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Item 1. Financial Statements

2025-05-13 compared with 2024-11-12 · 185 added, 360 removed, 198 unchanged (73% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

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Series B, $ 0.001 par value:

1,804,394 shares issued and outstanding as of September 30, 2024 and December 31, 2023

1,804,394 shares issued and outstanding as of March 31, 2025 and December 31, 2024

Common stock, $ 0.001 par value;

10,000,000 shares authorized as of September 30, 2024 and December 31, 2023;

1,544,840 and 1,543,385 shares issued as of September 30, 2024 and December 31, 2023, respectively;

1,542,139 and 1,540,684 shares outstanding as of September 30, 2024 and December 31, 2023, respectively

10,000,000 shares authorized as of March 31, 2025 and December 31, 2024;

1,544,840 shares issued as of March 31, 2025 and December 31, 2024;

1,542,139 shares outstanding as of March 31, 2025 and December 31, 2024

Additional paid in capital

4 unchanged sentences

Treasury stock

( 5,281,180 )

Total stockholders' equity

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED

SEPTEMBER 30,

NINE MONTHS ENDED

SEPTEMBER 30,

Three Months Ended March 31,

Royalty revenue

2 unchanged sentences

Research and development

( 1,020,618 )

( 2,246,077 )

( 2,519,137 )

General and administrative

( 2,710,670 )

( 2,608,934 )

Total operating costs and expenses

1 unchanged sentence

( 1,779,231 )

( 4,956,747 )

( 5,128,071 )

Loss from operations

( 1,268,414 )

( 3,105,283 )

( 3,260,048 )

Other income (expense):

Other income (expense)

Other income:

Interest income, net

2 unchanged sentences

$ ( 1,195,113 )

$ ( 2,905,754 )

$ ( 2,963,072 )

Basic and diluted net loss per share

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XENETIC BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS' EQUITY

THREE MONTHS ENDED SEPTEMBER 30, 2024

Preferred Stock

Accumulated Other

Number of Shares

Par Value ($0.001)

Number of Shares

Par Value ($0.001)

Paid in Capital

Accumulated Deficit

Comprehensive Income

Treasury Stock

Stockholders' Equity

Balance as of July 1, 2024

$ 208,173,105

$ ( 195,703,279 )

$ ( 5,281,180 )

Exercise of purchase warrants

Share-based expense

Balance as of September 30, 2024

$ 208,200,640

$ ( 196,139,950 )

$ ( 5,281,180 )

NINE MONTHS ENDED SEPTEMBER 30, 2024

Preferred Stock

Accumulated Other

Number of Shares

Par Value ($0.001)

Number of Shares

Par Value ($0.001)

Paid in Capital

Accumulated Deficit

Comprehensive Income

Treasury Stock

Stockholders' Equity

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

THREE MONTHS ENDED MARCH 31, 2025

Comprehensive

Stockholders'

Balance as of January 1, 2025

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$ ( 5,281,180 )

Exercise of purchase warrants

Issuance of common stock in connection with restricted stock

Share-based expense

( 2,905,754 )

Balance as of September 30, 2024

$ 208,200,640

$ ( 196,139,950 )

$ ( 5,281,180 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

XENETIC BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS' EQUITY

THREE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Stock

Accumulated Other

Number of Shares

Par Value ($0.001)

Number of Shares

Par Value ($0.001)

Paid in Capital

Accumulated Deficit

Comprehensive Income

Treasury Stock

Stockholders' Equity

Balance as of July 1, 2023

$ 207,908,129

$ ( 191,007,135 )

$ ( 5,281,180 )

Share-based expense

( 1,055,555 )

Balance as of September 30, 2023

Balance as of March 31, 2025

$ 208,244,999

1 unchanged sentence

$ ( 5,281,180 )

NINE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Stock

Accumulated Other

Number of Shares

Par Value ($0.001)

Number of Shares

Par Value ($0.001)

Paid in Capital

Accumulated Deficit

Comprehensive Income

Treasury Stock

Stockholders' Equity

THREE MONTHS ENDED MARCH 31, 2024

Comprehensive

Stockholders'

Balance as of January 1, 2024

2 unchanged sentences

$ ( 5,281,180 )

Issuance of common stock to adjust for reverse split rounding

Share-based expense

1 unchanged sentence

( 1,195,113 )

Balance as of September 30, 2023

Balance as of March 31, 2024

$ 208,131,009

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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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or the “Company”), incorporated in the state of Nevada and based in Framingham, Massachusetts, is a biopharmaceutical company

focused on advancing innovative immune-oncology technologies addressing hard to treat cancers.

focused on advancing innovative immune-oncology technologies addressing difficult to treat cancers.

The Company’s proprietary Deoxyribonuclease

(“DNase”) platform is designed to improve outcomes of existing treatments, including immunotherapies, by targeting neutrophil

extracellular traps (“NETs”), which have been implicated in cancer progression and resistance to cancer treatments.

is currently focused on advancing its systemic DNase program into the clinic as an adjunctive therapy for pancreatic carcinoma and locally

advanced or metastatic solid tumors.

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.

(“DNase”) technology is designed to improve outcomes of existing treatments, including immunotherapies, by targeting neutrophil

extracellular traps (“NETs”), which are involved in cancer progression.

Xenetic is currently focused on advancing its systemic

DNase program into the clinic as an adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors.

As used in this Quarterly Report on Form 10-Q

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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 condensed consolidated

financial statements.

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

While the Company believes 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 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.

While 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 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, 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

Impact of Global

Conflicts on Operations

Events and Conflicts on Operations

The short and long-term

implications of the conflicts in the Ukraine and 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.

implications of geopolitical events and global conflicts, including those in Ukraine and the Middle East are difficult to predict at this

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, 2024 filed with the SEC on March 18, 2025, and amended on April 29, 2025.

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 (“RSU”), 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.

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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balances and transactions have been eliminated in consolidation, the Company has $0.2 million of cash collateralizing these guarantees.

Segment Information

The Company is principally engaged in pre-clinical

research and development activities to advance its DNase technology.

Operating segments are identified as components of an enterprise

about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”),

who is the Company’s Chief Executive Officer, in making decisions on how to allocate resources and assess performance.

views its operations and manages its business as a single operating segment.

The Company’s measure of segment profit or loss is

The CODM manages and allocates to the operations of the Company on a total company basis.

Managing and allocating resources

on a consolidated basis enables the CODM to assess the overall level of resources available and how best to deploy these resources across

functions, therapeutic areas and research and development projects that are in line with the Company’s long-term company-wide strategic

Consistent with this decision-making process, the CODM uses consolidated financial information for purposes of evaluating performance,

forecasting future period financial results, allocating resources and setting incentive targets.

The following table is representative

of the significant expense categories regularly provided to the CODM when managing the Company’s single reporting segment.

A reconciliation

to the condensed consolidated net loss for the three months ended March 31, 2025 and 2024 is as follows:

Schedule of consolidated net loss

Three Months Ended March 31,

Program expenses (1)

Non-program expenses (2)

Salaries and wages

Other segment items (3)

$ ( 903,141 )

$ ( 1,195,113 )

Includes external research and development.

Includes information technology, legal, intellectual property and other general and administrative expenses.

Includes stock-based compensation expense, interest income and other expense (income).

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, 2024 and 2023, basic and diluted net loss per share are the same in each respective three and nine month 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 Pronouncements Not Yet

Segment Reporting - Improving Reportable Segment

Disclosures (Topic 280).

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

Update (“ASU”) No.

2023-07, to improve reportable segment disclosure requirements, primarily through enhanced disclosures

about significant expenses.

Under this ASU, a company is required to enhance its segment disclosures to include significant segment expenses

that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment,

and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

This ASU also requires

all annual disclosures currently required by Topic 280 to be included in interim periods.

This ASU is effective for the Company's fiscal

year ending December 31, 2024, and interim periods beginning in fiscal 2025, with early adoption permitted, and requires retrospective

application to all prior periods presented in the financial statements.

The Company has one reportable segment and is currently evaluating

the effects that the adoption of this ASU will have on its consolidated financial statements.

Income Taxes - Improvements to Income Tax Disclosures

(Topic 740) .

In December 2023, the FASB issued ASU No.

2023-09, to improve income tax disclosure requirements, primarily through enhanced

disclosures related to the income tax rate reconciliation and income taxes paid.

This ASU is effective for fiscal 2025, with early adoption

permitted, and may be applied retrospectively.

The Company is currently evaluating the effects that the adoption of this ASU will have

on its consolidated financial statements.

For the three months ended March 31, 2025 and

2024, 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 both the three and nine months ended September

30, 2024 and 2023, 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 from Takeda.

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 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.

of approximately $ 0.6 million and $ 0.5 million were recorded as revenue during the three months ended March 31, 2025 and 2024, 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.

Catalent Pharma Solutions LLC (“Catalent”)

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

The Company has paid Catalent approximately

$ 2.5 million through September 30, 2024, of which approximately $ 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 September 30, 2024 and December 31, 2023, respectively, and approximately

$ 0.1 million has been recognized as a liability and is included in accrued expenses and other current liabilities as of September 30,

There was no accrual as of December 31, 2023.

In addition, approximately $ 0.3 million has been recognized within other assets as

of both September 30, 2024 and December 31, 2023.

The Company has paid Catalent

approximately $ 2.5 million through March 31, 2025, of which $ 28,000 has been recognized as an advance payment and is included in prepaid

expenses and other current assets as of both March 31, 2025 and December 31, 2024, and approximately $ 0.1 million has been recognized

as a liability and is included in accrued expenses and other current liabilities as of both March 31, 2025 and December 31, 2024.

approximately $ 0.3 million has been recognized within other assets as of both March 31, 2025 and December 31, 2024.

Scripps Research Institute (“Scripps

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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.

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.

During the second quarter of 2024, the Company amended the Agreement

to extend the term to October 31, 2024 with no additional funding required.

The Company paid Scripps Research approximately $ 0.9 million

under the Agreement through September 30, 2024, of which approximately $ 20,000 and $ 0.4 million has been recognized as an advance payment

and is included in prepaid expenses and other current assets as of September 30, 2024 and December 31, 2023, respectively.

DNase technology.

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.

During the second quarter of 2024, the Company amended the Agreement to extend

the term to October 31, 2024 with no additional funding required.

On November 1, 2024, the Company and Scripps Research

entered into a Second Amendment to the Agreement (the “Second Amendment”) extending the term of the Agreement for an additional

twelve (12) month period and to provide Scripps Research additional funding in an aggregate amount of up to approximately $400,000 to

fund continuing research.

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 $65,000 on the date of the Second Amendment and subsequent monthly payments

of approximately $65,000 over a 5-month period.

All other terms of the Agreement remain unchanged.

The Company paid Scripps Research approximately

$ 0.9 million under the Agreement through March 31, 2025, of which approximately $ 0.4 million had been recognized as an advance payment

and was included in prepaid expenses and other current assets as of December 31, 2024.

There were no advance payments as of March 31,

University of Virginia (“UVA”)

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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 paid UVA approximately $ 0.2 million under the UVA Agreement through September 30, 2024, which was

expensed during the nine months ended September 30, 2024.

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

addition to advancing our existing intellectual property, the Company has 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.

In November 2024, the Company and UVA entered into an amendment to extend the UVA Agreement through December

Pursuant to the UVA agreement, as amended, UVA will build on the preclinical and translational data produced to date and continue

to investigate combinations of DNase I with immunotherapies in models of primary and metastatic colorectal cancer.

paid UVA approximately $ 0.4 million under the UVA Agreement through December 31, 2024 of which $ 0.1 million had been recognized as an

advance payment and was included within prepaid expenses and other current assets as of December 31, 2024.

There were no advance payments

as of March 31, 2025.

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, 2024.

to engage in research and development activities with no resultant commercial products through March 31, 2025.

No amounts were recognized

as revenue related to the Serum Institute, Pharmsynthez or SynBio agreements during the three and nine months ended September 30, 2024

and 2023, respectively.

Accrued Expenses and Other Current Liabilities

On June 19, 2024, the Company entered into a confidential

separation agreement and general release with each of Jeffrey F.

Eisenberg, the Company’s former Chief Executive Officer (the “Eisenberg

Separation Agreement”), and Curtis Lockshin, the Company’s former Chief Scientific Officer (together, the “Separation

Agreements”) pursuant to which Messrs.

Eisenberg and Lockshin were each eligible for certain severance payments and benefits consistent

with the terms of their existing employment agreements as described under “Employment Agreements with our Named Executive Officers”

in the Amendment No.

1 to Annual Report on Form 10-K/A filed by the Company with the Securities and Exchange Commission on April 26, 2024.

In addition, the Eisenberg Separation Agreement provided for accelerated vesting of all of the unvested stock options held by Mr.

as of May 16, 2024.

During the nine months ended September 30, 2024, the Company expensed approximately $ 0.8 million of accrued payroll

and benefits related to the Separation Agreements.

In addition, the Company recorded approximately $ 13,000 of share-based expense for

the accelerated vesting of unvested stock options.

As of September 30, 2024, approximately $ 0.3 million was accrued within accrued expenses

and other current liabilities related to these obligations.

as revenue related to the Serum Institute, Pharmsynthez or SynBio agreements during the three months ended March 31, 2025 and 2024, respectively.

Fair Value Measurements

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level of input that is available and significant to the fair value measurement.

Level 1 inputs are unadjusted quoted prices in active

markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 utilizes

quoted market prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels

of price transparency.

Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity

for the asset or liability at the measurement date.

As of September 30, 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, 2024 and 2023.

Level 1 inputs are quoted prices in active markets for

identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 utilizes quoted market

prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability

at the measurement date.

As of March 31, 2025 and December 31, 2024, 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 months ended March 31, 2025 and 2024.

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

of Change to the Company’s Articles of Incorporation with the Secretary of State of Nevada to effect the Reverse Stock Split.

Reverse Stock Split was effective at 12:01 a.m., Eastern Time, on May 15, 2023.

No fractional shares were issued as a result of the Reverse

Stock Split and any remaining share fractions were rounded up to the nearest whole share, resulting in 15,941 new shares of common stock

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

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

as of both September 30, 2024 and December 31, 2023, which expire on February 23, 2025.

The Series A Warrants are immediately exercisable

at a price of $ 33.00 per share of common stock.

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

September 30, 2024 and 2023.

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

as of December 31, 2024.

The Series A Warrants were immediately exercisable at a price of $ 33.00 per share of common stock.

A Warrants were exercised or forfeited during the three months ended March 31, 2025 and 2024.

These warrants expired in February 2025

and, as a result, no Series A Warrants were outstanding as of March 31, 2025.

The Company also has warrants to purchase approximately

800 shares of the Company’s common stock outstanding as of both September 30, 2024

and December 31, 2023, which expire on July 3, 2026 .

These warrants have an exercise price

of $ 29.09 per share of common stock.

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

30, 2024 and 2023.

In addition, the Company had publicly traded warrants

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

These warrants had an exercise price of $ 130.00

per share of common stock and expired on July 19, 2024 .

The warrants ceased trading on Nasdaq under the symbol “XBIOW” upon

The warrants also provided that if the weighted-average price of common stock on any trading day on or after 30 days after

issuance is lower than the then-applicable exercise price per share, each warrant may be exercised, at the option of the holder, on a

cashless basis for one share of common stock, as adjusted for the Reverse Stock Split.

Warrants to purchase approximately 1,038 shares

of common stock were exercised on a cashless, one-for-one basis during the three and nine months ended September 30, 2024.

public warrants remaining outstanding as of July 19, 2024 expired, and no public warrants were outstanding at September 30, 2024.

of these warrants were exercised or forfeited during the three and nine months ended September 30, 2023.

800 shares of the Company’s common stock outstanding as of both March 31, 2025 and

December 31, 2024.

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, 2025 and 2024.

Share-Based Expense

Total share-based expense related to stock options

and RSUs was approximately $28,000 and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, and approximately

$0.1 million and $0.2 million for each of the nine months ended September 30, 2024 and 2023.

Share-based expense is classified in the condensed consolidated statements

of operations as follows:

Schedule of share-based expense

Three Months Ended September 30,

Nine Months Ended September 30,

and restricted stock units (“RSUs”) was approximately $ 19,000 and $ 77,000 during each of the three months ended March 31,

2025 and 2024, respectively.

Share-based expense is classified in the condensed

consolidated statements of operations as follows:

Schedule of share-based compensation expense

Three Months Ended March 31,

Research and development expenses

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Employee Stock Options and RSUs

During the nine months ended September 30,

stock options to purchase shares of common stock were granted by the Company.

stock options to purchase shares of common stock were granted during the three months ended September 30, 2024.

stock option awards to purchase shares of common stock were granted during the three and nine months ended September 30, 2023.

RSUs were granted during each of the three and nine months ended September 30, 2024 and 2023.

The Company recognized a total of

approximately $ 28,000

million of share-based expense related to employee stock options during the three months ended September 30, 2024 and 2023,

respectively, and $ 0.1

million and $ 0.2

million during the nine months ended September 30, 2024 and 2023, respectively.

The Company issued 417

shares of common stock during the nine months ended September 30, 2024 related to RSUs representing all the RSUs outstanding.

result, no RSUs were outstanding at September 30, 2024.

employee stock options were exercised during the three and nine months ended September 30, 2024 and 2023.

During each of the three

and nine months ended September 30, 2024 stock options to purchase 20,847

shares of common stock were cancelled and, during the nine months ended September 30, 2024, stock options to purchase 11,667

shares of common stock were forfeited.

employee stock options expired during the three and nine months ended September 30, 2023.

No stock option awards to purchase shares of common

stock were granted during the three months ended March 31, 2025 and 2024.

The Company recognized a total of approximately $ 19,000 and

$ 77,000 of share-based expense related to employee stock options during each of the three months ended March 31, 2025 and 2024.

stock options or RSUs were exercised during the three months ended March 31, 2025 and 2024.

During the three months ended March 31, 2025,

options to purchase 25,836 shares of common stock expired.

No options or RSUs expired during the three-months ended March 31, 2024.

Non-Employee Stock Options

There were no non-employee stock options granted

or exercised during the three and nine months ended September 30, 2024 and 2023, respectively.

No non-employee stock option grants expired

during the three and nine months ended September 30, 2024.

During the nine months ended September 30, 2023, non-employee stock option

grants to purchase approximately 100 shares of common stock expired.

The Company did not recognize any expense related to non-employee

stock options during the three and nine months ended September 30, 2024 and 2023, respectively.

During the three and nine months ended September

30, 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 $ 40.6 million and $ 39.7 million as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31,

or exercised during the three months ended March 31, 2025 and 2024.

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

ended March 31, 2025 and 2024.

The Company did not recognize any share-based expense related to non-employee stock options during the

three months ended March 31, 2025 and 2024.

During the three months ended March 31, 2025 and

2024, 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 $ 41.4 million and $ 41.1 million as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 and December 31, 2024,

the Company did no t record any unrecognized tax positions.

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The Company has entered into various research,

development, license and supply agreements with Serum Institute and Pharmsynthez, each a related party whose relationship has not materially

changed from that disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC

on March 21, 2024, as amended on April 26, 2024.

During the fourth quarter

of 2019, the Company entered into a loan agreement with Pharmsynthez (the “Pharmsynthez Loan”), pursuant to which the Company

advanced Pharmsynthez an aggregate principal amount of up to $ 500,000 to be used for the development of a specific product under the Company’s

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

and was secured by all of the common and preferred stock of the Company owned by Pharmsynthez and SynBio.

Pharmsynthez paid all

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

As a result, no amounts

were outstanding as of September 30, 2024 and December 31, 2023.

The Company did not recognize any interest income related to the Pharmsynthez

Loan during the three and nine months ended September 30, 2024.

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.

development, license and supply agreements with PeriNess Ltd.

(“PeriNess”), Serum Institute and Pharmsynthez, each a related

party whose relationship has not materially changed from that disclosed in the Company’s Annual Report on Form 10-K for the year

ended December 31, 2024 filed with the SEC on March 18, 2025, as amended on April 29, 2025.

The Company paid PeriNess approximately $ 20,000

during the three months ended March 31, 2025.

As of March 31, 2025, approximately $ 42,000 was recorded as an advanced payment and included

in Prepaid expenses and other on the March 31, 2025 condensed consolidated balance sheet.

No amounts were incurred in connection with agreements

with Serum Institute and Pharmsynthez during the three months ended March 31, 2025 and 2024.

During the first quarter of 2025, the Company

entered into a Consulting Agreement with Dr.

Dmitry Genkin, Chairman of our Board of Directors, to provide consulting services to the

Company’s DNase-based oncology program.

This agreement was effective January 1, 2025 and the Company paid Dr.

Genkin approximately

$ 0.1 million during the three months ended March 31, 2025, of which approximately $ 30,000 was reflected within accounts payable as of

March 31, 2025.

Genkin does not receive any fees for his service as a member of the Board of Directors.

Subsequent Events

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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 described below.

Scripps Research

On November 1, 2024, the Company and Scripps entered

into a Second Amendment to Research Funding and Option Agreement (the “Amendment”), pursuant to which the Company amended

that certain Research Funding and Option Agreement, dated March 17, 2023, by and between the Company and Scripps (the “Original

Agreement”), in order to extend the term of the Original Agreement for an additional twelve (12) month period and to provide Scripps

Research additional funding in an aggregate amount of up to approximately $400,000 to fund continuing 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 $65,000

on the date of the Amendment and subsequent monthly payments of approximately $65,000 over a 5-month period.

All other terms of the Original

Agreement remain unchanged.

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