| Summary of Significant Accounting Policies | 2.
Summary of Significant Accounting Policies Basis
of Presentation The
accompanying consolidated financial statements and related notes include activities of the Company and have been prepared in conformity
with accounting principles generally accepted in the United States of America (“GAAP”). Use
of Estimates The
preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period.
Significant estimates include the assumptions used in the accrual for potential liabilities, the valuation of debt and equity
instruments, the valuation of stock options and warrants issued for services, and deferred tax valuation allowances. Actual results
could differ from those estimates. Impact
of the Novel Coronavirus (COVID-19) on the Company’s Business Operations The
global outbreak of the novel coronavirus (COVID-19) has led to severe disruptions in general economic activities worldwide, as businesses
and governments have taken broad actions to mitigate this public health crisis. In light of the uncertain and continually evolving situation
relating to the spread of COVID-19, this pandemic could pose a risk to the Company. The extent to which the coronavirus may impact the
Company’s business operations will depend on future developments, which are highly uncertain and cannot be predicted at this time.
The Company intends to continue to monitor the situation and may adjust its current business plans as more information and guidance become
available. The
coronavirus pandemic presents a challenge to medical facilities worldwide. As the Company’s clinical trials are conducted on an
outpatient basis, it is not currently possible to predict the full impact of this developing health crisis on such clinical trials, which
could include delays in and increased costs of such clinical trials. Current indications from the clinical research organizations conducting
the clinical trials for the Company are that such clinical trials are being delayed or extended for several months as a result of the
coronavirus pandemic. There
is also significant uncertainty as to the effect that the coronavirus may have on the amount and type of financing available to the Company
in the future. Inflation Macroeconomic factors such as
inflation, rising interest rates, governmental responses there to and possible recession caused thereby also add significant uncertainty
to our operations and possible effects to the amount and type of financing available to the Company in the future. Cash Cash primarily consists of bank
demand deposits maintained by a major financial institution. The Company’s policy is to maintain its cash balances with financial
institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”) and/or
by the Securities Investor Protection Corporation (the “SIPC”). The Company may periodically have cash balances in financial
institutions in excess of the FDIC and SIPC insurance limits of $ 250,000 500,000 Fair
Value of Financial Instruments Accounting
standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for
establishing that fair value. The Company defines fair
value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable
inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two
are considered observable and the last is considered unobservable: Level
1: Quoted prices in active markets for identical assets or liabilities. Level
2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities. Level
3 assumptions: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities including liabilities resulting from embedded derivatives associated with certain warrants to purchase common stock. There
were n o financial instruments measured on a recurring basis
outstanding as of December 31, 2022. The fair value of financial instruments measured on a recurring basis was as follows as of December
31, 2022: Schedule
of Fair Value Liabilities Measured On Recurring Basis
Description Total Level 1 Level 2 Level 3
As of
Description Total Level 1 Level 2 Level 3
Liabilities:
Warrant liability $ 1,659,468 — — $ 1,659,468
Total liabilities at fair value $ 1,659,468 — — $ 1,659,468 As
of December 31, 2021, there was no warrant liability. The following table provides a roll-forward of the warrant liability measured at
fair value on a recurring basis using unobservable level 3 inputs for the years ended December 31, 2022 as follows: Schedule
of Warrant Liability Measured Fair Value On A Recurring Basis Using Unobservable
2022
Warrant liability
Balance as of beginning of period – December 31, 2021 $ -
Fair value of warrant liability recognized upon issuance of warrants 5,161,574
Extinguishment of warrant liability upon exercise of warrants (589,839 )
Change in fair value (2,912,267 )
Balance as of end of period – December 31, 2022 $ 1,659,468 The
Company’s financial instruments are cash, accounts payable and the warrant liability. The recorded values of cash, and accounts
payable ap Prepaid
Expenses At December 31, 2022,
prepaid expenses consist of prepaid insurance and prepaid services. Prepaid expenses are amounts paid to secure the use of assets or
the receipt of services at a future date or continuously over one or more future periods. When the prepaid expenses are eventually
consumed, they are charged to expense. The Company had
$ 956,925 and
$- 0 -
in prepaid expenses December 31, 2022 and 2021, respectively. Research
and Development Costs Research
and development costs include, but are not limited to, payroll and other personnel expenses, consultants, expenses incurred under agreements
with contract research and manufacturing organizations and animal clinical investigative sites and the cost to manufacture clinical trial
materials. Costs related to research, design and development of products are charged to research and development expense as incurred. Patents
and Licenses Effective
April 9, 2019, we entered into an Amended and Restated Exclusive License Agreement dated as of March 21, 2019 and amended through three
sets of amendments (as so amended the “Amended License Agreement”) with the UCLA TDG. The Amended License Agreement amends
and restates the Amended and Restated Exclusive License Agreement, dated as of June 19, 2017 (the “2017 Agreement”). The
2017 Agreement amended and restated the Exclusive License Agreement, effective March 15, 2006, between the Company and UCLA TDG, as amended
by ten amendments. See Note 7 for commitments related to the Exclusive License Agreement. Patent expenses include costs to acquire the
license of NELL-1, which was de minimis, and costs to file patent applications related to NELL-1. The
Company expenses the costs incurred to file patent applications, all costs related to abandoned patent applications and maintenance costs,
and these costs are included in general and administrative expenses. Costs associated with licenses acquired to be able to use products
from third parties prior to receipt of regulatory approval to market the related products are also expensed. The Company’s licensed
technologies may have alternative future uses in that they are enabling (or platform) technologies that can be the basis for multiple
products that would each target a specific indication. Costs of acquisition of licenses are expensed. Stock
Based Compensation ASC 718, Compensation – Stock Compensation Income
Taxes The
Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement
of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability
approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for
deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their
benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to
income tax matters in income tax expense. No such amounts are accrued as of December 31, 2022 and 2021. Loss
per Common Share Basic
loss per share is computed by dividing the loss available to common shareholders by the weighted-average number of common shares outstanding
during the period. All collateral shares were returned and cancelled on October 13, 2021 when the outstanding debt was converted. Diluted
loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were
dilutive. Diluted loss per common share reflects the potential dilution that could occur if convertible debentures, options and warrants
were to be exercised or converted or otherwise resulted in the issuance of common stock that then shared in the earnings of the entity. Since
the effects of outstanding options, warrants, and the conversion of convertible debt are anti-dilutive for the years ended December 31,
2022 and 2021, shares of common stock underlying these instruments have been excluded from the computation of loss per common share. The
following sets forth the number of shares of common stock underlying outstanding options, warrants, and convertible debt as of December
31, 2022 and 2021: Schedule
of Antidilutive Securities Excluded from Computation of Earnings Per Share
December 31,
2022 2021
Warrants 13,844,354 1,827,650
Stock options 452,829 241,128
14,297,183 2,068,778 New
Accounting Standards In August 2020, the FASB issued
ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).” ASU 2020-06 reduces the number of accounting models
for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. The diluted net income per share
calculation for convertible instruments will require the Company to use the if-converted method. For contracts in an entity’s own
equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives
under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies
the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares,
(ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective January 1, 2024,
for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective
method. Early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. Effective January
1, 2021, the Company early adopted ASU 2020-06 and that adoption did not have an impact on our financial statements and related disclosures. Other recent accounting pronouncements
issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange
Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements. |
