What changed in this filing

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Item 1. Financial Statements

2023-05-16 compared with 2022-11-14 · 771 added, 502 removed, 406 unchanged (76% of the section changed)

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(In thousands, except for share and per share

September 30,

Current assets:

Cash and cash equivalents

Prepaid expenses and other current assets

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Property, plant and equipment, net

Liabilities and stockholders’ (deficit) equity

Liabilities, mezzanine equity, and stockholders’ deficit

Current liabilities:

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Accrued liabilities

Warrant liability

Operating lease liability - current

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Commitments and contingencies (Note 8)

Stockholders’ (deficit) equity:

Preferred stock:

$ 0.001 par value per share— 10,000,000 shares authorized at December 31, 2021 and September 30, 2022;

no shares issued and outstanding at December 31, 2021 and September 30, 2022

Common stock, $ 0.001 par value per share – 200,000,000 shares authorized at December 31, 2021 and September 30, 2022;

14,996,534 shares issued and outstanding at December 31, 2021, and 15,087,943 shares issued and outstanding at September 30, 2022

Mezzanine equity:

Series A-1 preferred stock, $ 0.001 par value per share–zero and 30,190 shares authorized at December 31, 2022 and March 31, 2023, respectively;

zero and 30,190 shares issued and outstanding, liquidation preference of zero and $ 30.6 million at December 31, 2022, and March 31, 2023, respectively

Stockholders’ deficit:

Preferred stock, $ 0.001 par value per share – 10,000,000 and 9,969,810 shares authorized at December 31, 2022 and March 31, 2023, respectively;

no shares issued and outstanding at December 31, 2022, and March 31, 2023

Common stock, $ 0.001 par value per share – 200,000,000 shares authorized at December 31, 2022 and March 31, 2023;

15,231,655 shares issued and outstanding at December 31, 2022, and 15,233,836 shares issued and outstanding at March 31, 2023

Additional paid-in capital

Accumulated deficit

Total stockholders’ (deficit) equity

Total liabilities and stockholders’ (deficit) equity

Total stockholders’ deficit

Total liabilities, mezzanine equity, and stockholders’ deficit

See accompanying notes to the financial statements

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Licensing revenues:

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Other income (expenses):

Interest income

Interest expense

Loss on debt conversion

Gain on extinguishment of debt

Change in fair value of warrant liability

Total other income (expenses)

Net loss per share, basic and diluted

Deemed dividend to Series A-1 preferred stockholders

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders, basic and diluted

Weighted-average shares outstanding used in computing net loss per share, basic and diluted

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Unicycive Therapeutics, Inc.

Statements of Stockholders’ (Deficit)

Statements of Mezzanine

Equity and Stockholders’ Deficit

(In thousands, except share amounts)

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Balance at March 31, 2022

Issuance of common stock for exercise of options

Stock-based compensation expense

Balance at June 30, 2021

Issuance of common stock for cash, net of $ 2.7 million offering costs

Conversion of convertible notes into common stock

Issuance of common stock for exercise of options

Issuance of common stock for anti-dilution clause

Stock-based compensation expense

Balance at September 30, 2021

Preferred Stock

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Balance at December 31, 2022

Issuance of Series A-1 preferred stock, net of issuance costs and allocated fair value of warrant liability

Deemed dividends on Series A-1 preferred stock

Issuance of common stock for exercise of options

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Balance at March 31, 2023

Issuance of common stock for exercise of options

Stock-based compensation expense

Balance at June 30, 2022

Issuance of common stock for vested restricted stock units

Issuance of common stock for exercise of options

Stock-based compensation expense

Balance at September 30, 2022

See accompanying notes to the financial statements

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(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

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

R&D Expense for issuance of common stock for anti-dilution clause

Depreciation expense

Stock-based compensation expense

Convertible debt discount amortization

Convertible debt non-cash interest

Change in fair value of warrant liability

Amortization of operating lease right of use asset

Gain on extinguishment of debt

Deferred compensation to CEO

Loss on debt conversion

Changes in assets and liabilities:

Prepaid expense and other current assets

Prepaid related party service fee

Accounts payable and accrued liabilities

Operating lease liability

Related party service fee payable

Net cash used in operating activities

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Cash flows from financing activities

Net proceeds from initial public offering

Proceeds from loan from stockholder

Proceeds from convertible notes

Repayment of loan from stockholder

Proceeds from exercise of options

Payments on financed insurance policies

Issuance costs related to issuance of Series A-1 preferred stock and warrants

Proceeds from issuance of Series A-1 preferred stock and warrants

Net cash provided by financing activities

Net increase (decrease) in cash

Cash at the beginning of the period

Cash at the end of the period

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

Supplemental cash flow information

Deferred preclinical charges included in prepaid expenses and other current assets

Accrued dividends on preferred stock

Fair value of warrants issued in connection with the issuance of preferred stock

Deferred preclinical and other charges included in prepaid expenses and other current assets

Cash paid for income taxes

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Future revenue streams may consist of collaboration or licensing revenue as well as product

The Company has generated approximately $ 1.0 million in licensing revenue to date.

The Company has generated approximately $ 0.7 million in licensing revenue during the three months ended March 31, 2023.

The Company has incurred operating losses and

negative cash flows from operations since inception and expects to continue to incur negative cash flows from operations for the foreseeable

negative cash flows from operations since inception and expects to continue to incur negative cash flows from operations in the future.

As the Company increases its research and development activities, the operating losses are expected to increase.

The Company has

historically relied on private equity offerings, debt financings and loans from a stockholder to fund its operations.

As of December 31,

2021 and September 30, 2022, the Company had an accumulated deficit of $ 15.9 million and $ 28.7 million, respectively.

The Company has historically

relied on private equity offerings, debt financings and loans from a stockholder to fund its operations.

As of December 31, 2022 and March

31, 2023, the Company had an accumulated deficit of $ 34.0 million and $ 48.6 million, respectively.

As a result of its initial public offering (“IPO”),

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approximately $ 22.3 million in net proceeds after deducting the underwriting discounts, commissions and other offering expenses.

is using the net proceeds from the IPO to complete pre-clinical and clinical studies, submit regulatory filings to the FDA, and for general

and corporate purposes, including hiring additional management and conducting market research and other commercial planning.

Company has used the net proceeds from the IPO to complete pre-clinical and clinical studies, prepare regulatory filings for the FDA,

and for general and corporate purposes, including hiring additional management and conducting market research and other commercial planning.

On March 3, 2023, the Company entered into a

securities purchase agreement with certain healthcare-focused institutional investors that will provide up to $ 130.0 million in

gross proceeds through a private placement and that includes initial upfront funding of $ 30.0 million.

The Company expects to continue incurring losses

for the foreseeable future and will be required to raise additional capital in the future to complete its planned clinical trials, pursue

product development initiatives and penetrate markets for the sale of its products.

Management believes that the Company will continue

to have access to capital resources through possible equity offerings, debt financings, corporate collaborations or other means.

January 2021 through May 2021, the Company received an aggregate of $ 1.1 million upon the issuance of convertible notes.

These funds were

used primarily to settle outstanding accounts payable as well as to make payments on the loan outstanding from the chief executive officer

and principal stockholder.

In addition, the Company received approximately $ 22.3 million in net proceeds from its IPO.

There can be no

assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis or at all.

If the Company is unable to secure additional capital, it may be required to curtail any clinical trials and development of new or existing

products and take additional measures to reduce expenses in order to conserve its cash in amounts sufficient to sustain operations and

meet its obligations.

Based on the Company’s current level of expenditures, and, given the Company’s cash balance of $ 7.0

million as of September 30, 2022, the Company believes that it will need funding before the end of the first quarter 2023 to continue

operations, satisfy its obligations and fund the future expenditures that will be required to conduct the clinical and regulatory work

to develop its product candidates.

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of

liabilities and commitments in the normal course of business.

There is substantial doubt about the Company’s ability to continue

as a going concern for one year after the date that these financial statements are available to be issued.

The financial statements do

not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary from

the outcome of this uncertainty.

in the future and will be required to raise additional capital in the future to complete its planned clinical trials, pursue product

development initiatives and penetrate markets for the sale of its products.

Management believes that the Company will continue to have

access to capital resources through possible equity offerings, debt financings, corporate collaborations or other means.

Company received approximately $ 22.3 million in net proceeds from its IPO, and in March 2023 the Company received approximately $ 28.0

million in net proceeds from the sale of preferred stock.

There can be no assurance that the Company will be able to obtain additional

financing on terms acceptable to the Company, on a timely basis or at all.

If the Company is unable to secure additional capital, it

may be required to curtail any clinical trials and development of new or existing products and take additional measures to reduce expenses

in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations.

Based on the Company’s current

level of expenditures, and after receiving the proceeds from the private placement in March 2023, the Company believes that it has sufficient

resources such that there is not substantial doubt about the ability to continue operations for at least one year after the date that

these financial statements are available to be issued.

Summary of Significant Accounting Policies

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The accompanying unaudited financial statements

of the Company as of September 30, 2022 have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation

of the Company as of March 31, 2023 have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation

S-X and, accordingly, they do not include all information and footnote disclosures required by accounting principles generally accepted

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for a fair presentation of the results of the interim periods presented.

The financial statements include all adjustments (solely of a

normal recurring nature) which are, in the opinion of management, necessary to make the information presented not misleading.

The financial statements include all adjustments (solely of

a normal recurring nature) which are, in the opinion of management, necessary to make the information presented not misleading.

read these financial statements and the accompanying notes in conjunction with the financial statements and notes thereto included in

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Commission (“SEC”) on March 31, 2023.

All common share amounts and per share amounts

have been adjusted to reflect a 1-for-4.3 reverse stock split of the Company’s common stock that was effected on June 21, 2021.

Preferred Stock

The Company classifies its Series A-1

Preferred Stock (as defined in Note 10) outside of stockholders’ deficit on the accompanying balance sheets as it is

contingently redeemable upon the occurrence of an event that is not solely within the Company’s control.

The Company recorded

the issuance of Series A-1 Preferred Stock at the residual value from proceeds after the allocation of the fair value of warrants,

net of related and allocable issuance costs.

As the Series A-1 Preferred Stock is not currently redeemable, and as the Company has determined that

it is not probable of becoming redeemable, no subsequent remeasurement is required.

Since the Company is obligated to pay cumulative

dividends on the Series A-1 preferred stock whether or not declared by the Board of Directors, the Company accrues the dividends as

they are earned, based on the stated contractual rate.

Warrant Liabilities

In conjunction with the issuance of Series

A-1 Preferred Stock (see Note 10), the Company established a warrant liability as of March 3, 2023, representing the fair value of

warrants that may be issued, subject to shareholder approval, upon conversion of the Series A-1 Preferred Stock.

accounts for these warrants as liabilities (in accordance with ASC 480) on the balance sheets as a result of certain redemption

clauses that are not within the control of the Company.

The warrant liabilities are initially measured at fair value, resulting in

an implied discount on the related preferred stock financing arrangement (recognized as a partial offset to the carrying value of

the Series A-1 Preferred Stock), and are remeasured at fair value each reporting period.

Changes in the fair value of the warrant

liabilities are recognized in earnings during each period.

The warrant liabilities are measured using Level 3 fair value inputs.

Note 11 for a description of warrant liabilities and the related valuations.

Use of Estimates

The preparation of financial statements in conformity

with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and

the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during

the periods presented.

The preparation of financial statements in conformity with GAAP requires

management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of

contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the periods presented.

Management believes that these estimates and assumptions are reasonable;

however, actual results may differ and

could have a material effect on future results of operations and financial position.

Significant items subject to such estimates and assumptions

include progress estimates for material third party research and development contracts, stock-based compensation and fair value of the

Company’s common stock prior to the Company’s IPO.

Actual results may materially differ from those estimates.

however, actual results may differ and could have a material

effect on future results of operations and financial position.

Significant items subject to such estimates and assumptions include revenues,

stock-based compensation, research contract accruals and prepaid amounts, and the fair value of warrant liabilities.

Actual results may

materially differ from those estimates.

Segment Information

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as one reportable operating segment.

The Company’s Chief Executive Officer, who is the chief operating decision maker, reviews financial

information on an aggregate basis for purposes of allocating resources and evaluating financial performance.

The Company’s Chief Executive Officer, who is the chief operating decision maker, reviews

financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.

Risks and Uncertainties

The Company operates in a dynamic and highly competitive

industry and believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial

position, results of operations, or cash flows:

The Company operates in a dynamic and highly

competitive industry and believes that changes in any of the following areas could have a material adverse effect on the Company’s

future financial position, results of operations, or cash flows:

ability to obtain future financing;

advances and trends in new technologies and industry

advances and trends in new technologies

and industry standards;

results of clinical trials;

regulatory approval and market acceptance of the Company’s products;

development of sales

of sales channels;

certain strategic relationships;

litigation or claims against the Company related to intellectual property, product, regulatory,

or other matters;

litigation or claims against the Company related to intellectual property, product,

regulatory, or other matters;

and the Company’s ability to attract and retain employees necessary to support its growth.

The Company’s general business strategy

may be adversely affected by any such economic downturns (including the current downturn related to the ongoing COVID-19 pandemic),

volatile business environments and continued unstable or unpredictable economic and market conditions.

may be adversely affected by any such economic downturns (including the current downturn related to the COVID-19 pandemic), volatile

business environments and continued unstable or unpredictable economic and market conditions.

Any product candidates developed by the Company

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the Company’s current product candidates or any future product candidates will receive the necessary approvals.

If the Company is

denied approval, approval is delayed or the Company is unable to maintain approval, it could have a materially adverse impact on the Company.

If the Company

is denied approval, approval is delayed or the Company is unable to maintain approval, it could have a materially adverse impact on the

The Company has expended and will continue to

expend substantial funds to complete the research, development and clinical testing of its product candidates.

The Company also will be

required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution

of products that receive regulatory approval.

The Company also will

be required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and

distribution of products that receive regulatory approval.

The Company will require additional funds to commercialize its products.

The Company is

unable to entirely fund these efforts with its current financial resources.

If adequate funds are unavailable on a timely basis from operations

or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development

programs, which would materially and adversely affect its business, financial condition and operations.

The Company is dependent upon the services of its employees, consultants

and other third parties.

Company is unable to entirely fund these efforts with its current financial resources.

If adequate funds are unavailable on a timely

basis from operations or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more

of its research or development programs, which would materially and adversely affect its business, financial condition and operations.

The Company is dependent upon the services of

its employees, consultants and other third parties.

Property, Plant and Equipment

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cost less accumulated depreciation.

Additions, improvements, and major renewals or replacements that substantially extend the useful life

of an asset are capitalized.

Additions, improvements, and major renewals or replacements that substantially extend the useful

life of an asset are capitalized.

Repairs and maintenance expenditures are expensed as incurred.

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fair value at that time.

At September 30, 2022, management determined there were no impairments of the Company’s property and equipment.

At March 31, 2023, management determined there were no impairments of the Company’s property and equipment.

The Company determines whether a contract is,

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Fair Value of Financial Instruments

The Company’s financial instruments include

cash, prepaid expenses, and accounts payable, and in prior periods also included convertible notes and a loan from the Chief Executive

Officer and stockholder of the Company.

The carrying amounts of these items approximate fair value as of December 31, 2021 and September

30, 2022 due to their short-term nature.

The Company’s financial instruments

include warrants, cash and cash equivalents, prepaid expenses, and accounts payable.

Fair value is defined as the price that would be received for sale

of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date.

establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The hierarchy gives the highest

priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority

to unobservable inputs (Level 3 measurements).

The Company’s warrants, recorded in the accompanying balance sheets, are categorized

based on the inputs to valuation techniques as follows:

● Level 1 — defined as observable inputs based on unadjusted

quoted prices for identical instruments in active markets;

● Level 2 — defined as inputs other than Level 1 that

are either directly or indirectly observable in the marketplace for identical or similar instruments in markets that are not active;

● Level 3 — defined as unobservable inputs in which little

or no market data exists where valuations are derived from techniques in which one or more significant inputs are unobservable.

The fair value of the contingently issuable warrants

associated with the Company’s March 2023 private placement transaction, further described in Note 11 – Warrant Liability,

were determined by using a Monte Carlo simulation technique (“MCS”) to value the embedded derivatives associated with the

The MCS methodology calculates the theoretical value of a warrant based on certain parameters, including:

(i) the threshold

of exercising the warrant, (ii) the price of the underlying security, (iii) the time to expiration, or expected term, (iv) the expected

volatility of the underlying security, (v) the risk-free rate, (vi) the number of paths, and (vii) estimated probability assumptions surrounding

shareholder approval as well as the achievement by the Company of technical milestones associated with regulatory and commercial progress.

The Company estimated the probability of shareholder approval for the issuance of common shares upon the conversion of the Series A-1

Preferred Stock at 45 % as of March 3, 2023 and March 31, 2023.

The Company estimated probabilities of obtaining FDA approval for Renazorb,

for acceptance into the proposed TDAPA program, and for achieving 4 quarters of commercial sales at 21 %, 8 %, and 5 %, respectively, as

of March 3, 2023 and March 31, 2023.

These valuation techniques involve management’s

estimates and judgment based on unobservable inputs and are classified in Level 3.

The fair value estimates may not be indicative of the

amounts that would be realized in a market exchange.

Additionally, there may be inherent uncertainties or changes in the underlying assumptions

used, which could significantly affect the current or future fair value estimates.

Generally, a significant increase (decrease) in the

probabilities of shareholder approval and the achievement of technical milestones would have resulted in a significantly higher (lower)

fair value measurement;

however, changes in other inputs such as expected term and price of the underlying common stock will have a directionally

opposite impact on fair value measurement.

The following table summarizes the fair value hierarchy of financial

liabilities measured at fair value as of March 31, 2023 (in thousands).

Warrant liability

Total liabilities at fair value

The following table summarizes the changes in

fair value of the derivative liability classified in Level 3.

Gains and losses reported in this table include changes in fair value that

are attributable to unobservable inputs.

Three Months Ended

Fair value at January 1, 2023

Issuance of Warrants (March 3, 2023)

Change in fair value of Warrants

Fair value at March 31, 2023

The expense relating to the change in fair value

of the derivative liability of $ 10,375,000 for the three months ended March 31, 2023 is included in other income (expense) in the statements

of operations.

ASC 820, Fair Value Measurement and Disclosures

requires all entities to disclose the fair value of financial instruments, both assets and liabilities, for which it is practicable to

estimate fair value.

As of December 31, 2022 and March 31, 2023, the recorded values of cash and cash equivalents, prepaid expenses, and

accounts payable approximated fair value due to the short-term nature of the instruments.

Concentration of Credit Risk

Financial instruments that potentially subject

the Company to concentration of credit risk consist of cash.

All of the Company’s cash was deposited in one account at a financial

institution, and the account balance may at times exceed federally insured limits.

Management believes that the Company is not exposed

to significant credit risk due to the financial strength of the depository institution in which the cash is held.

the Company to concentration of credit risk consist of cash and cash equivalents.

All of the Company’s cash was deposited in one

account at a financial institution during 2022, and cash balances may at times exceed federally insured limits.

For 2023 the Company’s

cash is distributed across multiple financial institutions.

The cash and cash equivalents the Company uses to satisfy working capital

and operating expense needs are currently held in accounts at various financial institutions.

Cash and cash equivalents could be adversely

impacted, including the loss of uninsured deposits and other uninsured financial assets, if one or more of the financial institutions

in which the Company holds its cash or cash equivalents fails or is subject to other adverse conditions in the financial or credit markets.

Prepaid Expenses

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Revenue Recognition

The Company implemented ASC 606, Revenue from

Contracts with Customers.

These included the development of new policies based on the five-step model provided in the new revenue standard,

ongoing contract review requirements, and gathering of information provided for disclosures.

The Company recognizes revenue from product

sales or services rendered when control of the promised goods are transferred to a counterparty in an amount that reflects the consideration

to which we expect to be entitled in exchange for those goods and services.

To achieve this core principle, we apply the following five

identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate

the transaction price to performance obligations in the contract and recognize revenues when or as the Company satisfies a performance

The Company has implemented ASC 606, Revenue

from Contracts with Customers.

This guidance included the development of new policies based on the five-step model provided in the new

revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures.

The Company recognizes

revenue from product sales or services rendered when control of the promised goods are transferred to a counterparty in an amount that

reflects the consideration to which we expect to be entitled in exchange for those goods and services.

To achieve this core principle,

the Company applies the following five steps:

identify the contract with the client, identify the performance obligations in the contract,

determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize revenues when

or as the Company satisfies a performance obligation.

Research and Development Expenses

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and development expenses consist of expenses incurred in connection with the development of the Company’s product candidates.

expenses include fees paid to third parties to conduct certain research and development activities on the Company’s behalf and related

progress estimates for those activities, consulting costs, costs for laboratory supplies, product acquisition and license costs, certain

payroll and personnel-related expenses, including salaries and bonuses, employee benefit costs and stock-based compensation expenses for

the Company’s research and product development employees and allocated overheads, including information technology costs and utilities.

The Company expenses both internal and external research and development expenses as they are incurred.

expenses include fees paid to third parties to conduct certain research and development activities on the Company’s behalf, consulting

costs, costs for laboratory supplies, product acquisition and license costs, certain payroll and personnel-related expenses, including

salaries and bonuses, employee benefit costs and stock-based compensation expenses for the Company’s research and product development

employees and allocated overheads, including information technology costs and utilities and expenses for issuance of shares pursuant

to the anti-dilution clause in the purchase of IPR&D technology.

The Company expenses both internal and external research and development

expenses as they are incurred.

General and Administrative Expenses

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The Company estimates the fair value of stock options using the Black-Scholes option-pricing model.

The Black-Scholes model

requires the input of subjective assumptions, including expected common stock volatility, expected dividend yield, expected term, risk-free

interest rate, and the estimated fair value of the Company’s underlying common stock on the date of grant.

Common Stock Valuations

Prior to the Company’s IPO, the fair value

of common stock was estimated with the assistance of an independent third-party valuation expert when issuing stock options and computing

their estimated stock-based compensation expense.

The assumptions underlying these valuations represented management’s best estimates,

which involved inherent uncertainties and the application of significant levels of management judgment.

In order to determine the fair

value, the Company considered, among other things, contemporaneous transactions involving the sale of common stock to unrelated third

parties, the lack of marketability of the common stock and the market performance of comparable publicly traded companies.

Subsequent to the IPO, the Company determines

the fair value of common stock from closing prices as quoted on the NASDAQ exchange.

The Black-Scholes

model requires the input of subjective assumptions, including expected common stock volatility, expected dividend yield, expected term,

risk-free interest rate, and the estimated fair value (prior to the Company’s initial public offering) or the public market closing

price of the Company’s underlying common stock on the date of grant.

The Company accounts for corporate income taxes

in accordance with GAAP as stipulated in ASC, Topic 740, Income Taxes, (“ASC 740”).

This standard entails the use of the asset

and liability method of computing the provision for income tax expense.

Current tax expense results from corporate tax payable at the

Federal and California jurisdictions for the Company, which relate to the current accounting period.

Deferred tax expense results primarily

from temporary differences between financial statement and tax return reporting, which result in additional tax payable in future periods.

Deferred tax assets and liabilities are determined based on the differences between the financial statement basis and tax basis of assets

and liabilities using enacted tax rates and law.

Net future tax benefits are subject to a valuation allowance when management expects

that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

This standard entails the use of the

asset and liability method of computing the provision for income tax expense.

Current tax expense results from corporate tax payable

at the Federal and California jurisdictions for the Company, which relate to the current accounting period.

Deferred tax expense results

primarily from temporary differences between financial statement and tax return reporting, which result in additional tax payable in

future periods.

Deferred tax assets and liabilities are determined based on the differences between the financial statement basis and

tax basis of assets and liabilities using enacted tax rates and law.

Net future tax benefits are subject to a valuation allowance when

management expects that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

Current and non-current tax assets and liabilities

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interest or penalties related to income tax matters in income tax expense.

The Tax Cuts and Jobs Act of 2017 eliminated the

option to immediately deduct research and development expenditures in the year incurred under Section 174, which became effective January

We are monitoring legislation for any further changes to Section 174 and the impact, if any, to the financial statements in 2022.

The Tax Cuts and Jobs Act of 2017 eliminated

the option to immediately deduct research and development expenditures in the year incurred under Section 174, which became effective

January 1, 2022.

We are monitoring legislation for any further changes to Section 174 and the impact, if any, to the financial statements

Comprehensive Loss

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Net Loss per Share

Basic net loss per common share is calculated

by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration of potentially

dilutive securities.

Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and

potentially dilutive securities outstanding for the period.

For purposes of the diluted net loss per share calculation, common stock options

and warrants are considered to be potentially dilutive securities.

Basic and diluted net loss per share is presented in conformity with

the two-class method required for participating securities.

The Company has no participating securities and as such, the net

loss was attributed entirely to common stockholders.

As the Company has reported a net loss for all periods presented, diluted net loss

per common share is the same as basic net loss per common share for those periods.

All common share amounts and per share amounts have

been adjusted to reflect a 1-for-4.3 reverse stock split of the Company’s common stock that was effectuated on June 21, 2021.

Basic and diluted net loss per share is presented

in conformity with the two-class method required for participating securities.

Basic and diluted net loss for common stock and

for preferred stock is computed by dividing the sum of distributed earnings and undistributed earnings for each class of stock by the

weighted average number of shares outstanding for each class of stock for the period.

Diluted net loss per share includes potentially

dilutive securities outstanding for the period.

As the Company has reported a net loss for all periods presented, diluted net loss per

common share is the same as basic net loss per common share for those periods.

Recent Accounting Pronouncements

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not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

In August 2020, the FASB issued ASU 2020-06, Accounting

for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments.

In August 2020, the FASB issued ASU 2020-06,

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible

ASU 2020-06 eliminates certain models that require separate accounting for embedded conversion features.

Additionally, among other changes,

the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity.

also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and

include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified

Additionally, among

other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity.

The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share

calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified

share-based payment awards.

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Early adoption is permitted, but no earlier than annual periods beginning after December

The Company adopted the standard on January 1, 2022 using a modified approach, and the adoption did not result in any adjustments

on the Company’s financial statements.

In February 2016, the FASB issued ASU 2016-02,

Leases (Topic 842).

This ASU requires a lessee to recognize in the statement of financial position a liability to make lease payments

(the lease liability) and a right-of-use asset representing its right to use the underlying asset for the leases with a term of greater

than 12 months.

This ASU is effective for the Company’s fiscal years beginning after December 15, 2021, with early adoption permitted.

The Company has adopted this standard effective as of January 1, 2019.

The Company chose to adopt the package of practical expedients

available from the FASB.

As a policy election, the Company chose to expense and amortize, on a straight line, the leases with terms less

than 12 months.

The adoption of this standard did not have a material effect on the Company’s financial statements.

The Company adopted the standard on January 1, 2022 using a modified retrospective approach, and the adoption did not result

in any adjustments on the Company’s financial statements.

Significant Agreements

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provided all commercial supplies are continued to be manufactured and supplied by the vendor.

Unicycive is not obligated to make any payments

to the vendor until FDA approval of the product is obtained and commercial revenue is generated.

In October 2017, the Company entered into an exclusive

license agreement with Sphaera, a stockholder, for the rights to further develop the drug candidate, UNI 494, for commercialization.

payments were made upon execution of the agreement but rather payments for $50,000 will be due commencing with the initiation by the Company

of a second clinical trial and $50,000 on completion of such trial.

At the time the FDA accepts a NDA application submitted by the Company

for the product, the Company will pay Sphaera $1.65 million.

Upon commercialization and sale of the drug product, royalty payments will

also be payable quarterly to Sphaera equal to 2% of net sales on the preceding quarter.

Unicycive is not obligated to make any

payments to the vendor until FDA approval of the product is obtained and commercial revenue is generated.

In October 2017, the Company entered into an

exclusive license agreement with Sphaera, a stockholder, for the rights to further develop the drug candidate, UNI 494, for commercialization.

No payments were made upon execution of the agreement but rather payments for $50,000 will be due commencing with the initiation by the

Company of a second clinical trial and $50,000 on completion of such trial.

At the time the FDA accepts a NDA application submitted by

the Company for the product, the Company will pay Sphaera $1.65 million.

Upon commercialization and sale of the drug product, royalty

payments will also be payable quarterly to Sphaera equal to 2% of net sales on the preceding quarter.

In September 2018, the Company entered into an

Assignment and Asset Purchase Agreement with Spectrum Pharmaceuticals, Inc.

(“Spectrum Agreement”) pursuant to which the Company

purchased certain assets from Spectrum, including Spectrum’s right, title, interest in and intellectual property related to Renazorb

RZB 012, also known as RENALAN™ (“Renalan”) and RZB 014, also known as SPI 014 (“SPI” and together with

Renalan, the “Compounds”), to further develop and commercialize Renazorb and related compounds.

In partial consideration for

the Spectrum Agreement, the Company issued 313,663 shares of common stock to Spectrum valued at approximately $ 4,000 which represented

(“Spectrum Agreement”) pursuant to which the

Company purchased certain assets from Spectrum, including Spectrum’s right, title, interest in and intellectual property related

to Renazorb RZB 012, also known as RENALAN™ (“Renalan”) and RZB 014, also known as SPI 014 (“SPI” and together

with Renalan, the “Compounds”), to further develop and commercialize Renazorb and related compounds.

In partial consideration

for the Spectrum Agreement, the Company issued 313,663 shares of common stock to Spectrum valued at approximately $ 4,000 which represented

four percent of the Company on a fully-diluted basis at the date of the execution of the Spectrum Agreement.

The Spectrum Agreement has

an anti-dilution provision, which provides that Spectrum maintain its ownership interest in the Company at 4 % of the Company’s shares

on a fully-diluted basis.

Fully-diluted shares of common stock for purposes of the Renazorb Purchase Agreement assumes conversion of any

security convertible into or exchangeable or exercisable for common stock or any combination thereof, including any common stock reserved

for issuance under a stock option plan, restricted stock plan, or other equity incentive plan approved by the Board of Directors of the

Company immediately following the issuance of additional shares of the Company’s common stock (but prior to the issuance of any

additional shares of common stock to Spectrum).

Spectrum’s ownership shall not be subject to dilution until the earlier of thirty-six

months from the first date the Company’s stock trades on a public market, or the date upon which the Company attains a public market

capitalization of at least $ 50 million.

On July 13, 2021, the Company’s initial public offering resulted in a public market capitalization

of at least $ 50 million, and as a result the Company was required to issue 438,374 anti-dilution shares of common stock.

This issuance

represented the final anti-dilution calculation required under the Spectrum Agreement, and no further anti-dilution shares will be issued.

The Company calculated the fair value of the shares and recognized $ 2.2 million to research and development expenses as cost to issue

those shares during the third quarter of 2021.

The Company is also required to pay Spectrum 40% of all of the Company’s sublicense

income for any sublicense granted to certain sublicensees during the first 12 months after the Closing Date (as that term is defined in

the Renazorb Purchase Agreement) and 20% of all other sublicense income.

The Company’s payment obligations to Spectrum will expire

on the twentieth (20 th ) anniversary of the Closing Date of the Renazorb Purchase Agreement.

In August 2022, the Company received

an upfront payment of approximately $ 1.0 million as a result of a sublicense development agreement with Lee’s Pharmaceutical (HK) Limited.

The payment represents sublicense income as described in the Spectrum Agreement, and 20 % of the amount received has been accrued as an

R&D expense in the accompanying statements of operations for the three and nine months ended September 30, 2022.

an anti-dilution provision, which provides that Spectrum maintain its ownership interest in the Company at 4 % of the Company’s

shares on a fully-diluted basis.

Fully-diluted shares of common stock for purposes of the Renazorb Purchase Agreement assumes conversion

of any security convertible into or exchangeable or exercisable for common stock or any combination thereof, including any common stock

reserved for issuance under a stock option plan, restricted stock plan, or other equity incentive plan approved by the Board of Directors

of the Company immediately following the issuance of additional shares of the Company’s common stock (but prior to the issuance

of any additional shares of common stock to Spectrum).

Spectrum’s ownership shall not be subject to dilution until the earlier

of thirty-six months from the first date the Company’s stock trades on a public market, or the date upon which the Company attains

a public market capitalization of at least $ 50 million.

On July 13, 2021, the Company’s initial public offering resulted in a public

market capitalization of at least $ 50 million, and as a result the Company was required to issue 438,374 anti-dilution shares of common

This issuance represented the final anti-dilution calculation required under the Spectrum Agreement, and no further anti-dilution

shares will be issued.

The Company calculated the fair value of the shares and recognized $ 2.2 million to research and development expenses

as cost to issue those shares during the third quarter of 2021.

In the event an NDA filing for Renazorb is accepted by the FDA, the Company

will be required to pay $ 0.2 million to Altair Nanomaterials, Inc., (“Altair”) in accordance with the Spectrum Agreement.

In addition, in the event FDA approval for Renazorb is received, the Company will be required to pay $ 4.5 million to Altair.

is also required to pay Spectrum 40% of all of the Company’s sublicense income for any sublicense granted to certain sublicensees

during the first 12 months after the Closing Date (as that term is defined in the Renazorb Purchase Agreement) and 20% of all other sublicense

The Company’s payment obligations to Spectrum will expire on the twentieth (20 th ) anniversary of the Closing

Date of the Renazorb Purchase Agreement.

In August 2022, the Company received an upfront payment of approximately $ 1.0 million as a result

of a sublicense development agreement with Lee’s Pharmaceutical (HK) Limited.

The payment represents sublicense income as described

in the Spectrum Agreement, and 20 % of the amount received has been accrued as an R&D expense in the accompanying statements of operations

for the year ended December 31, 2022.

In February 2023, the Company received an upfront payment of approximately $ 0.7 million as a result

of a sublicense development agreement with Lotus International Pte Ltd.

The payment represents sublicense income as described in the

Spectrum Agreement, and 20 % of the amount received has been accrued as an R&D expense in the accompanying statements of operations

for the three months ended March 31, 2023.

On July 19, 2021, the Company entered into an

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related to the development of UNI-494.

The budget for the services, which also includes clinical pharmacology, translational sciences,

and bioanalytical services, is approximately $ 2.3 million.

The initial budget for the study, which includes clinical pharmacology, translational sciences,

and bioanalytical services, was approximately $ 2.3 million.

Related payments totaling approximately $ 2.0 million have been paid to Syneos

as of September 30, 2022, approximately $ 2.0 million of related expense has been recorded, and approximately $ 0.8 million has been recorded

as accounts payable or accrued expense in the accompanying balance sheet as of September 30, 2022.

On January 6, 2022, the Company entered into a

Master Services Agreement with Quotient Sciences Limited (“Quotient”), a UK based company that provides drug development and

analysis services, for the purpose of performing clinical research in support of UNI-494.

The budget for the study is approximately

$ 3.7 million.

Related payments totaling approximately $ 1.3 million have been paid to Quotient as of September 30, 2022, approximately

$ 0.5 million of related expense has been recorded, and approximately $ 0.8 million has been recorded as prepaid expense in the accompanying

balance sheet as of September 30, 2022.

as of March 31, 2023.

On January 6, 2022, the Company entered into

a Master Services Agreement with Quotient Sciences Limited (“Quotient”), a UK based company that provides drug development

and analysis services, for the purpose of performing clinical research in support of UNI-494.

The initial budget for the study is

approximately $ 3.7 million, and subsequent revisions reduced the overall budget to $ 2.6 million.

Related payments totaling approximately

$ 1.9 million have been paid to Quotient as of March 31, 2023, approximately $ 0.9 million of related expense has been recorded, and approximately

$ 1.0 million has been recorded as prepaid expense in the accompanying balance sheet as of March 31, 2023.

On February 9, 2022, the Company entered into

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$ 1.4 million.

Payments relating to the initial agreement totaling approximately $ 0.3 million have been paid to CBCC as of September 30,

2022, and approximately $ 0.4 million of related expense has been recorded.

Payments relating to the initial agreement totaling approximately $ 0.4 million have been paid to CBCC as of March 31, 2023, and approximately $ 0.4 million of related expense has been recorded.

In September 2022, a statement of work revised the remaining

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Approximately $ 0.8 million has been paid to Inotiv

as of September 30, 2022 and approximately $ 0.2 million has been recorded as prepaid expense in the accompanying balance sheet as of September

On July 14, 2022, the Company entered into a license

agreement with Lee’s Pharmaceutical (HK) Limited (see Note 4).

Under the terms of the agreement, Lee’s Pharmaceutical will be responsible

for development, registration filing and approval for Renazorb in China, Hong Kong, and certain other Asian markets.

In addition, Lee’s

Pharmaceutical will have sole responsibility for the importation of the drug product from the Company and for the costs of commercialization

of Renazorb in the licensed territories.

The Company has received an upfront payment of $ 1.0 million, expects to receive up to $ 1.0 million

in milestone payments upon product launch in China and will be eligible for tiered royalties of between 7 % and 10 % upon achievement of

prespecified regulatory and commercial achievements.

as of March 31, 2023 and approximately $ 0.1 million has been recorded as prepaid expense in the accompanying balance sheet as of March

On July 14, 2022, the Company entered into a

license agreement with Lee’s Pharmaceutical (HK) Limited (see Note 4).

Under the terms of the agreement, Lee’s Pharmaceutical

will be responsible for development, registration filing and approval for Renazorb in China, Hong Kong, and certain other Asian markets.

In addition, Lee’s Pharmaceutical will have sole responsibility for the importation of the drug product from the Company and for

the costs of commercialization of Renazorb in the licensed territories.

The Company has received an upfront payment of $ 1.0 million,

expects to receive up to $ 1.0 million in milestone payments upon product launch in China and will be eligible for tiered royalties of

between 7 % and 10 % upon achievement of prespecified regulatory and commercial achievements.

On July 27, 2022, the Company entered into an

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in support of Renazorb.

The budget for the services is approximately $ 2.7 million.

Approximately $ 0.8 million has been paid to Celerion

as of September 30, 2022.

$ 1.4 million has been recorded as prepaid expense with $ 0.6 million recorded in accounts payable based on contractual

terms for future clinical services as of September 30, 2022.

The budget for the services is approximately $ 2.7 million, and approximately $ 2.7 million has been paid to Celerion

as of March 31, 2023.

On February 1, 2023, the Company entered into a license agreement with Lotus International Pte Ltd.

(see Note 4).

Under the terms of the agreement, Lotus will be responsible for development, registration filing and approval for Renazorb

in the licensed territory of South Korea.

In addition, Lotus will have sole responsibility for the importation of the drug product from

the Company and for the costs of commercialization of Renazorb in the licensed territory.

The Company has received an upfront payment

of $ 0.7 million, may receive up to $ 3.7 million in future milestone payments and will be eligible for tiered royalties upon achievement

of specified commercial achievements.

Licensing Revenues

On July 14, 2022, the Company entered into a license

agreement (“Agreement”) with Lee’s Pharmaceutical (HK) Limited (“Lees”).

Under the terms of the agreement, Lee’s

Pharmaceutical will be responsible for development, registration filing and approval for Renazorb in China, Hong Kong, and certain other

Asian markets.

In addition, Lees will have sole responsibility for the importation of the drug product from the Company and for the costs

of commercialization of Renazorb in the licensed territories.

Both parties agreed to enter into a separate manufacturing and supply agreement

whereby Unicycive will supply Lees with Renazorb product.

The Company has received an upfront payment of approximately $ 1.0 million, expects

to receive up to $ 1.0 million in milestone payments upon product launch in China and will be eligible for tiered royalties of between

7 % and 10 % upon achievement of prespecified regulatory and commercial achievements.

On July 14, 2022, the Company entered into a

license agreement (“Agreement”) with Lee’s Pharmaceutical (HK) Limited (“Lee’s”).

Under the terms

of the agreement, Lee’s Pharmaceutical will be responsible for development, registration filing and approval for Renazorb in China,

Hong Kong, and certain other Asian markets.

In addition, Lee’s will have sole responsibility for the importation of the drug product

from the Company and for the costs of commercialization of Renazorb in the licensed territories.

Both parties agreed to enter into a

separate manufacturing and supply agreement whereby Unicycive will supply Lee’s with Renazorb product.

The Company has received

an upfront payment of approximately $ 1.0 million, expects to receive up to $ 1.0 million in milestone payments upon product launch in

China and will be eligible for tiered royalties of between 7 % and 10 % upon achievement of prespecified regulatory and commercial achievements.

The Company has evaluated the Agreement in accordance

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The Company does not believe that its promise

to provide goods under a future manufacturing and supply agreement represents a material right to Lees, and therefore the promise does

not represent current performance obligation.

The Company has concluded the agreement contains one performance obligation – the

to provide goods under a future manufacturing and supply agreement represents a material right to Lee’s, and therefore the promise

does not represent a current performance obligation.

The Company has concluded the agreement contains one performance obligation –

the IP license.

ASC 606 indicates that constrained variable consideration

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revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

consideration consisting of milestone payments and sales-based royalties may be received based on the completion of certain clinical,

regulatory, and commercial activities.

The Company has concluded that the future milestone payments should be excluded from the transaction

price due to the uncertainty of achievement as of March 31, 2023.

The Company will reassess this conclusion at each reporting date until

the uncertainties are resolved.

For the sales-based royalty payments, guidance

requires an entity to recognize revenue for a sales-based royalty promised in exchange for a license of intellectual property only when

the later of 1) the subsequent sale or usage occurs, or 2) the performance obligation to which some or all the sales-based or usage-based

royalty has been allocated has been satisfied or partially satisfied.

The Company has concluded that the future sales-based royalties

should be excluded from the transaction price as of December 31, 2022.

The Company will reassess this conclusion at each reporting date.

The Company has concluded that at contract inception

the total transaction price is the $ 1.0 million upfront fee.

The Company has concluded that the license of

the Renazorb IP is functional IP as it contains all the necessary information for Lee’s to develop for commercialization in the

Unicycive’s ongoing activities do not significantly affect the standalone functionality of the IP.

In addition, the

functionality of the IP is not expected to substantially change during the license period based on Unicycive’s activities.

revenue should therefore be recognized at a point in time.

This intellectual property was transferred to Lee’s in July 2022, and

the Company has recognized $ 1.0 million in the accompanying statements of operations as licensing revenue for the year ended December

On February 1, 2023, the Company entered into a license agreement with

Lotus International Pte Ltd.

Under the terms of the agreement, Lotus will be responsible for development, registration

filing and approval for Renazorb in the licensed territory of South Korea.

In addition, Lotus will have sole responsibility for the importation

of the drug product from the Company and for the costs of commercialization of Renazorb in the licensed territory.

The Company has agreed

to complete development of the drug product, at its own expense, as required for obtaining regulatory approval in the U.S.

agreed to enter into a separate manufacturing and supply agreement whereby Unicycive will supply Lotus with Renazorb product.

has received an upfront payment of $ 0.7 million, may receive up to $ 3.7 million in future milestone payments and will be eligible for

tiered royalties upon achievement of specified commercial achievements.

The Company has evaluated the Agreement in accordance

with FASB Topics 808 – Collaborative Arrangements and 606 -Revenue for Contracts from Customers.

The Company first assessed whether

the contractual arrangement is within the scope of ASC 808 which defines a collaborative arrangement as a contractual arrangement that

involves a joint operating activity.

Under ASC 606, the counterparty is considered a customer only if it is acquiring goods or services

that are an output of the entity’s “ordinary activities”.

The Agreement is consistent with the Company’s current

ongoing operations, which is an operating model adopted by many early-stage biotech companies.

The license portion of the contract as

well as the future potential transactions under a manufacturing and supply agreement both represent a vendor-customer relationship.

The Company does not believe that its promise to provide goods under

a future manufacturing and supply agreement represents a material right to Lotus, and therefore the promise does not represent a current

performance obligation.

The Company evaluated the development services and concluded that although not material in cost, they are highly

interrelated with the license grant.

If a promised good or service is not distinct, an entity is required to combine that good or service

with other promised goods or services until it identifies a bundle of goods or services that is distinct.

The combination of the license

grant and development services is distinct as Lotus plans to use the product of this bundled unit for developing its regulatory applications.

The Company concluded that the Lotus agreement contains one performance obligation, the bundle of the license grant and development services.

ASC 606 indicates that constrained variable consideration

should be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative

revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Variable consideration

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The Company has concluded that the future milestone payments should be excluded from the transaction price due

to the uncertainty of achievement as of September 30, 2022.

The Company will reassess this conclusion at each reporting date until the

uncertainties are resolved.

to the uncertainty of achievement as of March 31, 2023.

The Company will reassess this conclusion at each reporting date until the uncertainties

are resolved.

For the sales-based royalty payments, guidance

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The Company has concluded that the future sales-based royalties

should be excluded from the transaction price as of September 30, 2022.

should be excluded from the transaction price as of March 31, 2023.

The Company will reassess this conclusion at each reporting date.

The Company has concluded that at contract inception

the total transaction price is the $ 1.0 million upfront fee.

the total transaction price is the $ 675,000 amount of the upfront payment.

ASC 606 generally requires an entity to allocate the transaction

price to the performance obligations in proportion to their standalone selling prices (i.e., on a relative standalone selling price basis).

The Company identified the bundle of the license grant and development services as the single performance obligation in the agreement.

The $ 675,000 initial transaction price will therefore be entirely allocated to this obligation.

The Company has concluded that the license of

the Renazorb IP is functional IP as it contains all the necessary information for Lees to develop for commercialization in the Territory.

Unicycive’s ongoing activities do not significantly affect the standalone functionality of the IP.

In addition, the functionality

of the IP is not expected to substantially change during the license period based on Unicycive’s activities.

The revenue should

therefore be recognized at a point in time.

This intellectual property was transferred to Lees in July 2022, and the Company has recognized

$ 1.0 million in the accompanying statements of operations as licensing revenue for the three and nine months ended September 30, 2022.

the Renazorb IP is functional IP.

However, since it is not distinct, revenue must be recognized based on the combination of the functional

IP and the related development services.

Lotus will not simultaneously receive and consume the benefits of the Renazorb IP or development

Since the performance of the development services creates an asset that will also be used by the Company and can be licensed

to other customers outside of the Territory, the Company is considered to control the asset as it is created and it does create an asset

with an alternative use.

Therefore the Company concluded that control is not deemed to be transferred over time and is instead transferred

at a point in time.

The intellectual property was transferred to Lotus in February 2023, and the development services were determined

to be immaterial to the contract.

The Company has recognized a total of $ 675,000 in the accompanying statements of operations as licensing

revenue for the three months ended year ended March 31, 2023.

Balance Sheet Components

Prepaid expenses and other current assets as of

December 31, 2021 and September 30, 2022 consisted of the following (in thousands):

September 30,

Prepaid expenses and other current assets as

of December 31, 2022 and March 31, 2023 consisted of the following (in thousands):

Prepaid directors and officers’ liability insurance premiums

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Property, plant and equipment as of December

2021 and September 30, 2022 consisted of the following (in thousands):

September 30,

31, 2022 and March 31, 2023 consisted of the following (in thousands):

Leasehold improvements

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Less accumulated depreciation

Accounts payable as of December 31, 2021 and September

30, 2022 consisted of the following (in thousands):

September 30,

Accounts payable as of December 31, 2022 and

March 31, 2023 consisted of the following (in thousands):

Trade accounts payable

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Accrued liabilities as of December 31, 2022 and

September 30, 2022 consisted of the following (in thousands):

September 30,

March 31, 2023 consisted of the following (in thousands):

Accrued labor costs

1 unchanged sentence

Operating Lease

The Company leases office space under an operating

In December 2021, the Company entered into a lease agreement for 2,367 square feet of office space commencing December 1, 2021.

The initial lease term is for two years , and there is an option to extend the lease for an additional year.

The Company leases office space under an operating lease.

2021, the Company entered into a lease agreement for 2,367 square feet of office space commencing December 1, 2021.

The initial lease

term was for two years , and there was an option to extend the lease for an additional year.

On March 3, 2023, the Company expanded its

leased space through a lease amendment by an additional 2,456 square feet commencing March 15, 2023.

The term of the amended lease is

for three years with an option to extend the lease for three additional years.

In accounting for the leases, the Company adopted

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of the lease initially measured at the present value of the lease payments.

The Company classified the lease as an operating lease and,

at December 1, 2021, determined that the present value of the lease was approximately $ 318,000 using a discount rate of 8.0 %.

The lease amendment represents a modification of the original

lease, and the Company evaluated the new agreement under ASC 842.

The Company classified the lease as an operating lease and, at March

15, 2023, determined that the present value of the lease was approximately $ 1.0 million using a discount rate of 10.0 %.

In accordance

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The Company determined that the option to

extend the lease for an additional year was not considered reasonably certain at December 31, 2021 or September 30, 2022.

During the three

and nine months ended September 30, 2022, the Company reflected amortization of right-of-use asset of approximately $ 39,000 and $ 114,000 ,

respectively, resulting in a right of use asset balance at September 30, 2022 of $ 191,000 .

During the nine months ended September 30, 2022,

the Company made cash payments on the lease of approximately $ 127,000 towards the lease liabilities.

As of September 30, 2022, the total

lease liability was $ 194,000 .

ASC 842 requires recognition in the statement of operations of a single lease cost, calculated so that the

cost of the lease is allocated over the lease term, generally on a straight-line basis.

Rent expense for the lease for the three and nine

months ended September 30, 2022 was approximately $ 42,000 and $ 129,000 , respectively.

As of September 30, 2022, maturities of the Company’s

extend the lease for an additional three years was not considered reasonably certain at March 31, 2023.

During the three months ended

March 31, 2023, the Company reflected amortization of right-of-use asset of approximately $ 44,000 , resulting in a right of use asset balance

of approximately $ 1.0 million.

During the three months ended March 31, 2023,

the Company made cash payments on the lease of $ 65,000 towards the lease liabilities.

As of March 31, 2023, the total lease liability

was approximately $ 1.0 million.

ASC 842 requires recognition in the statement of operations of a single lease cost, calculated so that

the cost of the lease is allocated over the lease term, generally on a straight-line basis.

Rent expense for the lease for the three months

ended March 31, 2023 was $ 54,000 .

As of March 31, 2023, maturities of the Company’s

lease liabilities are as follows (in thousands, unaudited):

Operating Lease

Year ending December 31, 2023

Year ending December 31, 2024

Year ending December 31, 2025

Year ending December 31, 2026

Total lease payments

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Long term portion

Convertible Notes

In January through May 2021, the Company issued

convertible notes (the “2021 Notes”) in the aggregate principal amount of approximately $ 1,098,000 .

The 2021 Notes bear interest

at a rate of 12% per annum, payable at maturity, and mature between January and May, 2022.

The 2021 Notes shall automatically convert

into shares of the Company’s common stock upon the closing of a financing pursuant to which the Company receives gross proceeds

of at least $500,000 (a “Qualified Financing”) or upon a change of control.

The 2021 Notes shall convert into such numbers

of shares of the Company’s common stock equal to the conversion amount divided by the Conversion Price.

“Conversion Price”

means (i) in the event of a Qualified Financing, 70% of the price per share (or conversion price, as applicable) of common stock (or securities

convertible into common stock, as applicable) sold in such financing or (ii) in the event of a change of control, the price per share

reflected in such transaction.

The Company accounted for the 2021 Notes as stock-settled

debt and was accreting the carrying amount of the 2021 Notes to the settlement amount through maturity.

In July through November 2020, the Company issued

convertible notes (the “2020 Notes”) in the aggregate principal amount of $1,290,000.

The 2020 Notes bear interest at a rate

of 12% per annum, payable at maturity, and mature between July and November, 2021.

The 2020 Notes shall automatically convert into shares

of the Company’s common stock upon the closing of a financing pursuant to which the Company receives gross proceeds of at least

$500,000 (a “Qualified Financing”) or upon a change of control.

The 2020 Notes shall convert into such numbers of shares of

the Company’s common stock equal to the conversion amount divided by the Conversion Price.

“Conversion Price” means

(i) in the event of a Qualified Financing, 70% of the price per share (or conversion price, as applicable) of common stock (or securities

convertible into common stock, as applicable) sold in such financing or (ii) in the event of a change of control, the price per share

reflected in such transaction.

The Company accounted for the 2020 Notes as stock-settled

debt and was accreting the carrying amount of the 2020 Notes to the settlement amount through maturity.

As of December 31, 2020, unpaid

and accrued interest of $ 53,000 as well as debt discount accretion expense of approximately $ 186,000 was included with the convertible

notes on the balance sheet.

As a result of the Company’s initial public

offering on July 13, 2021, approximately $ 2,387,000 of principal and $ 191,000 of unpaid accrued interest related to the 2021 and 2020

Notes was converted into shares of common stock.

Additionally, the noteholders were granted warrants equal to 25 % of the conversion shares

The conversion resulted in a loss of $ 431,000 .

Paycheck Protection Program Loan

On April 23, 2020, the Company entered into an

$18,000 loan with Silicon Valley Bank pursuant to the Small Business Administration’s (“SBA”) Paycheck Protection Program

(“PPP”) as well as a $1,000 loan pursuant to the Economic Injury Disaster Assistance Program.

The PPP loan proceeds are intended

to be used for payroll over the eight-week period following the date of the loan.

The loan terms provide that no principal or interest

payments are due and interest will accrue at 1% per annum commencing on April 23, 2020 through October 23, 2020 (deferral period).

one month after the deferral period and continuing monthly through the maturity of the loan on April 23, 2022, equal monthly payments

of principal and interest are due.

The Company classified the loans as a current liability, has applied for and received loan forgiveness

in February 2021, and recorded a gain on extinguishment of debt in the statement of operations for the nine months ended September 30,

Related Party Transactions

1 unchanged sentence

The Company received advances from the stockholder

of $ 248,000 during the nine months ended September 30, 2021.

The Company repaid all remaining amounts owed to the stockholder of $ 1,361,000

during the nine months ended September 30, 2021.

Service agreement with Globavir

of $ 210,000 during February 2023.

The Company repaid amounts owed to the stockholder of $ 210,000 plus accrued interest during March 2023.

Common Stock Purchase Agreement and Service

Agreement with Globavir

On July 1, 2017, the Company entered into a Common

16 unchanged sentences

wrote off the $ 28,000 remaining prepaid balance due from Globavir as of December 31, 2021.

During the nine months ended September 30,

2022, after determining that although a shared office space is no longer utilized, consulting services continued to be provided, the Company

amended the Service Agreement to reflect the consulting services at a reduced service fee of $ 6,000 per month and a termination date of

June 30, 2022.

During the year ended December 31, 2022, after

determining that although a shared office space is no longer utilized, consulting services continued to be provided, the Company amended

the Service Agreement to reflect the consulting services at a reduced service fee of $ 6,000 per month and a termination date of June

Commitments and Contingencies

2 unchanged sentences

that arise in the ordinary course of business.

Such matters are inherently uncertain, and there can be no guarantee that the outcome of

any such matter will be decided favorably to the Company or that the resolution of any such matter will not have a material adverse effect

upon the Company’s financial statements.

Such matters are inherently uncertain, and there can be no guarantee that the outcome

of any such matter will be decided favorably to the Company or that the resolution of any such matter will not have a material adverse

effect upon the Company’s financial statements.

The Company currently has no pending claims or legal proceedings.

In March 2021, the Company signed an advisory

services agreement with The Benchmark Company LLC (“Benchmark”) pursuant to which the Company would pay Benchmark a $ 150,000

advisory fee upon the closing of the initial public offering, and Benchmark would provide advisory services with respect to the public

The Company paid the advisory fee in July 2021.

Indemnifications

19 unchanged sentences

The indemnification period covers all pertinent events and occurrences during the director’s or officer’s

Stockholders’ (Deficit) Equity

Employee Benefit Plan

In December 2021, the Company implemented a 401(k)

Plan which covers all eligible employees of the Company (the “401(k) Plan”).

Employer matching contributions are immediately

100 % vested.

The Company’s 401(k) Plan provides that the Company match each participant’s contribution at 100 % up to 4 % of

the employee’s eligible compensation.

Company contributions to the 401(k) Plan totaled approximately $ 60,000 and $ 21,000 for the

year ended December 31, 2022 and for the three months ended March 31, 2023, respectively.

Stockholders’ Deficit

Authorized Common Stock

1 unchanged sentence

shares of common stock at par value of $ 0.001 per share.

Issuance of Common Stock and Warrants

During July 2021, as a result of its IPO, the

Company issued 5,000,000 shares of common stock and 4,000,000 warrants to investors in exchange for cash at $ 5.00 per unit, consisting

of $ 4.99 per share of common stock and $.

0125 per four fifths of a warrant.

The warrants have a 5 -year term and an exercise price of $ 6.00

The underwriters exercised their option to purchase an additional 600,000 warrants, and the Company received $ 7,500 in proceeds.

As a result of the IPO, the Company’s outstanding

convertible notes and unpaid accrued interest were converted into 736,773 shares of common stock.

Additionally, in accordance with the

original terms of the warrant agreements convertible noteholders were granted a total of 184,193 common stock warrants with a 5 -year term

and with an exercise price of $ 6.00 per warrant.

The following table summarizes activity for warrants

for the nine months ended September 30, 2022:

Issuance of Common Stock and Warrants from

Initial Public Offering

During July 2021, as a result of its initial

public offering, the Company issued 5,000,000 shares of common stock and 4,000,000 warrants to investors in exchange for cash at $ 5.00

per unit, consisting of $ 4.99 per share of common stock and $ .0125 per four fifths of a warrant.

The warrants have a 5 -year term and

an exercise price of $ 6.00 per warrant.

The underwriters exercised their option to purchase an additional 600,000 warrants, and the Company

received $ 7,500 in proceeds.

As a result of the initial public offering,

the Company’s outstanding convertible notes and unpaid accrued interest were converted into 736,773 shares of common stock.

Additionally,

in accordance with the original terms of the warrant agreements convertible noteholders were granted a total of 184,193 common stock

warrants with a 5 -year term and with an exercise price of $ 6.00 per warrant.

The following table summarizes activity for

the Company’s common stock warrants for the three months ended March 31, 2023:

(in thousands)

2 unchanged sentences

Warrants exercised

Outstanding, September 30, 2022

Outstanding, March 31, 2023

See Note 11 for information on contingently issuable

preferred stock warrants associated with our sale in March of Series A-1 Preferred Stock.

Voting Rights of Common Stock

1 unchanged sentence

entitled to one vote for each share thereof held.

Issuance of Series A-1 Preferred

As of December 31, 2022, the Company had 10,000,000

shares of preferred stock authorized, par value of $ 0.001 per share, and no shares of preferred stock were issued or outstanding.

of March 31, 2023, as a result of the Company’s private placement financing, there were 30,190 shares of Series A-1 Preferred Stock issued

and outstanding.

On March 3, 2023, the Company issued and sold,

in a private placement, 30,190 shares of Series A-1 Preferred Stock for an aggregate net proceeds of $ 28.0 million (the “Preferred

Stock Offering”), net of placement agent fees and offering expenses of $ 2.2 million.

The Company intends to use the net proceeds

from the Preferred Stock Offering to support the Company’s New Drug Application (NDA) submission for approval of Renazorb for the

treatment of hyperphosphatemia and, if approved, for the commercial launch of Renazorb in the U.S.

Pursuant to the Certificate of Designation

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

Designation”), each share of Series A-1 Preferred Stock is, subject to approval of the Company’s stockholders,

convertible into a unit (“Unit”) consisting of:

(i) shares of common stock of the Company and, if applicable, shares of

Series A-2 Preferred Stock, in lieu of Common Stock, (ii) a tranche A warrant to acquire approximately 46,675,940 shares of Series A-3

Preferred Stock (the “Tranche A Warrant”), (iii) a tranche B warrant to acquire approximately 42,432,672 shares of Series

A-4 Preferred Stock (the “Tranche B Warrant”), and (iv) a tranche C warrant to acquire approximately 67,892,276 shares of

Series A-5 Preferred Stock (the “Tranche C Warrant”, together with the Tranche A Warrant and the Tranche B Warrant, the

The Tranche A warrants for an aggregate exercise price of approximately $25 million are exercisable until

21 days following the Company’s announcement of receipt of FDA approval for Renazorb, the Tranche B warrants for an aggregate

exercise price of approximately $25 million are exercisable until 21 days following the Company’s announcement of receipt of

Transitional Drug Add-On Payment Adjustment (“TDAPA”) approval for Renazorb, and the Tranche C Warrant for an aggregate

exercise price of approximately $50 million are exercisable until 21 days following four quarters of commercial sales of Renazorb

following receipt of TDAPA approval.

The Company has designated 30,190 shares of

Series A-1 Preferred Stock, 1,800,000 shares of Series A-2 Preferred Stock, 1,800,000 shares of Series A-3 Preferred Stock,

1,800,000 shares of Series A-4 Preferred Stock, and 3,600,000 shares of Series A-5 Preferred Stock, together the “Series A

Preferred Stock”.

As of December 31, 2021 and September 30, 2022,

the Company had 10,000,000 shares of preferred stock authorized, par value of $ 0.001 per share and no shares of preferred stock were issued

or outstanding.

The Series A Preferred Stock has a par value of $ 0.001 per share.

The Certificate of Designation states

that, to the extent that the conversion of the Series A-1 preferred stock as well as the exercise of the Tranche A, B, and C

warrants into Series A-2, Series A-3, Series A-4, and Series A-5 preferred stock results in a beneficial ownership interest in

excess of the maximum percentage of common stock upon conversion, the holders will receive the as converted equivalent for the

remaining shares in preferred stock on a one-for-one basis with common shares.

As the Company does not currently have sufficient

authorized shares of preferred stock available to satisfy the one-for-one conversion to Series A preferred stock, the Company may be

required to seek shareholder approval for an increase in the number of authorized preferred shares.

However, it is the

Company’s intent to modify the language of the Certificate of Designation such that the conversion will reflect a $ 1,000 per

share value for the preferred stock expected to be issued as Series A-2, Series A-3, Series A-4, and Series A-5 preferred stock.

The Company determined that the holders

can detach the warrants from the Series A-1 preferred stock, because the stock will automatically convert into shares of common

stock, and the holders will be able to sell those shares while retaining the warrants.

Accordingly, the warrants are considered

freestanding from the Series A-1 preferred stock.

The Company noted that at contract inception, the warrants are contingently

issuable upon the occurrence of a specified event (shareholder approval).

Once the warrants are legally issued as a result of the

automatic conversion of the Series A-1 preferred stock upon shareholder approval, they will become immediately exercisable at the

option of the holder.

The Company determined that the contingently issuable warrants qualify as derivative instruments pursuant to

ASC 815-40 and that the warrants will be considered issued for accounting purposes concurrently with the Series A-1 Preferred

In connection with the Series A-1 Preferred Stock

issuance, the Company recognized liabilities for the associated Warrants, which had an aggregate fair value of $ 2.8 million at the time

$ 0.2 million of offering costs were allocated to the Warrants and expensed during the three months ended March 31, 2023.

The fair value of the Warrants were accounted for as a reduction to the net proceeds of the Preferred Stock Offering, which resulted in

an initial carrying value of $ 25.4 million for the Series A-1 Preferred Stock (net of $ 2.0 million of placement agent fees and offering

costs allocated to the Series A-1 Preferred Stock).

Refer to Note 11 for disclosures related to the Warrants.

The Series A-1 Preferred Stock have the following

Prior to the receiving stockholder

approval, dividends will accrue, on all issued and outstanding shares of Series A-1 Preferred Stock, prior to and in preference to all

other shares of capital stock of the Company, at an annual rate of eight percent ( 8 %) compounded annually on the original per share price

(plus any such accreted compounded amounts);

provided that such annual dividend rate shall increase to fourteen percent ( 14 %) if stockholder

approval is not obtained at the first meeting of stockholders following the date of the Preferred Stock offering.

If such dividends are

not declared and paid in cash, the dividend amounts will be added to the aggregate liquidation preference then outstanding of the Series

A-1 Preferred Stock.

As of March 31, 2023, the Company has recorded $ 0.2 million, or $ 6.36 per share, of deemed dividends on the outstanding

Series A-1 Preferred Stock.

Holders of the Series A-1 Preferred Stock

are entitled to vote together with the common stock on an as-if-converted-to-common-stock basis as determined by dividing the liquidation

preference with respect to such shares of Series A Preferred Stock by the conversion price.

Holders of common stock are entitled to one

vote for each share of common stock held on all matters submitted to a vote of stockholders.

Board of Directors Designation Rights:

of Series A-1 Preferred Stock have the right to appoint one member to the Board of Directors.

Prior to the receipt of stockholder

approval, the Series A-1 Preferred Stock is not convertible by the holder thereof.

The Company intends to present for a vote the issuance by the Company of shares of common stock pursuant to the

terms of the private placement financing transaction during the Company’s Annual Meeting in June 2023.

On the tenth trading day following the announcement

of the stockholder approval, each share of Series A-1 Preferred Stock shall automatically convert into a unit consisting of:

number of shares of common stock equal to the quotient of (A) the liquidation preference with respect to such share of Series A-1 Preferred

Stock, divided by (B) the conversion price, provided that, to the extent the share conversion would cause such Holder’s beneficial

ownership to exceed 9.99%, such holder shall receive shares of Series A-2 Preferred Stock in lieu of common stock, on a one-for-one basis,

with respect to the number of shares of common stock that exceed 9.99% ownership, (2) a Tranche A Warrant, (3) a Tranche B Warrant, and

(4) a Tranche C Warrant.

In the event stockholder approval

is not obtained within one year following the issuance of the Series A-1 Preferred Stock, at the election of the holder, shares of Series

A-1 Preferred Stock shall be redeemed by the Corporation at a price equal to the then liquidation preference at any time for up to three

years following the issuance date.

The Series A-1 Preferred Stock shall have a liquidation preference of one-times the original per share price

of $ 1,000 per share, plus any accrued but unpaid dividends thereon, whether or

not declared, subject to certain customary anti-dilution adjustments.

Series A-2, A-3, A-4, and A-5 Preferred Stock have the following rights:

Dividends will accrue, on all issued and outstanding shares of Series A-2, A-3, A-4, and A-5 Preferred

Stock, prior to and in preference to all other shares of capital stock of the Company, at an annual rate of eight percent ( 8 %) compounded

annually on the original per share price (plus any such accreted compounded amounts).

If such dividends are not declared and paid in cash,

the dividend amounts will be added to the aggregate liquidation preference then outstanding.

Holders of the Series A-2, A-3, A-4, and

A-5 Preferred Stock are entitled to vote together with the common stock on an as-if-converted-to-common-stock basis as determined by dividing

the liquidation preference with respect to such shares of Preferred Stock by the conversion price.

Holders of common stock are entitled

to one vote for each share of common stock held on all matters submitted to a vote of stockholders.

the option of the holder thereof, each share of Series A-2 Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock, or

Series A-5 Preferred Stock shall be convertible into one share of common stock.

Warrant Liability

In connection with the Preferred Stock Offering

(see Note 10), the Company issued Warrants, which included Warrants to purchase Series A-3 Preferred Stock, Series A-4 Preferred Stock,

and Series A-5 Preferred Stock.

The Warrants are recognized as liabilities in

the balance sheets and were initially recognized at fair value at the time of issuance.

The Warrants are also subject to remeasurement

at each balance sheet date after issuance.

Any change in fair value is recognized as a component of other income (expense) in the statements

of operations in the period of change.

The valuation of the Warrants contained unobservable

inputs that reflected the Company’s own assumptions for which there was little market data.

Accordingly, the Warrants were measured

at fair value on a recurring basis using unobservable inputs and were classified as Level 3 inputs.

The significant unobservable inputs

used in the fair value measurement of the Company’s Warrants include, but are not limited to, probability of obtaining certain shareholder

approvals, probability of reaching certain technical milestones related to the development of Renazorb, and the estimated term of the

Significant increases (decreases) in any of those inputs in isolation would have resulted in a significantly higher (lower)

fair value measurement.

Generally, a change in the assumption used for the probability of obtaining certain shareholder approvals is not

correlated to a change in the probability of reaching certain technical milestones.

However, a change to the assumption used for the probability

of obtaining certain shareholder approvals or a change in the probability of reaching certain technical milestones would have been accompanied

by a directionally opposite change and a directionally similar change, respectively, in the assumption used for the estimated term.

The fair value of the contingently issuable warrants

associated with the Company’s March 2023 private placement transaction were determined by using a Monte Carlo simulation technique

(“MCS”) to value the embedded derivatives associated with the warrants.

The MCS methodology calculates the theoretical value

of a warrant based on certain parameters, including:

(i) the threshold of exercising the warrant, (ii) the price of the underlying security,

(iii) the time to expiration, or expected term, (iv) the expected volatility of the underlying security, (v) the risk-free rate, (vi)

the number of paths, (vii) estimated probability assumptions surrounding shareholder approval as well as the achievement by the Company

of technical milestones associated with our regulatory and commercial progress, and (viii) an estimated discount for lack of marketability.

These valuation techniques involve management’s estimates and

judgment based on unobservable inputs and are classified in Level 3.

The fair value estimates may not be indicative of the amounts that

would be realized in a market exchange.

Additionally, there may be inherent uncertainties or changes in the underlying assumptions used,

which could significantly affect the current or future fair value estimates.

Generally, a significant increase (decrease) in the probabilities

of shareholder approval and the achievement of technical milestones would have resulted in a significantly higher (lower) fair value measurement;

however, changes in other inputs such as expected term and price of the underlying common stock will have a directionally opposite impact

on fair value measurement.

The Company uses a third-party valuation expert

to assist in the determination of the fair value of the Warrants.

The tables below summarize the valuation inputs into the MCS model for

the derivative liability associated with the three tranches of contingently issuable warrants on the date of signing of our private placement

financing of March 3, 2023 and at March 31, 2023.

Tranche A Warrant

Fair value of underlying stock

90.2 % – 94.6 %

109.5 % – 128.2 %

Risk free rate

4.7 % – 5.0 %

4.1 % – 4.5 %

Dividend yield

Term (in years)

Discount for lack of marketability

Probability for shareholder approval

Probability for FDA approval

16.0 % – 31.9 %

Tranche B Warrant

Fair value of underlying stock

93.7 % – 95.8 %

108.5 % – 110.0 %

Risk free rate

4.6 % – 4.9 %

3.9 % – 4.3 %

Dividend yield

Term (in years)

Discount for lack of marketability

Probability for shareholder approval

Probability for TDAPA approval

Tranche C Warrant

Fair value of underlying stock

97.1 % – 103.9 %

103.6 % – 109.8 %

Risk free rate

4.5 % – 4.6 %

3.7 % – 3.9 %

Dividend yield

Term (in years)

Discount for lack of marketability

Probability for shareholder approval

Probability for commercialization

2.7 % – 9.1 %

As of the issuance date (March 3, 2023), the Company

estimated the fair value of the Warrants to be $ 2.8 million.

As of March 31, 2023, the Company estimated the fair value of the Warrants

to be $ 13.2 million.

The following table summarizes activity for the

Company’s contingently issuable preferred stock warrants for the three months ended March 31, 2023:

(in thousands)

Outstanding, December 31, 2022

Warrants contingently issuable

Warrants exercised

Outstanding, March 31, 2023

Stock-based Compensation

11 unchanged sentences

units, and other stock-based awards.

In October 2019, the Company adopted the 2019

Stock Option Plan (“2019 Plan”) which allowed for the granting of incentive stock options (“ISO”), non-qualified

stock options (“NSO”) to the employees, members of the board of directors and consultants of the Company.

In 2019 and during

the first seven months of 2020, the Company granted ISOs and NSOs to consultants and directors from the 2019 Plan.

As of December 31,

2019, 232,558 shares were authorized for issuance and 75,581 shares were available for future grant under the 2019 Plan.

On April 6, 2020

the Company increased the shares authorized for issuance to 348,837 shares total.

On February 17, 2021, the Company increased the shares

authorized for issuance to 1,767,442 shares total.

As of July 15, 2021, no further awards may be issued under the 2019 Plan due to the

adoption of the Company’s 2021 Plan.

In 2018, the Company adopted the 2018 Equity Incentive

Plan (“2018 Plan”) which allowed for the granting of incentive stock options (“ISO”), non-qualified stock options

(“NSO”), stock appreciation rights, restricted stock and restricted stock units to the employees, members of the board of

directors and consultants of the Company.

In 2018, the Company granted ISOs and NSOs to consultants and directors from this plan.

December 31, 2020, 465,116 shares were authorized for issuance and 17,442 shares were available for future grant under the 2018 Plan.

As of July 15, 2021, no further awards may be issued under the 2018 Plan due to the adoption of the Company’s 2021 Plan.

As of December 31, 2022 and March 31, 2023, 352,938 shares of common stock are available under the

The following table summarizes activity for stock

options under all plans for the nine months ended September 30, 2022:

options under all plans for the three months ended March 31, 2023:

(in thousands)

3 unchanged sentences

Options exercised

Outstanding, September 30, 2022

Options vested and exercisable as of September 30, 2022

The grant date fair value of options granted during

the nine months ended September 30, 2022 was $ 11,000 .

As of September 30, 2022, the unrecognized compensation

Outstanding, March 31, 2023

Options vested and exercisable as of March 31, 2023

As of March 31, 2023, the unrecognized compensation

cost related to outstanding stock options was $ 0.9 million, which is expected to be recognized as expense over approximately 2.1 years.

During the three months ended March 31, 2021,

employees and consultants exercised a total of 383,721 stock options and the Company received $119,000 in proceeds.

A portion of these

options were exercised early (prior to vesting), and as of September 30, 2022, 11,726 of the options remained unvested.

Proceeds received

related to the unvested options of approximately $38,000 at September 30, 2022 were recorded in accrued liabilities on the accompanying

balance sheets and will be reclassified to equity as vesting occurs, provided the employees and consultants continue to provide services

to the Company.

Proceeds received related to the vested portion of options of $51,000 and $22,000 were reclassified to equity during the

nine-month periods ended September 30, 2021 and 2022, respectively.

The vested portion of the exercises was 371,988 shares at September

During the year ended December 31, 2021, employees

and consultants exercised a total of 383,721 stock options and the Company received $ 119,000 in proceeds.

A portion of these options

were exercised early (prior to vesting), and as of March 31, 2023, 7,365 of the options remained unvested.

Proceeds received related

to the unvested options of approximately $ 24,000 at March 31, 2023 were included in accrued liabilities on the accompanying balance sheet

and will be reclassified to equity as vesting occurs, provided the employees and consultants continue to provide services to the Company.

Proceeds received related to the vested portion of options of $ 7,000 were reclassified to equity during the three months ended March

The vested portion of the exercises was 376,349 shares at March 31, 2023.

During May 2022, the Company granted a consultant

10,000 restricted stock units with a grant date fair value of $ 7,200 , resulting in a fair value per share of $ 0.72 .

Subject to the consultant’s

continued service, the restricted stock units shall vest upon the two-year anniversary of the date of grant.

As of March 31, 2023, the

unrecognized compensation cost related to the grant was approximately $ 4,000 , which is expected to be recognized as expense over approximately

During July 2021, the Company granted a director

26,738 restricted stock units with a grant date fair value of $ 100,000 , resulting in a fair value per share of $ 3.74 .

The restricted

stock units vested in July 2022.

The Company has recorded stock-based compensation

expense, which includes expense related to restricted stock units, allocated by functional cost as follows for the three and nine months

ended September 30, 2021 and 2022 (in thousands):

expense, which includes expense related to restricted stock units, allocated by functional cost as follows for the three months ended

March 31, 2022 and 2023 (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Research and development

11 unchanged sentences

date is used as the expected term under this method.

Common Stock Fair Value –

The fair value of the common stock underlying the Company’s stock options prior to the initial public offering was estimated at

each grant date and was determined on a periodic basis and based either on transactions with third parties in which common stock was sold

for cash or with the assistance of an independent third-party valuation expert.

The assumptions underlying these valuations represented

management’s best estimates, which involved inherent uncertainties and the application of significant levels of management judgment.

Volatility – The expected

volatility being used is derived from the historical stock volatilities of a representative industry peer group of comparable publicly

listed companies over a period approximately equal to the expected term of the options.

Risk-free Interest Rate –

The risk-free interest rate is based on median U.S.

Common Stock Fair Value - The

fair value underlying the Company’s common stock is determined based on the public market closing price on each date of grant.

The assumptions underlying these valuations represented management’s best estimates, which involved inherent uncertainties and

the application of significant levels of management judgment.

Volatility - The expected volatility

being used is derived from the historical stock volatilities of a representative industry peer group of comparable publicly listed companies

over a period approximately equal to the expected term of the options.

Risk-free Interest Rate - The

risk-free interest rate is based on median U.S.

Treasury zero coupon issues with remaining terms similar to the expected term on the

Expected Dividend – The

Company has never declared nor paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore,

used an expected dividend yield of zero .

The following averaged assumptions were used to

calculate the fair value of awards granted to employees, directors and non-employees for the nine months ended September 30, 2021 and

Nine Months Ended

September 30,

Expected volatility

102.00 – 105.00

101.00 - 105.00

Risk-free interest rate

Dividend yield

Expected term

5.13 – 6.25 years

Expected Dividend – Through

March 31, 2023, the Company has never declared nor paid any cash dividends.

Company shall modify its dividend policy to state that the Company intends to pay dividends to all stockholders, including holders of

Series A Preferred Stock on an as-if-converted-to-common-stock basis, on a quarterly basis in an amount of which the aggregate of all

quarterly dividends shall equal at least seventy-five percent ( 75 %) of its annual net cash flow from operations following the approval

of Renazorb by the FDA if

obtained, and the commencement of commercial sales.

There were no equity awards granted to employees, directors and non-employees

for the three months ended March 31, 2022 and 2023.

Net loss per share

The following table sets forth the computation

of basic and diluted net loss per share (in thousands, except share and per share data):

The Company computes net loss per share using

the two-class method.

The two-class method uses an earnings allocation formula that determines net loss per share for common stock and

any participating securities according to dividends declared and participation rights in undistributed earnings.

Diluted net loss per share includes the potential dilutive effect of

common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive.

equivalents include:

(i) outstanding stock options and restricted stock units;

(ii) common stock to be issued upon the assumed exercise

of the Company's common stock warrants;

and (iii) prior to issuance, the contingently issuable warrants related to the Company’s

March private placement financing.

Because the impact of these items is generally anti-dilutive during periods of net loss, there is no

difference between basic and diluted loss per common share for periods with net losses.

The following table sets forth the computation of basic and diluted

net loss per share of common and preferred stock (in thousands, except share and per share data):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Deemed dividends on Series A-1 Preferred Stock

Net loss attributable to common shares, basic and diluted

Weighted-average shares outstanding used in computing net loss per share attributable to common stockholders, basic and diluted

4 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Options to purchase common stock

Warrants to purchase common stock

Subsequent events

Contingently issuable warrants to purchase convertible preferred stock

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

What changed 10-Q

Item 1. Financial Statements