-in capital balance related to common stock with no effect on additional paid-in capital.

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 and had no impact to the Stockholders equity.

On September 27, 2024, the Company consummated a public offering (the “Offering”) of an aggregate of (i) 918,600 shares (the “Shares”) of Common Stock, (ii) pre-funded warrants (“Pre-Funded Warrants”) to purchase up to 510,000 shares of Common Stock (the “Pre-Funded Warrant Shares”), and (iii) Common Stock purchase warrants (“Common Warrants”) to purchase up to 1,428,600 shares of Common Stock (the “Common Warrant Shares”).

Each Share and associated Common Warrant to purchase one (1) Common Warrant Share was sold at a combined public offering price of $ 1.75 .

Each Pre-Funded Warrant and associated Common Warrant to purchase one (1) Common Warrant Share was sold at a combined public offering price of $ 1.7499 .

The Company received aggregate gross proceeds from the Offering of approximately $ 2.5 million, before deducting placement agent fees and other offering expenses.

The Company intends to use the proceeds of the Offering primarily for working capital and general corporate purposes, including research and development and manufacturing scale-up and may use a portion of the proceeds to invest in or acquire other products, businesses or technologies.

Each Pre-Funded Warrant was immediately exercisable for one (1) Pre-Funded Warrant Shares at an exercise price of $ 0.0001 per share and was to remain exercisable until the Pre-Funded Warrants are exercised in full.

Each Common Warrant has an exercise price of $ 2.00 per share, is immediately exercisable for one (1) Common Warrant Share, and expires five (5) years from its issuance date.

The Shares, Pre-Funded Warrants and accompanying Common Warrants were issued separately.

The exercise price of the Common Warrants and the Pre-Funded Warrants and number of shares of Common Stock issuable upon exercise will adjust in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events.

The Common Warrants may be exercised on a cashless basis if at the time of exercise thereof there is no effective registration statement registering, or the prospectus contained therein is not available for, the issuance of the Common Warrant Shares to the holder.

The Pre-Funded Warrants could be exercised on a cashless basis at any time.

A holder of the Common Warrants and the Pre-Funded Warrants (together with its affiliates) may not exercise any portion of the Common Warrant or Pre-Funded Warrant to the extent that the holder would own more than 4.99 % (or 9.99 %, at the election of the holder) of the outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days ’ prior notice from the holder to the Company, the holder may increase the amount of beneficial ownership of outstanding shares after exercising the holder’s Common Warrants or Pre-Funded Warrants up to 9.99 % of the number of the Company’s shares of Common Stock outstanding immediately after giving effect to the exercise.

The Company has concluded that the Common Warrants and Pre-Funded Warrants are required to be equity classified.

The Common Warrants were valued on the date of grant using Black Scholes model.

During the year ended December 31, there were zero Common Warrants exercised and as of December 31, 2024, 510,000 Pre-Funded warrants were exercised.

Theriva Biologics, Inc.

2 unchanged sentences

Stock Warrants – (continued)

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

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, warrants 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.

The Warrants were valued on the date of grant using Monte Carlo simulations.

There were no Warrants exercised during the year ended December 31, 2023.

The Warrants expired in October 2023 and are no longer outstanding.

Upon expiration, the balance in additional paid - in capital related to the warrants was transferred to the additional paid - in capital balance related to Common Stock with no effect on additional paid - in capital.

A summary of all warrant activity for the Company for the year ended December 31, 2024 and the year ended December 31, 2023 is as follows:

Weighted Average

5 unchanged sentences

Balance at December 31, 2024

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Stockholders’ Equity

5 unchanged sentences

The Company included certain proposals at its 2022 annual meeting of stockholders, including (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) 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 and (ii) vote the shares of the Series C Preferred Stock purchased in the Offering in favor of the Stockholder Items.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Stockholders’ Equity – (continued)

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 being proposed at the 2022 annual meeting of stockholders was effected or October 26, 2022 and (ii) vote the shares of the Series C Preferred Stock purchased in the Offering in favor of the Stockholder Items.

The authorized increase was effected prior to October 26, 2022.

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 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 (as defined therein) 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.

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

The Conversion Price may be adjusted pursuant to the Certificates of Designation for stock dividends and stock splits, subsequent rights offering, pro rata distributions of dividends or the occurrence of a fundamental transaction (as defined in the applicable Certificate of Designation).

The Series C Preferred Stock and Series D Preferred Stock are classified as temporary equity as a result of the deemed liquidation provision.

The Series C Preferred Stock and Series D Preferred Stock were classified as temporary equity as a result of the deemed liquidation provision.

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.

Stock Repurchase

On December 22, 2022, the Company repurchased an aggregate of approximately 720,000 shares of its common stock, par value $ 0.001 from three founders of its subsidiary Theriva Biologics S.L.

(formerly known as VCN Biosciences S.L.) in a privately negotiated transaction pursuant to the terms of a Share Repurchase Agreement entered into on December 20, 2022 with each of the Selling Stockholders.

The price per share was $ 0.4001 , which was the closing price of the Common Stock on the day prior to the closing for an aggregate purchase price was $ 288,072 .

The closing was subject to fulfillment of certain conditions, including delivery of certain closing documents.

The Share Repurchase Agreement contains customary representations, warranties and covenants of the parties.

The repurchase was funded from the Company’s cash on hand and the shares to be repurchased will be held as treasury stock.

The Selling Stockholders acquired the shares of the Company’s Common Stock as consideration for the sale of their shares of the subsidiary to the Company in March 2022.

Riley Securities and Alliance Global Partners Sales Agreement

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) 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.

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.

During the year ended December 31, 2023, the Company sold through the Amended and Restated Sales Agreement approximately 2.0 million shares of the Company’s common stock and received net proceeds of approximately $ 2.2 million.

During the year ended December 31, 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.

During year ending December 31, 2024, the Company issued 72,132 shares of its Common Stock upon the conversion effected by the holder of the Series C Preferred of 275,000 shares of its Series C convertible Preferred Stock at a conversion price of $ 30.50 per share.

As a result of the conversions during the year ending December 31, 2024, the Company reduced the Series C Preferred Stock $ 2.0 million and Additional Paid in Capital $ 2.0 million.

There are no shares of Series C Preferred Stock outstanding as of December 31, 2024.

Theriva Biologics, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements

Stockholders’ Equity – (continued)

During year ending December 31, 2024, the Company issued 26,230 shares of its Common Stock upon the conversion effected by the holder of the Series D Preferred of 100,000 shares of its Series D convertible Preferred Stock at a conversion price of $ 30.50 per share.

As a result of the conversion during the year ending December 31, 2024 the Company reduced the Series D Preferred Stock $ 728,000 and Additional Paid in Capital $ 728,000 .

There are no shares of Series D Preferred stock outstanding as of December 31, 2024.

At Market Issuance Sales Agreement

On May 2, 2024, the Company and A.G.P./Alliance Global Partners (“AGP”) entered into Amendment No.

2 (“Amendment No.

2”) to that certain Amended and Restated Sales Agreement among the Company, AGP and FBR Capital Markets & Co.

(now known as B.

Riley Securities) dated as of February 9, 2021, as amended by Amendment No.

1 thereto dated May 3, 2021 (the “Sales Agreement”), pursuant to which the Company may offer and sell, from time to time, at its option, shares of the Common Stock through A.G.P./Alliance Global Partners, as sales agent, in an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”).

Sales in the “at the market offering” may occur under the Company’s current effective registration statement on Form S-3 which was filed on May 2, 2024 (File No.

333-279077) and declared effective on September 25, 2024.

In addition, on May 1, 2024, the Company and B.

Riley Securities, Inc.

mutually agreed to enter into a notice of termination whereby B.

Riley Securities, Inc.

would no longer be a party to the Sales Agreement.

During the year ended December 31, 2024, the Company sold through the Sales Agreement approximately 569,000 shares of the Company’s Common Stock and received net proceeds of approximately$ 3.6 million, respectively.

During the year ended December 31, 2023, the Company sold through the At Market Issuance Sales Agreement and the Amended and Restated Sales Agreement approximately 81,000 shares of the Company’s Common Stock and received net proceeds of approximately $ 2.2 million.

Loans payable

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December 31, 2023

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Loans payable (continued)

A maturity analysis of the debt as of December 31, 2024 is as follows (amounts in thousands of dollars) :

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 .

On December 14, 2023 the Company approved the retention of MaryAnn Shallcross for compensation of $ 152,000 , a bonus of $ 70,000 and the grant of an option to purchase 75,000 shares of common stock having a value of $ 30,000 .

On December 14, 2023 the Company approved the retention of MaryAnn Shallcross, the wife of Steven Shallcross, as director of Clinical Operations, for compensation of $ 152,000 , a bonus of $ 70,000 and the grant of an option to purchase 3,000 shares of common stock having a value of $ 30,000 .

During the year ended December 31, 2023, Ms.

Shallcross had $ 145,000 in compensation expense.

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

On December 13, 2024 the Company approved the compensation of MaryAnn Shallcross of $ 157,000 and a bonus of $ 45,000 .

License, Collaborative and Employment Agreements and Commitments

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Due to the long-range nature of such commercial milestone liability amounts, they are neither probable at this time nor predictable and consequently are not recorded in the financial statements or included in this disclosure.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

License, Collaborative and Employment Agreements and Commitments – (continued)

On August 31, 2010, VCN entered into a Technology Transfer Agreement (the “Technology Transfer Agreement”) with the Bellvitge Biomedical Research Institute (“IDIBELL”) for the exclusive license of the right to use a Spanish patent number P200901201 titled “Oncolytic adenoviruses for treating cancer” which is co-owned by IDIBELL and Catalan Oncology Institute (“ICO”) for the term of the patent.

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In addition, IDIBELL has the right to revoke the license if VCN ceases business activities for a continuous year or ceases to utilize the technology subject of the Technology Transfer Agreement, uses the technology in violation of the principals of IDIBELL or ICO or stops maintaining the patent licensed under the Technology Transfer Agreement.

No amounts incurred in 2023 and 2022.

No amounts were incurred in 2024 and 2023.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

License, Collaborative and Employment Agreements and Commitments – (continued)

ICO Marketing License

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The validity period of the license granted is unlimited with the only applicable limit being the patent’s own validity.

The ICO License Agreement provides that the ICO is entitled to a royalty of low double digit percentage of the net value of the income from the concession of the identified sublicense and low double digit precentage on other lump sums received thereunder.

VCN and its sublicensees have an obligation to use all diligent and commercially reasonable efforts for the exploitation of the patent, otherwise, ICO may proceed to recover the license.

The ICO License terminates upon the expiration of the patent rights and is subject to early termination by either party in the event of a breach by the other party of its obligations thereunder.

No amounts incurred in 2023 and 2022.

No amounts were incurred in 2024 and 2023.

IDIBELL/ICO License Agreement

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In addition, the licensors have the right to revoke the IDIBELL/ICO License Agreement if VCN during a continuous period of two years abandons its research or development activities of the licensed patent or activities aimed at exploitation of the resulting products, VCN has undertaken no marketing whatsoever during the term of the IDIBELL/ICO License Agreement or uses the patent licensed for purposes other those as set forth in the IDIBELL/ICO License Agreement.

No amounts incurred in 2023 and 2022.

No amounts were incurred in 2024 and 2023.

Theriva Biologics, Inc.

2 unchanged sentences

License, Collaborative and Employment Agreements and Commitments – (continued)

Saint Joan De Déu Collaboration and License Agreement

On February 15, 2016, VCN entered into a Collaboration Agreement to Conduct a Clinical Trial and Grant an Operating License (the “Collaboration and License Agreement”) with the Saint Joan De Déu Hospital (the “Hospital”) and the Saint Joan De Déu Foundation (the “Foundation”, and together with the Hospital, the “Institution”) regarding the conduct of a clinical trial to evaluate the safety and activity of VCN-01 in patients with refractory retinoblastoma.

Sant Joan De Déu Collaboration and License Agreement

On February 15, 2016, VCN entered into a Collaboration Agreement to Conduct a Clinical Trial and Grant an Operating License (the “Collaboration and License Agreement”) with the Sant Joan De Déu Hospital (the “Hospital”) and the Sant Joan De Déu Foundation (the “Foundation”, and together with the Hospital, the “Institution”) regarding the conduct of a clinical trial to evaluate the safety and activity of VCN-01 in patients with refractory retinoblastoma.

The Collaboration and License Agreement provides that if the trial results are positive and VCN is interested in continuing with the development of VCN-01 for the treatment of retinoblastoma;

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The Collaboration and License Agreement continues in force and effect until all obligations arising from the trial have been fulfilled, subject to early termination for a material breach by a party of any of their contractual and/or legal obligations, or, in the case of any other type of breach, when the breaching party has been asked in writing to remedy the breach and the breach is not cured within thirty (30) days from the date on which the written request was sent.

On November 2, 2023, VCN and Sant Joan de Déu-Barcelona Children’s Hospital announced an agreement for an exclusive worldwide option to negotiate an exclusive license of certain Sant Joan de Deu intellectual property rights related to the use of VCN-01 in combination with topoisomerase I inhibitor chemotherapies for the treatment of cancer.

On November 2, 2023, after Sant Joan de Déu - Barcelona Children's Hospital determined that the trial results were positive, VCN and Sant Joan de Déu-Barcelona Children’s Hospital announced an agreement for an exclusive worldwide option to negotiate an exclusive license of certain Sant Joan de Deu intellectual property rights related to the use of VCN-01 in combination with topoisomerase I inhibitor chemotherapies for the treatment of cancer.

During the year ended December 31, 2023 the Company paid a Euros (€ 25,000 ) option fee.

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The Company paid $ 1.1 million related to this agreement during the year ended 2022.

There we no payments during 2023.

There we no payments during 2023 or 2024.

Massachusetts General Hospital Exclusive Option License Agreement

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During the second quarter of 2021, the Company announced an amendment to its option for an exclusive license agreement with MGH to include intellectual property and technology related to the use of SYN-020 to inhibit liver fibrosis in select diseases, including NAFLD.

In January 2023, the company paid $ 7,500 to extend the option period until July 2024.

In January 2023, the Company paid $ 7,500 to extend the option period until July 2024 but elected to not extend the option thereafter.

University of Texas Austin Agreement

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provided, however that the License Agreement is subject to early termination by the Company in its discretion and by UT Austin for a breach of the License Agreement by the Company.

No amounts incurred in 2023 and 2022.

No amounts were incurred in 2024 and 2023.

In connection with the License Agreement, the Company and UT Austin also entered into a Sponsored Research Agreement pursuant to which UT Austin will perform certain research work related to pertussis.

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Shallcross, (the “2022 Shallcross Employment Agreement”), to serve as the Chief Executive Officer and to continue to serve as the Chief Financial Officer of the Company.

The Employment Agreement has a stated term of three years but may be terminated earlier pursuant to its terms.

Shallcross’ employment is terminated for any reason, he or his estate as the case may be, will be entitled to receive the accrued base salary, vacation pay, expense reimbursement and any other entitlements accrued by him to the extent not previously paid (the “Accrued Obligations”);

provided, however, that if his employment is terminated (i) by the Company without Cause or by Mr.

Shallcross for Good Reason (as each is defined in the Employment Agreement) then in addition to paying the Accrued Obligations, (a) the Company will continue to pay his then current base salary and continue to provide benefits at least equal to those that were provided at the time of termination for a period of twelve (12) months and (b) he shall have the right to exercise any vested equity awards until the earlier of six (6) months after termination or the remaining term of the awards;

or (ii) by reason of his death or Disability (as defined in the Employment Agreement), then in addition to paying the Accrued Obligations, Mr.

Shallcross would have the right to exercise any vested options until the earlier of six (6) months after termination or the remaining term of the awards.

In such event, if Mr.

Shallcross commenced employment with another employer and becomes eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits to be provided by the Company as described herein would terminate.

The Employment Agreement had a stated term of three years and expired on January 2, 2025;

Shallcross continued thereafter to serve as the Chief Executive Officer and continued to serve as the Chief Financial Officer of the Company thereafter.

A new agreement was signed on March 3, 2025.

See Subsequent Events.

On December 15, 2022, the Board of Directors of the Company awarded Steven A.

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In addition, on December 14, 2023, the Company increased his base salary to $ 644,963 due to a merit increase.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

License, Collaborative and Employment Agreements and Commitments – (continued)

On March 22, 2022, Synthetic Biologics, Inc.

(the “Company”) entered into an employment agreement with Frank Tufaro (the “Employment Agreement”) to serve as the Chief Operating Officer of the Company.

Pursuant to the Employment Agreement, Dr.

Tufaro had received an annual base salary of $ 375,000 and was eligible to earn an annual performance bonus of up to forty percent ( 40 %) of his annual base salary.

The annual bonus was based upon the assessment of the Company’s Board of Directors (the “Board”) of Dr.

Tufaro’s performance and the Company’s attainment of targeted goals set by the Board.

In addition, Dr.

Tufaro was also be eligible to receive annual equity awards pursuant to the Company’s incentive equity plans, such awards (including the number and type of awards), if any, was to be in the sole discretion of the Board.

The Employment Agreement also included confidentiality obligations and inventions assignments by Dr.

Tufaro and non-solicitation and non-competition provisions.

The employment agreement had a stated term of three (3) years but may be terminated earlier pursuant to its terms.

The employment agreement provided that if Dr.

Tufaro’s employment was terminated for any reason, he or his estate as the case may be, would be entitled to receive the accrued base salary, any unpaid annual bonus earned with respect to any calendar year ending on or preceding the date of termination, vacation pay, expense reimbursement and any other entitlements accrued by him to the extent not previously paid (the “Accrued Obligations”);

provided, however, that if his employment was terminated (i) by the Company without Cause or by Dr.

Tufaro for Good Reason (as each is defined in the Employment Agreement) then in addition to paying the Accrued Obligations, (a) the Company would continue to pay his then current base salary and continue to provide benefits at least equal to those that were provided at the time of termination for a period of six (6) months and (b) all unvested stock options and other equity awards would immediately vest and he would be entitled to exercise any vested equity awards until the earlier of six (6) months after termination or the remaining term of the awards;

or (ii) by reason of his death or Disability (as defined in the employment agreement), then in addition to paying the Accrued Obligations, Dr.

Tufaro, or his estate as the case may be, would have the right to exercise any vested options until the earlier of six (6) months after termination or the remaining term of the awards.

Tufaro commenced employment with another employer and became eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits to be provided by the Company as described herein would terminate.

On December 15, 2022, the Board awarded Frank Tufaro, the Company's Chief Operating Officer:

(i) a cash bonus equal to approximately 23 % of his current base salary, and (ii) an option to purchase 100,000 shares of the Company's Common Stock.

In addition, on December 15, 2022, the Company entered into an Amendment to Dr.

Tufaro's Employment Agreement to increase his base salary to $ 393,750 .

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.

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 Company recorded $ 22,000 of stock option expense due to the acceleration of the vesting.

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.

There were no amounts paid under this conlsuting agreement during the year ended December 31, 2023.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

License, Collaborative and Employment Agreements and Commitments – (continued)

On December 13, 2024, the Board of Directors of the Company awarded Steven A.

Shallcross a cash bonus equal to $ 200,000 .

In addition, on December 14, 2023, the Company increased his base salary to $ 667,536 due to a merit increase.

Operating Lease

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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 its space by giving notice to the landlord before December 31, 2021.

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

The Second Extension Term is offered at market rates and there is no economic incentive for the lessee, therefore the Company has determined that it is not part of the original lease term.

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.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

License, Collaborative and Employment Agreements and Commitments – (continued)

The Company also leases research and office facilities in Barcelona, Spain for its 100 percent owned Theriva S.L.

The lease that was in existence from December 2021 to December 2022 was a short term agreement with a 90-day termination notice provision that can be exercised by either party.

On the closing date of the Theriva S.L.

acquisition, a sublease was executed for Theriva S.L.

On the closing date of the Acquisition, a sublease was executed for Theriva S.L.

to lease research and office facilities at a new location in Parets del Valles (Barcelona) from the former owner of Theriva S.L.

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The uncertain financial markets, disruptions in supply chains, mobility restraints, and changing priorities as well as volatile asset values could impact the Company’s business in the future.

The Company and its third-party contract manufacturers, contract research organizations, and clinical sites may also face disruptions in procuring items that are essential to the Company’s research and development activities, including, for example, medical and laboratory supplies used in its clinical trials or preclinical studies, in each case, that are sourced from abroad or for which there are shortages because of ongoing efforts to address the outbreak.

Further, although the Company has not experienced any material adverse effects on business due to increasing inflation, it has raised operating costs for many businesses and, in the future, could impact demand or pricing manufacturing of its drug candidates or services providers, foreign exchange rates or employee wages.

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Changes in Valuation Allowances

VCN Impairment

Changes in Valuation Allowances

1 unchanged sentence

Other Adjustments

NOL adjustment- 382 study

Effective Tax Rate

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Amortizable License Fee

Other Deferred Tax Asset

Capitalized Research & Development costs

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A deferred tax asset was also established with purchase accounting related to VCN’s unlimited life net operating loss carryover.

During 2024, for book purposes, IPR&D and Goodwill assets were both impaired, with Goodwill written down to zero and IPR&D written down to $ 17.4 million.

The impairment to Goodwill represents a permanent difference and the impairment to IPR&D represents a reduction in the deferred tax liability established with the Company’s VCN acquisition.

At December 31, 2024, the Company has a gross Federal net operating loss carry-forward of approximately $ 1.8 million available to offset future United States taxable income.

In addition, it was determined that the utilization of gross Federal net operating losses of approximately $ 228.3 million was limited by $ 155.6 .

million as a result of change of control ownership changes that occurred under Section 382 of the Internal Revenue Code.

State NOL’s are also limited by Section 382 of the Internal Revenue Code and were limited accordingly.

In 2024, it was determined that availability of gross Federal net operating losses of $ 72.7 million were fully limited as well as $ 3.9 million of current 2024 net operating losses as a result of change of ownership that occurred in 2024 under Section 382 of the Internal Revenue Code.

State Net Operating Losses are also limited by Section 382 of the Internal Revenue Code and were limited accordingly.

At December 31, 2024, the Company has a gross Foreign net operating loss carry forward of approximately $ 35.4 million USD.

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The decrease in the prior year net operating loss is attributable to control ownership changes which were determined for the years 2013 and 2018 which caused the reduction in the value of the historical net operating loss carry-forward amounts.

Updated section 382 analysis were performed in 2021, 2022, and 2023 to identify if any additional ownership shifts occurred in these years.

The result of the updated Section 382 analysis produced an IRC 382 limit due to the 2021 ownership change.

There was no ownership change determined for 2022 or 2023.

All previously limited net operating losses remain available for use in future periods.

The Company’s pre-2018 net operating losses expire on various dates through 2037 while the net operating loss carry-forward originating in the 2018 year and later carryforward indefinitely and are subject to additional limitations based on taxable income.

At December 31, 2023, the Company has a gross Foreign net operating loss carryforward of approximately $ 25.2 million related to its newly acquired Spanish subsidiary, VCN.

Updated section 382 analysis were performed in 2021, 2022, 2023 to identify if any additional ownership shifts occurred in these years.

It was determined that an ownership shift occurred on January 20, 2021.

The result of the updated Section 382 analysis produced an IRC 382 limit due to the 2021 ownership changes.

There was no ownership change determined for 2022 or 2023.In 2024 it was determined that all of the Company’s Federal and state Net Operating Loss carryforwards through 12/31/2023 as well as a portion of the current year 2024 loss were limited due to an updated 382 study performed in 2024.

As a result of 2024 section 382 study, the Company’s does not have any pre-2018 net operating losses available for use in future tax years.

In addition, all post 2017 net operating losses through 12/31/2023 are also not available due the section 382 study.

A portion or $ 1.8 million of the net operating loss carry-forward originating in 2024 is subject to additional limitations based on taxable income.

At December 31, 2024, the Company has a gross foreign net operating loss carryforward of approximately $ 35.4 million Euros related to its Spanish subsidiary, VCN.

The net operating loss does not expire and is available to offset future Spanish taxable income.

The Company’s valuation allowance at December 31, 2024 was approximately $ 11.3 million.

The net change in valuation allowance during the year ended December 31, 2023, was an increase of approximately $ 3.8 million primarily due to increases in gross federal and state deferred tax assets in 2023.

The net change in valuation allowance during the year ended December 31, 2024,was a decrease of $ 17 million due to the following;

$ 22 million federal and state net operating loss write off related to the 382 limitation offset by increase in gross domestic and foreign deferred tax assets of $ 1.6 and $ 3.5 million.

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 income tax assets will not be realized.

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income taxes that might be payable if these earnings were repatriated.

The Company continually evaluates expiring statutes of limitation, audits, proposed settlements, changes in tax law, and new authoritative rulings.

Due to the existence of net operating carryforwards since inception, all of the Company’s income tax filings remain open.

We have incurred net operating losses since inception, and we do not have any significant unrecognized tax benefits.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Subsequent Events

On March 3, 2025, the Company entered into a two-year employment agreement with Steven A.

Shallcross, (the “2025 Shallcross Employment Agreement”), to serve as the Chief Executive Officer and to continue to serve as the Chief Financial Officer of the Company.

The 2025 Shallcross Employment Agreement has a stated term of two years but may be terminated earlier pursuant to its terms.

The terms of the 2025 Shallcross Employment Agreement were substantially the same as the terms of the 2022 Shallcross Employment Agreement except for the stated term.

provided, however, that if his employment is terminated (i) by the Company without Cause or by Mr.

Shallcross for Good Reason (as each is defined in the 2025 Shallcross Employment Agreement) then in addition to paying the Accrued Obligations, (a) the Company will continue to pay his then current base salary and continue to provide benefits at least equal to those that were provided at the time of termination for a period of twelve (12) months and (b) he shall have the right to exercise any vested equity awards until the earlier of six (6) months after termination or the remaining term of the awards;

or (ii) by reason of his death or Disability (as defined in the 2025 Shallcross Employment Agreement), then in addition to paying the Accrued Obligations, Mr.

Shallcross would have the right to exercise any vested options until the earlier of six (6) months after termination or the remaining term of the awards.

In such event, if Mr.

The 2025 Shallcross Employment Agreement provides that upon the closing of a “Change in Control” (as defined in the 2025 Shallcross Employment Agreements), all unvested options shall immediately vest and the time period that Mr.

Shallcross will have to exercise all vested stock options and other awards that Mr.

Shallcross may have will be equal to the shorter of:

(i) eighteen (18) months after termination, or (ii) the remaining term of the award(s).

If within one (1) year after the occurrence of a Change in Control, Mr.

Shallcross terminates his employment for “Good Reason” or we terminate Mr.

Shallcross’s employment for any reason other than death, disability or Cause, Mr.

Shallcross will be entitled to receive:

(i) the portion of his base salary for periods prior to the effective date of termination accrued but unpaid (if any);

(ii) all unreimbursed expenses (if any);

(iii) an aggregate amount (the “Change in Control Severance Amount”) equal to two (2) times the sum of his base salary plus an amount equal to the bonus that would be payable if the “target” level performance were achieved under the Company’s annual bonus plan (if any) in respect of the fiscal year during which the termination occurs (or the prior fiscal year if bonus levels have not yet been established for the year of termination) subject to him executing a general release in form acceptable to us that becomes effective.

If within two (2) years after the occurrence of a Change in Control, Mr.

Shallcross terminates his employment for “Good Reason” or the Company terminates Mr.

Shallcross’s employment for any reason other than death, disability or Cause, Mr.

Shallcross will be entitled to also receive for the period of two (2) consecutive years commencing on the date of such termination of his employment, medical, dental, life and disability insurance coverage for him and the members of his family that are not less favorable to him than the group medical, dental, life and disability insurance coverage carried by the Company for him subject to him executing a general release in form acceptable to the Company that becomes effective.

The Change in Control Severance Amount is to be paid in a lump sum if the Change in Control event constitutes a “change in the ownership” or a “change in the effective control” of the Company or a “change in the ownership of a substantial portion of a corporation’s assets” (each within the meaning of Section 409A of the Internal Revenue Code (“Rule 409A”)), or in 48 substantially equal payments, if the Change in Control event does not so comply with Section 409A.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Subsequent Events – (continued)

On February 3, 2025, the Company received $ 1.7 million for the 2023 Research and Development rebate program sponsored by the Spanish government.

The program provides for reimbursement of certain expenses incurred in research and development efforts the Company incurs in Spain.

The reimbursements can be through either tax credits or direct refunds.

On September 16, 2024, the Company issued a press release noting that its THERICAL project had been awarded € 2.28 million (approximately $ 2.54 million) from the National Knowledge Transfer Program of the Spanish government’s Ministry of Science, Innovation & Universities to support a collaboration between the Company and the Universitat Autònoma de Barcelona (“UAB”) to advance the Company’s suspension cell platform for the clinical manufacture of adenovirus- and adeno-associated virus (“AAV”) therapies.

Under the award, the Company (via its wholly owned subsidiary, Theriva Biologics SL) will receive an unsecured loan (the “Loan”) of € 1.33 million (approximately $ 1.48 million) as a lump sum payment in Q1 2025 which shall bear interest at a rate of 4.015 % and be repaid over 7 years commencing three years from the date of award and UAB will receive a grant of € 0.95 million (approximately $ 1.06 million) dedicated to the THERICEL project and paid in annual installments over the next 3 years .

The loan was funded on January 17, 2025.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .

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 8. Financial Statements and Supplementary Data