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Item 1. Financial Statements

2024-05-09 compared with 2023-11-09 · 171 added, 320 removed, 223 unchanged (69% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

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Total liabilities

Commitments and contingencies (Note 9)

Commitments and contingencies

Stockholders' equity:

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Series B, $ 0.001 par value:

1,804,394 shares issued and outstanding as of September 30, 2023 and December 31, 2022

Series A, $ 0.001 par value:

970,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022

1,804,394 shares issued and outstanding as of March 31, 2024 and December 31, 2023

Common stock, $ 0.001 par value;

10,000,000 shares authorized as of September 30, 2023 and December 31, 2022;

1,535,301 and 1,519,360 shares issued as of September 30, 2023 and December 31, 2022, respectively;

1,532,600 and 1,516,659 shares outstanding as of September 30, 2023 and December 31, 2022, respectively

10,000,000 shares authorized as of March 31, 2024 and December 31, 2023;

1,543,385 shares issued as of March 31, 2024 and December 31, 2023;

1,540,684 shares outstanding as of March 31, 2024 and December 31, 2023

Additional paid in capital

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED

SEPTEMBER 30,

NINE MONTHS ENDED

SEPTEMBER 30,

Three Months Ended March 31,

Royalty revenue

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Research and development

( 1,020,618 )

( 2,519,137 )

( 3,577,701 )

General and administrative

( 2,608,934 )

( 2,796,832 )

Total operating costs and expenses

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( 1,521,019 )

( 5,128,071 )

( 6,374,533 )

Loss from operations

( 1,268,414 )

( 3,260,048 )

( 5,154,580 )

Other income (expense):

Other income (expense)

Other income:

Interest income, net

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$ ( 856,554 )

$ ( 2,963,072 )

$ ( 5,069,818 )

Basic and diluted net loss per share

Basic and diluted loss per share

Weighted-average shares of common stock outstanding, basic and diluted

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

THREE MONTHS ENDED

SEPTEMBER 30, 2023

Comprehensive

Stockholders’

Balance as of July 1,

$ 207,908,129

$ ( 191,007,135 )

$ ( 5,281,180 )

Share-based expense

( 1,055,555 )

of September 30, 2023

$ 207,978,395

$ ( 192,062,690 )

$ ( 5,281,180 )

NINE MONTHS ENDED SEPTEMBER 30, 2023

THREE MONTHS ENDED MARCH 31, 2024

Comprehensive

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$ ( 5,281,180 )

Issuance of common stock to adjust for reverse split rounding

Share-based expense

1 unchanged sentence

( 1,195,113 )

of September 30, 2023

$ 207,978,395

$ ( 192,062,690 )

$ ( 5,281,180 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

XENETIC BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

THREE MONTHS ENDED SEPTEMBER 30, 2022

Comprehensive

Stockholders'

Balance as of July 1, 2022

$ 207,025,224

$ ( 186,813,066 )

$ ( 5,281,180 )

Share-based expense

Balance as of September 30, 2022

Balance as of March 31, 2024

$ 208,131,009

1 unchanged sentence

$ ( 5,281,180 )

NINE MONTHS ENDED SEPTEMBER 30, 2022

THREE MONTHS ENDED MARCH 31, 2023

Comprehensive

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$ ( 5,281,180 )

Issuance of common stock in connection with purchase of in-process research

and development

Share-based expense

Exercise of purchase warrants

( 5,069,818 )

Balance as of September 30, 2022

Balance as of March 31, 2023

$ 207,838,756

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Acquired in-process research and development

Amortization of right of use asset

Share-based expense

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( 1,102,438 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Net cash paid to acquire in-process research and development

Net cash used in investing activities

Net change in cash

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Cash paid for interest

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Issuance of common stock from cashless exercise of purchase warrants

Issuance of common stock to acquire in-process research and development

The accompanying notes are an integral part of

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advanced or metastatic solid tumors.

XCART ™ is the Company’s personalized Chimeric Antigen Receptor (“CAR”)

T platform technology engineered to target patient specific tumor neoantigens with a demonstrated proof of mechanism in B-cell lymphomas.

Additionally, Xenetic has partnered with biotechnology and pharmaceutical companies to develop its proprietary drug delivery platform,

PolyXen ® , and receives royalty payments under an exclusive license arrangement in the field of blood coagulation disorders.

Additionally, Xenetic has partnered with biotechnology and pharmaceutical companies to develop its

proprietary drug delivery platform, PolyXen ® , and receives royalty payments under an exclusive license arrangement in the

field of blood coagulation disorders.

As used in this Quarterly Report on Form 10-Q

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SymbioTec, GmbH (“SymbioTec”), own various United States (“U.S.”) federal trademark registrations and applications

along with unregistered trademarks and service marks, including but not limited to XCART, OncoHist™, PolyXen, ErepoXen™, and

ImuXen™, which may be used throughout this Quarterly Report.

along with unregistered trademarks and service marks, including but not limited to XCART™, OncoHist™, PolyXen, ErepoXen™,

and ImuXen™, which may be used throughout this Quarterly Report.

All other company and product names may be trademarks of the respective

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Going Concern and Management’s Plan

Management evaluates whether there are

conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a

going concern within one year after the date that the financial statements are issued.

The Company has incurred substantial losses

since its inception and expects to continue to incur operating losses in the near-term.

These factors raise substantial doubt about

its ability to continue as a going concern.

The Company believes that it has access to capital resources through possible public or

private equity offerings, debt financings, corporate collaborations, related party funding, or other means to continue as a going

The Company believes that its existing resources will be adequate to fund the Company’s operations for a period of at

least twelve months from the date of the issuance of these financial statements.

However, the Company anticipates it may need

additional capital in the long-term to pursue its business initiatives.

The terms, timing and extent of any future financing will

depend upon several factors, including the achievement of progress in its product development programs, its ability to identify and

enter into licensing or other strategic arrangements, its continued listing on the Nasdaq Stock Market (“Nasdaq”), and

factors related to financial, economic, geo-political, industry and market conditions, many of which are beyond its control.

capital markets for the biotech industry can be highly volatile, which make the terms, timing and extent of any future financing

On June 3, 2022, the Company received a written notification (the “Notice”) from the Listing Qualifications

Department of Nasdaq notifying the Company that the closing bid price for its common stock had been below $1.00 for 30 consecutive

business days and that the Company therefore was not in compliance with the minimum bid price requirement for continued inclusion on

Nasdaq under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”).

The Notice had no immediate effect on the

listing of the Company’s common stock on the Nasdaq Capital Market.

On May 15, 2023, the Company effected a reduction, on a 1-for-10

basis, in its authorized common stock, par value $ 0.001 ,

along with a corresponding and proportional decrease in the number of shares issued and outstanding (the “Reverse Stock

On May 30, 2023, the Company received a letter from Nasdaq notifying the Company that it has regained compliance with

the Bid Price Requirement as a result of the closing bid price of the Company’s common stock being at $ 1.00

per share or greater for the 10 consecutive business days from May 15, 2023 through May 26, 2023 and that this matter is now

Management evaluates whether there are conditions

or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern

within one year after the date that the financial statements are issued.

The Company has incurred substantial losses since its inception

and expects to continue to incur operating losses in the near-term.

These factors raise substantial doubt about its ability to continue

as a going concern.

The Company believes that it has access to capital resources through possible public or private equity offerings,

debt financings, corporate collaborations, related party funding, or other means to continue as a going concern.

The Company believes

that its existing resources will be adequate to fund the Company’s operations for a period of at least twelve months from the date

of the issuance of these financial statements.

However, the Company anticipates it may need additional capital in the long-term to pursue

its business initiatives.

The terms, timing and extent of any future financing will depend upon several factors, including the achievement

of progress in its product development programs, its ability to identify and enter into licensing or other strategic arrangements, its

continued listing on the Nasdaq Stock Market (“Nasdaq”), and factors related to financial, economic, geo-political, industry

and market conditions, many of which are beyond its control.

The capital markets for the biotech industry can be highly volatile, which

make the terms, timing and extent of any future financing uncertain.

Risks and Uncertainties

Effects of the

COVID-19 Pandemic

During March 2020, a

global pandemic was declared by the World Health Organization related to the outbreak of a novel strain of coronavirus, or COVID-19.

pandemic significantly affected economic conditions in the U.S., accelerating during the first half of March 2020 and continuing throughout

2021 and 2022 and into 2023, as federal, state and local governments reacted to the public health crisis with mitigation measures, creating

significant uncertainties in the U.S.

The Company continues to evaluate the effects of the COVID-19 pandemic on its business

and while there has been no significant impact to the Company’s operations to date, the Company at this time remains uncertain of

the impact this event may have on the Company’s future operations.

The extent to which the COVID-19 pandemic affects our business,

operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, and such uncertainty

is expected to continue for some time.

Impact of the conflict

in Ukraine on Operations

Impact of Global

Conflicts on Operations

The short and long-term

implications of Russia’s invasion of Ukraine are difficult to predict at this time.

The imposition of sanctions and counter sanctions

may have an adverse effect on the economic markets generally and could impact our business, financial condition, and results of operations.

implications of Russia’s invasion of Ukraine and conflict in the Middle East are difficult to predict at this time.

The imposition

of current and future sanctions and counter sanctions may have an adverse effect on the economic markets generally and could impact our

business, financial condition, and results of operations.

Summary of Significant Accounting Policies

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December 31, 2023 filed with the SEC on March 21, 2024, and amended on April 26, 2024.

On May 15, 2023, the Company effected the Reverse

On the effective date of the Reverse Stock Split, (i) every 10 shares of common stock were reduced to one share of common

stock, with any fractional amounts rounded up to one share;

(ii) the number of shares of common stock into which each outstanding warrant,

restricted stock unit, or option to purchase common stock were proportionately reduced on the same basis as the common stock;

exercise price of each outstanding warrant or option to purchase common stock were proportionately increased on a 1-to-10 basis;

the number of shares of common stock into which each share of preferred stock were proportionately reduced on the same basis as the common

Unless otherwise indicated, all of the share numbers, share prices, and exercise prices have been adjusted in this Quarterly Report,

on a retroactive basis, to reflect this 1-for-10 Reverse Stock Split .

On May 15, 2023, the Company effected a reduction,

on a 1-for-10 basis, in its authorized common stock, par value $0.001, along with a corresponding and proportional decrease in the number

of shares issued and outstanding (the “Reverse Stock Split”).

On the effective date of the Reverse Stock Split, (i) every

10 shares of common stock were reduced to one share of common stock, with any fractional amounts rounded up to one share;

(ii) the number

of shares of common stock into which each outstanding warrant, restricted stock unit, or option to purchase common stock was convertible

into was proportionately reduced on the same basis as the common stock;

(iii) the exercise price of each outstanding warrant or option

to purchase common stock was proportionately increased on a 1-to-10 basis;

and (iv) the number of shares of common stock into which each

share of preferred stock was convertible into was proportionately reduced on the same basis as the common stock.

Unless otherwise indicated,

all of the share numbers, share prices, and exercise prices have been adjusted in this Quarterly Report, on a retroactive basis, to reflect

this 1-for-10 Reverse Stock Split.

Principles of Consolidation

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All intercompany balances and transactions have been eliminated in consolidation.

Cash and Concentrations of Credit Risk

The Company considers all highly liquid investments

with an original maturity of 90 days or less from the date of purchase to be cash equivalents.

Investments with original maturities of

greater than 90 days from the date of purchase but less than one year from the balance sheet date are classified as short-term investments,

while investments with maturities of one year or beyond from the balance sheet date are classified as long-term investments.

determines the appropriate classification of its cash equivalents and investment securities at the time of purchase and re-evaluates such

determination as of each balance sheet date.

The carrying amount of cash equivalents approximate their fair value due to the short-term

nature of these instruments.

Financial instruments that potentially subject

the Company to credit risk consist primarily of cash on deposit with financial institutions, the balances of which may exceed federally

insured limits.

The Company has not experienced any losses on such accounts, and does not believe it is exposed to any unusual credit

risk beyond the normal credit risk currently associated with commercial banking relationships.

Cash deposits are insured by the Federal

Deposit Insurance Corporations up to $ 250,000 .

The Company maintains its primary banking relationship with one large financial institution

and all cash on deposit is covered under federally insured limits.

Certain prior period amounts have been reclassified

in this Quarterly Report to conform to the presentation for the current period and had no impact on the reported results of operations.

Basic and Diluted Net Loss per Share

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that are outstanding during the period, except where such non-participating securities would be anti-dilutive.

For the three and nine months ended September

30, 2023 and 2022, basic and diluted net loss per share are the same for each respective period due to the Company’s net loss position.

Potentially dilutive, non-participating securities have not been included in the calculations of diluted net loss per share, as their

inclusion would be anti-dilutive.

Recent Accounting Standards

In June 2016, the Financial Accounting Standards

Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326):

of Credit Losses on Financial Instruments .

The guidance modified the measurement and recognition of credit losses for most financial

assets and certain other instruments.

The amendment updated the guidance for measuring and recording credit losses on financial assets

measured at amortized cost by replacing the “incurred loss” model with an “expected loss” model.

This may result

in earlier recognition of allowance for losses.

The Company adopted ASU 2016-13 as of January 1, 2023 and the adoption did not have a

material effect on our consolidated financial statements.

For the three months ended March 31, 2024 and

2023, basic and diluted net loss per share are the same for each respective period due to the Company’s net loss position.

dilutive, non-participating securities have not been included in the calculations of diluted net loss per share, as their inclusion would

be anti-dilutive.

Significant Strategic Collaborations

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Royalty payments

of approximately $ 0.6 million and $ 1.9 million were recorded as revenue by the Company during the three and nine months ended September

30, 2023, respectively, and approximately $ 0.4 million and $ 1.2 million were recorded as revenue by the Company during the three and nine

months ended September 30, 2022, respectively.

These payments are based on single digit royalties on net sales of certain covered products.

The Company’s policy is to recognize royalty payments as revenue when they are reliably measurable, which is upon receipt of reports

The Company receives these reports in the quarter subsequent to the actual sublicensee sales.

At the time the revenue was

received, there were no remaining performance obligations and all other revenue recognition criteria were met.

CLS Therapeutics Ltd.

On April 26, 2022, the Company entered into an

Exclusive Sublicense Agreement (the “Sublicense Agreement”) with CLS pursuant to which the Company received an exclusive license,

under certain patent rights and know-how owned or controlled by CLS, to develop and commercialize pharmaceutical products and methods

incorporating DNase enzyme for use in treatment of cancer (the “Sublicensed Products”).

Under the terms of the Sublicense

Agreement, the Company will have sole responsibility for, and shall use commercially reasonable efforts to, among other things, research,

develop and obtain marketing approval for the Sublicensed Products in the U.S.

and certain European markets, and to commercialize such

Sublicensed Products in the relevant market once marketing approval is obtained.

Concurrent with the Sublicense Agreement, the

Company entered into an Exclusive License Agreement (the “License Agreement”) with CLS, pursuant to which the Company received

an exclusive license under certain patent rights and know-how owned or controlled by CLS to develop and commercialize pharmaceutical products

and methods incorporating DNase in conjunction with CAR T therapies (the “Licensed Products”).

Under the terms of the License

Agreement, the Company will have sole responsibility for, and shall use commercially reasonable efforts to, among other things, research,

develop and obtain marketing approval for the Licensed Products in the U.S.

and certain European markets, and to commercialize such Licensed

Products in the relevant market once marketing approval is obtained.

Volition Collaboration

of approximately $ 0.5 million and $ 0.6 million were recorded as revenue by the Company during the three months ended March 31, 2024 and

2023, respectively, and are based on single digit royalties on net sales of certain covered products.

The Company’s policy is to

recognize royalty payments as revenue when they are reliably measurable, which is upon receipt of reports from Takeda.

The Company receives

these reports in the quarter subsequent to the actual sublicensee sales.

At the time the revenue was received, there were no remaining

performance obligations and all other revenue recognition criteria were met.

Belgian Volition SARL Limited (“Volition”)

Collaboration

On August 2, 2022, the Company announced a research

and development collaboration with Belgian Volition SARL Limited (“Volition”) to develop NETs-targeted adoptive cell therapies

for the treatment of cancer.

The collaboration is an early exploratory program to evaluate the potential combination of Volition’s

Nu.Q ® technology Test and the Company’s DNase-Armored CAR T platform to develop proprietary adoptive cell therapies

potentially targeting multiple types of solid cancers.

Under the terms of the collaboration agreement, Volition will fund a research program

and the two parties will share proceeds from commercialization or licensing of any products arising from the collaboration.

2023 the Company entered into the first Collaborator Statement of Work as part of this collaboration with Volition.

and development collaboration with Volition to develop NETs-targeted adoptive cell therapies for the treatment of cancer.

The collaboration

is an early exploratory program to evaluate the potential combination of Volition’s Nu.Q ® technology Test and the

Company’s DNase-Armored CAR T platform to develop proprietary adoptive cell therapies potentially targeting multiple types of solid

Under the terms of the collaboration agreement, Volition will fund a research program and the two parties will share proceeds

from commercialization or licensing of any products arising from the collaboration.

To date, Volition has funded $ 26,000 under this agreement.

Catalent Pharma Solutions LLC (“Catalent”)

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by the SOW and that will supersede the addendum to the SOW containing Catalent's standard terms and conditions.

In addition, in

the event of any conflict between the project-specific terms and conditions set forth in the SOW and the MSA, the MSA terms and conditions

shall govern.

The estimated total cost of the project contemplated by the SOW is expected to be up to approximately $5 million (exclusive

of certain fees and potential alternatives) for the manufacturing services over the course of the term of the project with each phase

of the project invoiced separately in connection with the commencement of such phase.

The SOW is terminable by the Company at any time

with 30 days’ prior written notice to Catalent.

The SOW also contains customary provisions related to, among other things, confidentiality,

warranties, intellectual property and indemnification.

The Company has paid Catalent approximately $ 2.4 million through September 30,

2023, of which $ 0.9 million and $ 0.3 million has been recognized as an advance payment and is included in prepaid expenses and other as

of September 30, 2023 and December 31, 2022, respectively.

Scripps Research

In addition, in the event

of any conflict between the project-specific terms and conditions set forth in the SOW and the MSA, the MSA terms and conditions shall

The Company has paid Catalent approximately $ 2.5 million through March 31, 2024, of which $ 28,000 and $ 0.1 million has been recognized

as an advance payment and is included in prepaid expenses and other current assets as of March 31, 2024 and December 31, 2023, respectively.

In addition, $ 0.3 million has been recognized within other assets as of both March 31, 2024 and December 31, 2023.

Scripps Research Institute (“Scripps

On March 17, 2023, the Company and Scripps Research

entered into a Research Funding and Option Agreement (the “Agreement”), pursuant to which the Company has agreed to provide

Scripps Research an aggregate of up to $ 938,000 to fund research relating to advancing the pre-clinical development of the Company’s

Scripps Research an aggregate of up to $ 0.9 million to fund research relating to advancing the pre-clinical development of the Company’s

DNase oncology platform technology.

The research funding is payable by the Company to Scripps Research on a monthly basis in accordance

with a negotiated budget, which provides for an initial payment of approximately $ 78,000 on the date of the Agreement and subsequent monthly

payments of approximately $ 78,000 over a 12-month period.

Under the Agreement, the Company has the option to acquire a worldwide exclusive

license to Scripps Research’s rights in the Technology or Patent Rights (as defined in the Agreement), as well as a non-exclusive,

royalty-free, non-transferrable license to make and use TSRI Technology (as defined in the Agreement) solely for the Company’s internal

research purposes during the performance of the research program contemplated by the Agreement.

Unless earlier terminated, the term of the Agreement

continues from the date of the Agreement for fifteen (15) months.

The Agreement may be terminated by the Company with 30 days advance

written notice to Scripps Research beginning six (6) months after the Effective Date (as defined in the Agreement) or by Scripps Research

if the Company fails to make timely payments due under the Agreement, subject to 30 days’ written notice to cure such nonpayment.

The Agreement may further be terminated by either party in the event of the other party’s uncured failure to perform any obligations

under the Agreement or the bankruptcy of the other party.

The Company has paid Scripps Research approximately

$ 0.5 million under the Agreement through September 30, 2023, of which approximately $ 0.3 million has been recognized as an advance payment

and is included in prepaid expenses and other as of September 30, 2023.

Under the Agreement, the Company has the option to acquire a worldwide exclusive license to Scripps

Research’s rights in the Technology or Patent Rights (as defined in the Agreement), as well as a non-exclusive, royalty-free, non-transferrable

license to make and use TSRI Technology (as defined in the Agreement) solely for the Company’s internal research purposes during

the performance of the research program contemplated by the Agreement.

Unless earlier terminated, the term of the Agreement continues

from the date of the Agreement for fifteen (15) months.

The Agreement may be terminated by the Company with 30 days advance written notice

to Scripps Research or by Scripps Research if the Company fails to make timely payments due under the Agreement, subject to 30 days’

written notice to cure such nonpayment.

The Agreement may further be terminated by either party in the event of the other party’s

uncured failure to perform any obligations under the Agreement or the bankruptcy of the other party.

The Company has paid Scripps Research

approximately $ 0.9 million under the Agreement through March 31, 2024, of which approximately $ 0.1 million and $ 0.4 million has been recognized

as an advance payment and is included in prepaid expenses and other current assets as of March 31, 2024 and December 31, 2023, respectively.

University of Virginia (“UVA”)

On December 21, 2023, the Company entered into

a Research Funding and Material Transfer Agreement with UVA (the “UVA Agreement”) to advance the development of our systemic

DNase program.

Under the terms of the UVA Agreement, i n

addition to advancing our existing intellectual property, we have an option to acquire an exclusive license to any new intellectual property

arising from the DNase research program.

Allan Tsung, MD, a member of the Company’s Scientific Advisory Board and Chair of

the Department of Surgery at the UVA School of Medicine, will oversee the research conducted under

the UVA Agreement.

The Company has paid UVA approximately $ 0.1 million under the UVA Agreement through March 31, 2024, of which

approximately $ 29,000 has been recognized as an advance payment and is included in prepaid expenses and other current assets as of March

There were no amounts incurred as of December 31, 2023.

Other Agreements

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The Company and its collaborative partners continue

to engage in research and development activities with no resultant commercial products through September 30, 2023.

to engage in research and development activities with no resultant commercial products through March 31, 2024.

No amounts were recognized

as revenue related to the Serum Institute, Pharmsynthez or SynBio agreements during the three and nine months ended September 30, 2023

and 2022, respectively.

as revenue related to the Serum Institute, Pharmsynthez or SynBio agreements during the three months ended March 31, 2024 and 2023, respectively.

Fair Value Measurements

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at the measurement date.

As of September 30, 2023 and December 31, 2022, the carrying amounts of the Company’s financial instruments

As of March 31, 2024 and December 31, 2023, the carrying amounts of the Company’s financial instruments

approximates fair value due to their short maturities.

There were no financial instruments classified as Level 3 in the fair value hierarchy

during the three and nine months ended September 30, 2023 and 2022.

during the three months ended March 31, 2024 and 2023.

Stockholders’ Equity

Each share of the Company’s

common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

Common stockholders

are entitled to dividends when and if declared by the Board of Directors.

In the event of any voluntary or involuntary liquidation, dissolution

or winding-up of the Company, the holders of common stock are entitled to share ratably in the assets of the Company available for distribution.

On May 11, 2023, the Company filed a Certificate

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being issued to existing holders of the Company’s common stock.

In connection

with its July 2021 private placement, the Company issued warrants to purchase an aggregate of 462,963 shares of the Company’s common

stock (the “Series A Warrants”).

has warrants to purchase approximately 462,963 shares of the Company’s common stock (the “Series A Warrants”) outstanding

as of both March 31, 2024 and December 31, 2023.

The Series A Warrants are immediately exercisable at a price of $ 33.00 per share of common

stock and expire on February 23, 2025 .

No Series A Warrants were exercised or forfeited during the three and nine months ended September

30, 2023 and 2022.

No Series A Warrants were exercised or forfeited during the three months ended March 31, 2024 and

In addition, the Company has publicly traded warrants

to purchase approximately 2,100 shares of common stock outstanding as of both September 30, 2023 and December 31, 2022.

These warrants

have an exercise price of $ 130.00 per share and expire on July 17, 2024 .

to purchase approximately 2,100 shares of common stock outstanding as of both March 31, 2024 and December 31, 2023.

These warrants have

an exercise price of $ 130.00 per share of common stock and expire on July 17, 2024 .

The warrants trade on Nasdaq under the symbol “XBIOW.”

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for one share of common stock.

None of these warrants were exercised during the three and nine months ended September 30, 2023.

to purchase approximately 199 shares of common stock were exercised on a cashless, one-for-one basis during the nine months ended September

No warrants were exercised during the three months ended September 30, 2022.

None of these warrants were forfeited during the

three and nine months ended September 30, 2023 and 2022.

The Company also has outstanding warrants to purchase

approximately 800 shares of the Company’s common stock as of September 30, 2023 and December 31, 2022.

These warrants have an exercise

price of $ 29.09 per share and expire on July 3, 2026 .

None of these warrants were exercised or forfeited during the three and nine months

ended September 30, 2023 and 2022.

None of these warrants were exercised or forfeited during the three months ended March 31, 2024 and 2023.

The Company also has warrants to purchase approximately

800 shares of the Company’s common stock outstanding as of both March 31, 2024 and

December 31, 2023.

These warrants have an exercise price of $ 29.09 per share of common stock and expire on July 3, 2026 .

None of these

warrants were exercised or forfeited during the three months ended March 31, 2024 and 2023.

Share-Based Expense

Total share-based expense related to stock options

restricted stock units and common stock awards was approximately $ 0.1 million for each of the three months ended September 30, 2023 and

2022 and approximately $ 0.2 million and $ 0.4 million for the nine months ended September 30, 2023 and 2022, respectively.

Share-based expense is classified in the condensed consolidated statements

of operations as follows:

and restricted stock units (“RSUs”) was approximately $ 0.1 million during each of the three months ended March 31, 2024 and

Share-based expense is classified in the condensed

consolidated statements of operations as follows:

Schedule of Share-Based Compensation Expense

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Research and development expenses

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No stock option awards to purchase shares of common

stock were granted during the three and nine months ended September 30, 2023.

During the nine months ended September 30, 2022, the Company

granted 20,000 stock option awards to purchase shares of common stock.

The Company recognized a total of $ 0.1 million of share-based expense

related to employee stock options during each of the three months ended September 30, 2023 and 2022 and $ 0.2 million and $ 0.4 million

during the nine months ended September 30, 2023 and 2022, respectively.

No employee stock options or RSUs were exercised and none expired

during the three and nine months ended September 30, 2023 and 2022.

stock were granted during the three months ended March 31, 2024 and 2023.

The Company recognized a total of approximately $ 0.1 million of share-based expense related to employee stock options during each of the three months ended March 31, 2024 and 2023.

No employee stock

options or RSUs were exercised and none expired during the three months ended March 31, 2024 and 2023.

Non-Employee Stock Options

There were no non-employee stock options granted

or exercised during the three and nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September

30, 2023, non-employee stock option grants to purchase approximately 100 shares of common stock expired.

No non-employee stock option

grants expired during the nine months ended September 30, 2022.

The Company did no t recognize any share-based expense related to non-employee

stock options during the three and nine months ended September 30, 2023 and 2022, respectively.

During the three and nine months ended September

30, 2023 and 2022, there was no provision for income taxes as the Company incurred losses during both periods.

Deferred tax assets and

liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting

purposes and the amounts used for income tax purposes.

The Company records a valuation allowance against its deferred tax assets as the

Company believes it is more likely than not the deferred tax assets will not be realized.

The valuation allowance against deferred tax

assets was approximately $ 39.2 million and $ 38.6 million as of September 30, 2023 and December 31, 2022, respectively.

As of September 30, 2023 and December 31,

2022, the Company did not record any unrecognized tax positions.

and Contingencies

Supplemental cash flow information and non-cash

activity related to the Company’s operating leases are as follows:

September 30,

Operating cash flow information:

Cash paid for amounts included in the measurement of lease liabilities

Effective October 1, 2022, the Company did not apply the provisions

of ASU 2016-02 as its leases had terms of 12-month or less at inception.

As of September 30, 2023, total minimum lease payments were approximately

or exercised during the three months ended March 31, 2024 and 2023.

No non-employee stock option grants expired during the three months

ended March 31, 2024.

During the three months ended March 31, 2023, non-employee stock option grants to purchase approximately 100 shares

of common stock expired.

The Company did no t recognize any share-based expense related to non-employee stock options during the three

months ended March 31, 2024 and 2023.

During the three months ended March 31, 2024 and

2023, there was no provision for income taxes as the Company incurred losses during both periods.

Deferred tax assets and liabilities

reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes

and the amounts used for income tax purposes.

The Company records a valuation allowance against its deferred tax assets as the Company

believes it is more likely than not the deferred tax assets will not be realized.

The valuation allowance against deferred tax assets

was approximately $ 40.1 million and $ 39.7 million as of March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024 and December 31, 2023,

the Company did no t record any unrecognized tax positions.

Related Party Transactions

7 unchanged sentences

Co-Development Agreement with Pharmsynthez.

The Pharmsynthez Loan had an initial term of 15-months and accrued interest at a rate of 10 %

The Pharmsynthez Loan had an initial term of 15-months and accrued interest at a rate of 10 % per annum.

The Pharmsynthez Loan was guaranteed by all of the operating subsidiaries of Pharmsynthez, including SynBio and AS Kevelt,

2 unchanged sentences

obligations due under the Pharmsynthez Loan in May 2023, and no further amounts are due under the Pharmsynthez Loan.

As a result, the

Company recognized approximately $ 65,000 of income related to interest and fees associated with the Pharmsynthez Loan including approximately

$ 40,000 related to interest income during the nine months ended September 30, 2023.

The Company recognized approximately $ 9,000 of interest

income related to the Pharmsynthez Loan during the nine months ended September 30, 2022.

As of December 31, 2022, approximately $ 0.4 million

was included in other assets on the condensed consolidated balance sheet.

No amounts were outstanding as of September 30, 2023.

As a result, no amounts

were outstanding as of March 31, 2024 and December 31, 2023.

The Company did no t recognize any interest income related to the Pharmsynthez

Loan during the three months ended March 31, 2024 and 2023.

Subsequent Events

1 unchanged sentence

to the balance sheet date through the date the financial statements were issued and determined that there were no such events requiring

recognition or disclosure in the financial statements except as discussed below.

On October 24, 2023, all of the Company’s Series

A Preferred Stock was converted into approximately 8,000 shares of common stock.

recognition or disclosure in the financial statements.

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