| BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of presentation The
accompanying unaudited condensed consolidated interim financial statements have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These financial statements
are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary
for a fair statement of the balance sheet, operating results, and cash flows for the periods presented in accordance with accounting
principles generally accepted in the United States of America (“U.S. GAAP”). Operating results for the three months ended
March 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022 or any
other future period. Certain information and footnote disclosure normally included in the annual financial statements prepared in accordance
with U.S. GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. The Company’s
financial position, results of operations, and cash flows are presented in U.S. Dollars. These financial statements and related notes
should be read in conjunction with the audited financial statements and related notes thereto for the year ended December 31, 2021 included
in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2022. The Company
operates in one segment. Principles
of consolidation The
condensed consolidated financial statements include the accounts of HBI and its wholly-owned subsidiaries, HB and Farrington.
All significant intercompany balances and transactions have been eliminated in consolidation. Recently
adopted account pronouncements The
Company has evaluated all recent accounting pronouncements and believed that none of them will have a material effect on the Company’s
financial position, results of operations, or cash flows, except as described below. Earnings
per share In
May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) 2021-04, Earnings
Per Share Compensation-Stock Compensation Derivatives and Hedging-Contracts in Entity’s Own Equity Use
of estimates The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates on historical experience
and on assumptions believed to be reasonable under the circumstances. The estimation process often may yield a range of potentially reasonable
estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates.
Estimates are used in the following areas, among others: research and development expense recognition, valuation of common shares and
stock options, allowances of deferred tax assets, valuation of debt related instruments, accrued expenses and liabilities, and cash flow
assumptions regarding going concern considerations. Given the situation surrounding the COVID-19 pandemic, many estimates and assumptions
have required increased judgment and are subject to a higher degree of variability and volatility. Although management believes the estimates
that have been used are reasonable, as events continue to evolve and additional information becomes available, actual results could vary
from the estimates that were used. Concentration
of credit risk The
Company maintains cash balances with various financial institutions. Account balances at these institutions are insured by the Federal
Deposit Insurance Corporation up to $ 250,000
per depositor. At various times during the year,
bank account balances may have been in excess of federally insured limits. The Company has not experienced losses in such accounts.
The Company believes that it is not subject to unusual credit risk beyond the normal credit risk
associated with commercial banking relationships. Research and development Research
and development costs are expensed as incurred. Research and development expenses include personnel costs associated with research and
development activities, including third party contractors to perform research, conduct clinical trials, and manufacture drug supplies
and materials. The Company accrues for costs incurred by external service providers, including contract research organizations and clinical
investigators, based on its estimates of service performed and costs incurred. These estimates include the level of services performed
by third parties, patient enrollment in clinical trials, administrative costs incurred by third parties, and other indicators of the
services completed. Approximately $ 61,000 Stock based compensation The
Company recognizes compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as
an expense in the condensed consolidated statements of operations over the requisite service period based on a measurement
of fair value for each stock-based award. The fair value of each option grant to employees, non-employees and directors is estimated
as of the date of grant using the Black-Scholes option-pricing model, net of actual forfeitures. The fair value is amortized as compensation
cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The
fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Prior to January
12, 2022, the Company was a private company and the Company’s common stock has only been publicly traded since that date. As
a result, it lacked company-specific historical and implied volatility information. Therefore, it has estimated its
expected stock volatility based on the historical data regarding the volatility of a publicly traded set of peer companies. The expected
term of stock options granted was between five and seven years. The risk-free interest rate was determined by reference to the U.S. Treasury
yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Common stock valuations Prior
to the IPO, the Company was required to periodically
estimate the fair value of common stock with the assistance of an independent third-party valuation expert when issuing stock options
and computing its estimated stock-based compensation expense and value of shares issued in acquiring product candidates. The assumptions
underlying these valuations represented management’s best estimates, which involved inherent uncertainties and the application
of significant levels of management judgment. In order to determine the fair value, the Company considered, among other things, contemporaneous
valuations of the Company’s common stock; the Company’s business, financial condition and results of operations, including
related industry trends affecting its operations; the likelihood of achieving various liquidity events; the lack of marketability of
the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital
market conditions. After the closing of the Company’s IPO on January 14, 2022, the fair value of common stock is determined
by using the closing price of the Company’s common stock on The Nasdaq Capital Market. Debt discount and
derivative instruments The
initial fair value of the redemption feature relating to the convertible debt instruments was treated as a debt discount and was
amortized over the term of the related debt using the straight-line method, which approximates the interest method. Amortization of
debt discount is recorded as a component of interest expense. If a loan is paid in full, any unamortized debt discounts will be
removed from the related accounts and charged to operations. As the convertible debt was converted into common stock at the date of
the IPO, the unamortized debt discount was charged to interest expense. In accordance with the FASB ASU 2015-03, Interest
- Imputation of Interest The
Company accounts for derivative instruments in accordance with FASB Accounting Standards Codification (“ASC”) 815,
Derivative and Hedging, which establishes accounting and reporting standards for derivative instruments, including certain derivative
instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at
fair value. The Company’s derivative financial instrument consisted of an embedded feature contained in the Company’s convertible
debt that was bifurcated and accounted for separately. See Note 3 to the condensed consolidated financial statements for further details. Fair value measurements The
Company applies FASB ASC 820, Fair Value Measurement The
carrying value of the Company’s prepaid expenses, accounts payable, and accrued expenses approximate fair value because of the
short-term maturity of these financial instruments. The redemption feature of the debt instruments is recorded at fair value. See Note
4 to the condensed consolidated financial statements for further details. The
valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input
that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level
1 Inputs: Level
2 Inputs: Level
3 Inputs: Deferred offering costs Deferred
offering costs consisted of legal, accounting, printing, and filing fees that the Company capitalized which were offset against the proceeds
from the IPO. Income taxes The
Company accounts for income taxes using the asset-and-liability method in accordance with FASB ASC 740, Income Taxes Deferred
income taxes are recognized for the tax effect of temporary differences between the financial statement carrying amount of assets
and liabilities and the amounts used for income tax purposes and for certain changes in valuation allowances. Valuation allowances
are recorded to reduce certain deferred tax assets when, in management’s estimation, it is more likely than not that a tax
benefit will not be realized. A valuation allowance has been recognized for all periods since it is more likely than not that
some portion or all of the deferred tax assets will not be realized in future periods. The
Company follows the guidance in FASB ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax
positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of
recognition and measurement. The first step involves assessing whether the tax position is more likely than not to be sustained upon
examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that
meet the more likely than not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being
realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position
in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing
authority. The Company will recognize interest and penalties related to tax positions in income tax expense. At March 31, 2022 and
December 31, 2021, the Company had no unrecognized uncertain income tax positions, and therefore no amounts have been recognized in
the condensed consolidated financial statements. Net loss per share The
Company reports loss per share in accordance with FASB ASC 260-10, Earnings Per Share Potentially
dilutive securities not included in the computation of loss per share for the three months ended March 31, 2022 and 2021
included options to purchase 1,819,339 and 798,391 shares
of common stock, respectively. All common share amounts as of March 31, 2022 and December 31, 2021 and per share amounts for the
three months ended March 31, 2022 and 2021 have been adjusted to reflect a 1-for-26.4 reverse
stock split of the Company’s common stock effectuated on September 16, 2021. Other potentially dilutive securities also not
included in the computation of loss per share for the three months ended March 31, 2022 included warrants to purchase 187,500 shares
of the Company’s common stock. Recent accounting pronouncements not yet adopted Debt with conversion and other options and
derivatives and hedging The
FASB recently issued 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
Earnings Per Share Codification
improvements In
October 2020, the FASB issued ASU 2020-10, Codification Improvements This
ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December
15, 2022. The Company does not expect the adoption of ASU 2020-10 to have a material impact on
its consolidated financial statements. |
