NOTE 8 – STOCKHOLDERS’ EQUITY

The Company is authorized to issue an aggregate of 500,000,000 shares. The authorized capital stock is divided into: (i) 495,000,000 shares of Common Stock having a par value of $0.0001 per share and (ii) 5,000,000 shares of preferred stock having a par value of $0.0001 per share.

Effective April 8, 2021, the Company amended its certificate of incorporation to effect a one-for-twenty (1:20) reverse stock split of our outstanding shares of Common Stock. No fractional shares were issued as a result of the reverse stock split. Any fractional shares resulting from the reverse stock split were paid in cash. The reverse stock split did not otherwise affect any of the rights currently accruing to holders of our Common Stock. All share information presented in these financial statements has been retroactively adjusted to reflect the reduced number of shares of Common Stock outstanding.

Common Stock

The Company had 26,043,406 and 23,008,371 shares of its Common Stock issued and outstanding at December 31, 2022 and 2021, respectively.

Each holder of Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of the stockholders. Our Charter and Amended and Restated Bylaws (the “Bylaws”) do not provide for cumulative voting rights.

In addition, the holders of our Common Stock will be entitled to receive ratably such dividends, if any, as may be declared by the Board out of legally available funds; however, the current policy of our Board is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our Common Stock will be entitled to share ratably in all assets that are legally available for distribution.

Holders of our Common Stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. The rights, preferences and privileges of the holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.

2021 Stock Incentive Plan

The Company’s Board (the “Board”) and stockholders have adopted and approved the 2021 Stock Incentive Plan (the “2021 Plan”) which took effect on July 15, 2021. The 2021 Plan allows for the issuance of securities, including stock options, restricted stock, and restricted stock units (“RSUs”) to employees, Board members and consultants. The initial number of shares of Common Stock available for issuance under the 2021 Plan was 1,280,732 shares, which will, on January 1 of each calendar year, beginning on January 1, 2022 and ending on and including January 1, 2031, unless the Board decides otherwise, automatically increase to equal to the lessor of (A) three percent (3%) of the number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year or (B) such smaller number of Shares as is determined by the Board.

As of January 1, 2022, the number of shares of Common Stock available for issuance under the 2021 Plan automatically increased by 685,751 to 1,966,483. The Company issued an aggregate of 800,000 and 600,000 stock options under the 2021 Plan during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, 1,966,483 total shares were available under the 2021 Plan, of which 1,500,000 were issued and outstanding and 466,483 shares were available for potential issuances.

2021 Common Stock Transactions

Prior to the Initial Public Offering, during 2021, the Company entered into various subscription agreements in connection with a private placement of Common Stock at a price of $1.60 per share that closed on of January 31, 2021. The Company issued a total of 395,625 shares of Common Stock for aggregate gross proceeds of approximately $633,000 related to such private placement.

Prior to the Initial Public Offering, during 2021, the Company entered into various subscription agreements in connection with a second private placement of Common Stock at a price of $2.40 per share that closed on June 30, 2021. The Company issued a total of 239,969 shares of Common Stock for aggregate gross proceeds of approximately $576,000 related to such second private placement.

Prior to the Initial Public Offering, during 2021, the Company issued an additional 153,652 shares of Common Stock to existing investors related to an administrative correction, with no significant effect on the Company’s financial statements.

During the year ended December 31, 2021, the Company issued an aggregate of 4,800,000 shares of Common Stock in connection with the Initial Public Offering as referenced in Note 3.

During the year ended December 31, 2021, the Company issued an aggregate of 1,120,000 shares of Common Stock pursuant to exercises of Public Warrants for gross proceeds of $7.0 million as referenced in Note 9.

November 2021 Private Placement

On November 24, 2021, the Company entered into a securities purchase agreement (the “November 2021 Purchase Agreement”) pursuant to which the Company agreed to sell, in a private placement (the “November 2021 Private Placement”) with institutional investors 8,680,000 shares of Common Stock (the “PIPE Shares”) and warrants to purchase up to 8,680,000 shares of Common Stock (the “PIPE Warrants”) . The combined purchase price for one PIPE Share and one PIPE Warrant was $3.50. The PIPE Warrants are immediately exercisable, expire five years from the date of issuance and have an exercise price of $3.50 per share, subject to adjustment as set forth in the PIPE Warrants.

The investors may exercise the PIPE Warrants on a cashless basis if the shares of Common Stock underlying the PIPE Warrants are not then registered pursuant to an effective registration statement. The investors have contractually agreed to restrict their ability to exercise the PIPE Warrants such that the number of shares of Common Stock held by the investors and any of their affiliates after such exercise does not exceed either 4.99% or 9.99% of the Company’s then issued and outstanding shares of Common Stock, at the investor’s election.

In connection with the November 2021 Purchase Agreement, the Company entered into a registration rights agreement (the “November 2021 Registration Rights Agreement”) with the investors. Pursuant to the November 2021 Registration Rights Agreement, the Company was required to file a resale registration statement with the Securities and Exchange Commission (the “SEC”) to register for resale the shares and the warrant shares and to have such registration statement declared effective within 60 days after the date of the Purchase Agreement, or 90 days of the date of the November 2021 Purchase Agreement in the event the registration statement is subject to a “full review” by the SEC. The Company is obligated to pay certain cash liquidated damages to the investor if it fails to file the resale registration statement when required, fail to cause the registration statement to be declared effective by the SEC when required, or if it fails to maintain the effectiveness of the registration statement. The registration statement was declared effective by the SEC on December 16, 2021.

Pursuant to a placement agent agreement (the “Placement Agent Agreement”), dated as of November 24, 2021 the Company paid the placement agent a cash fee of 9.0% of the gross proceeds raised in the November 2021 Private Placement, and a cash fee equal to 1.0% of the gross proceeds raised in the November 2021 Private Placement for non-accountable expenses, and also reimbursed the placement agent $70,000 for accountable expenses.

On November 29, 2021, the Company consummated the November 2021 Private Placement, pursuant to which it issued an aggregate of 8,680,000 PIPE Shares and PIPE Warrants to purchase up to 8,680,000 shares of Common Stock. The offering price per PIPE Share and accompanying PIPE Warrant was $3.50, resulting in aggregate gross proceeds of approximately $30.4 million and net proceeds to the Company, net of underwriter discounts and fees, of approximately $27 million. No liability accounting or valuation is deemed necessary for these warrants.

2022 Common Stock Transactions

During the year ended December 31, 2022, the Company issued 3,260,870 shares of Common Stock in connection with the business combination with Alpha-5 as referenced in Note 6.

During the year ended December 31, 2022, the Company issued 2,700,000 shares of Common Stock in connection with the acquisition of AlloMek as referenced in Note 6.

During the year ended December 31, 2022, the Company entered into a comprehensive Settlement and Cooperation Agreement (“the Settlement and Cooperation Agreement”) with certain shareholders (collectively, the “Camac Group”) resolving all outstanding issues between the parties. Pursuant to the Settlement and Cooperation Agreement, the Camac Group agreed to a three-year standstill provision and the parties agreed to dismiss with prejudice the pending Delaware litigation against the Company and the Board filed by the Camac Group. The Company purchased all 3,205,282 shares of Common Stock held by the Camac Group at a price of $1.0003 per share, the equivalent to the 5-day volume-weighted average price of the Common Stock. Additionally, the Company reimbursed approximately $698,000 of certain fees and expenses of the Camac Group.

All repurchased shares were cancelled and recorded within Accumulated Deficit on the Company’s consolidated balance sheet as of December 31, 2022. The Company recorded the reimbursed fees and expenses within Litigation settlements on the consolidated statement of operations for the year ended December 31, 2022.

During the year ended December 31, 2022, the Company entered into settlement agreements with certain shareholders for approximately $300,000.

Restricted Stock Units

During the year ended December 31, 2021, the Company issued its chief executive officer, Dr. Marques, 200,000 RSUs with a grant date fair value of $288,000. During the year ended December 31, 2022, 66,667 RSUs vested. The Company recognized approximately $96,000 and $3,000 of stock-based compensation expense for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, remaining unamortized RSU compensation expense was approximately $189,000.

Restricted Stock

During the year ended December 31, 2022, the Company issued an aggregate of 279,447 shares of restricted Common Stock to certain consultants for services provided. These 279,447 shares of restricted Common Stock had a total grant date fair value of approximately $282,000 and vested immediately. The Company recognized approximately $282,000 of stock-based compensation expense for these restricted stock issuances for year ended December 31, 2022.

During the year ended December 31, 2021, the Company issued 25,000 shares of restricted Common Stock to Brio Financial Group, LLC (“Brio”) pursuant to which Brio provided Stanley M. Gloss to serve as the Chief Financial Officer of the Company and also provided certain other specified financial and accounting services typically provided by a Chief Financial Officer. These 25,000 shares of restricted Common Stock had a grant date fair value of $60,000 and vest over a one-year period for services to be provided. The Company recognized approximately $15,000 and $45,000 of stock-based compensation expense for the years ended December 31, 2022 and 2021, respectively.

During the year ended December 31, 2021, the Company recognized approximately $152,000 of stock-based compensation expense related to 150,000 shares of restricted Common Stock entitled to a consultant for services provided. The Company issued these 150,000 shares of restricted Common Stock during the year ended December 31, 2022.