What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-13 · 385 added, 310 removed, 1021 unchanged (41% of the section changed)

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Mezzanine equity:

Series B-1 preferred stock, $ 0.001 par value per share – zero shares authorized at December 31, 2023, and 50,000 shares authorized at March 31, 2024;

zero shares outstanding at December 31, 2023, and 50,000 shares outstanding at March 31, 2024

Series B-1 preferred stock, $ 0.001 par value per share – zero shares authorized at December 31, 2023, and 50,000 shares authorized at June 30, 2024;

zero shares outstanding at December 31, 2023, and 50,000 shares outstanding at June 30, 2024

Stockholders’ deficit:

Series A-2 preferred stock, $ 0.001 par value per share – 43,649 Series A-2 shares authorized at December 31, 2023 and 21,388.01 Series A-2 Prime shares authorized at March 31, 2024;

43,649 Series A-2 shares outstanding at December 31, 2023 and 19,991.51 Series A-2 Prime shares outstanding at March 31, 2024

Series A-2 preferred stock, $ 0.001 par value per share – 43,649

Series A-2 shares authorized at December 31, 2023 and 21,388.01 Series A-2 Prime shares authorized at June 30, 2024;

43,649 Series A-2

shares outstanding at December 31, 2023 and 17,073.07 Series A-2 Prime shares outstanding at June 30, 2024

Preferred stock:

$ 0.001 par value per share— 9,926,161 and 9,904,773 shares authorized at December 31, 2023 and March 31, 2024, respectively;

zero shares issued and outstanding at December 31, 2023 and March 31, 2024

Common stock, $ 0.001 par value per share – 200,000,000 shares authorized at December 31, 2023 and March 31, 2024;

34,756,049 and 37,606,630 shares issued and outstanding at December 31, 2023 and March 31, 2024, respectively

$ 0.001 par value per share— 9,926,161 and 9,904,773 shares authorized at December 31, 2023 and June 30, 2024, respectively;

zero shares issued and outstanding at December 31, 2023 and June 30, 2024

Common stock, $ 0.001 par value per share – 200,000,000 shares authorized at December 31, 2023 and 400,000,000 shares authorized at June 30, 2024;

34,756,049 and 43,573,212 shares issued and outstanding at December 31, 2023 and June 30, 2024, respectively

Additional paid-in capital

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Three Months Ended

Six Months Ended

Licensing revenues

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Total other income (expenses)

Net income (loss)

Deemed dividend to Series A-1 preferred stockholders

Dividend to Series B-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

Net income attributable to participating securities

Net income (loss) attributable to common stockholders

Net income (loss) per share attributable to common stockholders, basic

Net loss per share attributable to common stockholders, diluted

Weighted-average shares outstanding used in computing net income (loss) per share, basic

Weighted-average shares outstanding used in computing net loss per

share, diluted

See accompanying notes to the financial statements

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Balance at March 31, 2023

Deemed dividends on Series A-1 preferred stock

Issuance of common stock for exercise of options

Stock-based compensation expense

Balance at June 30, 2023

Series A-2 Prime

Stockholders’

Preferred Stock

Balance at December 31, 2023

Issuance of Series B-1 preferred

stock, net of issuance costs

Dividends on Series B-1 preferred

Exchange of Series A-2 preferred

stock for Series A-2 Prime preferred stock

Conversion of Series A-2 Prime

preferred stock into common stock

Issuance of common stock for exercise

compensation expense

March 31, 2024

Issuance of Series B-1 preferred stock, net of issuance costs

Dividends on Series B-1 preferred stock

Exchange of Series A-2 preferred stock for Series A-2 Prime preferred stock

Conversion of Series A-2 Prime preferred stock into common stock

Issuance of common stock for exercise of options

Stock-based compensation expense

Balance at March 31, 2024

Dividends Paid on Series B-1 preferred stock

Conversion of Series A-2 Prime preferred stock into common stock

Issuance of common stock for exercise of options

Stock-based compensation expense

Balance at June 30, 2024

See accompanying notes to the financial statements

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(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

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

Dividends on preferred stock

Net cash provided by financing activities

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revenue as well as product sales.

The Company has not generated any licensing revenue during the three months ended March 31, 2024.

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 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 financing and loans from a stockholder to fund its operations.

As of December 31, 2023 and March

31, 2024, the Company had an accumulated deficit of $ 64.5 million and $ 85.5 million, respectively.

The Company has not generated any licensing revenue during the six months ended June 30, 2024.

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 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 financing and loans from a stockholder to fund its operations.

As of December 31, 2023 and June 30, 2024, the Company

had an accumulated deficit of $ 64.5 million and $ 75.6 million, respectively.

In connection with its initial public offering

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a private placement and that included initial upfront funding of $ 28.0 million in net proceeds.

On March 13, 2024, the Company entered into a

securities purchase agreement with certain healthcare-focused institutional investors to provide $ 50 million in gross proceeds through

a private placement.

Pursuant to the securities purchase agreement, the Company issued institutional purchasers $ 50 million in shares

of Series B Convertible Preferred Stock.

On March 13, 2024, the Company entered into a securities purchase agreement

with certain healthcare-focused institutional investors to provide $ 50 million in gross proceeds through a private placement.

to the securities purchase agreement, the Company issued institutional investors $ 50 million in shares of Series B Convertible Preferred

The Company received $ 46.2 million in net proceeds (net of issuance costs).

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The accompanying unaudited financial statements

of the Company as of March 31, 2024 have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X

of the Company as of June 30, 2024 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 in

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Warrant Liability

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

(and have since been issued – see Note 12), subject to shareholder approval, upon conversion of the Series A-1 Preferred Stock.

The Company accounts for these warrants as liabilities (in accordance with ASC 480, Distinguishing Liabilities from Equity ) on

the balance sheets as a result of certain redemption clauses that are not within the control of the Company.

The warrant liability was

initially measured at fair value and is remeasured at fair value each reporting period.

Changes in the fair value of the warrant liability

are recognized in earnings during each period.

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 (and have since been issued – see Note 12), subject to shareholder approval, upon conversion of the Series A-1

Preferred Stock.

The Company accounts for these warrants as liabilities (in accordance with ASC 480, Distinguishing Liabilities from

Equity ) on the balance sheets as a result of certain redemption clauses that are not within the control of the Company.

liability was initially measured at fair value and is remeasured at fair value each reporting period.

Changes in the fair value of the

warrant liability are recognized in earnings during each period.

The warrant liability is measured using Level 3 fair value inputs.

See Note 12 for a description

of warrant liability and the related valuations.

Note 12 for a description of warrant liability and the related valuations.

Segment Information

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fair value at that time.

At March 31, 2024, management determined there were no impairments of the Company’s property and equipment.

At June 30, 2024, management determined there were no impairments of the Company’s property and equipment.

The Company determines whether a contract is,

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hierarchy contains the following levels:

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 following table summarizes the fair value

hierarchy of financial liabilities measured at fair value as of March 31, 2024 (in thousands):

● 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 following table summarizes the fair value hierarchy of financial

liabilities measured at fair value as of June 30, 2024 (in thousands):

Warrant liability

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are attributable to unobservable inputs (in thousands):

Three Months Ended

Six Months Ended

Fair value at January 1, 2023

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Change in fair value of warrants

Fair value at December 31, 2023

Fair value at June 30, 2023

Fair value at January 1, 2024

Change in fair value of warrants

Fair value at March 31, 2024

The expense relating to the change in fair

value of the warrant liability of $ 10.4 million and $ 11.8 million for the three months ended March 31, 2023 and March 31, 2024 is

Change in fair value of warrants

Fair value at June 30, 2024

The expense relating to the change in fair value

of the warrant liability of $ 0.3 million and $ 16.8 million for the three months ended June 30, 2023 and June 30, 2024 respectively is

included in other income (expense) in the statements of operations.

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to estimate fair value.

As of December 31, 2023 and March 31, 2024, the recorded values of cash and cash equivalents, accounts payable,

As of December 31, 2023 and June 30, 2024, the recorded values of cash and cash equivalents, accounts payable,

and accrued liabilities approximated fair value due to the short-term nature of the instruments.

Cash and cash equivalents, accounts

payable, and accrued liabilities are Level 1 financial instruments.

Cash and cash equivalents, accounts payable,

and accrued liabilities are Level 1 financial instruments.

Concentration of Credit Risk

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to other adverse conditions in the financial or credit markets.

No such losses have been incurred through March 31, 2024.

No such losses have been incurred through June 30, 2024.

Prepaid Expenses and Other Current Assets

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as a result comprehensive loss is the same as net loss for each period presented.

Net Loss per Share

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.

Net Income (Loss) per Share

Basic and diluted net income (loss) per share

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

Basic and diluted net income (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 income (loss) per share

includes potentially dilutive securities outstanding for the period.

See Note 14 for reconciliations of basic and diluted net income (loss)

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 November 2023, the Financial Accounting Standards Board (“FASB”)

issued Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,

which requires an enhanced disclosure of significant segment expenses on an annual and interim basis.

This guidance is effective for fiscal

years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is

Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements.

do not expect the adoption of this guidance to have a material impact on our financial statements.

The Company adopted Accounting Standards Update

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Significant Agreements

With regards to manufacturing, testing and potential commercial supply

of Oxylanthanum Carbonate, the Company has entered into an agreement with Shilpa Medicare Ltd based in India.

According to the terms of

the agreement Unicycive will pay the vendor $ 2 million in the first calendar year when the net revenue reaches $ 10 million from sales

of Oxylanthanum Carbonate following its approval by the FDA and commercial supply of the product by the vendor.

Thereafter, the Company

will pay $ 2 million per year for four consecutive years , after the first year’s payment, for total payments of $ 10 million, 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.

With regards to manufacturing, testing and potential

commercial supply of oxylanthanum carbonate, on October 31, 2020, the Company entered into an agreement with Shilpa Medicare Ltd (“Shilpa”)

based in India.

P ursuant to the Agreement, Shilpa provides certain development, manufacturing, supply

and other CMC-related services related to the development and commercialization of oxylanthanum carbonate (“OLC”).

In June 2024, the Company entered into the

First Amendment to Manufacturing and Supply Agreement with Shilpa (the “Amendment”).

Company has entered into the Amendment in anticipation of an increased manufacturing demand for OLC.

Pursuant to the Amendment, the

Company has agreed to make a binding purchase order for tablets of OLC and Shilpa has agreed to deliver such order by June 30, 2025.

In addition, the Company has agreed to order additional tablets for delivery between December 31, 2025, and June 30, 2026.

the Company has agreed to make certain milestone payments and to provide certain funding to Shilpa for a new manufacturing line.

initial term of the Agreement shall continue until the eighth (8th) anniversary of the date of receipt by the Company of FDA

approval of its NDA of OLC (the “Initial Term”).

Following the Initial Term, the Agreement shall continue in effect for

consecutive periods of four (4) years each unless earlier terminated pursuant to the terms of the Agreement.

In October 2017, the Company entered into an exclusive

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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 Oxylanthanum Carbonate and related compounds.

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.

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 Oxylanthanum Carbonate 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.

In the event an NDA filing for Oxylanthanum Carbonate

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 Oxylanthanum Carbonate is received, the Company will be required

to pay $ 4.5 million to Altair.

The Company is also required to pay Spectrum 40 % of all 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 Spectrum

Agreement) and 20 % of all other sublicense income.

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

anniversary of the Closing Date of the Spectrum Agreement.

In August 2022, the Company received an upfront payment of approximately $ 1.0

million resulting from 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 resulting from 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.

(“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 oxylanthanum carbonate 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 oxylanthanum carbonate 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 oxylanthanum carbonate 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

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

The Company is also required to pay Spectrum 40 % of all 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 Spectrum Agreement) and 20 % of

all other sublicense income.

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

Closing Date of the Spectrum Agreement.

In August 2022, the Company received an upfront payment of approximately $ 1.0 million resulting

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

In February 2023, the Company received an upfront

payment of approximately $ 0.7 million resulting from a sublicense development agreement with Lotus International Pte Ltd.

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 six months ended June 30, 2023.

On July 19, 2021, the Company entered into an

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Related payments totaling approximately $ 2.8 million

have been paid to Quotient as of March 31, 2024, approximately $ 2.4 million of related expense has been recorded, and approximately $ 0.6

have been paid to Quotient as of June 30, 2024, approximately $ 2.7 million of related expense has been recorded, and approximately $ 0.6

million and $ 0.8 million has been recorded as prepaid expenses and other current assets in the accompanying balance sheets as of December

31, 2023 and March 31, 2024, respectively.

31, 2023 and June 30, 2024, respectively.

On February 9, 2022, the Company entered into

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The budget for these services is approximately $ 2.9 million.

Approximately $ 2.8 million has been paid to Inotiv as of March 31, 2024 and

Approximately $ 2.9 million has been paid to Inotiv as of June 30, 2024 and

approximately $ 0.3 million and $ 0.1 million has been recorded as prepaid expenses and other current assets in the accompanying balance

sheets as of December 31, 2023 and March 31, 2024, respectively.

sheets as of December 31, 2023 and June 30, 2024, respectively.

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

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The agreements provide

for total payments of up to $ 3.7 million, and the Company has made $ 3.0 million in payments pursuant to the agreements as of March 31,

for total payments of up to $ 3.7 million, and the Company has made $ 3.0 million in payments pursuant to the agreements as of June 30,

Licensing Revenues

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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 December 31, 2023 and March 31, 2024.

to the uncertainty of achievement as of December 31, 2023 and June 30, 2024.

The Company will reassess this conclusion at each reporting

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The Company has concluded that the future sales-based royalties

should be excluded from the transaction price as of December 31, 2023 and March 31, 2024.

should be excluded from the transaction price as of December 31, 2023 and June 30, 2024.

The Company will reassess this conclusion at

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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 March 31, 2024.

to the uncertainty of achievement as of June 30, 2024.

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

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The Company has concluded that the future sales-based royalties

should be excluded from the transaction price as of December 31, 2023 and March 31, 2024.

should be excluded from the transaction price as of December 31, 2023 and June 30, 2024.

The Company will reassess this conclusion at

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

of operations as licensing revenue for the three months ended March 31, 2023.

of operations as licensing revenue for the six months ended June 30, 2023.

Balance Sheet Components

Prepaid expenses and other current assets as of

December 31, 2023 and March 31, 2024 consisted of the following (in thousands):

December 31, 2023 and June 30, 2024 consisted of the following (in thousands):

Prepaid directors’ and officers’ liability insurance premiums

Prepaid preclinical services

Property, plant and equipment as of December 31,

2023 and March 31, 2024 consisted of the following (in thousands):

Property, plant and equipment as of December 31, 2023 and June 30,

2024 consisted of the following (in thousands):

Leasehold improvements

Furniture and fixtures

Lab Equipment

Less accumulated depreciation

Accounts payable as of December 31, 2023 and March

Accounts payable as of December 31, 2023 and June

30, 2024 consisted of the following (in thousands):

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Accrued liabilities as of December 31, 2023 and

March 31, 2024 consisted of the following (in thousands):

June 30, 2024 consisted of the following (in thousands):

Accrued labor costs

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borrowing rate of 10 %.

During the three months ended March 31, 2024, the Company reflected amortization of right-of-use asset of approximately

During the six months ended June 30, 2024, the Company reflected amortization of right-of-use asset of approximately

$ 162,000 , resulting in a right of use asset balance of approximately $ 0.6 million.

During the three months ended March 31, 2024,

the Company made cash payments on the lease of $ 97,000 towards the lease liabilities.

As of March 31, 2024, the total lease liability

was approximately $ 0.7 million.

As of March 31, 2024, maturities of the Company’s

During the six months ended June 30, 2024, the

Company made cash payments on the lease of $ 194,000 towards the lease liabilities.

As of June 30, 2024, the total lease liability was

approximately $ 0.6 million.

As of June 30, 2024, maturities of the Company’s

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

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Company contributions to the 401(k) Plan totaled approximately $ 107,000 and $ 72,000 for the

year ended December 31, 2023 and for the three months ended March 31, 2024, respectively.

year ended December 31, 2023 and for the six months ended June 30, 2024, respectively.

Stockholders’ Deficit

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are equity classified.

The following table summarizes activity for the Company’s IPO warrants for the three months ended March 31,

(in thousands)

The following table summarizes activity for the Company’s IPO warrants for the six months ended June 30,

Number of Average

Shares Weighted- Remaining Aggregate

Underlying Average Contractual Intrinsic

Outstanding Exercise Term Value

Warrants Price (in Years) (in thousands)

Outstanding, December 31, 2023 4,784,193 6.00 2.54 -

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Warrants exercised -

Outstanding, March 31, 2024

See Note 12 for information on preferred stock warrants associated

with our sale in March of Series A-1 Preferred Stock.

Outstanding, June 30, 2024 4,784,193 6.00 2.04 -

See Note 12 for information on preferred stock

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

Issuance of Common Stock Upon Conversion of Series A-1 Preferred

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

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 of issuance.

costs of $ 0.2 million were allocated to the Warrants and expensed during March 2023.

The fair value of the Warrants was 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).

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

Offering costs of $ 0.2 million were allocated to the Warrants and expensed during March 2023.

The fair value of the Warrants

was 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 12 for disclosures related to the Warrants.

On June 26, 2023, the Company held its annual shareholder meeting and,

as a result, shareholder approval for the conversion of the Series A-1 Preferred Stock was obtained.

On July 11, 2023, pursuant to the

Series A Certificate of Designation, the Company issued 19,516,205 shares of common stock (see Note 9) and 43,649 shares of Series A-2

Preferred Stock in partial settlement of the auto-conversion of the Series A-1 preferred shares.

As of December 31, 2023, there were zero

shares of Series A-1 preferred stock issued and outstanding and there were 43,649 shares of Series A-2 Preferred Stock issued and outstanding.

On June 26, 2023, the Company held its annual

shareholder meeting and, as a result, shareholder approval for the conversion of the Series A-1 Preferred Stock was obtained.

11, 2023, pursuant to the Series A Certificate of Designation, the Company issued 19,516,205 shares of common stock (see Note 9) and 43,649

shares of Series A-2 Preferred Stock in partial settlement of the auto-conversion of the Series A-1 preferred shares.

As of December 31,

2023, there were zero shares of Series A-1 preferred stock issued and outstanding and there were 43,649 shares of Series A-2 Preferred

Stock issued and outstanding.

The Series A-2, A-3, A-4, and A-5 Preferred Stock

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Exchange Agreement

On March 13, 2024, the

Company entered into an exchange agreement (the “Exchange Agreement”) with certain accredited investors (the “Investors”),

pursuant to which the Investors surrendered all shares of Series A-2 Preferred Stock held by them in exchange for an aggregate of 21,388.01

shares of new preferred stock to be known as “Series A-2 Prime Preferred” (the “Exchanged Preferred”) having rights

set forth the Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Voting

Preferred Stock (the “Amended Series A Certificate of Designation”).

Concurrent with execution

of the Exchange Agreement, but prior to filing of the Amended Series A Certificate of Designation with the Delaware Secretary of State,

the Company filed Certificates of Elimination for each of its Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred

Stock, Series A-4 Preferred Stock and Series A-5 Preferred Stock (collectively, the “Certificates of Elimination”) with the

Delaware Secretary of State.

Concurrent with the execution

of the Exchange Agreement, the Company and each Investor have amended and restated the following warrants:

(i) tranche A warrants to acquire

an aggregate of 47,852,430 shares of Series A-3 Convertible Preferred Stock of the Company that were issued on July 11 2023 (the “Original

Tranche A Warrants”) have been amended and restated to acquire an aggregate of 25,840.3122 shares of Series A-3 Convertible Preferred

Stock (as amended, the “Amended Tranche A Warrants”);

(ii) tranche B warrants to acquire an aggregate of 43,502,206 shares

of Series A-4 Convertible Preferred Stock of the Company that were issued on July 11, 2023 (the “Original Tranche B Warrants”)

have been amended and restated to acquire an aggregate of 25,666.30154 shares of Series A-4 Convertible Preferred Stock (as amended, the

“Amended Tranche B Warrants”) and (iii) tranche C warrants to acquire an aggregate of 69,603,531 shares of Series A-5 Convertible

Preferred Stock of the Company that were issued on July 11, 2023(the “Original Tranche C Warrants”, and together with the

Original Tranche A Warrants and Tranche B Warrants, the “Original Warrants”) have been amended and restated to acquire 51,506.61294

shares of Series A-5 Convertible Preferred Stock (as amended, the “Amended Tranche C Warrants,” together with the Amended

Tranche A Warrants and the Amended Tranche B Warrants, the “Amended Warrants”).

The Amended Warrants have the same terms and

conditions as the original warrants except that such Amended Warrants:

(i) reduced the amount of shares of Series A-3 Convertible Preferred

Stock, Series A-4 Convertible Preferred Stock and Series A-5 Convertible Preferred Stock into which such Amended Warrants are convertible

as described above;

On March 13, 2024, the Company entered into

an exchange agreement (the “Exchange Agreement”) with certain accredited investors (the “Investors”), pursuant

to which the Investors surrendered all shares of Series A-2 Preferred Stock held by them in exchange for an aggregate of 21,388.01 shares

of new preferred stock to be known as “Series A-2 Prime Preferred” (the “Exchanged Preferred”) having rights set

forth the Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Voting Preferred

Stock (the “Amended Series A Certificate of Designation”).

Concurrent with execution of the Exchange Agreement,

but prior to filing of the Amended Series A Certificate of Designation with the Delaware Secretary of State, the Company filed Certificates

of Elimination for each of its Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred

Stock and Series A-5 Preferred Stock (collectively, the “Certificates of Elimination”) with the Delaware Secretary of State.

Concurrent with the execution of the Exchange

Agreement, the Company and each Investor have amended and restated the following warrants:

(i) tranche A warrants to acquire an aggregate

of 47,852,430 shares of Series A-3 Convertible Preferred Stock of the Company that were issued on July 11 2023 (the “Original Tranche

A Warrants”) have been amended and restated to acquire an aggregate of 25,840.3122 shares of Series A-3 Convertible Preferred Stock

(as amended, the “Amended Tranche A Warrants”);

(ii) tranche B warrants to acquire an aggregate of 43,502,206 shares of Series

A-4 Convertible Preferred Stock of the Company that were issued on July 11, 2023 (the “Original Tranche B Warrants”) have

been amended and restated to acquire an aggregate of 25,666.30154 shares of Series A-4 Convertible Preferred Stock (as amended, the “Amended

Tranche B Warrants”) and (iii) tranche C warrants to acquire an aggregate of 69,603,531 shares of Series A-5 Convertible Preferred

Stock of the Company that were issued on July 11, 2023(the “Original Tranche C Warrants”, and together with the Original Tranche

A Warrants and Tranche B Warrants, the “Original Warrants”) have been amended and restated to acquire 51,506.61294 shares

of Series A-5 Convertible Preferred Stock (as amended, the “Amended Tranche C Warrants,” together with the Amended Tranche

A Warrants and the Amended Tranche B Warrants, the “Amended Warrants”).

The Amended Warrants have the same terms and conditions

as the original warrants except that such Amended Warrants:

(i) reduced the amount of shares of Series A-3 Convertible Preferred Stock,

Series A-4 Convertible Preferred Stock and Series A-5 Convertible Preferred Stock into which such Amended Warrants are convertible as

described above;

(ii) allow for the issuance of fractional shares of Series A-3 Preferred Stock, Series A-4 Preferred Stock and Series

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and the Series A-5 Preferred Stock and exercise period in the Amended Warrants did not change from the Original Warrants.

Subject to the terms

and limitations contained in the Amended Series A Certificate of Designation, each share of Series A-2 Prime Convertible Preferred Stock,

Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock are convertible

into a number shares of Common Stock obtained by dividing the Original Per Share Price ($ 1,000 ) of each such share of Series A-2 Prime

Convertible Preferred Stock, Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible

Preferred Stock by the applicable conversion price of $ 0.49 , $ 0.54 , $ 0.59 and $ 0.74 of each such share of Series A-2 Prime Convertible

Preferred Stock, Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock,

respectively.

Pursuant to the terms of the Exchange Agreement, effective March 13, 2024, the Company filed the Amended Certificate of Designation

with the Delaware Secretary of State designating, 21,400 shares as Series A-2 Prime Preferred Stock, 25,900 shares as Series A-3 Convertible

Preferred Stock, 25,700 shares as Series A-4 Convertible Preferred Stock, and 51,600 shares as Series A-5 Convertible Preferred

Stock (all such series of preferred stock referred to herein collectively as “Series A Preferred Stock”), each with a stated

value of $ 1,000 per share (the “Original Per Share Price”).

The Amended Certificate of Designation sets forth the rights,

preferences and limitations of the shares of Series A Preferred Stock.

Terms not otherwise defined in this item shall have the meanings

given in the Amended Certificate of Designation.

The Amended Certificate of Designation was filed with an effective date of 6:01 a.m.

ET on March 14, 2024.

The following is a summary

of terms of the Series A Preferred Stock under the Amended Series A Certificate of Designation:

times following the Issuance Date, while shares of Series A Preferred Stock are issued and outstanding, holders of Series A Preferred

Stock shall be entitled to receive, and the Company shall pay, dividends on shares of Series A Preferred Stock equal (on an as-if-converted-to-Common-Stock

basis and without regard to any limitations on conversion set forth herein or otherwise) to and in the same form as dividends (other than

dividends in the form of Common Stock, which shall be made in accordance with the terms of the Amended Certificate of Designation) actually

paid on shares of the Common Stock when, as and if such dividends (other than dividends in the form of Common Stock, which shall be made

in accordance with the terms of the Amended Certificate of Designation) are paid on shares of the Common Stock.

Subject to the terms and limitations contained

in the Amended Series A Certificate of Designation, each share of Series A-2 Prime Convertible Preferred Stock, Series A-3 Convertible

Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock are convertible into a number shares

of Common Stock obtained by dividing the Original Per Share Price ($ 1,000 ) of each such share of Series A-2 Prime Convertible Preferred

Stock, Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock by the

applicable conversion price of $ 0.49 , $ 0.54 , $ 0.59 and $ 0.74 of each such share of Series A-2 Prime Convertible Preferred Stock, Series

A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock, respectively.

Pursuant to the terms of the Exchange Agreement,

effective March 13, 2024, the Company filed the Amended Certificate of Designation with the Delaware Secretary of State designating,

21,400 shares as Series A-2 Prime Preferred Stock, 25,900 shares as Series A-3 Convertible Preferred Stock, 25,700 shares as

Series A-4 Convertible Preferred Stock, and 51,600 shares as Series A-5 Convertible Preferred Stock (all such series of preferred

stock referred to herein collectively as “Series A Preferred Stock”), each with a stated value of $ 1,000 per share (the “Original

Per Share Price”).

The Amended Certificate of Designation sets forth the rights, preferences and limitations of the shares of Series

A Preferred Stock.

Terms not otherwise defined in this item shall have the meanings given in the Amended Certificate of Designation.

The Amended Certificate of Designation was filed with an effective date of March 14, 2024.

The following is a summary of terms of the Series

A Preferred Stock under the Amended Series A Certificate of Designation:

At all times following the Issuance

Date, while shares of Series A Preferred Stock are issued and outstanding, holders of Series A Preferred Stock shall be entitled to receive,

and the Company shall pay, dividends on shares of Series A Preferred Stock equal (on an as-if-converted-to-Common-Stock basis and

without regard to any limitations on conversion set forth herein or otherwise) to and in the same form as dividends (other than dividends

in the form of Common Stock, which shall be made in accordance with the terms of the Amended Certificate of Designation) actually paid

on shares of the Common Stock when, as and if such dividends (other than dividends in the form of Common Stock, which shall be made in

accordance with the terms of the Amended Certificate of Designation) are paid on shares of the Common Stock.

Voting Rights.

to certain limitations described in the Amended Certificate of Designation, the Series A Preferred Stock is voting stock.

Holders of the

Series A Preferred Stock are entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock basis.

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.

Accordingly, holders

of Series A Preferred Stock will be entitled to one vote for each whole share of Common Stock into which their Series A Preferred Stock

is then-convertible on all matters submitted to a vote of stockholders.

Liquidation, the assets of the Company available for distribution to its stockholders shall be distributed among the holders of the shares

of Series A Preferred Stock and Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose

all shares of Series A Preferred Stock as if they had been converted to Common Stock pursuant to the terms of the Amended Certificate

of Designation immediately prior to such Liquidation, without regard to any limitations on conversion set forth in the Amended Certificate

of Designation or otherwise.

to the limitations set forth in the Amended Certificate of Designation, at the option of the holder, each share of Series A-2 Prime Preferred

Stock, Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock shall

be convertible into a number shares of Common Stock obtained by dividing the Original Per Share Price ($ 1,000 ) of each such share of Series

A-2 Prime Convertible Preferred Stock, Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible

Preferred Stock by the applicable conversion price of $ 0.49 , $ 0.54 , $ 0.59 and $ 0.74 for the Series A-2 Prime Convertible Preferred Stock,

Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock, respectively.

Subject to certain limitations

described in the Amended Certificate of Designation, the Series A Preferred Stock is voting stock.

Holders of the Series A Preferred Stock

are entitled to vote together with the Common Stock on an as-if-converted-to-Common-Stock basis.

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.

Accordingly, holders of Series A Preferred

Stock will be entitled to one vote for each whole share of Common Stock into which their Series A Preferred Stock is then-convertible

on all matters submitted to a vote of stockholders.

Upon any Liquidation, the assets

of the Company available for distribution to its stockholders shall be distributed among the holders of the shares of Series A Preferred

Stock and Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose all shares of Series

A Preferred Stock as if they had been converted to Common Stock pursuant to the terms of the Amended Certificate of Designation immediately

prior to such Liquidation, without regard to any limitations on conversion set forth in the Amended Certificate of Designation or otherwise.

Subject to the limitations set

forth in the Amended Certificate of Designation, at the option of the holder, each share of Series A-2 Prime Preferred Stock, Series A-3

Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock shall be convertible into

a number shares of Common Stock obtained by dividing the Original Per Share Price ($ 1,000 ) of each such share of Series A-2 Prime Convertible

Preferred Stock, Series A-3 Convertible Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock

by the applicable conversion price of $ 0.49 , $ 0.54 , $ 0.59 and $ 0.74 for the Series A-2 Prime Convertible Preferred Stock, Series A-3 Convertible

Preferred Stock, Series A-4 Convertible Preferred Stock or Series A-5 Convertible Preferred Stock, respectively.

Issuance of Series B-1 Preferred Stock

86 unchanged sentences

to approve the issuance of Common Stock upon conversion of the Series B Preferred Stock in excess of the Cap (the “Proposal”).

Issuance of Common Stock Upon Conversion of Series B-1 Preferred

On June 20, 2024, the Company held its annual

shareholder meeting and, as a result, shareholder approval for the conversion of the Series B-1 Preferred Stock was obtained.

5, 2024, pursuant to the Series B Certificate of Designation, the Company issued 42,118,000 shares of common stock and 7,882 shares of

Series B-2 Preferred Stock in settlement of the auto-conversion of the Series B-1 preferred shares.

As of June 30, 2024, there were 50,000

shares of Series B-1 Preferred Stock issued and outstanding and there were zero shares of Series B-2 Preferred Stock issued and outstanding.

Warrant Liability

7 unchanged sentences

with the Series A-1 Preferred Stock.

On June 26, 2023, the Company held its annual shareholder meeting,

and as a result, shareholder approval for the conversion of the Series A-1 Preferred Stock was obtained.

On July 11, 2023, pursuant to

the Series A Certificate of Designation, the Company issued, in addition to common stock and Series A-2 Preferred Stock, (i) a Tranche

A Warrant to acquire 47,852,430 shares of Series A-3 Preferred Stock, (ii) a Tranche B Warrant to acquire 43,502,206 shares of Series

A-4 Preferred Stock, and (iii) a Tranche C Warrant to acquire 69,603,531 shares of Series A-5 Preferred Stock.

See Note 10 for discussion

of exchange agreement related to Series A-2 Preferred Stock and warrants.

On June 26, 2023, the Company held its annual

shareholder meeting, and as a result, shareholder approval for the conversion of the Series A-1 Preferred Stock was obtained.

11, 2023, pursuant to the Series A Certificate of Designation, the Company issued, in addition to common stock and Series A-2 Preferred

Stock, (i) a Tranche A Warrant to acquire 47,852,430 shares of Series A-3 Preferred Stock, (ii) a Tranche B Warrant to acquire 43,502,206

shares of Series A-4 Preferred Stock, and (iii) a Tranche C Warrant to acquire 69,603,531 shares of Series A-5 Preferred Stock.

10 for discussion of exchange agreement related to Series A-2 Preferred Stock and warrants.

The Warrants are recognized as liabilities in

35 unchanged sentences

the exercise price for the Warrants became fixed.

Therefore, as of December 31, 2023 and March 31, 2024, the fair value of the Warrants

Therefore, as of December 31, 2023 and June 30, 2024, the fair value of the Warrants

was determined using a Black Scholes model using parameters including (i) the exercise price of the warrant, (ii) the price of the underlying

13 unchanged sentences

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 Black Scholes model for the liability associated

with the three tranches of Warrants at December 31, 2023 and March 31, 2024.

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 Black Scholes

model for the liability associated with the three tranches of Warrants at December 31, 2023 and June 30, 2024.

Tranche A Warrant

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4.6 % – 5.3 %

4.8 % – 5.5 %

Dividend yield

2 unchanged sentences

Probability for FDA approval

36.55 – 38.11 %

Tranche B Warrant

23 unchanged sentences

1.56 %- 21.6 %

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

fair value of the Warrants to be $ 2.8 million.

As of December 31, 2023 and March 31, 2024, the Company estimated the fair value of the

Warrants to be $ 13.1 million and $ 24.9 million, respectively.

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

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

As of December 31, 2023 and June 30, 2024, the Company estimated the fair

value of the Warrants to be $ 13.1 million and $ 8.1 million, respectively.

The following table summarizes activity for the

Company’s preferred stock warrants for the three months ended March 31, 2024:

(in thousands)

Company’s preferred stock warrants for the six months ended June 30, 2024:

Number of Average

Shares Weighted- Remaining Aggregate

Underlying Average Contractual Intrinsic

Outstanding Exercise Term Value

Warrants Price (in Years) (in thousands)

Outstanding, December 31, 2023 160,958,167 $ 0.64 2.34 $ 36,864

1 unchanged sentence

Warrants exercised -

Outstanding, March 31, 2024

Outstanding, June 30, 2024 160,958,167 $ 0.64 2.63 $ -

Stock-based Compensation

9 unchanged sentences

meeting on June 26, 2023.

Shareholders approved an increase to the number of shares reserved on June 26, 2023, and accordingly, at March

31, 2024, approximately 12,775,996 shares are reserved for issuance.

The 2021 Plan provides for the issuance of incentive stock options,

non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards.

December 31, 2023, approximately 2,815,503 shares of common stock were available under the 2021 Plan.

As of March 31, 2024, there are

approximately 2,796,503 shares of common stock available under the 2021 Plan.

Shareholders approved an increase to the number of shares reserved on June 26, 2023, for a total of 12,775,996

On June 20, 2024, shareholders approved a further increase of 8,000,000 shares, to the number of shares reserved, for a total

of 20,775,996 shares.

The 2021 Plan provides for the issuance of incentive stock options, non-statutory stock options, stock appreciation

rights, restricted stock, restricted stock units, and other stock-based awards.

As of December 31, 2023, approximately 2,815,503 shares

of common stock were available under the 2021 Plan.

As of June 30, 2024, there are approximately 8,027,805 shares of common stock available

under the 2021 Plan.

The following table summarizes activity for stock

options under all plans for the three months ended March 31, 2024:

(in thousands)

options under all plans for the six months ended June 30, 2024:

Number of Average

Shares Weighted- Remaining Aggregate

Underlying Average Contractual Intrinsic

Outstanding Exercise Term Value

Options Price (in Years) (in thousands)

Outstanding, December 31, 2023 10,302,086 $ 1.00 9.34 $ 1,196

2 unchanged sentences

Options exercised ( 1,163 ) $ 3.27 -

Outstanding, March 31, 2024

Options vested and exercisable as of March 31, 2024

As of March 31, 2024, the unrecognized compensation

Outstanding, June 30, 2024 13,088,621 $ 1.03 9.05 $ 48

Options vested and exercisable as of June 30, 2024 3,877,191 $ 1.31 8.5 $ 48

As of June 30, 2024, the unrecognized compensation

cost related to outstanding stock options was $ 6.5 million, which is expected to be recognized as expense over approximately 3.0 years.

3 unchanged sentences

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

As of March 31, 2024, the

As of June 30, 2024, the

unrecognized compensation cost related to the grant was approximately $ 2,500 , which is expected to be recognized as expense over approximately

2 unchanged sentences

A portion of these options were

exercised early (prior to vesting), and as of March 31, 2023, 776 of the options remained unvested.

exercised early (prior to vesting), and as of June 30, 2024, 194 of the options remained unvested.

Proceeds received related to the unvested

options of approximately $ 2,500 at March 31, 2024 were included in accrued liabilities on the accompanying balance sheet and will be reclassified

options of approximately $ 631 at June 30, 2024 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 $ 1,900 were reclassified to equity during the three months ended March 31, 2024.

The vested portion

of the exercises was 382,939 shares at March 31, 2024.

to the vested portion of options of $ 2,500 were reclassified to equity during the six months ended June 30, 2024.

The vested portion of

the exercises was 383,521 shares at June 30, 2024.

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, 2024, the

unrecognized compensation cost related to the grant was approximately $ 800 , which is expected to be recognized as expense over approximately

The restricted stock

units vested in May 2024.

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 months ended

March 31, 2023 and 2024 (in thousands):

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

ended June 30, 2023 and 2024 (in thousands):

Three Months Ended

Six Months Ended

Research and development

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Expected Dividend – Through

March 31, 2024, the Company has never declared nor paid any cash dividends.

June 30, 2024, the Company has never declared nor paid any cash dividends.

The Company shall modify its dividend policy to state that

3 unchanged sentences

of commercial sales.

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

for the three months ended March 31, 2023.

The following averaged assumptions were used to calculate the fair value of awards granted

to employees, directors and non-employees for the three months ended March 31, 2024:

Three Months Ended

There were no equity awards granted to employees,

directors and non-employees for the six months ended June 30, 2023.

The following averaged assumptions were used to calculate the fair

value of awards granted to employees, directors and non-employees for the six months ended June 30, 2024:

Six Months Ended

Expected volatility

Risk-free interest rate

4.49 % - 4.65 %

Dividend yield

Expected term

Net Loss Per Share

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.

Net Income (Loss) Per Share

The Company computes net income (loss) per share

using the two-class method.

The two-class method uses an earnings allocation formula that determines net income (loss) per share for common

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

Diluted net income (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

Common stock 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 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.

(ii) common stock to be issued

upon the assumed exercise of the Company’s common stock warrants;

(iii) convertible preferred stock;

and (iv) prior to issuance,

the issuable warrants related to the Company’s March private placement financing.

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):

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

Three Months Ended

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

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

Six Months Ended

Basic net income (loss) per share

Net income (loss)

Net income (loss) attributable to participating securities

Deemed dividends on preferred stock

Net income (loss) attributable to common shares, basic

Weighted-average shares outstanding used in computing net income (loss) per share attributable to common stockholders, basic

Net income (loss) per share attributable to common stockholders, basic

Diluted net income (loss) per share

Net income (loss) attributable to common shares, basic

Change in fair value of preferred stock warrant liability

Net (loss) attributable to common shares, diluted

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

Weighted-average effect of diluted securities:

Tranche warrants to purchase convertible preferred stock

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

Net loss per share attributable to common stockholders, diluted

The following outstanding shares of potentially

2 unchanged sentences

Three Months Ended

Six Months Ended

Options to purchase common stock

Warrants to purchase common stock

Contingently issuable warrants to purchase convertible preferred stock

Restricted stock units

Common stock issuable upon conversion of Series B-1 convertible preferred stock

Common stock issuable upon conversion of Series A-2 Prime convertible preferred stock

Warrants to purchase convertible preferred stock

Subsequent Events

On July 5, 2024, the Company completed the automatic conversion of

the Series B-1 convertible preferred stock whereby each share of Series B-1 preferred stock converted into a combination of common stock

and Series B-2 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