424B3 1 ea135201-424b3_aditxtherap.htm PROSPECTUS

| Filed Pursuant to Rule 424(b)(3)
| Registration No. 333-252711

6,798,122 Shares of Common Stock

This prospectus relates to the sale from time to time of up to 6,798,122 shares of common stock held by the selling stockholders named in this prospectus, including 4,802,497 shares of common stock issuable upon conversion of an outstanding senior secured convertible promissory note (the “Note”), 1,600,000 shares of common stock issuable upon exercise of certain outstanding warrants (the “January 2021 Warrants”), and 395,625 shares of common stock issuable upon exercise of certain other outstanding Warrants (the “Warrants”). We are not selling any common stock under this prospectus and will not receive any of the proceeds from the sale of shares by the selling stockholders. We will, however, receive the net proceeds of any January 2021 Warrants and/or the Warrants exercised for cash.

The selling stockholders identified in this prospectus may offer the shares from time to time through public or private transactions at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. The registration of the shares of common stock on behalf of the selling stockholders, however, does not necessarily mean that any of the selling stockholders will offer or sell their shares under this registration statement or at any time in the near future. We provide more information about how the selling stockholders may sell their shares of common stock in the section entitled “Plan of Distribution” on page 74.

The selling stockholders will bear all commissions and discounts, if any, attributable to the sale or disposition of the shares, or interests therein and all costs, expenses and fees in connection with the registration of the shares. We will not be paying any underwriting discounts or commissions in this offering or costs, expenses, and fees in connection with the registration of the shares of common stock described in this prospectus. We will pay the expenses of registering the shares.

Our common stock is traded on The Nasdaq Capital Market under the symbol “ADTX.” On February 1, 2021, the last reported sale price of our common stock was $3.26 per share.

We are an “emerging growth company” under the federal securities laws and, as such, are subject to reduced public company reporting requirements.

An investment in our common stock involves a high degree of risk. See “Risk Factors” on page 13 of this prospectus for more information on these risks.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is February 10, 2021

TABLE OF CONTENTS

|  | Page
PROSPECTUS SUMMARY |  | 1
RISK FACTORS |  | 13
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS |  | 33
INDUSTRY AND MARKET DATA |  | 33
USE OF PROCEEDS |  | 34
DIVIDEND POLICY |  | 34
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS |  | 35
BUSINESS |  | 43
MANAGEMENT |  | 57
EXECUTIVE AND DIRECTOR COMPENSATION |  | 64
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS |  | 66
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT |  | 67
DESCRIPTION OF CAPITAL STOCK |  | 68
SELLING STOCKHOLDERS |  | 72
PLAN OF DISTRIBUTION |  | 74
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR COMMON STOCK |  | 76
LEGAL MATTERS |  | 80
EXPERTS |  | 80
WHERE YOU CAN FIND MORE INFORMATION |  | 80
INDEX TO FINANCIAL STATEMENTS |  | F-1

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give to you. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock.

You should rely only on the information contained in this prospectus. No dealer, salesperson or other person is authorized to give information that is not contained in this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of these securities.

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PROSPECTUS SUMMARY

The following summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. It does not contain all the information that may be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless context requires otherwise, references to “we,” “us,” “our,” “ADTX,” “Aditx Therapeutics,” or “the Company” refer to Aditx Therapeutics, Inc.

Overview

We were incorporated in the State of Delaware on September 28, 2017 and our headquarters are located in Mountain View, CA. We are a biotech innovation company with a mission of prolonging life and enhancing its quality by improving the health of the immune system.

We are developing biotechnologies specifically focused on improving the health of the immune system through immune reprogramming and monitoring. Our immune reprogramming technologies are currently at the pre-clinical stage and are designed to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases, and allergies. Our immune monitoring technologies are designed to provide a personalized comprehensive profile of the immune system and we plan to utilize them in our upcoming reprogramming clinical trials to monitor subjects’ immune response before, during and after drug administration.

Our Business

We are a biotech innovation company with a mission of prolonging life and enhancing its quality by improving the health of the immune system. Our immune reprogramming technology is currently at the pre-clinical stage and designed to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases, and allergies. Our immune monitoring technology is designed to provide a personalized comprehensive profile of the immune system and we plan to utilize it in our upcoming clinical trials to monitor subjects’ immune response before, during and after drug administration. We are developing our immune monitoring platforms with the objective of utilizing them as clinical assays in pre-clinical and clinical studies. The multiplex technologies could potentially allow evaluation of more analytes with less tissue samples. For this, we have completed validation studies using one of our monitoring platform technologies to demonstrate utility of our AditxtScore™ for COVID-19 to detect multiple antibody isotypes produced in response to SARS-CoV-2 antigens. Data obtained from these validation studies will be used for preparation of an application to the FDA to seek an Emergency Use Authorization for this assay.

Immune Reprogramming

The discovery of immunosuppressive (anti-rejection and monoclonal) drugs over 40 years ago has made possible life-saving organ transplantation procedures and blocking of unwanted immune responses in autoimmune diseases. However, immune suppression leads to significant undesirable side effects, such as increased susceptibility to life-threatening infections and cancers, because it indiscriminately and broadly suppresses immune function throughout the body. While the use of these drugs has been justifiable because they prevent or delay organ rejection, their use for treatment of autoimmune diseases and allergies may not be acceptable because of the above-mentioned side effects. Furthermore, transplanted organs often ultimately fail despite the use of immune suppression, and about 40% of transplanted organs survive no more than 5 years.

New, focused therapeutic approaches are needed to modulate only the small portion of immune cells that are involved in rejection of the transplanted organ, as this approach can be safer for patients than indiscriminate immune suppression. Such approaches are referred to as immune tolerance, and when therapeutically induced, may be safer for patients and also potentially allow long-term survival of transplanted tissues and organs.

In the late 1990s, academic research on these approaches was conducted at the Transplant Center in Loma Linda University (“LLU”) in connection with a project that secured initial grant funding from the U.S. Department of Defense. The focus of that project was for skin grafting for burn victims. Twenty years of research at LLU and an affiliated incubator led to a series of discoveries that have been translated into a large patent portfolio of therapeutic approaches that may be applied to the modulation of the immune system in order to induce tolerance to self and transplanted organs.

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We have an exclusive worldwide license for commercializing this nucleic acid-based technology (which is currently at the pre-clinical stage), named Apoptotic DNA Immunotherapy™ (ADi™), which utilizes a novel approach that mimics the way the body naturally induces tolerance to our own tissues (“therapeutically induced immune tolerance”). While immune suppression requires continuous administration to prevent rejection of a transplanted organ, induction of tolerance has the potential to retrain the immune system to accept the organ for longer periods of time. Thus, ADi™ may allow patients to live with transplanted organs with significantly reduced immune suppression. ADi™ is a technology platform which we believe can be engineered to address a wide variety of indications.

We are developing ADi™ products for organ transplantation including skin grafting, autoimmune diseases, and allergies. Our initial focus will be on skin allografts and psoriasis, as we believe these indications will be most efficient in providing safety and efficacy data in clinical trials. To submit a Biologics License Application (“BLA”) for a biopharmaceutical product, clinical safety and efficacy must be demonstrated in a series of clinical studies conducted with human subjects. For products in our class of drugs, the first-in-human trials will be a combination of Phase I (safety/tolerability) and Phase II (efficacy) in affected subjects. To obtain approval to initiate the Phase I/IIa studies, an Investigational New Drug Application will be submitted to compile non-clinical efficacy data as well as manufacturing and pre-clinical safety/toxicology data. To date, we have conducted non-clinical studies in a stringent model of skin transplantation using genetically mismatched donor and recipient animals demonstrating a 3-fold increase in the survival of the skin graft in animals that were tolerized with ADi™ compared to animals that receive immune suppression alone. Prolongation of graft life was observed despite discontinuation of immune suppression after the first 5 weeks. Additionally, in an induced non-clinical model for psoriasis, ADi™ treatment resulted in a 69% reduction in skin thickness and a 38% decrease in skin flaking (two clinical parameters for assessment of psoriasis skin lesions). The Phase I/IIa studies in psoriasis will evaluate the safety/tolerability of ADi™ in patients diagnosed with psoriasis. Since the drug will be administered in subjects diagnosed with psoriasis, effectiveness of the drug to improve psoriatic lesions will also be evaluated. In another Phase I/IIa study, patients requiring skin allografts will receive weekly intra-dermal injections of ADi™ in combination with standard immune suppression to assess safety/tolerability and possibility of reducing levels of immunosuppressive drugs as well as prolongation of graft life. Later phase trials are planned after successful completion of these studies in preparation for submission for a BLA to regulatory agencies.

Immune Monitoring

We believe that understanding the status of an individual’s immune system is key to developing and administering immunotherapies such as ADi™. We have secured an exclusive worldwide license for commercializing a technology platform which provides a personalized comprehensive profile of the immune system. It is intended to be informative for individual immune responses to viruses, bacterial antigens, peptides, drugs, bone marrow and solid organ transplants, and cancer. It has broad applicability to many other agents of clinical interest impacting the immune system, including those not yet identified such as future infectious agents. We plan to brand this technology, and other future licensed and/or in-house developed monitoring technologies collectively as AditxtScore™.

AditxtScore™ is being designed to allow individuals to understand, manage and monitor their immune profiles in order to be informed about attacks on or by their immune system. We believe AditxtScore™ can also assist the medical community in anticipating possible immune responses and reactions to viruses, bacteria, allergens and transplanted organs. It can be useful in anticipating attacks on the body by having the ability to determine its potential response and for developing a plan to deal with an undesirable reaction by the immune system. Its advantages include the ability to provide a simple, rapid, accurate, high throughput, single platform assay that can be multiplexed to determine the immune status with respect to several factors simultaneously, in 3-16 hours, as well as detect antigen and antibody in a single test (i.e. infectious, recovered, immune). In addition, it can determine and differentiate between various types of cellular and humoral immune responses (T and B cells). It also provides for simultaneous monitoring of cell activation and levels of cytokine release (i.e., cytokine storms).

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We plan to utilize AditxtScore™ in our upcoming clinical trials to monitor subjects’ immune response before, during and after ADi™ drug administration. We are working with regulatory consultants with the objective to obtain FDA approval for AditxtScore™ as a clinical assay. We are currently securing marketing and distribution partnerships for application of AditxtScore™ in the infectious diseases market. To obtain FDA approval to use AditxtScore™ as a clinical assay, we are performing validation studies to demonstrate AditxtScore™’s utility to evaluate various components of the immune system reproducibly. We believe that these data will show AditxtScore™’s ability to measure various components of the immune system (e.g. humoral and cell-mediated immune responses) to provide a broader view of the immune system and its status in health and disease. Our plan is to submit a 510(K) application to the FDA after compilation of these data. Beyond infectious diseases, we plan to develop AditxtScore™ for applications in additional markets such as organ rejection, allergies, drug/vaccine response, and disease susceptibility.

On August 6, 2020 Aditxt announced the first application of its AditxtScore™ platform - AditxtScore™ for COVID-19. AditxtScore™ for COVID-19 is a double-multiplex assay that can be used to detect and differentiate various antibody isotypes (IgG, IgM, IgA) against multiple SARS-CoV-2 antigens (e.g. RBD, S1, NP) simultaneously in a single reaction. Currently, one of the most widely used platforms, ELISA, can only detect one antibody isotype against one antigen at a time. We believe AditxtScore™ for COVID-19 will increase the resolution of results obtained for each antibody isotype thereby enhancing sensitivity for monitoring changes in these values over time. Due to the enhanced specificity and sensitivity of this comprehensive antibody profiling system, false positive and false negative results have proven to be significantly reduced when testing for the antibodies produced to SARS-CoV-2, thereby expanding its utility beyond a tool used in epidemiology. Therefore, and importantly, AditxtScore™ for COVID-19 can serve as a valuable tool to evaluate immune responses to SARS-CoV-2 vaccines in clinical settings.

In August 2020, we filed for an Emergency Use Authorization (EUA) with the FDA with the ultimate objective of filing a 510(K) application. In the meantime, we are providing AditxtScore™ as a service as a Laboratory Developed Test (LDT) to assess immunity status to COVID-19.

On November 19, 2020 we announced that we secured CLIA Certification for AditxtScore(TM) laboratory operations in Richmond, VA, and plans to launch AditxtScore(TM) for COVID-19 as a Lab Developed Test (LDT).

License Agreement with Loma Linda University

On March 8, 2018, we entered into an Assignment Agreement (the “Assignment Agreement”) with Sekris Biomedical, Inc. (“Sekris”). Sekris was a party to a License Agreement with Loma Linda University (“LLU”), entered into and made effective on May 25, 2011, and amended on June 24, 2011, July 16, 2012 and December 27, 2012 (the “Original Agreement,” and together with the Assignment Agreement, the “Sekris Agreements”). Pursuant to the Assignment Agreement, Sekris transferred and assigned all of its rights and obligations in and to and liabilities under the Original Agreement, of whatever kind or nature, to us. In exchange, on March 8, 2018, we issued a warrant to Sekris to purchase up to 500,000 shares of our common stock (the “Sekris Warrant”). The warrant was immediately exercisable and has an exercise price of $4.00 per share. The expiration date of the warrant is March 8, 2023. On March 15, 2018, as amended on July 1, 2020, we entered into a LLU License Agreement directly with Loma Linda University, which amends and restates the Sekris Agreements.

Pursuant to the LLU License Agreement, we obtained the exclusive royalty-bearing worldwide license in and to all intellectual property, including patents, technical information, trade secrets, proprietary rights, technology, know-how, data, formulas, drawings, and specifications, owned or controlled by LLU and/or any of its affiliates (the “LLU Patent and Technology Rights”) and related to therapy for immune-mediated inflammatory diseases (the ADi™ technology). In consideration for the LLU License Agreement, we issued 25,000 shares of common stock to LLU.

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Pursuant to the LLU License Agreement, we are required to pay an annual license fee to LLU. Also, we agreed to pay LLU $455,000 in July 2020 in payment of outstanding milestone payments and license fees. We are also required to pay to LLU milestone payments in connection with certain development milestones. Specifically, we are required to make the following milestone payments: $175,000 on March 31, 2022; $100,000 on March 31, 2024; $500,000 on March 31, 2026; and $500,000 on March 31, 2027. Additionally, as consideration for prior expenses incurred by LLU to prosecute, maintain and defend the LLU Patent and Technology Rights, we are obligated to make the following payments to LLU:, $70,000 due at the end of December 2018, and a final payment of $60,000 due at the end of March 2019. We are required to defend the LLU Patent and Technology Rights during the term of the LLU License Agreement. Additionally, we will owe royalty payments of (i) 1.5% of Net Product Sales and Net Service Sales on any Licensed Products (defined as any finished pharmaceutical products which utilizes the LLU Patent and Technology Rights in its development, manufacture or supply), and (ii) 0.75% of Net Product Sales and Net Service Sales for Licensed Products and Licensed Services not covered by a valid patent claim for technology rights and know-how for a three (3) year period beyond the expiration of all valid patent claims. We also are required to produce a written progress report to LLU, discussing our development and commercialization efforts, within 45 days following the end of each year. All intellectual property rights in and to LLU Patent and Technology Rights shall remain with LLU (other than improvements developed by or on our behalf).

The LLU License Agreement shall terminate on the last day that a patent granted in to us by LLU is valid and enforceable or the day that the last patent application licensed to us is abandoned. The LLU License Agreement may be terminated by mutual agreement or by us upon 90 days written notice to LLU. LLU may terminate the LLU License Agreement in the event of (i) non-payments or late payments of royalty, milestone and license maintenance fees not cured within 90 days after delivery of written notice by LLU, (ii) a breach of any non-payment provision (including the provision that requires us to meet certain deadlines for milestone events (each, a “Milestone Deadline”)) not cured within 90 days after delivery of written notice by LLU and (iii) LLU delivers notice to us of three or more actual breaches of the LLU License Agreement by us in any 12-month period. Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate a first-in-human clinical trials on or before March 31, 2022, (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval by the FDA by March 31, 2027.

License Agreement with Leland Stanford Junior University (“Stanford”)

On February 3, 2020, we entered into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford with regard to a patent concerning a method for detection and measurement of specific cellular responses. Pursuant to the February 2020 License Agreement, we received an exclusive worldwide license to Stanford’s patent with regard to use, import, offer, and sale of Licensed Products (as defined in the agreement). The license to the patented technology is exclusive, including the right to sublicense, beginning on the effective date of the agreement and ending when the patent expires. Under the exclusivity agreement, we acknowledged that Stanford had already granted a non-exclusive license in the Nonexclusive Field of Use, under the Licensed Patents in the Licensed Field of Use in the Licensed Territory (as those terms are defined in the February 2020 License Agreement”). However, Stanford agreed to not grant further licenses under the Licensed Patents in the Licensed Field of Use in the Licensed Territory.

We were obligated to pay a fee of $25,000 to Stanford within 60 days of February 3, 2020. We also issued 18,750 shares of the Company’s common stock to Stanford. An annual licensing maintenance fee is payable by us on the first anniversary of the February 2020 License Agreement in the amount of $40,000 for 2021 through 2024 and $60,000 in starting in 2025 until the license expires upon the expiration of the patent. The Company will pay milestone fees of $50,000 on the first commercial sales of a licensed product and $25,000 at the beginning of any clinical study for regulatory clearance of an in vitro diagnostic product developed and a potential licensed product. We are also required to: (i) provide a listing of the management team or a schedule for the recruitment of key management positions by March 31, 2020 (which has been completed), (ii) provide a business plan covering projected product development, markets and sales forecasts, manufacturing and operations, and financial forecasts until at least $10,000,000 in revenue by June 30, 2020, (iii) conduct validation studies by September 30, 2020, (iv) hold a pre-submission meeting with the FDA by September 30, 2020, (v) submit a 510(k) application to the FDA , Emergency Use Authorization (“EUA”), or a Laboratory Developed Test (“LDT”) by March 31, 2021, (vi) obtain FDA approval by December 31, 2021, (vii) complete a prototype assay kit by December 31, 2021 and (viii) have a written agreement with Stanford on further development and commercialization milestones for specific fields of use by December 31, 2021.

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In addition to the annual license maintenance fees outlined above, we will pay Stanford royalties on Net Sales (as such term is defined in the February 2020 License Agreement) during the of the term of the agreement as follows: 4% when Net Sales are below or equal to $5 million annually or 6% when Net Sales are above $5 million annually. The February 2020 License Agreement may be terminated upon our election on at least 30 days advance notice to Stanford, or by Stanford if we: (i) are delinquent on any report or payment; (ii) are not diligently developing and commercializing Licensed Product; (iii) miss certain performance milestones; (iv) are in breach of any provision of the February 2020 License Agreement; or (v) provide any false report to Stanford. Should any events in the preceding sentence occur, we have a thirty (30) day cure period to remedy such violation.

Our Team

We have assembled a team of experts coming from a variety of different scientific fields and commercial backgrounds, with a collective experience that range from founding startup biotech companies, to developing and marketing biopharmaceutical products, to designing clinical trials, and management of private and public companies.

Risks Related to Our Business

Our business and our ability to execute our business strategy are subject to a number of risks as more fully described in the section titled “Risk Factors” beginning on page 13. These risks include, among others:

| ● | The success of our product candidates will require significant capital resources and years of clinical development efforts. We have incurred losses and expect to continue to operate at a net loss for at least the next several years and our auditors have indicated that our financial conditions raise substantial doubt about our ability to continue as a going concern;
| ● | Our short-to-medium term prospects depend largely on our ability to develop and commercialize two technologies, the ADi™ and the AditxtScore™ platforms, and our ability to generate revenues in the future will depend heavily on the successful development and commercialization of these technologies;

| ● | Our ability to comply with the provisions of our license agreement with Loma Linda University, including regulatory approval deadlines therein;

| ● | The results of clinical testing and trial activities of our products;

| ● | Our ability to obtain regulatory approval and market acceptance of, and reimbursement for our products;
| ● | Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand;

| ● | Our ability to compete and succeed in a highly competitive and evolving industry;

| ● | Our lack of operating history on which to judge our business prospects and management;

| ● | Our ability to raise capital and the availability of future financing;

| ● | Our ability to manage our research, development, expansion, growth and operating expenses; and

| ● | Our reliance on third parties to conduct our research, preclinical studies and expected clinical trials.

Our financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our future viability is largely dependent upon our ability to raise additional capital to finance our operations. Our management expects that future sources of funding may include sales of equity, obtaining loans, or other strategic transactions. These circumstances raise substantial doubt on our ability to continue as a going concern, and our financial statements do not include any adjustments that might result from the outcome of these uncertainties.

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Recent Developments

Reverse Stock Split

On June 29, 2020, we filed a certificate of amendment to our amended and restated certificate of incorporation (the “Amendment”), with the Secretary of State of the State of Delaware to effectuate a one-for-two (1:2) reverse stock split (the “Reverse Stock Split”) of our common stock without any change to its par value. The Amendment became effective on upon such filing. No fractional shares were issued in connection with the Reverse Stock Split as all fractional shares were rounded down to the next whole share. All share and per share amounts of our common stock listed in this prospectus have been adjusted to give effect to the Reverse Stock Split.

Initial Public Offering

On July 2, 2020, the Company closed its initial public offering (the “IPO”) of 1,226,668 Units of the Company’s securities, at a price to the public of $9.00 per Unit, resulting in net proceeds to the Company of approximately $9.5 million after offering costs and expenses. Shares of our common stock began trading on the Nasdaq Capital Market on June 30, 2020 under the symbol “ADTX.”

Amendment to LLU License Agreement

On July 1, 2020, the Company and LLU entered into an amendment to the LLU License Agreement, whereby the milestone payments owed under the LLU Agreement were modified to be $175,000 on March 31, 2022; $100,000 on March 31, 2024; $500,000 on March 31, 2026; and $500,000 on March 31, 2027.

AditxtScore™

In August 2020, the Company introduced AditxtScore™ for COVID-19 that can be used for monitoring an individual’s immune response to SARS-CoV-2 based on detection of antibodies against SARS-CoV-2 antigens.

AditxtScore™ for COVID-19 is intended to be based upon a double-multiplex assay that can be used to detect and differentiate various antibody isotypes (IgG, IgM, IgA) against multiple SARS-CoV-2 antigens (e.g. RBD, S1, NP) simultaneously in a single reaction. Management believes that AditxtScore™ for COVID-19 may serve as a valuable tool to evaluate immune responses to SARS-CoV-2 vaccines in clinical settings.

In August 2020, we filed for an Emergency Use Authorization (EUA) with the FDA with the ultimate objective of filing a 510(K) application. In the meantime, we are providing AditxtScore™ as a service as a Laboratory Developed Test (LDT) to assess immunity status to COVID-19.

September 2020 Follow-On Public Offering

On September 10, 2020, we completed a follow-on public offering (“September 2020 Offering”). In connection therewith, we issued 2,400,000 Units (the “Follow-On Units”), excluding the underwriters’ option to cover overallotments, at an offering price of $4.00 per Follow-On Unit, resulting in gross proceeds to us of approximately $9.6 million. The Follow-On Units issued in the September 2020 Offering consisted of one share of common stock (or Series A Preferred Stock for investors who would own more than 4.99% of the Company if they invested in common stock), one Series A-1 warrant, and one Series B-1 warrant. The Series A-1 warrants have an exercise price of $3.19 per share and a term of 5 years. The Series B-1 warrants have exercise price of $5.00 per share, a term of 5 years and contain a cashless exercise option upon certain criteria being met. In addition, we issued a warrant to the underwriters to purchase up to 60,000 shares of common stock at an exercise price of $5.00 per share. All of the Series B-1 warrants issued in the September 2020 Offering have been exercised pursuant to a cashless provision therein. As of the date of this prospectus, there are no longer any shares of Series A Preferred Stock outstanding.

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Salveo Consulting Agreement

On November 18, 2020, we entered into a Consulting Agreement (the “Salveo Consulting Agreement”) with Salveo Diagnostics, Inc., a Delaware corporation (“Salveo”). Pursuant to the Salveo Consulting Agreement, Salveo agreed to establish, setup and commence commercial operations of a licensed, College of American Pathologists accredited, and Clinical Laboratory Improvement Amendments (CLIA) certified, independent clinical and diagnostic laboratory for us and our AditxtScore™ immune monitoring technology (the “ Salveo Services”).

In consideration for the Services, and upon the successful completion of certain milestones (the “Milestones”) described below, we issued Salveo 650,000 shares of our common stock (the “Salveo Shares”) in the aggregate. The Salveo Shares were issued to Salveo upon the completion of the following Milestones: (i) 150,000 shares upon the sale and transfer to the Company of certain code and interpretive commenting algorithms (the “Algorithms”) along with related testing protocols and all technology, codes and spreadsheets, know-how, any necessary information or tools to implement, use, and/or continue to improve or further refine the Algorithms, and other associated intellectual property; (ii) 250,000 shares upon securing temporary laboratory space and other related tasks in connection with the launch of the AditxtScore™ platform; and (iii) 250,000 shares upon satisfaction of tasks related to the establishment of a long-term AditxtScore™ center in Richmond, VA. We also pay Salveo at cost for Salveo’s reasonable and documented purchases, general operating costs and expenses incurred in connection with the Salveo Services.

January 2021 Private Placement of Notes and Warrants

On January 25, 2021 (the “Closing Date”), the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional accredited investor (the “Investor”) for the offering, sale, and issuance (the “Offering”) by the Company of the Note (a $6,000,000 senior secured convertible promissory note). Concurrently with the sale of the Note, pursuant to the Purchase Agreement, the Company also issued the January 2021 Warrants to the Investor to purchase up to 800,000 shares (the “January 2021 Warrant Shares”) of the Company’s common stock. As a result of the Offering, the Company received aggregate gross proceeds of $5,000,000.

The Note has a twenty-four month term and is convertible at the option of the Investor at any time prior to maturity in shares of Common Stock (the “Conversion Shares”) at an initial conversion price of $4.00 per share, subject to adjustment under certain circumstances. The Note amortizes in nineteen (19) equal monthly installments (the “Installment Payments”) starting the first day of the sixth month after the Closing Date (each, an “Installment Date”). At the Company’s option, Installment Payments may be made in cash or in shares of the Company’s common stock. If the Company elects to repay in cash, the amount payable shall be 105% of the applicable Installment Payment. If the Company elects to repay in shares of common stock, the shares shall be priced at the lowest of (i) the Conversion Price then in effect, and (ii) the greater of (x) the Floor Price (as defined in the Note) and (y) the lower of 90% of the lowest volume weighted average price (VWAP) of the common stock for each of the five (5) Trading Days (as such term is defined in the Note) ending and including the Trading Day immediately prior to the applicable Installment Date.

All Installment Payments are subject to the Investor’s right to (a) defer some or all of any Installment Payment to a subsequent Installment Date or (b) to convert an additional Installment Payment of the Note at the then-current Installment Price until the next Installment Date. Upon the occurrence of an Event of Default or a Change of Control (as such terms are defined in the Note), the Note is subject to redemption by the Investor. The Company is prohibited from effecting a conversion of the Note to the extent that, as a result of such exercise, the Investor, together with the its affiliates, would beneficially own more than 4.99% of the number of shares of common stock of the Company outstanding immediately after giving effect to the issuance of the such shares, which beneficial ownership limitation may be increased by Investor up to, but not exceeding, 9.99%.

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The January 2021 Warrants are immediately exercisable for a period of three (3) years at an exercise price of $4.00 per share, subject to adjustment. After a period of one hundred eight (180) days, if a registration statement covering the resale of the shares of common stock underlying the January 2021 Warrants is not effective, the holder may exercise the January 2021 Warrant by means of a cashless exercise. The Company is prohibited from effecting an exercise of the January 2021 Warrants to the extent that, as a result of such exercise, the holder of the January 2021 Warrants together with the holder’s affiliates, would beneficially own more than 4.99% of the number of shares of common stock of the Company outstanding immediately after giving effect to the issuance of the such shares, which beneficial ownership limitation may be increased by the holder up to, but not exceeding, 9.99%.

Additionally, until the earlier of the (i) one year anniversary the Closing Date, and (ii) such time as less than $2 million of aggregate Principal Amount (as such term is defined in the Note) of the Note remains outstanding, the Company is prohibited from effecting or entering into an agreement to effect any issuance of securities involving a Variable Rate Transaction (as such term is defined in the Purchase Agreement).

The Note, the Conversion Shares, the January 2021 Warrants, the January 2021 Warrant Shares, were not initially registered under the Securities Act of 1933, as amended (the “Securities Act”), and were instead offered and sold to the Investor pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated under the Securities Act.

The foregoing description of the Note and the January 2021 Warrants is not complete and is qualified in its entirety by reference to the full text of the forms of the Note and the January 2021 Warrants, copies of which are filed as Exhibits to the registration statement of which this prospectus forms a part and are incorporated by reference herein.

Corporate Information

We were incorporated as a Delaware corporation on September 28, 2017. Our principal executive offices are located at 2569 Wyandotte St., Suite 101, Mountain View, CA 94043, and our telephone number is (650) 870-1200. Our website address is www.aditxt.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common shares.

Implications of Being an Emerging Growth Company

On April 5, 2012, the Jumpstart Our Business Startups (“JOBS”) Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our consolidated financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including, without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act pf 2002, as amended and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

8

THE OFFERING

Common stock offered by selling security holders |  | 6,798,122 shares of our common stock. These shares include: (i) 4,802,497 shares of common stock issuable upon conversion of an outstanding senior secured convertible promissory note (the “Note”), (ii) 1,600,000 shares of common stock issuable upon exercise of certain outstanding warrants (“January 2021 Warrants”), and (iii) 395,625 shares of common stock issuable upon exercise of certain other outstanding warrants (“Warrants”).
Offering price |  | The prevailing market price for the shares or in privately negotiated transactions.
Common stock outstanding before the offering |  | 14,001,398 shares(1)
Common stock outstanding after the offering |  | 20,799,520 shares(2)
Use of proceeds |  | We will not receive any proceeds from the sale of the common stock by the selling security holders.
Risk Factors |  | Investing in our securities is highly speculative and involves a significant degree of risk. You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the “Risk Factors” section beginning on page 13 before deciding whether or not to invest in our common stock.

| (1) | The number of shares of common stock outstanding is based on 14,001,398 shares of common stock issued and outstanding as of February 1, 2021 and excludes the following:

| ● | 4,777,441 shares of common stock issuable upon the exercise of outstanding warrants as of that date having a weighted average exercise price of $3.93 per share; and

| ● | 2,500,000 shares of our common stock reserved for future issuance under our 2017 Equity Incentive Plan, or the 2017 Plan.

| (2) | Includes (i) 14,001,398 shares of common stock, up to 4,802,497 shares of common stock that may be issuable upon conversion of the Note, up to 1,600,000 shares of common stock that may be issuable upon exercise of the January 2021 Warrants, and 395,625 shares of common stock issuable upon exercise of the Warrants.

9

SUMMARY OF RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors,” that represent challenges that we face in connection with the successful implementation of our strategy. The occurrence of one or more of the events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events or circumstances, may have an adverse effect on our business, cash flows, financial condition and results of operations. Such risks include, but are not limited to:

| ● | we have generated no revenue from commercial sales to date and our future profitability is uncertain;

| ● | if we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development and you will likely lose your entire investment;

| ● | our financial situation creates doubt whether we will continue as a going concern;

| ● | we may need to raise additional funding, which may not be available on acceptable terms, or at all;

| ● | even if we can raise additional funding, we may be required to do so on terms that are dilutive to you.;

| ● | the regulatory approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of our future product candidates, if any;

| ● | we may encounter substantial delays in completing our clinical studies which in turn will require additional costs, or we may fail to demonstrate adequate safety and efficacy to the satisfaction of applicable regulatory authorities;

| ● | if our future pre-clinical development and future clinical Phase I/II studies are unsuccessful, we may be unable to obtain regulatory approval of, or commercialize, our product candidates on a timely basis or at all;

| ● | even if we receive regulatory approval for any of our product candidates, we may not be able to successfully commercialize the product and the revenue that we generate from their sales, if any, may be limited;

| ● | adverse events involving our products may lead the FDA or applicable foreign regulatory agency to delay or deny clearance for our products or result in product recalls that could harm our reputation, business and financial results;

| ● | our technology is subject to licenses from LLU and Stanford, each of which are revocable in certain circumstances, including in the event we do not achieve certain payments and milestone deadlines. Without these licenses, we may not be able to continue to develop our product candidates;

| ● | our results of operations will be affected by the level of royalty and milestone payments that we are required to pay to third parties;

| ● | we face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do;

| ● | our technologies and products under development, and our business, may fail if we are not able to successfully commercialize them and ultimately generate significant revenues as a result;

| ● | customers may not adopt our products quickly, or at all;

| ● | COVID-19 may impact our business and operations;

| ● | the failure to obtain or maintain patents, licensing agreements and other intellectual property could materially impact our ability to compete effectively;

| ● | some of our intellectual property may be subject to “march-in” rights by the U.S. federal government;

| ● | we do not expect to pay dividends in the foreseeable future;

| ● | if our stock price fluctuates after the offering, you could lose a significant part of your investment;

| ● | the delisting of our securities by Nasdaq; and

| ● | exclusive forum provisions in our amended and restated certificate of incorporation and amended and restated bylaws.

10

SUMMARY FINANCIAL DATA

We present below our summary historical financial and operating data. The historical financial data as of December 31, 2019 and 2018 has been derived from our audited financial statements and the related notes thereto, which are included elsewhere in this prospectus and which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).

Our historical results are not necessarily indicative of the financial results to be expected in any future periods. You should read this information in conjunction with our financial statements and related notes included elsewhere in this prospectus, as well as the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Balance Sheets

|  | September 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (unaudited) |  |  |  |  |  |  |
ASSETS |  |  |  |  |  |  |  |  |
CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 13,715,534 |  |  | $ | 4,090 |  |  | $ | 115,709 |
Prepaid expenses |  |  | 238,308 |  |  |  |  |  |  |  |  |
ROU asset – short term |  |  | 324,289 |  |  |  | — |  |  |  | — |
TOTAL CURRENT ASSETS |  |  | 14,278,131 |  |  |  | 4,090 |  |  |  | 115,709 |
Fixed Assets |  |  | 157,738 |  |  |  | — |  |  |  | — |
Deferred offering costs |  |  | — |  |  |  | 119,442 |  |  |  | — |
ROU asset – long term |  |  | 870,311 |  |  |  | — |  |  |  | — |
Deposits |  |  | 61,586 |  |  |  | — |  |  |  | — |
TOTAL ASSETS |  | $ | 15,367,766 |  |  | $ | 123,532 |  |  | $ | 115,709 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |  |  |  |  |  |  |  |  |  |  |  |
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 422,601 |  |  | $ | 1,847,458 |  |  | $ | 1,056,226 |
Accrued compensation to related parties |  |  | 3,668 |  |  |  | 962,651 |  |  |  | 432,615 |
Notes payable - related party |  |  | — |  |  |  | 10,000 |  |  |  | 42,502 |
Notes payable, net of discount |  |  | — |  |  |  | 155,600 |  |  |  | 121,100 |
Deferred Rent |  |  | 2,615 |  |  |  | — |  |  |  | — |
Lease liability – short term |  |  | 326,904 |  |  |  | — |  |  |  | — |
TOTAL CURRENT LIABILITIES |  |  | 755,788 |  |  |  | 2,975,709 |  |  |  | 1,652,443 |
Lease liability – long term |  |  | 865,081 |  |  |  | — |  |  |  | — |
TOTAL LIABILITIES |  |  | 1,620,869 |  |  |  | 2,975,709 |  |  |  | 1,652,443 |
COMMITMENTS AND CONTINGENCIES |  |  | — |  |  |  | — |  |  |  | — |
STOCKHOLDERS’ DEFICIT |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock, $0.001 par value, 3,000,000 shares authorized, zero shares issued and outstanding, respectively |  |  | — |  |  |  | — |  |  |  | — |
Common stock, $0.001 par value, 27,000,000 shares authorized, 11,823,545, 3,915,900, and 3,763,925 shares issued and 11,722,742 3,821,087, and 3,763,925 shares outstanding, respectively |  |  | 11,827 |  |  |  | 3,916 |  |  |  | 3,764 |
Treasury stock, 100,803 and 94,813 shares, respectively |  |  | (201,605 | ) |  |  | (189,625 | ) |  |  | - |
Additional paid-in capital |  |  | 30,134,728 |  |  |  | 9,063,483 |  |  |  | 4,361,725 |
Accumulated deficit |  |  | (16,198,053 | ) |  |  | (11,729,951 | ) |  |  | (5,902,223 | )
TOTAL STOCKHOLDERS’ DEFICIT |  |  | 13,746,897 |  |  |  | (2,852,177 | ) |  |  | (1,536,734 | )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |  | $ | 15,367,766 |  |  | $ | 123,532 |  |  | $ | 115,709 |

11

Statements of Operations

|  | Nine Months Ended September 30, |  |  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2019 |  |  | 2018 |
|  | (unaudited) |  |  | (unaudited) |  |  |  |  |  |  |
Statements of Operations Data: |  |  |  |  |  |  |  |  |  |  |  |
REVENUE |  | — |  |  | — |  |  | — |  |  | — |
OPERATING EXPENSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General and administrative expenses |  |  | 3,677,490 |  |  |  | 4,771,567 |  |  |  | 5,694,806 |  |  |  | 5,044,634 |
Research and development |  |  | 514,478 |  |  |  | 108,449 |  |  |  | 175,441 |  |  |  | 525,000 |
Sales and marketing |  |  | 7,848 |  |  |  | 147 |  |  |  | 551 |  |  |  | 39,837 |
Total Operating Expenses |  |  | 4,199,816 |  |  |  | 4,880,163 |  |  |  | 5,870,798 |  |  |  | 5,609,471 |
NET LOSS FROM OPERATIONS |  |  | (4,199,816 | ) |  |  | (4,880,163 | ) |  |  | (5,870,798 | ) |  |  | (5,609,471 | )
OTHER INCOME (EXPENSE) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (902 | ) |  |  | (1,481 | ) |  |  | (1,930 | ) |  |  | (3,009 | )
Interest income |  |  | 116 |  |  |  | — |  |  |  | — |  |  |  | — |
Gain on forgiveness of debt |  |  | 32,500 |  |  |  | 45,000 |  |  |  | 45,000 |  |  |  | — |
Amortization of debt discount |  |  | (300,000 | ) |  |  | — |  |  |  | — |  |  |  | (76,757 | )
Total Other Income (Expense) |  |  | (268,286 | ) |  |  | 43,519 |  |  |  | 43,070 |  |  |  | (79,766 | )
Net loss before provision for income taxes |  |  | (4,468,102 | ) |  |  | (4,836,644 | ) |  |  | (5,827,728 | ) |  |  | (5,689,237 | )
Provision for income taxes |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
NET LOSS |  |  | (4,468,102 | ) |  |  | (4,836,644 | ) |  |  | (5,827,728 | ) |  |  | (5,689,237 | )
Net loss per share - basic and diluted |  |  | (0.88 | ) |  |  | (1.26 | ) |  |  | (1.52 | ) |  |  | (1.57 | )
Weighted average number of shares outstanding during the period - basic and diluted |  |  | 5,091,854 |  |  |  | 3,836,659 |  |  |  | 3,830,971 |  |  |  | 3,630,818 |

12

RISK FACTORS

An investment in our securities involves a high degree of risk. Before making an investment decision, you should give careful consideration to the following risk factors, in addition to the other information included in this prospectus, including our financial statements and related notes, before deciding whether to invest in our securities. The occurrence of any of the adverse developments described in the following risk factors could materially and adversely harm our business, financial condition, results of operations or prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Financial Position and Need for Capital

We have generated no revenue from commercial sales to date and our future profitability is uncertain.

We were incorporated in September 2017 and have a limited operating history and our business is subject to all of the risks inherent in the establishment of a new business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with development and expansion of a new business enterprise. Since inception, we have incurred losses and expect to continue to operate at a net loss for at least the next several years as we commence our research and development efforts, conduct clinical trials and develop manufacturing, sales, marketing and distribution capabilities. Our net loss for the years ended December 31, 2019 and 2018 was $5,827,728 and $5,689,237, respectively, and our accumulated deficit as of December 31, 2019 was $11,729,951. Our net loss for the nine months ended September 30, 2020 and 2019 was $4,468,102 and $4,836,644, respectively, and our accumulated deficit as of September 30, 2020 was $16,198,053. There can be no assurance that the products under development by us will be approved for sale in the U.S. or elsewhere. Furthermore, there can be no assurance that if such products are approved, they will be successfully commercialized, and the extent of our future losses and the timing of our profitability are highly uncertain. If we are unable to achieve profitability, we may be unable to continue our operations.

If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development and you will likely lose your entire investment.

We will need to continue to seek capital from time to time to continue development of our lead drug candidate beyond our initial combined Phase I/IIa clinical trial and to acquire and develop other product candidates. Once approved for commercialization, we cannot provide any assurances that any revenues it may generate in the future will be sufficient to fund our ongoing operations. We our current cash position, we expect to be sufficient to satisfy our capital requirements for a period of eighteen (18) months from the date of this prospectus. Accordingly, we believe that we will need to raise substantial additional capital to fund our continuing operations and the development and commercialization of our product candidate in or before eighteen months from the date of this prospectus.

Our business or operations may change in a manner that would consume available funds more rapidly than anticipated and substantial additional funding may be required to maintain operations, fund expansion, develop new or enhance products, acquire complementary products, business or technologies or otherwise respond to competitive pressures and opportunities, such as a change in the regulatory environment or a change in preferred treatment modalities. In addition, we may need to accelerate the growth of our sales capabilities and distribution beyond what is currently envisioned, and this would require additional capital. However, we may not be able to secure funding when we need it or on favorable terms. We may not be able to raise sufficient funds to commercialize the product candidates we intend to develop.

If we cannot raise adequate funds to satisfy our capital requirements, we will have to delay, scale back or eliminate our research and development activities, clinical studies or future operations. We may also be required to obtain funds through arrangements with collaborators, which arrangements may require us to relinquish rights to certain technologies or products that we otherwise would not consider relinquishing, including rights to future product candidates or certain major geographic markets. This could result in sharing revenues which we might otherwise retain for ourselves. Any of these actions may harm our business, financial condition and results of operations.

13

The amount of capital we may need depends on many factors, including the progress, timing and scope of our product development programs; the progress, timing and scope of our preclinical studies and clinical trials; the time and cost necessary to obtain regulatory approvals; the time and cost necessary to further develop manufacturing processes and arrange for contract manufacturing; our ability to enter into and maintain collaborative, licensing and other commercial relationships; and our partners’ commitment of time and resources to the development and commercialization of our products.

Our financial situation creates doubt whether we will continue as a going concern.

The Company was incorporated on September 28, 2017 and through the date of this prospectus has generated no revenues. For the years ended December 31, 2019 and 2018, the Company had a net loss of $5,827,728 and $5,689,237, respectively. For the nine months ended September 30, 2020, the Company had a net loss of $ 4,468,102. There can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or additional financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms. These conditions raise substantial doubt about our ability to continue as a going concern. If adequate working capital is not available, we may be forced to discontinue operations, which would cause investors to lose their entire investment. Our auditors have indicated that these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

We may need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.

We expect that our current cash position will be sufficient to fund our current operations for at least the next 18 months. However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. In any event, we will require additional capital to obtain regulatory approval for, and to commercialize, our product candidates. Raising funds in the current economic environment may present additional challenges. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities may dilute our existing stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

14

If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.

Even if we can raise additional funding, we may be required to do so on terms that are dilutive to you.

The capital markets have been unpredictable in the past for unprofitable companies such as ours. In addition, it is generally difficult for development stage companies to raise capital under current market conditions. The amount of capital that a company such as ours is able to raise often depends on variables that are beyond our control. As a result, we may not be able to secure financing on terms attractive to us, or at all. If we are able to consummate a financing arrangement, the amount raised may not be sufficient to meet our future needs. If adequate funds are not available on acceptable terms, or at all, our business, including our results of operations, financial condition and our continued viability will be materially adversely affected.

Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization

The regulatory approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of our future product candidates, if any.

We will not be permitted to market our product candidates in the United States until we receive approval from the FDA, or in any foreign countries until we receive the requisite approval from corresponding agencies in such countries. The testing, manufacturing, labeling, approval, selling, marketing and distribution of health- and life science-related products are subject to extensive regulation, which regulations differ from country to country.

Successfully completing our clinical program and obtaining approval of a Biologics License Application (“BLA”) is a complex, lengthy, expensive and uncertain process, and the FDA or other applicable foreign regulator may delay, limit or deny approval of our product candidates for many reasons, including, among others, because:

| ● | we may not be able to demonstrate that our product candidates are safe and effective in treating patients to the satisfaction of the FDA or foreign regulator;

| ● | the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or foreign regulator for marketing approval;

| ● | the FDA or foreign regulator may disagree with the number, design, size, conduct or implementation of our clinical trials;

| ● | the FDA or foreign regulator may require that we conduct additional clinical trials;

| ● | the FDA or foreign regulator may not approve the formulation, labeling or specifications of our product candidates;

| ● | the contract research organizations (CROs) and other contractors that we may retain to conduct our clinical trials may take actions outside of our control that materially adversely impact our clinical trials;

| ● | the FDA or foreign regulator may find the data from preclinical studies and clinical trials insufficient to demonstrate that our product candidate(s) are safe and effective for their proposed indications;

15

| ● | the FDA or foreign regulator may disagree with our interpretation of data from our preclinical studies and clinical trials;

| ● | the FDA or foreign regulator may not accept data generated at our clinical trial sites or may disagree with us over whether to accept efficacy results from clinical trial sites outside the United States or outside the EU, as applicable, where the standard of care is potentially different from that in the United States or in the EU, as applicable;

| ● | if and when our BLAs or foreign equivalents are submitted to the applicable regulatory authorities, such agencies may have difficulties scheduling the necessary review meetings in a timely manner, may recommend against approval of our application or may recommend or require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;

| ● | the FDA or foreign regulator may require development of a Risk Evaluation and Mitigation Strategy (REMS), which would use risk minimization strategies to ensure that the benefits of certain prescription drugs outweigh their risks, as a condition of approval or post-approval;

| ● | the FDA or other applicable foreign regulatory agencies may not approve the manufacturing processes or facilities of third-party manufacturers with which we contract; or

| ● | the FDA or the other applicable foreign regulatory agencies may change their approval policies or adopt new regulations.

We may encounter substantial delays in completing our clinical studies which in turn will require additional costs, or we may fail to demonstrate adequate safety and efficacy to the satisfaction of applicable regulatory authorities.

It is difficult to predict if or when any of our product candidates, will prove safe or effective in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing is expensive, time-consuming and uncertain as to outcome. We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical studies can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include:

| ● | delays in reaching, or failing to reach, a consensus with regulatory agencies on study design;

| ● | delays in reaching, or failing to reach, agreement on acceptable terms with a sufficient number of prospective contract research organizations (“CROs”) and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
| ● | delays in obtaining required Institutional Review Board (“IRB”) or Ethics Committee (“EC”) approval at each clinical study site;
| ● | delays in recruiting a sufficient number of suitable patients to participate in our clinical studies;
| ● | imposition of a clinical hold by regulatory agencies, after an inspection of our clinical study operations or study sites;

| ● | failure by our CROs, other third parties or us to adhere to the clinical study, regulatory or legal requirements;
| ● | failure to perform in accordance with the FDA’s good clinical practices (“GCP”) or applicable regulatory guidelines in other countries;

16

| ● | delays in the testing, validation, manufacturing and delivery of sufficient quantities of our product candidates to the clinical sites;
| ● | delays in having patients’ complete participation in a study or return for post-treatment follow-up;
| ● | clinical study sites or patients dropping out of a study;
| ● | delay or failure to address any patient safety concerns that arise during the course of a trial;
| ● | unanticipated costs or increases in costs of clinical trials of our product candidates;
| ● | occurrence of serious adverse events associated with the product candidates that are viewed to outweigh their potential benefits; or
| ● | changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs or ECs of the institutions in which such trials are being conducted, by an independent Safety Review Board (“SRB”) for such trial or by the FDA, European Medicines Agency (“EMA”), or other regulatory authorities. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA, EMA, or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenues from product sales, regulatory and commercialization milestones and royalties. In addition, if we make manufacturing or formulation changes to our product candidates, we may need to conduct additional studies to bridge our modified product candidates to earlier versions.

Clinical study delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates. In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may significantly harm our business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Further, preclinical and clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have, nonetheless, failed to obtain marketing approval. If the results of our clinical studies are inconclusive or if there are safety concerns or adverse events associated with our other product candidates, we may:

| ● | be delayed in obtaining marketing approval for our product candidates, if approved at all;

| ● | obtain approval for indications or patient populations that are not as broad as intended or desired;
| ● | obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;

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| ● | be required to change the way the product is administered;
| ● | be required to perform additional clinical studies to support approval or be subject to additional post-marketing testing requirements;
| ● | have regulatory authorities withdraw their approval of a product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy;
| ● | be sued; or
| ● | experience damage to our reputation.

Additionally, our product candidates could potentially cause other adverse events that have not yet been predicted. The inclusion of ill patients in our clinical studies may result in deaths or other adverse medical events due to other therapies or medications that such patients may be using. As described above, any of these events could prevent us from achieving or maintaining market acceptance of our product candidates and impair our ability to commercialize our products.

If our future pre-clinical development and future clinical Phase I/II studies are unsuccessful, we may be unable to obtain regulatory approval of, or commercialize, our product candidates on a timely basis or at all.

The successful completion of pre-clinical development and multiple clinical trials is critical to the success of our future products. If the pre-clinical development and clinical trials are unsuccessful or produce inconsistent results or unanticipated adverse side effects, or if we are unable to collect reliable data, regulatory approval of our products could be delayed or not given and as a result we may be unable to commercialize our products. Generally, we expect to engage third parties such as consultants, universities or other collaboration partners to conduct clinical trials on our behalf. Incompatible practices or misapplication of our products by these third parties could impair the success of our clinical trials.

Even if we receive regulatory approval for any of our product candidates, we may not be able to successfully commercialize the product and the revenue that we generate from their sales, if any, may be limited.

If approved for marketing, the commercial success of our product candidates will depend upon each product’s acceptance by the medical community, including physicians, patients and health care payors. The degree of market acceptance for any of our product candidates will depend on a number of factors, including:

| ● | demonstration of clinical safety and efficacy;
| ● | relative convenience, dosing burden and ease of administration;
| ● | the prevalence and severity of any adverse effects;
| ● | the willingness of physicians to prescribe our product candidates, and the target patient population to try new therapies;

| ● | efficacy of our product candidates compared to competing products;
| ● | the introduction of any new products that may in the future become available targeting indications for which our product candidates may be approved;
| ● | new procedures or therapies that may reduce the incidences of any of the indications in which our product candidates may show utility;

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| ● | pricing and cost-effectiveness;
| ● | the inclusion or omission of our product candidates in applicable therapeutic and vaccine guidelines;
| ● | the effectiveness of our own or any future collaborators’ sales and marketing strategies;

| ● | limitations or warnings contained in approved labeling from regulatory authorities;
| ● | our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers and other third-party payors or to receive the necessary pricing approvals from government bodies regulating the pricing and usage of therapeutics; and
| ● | the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals.

If any of our product candidates are approved, but do not achieve an adequate level of acceptance by physicians, health care payors, and patients, we may not generate sufficient revenues and we may not be able to achieve or sustain profitability. Our efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successful.

In addition, even if we obtain regulatory approvals, the timing or scope of any approvals may prohibit or reduce our ability to commercialize our product candidates successfully. For example, if the approval process takes too long, we may miss market opportunities and give other companies the ability to develop competing products or establish market dominance. Any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render our product candidates not commercially viable. For example, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve any of our product candidates with a label that does not include the labeling claims necessary or desirable for the successful commercialization for that indication. Further, the FDA or comparable foreign regulatory authorities may place conditions on approvals or require risk management plans or a Risk Evaluation and Mitigation Strategy (“REMS”) to assure the safe use of the drug. If the FDA or applicable foreign regulatory agency concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS; the regulatory agencies will not approve the BLA without an approved REMS, if required. A REMS could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The regulatory agencies may also require a REMS for an approved product when new safety information emerges. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of our product candidates. Moreover, product approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following the initial marketing of the product. Any of the foregoing scenarios could materially harm the commercial success of our product candidates.

Adverse events involving our products may lead the FDA or applicable foreign regulatory agency to delay or deny clearance for our products or result in product recalls that could harm our reputation, business and financial results.

Once a product receives regulatory clearance or approval, the agency has the authority to require the recall of commercialized products in the event of adverse side effects, material deficiencies or defects in design or manufacture. The authority to require a recall must be based on a regulatory finding that there is a reasonable probability that the product would cause serious injury or death. Manufacturers may, under their own initiative, recall a product if any material deficiency in a product is found. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of adverse side effects, impurities or other product contamination, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our financial condition and results of operations. The regulatory agencies require that certain classifications of recalls be reported to them within ten (10) working days after the recall is initiated. Companies are required to maintain certain records of recalls, even if they are not reportable to the regulatory agency. We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the regulatory agencies. If the regulatory agency disagrees with our determinations, they could require us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect our sales. In addition, the regulatory agency could take enforcement action for failing to report the recalls when they were conducted.

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The in-licensing of technologies and the successful testing and early development of technologies in the laboratory may not be indicative of future results and may not result in commercially viable technologies or products. Further, our future products may have to be modified from their originally conceived versions in order to reach or be successful in the market.

Positive results from laboratory testing and early developmental successes, may not be predictive of future successful development, commercialization and sales results and should not be relied upon as evidence that products developed from our technologies will become commercially viable and successful. Further, the products we plan to develop in the future may have to be significantly modified from their originally conceived versions in order for us to control costs, compete with similar products, receive market acceptance, meet specific development and commercialization timeframes, avoid potential infringement of the proprietary rights of others, or otherwise succeed in developing our business and earning ongoing revenues. This can be a costly and resource draining activity. What appear to be promising technologies when we license them may not lead to viable technologies or products, or to commercial success.

Risks Related to the Company and our Business

Our technology is subject to licenses from LLU and Stanford, each of which are revocable in certain circumstances, including in the event we do not achieve certain payments and milestone deadlines. Without these licenses, we may not be able to continue to develop our product candidates.

The LLU License Agreement may be terminated by LLU in the event of a breach by us of any non-payment provision (including the provision that requires us to meet certain deadlines for milestone events (each, a “Milestone Deadline”)) not cured within 90 days after delivery of written notice by LLU. Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate first-in-human clinical trials on or before March 31, 2022, (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval (BLA) by the FDA by March 31, 2027. If the LLU License Agreement were to be terminated by LLU, we would lose our most significant asset and may no longer be able to develop our product candidates, which would have a material adverse effect on our operations.

The February 2020 License Agreement with Stanford may be terminated by Stanford if we (i) are delinquent on any report or payments; (ii) are not diligently developing and commercializing Licensed Product (as defined in the February 2020 License Agreement); (iii) miss a milestone described in the agreement; (iv) are in breach of any other provision of the agreement; or (v) if we provide a false report to Stanford. The Termination discussed above will take effect only upon 30 days written notice by Stanford unless we remedy the breach within a 30 day cure period. If the February 2020 License Agreement were to be terminated by Stanford, we would lose a significant asset and may no longer be able to develop our product candidates, which would have a material adverse effect on our operations.

Our results of operations will be affected by the level of royalty and milestone payments that we are required to pay to third parties.

The LLU License Agreement and February 2020 License Agreement with Stanford each require us to remit royalty payments and meet certain performance milestones related to in-licensed intellectual property. Any failure on our part to pay royalties owed or meet milestones could lead to us losing rights under our licenses and could thereby adversely affect our business. As our product sales increase, we may, from time-to-time, disagree with our third-party collaborators as to the appropriate royalties owed and the resolution of such disputes may be costly and may consume management’s time. Furthermore, we may enter into additional license agreements in the future, which may also include royalty payments.

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We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

The development and commercialization of drugs is highly competitive. We compete with a variety of multinational pharmaceutical companies and specialized biotechnology companies, as well as products and processes being developed at universities and other research institutions. Our competitors have developed, are developing or will develop product candidates and processes competitive with our product candidates. Competitive therapeutic treatments include those that have already been approved and accepted by the medical community and any new treatments that may enter the market. We believe that a significant number of products are currently available, under development, and may become commercially available in the future, for the treatment of indications for which we may try to develop product candidates.

More established companies may have a competitive advantage over us due to their greater size, cash flows and institutional experience. Compared to us, many of our competitors may have significantly greater financial, technical and human resources. As a result of these factors, our competitors may have an advantage in marketing their approved products and may obtain regulatory approval of their product candidates before we are able to, which may limit our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are safer, more effective, more widely used and less expensive than ours, and may also be more successful than us in manufacturing and marketing their products.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These companies compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Our technologies and products under development, and our business, may fail if we are not able to successfully commercialize them and ultimately generate significant revenues as a result.

Successful development of technologies and our product candidates will require significant additional investment, including costs associated with additional development, completing trials and obtaining regulatory approval, as well as the ability to manufacture or have others manufacture our products in sufficient quantities at acceptable costs while also preserving product quality. Difficulties often encountered in scaling up production include problems involving production yields, quality control and assurance, shortage of qualified personnel, production costs and process controls. In addition, we are subject to inherent risks associated with new technologies and products. These risks include the possibility that any of our technologies or future products may:

| ● | be found unsafe;

| ● | be ineffective or less effective than anticipated;

| ● | fail to receive necessary regulatory approvals;

| ● | be difficult to competitively price relative to alternative solutions;

| ● | be harmful to consumers or the environment;

| ● | be difficult to manufacture on an economically viable scale;

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| ● | be subject to supply chain constraints for raw materials;

| ● | fail to be developed and accepted by the market prior to the successful marketing of alternative products by competitors;

| ● | be difficult to market because of infringement on the proprietary rights of third parties; or

| ● | be too expensive for commercial use.

Furthermore, we may be faced with lengthy market partner or distributor evaluation and approval processes. Consequently, we may incur substantial expenses and devote significant management effort in order to customize products for market partner or distributor acceptance, though there can be no assurance of such acceptance. As a result, we cannot accurately predict the volume or timing of any future sales.

Customers may not adopt our products quickly, or at all.

Customers in the sector in which we operate can be generally cautious in their adoption of new products and technologies. In addition, given the relative novelty of our future planned products, customers of those products may require education regarding their utility and use, which may delay their adoption. There can be no assurance that customers will adopt our products quickly, or at all.

The significant level of competition in the markets for our products developed in the future may result in pricing pressure, reduced margins or the inability of our future products to achieve market acceptance.

The markets for our future products are intensely competitive and rapidly changing. We may be unable to compete successfully, which may result in price reductions, reduced margins and the inability to achieve market acceptance for our products.

Our competitors may have longer operating histories, significantly greater resources, greater brand recognition and large customer bases than we do. As a result, they may be able to devote greater resources to the manufacture, promotion or sale of their products, receive greater resources and support from market partners and independent distributors, initiate or withstand substantial price competition or more readily take advantage of acquisition or other opportunities.

We may rely on third parties for the production of our future products. If these parties do not produce our products at a satisfactory quality, in a timely manner, in sufficient quantities or at an acceptable cost, our sales and development efforts could be delayed or otherwise negatively affected.

We may rely on third parties for the manufacture of our future products. Our reliance on third parties to manufacture our future products may present significant risks to us, including the following:

| ● | reduced control over delivery schedules, yields and product reliability;

| ● | price increases;

| ● | manufacturing deviations from internal and regulatory specifications;

| ● | the failure of a key manufacturer to perform as we require for technical, market or other reasons;

| ● | difficulties in establishing additional manufacturer relationships if we are presented with the need to transfer our manufacturing process technologies to them;

| ● | misappropriation of our intellectual property; and

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| ● | other risks in potentially meeting our product development schedule or satisfying the requirements of our market partners, distributors, direct customers and end users.

If we need to enter into agreements for the manufacturing of our future products, there can be no assurance we will be able to do so on favorable terms, if at all.

If we are unable to establish successful relations with third-party market partners or distributors, or these market partners or distributors do not focus adequate resources on selling our products or are otherwise unsuccessful in selling them, sales of our products may not develop.

We anticipate relying on independent market partners and distributors to distribute and assist us with the marketing and sale of our products. Our future revenue generation and growth will depend in large part on our success in establishing and maintaining this sales and distribution channel. If our market partners and distributors are unable to sell our products, or receive negative feedback from end users, they may not continue to purchase or market our products. In addition, there can be no assurance that our market partners and distributors will focus adequate resources on selling our products to end users or will be successful in selling them. Many of our potential market partners and distributors are in the business of distributing and sometimes manufacturing other, possibly competing, products. As a result, these market partners and distributors may perceive our products as a threat to various product lines currently being distributed or manufactured by them. In addition, these market partners and distributors may earn higher margins by selling competing products or combinations of competing products. If we are unable to establish successful relationships with independent market partners and distributors, we will need to further develop our own sales and distribution capabilities, which would be expensive and time-consuming and might not be successful.

If we are not able to attract and retain highly skilled employees and contractors, we may not be able to implement our business model successfully.

We will rely upon employees and third-party consultant/contractors to effectively establish, manage and grow our business. Consequently, we believe that our future viability will depend largely on our ability to attract and retain highly skilled personnel. In order to do so, we may need to pay higher compensation, fees, and/or other incentives to our employees or consultants than we currently expect, and such higher compensation payments would have a negative effect on our operating results. Competition for experienced, high-quality employees, consultants and contractors is intense and we cannot assure that we will be able to recruit and retain such personnel. We may not be able to hire or retain the necessary personnel to implement our business strategy. Our failure to hire and retain such personnel could impair our ability to develop new products and manage our business effectively.

The loss of our management team or other key personnel would have an adverse impact on our future development and impair our ability to succeed.

In the early stages of development, our business will be significantly dependent on the Company’s management team and other key personnel. Our success will be particularly dependent upon Mr. Amro Albanna and Dr. Shahrokh Shabahang. The loss of any one of these individuals or any other future key personnel could have a material adverse effect on the Company and our ability to further execute our intended business.

The use of our products may be limited by regulations, and we may be exposed to product liability and remediation claims.

The use of our planned products may be regulated by various local, state, federal and foreign regulators. Even if we are able to comply with all such regulations and obtain all necessary registrations, we cannot provide assurance that our future products will not cause injury to the environment, people, or animals and/or otherwise have unintended adverse consequences, under all circumstances. For example, our products may be improperly combined with other chemicals or, even when properly combined, our products may be blamed for damage caused by those other chemicals. The costs of remediation or products liability could materially adversely affect our results, financial condition and operations.

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We may be held liable for, or incur costs to settle, liability and remediation claims if any products we develop, or any products that use or incorporate any of our technologies, cause injury or are found unsuitable during product testing, manufacturing, marketing, sale or use. These risks exist even with respect to products that have received, or may in the future receive, regulatory approval, registration or clearance for commercial use. We cannot guarantee that we will be able to avoid product liability exposure.

At the stage customary to do so, we expect to maintain product liability insurance at levels we believe are sufficient and consistent with industry standards for like companies and products. However, we cannot guarantee that our product liability insurance will be sufficient to help us avoid product liability-related losses. In the future, it is possible that meaningful insurance coverage may not be available on commercially reasonable terms or at all. In addition, a product liability claim could result in liability to us greater than our assets or insurance coverage. Moreover, even if we have adequate insurance coverage, product liability claims or recalls could result in negative publicity or force us to devote significant time and attention to these matters, which could harm our business.

There may be limitations on the effectiveness of our internal controls, and a failure of our control systems to prevent error or fraud may materially harm our Company.

We do not expect that internal control over financial accounting and disclosure, even if timely and well established, will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Failure of our control systems to prevent error or fraud could materially adversely affect our business.

COVID-19 may impact our operations.

On January 30, 2020 the World Health Organization declared the COVID-19 coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The COVID-19 coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last and what the complete financial effect will be to the Company, capital raise efforts and additional development of our technologies may be negatively affected.

Risks Relating to Our Intellectual Property Rights

The failure to obtain or maintain patents, licensing agreements and other intellectual property could materially impact our ability to compete effectively.

In order for our business to be viable and to compete effectively, we need to develop and maintain, and we will heavily rely on, a proprietary position with respect to our technologies and intellectual property. However, there are significant risks associated with our actual or proposed intellectual property. The risks and uncertainties that we face with respect to our rights principally include the following:

| ● | pending patent applications we have filed or will file may not result in issued patents or may take longer than we expect to result in issued patents;

| ● | we may be subject to interference proceedings;

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| ● | we may be subject to reexamination proceedings;

| ● | we may be subject to post grant review proceedings;

| ● | we may be subject to inter partes review proceedings;

| ● | we may be subject to derivation proceedings;

| ● | we may be subject to opposition proceedings in the U.S. or in foreign countries;

| ● | any patents that are issued to us may not provide meaningful protection;

| ● | we may not be able to develop additional proprietary technologies that are patentable;

| ● | other companies may challenge patents licensed or issued to us;

| ● | other companies may have independently developed and patented (or may in the future independently develop and patent) similar or alternative technologies, or duplicate our technologies;

| ● | other companies may design around technologies we have licensed or developed;

| ● | enforcement of patents is complex, uncertain and very expensive and we may not be able to secure, enforce and defend our patents; and

| ● | in the event that we were to ever seek to enforce our patents in ligation, there is some risk that they could be deemed invalid, not infringed, or unenforceable.

We cannot be certain that any patents will be issued as a result of any pending or future applications, or that any patents, once issued, will provide us with adequate protection from competing products. For example, issued patents may be circumvented or challenged, declared invalid or unenforceable, or narrowed in scope. In addition, since publication of discoveries in scientific or patent literature often lags behind actual discoveries, we cannot be certain that we or our licensors were the first to invent or to file patent applications covering them.

It is also possible that others may have or may obtain issued patents that could prevent us from commercializing our products or require us to obtain licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business. There is no guarantee that such licenses will be available based on commercially reasonable terms. As to those patents that we have licensed, our rights depend on maintaining our obligations to the licensor under the applicable license agreement, and we may be unable to do so.

If we are unable to obtain and maintain patent protection for our products, or if the scope of the patent protection obtained is not sufficiently broad, competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products could be impaired.

The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost, in a timely manner, or in all jurisdictions. It is also possible that we will fail to identify patentable aspects of our development output before it is too late to obtain patent protection.

The patent position of life science companies generally is highly uncertain, involves complex legal and factual questions and has in past years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States and we may fail to seek or obtain patent protection in all major markets. For example, unlike the U.S., European patent law restricts the patentability of methods of treatment of the human body. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection, even post-grant.

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Recent patent reform legislation has increased the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The U.S. Patent and Trademark Office, or USPTO, recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

Moreover, we may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights (whether licensed or otherwise held) or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights (whether licensed or otherwise held), allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications (whether licensed or otherwise held) is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

Even if our patent applications (whether licensed or otherwise held) result in the issuance of patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our licensed or owned patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products, or limit the duration of the patent protection of our products. Given the amount of time required for the development, testing and regulatory review of new life science product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property rights portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

We may become involved in lawsuits to protect or enforce our intellectual property rights, which could be expensive, time-consuming and ultimately unsuccessful.

Competitors may infringe our intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property or that our intellectual property is invalid or unenforceable. In addition, in a patent infringement proceeding, a court may decide that a licensed or owned patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover that technology. Moreover, lawsuits to protect or enforce our intellectual property rights could be expensive, time-consuming and ultimately unsuccessful.

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Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain.

Our commercial success depends upon our ability to develop, manufacture, market and sell our product candidates without infringing the proprietary rights of third parties. There is considerable intellectual property litigation in the life sciences industry. We cannot guarantee that our product candidates will not infringe third-party patents or other proprietary rights. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including inter partes review, interference, or derivation proceedings before the USPTO and similar bodies in other countries. Third parties may assert infringement claims against us based on existing intellectual property rights and intellectual property rights that may be granted in the future.

If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our own patent protection could be reduced or eliminated for noncompliance with these requirements.

Periodic maintenance fees and annuities on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, our competitors might be able to enter our markets, which could have a material adverse effect on our business.

We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property or claiming ownership of what we regard as our own intellectual property.

Certain of our employees and contractors were previously employed at universities or other companies, including potential competitors. Although we try to ensure that our employees and contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these employees or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims, and any such litigation could have an unfavorable outcome.

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In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Our and their assignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.

If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and adverse results, and be a distraction to management.

Some intellectual property which we own or have licensed may have been discovered through government funded programs such as, for example, the government funded programs referenced in intellectual property licensed under the LLU License Agreement, and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements, and a preference for United States industry. Compliance with such regulations may limit our exclusive rights, subject us to expenditure of resources with respect to reporting requirements, and limit our ability to contract with non-U.S. manufacturers.

Some of the intellectual property rights we own or have licensed have been generated through the use of United States government funding and may therefore be subject to certain federal regulations. As a result, the United States government may have certain rights to intellectual property embodied in our current or future products and product candidates pursuant to the Bayh-Dole Act of 1980. These United States government rights in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the United States government has the right to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”). The United States government also has the right to take title to these inventions if we fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits. In addition, the United States government may acquire title to these inventions in any country in which a patent application is not filed within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us to expend substantial resources. In addition, the United States government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for United States manufacturers may limit our ability to contract with non-U.S. product manufacturers for products covered by such intellectual property. Any exercise by the government of any of the foregoing rights could harm our competitive position, business, financial condition, results of operations and prospects.

Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have an adverse effect on the price of our common stock. Such litigation or proceedings could increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.

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We may spend considerable resources developing and maintaining patents, licensing agreements and other intellectual property that may later be abandoned or may otherwise never result in products brought to market.

Not all technologies and candidate products that initially show potential as the basis for future products ultimately meet the rigors of our development process and as a result may be abandoned and/or never otherwise result in products brought to market. In some cases, prior to abandonment we may be required to incur significant costs developing and maintaining intellectual property and/or maintaining license agreements and our business could be harmed by such costs.

We rely on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations could be disrupted, and our business could be negatively affected.

We rely on information technology networks and systems to process, transmit and store electronic and financial information; to coordinate our business; and to communicate within our Company and with customers, suppliers, partners and other third-parties. These information technology systems may be susceptible to damage, disruptions or shutdowns, hardware or software failures, power outages, computer viruses, cyber-attacks, telecommunication failures, user errors or catastrophic events. If our information technology systems suffer severe damage, disruption or shutdown, and our business continuity plans do not effectively resolve the issues in a timely manner, our operations could be disrupted, and our business could be negatively affected. In addition, cyber-attacks could lead to potential unauthorized access and disclosure of confidential information, and data loss and corruption. There is no assurance that we will not experience these service interruptions or cyber-attacks in the future.

Risks Related to this Offering and Our Common Stock

We are currently listed on The Nasdaq Capital Market. If we are unable to maintain listing of our securities on Nasdaq or any stock exchange, our stock price could be adversely affected and the liquidity of our stock and our ability to obtain financing could be impaired and it may be more difficult for our stockholders to sell their securities.

Although our common stock is currently listed on The Nasdaq Capital Market, we may not be able to continue to meet the exchange’s minimum listing requirements or those of any other national exchange. If we are unable to maintain listing on Nasdaq or if a liquid market for our common stock does not develop or is sustained, our common stock may remain thinly traded.

The listing rules of Nasdaq require listing issuers to comply with certain standards in order to remain listed on its exchange. If, for any reason, we should fail to maintain compliance with these listing standards and Nasdaq should delist our securities from trading on its exchange and we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our stockholders:

| ● | the liquidity of our common stock;

| ● | the market price of our common stock;

| ● | our ability to obtain financing for the continuation of our operations;

| ● | the number of institutional and general investors that will consider investing in our common stock;

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| ● | the number of investors in general that will consider investing in our common stock;

| ● | the number of market makers in our common stock;

| ● | the availability of information concerning the trading prices and volume of our common stock; and

| ● | the number of broker-dealers willing to execute trades in shares of our common stock.

We do not expect to pay dividends in the foreseeable future.

We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any and all future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all. We cannot assure you of a positive return on your investment or that you will not lose the entire amount of your investment.

Upon dissolution of our Company, you may not recoup all or any portion of your investment.

In the event of a liquidation, dissolution or winding-up of our Company, whether voluntary or involuntary, our assets would be used to pay all of our debts and liabilities, and only thereafter would any remaining assets be distributed to our stockholders, subject to rights of the holders of the Preferred Stock, if any, on a pro rata basis. There can be no assurance that we will have assets available from which to pay any amounts to our stockholders upon such a liquidation, dissolution or winding-up. In such an event, you would lose all of your investment.

Limitation of Liability and Indemnification of Management.

The Delaware General Corporation Law and the Company’s Amended and Restated Certificate of Incorporation provide for the limitation of the liability of directors for monetary damages. Such provisions may discourage shareholders from bringing a lawsuit against directors for breaches of fiduciary duty and may also have the effect of reducing the likelihood of derivative litigation against directors and officers even though such action, if successful, might otherwise be a benefit to the Company’s shareholders. In addition, a shareholder’s investment in the Company may be adversely affected to the extent that costs of settlement and damage awards against the Company’s officers or directors are paid by the Company pursuant to such provisions. Additionally, in accordance with Delaware law and the Company’s Amended and Restated Certificate of Incorporation, the Company shall indemnify, hold harmless and provide advancement of expenses, to the fullest extent permitted by applicable law, directors, officers, employees, and agents that are made a party or threatened to be made a party to legal proceedings by reason of the fact that such parties were working at the request of the Company. We direct you to the Company’s Amended and Restated Certificate of Incorporation for more information.

Anti-takeover provisions under Delaware law could discourage, delay or prevent a change in control of our Company and could affect the trading price of our securities.

We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change in control would be beneficial to our existing stockholders.

Our management team is required to devote substantial time to public company compliance initiatives.

As a publicly reporting company, we incur significant legal, accounting and other expenses. Our management and other personnel devote a substantial amount of time to comply with our reporting obligations. Moreover, these reporting obligations increase our legal and financial compliance costs and make some activities more time-consuming and costly.

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Failure to develop our internal controls over financial reporting as we grow could have an adverse impact on us.

As our Company matures, we will need to develop our current internal control systems and procedures to manage our growth. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish appropriate controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.

If our stock price fluctuates after the offering, you could lose a significant part of your investment.

The market price of our common stock is subject to wide fluctuations in response to, among other things, the risk factors described in this section of this prospectus, and other factors beyond our control, such as fluctuations in the valuation of companies perceived by investors to be comparable to us. Furthermore, stock markets have historically experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political, and market conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of our common stock. In the past, many companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

A sale of a substantial number of shares of common stock by the selling securityholders may cause the price of our common stock to decline.

If our securityholders sell, or the market perceives that our securityholders intend to sell for various reasons, substantial amounts of our common stock in the public market, the price of our common stock may decline. Additionally, such conditions may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders covered by this prospectus.

We are registering the shares of common stock that were, or may be, issued by us to the selling securityholders to permit the resale of these shares of common stock from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling securityholders of the shares of common stock. We will, however, receive the net proceeds of any Warrants exercised for cash.

We could issue “blank check” preferred stock without stockholder approval with the effect of diluting interests of then-current stockholders and impairing their voting rights, and provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.

Our Amended and Restated Certificate of Incorporation provides for the authorization to issue up to 3,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by our board of directors. Our board of directors is empowered, without stockholder approval, to issue one or more series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our common stockholders. The issuance of a series of preferred stock could be used as a method of discouraging, delaying or preventing a change in control. For example, it would be possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of our company. In addition, advanced notice is required prior to stockholder proposals, which might further delay a change of control.

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Our Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between the Company and its stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or its directors, officers or employees.

Our Amended and Restated Certificate of Incorporation provides that unless the Company consents in writing to the selection of an alternative forum, the State of Delaware is the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim against the Company, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law (the “DGCL”) or our Amended and Restated Certificate of Incorporation or the Company’s Amended and Restated Bylaws, or (iv) any action asserting a claim against the Company, its directors, officers, employees or agents governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. This exclusive forum provision would not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. However, our Amended and Restated Bylaws contain a federal forum provision which provides that unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation are deemed to have notice of and consented to this provision. The Supreme Court of Delaware has held that this type of exclusive federal forum provision is enforceable. There may be uncertainty, however, as to whether courts of other jurisdictions would enforce such a provision, if applicable.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find our choice of forum provisions contained in either our Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, pursuant to Section 107 of the JOBS Act, as an “emerging growth company” we intend to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.

We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. All statements other than statements of historical facts contained in this prospectus are forward-looking statements. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. In some cases, you can identify these forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words. We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements include, but are not limited to, statements concerning the following:

| ● | our plans to initiate clinical trials for our product candidates;
| ● | our plans to research, develop and commercialize our product candidates

| ● | Our ability to comply with the provisions of our license agreement with Loma Linda University;

| ● | The results of clinical testing and trial activities of our product candidates;

| ● | Our ability to obtain regulatory approval and market acceptance of, and reimbursement for our products;

| ● | Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand;

| ● | Our ability to compete and succeed in a highly competitive and evolving industry;

| ● | Our lack of operating history on which to judge our business prospects and management;

| ● | Our ability to raise capital and the availability of future financing;

| ● | Our ability to manage our research, development, expansion, growth and operating expenses;

| ● | Our reliance on third parties to conduct our research, preclinical studies and expected clinical trials; and

| ● | the impact of government laws and regulation.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

INDUSTRY AND MARKET DATA

This prospectus contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. We obtained the industry and market data in this prospectus from our own research as well as from industry and general publications, surveys and studies conducted by third parties. These data involve a number of assumptions and limitations and contain projections and estimates of the future performance of the industries in which we operate that are subject to a high degree of uncertainty, including those discussed in “Risk Factors.” We caution you not to give undue weight to such projections, assumptions and estimates. Further, industry and general publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that these publications, studies and surveys are reliable, we have not independently verified the data contained in them. In addition, while we believe that the results and estimates from our internal research are reliable, such results and estimates have not been verified by any independent source.

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USE OF PROCEEDS

The net proceeds from any disposition of the shares of common stock covered hereby will be received by the selling stockholders. We will not receive any of the proceeds from any such shares of common stock offered by this prospectus. We will, however, receive the net proceeds of any January 2021 Warrants and/or Warrants exercised for cash. We expect to use the proceeds received from the exercise of the January 2021 Warrants and/or Warrants, if any, for general working capital purposes.

DIVIDEND POLICY

We plan to retain any earnings for the foreseeable future for our operations. We have never paid any dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the sole discretion of our Board and will depend on our financial condition, operating results, capital requirements and such other factors as our Board deems relevant.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS

You should read the following discussion and analysis of our financial condition and plan of operations together with “Selected Financial Data” and our financial statements and the related notes appearing elsewhere in this prospectus. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this prospectus. All amounts in this report are in U.S. dollars, unless otherwise noted.

Overview

We were incorporated in the State of Delaware on September 28, 2017 and our headquarters are located in Mountain View, CA. We are a biotech innovation company with a mission of prolonging life and enhancing its quality by improving the health of the immune system.

We are developing biotechnologies specifically focused on improving the health of the immune system through immune reprogramming and monitoring. Our immune reprogramming technologies are currently at the pre-clinical stage and are designed to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases, and allergies. Our immune monitoring technologies are designed to provide a personalized comprehensive profile of the immune system and we plan to utilize them in our upcoming reprogramming clinical trials to monitor subjects’ immune response before, during and after drug administration.

Immune Reprogramming

The discovery of immunosuppressive (anti-rejection and monoclonal) drugs over 40 years ago has made possible life-saving organ transplantation procedures and blocking of unwanted immune responses in autoimmune diseases. However, immune suppression leads to significant undesirable side effects, such as increased susceptibility to life-threatening infections and cancers, because it indiscriminately and broadly suppresses immune function throughout the body. While the use of these drugs has been justifiable because they prevent or delay organ rejection, their use for treatment of autoimmune diseases and allergies may not be acceptable because of the aforementioned side effects. Furthermore, transplanted organs often ultimately fail despite the use of immune suppression, and about 40% of transplanted organs survive no more than 5 years.

New, focused therapeutic approaches are needed that modulate only the small portion of immune cells that are involved in rejection of the transplanted organ, as this approach can be safer for patients than indiscriminate immune suppression. Such approaches are referred to as immune tolerance, and when therapeutically induced, may be safer for patients and also potentially allow long-term survival of transplanted tissues and organs.

In the late 1990s, academic research on these approaches was conducted at the Transplant Center in Loma Linda University (“LLU”) in connection with a project that secured initial grant funding from the U.S. Department of Defense. The focus of that project was for skin grafting for burn victims. Twenty years of research at LLU and an affiliated incubator led to a series of discoveries that have been translated into a large patent portfolio of therapeutic approaches that may be applied to the modulation of the immune system in order to induce tolerance to self and transplanted organs.

We have an exclusive worldwide license for commercializing this nucleic acid-based technology (which is currently at the pre-clinical stage), named Apoptotic DNA Immunotherapy™ (ADi™) from LLU, which utilizes a novel approach that mimics the way the body naturally induces tolerance to our own tissues (“therapeutically induced immune tolerance”). While immune suppression requires continuous administration to prevent rejection of a transplanted organ, induction of tolerance has the potential to retrain the immune system to accept the organ for longer periods of time. Thus, ADi™ may allow patients to live with transplanted organs with significantly reduced immune suppression. ADi™ is a technology platform which we believe can be engineered to address a wide variety of indications.

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We are developing ADi™ products for organ transplantation including skin grafting, autoimmune diseases, and allergies, with the initial focus on skin allografts and psoriasis, as we believe these indications will be most efficient in providing safety and efficacy data in clinical trials. To submit a Biologics License Application (“BLA”) for a biopharmaceutical product, clinical safety and efficacy must be demonstrated in a series of clinical studies conducted with human subjects. For products in our class of drugs, the first-in-human trials will be a combination of Phase I (safety/tolerability) and Phase II (efficacy) in affected subjects. To obtain approval to initiate the Phase I/IIa studies, an Investigational New Drug Application will be submitted to compile non-clinical efficacy data as well as manufacturing and pre-clinical safety/toxicology data. To date, we have conducted non-clinical studies in a stringent model of skin transplantation using genetically mismatched donor and recipient animals demonstrating a 3-fold increase in the survival of the skin graft in animals that were tolerized with ADi™ compared to animals that receive immune suppression alone. Prolongation of graft life was observed despite discontinuation of immune suppression after the first 5 weeks. Additionally, in an induced non-clinical model for psoriasis, ADi™ treatment resulted in a 69% reduction in skin thickness and a 38% decrease in skin flaking (two clinical parameters for assessment of psoriasis skin lesions). The Phase I/IIa studies in psoriasis will evaluate the safety/tolerability of ADi™ in patients diagnosed with psoriasis. Since the drug will be administered in subjects diagnosed with psoriasis, effectiveness of the drug to improve psoriatic lesions will also be evaluated. In another Phase I/IIa study, patients requiring skin allografts will receive weekly intra-dermal injections of ADi™ in combination with standard immune suppression to assess safety/tolerability and possibility of reducing levels of immunosuppressive drugs as well as prolongation of graft life. Later phase trials are planned after successful completion of these studies in preparation for submission for a BLA to regulatory agencies.

Immune Monitoring

We believe that understanding the status of an individual’s immune system is key to developing and administering immunotherapies such as ADi™. We have secured an exclusive worldwide license for commercializing a technology platform named AditxtScore™, which provides a personalized comprehensive profile of the immune system. It is intended to be informative for individual immune responses to viruses, bacterial antigens, peptides, drugs, bone marrow and solid organ transplants, and cancer. It has broad applicability to many other agents of clinical interest impacting the immune system, including those not yet identified such as future infectious agents.

AditxtScore™ is being designed to allow individuals to understand, manage and monitor their immune profiles in order to be informed about attacks on or by their immune system. We believe AditxtScore™ can also assist the medical community in anticipating possible immune responses and reactions to viruses, bacteria, allergens and transplanted organs. It can be useful in anticipating attacks on the body by having the ability to determine its potential response and for developing a plan to deal with an undesirable reaction by the immune system. Its advantages include the ability to provide a simple, rapid, accurate, high throughput, single platform assay that can be multiplexed to determine the immune status with respect to several factors simultaneously, in 3-16 hours, as well as detect antigen and antibody in a single test (i.e. infectious, recovered, immune). In addition, it can determine and differentiate between various types of cellular and humoral immune responses (T and B cells). It also provides for simultaneous monitoring of cell activation and levels of cytokine release (i.e., cytokine storms).

We plan to utilize AditxtScore™ in our upcoming clinical trials to monitor subjects’ immune response before, during and after ADi™ drug administration. We are working with regulatory consultants with the objective to obtain FDA approval for AditxtScore™ as a clinical assay. We are currently securing marketing and distribution partnerships for application of AditxtScore™ in the infectious diseases market. To obtain FDA approval to use AditxtScore™ as a clinical assay, we are performing validation studies to demonstrate AditxtScore™’s utility to evaluate various components of the immune system reproducibly. We believe that these data will show AditxtScore™’s ability to measure various components of the immune system (e.g. humoral and cell-mediated immune responses) to provide a broader view of the immune system and its status in health and disease. Our plan is to submit a 510(K) application to the FDA after compilation of these data. Beyond infectious diseases, we plan to develop AditxtScore™ for applications in additional markets such as organ rejection, allergies, drug/vaccine response, and disease susceptibility.

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License Agreement with Loma Linda University

On March 8, 2018, we entered into an Assignment Agreement (the “Assignment Agreement”) with Sekris Biomedical, Inc. (“Sekris”). Sekris was a party to a License Agreement with Loma Linda University (“LLU”), entered into and made effective on May 25, 2011, and amended on June 24, 2011, July 16, 2012 and December 27, 2012 (the “Original Agreement,” and together with the Assignment Agreement, the “Sekris Agreements”). Pursuant to the Assignment Agreement, Sekris transferred and assigned all of its rights and obligations in and to and liabilities under the Original Agreement, of whatever kind or nature, to us. In exchange, on March 8, 2018, we issued a warrant to Sekris to purchase up to 500,000 shares of our common stock (the “Sekris Warrant”). The warrant was immediately exercisable and has an exercise price of $4.00 per share. The expiration date of the warrant is March 8, 2023. On March 15, 2018, as amended on July 1, 2020, we entered into a LLU License Agreement directly with Loma Linda University, which amends and restates the Sekris Agreements.

Pursuant to the LLU License Agreement, we obtained the exclusive royalty-bearing worldwide license in and to all intellectual property, including patents, technical information, trade secrets, proprietary rights, technology, know-how, data, formulas, drawings, and specifications, owned or controlled by LLU and/or any of its affiliates (the “LLU Patent and Technology Rights”) and related to therapy for immune-mediated inflammatory diseases (the ADi™ technology). In consideration for the LLU License Agreement, we issued 25,000 shares of common stock to LLU.

Pursuant to the LLU License Agreement, we are required to pay an annual license fee to LLU. Also, we agreed to pay LLU $455,000 in July 2020 in payment of outstanding milestone payments and license fees. We are also required to pay to LLU milestone payments in connection with certain development milestones. Specifically, we are required to make the following milestone payments: $175,000 on March 31, 2022; $100,000 on March 31, 2024; $500,000 on March 31, 2026; and $500,000 on March 31, 2027. Additionally, as consideration for prior expenses incurred by LLU to prosecute, maintain and defend the LLU Patent and Technology Rights, we are obligated to make the following payments to LLU:, $70,000 due at the end of December 2018, and a final payment of $60,000 due at the end of March 2019. We are required to defend the LLU Patent and Technology Rights during the term of the LLU License Agreement. Additionally, we will owe royalty payments of (i) 1.5% of Net Product Sales and Net Service Sales on any Licensed Products (defined as any finished pharmaceutical products which utilizes the LLU Patent and Technology Rights in its development, manufacture or supply), and (ii) 0.75% of Net Product Sales and Net Service Sales for Licensed Products and Licensed Services not covered by a valid patent claim for technology rights and know-how for a three (3) year period beyond the expiration of all valid patent claims. We also are required to produce a written progress report to LLU, discussing our development and commercialization efforts, within 45 days following the end of each year. All intellectual property rights in and to LLU Patent and Technology Rights shall remain with LLU (other than improvements developed by or on our behalf).

The LLU License Agreement shall terminate on the last day that a patent granted in to us by LLU is valid and enforceable or the day that the last patent application licensed to us is abandoned. The LLU License Agreement may be terminated by mutual agreement or by us upon 90 days written notice to LLU. LLU may terminate the LLU License Agreement in the event of (i) non-payments or late payments of royalty, milestone and license maintenance fees not cured within 90 days after delivery of written notice by LLU, (ii) a breach of any non-payment provision (including the provision that requires us to meet certain deadlines for milestone events (each, a “Milestone Deadline”)) not cured within 90 days after delivery of written notice by LLU and (iii) LLU delivers notice to us of three or more actual breaches of the LLU License Agreement by us in any 12-month period. Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate a first-in-human clinical trials on or before March 31, 2022, (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval by the FDA by March 31, 2027.

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License Agreement with Leland Stanford Junior University (“Stanford”)

On February 3, 2020, we entered into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford with regard to a patent concerning a method for detection and measurement of specific cellular responses. Pursuant to the February 2020 License Agreement, we received an exclusive worldwide license to Stanford’s patent with regard to use, import, offer, and sale of Licensed Products (as defined in the agreement). The license to the patented technology is exclusive, including the right to sublicense, beginning on the effective date of the agreement and ending when the patent expires. Under the exclusivity agreement, we acknowledged that Stanford had already granted a non-exclusive license in the Nonexclusive Field of Use, under the Licensed Patents in the Licensed Field of Use in the Licensed Territory (as those terms are defined in the February 2020 License Agreement”). However, Stanford agreed to not grant further licenses under the Licensed Patents in the Licensed Field of Use in the Licensed Territory.

We were obligated to pay a fee of $25,000 to Stanford within 60 days of February 3, 2020. We also issued 18,750 shares of the Company’s common stock to Stanford. An annual licensing maintenance fee is payable by us on the first anniversary of the February 2020 License Agreement in the amount of $40,000 for 2021 through 2024 and $60,000 in starting in 2025 until the license expires upon the expiration of the patent. The Company will pay milestone fees of $50,000 on the first commercial sales of a licensed product and $25,000 at the beginning of any clinical study for regulatory clearance of an in vitro diagnostic product developed and a potential licensed product. We are also required to: (i) provide a listing of the management team or a schedule for the recruitment of key management positions by March 31, 2020 (which has been completed), (ii) provide a business plan covering projected product development, markets and sales forecasts, manufacturing and operations, and financial forecasts until at least $10,000,000 in revenue by June 30, 2020, (iii) conduct validation studies by September 30, 2020, (iv) hold a pre-submission meeting with the FDA by September 30, 2020, (v) submit a 510(k) application to the FDA , Emergency Use Authorization (“EUA”), or a Laboratory Developed Test (“LDT”) by March 31, 2021, (vi) obtain FDA approval by December 31, 2021, (vii) complete a prototype assay kit by December 31, 2021 and (viii) have a written agreement with Stanford on further development and commercialization milestones for specific fields of use by December 31, 2021.

In addition to the annual license maintenance fees outlined above, we will pay Stanford royalties on Net Sales (as such term is defined in the February 2020 License Agreement) during the of the term of the agreement as follows: 4% when Net Sales are below or equal to $5 million annually or 6% when Net Sales are above $5 million annually. The February 2020 License Agreement may be terminated upon our election on at least 30 days advance notice to Stanford, or by Stanford if we: (i) are delinquent on any report or payment; (ii) are not diligently developing and commercializing Licensed Product; (iii) miss certain performance milestones; (iv) are in breach of any provision of the February 2020 License Agreement; or (v) provide any false report to Stanford. Should any events in the preceding sentence occur, we have a thirty (30) day cure period to remedy such violation.

Our Team

We have assembled a team of experts from a variety of scientific fields and commercial backgrounds, with many years of collective experience that ranges from founding startup biotech companies, to developing and marketing biopharmaceutical products, to designing clinical trials, and to management of private and public companies.

Going Concern

We were incorporated on September 28, 2017 and has not generated revenues to date. During the nine months ended September 30, 2020 we had a net loss of $4,468,102 and will require significant additional capital in order to operate in the normal course of business and fund clinical studies in the long-term. As a result of the IPO and the September 2020 Offering, we received net proceeds of approximately $18 million during the period. We believe that the funds raised by the IPO will be sufficient to fund our operations for at least the next 12 months. As a result, these conditions have alleviated the doubt regarding our ability to continue as a going concern beyond one year.

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Financial Results

We have a limited operating history. Therefore, there is limited historical financial information upon which to base an evaluation of our performance. Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operations. Our financial statements for the nine months ended September 30, 2020, show a net loss of $4,468,102. We expect to incur additional net expenses over the next several years as we continue to maintain and expand our existing operations. The amount of future losses and when, if ever, we will achieve profitability are uncertain.

On July 2, 2020, we completed our IPO. In connection therewith, we issued 1,226,668 Units, excluding the underwriters’ overallotment, at an offering price of $9.00 per Unit, resulting in gross proceeds of approximately $11.0 million. The Units issued in the IPO consisted of one share of common stock, one Series A warrant, and one Series B warrant. The Series A warrants originally had an exercise price of $9.00 and a term of 5 years. In addition, the Company issued a Unit Purchase Option at an exercise price of $11.25 per unit to the underwriters to purchase up to 67,466 units, with each unit consisting of (i) one share of common stock and (ii) one Series A Warrant. On August 19, 2020 the Company modified the exercise price of the Series A Warrants from $9.00 per share to $4.50 per share. The term of the Series A Warrants was not modified. The Series B warrants have an exercise price of $11.25 per share and a term of 5 years. Substantially all of the Series B warrants issued in the IPO as part of the Units have been exercised pursuant to a cashless provision therein.

On September 10, 2020, we completed a follow-on public offering (“September 2020 Offering”). In connection therewith, we issued 2,400,000 units, or Follow-On Units, excluding the underwriters’ option to cover overallotments, at an offering price of $4.00 per Follow-On Unit, resulting in gross proceeds to the Company of approximately $9.6 million. Each of the Follow-On Units issued in the September 2020 Offering consisted of one share of common stock or Series A Preferred Stock for investors who would own more than 4.99% of the Company if they invested in common stock, one Series A-1 warrant, and one Series B-1 warrant. The Series A-1 warrants have an exercise price of $3.19 per share and a term of 5 years. The Series B-1 warrants have exercise price of $5.00 per share, a term of 5 years and contain a cashless exercise option upon certain criteria being met. In addition, the Company issued a warrant to the underwriters to purchase up to 60,000 shares of common stock at an exercise price of $5.00 per share. All of the Series B-1 warrants issued in the September 2020 Offering have been exercised pursuant to a cashless provision therein.

Results of Operations

Results of operations for the year ended December 31, 2019

During the year ended December 31, 2019, we incurred a loss from operations of $5,870,798. This is due to general and administrative expenses of $5,694,806, which includes $4,221,733 in stock-based compensation, research and development of $175,441, which includes $10,000 in stock-based compensation, and sales and marketing expenses of $551. The $175,441 in research and development is comprised of $18,396 in licensing fees, $54,000 in product development, and $103,045 in other research and development expense.

During the year ended December 31, 2018, we incurred a loss from operations of $5,609,471. This is due to general and administrative expenses of $5,044,634, which includes $3,417,526 in stock-based compensation, research and development of $525,000, and sales and marketing expenses of $39,837. The $525,000 in research and development is comprised of licensing fees.

Results of operations for the three months ended September 30, 2020

During the three months ended September 30, 2020, we incurred a loss from operations of $2,744,538. This is due to general and administrative expenses of $2,453,725, which includes $874,363 in stock-based compensation, research and development of $285,813, and sales and marketing expenses of $5,000. The $285,813 in research and development is comprised of $131,965 in licensing fees, $30,000 in product development, and $152,178 in other research and development expense.

During the three months ended September 30, 2019, we incurred a loss from operations of $1,079,949. This is due to general and administrative expenses of $1,060,346, which includes $720,649 in stock-based compensation, research and development of $19,603, and sales and marketing expenses of $0. The $19,603 in research and development is comprised of $2,890 in licensing fees, $13,500 in product development and $3,213 in other research and development expense.

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The increase in expenses during the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was due to the Company beginning to execute its business plan and incur costs of being a public company.

Results of operations for the nine months ended September 30, 2020

During the nine months ended September 30, 2020, we incurred a loss from operations of $4,199,816. This is due to general and administrative expenses of $3,677,490, which includes $1,564,129 in stock-based compensation, research and development of $514,478, and sales and marketing expenses of $7,848. The $514,478 in research and development is comprised of $258,635 in licensing fees, $57,000 in product development, and $198,843 in other research and development expense.

During the nine months ended September 30, 2019, we incurred a loss from operations of $4,880,163. This is due to general and administrative expenses of $4,771,567, which includes $3,543,016 in stock-based compensation, research and development of $108,449, and sales and marketing expenses of $147. The $108,449 in research and development is comprised of $18,071 in licensing fees, $40,500 in product development and $49,878 in other research and development expense.

The increase in expenses during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was due to the Company beginning to execute its business plan and incur costs of being a public company.

Liquidity

We have incurred substantial operating losses since inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of September 30, 2020, we had an accumulated deficit of $16,198,053. We had working capital of $13,522,343 as of September 30, 2020. During the three and nine months ended September 30, 2020, we paid off outstanding notes payable with a principal totaling $715,600 and accrued interest totaling $5,842. During the three and nine months ended September 30, 2020, we paid $160,534 for the purchase of fixed assets. These fixed assets were purchased to furnish our new office and laboratory. Approximately $105,000 of these fixed assets were lab equipment and $55,000 was for office furniture and equipment.

Our financial statements have been prepared assuming that we will continue as a going concern.

We have funded our operations from proceeds from the sale of equity and debt securities. On July 2, 2020, we completed our IPO and raised approximately $9.5 million in net proceeds. At the time of the IPO, we believed that these funds would be sufficient to fund our operations for the foreseeable future.

On September 10, 2020, we completed a follow-on public offering. In connection therewith, we issued 2,400,000 units, or Follow-On Units, excluding the underwriters’ option to cover overallotments, at an offering price of $4.00 per Follow-On Unit, resulting in gross proceeds of approximately $9.6 million. Each of the Follow-On Units issued in the September 2020 Offering consisted of one share of common stock or Series A Preferred stock for investors who would own more than 4.99% of the company if they invested in common stock, one Series A-1 warrant, and one Series B-1 warrant. The Series A-1 warrants have an exercise price of $3.19 and a term of 5 years. The Series B-1 warrants have exercise price of $5.00, a term of 5 years and contain a cashless exercise option upon certain criteria being met. Subsequent to quarter end, substantially all of the Series B-1 warrants issued in the September 2020 Offering have been exercised pursuant to a cashless provision therein.

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We may need to raise significant additional capital to continue to fund our operations and the clinical trials for our product candidates. We may seek to sell common stock, preferred stock or convertible debt securities, enter into a credit facility or another form of third-party funding or seek other debt financing. In addition, we may seek to raise cash through collaborative agreements or from government grants. The sale of equity and convertible debt securities may result in dilution to our stockholders and certain of those securities may have rights senior to those of our common shares. If we raise additional funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or other debt could contain covenants that would restrict our operations. Any other third-party funding arrangement could require us to relinquish valuable rights.

The source, timing and availability of any future financing will depend principally upon market conditions, and, more specifically, on the progress of our clinical development program. Funding may not be available when needed, at all, or on terms acceptable to us. Lack of necessary funds may require us to, among other things, delay, scale back or eliminate expenses including some or all of our planned development, including our clinical trials. While we may need to raise funds in the future, we believed its current cash reserves should be sufficient to fund the our operation for the foreseeable future. Because of these factors, we believe that this alleviates the issues about the our ability to continue as a going concern.

Contractual Obligations

The following table shows our contractual obligations as of September 30, 2020:

|  |  |  |  | Payment Due by Year |
|  | Total |  |  | 2020 (remainder) |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |
Lease |  | $ | 1,358,961 |  |  | $ | 84,536 |  |  | $ | 342,500 |  |  | $ | 352,958 |  |  | $ | 363,416 |  |  | $ | 215,551 |
Total contractual obligations |  | $ | 1,358,961 |  |  | $ | 84,536 |  |  | $ | 342,500 |  |  | $ | 352,958 |  |  | $ | 363,416 |  |  | $ | 215,551 |

Critical Accounting Polices and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We believe that of our critical accounting policies described under the heading “Management’s Discussion and Analysis of Financial Condition and Plan of Operations—Critical Accounting Policies” in the our Prospectus, dated September 1, 2020, filed with the SEC pursuant to Rule 424(b), the following involve the most judgment and complexity:

| ● | Research and development
| ● | Stock-based compensation expense
| ● | Fair value of common stock

Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected.

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Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

JOBS Act

On April 5, 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission.

Recently Issued and Adopted Accounting Pronouncements

See Note 3 - Summary of Significant Accounting Policies to the accompanying financial statements for a description of other accounting policies and recently issued accounting pronouncements.

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BUSINESS

Overview

We are a biotech innovation company with a mission of prolonging life and enhancing its quality by improving the health of the immune system.

We are developing biotechnologies specifically focused on improving the health of the immune system through immune reprogramming and monitoring. Our immune reprogramming technologies are currently at the pre-clinical stage and are designed to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases, and allergies. Our immune monitoring technologies are designed to provide a personalized comprehensive profile of the immune system and we plan to utilize them in our upcoming reprogramming clinical trials to monitor subjects’ immune response before, during and after drug administration.

Immune Reprogramming

The discovery of immunosuppressive (anti-rejection and monoclonal) drugs over 40 years ago has made possible life-saving organ transplantation procedures and blocking of unwanted immune responses in autoimmune diseases. However, immune suppression leads to significant undesirable side effects, such as increased susceptibility to life-threatening infections and cancers, because it indiscriminately and broadly suppresses immune function throughout the body. While the use of these drugs has been justifiable because they prevent or delay organ rejection, their use for treatment of autoimmune diseases and allergies may not be acceptable because of the above-mentioned side effects. Furthermore, transplanted organs often ultimately fail despite the use of immune suppression, and about 40% of transplanted organs survive no more than 5 years.

New, focused therapeutic approaches are needed that modulate only the small portion of immune cells that are involved in rejection of the transplanted organ, as this approach can be safer for patients than indiscriminate immune suppression. Such approaches are referred to as immune tolerance, and when therapeutically induced, may be safer for patients and also potentially allow long-term survival of transplanted tissues and organs.

In the late 1990s, academic research on these approaches was conducted at the Transplant Center at Loma Linda University in connection with a project that secured initial grant funding from the U.S. Department of Defense. The focus of that project was for skin grafting for burn victims. Twenty years of research at LLU and an affiliated incubator led to a series of discoveries that have been translated into a large patent portfolio of therapeutic approaches that may be applied to the modulation of the immune system in order to induce tolerance to self and transplanted organs.

We have an exclusive worldwide license from LLU for commercializing this nucleic acid-based technology (which is currently at the pre-clinical stage), called Apoptotic DNA Immunotherapy™ (ADi™), which utilizes a novel approach that mimics the way our bodies naturally induce tolerance to our own tissues (“therapeutically induced immune tolerance”). While immune suppression requires continuous administration to prevent rejection of a transplanted organ, induction of tolerance has the potential to retrain the immune system to accept the organ for longer periods of time. Thus, ADi™ may allow patients to live with transplanted organs with significantly reduced immune suppression. ADi™ is a technology platform, which we believe can be engineered to address a wide variety of indications.

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We are developing ADi™ products for organ transplantation including skin grafting, autoimmune diseases, and allergies, with the initial focus on skin allografts and psoriasis, as we believe these indications will be most efficient in providing safety and efficacy data in clinical trials. To submit a BLA for a biopharmaceutical product, clinical safety and efficacy must be demonstrated in a series of clinical studies conducted with human subjects. For products in our class of drugs, the first-in-human trials will be a combination of Phase I (safety/tolerability) and Phase II (efficacy) in affected subjects. To obtain approval to initiate the Phase I/IIa studies, an Investigational New Drug Application will be submitted to compile non-clinical efficacy data as well as manufacturing and pre-clinical safety/toxicology data. To date, we have conducted non-clinical studies in a stringent model of skin transplantation using genetically mismatched donor and recipient animals demonstrating a 3-fold increase in the survival of the skin graft in animals that were tolerized with ADi™ compared to animals that receive immune suppression alone. Prolongation of graft life was observed despite discontinuation of immune suppression after the first 5 weeks. Additionally, in an induced non-clinical model for psoriasis, ADi™ treatment resulted in a 69% reduction in skin thickness and a 38% decrease in skin flaking (two clinical parameters for assessment of psoriasis skin lesions). The Phase I/IIa studies in psoriasis will evaluate the safety/tolerability of ADi™ in patients diagnosed with psoriasis. Since the drug will be administered in subjects diagnosed with psoriasis, effectiveness of the drug to improve psoriatic lesions will also be evaluated. In another Phase I/IIa study, patients requiring skin allografts will receive weekly intra-dermal injections of ADi™ in combination with standard immune suppression to assess safety/tolerability and possibility of reducing levels of immunosuppressive drugs as well as prolongation of graft life. Later phase trials are planned after successful completion of these studies in preparation for submission for a BLA to regulatory agencies.

ADi™ Advantages

ADi™ is a nucleic acid-based technology (e.g., plasmid DNA-based) which we believe selectively suppresses only those immune cells involved in the rejection of tissue and organ transplants. It does so by tapping into the body’s natural process of cell death (apoptosis) to reprogram the immune system to stop unwanted attacks on self or transplanted tissues. Apoptosis is a natural process of “immune tolerance” used by the body to clear dying cells and to allow recognition and tolerance to self-tissue. ADi™ triggers this process enabling the natural immune system cells to recognize the targeted tissues as “self”. Conceptually, it is designed to retrain the immune system to become accepting of the organ similar to how natural apoptosis reminds our immune system to be tolerant to our own “self” tissues.

While efforts have been made by various groups to promote tolerance through cell therapies and ex vivo manipulation of patient cells (takes place outside the body typically requiring hospitalization), to our knowledge, we will be unique in our approach of using in-body induction of apoptosis to promote tolerance to specific tissues. In addition, ADi™ treatment itself will not require hospitalization, only an injection in minute amounts into the skin.

Reduce Chronic Rejection

While immunosuppressants control acute rejection during the early time-period after receiving an organ, chronic rejection of the organ that occurs one or more years after the transplant procedure continues to pose a major challenge for organ recipients.

Chronic rejection has been likened to autoimmunity (a misdirected immune response that occurs when the immune system goes awry), where specific tissues in the transplanted organ are attacked by the immune system. In other words, chronic rejection may not be caused just by differences between the donor and the recipient, but rather by an immune response by the recipient to specific tissues in the organ. Our pre-clinical studies suggest that ADi™ has the ability to tolerize to specific tissues in a transplanted organ, and conceivably, reducing incidences of chronic rejection.

Moreover, preclinical studies have demonstrated that ADi™ treatment significantly and substantially prolongs graft survival, in addition to successfully “reversing” other established immune-mediated inflammatory processes.

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Reduce immune suppression

Studies in animal models have shown that conditioning/desensitizing the animals to receive the transplant, prolongs the survival of the transplanted tissue or organ. These studies have used repeated exposure to low doses of protein components in specific organs to reduce immunologic recognition and attack on the transplanted organ.

Based on some of our data, we believe that with ADi™ treatment, recipients can be conditioned/desensitized ahead of transplantation, thereby retraining the immune system to more readily accept the organ and also reduce the levels of immunosuppressive drugs needed post-transplantation.

Preformed Antibodies

Studies have shown that presence of preformed antibodies prior to transplantation procedures increases the rate of organ rejection. Preformed antibodies can develop in previously transplanted patients, patients who have given birth, and patients who have previously received blood transfusions. With more than 113,000 patients on transplant waiting lists in the U.S. alone, patients with pre-existing antibodies have much lower chances at qualifying to receive organs due to their increased risk of rejection – even with immune suppression.

Sadly, transplanted patients have a probability of needing re-transplantation at some point due to eventual chronic rejection of their transplanted organ, with the possible exception of some newborn recipients. With increased incidence of preformed antibodies, these patients may never have the opportunity to receive another organ. Based on experimental data, we believe that ADi™ may have the potential to address this issue providing these individuals better opportunities at receiving an organ transplantation.

ADi™ Key Differentiators

Ease of Delivery

Therapeutic products are typically administered systemically (i.e., by mouth in pill form or injected intramuscularly/intravenously). This requires repeated large doses of the drug to allow sufficient concentrations to reach the affected sites. ADi™ is a DNA-based product that can be injected directly into the skin where the target cells of the immune system reside, thereby significantly simplifying the delivery of the product and reducing the amount of product needed.

Repeat Dosing

DNA-based products are less likely to result in formation of neutralizing antibodies, which lend themselves to repeat dosing as may be required by ADi™ products.

Cost of Goods Advantage

ADi™ products are DNA-based and cost-effective to manufacture. Furthermore, DNA-based products are very stable and do not require adherence to cold chain (temperature-controlled) protocols for shipping. This also makes the product ideal for global distribution.

Simplified Therapy Delivery System

We believe that tolerance induction using ADi™ may potentially obviate the need for hospitalization because it can simply be injected into the skin. This approach reduces treatment costs and complexities in treatment delivery. The anticipated administration of ADi™ will include an initial priming regimen that will require injections administered once a week for several weeks. Thereafter, booster or maintenance doses will be provided on an individual basis as determined by immune and inflammation testing. ADi™ treatments will be significantly more convenient and comfortable for patients because they do not require removal of patient cells for ex vivo manipulation.

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ADi™ Technology Platform

ADi™ utilizes a novel approach that mimics the way our bodies naturally induce tolerance to our own tissues. It is a technology platform which we believe can be engineered to address a wide variety of indications. ADi™ includes two DNA molecules which are designed to deliver signals to induce tolerance. The first DNA molecule encodes a pro-apoptotic protein, which induces ‘programmed’ cell death. This is a core component of the technology because it is intended to greatly increase the recruitment of dendritic cells, which are implicated in regulating the immune system. The second DNA molecule encodes the protein of interest (guiding antigen), which is modified to promote a path of tolerance. The guiding antigen is intended to result in tolerance induction specific to the tissue where the protein is found.

ADi™ has been successfully tested in several preclinical models (skin grafting, psoriaris, type 1 diabetes, alopecia areata) and its efficacy can be attributed to multiple factors:

| 1. | ADi™ does not rely on a single mechanistic approach. It has multiple components (interchangeable target antigen, apoptosis, methylated plasmid DNA) that affect different arms of the immune system, which can be manipulated.

| 2. | ADi™ activates key immune cells known to maintain tolerance in test animals and humans.

| 3. | ADi™ has been successfully applied to a stringent transplantation model.

| 4. | ADi™ lends itself to repeat dosing, which may be required to achieve its full potential therapeutic effect.

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Proof of Concept: Skin Grafting

Results shown are 5 weeks post-transplantation

The proof of concept experiment performed in transplantation was a skin allograft transplantation procedure in which the donor skin was obtained from white BALB/c mice and transplanted to black C57BL/6 mice. The experiment was designed to address a more challenging scenario where the donor tissue was obtained from a donor which is genetically mismatched with the recipient. This is unlike clinical scenarios where the donor and recipient are genetically matched as much as possible. While these experiments were repeated in several separate experiments, the results shown here were obtained from a study conducted with 14 mice in the ADi™ treatment group and 7 mice in the control group. Prior to submission of an Investigational New Drug Application, additional non-clinical studies will be conducted in a pig model to establish the precise protocol (e.g. timing of vaccine administration, dosing, and appropriate immunosuppressive agents that will be used in combination with ADi™) that will be used in the clinical trials. In addition, IND-enabling safety/toxicology studies will be conducted by a GLP lab to ensure product safety for clinical testing.

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Proof of Concept: Psoriasis

| ● | Psoriasis causes increased skin thickness and scaling in an established 10-day psoriasis model

| ● | ADiTM treatment resulted in a 69% reduction in skin thickening and 38% reduction in scaling over the 10-day study period

Proof of Concept: Type 1 Diabetes

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90% of female NOD mice developed spontaneous autoimmune diabetes. Disease progression may be different for individual animals.

ADiTM was administered once a week for 8 weeks after each animal developed hyperglycemia. All animals responded with 80% showing durable response for the entire 40-week study period.

| ● | Type 1 or autoimmune diabetes is a condition where the body’s immune system mistakenly attacks cells in the pancreas resulting in diminished production of insulin

| ● | ADiTM incorporates an antigen (GAD) expressed in the pancreas

| ● | Administration of ADiTM using GAD as the antigen over an 8-week period in animals with T1D restores insulin production and reverses hyperglycemia

Proof of Concept: Alopecia Areata

ADiTM protects hair follicles from autoimmune attack

Immune Monitoring

We believe that understanding the status of an individual’s immune system is key to developing and administering immunotherapies such as ADi™. We have secured an exclusive worldwide license for commercializing a technology platform which provides a personalized comprehensive profile of the immune system. It is intended to be informative for individual immune responses to viruses, bacterial antigens, peptides, drugs, bone marrow and solid organ transplants, and cancer. It has broad applicability to many other agents of clinical interest impacting the immune system, including those not yet identified such as future infectious agents. We plan to brand this technology, and other future licensed and/or in-house developed monitoring technologies collectively as AditxtScore™.

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AditxtScore™ is being designed to allow individuals to understand, manage and monitor their immune profiles in order to be informed about attacks on or by their immune system. We believe AditxtScore™ can also assist the medical community in anticipating possible immune responses and reactions to viruses, bacteria, allergens and transplanted organs. It can be useful in anticipating attacks on the body by having the ability to determine its potential response and for developing a plan to deal with an undesirable reaction by the immune system. Its advantages include the ability to provide a simple, rapid, accurate, high throughput, single platform assay that can be multiplexed to determine the immune status with respect to several factors simultaneously, in 3-16 hours, as well as detect antigen and antibody in a single test (i.e. infectious, recovered, immune). In addition, it can determine and differentiate between various types of cellular and humoral immune responses (T and B cells). It also provides for simultaneous monitoring of cell activation and levels of cytokine release (i.e., cytokine storms).

We plan to utilize AditxtScore™ in our upcoming clinical trials to monitor subjects’ immune response before, during and after ADi™ drug administration. We are working with regulatory consultants with the objective to obtain FDA approval for AditxtScore™ as a clinical assay. We are currently securing marketing and distribution partnerships for application of AditxtScore™ in the infectious diseases market. To obtain FDA approval to use AditxtScore™ as a clinical assay, we are performing validation studies to demonstrate AditxtScore™’s utility to evaluate various components of the immune system reproducibly. We believe that these data will show AditxtScore™’s ability to measure various components of the immune system (e.g. humoral and cell-mediated immune responses) to provide a broader view of the immune system and its status in health and disease. Our plan is to submit a 510(K) application to the FDA after compilation of these data. Beyond infectious diseases, we plan to develop AditxtScore™ for applications in additional markets such as organ rejection, allergies, drug/vaccine response, and disease susceptibility.

| (1) | Organ Rejection

Typically, by the time a transplanted or a native organ shows signs of failure, the damage is already done, and reversal of the tissue injury becomes challenging. Access to early warning signs of damage would be invaluable to reverse or even prevent the damage. There are currently no practical, efficient assays available to measure cellular immune responses and available tools do not provide timely information for patients. AditxtScore™ can be used to provide a sensitive and rapid tool to determine T cell response and to differentiate between various types of cellular immune responses. It can be multiplexed providing information about the number of cells responding as well as quantifying the amounts of various cytokines released by the cells in a single assay. Determination of cellular response has valuable applications for prediction, monitoring, early detection, and treatment of disease, including organ failure/rejection, as well as treatment efficacy. It can also reveal dysfunction of the immune system potentially contributing to more severe disease.

| (2) | Allergies

Our immune system protects us by acting as a barrier against foreign substances and by eliminating them when they penetrate our bodies. Once the initial exposure has occurred, memory cells develop to prepare the body against a future exposure. This process is called immunity. In certain situations, however, instead of immunity, the immune system develops memory cells that result in a more severe reaction during a future exposure to the same substance. This type of response is called a hypersensitivity response, commonly known as an allergic response. AditxtScore™ can be used to develop multiplex assays each designed to test and monitor immune response to allergens. Based on the ability of this technology to run multiple tests in a single assay, 100 or more substances can potentially be tested for simultaneously.

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| (3) | Drug/Vaccine Response

There are currently no effective assays to predict and easily assess responses to vaccination. To determine whether an individual has responded to a particular vaccine, antibody titers are measured. This process may take several days. Furthermore, for vaccines that require a series of injections, titers are not measured between injections and may not be known for months. AditxtScore™ can be used to determine whether a patient is a responder or non-responder. It can provide an effective and rapid tool for potentially determining beneficial responses to a vaccine and can be used to monitor titer development post vaccination. It can allow evaluation of multiple vaccines in a single test (for memory B cell detection). This application can be useful for vaccines, cancer therapeutics anti-rejection drugs, anti-viral drugs, among others.

| (4) | Disease Susceptibility

Disease susceptibility can vary from one individual to another and it can be a function of various factors, including genetic variability and differences in human leukocyte antigens (HLA) encoded by major histocompatibility complex (MHC) and responsible for regulation of the immune system in humans. People with certain HLA types may have higher or lower susceptibility to diseases. AditxtScore™ can be used to develop assays to evaluate differences in HLA types in individuals to help elucidate the relationship between certain HLA types and susceptibility to various diseases.

| (5) | Infectious Diseases

Infectious diseases can cause a major predicament for scientific and medical professionals, epidemiologists, and infectious disease specialists, among others, who need to determine how to treat patients in real time while efficacious therapies are still being developed. Proper decision making requires understanding why some affected individuals show minor or no symptoms, some recover, and others die. This is fundamental to creating effective targeted therapeutics which may differ depending on the underlying profile of the individual at risk for, or with, disease. The immune system plays a major role in how any given individual responds to the infectious agent. This response can be inadequate or too robust or appropriately effective. Regardless, the kinetics of the response by the cellular and humoral (antibody) immune systems to the infectious agent are often unknown. A basic critical question, then, is what do the dynamics of the immune response look like from exposure to and through the disease period and during convalescence for those who survive and those who don’t; and how might vaccines and therapies alter these profiles such that predictions of vaccine/drug efficacy could be inferred prior to vaccination/treatment and/or disease severity or progression be prognosticated. AditxtScore™ can be used to help address these questions with multiplex assays each designed to test and monitor the immune response to infectious agents. Based on the ability to run multiple tests in a single assay, 100 or more agents can potentially be tested for simultaneously.

On August 6, 2020 Aditxt announced the first application of its AditxtScore™ platform - AditxtScore™ for COVID-19. AditxtScore™ for COVID-19 is a double-multiplex assay that can be used to detect and differentiate various antibody isotypes (IgG, IgM, IgA) against multiple SARS-CoV-2 antigens (e.g. RBD, S1, NP) simultaneously in a single reaction. Currently, one of the most widely used platforms, ELISA, can only detect one antibody isotype against one antigen at a time. We believe AditxtScore™ for COVID-19 will increase the resolution of results obtained for each antibody isotype thereby enhancing sensitivity for monitoring changes in these values over time. Due to the enhanced specificity and sensitivity of this comprehensive antibody profiling system, false positive and false negative results have proven to be significantly reduced when testing for the antibodies produced to SARS-CoV-2, thereby expanding its utility beyond a tool used in epidemiology. Therefore, and importantly, AditxtScore™ for COVID-19 can serve as a valuable tool to evaluate immune responses to SARS-CoV-2 vaccines in clinical settings.

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In August 2020, we filed for an Emergency Use Authorization (EUA) with the FDA with the ultimate objective of filing a 510(K) application. In the meantime, we are providing AditxtScore™ as a service as a Laboratory Developed Test (LDT) to assess immunity status to COVID-19.

License Agreement with Loma Linda University

On March 8, 2018, we entered into an Assignment Agreement (the “Assignment Agreement”) with Sekris Biomedical, Inc. (“Sekris”). Sekris was a party to a License Agreement with Loma Linda University (“LLU”), entered into and made effective on May 25, 2011, and amended on June 24, 2011, July 16, 2012 and December 27, 2012 (the “Original Agreement,” and together with the Assignment Agreement, the “Sekris Agreements”). Pursuant to the Assignment Agreement, Sekris transferred and assigned all of its rights and obligations in and to and liabilities under the Original Agreement, of whatever kind or nature, to us. In exchange, on March 8, 2018, we issued a warrant to Sekris to purchase up to 500,000 shares of our common stock (the “Sekris Warrant”). The warrant was immediately exercisable and has an exercise price of $4.00 per share. The expiration date of the warrant is March 8, 2023. On March 15, 2018, as amended on July 1, 2020, we entered into a LLU License Agreement directly with Loma Linda University, which amends and restates the Sekris Agreements.

Pursuant to the LLU License Agreement, we obtained the exclusive royalty-bearing worldwide license in and to all intellectual property, including patents, technical information, trade secrets, proprietary rights, technology, know-how, data, formulas, drawings, and specifications, owned or controlled by LLU and/or any of its affiliates (the “LLU Patent and Technology Rights”) and related to therapy for immune-mediated inflammatory diseases (the ADi™ technology). In consideration for the LLU License Agreement, we issued 25,000 shares of common stock to LLU.

Pursuant to the LLU License Agreement, we are required to pay an annual license fee to LLU. Also, we agreed to pay LLU $455,000 in July 2020 in payment of outstanding milestone payments and license fees. We are also required to pay to LLU milestone payments in connection with certain development milestones. Specifically, we are required to make the following milestone payments: $175,000 on March 31, 2022; $100,000 on March 31, 2024; $500,000 on March 31, 2026; and $500,000 on March 31, 2027. Additionally, as consideration for prior expenses incurred by LLU to prosecute, maintain and defend the LLU Patent and Technology Rights, we are obligated to make the following payments to LLU:, $70,000 due at the end of December 2018, and a final payment of $60,000 due at the end of March 2019. We are required to defend the LLU Patent and Technology Rights during the term of the LLU License Agreement. Additionally, we will owe royalty payments of (i) 1.5% of Net Product Sales and Net Service Sales on any Licensed Products (defined as any finished pharmaceutical products which utilizes the LLU Patent and Technology Rights in its development, manufacture or supply), and (ii) 0.75% of Net Product Sales and Net Service Sales for Licensed Products and Licensed Services not covered by a valid patent claim for technology rights and know-how for a three (3) year period beyond the expiration of all valid patent claims. We also are required to produce a written progress report to LLU, discussing our development and commercialization efforts, within 45 days following the end of each year. All intellectual property rights in and to LLU Patent and Technology Rights shall remain with LLU (other than improvements developed by or on our behalf).

The LLU License Agreement shall terminate on the last day that a patent granted in to us by LLU is valid and enforceable or the day that the last patent application licensed to us is abandoned. The LLU License Agreement may be terminated by mutual agreement or by us upon 90 days written notice to LLU. LLU may terminate the LLU License Agreement in the event of (i) non-payments or late payments of royalty, milestone and license maintenance fees not cured within 90 days after delivery of written notice by LLU, (ii) a breach of any non-payment provision (including the provision that requires us to meet certain deadlines for milestone events (each, a “Milestone Deadline”)) not cured within 90 days after delivery of written notice by LLU and (iii) LLU delivers notice to us of three or more actual breaches of the LLU License Agreement by us in any 12-month period. Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate a first-in-human clinical trials on or before March 31, 2022, (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval by the FDA by March 31, 2027.

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License Agreement with Leland Stanford Junior University (“Stanford”)

On February 3, 2020, we entered into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford with regard to a patent concerning a method for detection and measurement of specific cellular responses. Pursuant to the February 2020 License Agreement, we received an exclusive worldwide license to Stanford’s patent with regard to use, import, offer, and sale of Licensed Products (as defined in the agreement). The license to the patented technology is exclusive, including the right to sublicense, beginning on the effective date of the agreement and ending when the patent expires. Under the exclusivity agreement, we acknowledged that Stanford had already granted a non-exclusive license in the Nonexclusive Field of Use, under the Licensed Patents in the Licensed Field of Use in the Licensed Territory (as those terms are defined in the February 2020 License Agreement”). However, Stanford agreed to not grant further licenses under the Licensed Patents in the Licensed Field of Use in the Licensed Territory.

We were obligated to pay a fee of $25,000 to Stanford within 60 days of February 3, 2020. We also issued 18,750 shares of the Company’s common stock to Stanford. An annual licensing maintenance fee is payable by us on the first anniversary of the February 2020 License Agreement in the amount of $40,000 for 2021 through 2024 and $60,000 in starting in 2025 until the license expires upon the expiration of the patent. The Company will pay milestone fees of $50,000 on the first commercial sales of a licensed product and $25,000 at the beginning of any clinical study for regulatory clearance of an in vitro diagnostic product developed and a potential licensed product. We are also required to: (i) provide a listing of the management team or a schedule for the recruitment of key management positions by March 31, 2020 (which has been completed), (ii) provide a business plan covering projected product development, markets and sales forecasts, manufacturing and operations, and financial forecasts until at least $10,000,000 in revenue by June 30, 2020, (iii) conduct validation studies by September 30, 2020, (iv) hold a pre-submission meeting with the FDA by September 30, 2020, (v) submit a 510(k) application to the FDA , Emergency Use Authorization (“EUA”), or a Laboratory Developed Test (“LDT”) by March 31, 2021, (vi) obtain FDA approval by December 31, 2021, (vii) complete a prototype assay kit by December 31, 2021 and (viii) have a written agreement with Stanford on further development and commercialization milestones for specific fields of use by December 31, 2021.

In addition to the annual license maintenance fees outlined above, we will pay Stanford royalties on Net Sales (as such term is defined in the February 2020 License Agreement) during the of the term of the agreement as follows: 4% when Net Sales are below or equal to $5 million annually or 6% when Net Sales are above $5 million annually. The February 2020 License Agreement may be terminated upon our election on at least 30 days advance notice to Stanford, or by Stanford if we: (i) are delinquent on any report or payment; (ii) are not diligently developing and commercializing Licensed Product; (iii) miss certain performance milestones; (iv) are in breach of any provision of the February 2020 License Agreement; or (v) provide any false report to Stanford. Should any events in the preceding sentence occur, we have a thirty (30) day cure period to remedy such violation.

Plan of Operations

High-level objectives for skin allograft clinical program:

| ● | Dose optimization to determine optimum dose/ratio of product candidate in human subjects requiring skin and other organ and/or tissue allografts
| ● | Clinical Phase I/IIa First-In-Human (FIH) Study to demonstrate safety and clinical proof-of-concept in human subjects requiring skin allografts

Our FIH clinical studies will combine Phase I (designed to test clinical safety) and Phase IIa (designed to obtain proof of effectiveness in human subjects), in subjects requiring skin and other organ and/or tissue allografts. We have selected this indication for several reasons, including:

| 1. | Our existing preclinical data has shown promising results of ADi™ in prolonging skin allografts;

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| 2. | The relative ease of visualization of the graft without the need for biopsies; and

| 3. | The need for therapies that allow reduction of levels of immune suppression that are currently used for skin allografts to prevent rejection of skin, which is highly antigenic.

We have already identified a clinical trial center with adequate patients, which we believe will simplify and reduce the time required for patient recruitment. Upon approval by the FDA and/or the applicable regulatory agency, and once the exact protocol has been determined in the preclinical studies, clinical trials will be initiated.

High-level objectives for psoriasis clinical program:

| ● | Dose optimization to determine optimum dose of product candidate in psoriasis subjects
| ● | Clinical Phase I/IIa FIH Study to demonstrate safety and clinical proof-of-concept in psoriasis

Our FIH clinical studies will combine Phase I (designed to test clinical safety) and Phase IIa (designed to obtain proof of effectiveness in human subjects), in psoriasis patients. We have selected this indication for several reasons, including:

| 1. | Our existing preclinical data has shown promising results of ADi™ in reducing scaling and skin thickness in the mouse model; and
| 2. | The relative ease of visualization of the lesions to determine clinical effectiveness of the test article.

We will be identifying clinical trial centers with adequate patients. Upon approval by the FDA and/or the applicable regulatory agency clinical trials will be initiated.

We are developing our immune monitoring platforms with the objective of utilizing them as clinical assays in pre-clinical and clinical studies. The multiplex technologies could potentially allow evaluation of more analytes with less tissue samples.

Drug Approval Process

In the United States, FDA approval is required before any new drugs can be introduced to the market. We currently have a product candidate for our first-in-human studies, but as of the date of this prospectus, we have not submitted an application to the regulatory agencies for approval.

We are working with a contract manufacturer who has the know-how, product ingredients including plasmid DNA molecules, and our patent-pending bacterial strain. Several batch runs have been successfully completed to demonstrate our ability to produce the DNA plasmids in a GMP facility. Based on validation studies, we are reasonably confident in our ability to produce clinical grade product candidates at larger scales. The contract manufacturer has provided a proposal for manufacturing of our clinical grade material, which will be signed and accepted once this offering is completed and we are ready to initiate GMP manufacturing. We are not currently party to an agreement with this contract manufacturer. We intend to enter into such an agreement after the completion of this offering.

The product candidate selected for clinical trials must be subjected to pre-clinical safety/toxicology studies by an independent GLP (Good Laboratory Practice) laboratory to demonstrate its suitability for clinical testing in human patients. Upon completion of manufacturing and safety/toxicology testing, an Investigation New Drug (IND) application will be prepared for submission to the regulatory agencies.

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Upon receipt of clearance to initiate clinical testing, the ADi™ product can be tested in human patients. Our product will be tested in clinical trials, one in patients with psoriasis and one in patients who require skin allografting. Therefore, our first-in-human studies will be combined Phase I/Phase IIa studies in which safety and efficacy data will be obtained. We plan to start with in skin indications (psoriasis and skin allografting) because we believe these indications will be most efficient in providing safety and efficacy data in clinical trials. In parallel, we will continue to develop additional product formulations for other indications.

We are developing our immune monitoring platforms with the objective of utilizing them as clinical assays in pre-clinical and clinical studies. The multiplex technologies could potentially allow evaluation of more analytes with less tissue samples. In the U.S., FDA approval is required before any In Vitro Diagnostic (“IVD”) device can be introduced to the market for clinical use (excluding research purposes). This process does not require clinical trials, but it does require validation data demonstrating accuracy of the device.

Target Market

In the U.S. alone, there are over 36,000 patients who receive organ transplantations each year, with more than 113,000 on transplant waiting lists.

The field of organ transplantation has been made possible and continues to rely on broad-acting immunosuppressive drugs, high levels of which can result in a compromised immune system that renders organ recipients susceptible to cancer and potentially life-threatening infections including re-activation of latent viruses.

In addition, immunosuppressants control acute rejection during the early time-period after receiving an organ but chronic rejection of the organ remains an unmet challenge for surgeons and transplant recipients.

While efforts have been made by various groups to promote tolerance through cell therapies and ex vivo manipulation of patient cells, these procedures take place outside the body and typically require hospitalization.

Moreover, transplanted patients will need re-transplantation at some point, with the possible exception of some newborn recipients. With increased incidence of preformed antibodies, these patients may never have the opportunity to receive another organ. Preformed antibodies can develop in previously transplanted patients, patients who have given birth, and patients who have previously received blood transfusions. These patients have much lower chances at qualifying to receive organs due to their increased risk of rejection – even with immune suppression. The potential to reduce formation of preformed antibodies in these patients will provide better opportunities for them to receive another transplanted organ.

There are gaps between current approaches and what the market needs. We believe that ADi™ addresses these gaps. ADi™ is easy to administer (does not require ex-vivo treatment of patient cells), it does not appear to suppress the immune system, it may allow patients to live with transplanted organs with significantly reduced immune suppression, it may provide for long-term survival of transplanted tissues and organs, may be more effective because it does not rely on a single immune pathway/mechanism, and potentially provides patients with pre-existing antibodies a chance to qualify to receive organs.

While these advantages present opportunities for unmet medical needs in the field of organ transplantation, the industry in which we operate is highly competitive. A small company such as us will meet significant challenges including regulatory requirements for approval of a new class of therapeutic agents, challenges in large scale manufacturing and marketing, cost of developing a novel therapeutic agent, which may require co-development partners who may or may not be willing to work with us, and the willingness of transplant surgeons to adopt our therapeutic vaccines in their existing immune suppression protocols. These challenges pose risks that we may not be able to overcome.

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Operational Advantages

Location

We lease laboratory space in Mountain View, CA, located near resources including Stanford University (“Stanford”).

Strategic Partners

Our plan is to work with strategic partners to leverage common resources to accomplish milestones over the next 3 years and potentially get access to expertise, materials, and infrastructure (such as laboratory space) which we believe can be advantageous to our development. We hope that this strategy will reduce costs by obviating the need to duplicate resources.

Intellectual Property (IP)

We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to our business, including seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties. Our policy is to seek to protect our proprietary position by, among other methods, filing patent applications in the United States and in jurisdictions outside of the United States, to protect our proprietary technology, inventions, improvements and product candidates that are important to the development and implementation of our business. We also rely on trade secrets and know-how relating to our proprietary technology and product candidates, continuing innovation, and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of immuno-therapy. We also plan to rely on data exclusivity, market exclusivity, and patent term extensions when available. Our commercial success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions, and improvements; to preserve the confidentiality of our trade secrets; to obtain and maintain licenses to use intellectual property owned by third parties; to defend and enforce our proprietary rights, including any patents that we may own in the future; and to operate without infringing on the valid and enforceable patents and other proprietary rights of third parties.

The ADi™ technology and its various components are protected by multiple families of patents and patent applications, including several U.S. and non-U.S. issued patents. As of the date of this prospectus, our patent portfolio licensed from LLU includes 8 U.S. patents, 3 U.S. pending patent applications, 87 foreign patents, and 14 foreign pending patent applications directed to ADi™ and related technologies. The ADi™ patents are broadly categorized into three groups, one for autoimmune diseases and type 1 diabetes; one for organ transplantation and a method of producing plasmid DNA that is mammalian-like to prevent immune activation; and one providing patent protection for a composition of matter for a tolerance delivery system for antigens of interest that would be relevant for various given indications. The third group is the basis for a platform allowing development of a new class of immunotherapeutics for various indications. The projected expiration dates for these ADi™ patents ranges from 2021 to 2034. The AditxtScore™ technology licensed from Stanford is protected by a U.S. patent which encompasses methods, systems and kits for detection and measurement of specific immune responses. The patent has been issued by the USPTO and expires on December 28, 2037. We also possess and/or in-license substantial know-how and trade secrets relating to the development and commercialization of our product candidates, including related manufacturing processes and technology. We plan to continue expanding and strengthening our IP portfolio with additional patent applications in the future.

Corporate Advisor

Charles Crocker – Senior Advisor

Mr. Charles Crocker is the retired Chairman and Chief Executive Officer of BEI Technologies, Inc. He has over 40 years background in founding and growing companies, including public-company experience in the medical field. He has served as a member of the board of multiple public and private companies.

Employees

We have forty-two (42) full time employees, including our Chief Executive Officer, Chief Financial Officer, Chief Innovation Officer and Chief Operating Officer. We consider the relations with our employees to be good.

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MANAGEMENT

Executive Officers and Directors

The following table sets forth the name, age and position of each of our executive officers, key employees and directors as of the date of this prospectus.

Name |  | Age |  | Positions
Amro Albanna |  | 51 |  | Chief Executive Officer, Director
Corinne Pankovcin |  | 54 |  | Chief Financial Officer
Shahrokh Shabahang |  | 58 |  | Chief Innovation Officer, Director
Rowena Albanna |  | 55 |  | Chief Operating Officer
Brian Brady |  | 41 |  | Director
Namvar Kiaie |  | 54 |  | Director
Laura Anthony |  | 51 |  | Director
Jeffrey Runge, M.D. |  | 64 |  | Director

Amro Albanna – President, Chief Executive Officer, and Chairman of the Board

Mr. Albanna has been our President, Chief Executive Officer and a Director since we were formed in 2017. In 2010, Mr. Albanna co-founded Innovation Economy Corporation (“IEC”), formed to license and commercialize innovations and create a group of life and health subsidiaries. From 2010 until 2017, Mr. Albanna was Chief Executive Officer and a Director of IEC and Olfactor Laboratories, Inc., a majority-owned subsidiary of IEC. From 2010 to August 2016, he was the Chief Executive Officer and a Director of Nano Engineered Applications, Inc., another majority-owned subsidiary of IEC. In 2003, Mr. Albanna founded Qmotions, Inc. (subsequently renamed Deal A Day Group Corp.). He served as its Chief Executive Officer and a Director until 2011. Qmotions used 3-D spatial tracking and pattern recognition technologies to develop motion-capturing video game controllers. In 2002, Mr. Albanna was a co-founder of Digital Angel Corporation – a company formed via the merger of three private companies (one being TTC below) into a fourth publicly traded company (American Stock Exchange) and was placed in charge of commercializing its GPS/wireless technologies. Around that time, Mr. Albanna co-founded an incubator for startups at the University of California, Riverside Research Park which was acquired in 2007. In 1997, he founded Timely Technology Corporation (“TTC”), which designed and developed e-commerce software for education, retail and finance. TTC was acquired in 2000 by a Nasdaq-listed company. Mr. Albanna graduated from California State University San Bernardino in 1991 with a B.S. in Business Administration with concentration in Computer Information Systems. He completed graduate coursework in Computer Science and Engineering at California State University, Long Beach from 1992 to 1993. In 2019, Mr. Albanna completed coursework in Immunology and Genetics at Harvard Medical School HMX online learning platform. We believe that Mr. Albanna’s expertise leading technology companies across various sectors, leading private and public financing, and in positioning companies for mergers and acquisitions, qualifies him to serve as a director of our Company.

Shahrokh Shabahang – Chief Innovation Officer, Director

Dr. Shabahang has been our Chief Innovation Officer and Director since our inception. In 2009, Dr. Shabahang co-founded Sekris Biomedical Inc. to incubate immunotherapy technologies. He served as its Chairman of the board and Chief Executive Officer since its inception. In 2004, Dr. Shabahang joined Genelux Corporation to lead its clinical development program and to serve as board secretary. Genelux developed an oncolytic virus technology for treatment of cancer, co-invented by Dr. Shabahang. During his tenure from 2004-2007, Genelux raised $20M+ and obtained regulatory approval to initiate First-In-Human clinical studies in Europe with patients who had not responded to chemotherapy. In 2001, Dr. Shabahang became the Director of the Microbiology and Molecular Biology Lab at Loma Linda University (“LLU”). He led the research and development of an antimicrobial therapeutic agent for treatment of dental infections, which was licensed and marketed by one of the largest dental distribution companies. Dr. Shabahang attended the University of California, Santa Barbara from 1982 to 1984 and later received his DDS from the University of Pacific in 1987. He earned his PhD in Microbiology and Molecular Genetics at LLU in 2001. During the same year, he established his laboratory at LLU to study infectious diseases and host immune responses. We believe that Dr. Shabahang’s experience leading biotech startups, leading clinical development programs, and his expertise in immunology and immune tolerance qualifies him to serve as a director of our Company.

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Corinne Pankovcin –Chief Financial Officer

Ms. Pankovcin has been our Chief Financial Officer since July 2020. From December 2015 to July 2019, Ms. Pankovcin was the Chief Financial Officer and Managing Director and Treasurer of Business Development Corporation of America (“BDCA”), a business development company. Prior thereto, from January 2011 to August 2015, Ms. Pankovcin was the Chief Financial Officer and Treasurer of Blackrock Capital Investment Corporation (NASDAQ: BKCC), and a Managing Director of Finance at BlackRock Investment Management LLC. Prior to joining BlackRock, Ms. Pankovcin was a senior member of Finance & Accounting of Alternative Investments and served as Chief Financial Officer for the Global Emerging Markets products group at AIG Capital Partners. Ms. Pankovcin began her career with PricewaterhouseCoopers LLP, where she ultimately held the role of Senior Manager of Business Assurance for Consumer Products, Manufacturing, and Middle Market industries from 1991 to 2001. Ms. Pankovcin earned her B.S. in Accounting from Dowling College and her Master’s Degree in Business Administration from Hofstra University. She is a Certified Public Accountant.

Rowena Albanna – Chief Operating Officer

Ms. Albanna has been our Chief Operating Officer since July 2020. From 2017 to immediately prior to her appointment as Chief Operating Officer, Ms. Albanna was an independent operations consultant for the Company. Prior thereto, from 2013 to 2017, Ms. Albanna was the Chief Operating Officer of Innovation Economy Corporation (“IEC”), formed to license and commercialize innovations and create a group of life and health subsidiaries. From 2010 to 2013, Ms. Albanna was Senior Vice President of IEC. From 2004 to 2009, Ms. Albanna was the founder and principal of Weezies, an online-based business focused on building and operating e-commerce stores and affiliate marketing sites. From 2003 to 2004, Ms. Albanna was the head of Product Development and Engineering of Qmotions Inc. Qmotions used 3-D spatial tracking and pattern recognition technologies to develop motion-capturing video game controllers. In 2002, Ms. Albanna was VP of Product Development at Digital Angel Systems where she led the development of devices which combined GPS, wireless, and biosensing. Prior to that, Ms. Albanna held multiple product development roles with increasing responsibilities for various technology companies in the areas of financial, medical, telecommunications, integrated circuit layout design, and defense. Ms. Albanna is a co-inventor of two patents related to systems for localizing, monitoring, and sensing objects. Ms. Albanna received a Bachelor of Science degree in Computer Science with a minor in Mathematics from California State University, San Bernardino in 1988.

Brian Brady – Director

Mr. Brady has served as a Director since December 1, 2018. Mr. Brady has also been the Director of Investments at Prime Healthcare since March 2016, where he is responsible for the management of investment activity related to the organization and personal investments of the family that owns that company. From December 2011 to March 2016, Mr. Brady was the Vice President/Portfolio Manager at Northern Trust, where he served in an investment advisory role, including asset and portfolio management. Mr. Brady graduated in 2001 with a Bachelor’s degree in Finance from the University of Illinois at Chicago and in 2014 with a Master of Business Administration degree from the University of Chicago. We believe that Mr. Brady’s extensive experience with financial markets and management of investment activities qualifies him to serve as a director of our Company.

Namvar Kiaie – Director

Mr. Kiaie has served as a director since July 2020. Mr. Kiaie has been associated with Abbott Diabetes Care since December 2005 (Director of Engineering 2005-2007; R&D Director 2007-2010; and Senior Director of R&D 2010-present), where he is responsible for the commercial launch of diabetes management related products and accessories, including blood glucose monitoring devices and data management software. Mr. Kiaie graduated in 1985 with a Bachelor of Science degree in Electrical Engineering and in 1986 with a Master of Science degree in Electrical Engineering, both from the University of California Santa Barbara. We believe that Mr. Kiaie’s extensive experience leading research and development efforts in the biotech industry qualifies him to serve as a director of our Company.

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Laura Anthony – Director

Ms. Anthony has served as a director since July 2020. Ms. Anthony is the founding partner of Anthony L.G., PLLC, a corporate, securities and business transactions law firm and has been practicing law since 1993. Ms. Anthony provides corporate counsel to small-cap and middle market private and public companies. For over twenty-five years, Ms. Anthony has served clients in the areas including but not limited to compliance with the Securities Act of 1933 offer sale and registration requirements, including private and public offerings; initial public offerings; follow-on offerings and PIPE transactions; compliance with NASDAQ and NYSE American initial and continued listing requirements; compliance with the initial quotation and maintenance of standards for the OTCQB and OTCQX; working with foreign private issuers; Regulation A/A+ offerings; compliance with the registration and reporting requirements under the Securities Exchange Act of 1934; mergers and acquisitions; and general contract and business transactions. Ms. Anthony received a juris doctorate from Florida State University College of Law in 1993. We believe that Ms. Anthony’s extensive experience as corporate counsel to private and public companies qualifies her to serve as a director of our Company.

Jeffrey Runge, M.D. – Director

Dr. Runge has served as a director since July 2020. From 2008 to the present, Dr. Runge has been the President and founder of Biologue, Inc., which provides consulting in biodefense, medical preparedness and injury prevention and control. From 2001 through August of 2008, Dr. Runge served in the Bush administration, first as the head of the National Highway Traffic Safety Administration, and, beginning in September 2005, as the Department of Homeland Security’s (DHS) first Chief Medical Officer. Dr. Runge founded the DHS Office of Health Affairs in 2007 and was confirmed by the United States Senate as DHS’ first Assistant Secretary for Health Affairs in December of 2007. Dr. Runge also served as Acting DHS Undersecretary for Science and Technology from February through August 2006. In his role at DHS, Dr. Runge oversaw the operations of the department’s biodefense activities, medical preparedness and workforce health protection, including managing DHS’ role in Project BioShield, working with the various federal departments on medical countermeasure assurance. Prior to joining DHS, Dr. Runge was Assistant Chairman of the Department of Emergency Medicine at the Carolinas Medical Center in Charlotte, NC, from 1984 through 2001. Additionally, Dr. Runge was previously a principal at The Chertoff Group, a firm providing advisory services in business risk management, homeland security and homeland defense. Dr. Runge earned his medical degree from the Medical University of South Carolina and his undergraduate degree from the University of the South. We believe that Dr. Runge’s public sector and medical experiences qualify him to serve as a director of our Company.

Board Leadership Structure and Risk Oversight

The Board oversees our business and considers the risks associated with our business strategy and decisions. The Board currently implements its risk oversight function as a whole. Each of the Board committees, when established, will also provide risk oversight in respect of its areas of concentration and reports material risks to the Board for further consideration.

Term of Office

Officers hold office until his or her successor is elected and qualified. Directors are appointed to serve for one year until the meeting of the Board following the annual meeting of stockholders and until their successors have been elected and qualified.

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Director Independence

We use the definition of “independence” of The Nasdaq Stock Exchange LLC (“Nasdaq”) listing rules to make this determination. Nasdaq listing rules provide that an “independent director” is one who the board “affirmatively determines” has no “material relationship” with the company “either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. Nasdaq listing rules provide that a director cannot be considered independent if:

| ● | the director is, or has been within the last three (3) years, an employee of the Company or an immediate family member of director is, or has been within the last three (3) years, an executive officer of the Company;

| ● | the director has received, or has an immediate family member who is an executive officer of the Company and has received, during any twelve-month period within the last three (3) years, more than $120,000 compensation directly from the Company (not including compensation received for director service, pension plan payments or deferred compensation for prior service not contingent on continued service);

| ● | the director or an immediate family member is a current partner of the Company’s internal or external auditor; the director is a current employee of the auditor; an immediate family member is a current employee of the auditor and personally works on the Company’s audit; or the director or an immediate family member was within the last three (3) years a partner or employee of the auditor and personally worked on the Company’s audit within that time;

| ● | the director or an immediate family member is, or has been within the last three (3) years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or served on that company’s compensation committee; or

| ● | the director is a current employee, or an immediate family member is a current executive officer, of an organization that has made to or received from the Company payments for property or services in an amount which, in any of the last three fiscal (3) years, exceeds greater of 2% of such other company’s consolidated gross revenues or $1 million. Charitable contributions not considered “payments” for purposes of this prohibition but contributions meeting these thresholds must be disclosed on the Company’s website or in its annual proxy statement or its Annual Report on Form 10-K.

Under such definitions, we consider Mr. Kiaie, Mr. Brady, Ms. Anthony, and Dr. Runge to be “independent.” Nasdaq listing rules permits a phase-in period of up to one year for an issuer registering securities in an initial public offering to comply with its requirement that a majority of the board of directors be made up of independent directors. However, our common stock is not currently quoted or listed on any national exchange or interdealer quotation system with a requirement that a majority of our Board be independent and, therefore, the Company is not subject to any director independence requirements. We are subject to Nasdaq’s director independence requirements and are required to structure our board of directors accordingly.

Committees of the Board

Our board of directors has established three standing committees: Audit, Compensation, and Nominating and Corporate Governance. Each of these standing committees operate pursuant to its respective charter. The committee charters are reviewed annually by the Nominating and Corporate Governance Committee. If appropriate, and in consultation with the chairs of the other committees, the Nominating and Corporate Governance Committee may propose revisions to the charters. The responsibilities of each committee are described in more detail below.

Nasdaq listing rules permits a phase-in period for an issuer registering securities in an initial public offering to meet the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee independence requirements. Under the initial public offering phase-in period, only one member of each committee is required to satisfy the heightened independence requirements at the time our registration statement becomes effective, a majority of the members of each committee must satisfy the heightened independence requirements within 90 days following the effectiveness of our registration statement, and all members of each committee must satisfy the heightened independence requirements within one year from the effectiveness of our registration statement.

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Audit Committee

The Audit Committee, among other things, is responsible for:

| ● | appointing; approving the compensation of; overseeing the work of; and assessing the independence, qualifications, and performance of the independent auditor;

| ● | reviewing the internal audit function, including its independence, plans, and budget;

| ● | approving, in advance, audit and any permissible non-audit services performed by our independent auditor;

| ● | reviewing our internal controls with the independent auditor, the internal auditor, and management;

| ● | reviewing the adequacy of our accounting and financial controls as reported by the independent auditor, the internal auditor, and management;

| ● | overseeing our financial compliance system; and

| ● | overseeing our major risk exposures regarding the Company’s accounting and financial reporting policies, the activities of our internal audit function, and information technology.

The Board has affirmatively determined that each member of the Audit Committee meets the additional independence criteria applicable to audit committee members under SEC rules and Nasdaq listing rules. The Board has adopted a written charter setting forth the authority and responsibilities of the Audit Committee. The Board has affirmatively determined that each member of the Audit Committee is financially literate, and that Mr. Brady meets the qualifications of an Audit Committee financial expert.

The Audit Committee consists of Mr. Brady, Ms. Anthony, and Mr. Kiaie. Mr. Brady chairs the Audit Committee.

Compensation Committee

The Compensation Committee is responsible for:

| ● | reviewing and making recommendations to the Board with respect to the compensation of our officers and directors, including the CEO;

| ● | overseeing and administering the Company’s executive compensation plans, including equity-based awards;

| ● | negotiating and overseeing employment agreements with officers and directors; and

| ● | overseeing how the Company’s compensation policies and practices may affect the Company’s risk management practices and/or risk-taking incentives.

The Board has adopted a written charter setting forth the authority and responsibilities of the Compensation Committee.

The Compensation Committee consists of Ms. Anthony, Mr. Brady, and Mr. Kiaie. Mr. Kiaie serves as chairman of the Compensation Committee. The Board has affirmatively determined that each member of the Compensation Committee meets the independence criteria applicable to compensation committee members under SEC rules and Nasdaq listing rules.

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Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee, among other things, is responsible for:

| ● | reviewing and assessing the development of the executive officers and considering and making recommendations to the Board regarding promotion and succession issues;

| ● | evaluating and reporting to the Board on the performance and effectiveness of the directors, committees and the Board as a whole;

| ● | working with the Board to determine the appropriate and desirable mix of characteristics, skills, expertise and experience, including diversity considerations, for the full Board and each committee;

| ● | annually presenting to the Board a list of individuals recommended to be nominated for election to the Board;

| ● | reviewing, evaluating, and recommending changes to the Company’s Corporate Governance Principles and Committee Charters;

| ● | recommending to the Board individuals to be elected to fill vacancies and newly created directorships;

| ● | overseeing the Company’s compliance program, including the Code of Conduct; and

| ● | overseeing and evaluating how the Company’s corporate governance and legal and regulatory compliance policies and practices, including leadership, structure, and succession planning, may affect the Company’s major risk exposures.

The Board of Directors has adopted a written charter setting forth the authority and responsibilities of the Corporate Governance/Nominating Committee.

The Nominating and Corporate Governance Committee consists of Ms. Anthony, Mr. Brady, and Mr. Kiaie. Ms. Anthony serves as chairman. The Company’s Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is independent within the meaning of the independent director guidelines of Nasdaq listing rules.

Indemnification

In accordance with the Delaware General Corporation Law and the Company’s Amended and Restated Certificate of Incorporation, the Company will indemnify, hold harmless and provide advancement of expenses, to the fullest extent permitted by applicable law, directors, officers, employees, and agents that are made a party or threatened to be made a party to legal proceedings by reason of the fact that such parties were working at the request of the Company. For more information see the section of this prospectus titled “Risk Factors.”

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable.

Involvement in Certain Legal Proceedings

To our knowledge, none of our current directors or executive officers has, during the past ten years:

| ● | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

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| ● | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he or she was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

| ● | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

| ● | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

| ● | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

| ● | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934, as amended (the Exchange Act)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Except as set forth above and in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Other than as set forth below, we are not currently a party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, we believe will have a material adverse effect on our business, financial condition or operating results.

The Company, Amro Albanna, our President and Chief Executive Officer, and Dr. Shahrokh Shabahang, our Chief Innovation Officer, have been named as cross-defendants in a counterclaim filed by Christopher Sechrist in an action entitled Shahrokh Shabahang v. Christopher Sechrist, San Bernardino County Superior Court Case No. CIVDS1831323. In a cross-complaint, Mr. Sechrist contends that he was a partner in a dental practice with Dr. Shabahang, and that disputes arose as between those partners. Neither the Company nor Mr. Albanna were partners in, or otherwise have an interest in, the dental practice. Notwithstanding, and seemingly based solely on the fact that Dr. Shabahang became the Chief Innovation Officer for the Company, Mr. Sechrist has brought claims against the Company and Mr. Albanna. Both the Company and Mr. Albanna believe that the Counterclaims filed by Mr. Sechrist have no factual or legal merit, and they intend to vigorously defend themselves in the action and to seek a dismissal of the case as against them as soon as possible. On May 26, 2020, Mr. Sechrist filed a request for dismissal as to the Company and Mr. Albanna with the Superior Court of California, County of San Bernardino, San Bernardino District. The clerk of the court entered the dismissal with prejudice on May 26, 2020.

Our CEO, Amro Albanna, is a party to litigation matters unrelated to the Company or any of its properties. Such litigations relate to Innovation Economy Corporation (IEC), a company in which Mr. Albanna served as the CEO and a Director from 2010 until 2017, and its wholly-owned subsidiaries (Innovation Economy Corporation d/b/a ieCrowd). The first litigation (ieCrowd v. Kim, et. al, Superior Court, Riverside County) was originally commenced by IEC and its subsidiary after Mr. Albanna was no longer affiliated with IEC, against certain third-party defendants based upon claims related to their misconduct and mismanagement. Such defendants subsequently brought a countersuit against IEC and its subsidiary, in which they named Mr. Albanna and others as defendants, alleging that they were misled to invest in IEC and its subsidiary based upon misrepresentations by, among others, Mr. Albanna. The cases have now been consolidated. Mr. Albanna believes that the counteraction commenced by the third parties against him is without merit and intends to defend himself. The second matter (Calabria v. ieCrowd) was commenced by Calabria Ventures (the “Calabria Action”) more than 2 years after Mr. Albanna was no longer affiliated with IEC, related to uncollected rent. Mr. Albanna believes that the action commenced against him is without merit and intends to defend himself. IEC (either directly or through its Director and officer insurance policy) has covered all related legal costs to date. On August 5, 2020, the plaintiff in the Calabria Action filed a request for dismissal as to Mr. Albanna with the Superior Court of California, County of Riverside. The clerk of the court entered the dismissal without prejudice on August 5, 2020.

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EXECUTIVE AND DIRECTOR COMPENSATION

The following table represents information regarding the total compensation for the named executive officers of the Company as of December 31, 2020 and 2019:

Name and Principal Position |  | Year |  |  | Salary ($) |  |  | Bonus ($) |  |  | Stock Awards ($) |  |  | Option Awards ($) |  |  | All Other Compensation ($) |  |  | Total ($) |
Amro Albanna |  | 2020 |  |  | 252,000 |  |  |  | -- |  |  |  | -- |  |  |  |  |  |  |  |  |  |  |  | 252,000 |
Chief Executive Officer, President, and Director |  | 2019 |  |  | 252,000 |  |  |  | -- |  |  |  | -- |  |  |  | 1,426,059 | (1) |  |  | -- |  |  |  | 1,678,059 |
Shahrokh Shabahang |  | 2020 |  |  | 210,000 |  |  |  | -- |  |  |  | -- |  |  |  | 206,800 | (2) |  |  |  |  |  |  | 416,800 |
Chief Innovation Officer |  | 2019 |  |  | 204,000 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 204,000 |
Corinne Pankovcin (3) |  | 2020 |  |  | 225,000 |  |  |  | -- |  |  |  | -- |  |  |  | 366,225 | (4) |  |  |  |  |  |  | 591,225 |
Chief Financial Officer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

Option awards represent granted options at the fair market value as of the date of grant.

| (1) | $1,426,059 represents the option expense for 400,000 vested options as of December 31, 2019. A total of 400,000 options were granted on April 17, 2019 which vested on grant, an exercise price of $4.00, and expiration date of October 5, 2027.

| (2) | $211,200 represents the option expense for 110,000 options that were granted on November 2, 2020, at an exercise price of $1.92 and an expiration date of November 2, 2030. These options fully vest by September 30, 2022.

| (3) | Effective the date of the IPO salary was calculated on an annualized basis.

| (4) | $360,000 represents the option expense for the following granted options: 7,500 options were granted on March 30, 2020 which vested on grant, at an exercise price of $11.00, and expiration date of October 5, 2027, 15,000 options were granted on November 2, 2020 which vested on grant, an exercise price of $1.92 and an expiration date of November 2, 2030, and 165,000 options were granted on November 2, 2020 which will be fully vested by September 30, 2022.

Director Compensation

The Company accrued or paid compensation to its directors for serving in such capacity, as show in the table below.

Director |  | Year |  |  | Option Awards |  |  | Fees Earned or Paid in Cash |  |  | Total |
Amro Albanna |  | 2020 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
|  | 2019 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Shahrokh Shabahang |  | 2020 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
|  | 2019 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Brian Brady |  | 2020 |  |  | $ | 19,400 |  |  | $ | 7,500 |  |  | $ | 26,900 |
|  | 2019 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Laura Anthony |  | 2020 |  |  | $ | 19,400 |  |  | $ | 7,500 |  |  | $ | 26,900 |
|  | 2019 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Namvar Kiaie |  | 2020 |  |  | $ | 19,400 |  |  | $ | 7,500 |  |  | $ | 26,900 |
|  | 2019 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Jeffrey Runge, M.D. |  | 2020 |  |  | $ | 19,400 |  |  | $ | 5,500 |  |  | $ | 24,900 |
|  | 2019 |  |  | $ | - |  |  | $ | - |  |  | $ | - |

Option awards represent granted options at the fair market value as of the date of grant.

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On October 13, 2020, the Board of Directors adopted a director compensation program for the Company’s independent directors consisting of both cash and equity compensation, beginning in 2020. The program consists of the following compensation for directors:

Cash Compensation (payable quarterly)

| ● | Board service - $11,000 per year
| ● | Chairperson of the Audit Committee – additional $4,000 per year
| ● | Chairperson of the Compensation Committee – additional $4,000 per year
| ● | Chairperson of the Nominating and Corporate Governance Committee – additional $4,000 per year

Equity Compensation (payable quarterly)

| ● | Board service – 10,000 shares of common stock

Employment Agreements

Other than as set forth below, we do not currently have employment agreements with any of our officers or employees.

C. Pankovcin Employment Agreement

On March 30, 2020, the Company entered into an Employment Letter Agreement with Corinne Pankovcin, our Chief Financial Officer, pursuant to which she receives a base salary at the annual rate of $225,000, payable in accordance with the Company’s standard payroll policies. Ms. Pankovcin also received stock options to purchase up to 165,000 shares of common stock under the Company’s 2017 Equity Incentive Plan, which vest as follows: 1/3 of the options shall vest on March 30, 2021; and (ii) the remaining 2/3 of the options shall vest and become exercisable in 8 successive equal quarterly installments thereafter. Additionally, Ms. Pankovcin received 22,500 options to purchase shares of our common stock that were fully vested.

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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

Transactions with Related Persons

Except as described below and except for employment arrangements which are described under “executive compensation,” since January 1, 2018, there has not been, nor is there currently proposed, any transaction in which we are or were a participant, the amount involved exceeds the lesser of $120,000 or 1% of the average of the total assets at December 31, 2019 and 2018, and any of our directors, executive officers, holders of more than 5% of our common stock or any immediate family member of any of the foregoing had or will have a direct or indirect material interest.

During the years ended December 31, 2019 and 2018, Rowena Albanna, the wife of Amro Albanna, our Chief Executive Officer, provided the Company with operations consulting services. In July 2020, Ms. Albanna joined the Company as its Chief Operating Officer. As of December 31, 2018, $112,000 was accrued as compensation. An additional $180,000 was expensed as compensation during the year ended December 31, 2019, and $17,000 was paid on the accrued balance. As of December 31, 2019, $275,000 remained accrued and outstanding.

On January 22, 2018, the Company issued an unsecured promissory note to Sekris for $40,000 that accrued interest of 4% annually. The note was due on the earlier of July 22, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.

On February 12, 2018, the Company issued an unsecured promissory note to Sekris for $50,000 that accrued interest of 4% annually. The note was due on the earlier of August 12, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.

On March 2, 2018, the Company issued an unsecured promissory note to Sekris for $10,000 that accrued interest of 4% annually. The note was due on the earlier of September 2, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.

On March 8, 2018, we entered into an Assignment Agreement (the “Assignment Agreement”) with Sekris. See “Summary—Overview—License Agreement with Loma Linda University.” Dr. Shabahang, our Chief Innovative Officer, was the Chief Executive Officer of Sekris. Sekris was subsequently dissolved in 2019.

On March 8, 2018, we issued a warrant to purchase up to 500,000 shares of our common stock to Sekris. On March 2, 2018, we issued a 4% unsecured promissory note to Sekris in the principal amount of $10,000. Principal and interest was due on September 2, 2018 or immediately upon an event of default. On February 12, 2018, we issued a 4% unsecured promissory note to Sekris in the principal amount of $50,000. Principal and interest was due on August 12, 2018 or immediately upon an event of default. On January 22, 2018, we issued a 4% unsecured promissory note to Sekris in the principal amount of $40,000. Principal and interest was due on July 22, 2018 or immediately upon an event of default.

On June 18, 2018, the Company issued an unsecured promissory note to Sekris for $17,502 that accrued interest of 4% annually. The note was due on the earlier of December 18, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.

On January 1, 2019, we entered into a consulting agreement with Rowena Albanna, the wife of Amro Albanna, our Chief Executive Officer, to perform operations consulting services. As part of this agreement, we pay Ms. Albanna $15,000 per month for her services. This agreement terminated on June 30, 2020. In July 2020, Ms. Albanna joined the Company as its Chief Operating Officer.

On March 21, 2019, we issued a promissory note to Dr. Shabahang, our Chief Innovative Officer. The note has a principal amount of $10,000, was due on September 21, 2019, and bears an interest rate of 4% per year. This note remains outstanding.

During the year ended December 31, 2019, we assumed an aggregate of $189,625 of liabilities from Sekris in exchange for the return of 94,813 shares of our common stock.

On January 20, 2020, we issued a promissory note to Brian Brady, a member of our board of directors. The note has a principal amount of $50,000, was due on the earlier of April 19, 2020 or within 10 days of the closing of our initial public offering. This note carried an original issue discount of $25,000. The note was amended on April 23, 2020 to extend the maturity date to the earlier of June 30, 2020 or within 10 days of the closing of our initial public offering. This note was repaid in July 2020.

In July 2020, we issued units of securities to the related parties listed below in conversion of their outstanding accrued compensation through March 31, 2020. The units were the same type and form of the units offered in the IPO.

| ● | 38,055 units to Amro Albanna, our Chairman and Chief Executive Officer, in conversion of $342,500 in accrued compensation through March 31, 2020;

| ● | 47,222 units to Shahrokh Shabahang, our Chief Innovation Officer and Director, in conversion of $425,000 in accrued compensation through March 31, 2020; and

| ● | 35,555 units to Rowena Albanna, the wife of our Chief Executive Officer and an independent contractor providing services to the Company, in conversion of $320,000 in accrued compensation through March 31, 2020. In July 2020, Ms. Albanna joined the Company as its Chief Operating Officer.

Review, Approval and Ratification of Related Party Transactions

Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officer(s), Director(s) and significant stockholders. We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional Directors, so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof. On a moving forward basis, our Directors will continue to approve any related party transaction.

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SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial ownership of our common stock as of the date of this prospectus by (i) each person (or group of affiliated persons) who is known by us to own more than five percent (5%) of the outstanding shares of our common stock, (ii) each director and executive officer, and (iii) all of our directors and executive officers as a group. As of the date of this prospectus, there were 14,001,398 shares of our common stock issued and outstanding.

Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.

Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person currently owns or has the right to acquire within 60 days of the date of this prospectus. With respect to options and warrants, this would include options and warrants that are currently exercisable within 60 days. With respect to convertible securities, this would include securities that are currently convertible within 60 days.

Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each director and executive officer listed is: c/o Aditx Therapeutics, Inc., 2569 Wyandotte, St., Suite 101, Mountain View, CA 94043.

|  | Number of shares of Common Stock Beneficially Owned |  |  | Percentage Before Completion of Offering |  |  | Percentage After Completion of Offering |
Directors and Officers: |  |  |  |  |  |  |  |  |
Amro Albanna (1) |  |  | 1,114,165 |  |  |  | 7.20 | % |  |  | 5.00 | %
Shahrokh Shabahang (2) |  |  | 1,235,159 |  |  |  | 8.19 | % |  |  | 5.64 | %
Corinne Pankovcin (3) |  |  | 22,500 |  |  |  | * | % |  |  | * | %
Rowena Albanna (4) |  |  | 306,665 |  |  |  | 2.03 | % |  |  | 1.40 | %
Brian Brady (5) |  |  | 17,500 |  |  |  | * | % |  |  | * | %
Laura Anthony (6) |  |  | 5,000 |  |  |  | * | % |  |  | * | %
Namvar Kiaie (7) |  |  | 8,333 |  |  |  | * | % |  |  | * | %
Jeffrey Runge, M.D. (8) |  |  | 7,500 |  |  |  | * | % |  |  | * | %
All directors and executive officers as a group (8 persons) |  |  | 2,716,822 |  |  |  | 16.98 | % |  |  | 11.92 | %

| * | less than 1%

(1) | Held beneficially by Albanna Family Trust, Amro Albanna, Trustee. Includes 600,000 options and 38,055 Series A Warrants issued as part of the conversion of outstanding accrued compensation through March 31, 2020. Mr. Albanna may be deemed to beneficially own the securities held by his wife Rowena Albanna, the Company’s Chief Operating Officer.

(2) | Held beneficially by Shabahang-Hatami Family Trust, Shahrokh Shabahang, Trustee. Includes 238,903 warrants to purchase shares of the Company’s common stock. Included in this amount are 47,222 Series A Warrants issued as part of the conversion of outstanding accrued compensation through March 31, 2020.

(3) | Includes 22,500 options to purchase common stock that are fully vested.

(4) | Includes 35,555 Series A Warrants issued as part of the conversion of outstanding accrued compensation through March 31, 2020. Ms. Albanna may be deemed to beneficially own the securities held by her husband Amro Albanna, the Company’s Chief Executive Officer.

(5) | Includes (i) 12,500 shares of common stock; and (ii) 5,000 shares of common stock issuable pursuant to options that have vested or will vest within 60 days of the date of this prospectus.

(6) | Includes 5,000 shares of common stock issuable pursuant to options that have vested or will vest within 60 days of the date of this prospectus.

(7) | Includes (i) 2,222 shares of common stock; (ii) 1,111 Series A Warrants; and (iii) 5,000 shares of common stock issuable pursuant to options that have vested or will vest within 60 days of the date of this prospectus.

(8) | Includes (i) 2,500 shares of common stock; and (ii) 5,000 shares of common stock issuable pursuant to options that have vested or will vest within 60 days of the date of this prospectus.

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DESCRIPTION OF CAPITAL STOCK

General

The following description of the Company’s capital stock and provisions of its Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws are summaries and are qualified by reference to the full text of the Company’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws.

The Company is authorized to issue 30,000,000 shares of capital stock, par value $0.001 per share, of which 27,000,000 are shares of common stock and 3,000,000 are shares of “blank check” preferred stock.

On June 29, 2020, we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation (the “Amendment”), with the Secretary of State of the State of Delaware to effectuate a one-for-two (1:2) reverse stock split (the “Reverse Stock Split”) of our common stock without any change to its par value. The Amendment became effective on upon such filing. No fractional shares were issued in connection with the Reverse Stock Split as all fractional shares were rounded down to the next whole share.

As of the date of this prospectus, the Company had outstanding 14,001,398 shares of common stock held by 94 shareholders of record. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.

Common Stock

Voting

The holders of our common stock are entitled to one vote for each share held on all matters to be voted on by the Company’s stockholders. There shall be no cumulative voting.

Dividends

The holders of shares of our common stock are entitled to dividends when and as declared by the Board from funds legally available therefor if, as and when determined by the Board of Directors of the Company in their sole discretion, subject to provisions of law, and any provision of the Company’s Amended and Restated Certificate of Incorporation, as amended from time to time. There are no preemptive, conversion or redemption privileges, nor sinking fund provisions with respect to the common stock.

Liquidation

In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of or provision for all of our debts and other liabilities.

Fully Paid and Non-assessable

All outstanding shares of common stock are duly authorized, validly issued, fully paid and non-assessable.

Preferred Stock

We are authorized to issue up to 3,000,000 shares of preferred stock. This preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our board of directors without further action by stockholders. The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. No preferred stock is currently outstanding. The issuance of any preferred stock could materially adversely affect the rights of the holders of our common stock, and therefore, reduce the value of our common stock and the Notes. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management.

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Exclusive Forum

Our Amended and Restated Certificate of Incorporation provides that unless the Company consents in writing to the selection of an alternative forum, the State of Delaware is the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim against the Company, its directors, officers or employees arising pursuant to any provision of the DGCL or our Amended and Restated Certificate of Incorporation or the Amended and Restated Bylaws, or (iv) any action asserting a claim against the Company, its directors, officers, employees or agents governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction.

Additionally, our Amended and Restated Bylaws provide that unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation are deemed to have notice of and consented to this provision. The Supreme Court of Delaware has held that this type of exclusive federal forum provision is enforceable. There may be uncertainty, however, as to whether courts of other jurisdictions would enforce such a provision, if applicable.

Transfer Agent

The transfer agent and registrar for our common stock is VStock Transfer, LLC.

Changes in Authorized Number

The number of authorized shares of common stock may be increased or decreased subject to the Company’s legal commitments at any time and from time to time to issue them, by the affirmative vote of the holders of a majority of the stock of the Company entitled to vote.

Delaware Anti-Takeover Statute

We may become subject to Section 203 of the Delaware General Corporation Law, which prohibits persons deemed to be “interested stockholders” from engaging in a “business combination” with a publicly held Delaware corporation for three years following the date these persons become interested stockholders unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the Board of Directors. A Delaware corporation may “opt out” of these provisions with an express provision in its original certificate of incorporation or an express provision in its certificate of incorporation or bylaws resulting from a stockholders’ amendment approved by at least a majority of the outstanding voting shares. We have not opted out of these provisions. As a result, mergers or other takeover or change in control attempts of us may be discouraged or prevented.

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The Amended and Restated Bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors. At an annual meeting, stockholders may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our board of directors. Stockholders may also consider a proposal or nomination by a person who was a stockholder at the time of giving notice and at the time of the meeting, who is entitled to vote at the meeting and who has complied with the notice requirements of the Amended and Restated Bylaws in all respects. The Amended and Restated Bylaws do not give our board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting of our stockholders. However, the Amended and Restated Bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

The Amended and Restated Bylaws provide that a special meeting of our stockholders may be called only by our Chairman or by resolution adopted by a majority of our board of directors. Because our stockholders do not have the right to call a special meeting, a stockholder could not force stockholder consideration of a proposal over the opposition of our board of directors by calling a special meeting of stockholders prior to such time as a majority of our board of directors, the chairperson of our board of directors, the president or the chief executive officer believed the matter should be considered or until the next annual meeting provided that the requestor met the notice requirements. The restriction on the ability of stockholders to call a special meeting means that a proposal to replace our board of directors also could be delayed until the next annual meeting.

Equity Incentive Plan

2017 Equity Incentive Plan

Our 2017 Equity Incentive Plan (the “2017 Plan”), was adopted by our board of directors and approved by our stockholders in October 2017. Our 2017 Plan provides for the grant of incentive stock options (within the meaning of Section 422 of the Code), or ISOs to employees, and non-statutory stock options, or NSOs, restricted stock, restricted stock units and stock appreciation rights, to our employees, directors, consultants and advisors.

Authorized Shares. On December 21, 2018, our board of directors amended the 2017 Plan to increase the number of authorized shares of common stock issuable thereunder to 5,000,000 shares, subject to shareholder approval. On December 20, 2019 our shareholders approved the increase. As a result of the reverse stock split effectuated on June 29, 2020, the number authorized shares of common stock issuable under the 2017 Plan was adjusted to 2,500,000.

Plan Administration. Currently, our board administers our 2017 Plan. Subject to the provisions of our 2017 Plan, the administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards, and the form of consideration, if any, payable upon exercise. The administrator also has the authority to amend existing awards to reduce their exercise price, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the administrator and to institute an exchange program by which outstanding awards may be surrendered in exchange for awards with a higher or lower exercise price.

Stock Options. The exercise price of options granted under our 2017 Plan must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years, except that with respect to any participant who owns more than 10% of the voting power of all classes of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. Subject to the provisions of our 2017 Plan, the administrator will determine the term of all other options.

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After the termination of service of an employee, director or consultant, he or she may exercise his or her option or stock appreciation right for the period of time stated in his or her award agreement. Generally, if termination is due to death or disability, the option or stock appreciation right will remain exercisable for six months. In no event may an option be exercised later than the expiration of its term.

Stock Appreciation Rights. Stock appreciation rights may be granted under our 2017 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. Subject to the provisions of our 2017 Plan, the administrator determines the terms of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of our common stock, or a combination thereof, except that the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant.

Restricted Stock. Restricted stock may be granted under our 2017 Plan. Restricted stock awards are grants of shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator determines the number of shares of restricted stock granted and may impose whatever conditions to vesting it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us). The administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.

Restricted Stock Units. Restricted stock units may be granted under our 2017 Plan. Restricted stock units represent an amount equal to the fair market value of one share of our common stock. The administrator will determine the terms and conditions of restricted stock units, including the number of units granted, the vesting criteria (which may include accomplishing specified performance criteria or continued service to us), and the form and timing of payment. The administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.

Certain Adjustments. In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the 2017 Plan, the administrator will adjust the number and class of shares that may be delivered under the 2017 Plan or the number, class and price of shares covered by each outstanding award, and the numerical share limits set forth in the 2017 Plan.

Merger or Change in Control. Our 2017 Plan provides that in the event of a merger or change in control, as defined in the 2017 Plan, each outstanding award will be treated as the administrator determines, including that the successor corporation or its parent or subsidiary will assume or substitute an equivalent award for each outstanding award. The administrator will not be required to treat all awards similarly. If there is no assumption or substitution of outstanding awards, the awards will fully vest, all restrictions will lapse and the awards will become fully exercisable.

Penny Stock Regulation.

The SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share. Such securities are subject to rules that impose additional sales practice requirements on broker-dealers who sell them. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchaser of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As our common stock immediately following this offering may be subject to such penny stock rules, purchasers in this offering may find it more difficult to sell their common stock shares in the secondary market.

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SELLING STOCKHOLDERS

The shares of common stock being offered by the selling stockholders are those issuable to the selling stockholders upon conversion of the Note and exercise of the January 2021 Warrants and the Warrants. For additional information regarding the issuance of the Note and the January 2021 Warrants, see “January 2021 Private Placement of Notes and Warrants” above. We are registering the shares of common stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except as set forth below, other than the ownership of the Note, the January 2021 Warrants, and the Warrants, the selling stockholders have not had any material relationship with us within the past three years.

The table below lists the selling stockholders and other information regarding the beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder) of the shares of common stock held by each of the selling stockholders. The second column lists the number of shares of common stock beneficially owned by the selling stockholders, based on their respective ownership of shares of common stock, the Note, the January 2021 Warrants and the Warrants, as of February 1, 2021, assuming conversion of the Note and exercise of the January 2021 Warrants and the Warrants held by each such selling stockholder, as the case may be, on that date but taking account of any limitations on conversion and exercise set forth therein.

The third column lists the shares of common stock being offered by this prospectus by the selling stockholders and does not take in account any limitations on (i) conversion of the Note set forth therein, (ii) exercise of the January 2021 Warrants set forth therein, or (iii) exercise of the Warrants set forth therein.

In accordance with the terms of a registration rights agreement with the holders of the Note and the January 2021 Warrants, this prospectus generally covers the resale of 200% of the sum of (i) the maximum number of shares of common stock issued or issuable pursuant to the Note, and (ii) the maximum number of shares of common stock issued or issuable upon exercise of the January 2021 Warrants, in each case, determined as if the outstanding notes and warrants were converted or exercised (as the case may be) in full (without regard to any limitations on conversion or exercise contained therein solely for the purpose of such calculation) at a conversion or exercise price (as the case may be) calculated as of the trading day immediately preceding the date this registration statement was initially filed with the SEC. Because the conversion price of the Note and the exercise price of the January 2021 Warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.

Under the terms of the Note and the January 2021 Warrants, a selling stockholder may not convert the Note or exercise the January 2021 Warrants to the extent (but only to the extent) such selling stockholder or any of its affiliates would beneficially own a number of shares of our common stock which would exceed 4.99% of the outstanding shares of the Company. The number of shares in the second column reflects these limitations. The selling stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”

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Name of Selling Stockholder |  | Number of Shares of Common Stock Owned Prior to Offering |  |  | Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus |  |  | Number of Shares of Common Stock of Owned After Offering |
CVI Investments, Inc. (1) |  |  | 1,018,156 | (2) |  |  | 6,402,497 |  |  |  | 0 |
Shabahang-Hatami Family Trust (3) |  |  | 1,235,159 | (4) |  |  | 18,750 |  |  |  | 1,216,409 |
Ali John Enayati |  |  | 12,500 | (5) |  |  | 6,250 |  |  |  | 6,250 |
James E. Stich and Angela B. Stich |  |  | 15,000 | (6) |  |  | 7,500 |  |  |  | 7,500 |
John D. Vanderwerff |  |  | 12,500 | (7) |  |  | 6,250 |  |  |  | 6,250 |
John P. Boyne |  |  | 15,000 | (8) |  |  | 7,500 |  |  |  | 7,500 |
Khushro B. Unwalla |  |  | 12,500 | (9) |  |  | 6,250 |  |  |  | 6,250 |
Randal W. Rowland |  |  | 20,000 | 10) |  |  | 10,000 |  |  |  | 10,000 |
Hossein Rajab and Fahimeh Torabzadeh |  |  | 6,250 | (11) |  |  | 3,125 |  |  |  | 3,125 |
Charlie Crocker |  |  | 320,937 | (12) |  |  | 60,000 |  |  |  | 260,937 |
Joachim-Friedrich Kapp |  |  | 187,195 | (13) |  |  | 150,000 |  |  |  | 37,195 |
Mission Critical Solutions International (14) |  |  | 345,657 | (15) |  |  | 120,000 |  |  |  | 225,657 |

(1) | Heights Capital Management, Inc., the authorized agent of CVI Investments, Inc. (“CVI”), has discretionary authority to vote and dispose of the shares held by CVI, and may be deemed to be the beneficial owner of these shares. Martin Kobinger, in his capacity as Investment Manager of Heights Capital Management, Inc., may also be deemed to have investment discretion and voting power over the shares held by CVI. Mr. Kobinger disclaims any such beneficial ownership of the shares. CVI is affiliated with one or more FINRA members, none of whom are currently expected to participate in the sale of such shares pursuant to this prospectus.
(2) | This includes the number of shares of the Company’s common stock beneficially owned by CVI, as of February 3, 2021, after giving effect to the 4.99% limitation on conversion of the Note and exercise of the January 2021 Warrant, as set forth in the Note and the January 2021 Warrant, respectively, up to an aggregate additional 5,384,341 shares of common stock either issuable upon conversion of the Note and/or exercise of the January 2021 Warrant, as applicable. Without regard to such 4.99% limitation on conversion of the Note and exercise of the January 2021 Warrant, respectively, (i) 4,802,497 shares issuable to CVI upon conversion of the Note (assuming, solely for such purpose, that the entire Note is converted at the Alternate Conversion Price (as such term is defined in the Note) of $2.4987 per share, which is calculated assuming an alternate conversion date as of February 1, 2021), and (ii) 1,600,000 shares are issuable to CVI upon exercise of the Warrants.
(3) | Held beneficially by Shabahang-Hatami Family Trust, Shahrokh Shabahang, Trustee. Dr. Shabahang is our Chief Innovation Officer and a member of our board of directors.
(4) | Includes 238,903 warrants to purchase shares of the Company’s common stock. Included in this amount are 47,222 Series A Warrants issued as part of the conversion of outstanding accrued compensation through March 31, 2020.
(5) | Includes: (i) 6,250 shares of common stock; and (ii) 6,250 shares of common stock issuable upon the exercise of warrants.
(6) | Includes: (i) 7,500 shares of common stock; and (ii) 7,500 shares of common stock issuable upon the exercise of warrants.
(7) | Includes: (i) 6,250 shares of common stock; and (ii) 6,250 shares of common stock issuable upon the exercise of warrants.
(8) | Includes: (i) 7,500 shares of common stock; and (ii) 7,500 shares of common stock issuable upon the exercise of warrants.
(9) | Includes: (i) 6,250 shares of common stock; and (ii) 6,250 shares of common stock issuable upon the exercise of warrants.
(10) | Includes: (i) 10,000 shares of common stock; and (ii) 10,000 shares of common stock issuable upon the exercise of warrants.
(11) | Includes: (i) 3,125 shares of common stock; and (ii) 3,125 shares of common stock issuable upon the exercise of warrants.
(12) | Includes: (i) 248,437 shares of common stock; and (ii) 72,500 shares of common stock issuable upon the exercise of warrants.
(13) | Includes: (i) 14,210 shares of common stock; and (ii) 172,985 shares of common stock issuable upon the exercise of warrants.
(14) | Mission Critical Solutions International (“MCSI”) is a fictitious name for Canyon Ridge Development LLC. Dale Hutchins is the principal of MCSI and therefore may be deemed to beneficially own the securities held by MCSI.
(15) | Includes: (i) 68,938 shares of common stock; (ii) 120,000 shares of common stock issuable upon the exercise of warrants held by MCSI; (iii) 6,719 shares of common stock issuable upon the exercise of Series A-1 Warrants held by MCSI; and (iv) 150,000 shares of common stock issuable upon the exercise of options held by MCSI.

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PLAN OF DISTRIBUTION

We are registering the shares of common stock issuable upon conversion of the Note and exercise of the January 2021 Warrants and the Warrants, to permit the resale of these shares of common stock by the holders of such securities from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the shares of common stock, although we will receive the exercise price of any January 2021 Warrants and Warrants not exercised by the selling stockholders on a cashless exercise basis. We will bear all fees and expenses incident to our obligation to register the shares of common stock.

The selling stockholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:

| ● | on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

| ● | in the over-the-counter market;

| ● | in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

| ● | through the writing or settlement of options, whether such options are listed on an options exchange or otherwise;

| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

| ● | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

| ● | an exchange distribution in accordance with the rules of the applicable exchange;

| ● | privately negotiated transactions;

| ● | short sales made after the date the Registration Statement is declared effective by the SEC;

| ● | broker-dealers may agree with a selling security holder to sell a specified number of such shares at a stipulated price per share;

| ● | a combination of any such methods of sale; and

| ● | any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares of common stock under Rule 144 promulgated under the Securities Act, if available, rather than under this prospectus. In addition, the selling stockholders may transfer the shares of common stock by other means not described in this prospectus. If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling stockholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.

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The selling stockholders may pledge or grant a security interest in some or all of the notes, warrants or shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

To the extent required by the Securities Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common stock is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.

Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

There can be no assurance that any selling stockholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.

The selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock.

We will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be $50,000 in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the Securities Act in accordance with the registration rights agreements or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance with the related registration rights agreements or we may be entitled to contribution.

Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR COMMON STOCK

The following is a summary of the material U.S. federal income tax consequences to non-U.S. holders (as defined below) of the ownership and disposition of our common stock but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax consequences different from those set forth below. No ruling on the U.S. federal, state, or local tax considerations relevant to our operations or to the purchase, ownership or disposition of our shares, has been requested from the IRS or other tax authority. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.

This summary also does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction, or under U.S. federal gift and estate tax laws, except to the limited extent set forth below. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:

| ● | banks, insurance companies or other financial institutions, regulated investment companies or real estate investment trusts;

| ● | persons subject to the alternative minimum tax or Medicare contribution tax on net investment income;

| ● | tax-exempt organizations or governmental organizations;

| ● | controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax;

| ● | brokers or dealers in securities or currencies;

| ● | traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

| ● | persons that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below);

| ● | U.S. expatriates and certain former citizens or long-term residents of the United States;

| ● | partnerships or entities classified as partnerships for U.S. federal income tax purposes or other pass-through entities (and investors therein);

| ● | persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction or integrated investment;

| ● | persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation;

| ● | persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue Code; or

| ● | persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code.

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You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our common stock arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, non-U.S., or other taxing jurisdiction or under any applicable tax treaty.

Non-U.S. Holder Defined

For purposes of this discussion, you are a non-U.S. holder (other than a partnership) if you are any holder other than:

| ● | an individual citizen or resident of the United States (for U.S. federal income tax purposes);

| ● | a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States, any state thereof, or the District of Columbia, or other entity treated as such for U.S. federal income tax purposes;

| ● | an estate whose income is subject to U.S. federal income tax regardless of its source; or

| ● | a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more “U.S. persons” (within the meaning of Section 7701(a)(30) of the Internal Revenue Code) who have the authority to control all substantial decisions of the trust or (y) which has made a valid election to be treated as a U.S. person.

In addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors.

Distributions

As described in “Dividend Policy,” we have never declared or paid cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future. However, if we do make distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, they will constitute a return of capital and will first reduce your basis in our common stock, but not below zero, and then will be treated as gain from the sale of stock as described below under “—Gain on Disposition of Common Stock.”

Subject to the discussion below on effectively connected income, backup withholding and foreign accounts, any dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, you must provide us with an IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate version of IRS Form W-8 certifying qualification for the reduced rate. A non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries.

Dividends received by you that are effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, attributable to a permanent establishment maintained by you in the United States) are generally exempt from such withholding tax. In order to obtain this exemption, you must provide us with an IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty. You should consult your tax advisor regarding any applicable tax treaties that may provide for different rules.

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Gain on Disposition of Common Stock

Subject to the discussion below regarding backup withholding and foreign accounts, you generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

| ● | the gain is effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment maintained by you in the United States);

| ● | you are a non-resident alien individual who is present in the United States for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and certain other conditions are met; or

| ● | our common stock constitutes a United States real property interest by reason of our status as a “United States real property holding corporation,” or USRPHC, for U.S. federal income tax purposes at any time within the shorter of (i) the five-year period preceding your disposition of our common stock, or (ii) your holding period for our common stock.

We believe that we are not currently and will not become a USRPHC for U.S. federal income tax purposes, and the remainder of this discussion so assumes. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market, such common stock will be treated as U.S. real property interests only if you actually or constructively hold more than five percent of such regularly traded common stock at any time during the shorter of the five-year period preceding your disposition of, or your holding period for, our common stock.

If you are a non-U.S. holder described in the first bullet above, you will be required to pay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. If you are an individual non-U.S. holder described in the second bullet above, you will be required to pay a flat 30% tax (or such lower rate specified by an applicable income tax treaty) on the gain derived from the sale, which gain may be offset by U.S. source capital losses for the year (provided you have timely filed U.S. federal income tax returns with respect to such losses). You should consult any applicable income tax or other treaties that may provide for different rules.

Federal Estate Tax

Our common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal estate tax purposes) at the time of their death will generally be includable in the decedent’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise. The test for whether an individual is a resident of the United States for U.S. federal estate tax purposes differs from the test used for U.S. federal income tax purposes. Some individuals, therefore, may be non-U.S. holders for U.S. federal income tax purposes, but not for U.S. federal estate tax purposes, and vice versa.

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Backup Withholding and Information Reporting

Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address and the amount of tax withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of residence.

Payments of dividends or of proceeds on the disposition of stock made to you may be subject to information reporting and backup withholding at a current rate of 28% unless you establish an exemption, for example, by properly certifying your non-U.S. status on an IRS Form W-8BEN, IRS Form W-8BEN-E or another appropriate version of IRS Form W-8.

Backup withholding is not an additional tax; rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.

Foreign Account Tax Compliance

The Foreign Account Tax Compliance Act, or FATCA, imposes withholding tax at a rate of 30% on dividends on and gross proceeds from the sale or other disposition of our common stock paid to “foreign financial institutions” (as specially defined under these rules), unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or otherwise establishes an exemption. FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on and gross proceeds from the sale or other disposition of our common stock paid to a “non-financial foreign entity” (as specially defined for purposes of these rules) unless such entity provides the withholding agent with a certification identifying certain substantial direct and indirect U.S. owners of the entity, certifies that there are none or otherwise establishes an exemption. The withholding provisions under FATCA generally apply to dividends on our common stock, and under current transition rules, apply with respect to the gross proceeds from the sale or other disposition of our common stock. An intergovernmental agreement between the United States and an applicable foreign country may modify the requirements described in this paragraph. Non-U.S. holders should consult their tax advisors regarding the possible implications of this legislation on their investment in our common stock.

Each prospective investor should consult its tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing of our common stock, including the consequences of any proposed change in applicable laws.

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LEGAL MATTERS

The validity of the issuance of the securities offered hereby will be passed upon for us by Sheppard, Mullin, Richter & Hampton LLP, New York, New York.

EXPERTS

dbbmckennon, an independent registered public accounting firm, has audited our financial statements as of and for the years ended December 31, 2019 and 2018, as set forth in their report which includes an unqualified opinion on the financial statements and an explanatory paragraph about the existence of substantial doubt concerning the Company’s ability to continue as a going concern. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a Registration Statement on Form S-1 under the Securities Act with respect to the common stock offered by this prospectus. This prospectus, which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the registration statement. For further information pertaining to us and our common stock, reference is made to the registration statement and the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents or provisions of any documents referred to in this prospectus are not necessarily complete, and in each instance where a copy of the document has been filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of the matters involved.

Registration statements and certain other filings made with the Securities and Exchange Commission electronically are publicly available through the Securities and Exchange Commission’s website at http://www.sec.gov. The registration statement, including all exhibits and amendments to the registration statement, has been filed electronically with the Securities and Exchange Commission.

We are subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and, accordingly, are required to file annual reports containing financial statements audited by an independent public accounting firm, quarterly reports containing unaudited financial data, current reports, proxy statements and other information with the Securities and Exchange Commission. You may inspect and copy such periodic reports, proxy statements and other information at the Securities and Exchange Commission’s public reference room, and the website of the Securities and Exchange Commission referred to above.

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FINANCIAL STATEMENTS

Aditx Therapeutics, Inc.

INDEX TO FINANCIAL STATEMENTS

|  | Page
Years Ended December 31, 2019 and 2018 |  |
Report of Independent Registered Public Accounting Firm |  | F-2
Balance Sheets at December 31, 2019 and 2018 |  | F-3
Statements of Operations for the Years Ended December 31, 2019 and 2018 |  | F-4
Statement of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2019 and 2018 |  | F-5
Statements of Cash Flows for the Years Ended December 31, 2019 and 2018 |  | F-6
Notes to the Consolidated Financial Statements |  | F-7
Nine Months Ended September 30, 2020 and 2019 (Unaudited) |  |
Balance Sheets at September 30, 2020 and December 31, 2019 (Unaudited) |  | F-20
Statements of Operations for the Nine Months Ended September 30, 2020 and 2019 (Unaudited) |  | F-21
Statement of Stockholders’ Equity (Deficit) for the Nine Months Ended September 30, 2020 and 2019 (Unaudited) |  | F-22
Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (Unaudited) |  | F-24
Notes to the Condensed Consolidated Financial Statements (Unaudited) |  | F-25

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Aditx Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Aditx Therapeutics, Inc. (the “Company”) as of December 31, 2019 and 2018, the related statements of operations, stockholders’ deficit, and cash flows, for the years ended December 31, 2019 and 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 of the financial statements, the Company has incurred losses since Inception and requires additional financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with respect to these matters are discussed in Note 2. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ dbbmckennon

We have served as the Company’s auditor since 2018.

Newport Beach, California

February 19, 2020, except for the effects of the reverse stock split discussed in Note 5 to the financial statements, as to which the date is June 22, 2020

F-2

ADITX THERAPEUTICS, INC.

BALANCE SHEETS

|  | June 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (unaudited) |  |  |  |  |  |  |
ASSETS |  |  |  |  |  |  |  |  |
CURRENT ASSETS |  |  |  |  |  |  |  |  |
Cash |  | $ | 49,925 |  |  | $ | 4,090 |  |  | $ | 115,709 |
Prepaid expenses |  |  | 25,083 |  |  |  | — |  |  |  | — |
TOTAL CURRENT ASSETS |  |  | 75,008 |  |  |  | 4,090 |  |  |  | 115,709 |
Deferred offering costs |  |  | 542,581 |  |  |  | 119,442 |  |  |  | — |
TOTAL ASSETS |  | $ | 617,589 |  |  | $ | 123,532 |  |  | $ | 115,709 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |  |  |  |  |  |  |  |  |  |  |  |
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 2,268,581 |  |  | $ | 1,847,458 |  |  | $ | 1,056,226 |
Accrued compensation to related parties |  |  | 1,220,629 |  |  |  | 962,651 |  |  |  | 432,615 |
Notes payable - related party |  |  | 10,000 |  |  |  | 10,000 |  |  |  | 42,502 |
Notes payable |  |  | 830,600 |  |  |  | 155,600 |  |  |  | 121,100 |
TOTAL CURRENT LIABILITIES |  |  | 4,329,810 |  |  |  | 2,975,709 |  |  |  | 1,652,443 |
TOTAL LIABILITIES |  |  | 4,329,810 |  |  |  | 2,975,709 |  |  |  | 1,652,443 |
COMMITMENTS AND CONTINGENCIES |  |  | — |  |  |  | — |  |  |  | — |
STOCKHOLDERS’ DEFICIT |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock, $0.001 par value, 3,000,000 shares authorized, zero shares issued and outstanding, respectively |  |  | — |  |  |  | — |  |  |  | — |
Common stock, $0.001 par value, 27,000,000 shares authorized, 4,069,115, 3,915,900 and 3,763,925 shares issued and 3,968,312, 3,821,087 and 3,763,925 shares outstanding, respectively |  |  | 4,069 |  |  |  | 3,916 |  |  |  | 3,764 |
Treasury stock, 100,803, 94,813 and zero shares, respectively |  |  | (201,605 | ) |  |  | (189,625 | ) |  |  | — |
Additional paid-in capital |  |  | 9,938,946 |  |  |  | 9,063,483 |  |  |  | 4,361,725 |
Accumulated deficit |  |  | (13,453,631 | ) |  |  | (11,729,951 | ) |  |  | (5,902,223 | )
TOTAL STOCKHOLDERS’ DEFICIT |  |  | (3,712,221 | ) |  |  | (2,852,177 | ) |  |  | (1,536,734 | )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |  | $ | 617,589 |  |  | $ | 123,532 |  |  | $ | 115,709 |

See accompanying notes to the financial statements.

F-3

ADITX THERAPEUTICS, INC.

STATEMENTS OF OPERATIONS

|  | Three Months Ended |  |  | Six Months Ended |  |  | Years Ended |
|  | June 30, |  |  | June 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2019 |  |  | 2018 |
|  | (unaudited) |  |  | (unaudited) |  |  | (unaudited) |  |  | (unaudited) |  |  |  |  |  |  |
REVENUE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | — |  |  |  | — |
OPERATING EXPENSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General and administrative expenses, includes $160,329, $2,098,759, $689,766, $2,822,367, $4,221,733 and $3,417,526 in stock-based compensation |  | $ | 367,338 |  |  | $ | 2,511,438 |  |  | $ | 1,223,765 |  |  | $ | 3,711,221 |  |  | $ | 5,694,806 |  |  | $ | 5,044,634 |
Research and development, includes $0, $0, $0, $0, $10,000 and $100,000 in stock-based compensation |  |  | 28,294 |  |  |  | 43,978 |  |  |  | 228,665 |  |  |  | 88,846 |  |  |  | 175,441 |  |  |  | 525,000 |
Sales and marketing, includes $0, $0, $0, $0, $0 and $6,000 in stock-based compensation |  |  | 2,848 |  |  |  | 109 |  |  |  | 2,848 |  |  |  | 147 |  |  |  | 551 |  |  |  | 39,837 |
Total Operating Expenses |  |  | 398,480 |  |  |  | 2,555,525 |  |  |  | 1,455,278 |  |  |  | 3,800,214 |  |  |  | 5,870,798 |  |  |  | 5,609,471 |
NET LOSS FROM OPERATIONS |  |  | (398,480 | ) |  |  | (2,555,525 | ) |  |  | (1,455,278 | ) |  |  | (3,800,214 | ) |  |  | (5,870,798 | ) |  |  | (5,609,471 | )
OTHER INCOME (EXPENSE) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (448 | ) |  |  | (448 | ) |  |  | (902 | ) |  |  | (1,027 | ) |  |  | (1,930 | ) |  |  | (3,009 | )
Gain on forgiveness of debt |  |  | - |  |  |  | - |  |  |  | 32,500 |  |  |  | 45,000 |  |  |  | 45,000 |  |  |  | — |
Amortization of debt discount |  |  | (135,389 | ) |  |  | - |  |  |  | (300,000 | ) |  |  | - |  |  |  | — |  |  |  | (76,757 | )
Total Other Income (Expense) |  |  | (135,837 | ) |  |  | (448 | ) |  |  | (268,402 | ) |  |  | 43,973 |  |  |  | 43,070 |  |  |  | (79,766 | )
Net loss before provision for income taxes |  |  | (534,317 | ) |  |  | (2,555,973 | ) |  |  | (1,723,680 | ) |  |  | (3,756,241 | ) |  |  | (5,827,728 | ) |  |  | (5,689,237 | )
Provision for income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | — |  |  |  | — |
NET LOSS |  | $ | (534,317 | ) |  | $ | (2,555,973 | ) |  | $ | (1,723,680 | ) |  | $ | (3,756,241 | ) |  | $ | (5,827,728 | ) |  | $ | (5,689,237 | )
Net loss per share - basic and diluted |  | $ | (0.14 | ) |  | $ | (0.67 | ) |  | $ | (0.44 | ) |  | $ | (0.98 | ) |  | $ | (1.52 | ) |  | $ | (1.57 | )
Weighted average number of shares outstanding during the period - basic and diluted |  |  | 3,929,205 |  |  |  | 3,842,967 |  |  |  | 3,917,891 |  |  |  | 3,821,278 |  |  |  | 3,830,971 |  |  |  | 3,630,818 |

See accompanying notes to the financial statements.

F-4

ADITX THERAPEUTICS, INC.

STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 AND THE SIX MONTHS ENDED

JUNE 30, 2020

|  |  |  |  |  |  |  |  |  |  | Additional |  |  |  |  |  | Total |
|  | Common |  |  |  |  |  | Treasury |  |  | Paid-in |  |  | Accumulated |  |  | Stockholders’ |
|  | Shares |  |  | Par |  |  | Shares |  |  | Capital |  |  | Deficit |  |  | Deficit |
Balance December 31, 2017 |  |  | 3,550,000 |  |  | $ | 3,550 |  |  | $ | - |  |  | $ | 149,536 |  |  | $ | (212,986 | ) |  | $ | (59,900 | )
Issuance of shares for cash, net of issuance costs |  |  | 174,925 |  |  |  | 175 |  |  |  | - |  |  |  | 656,045 |  |  |  | - |  |  |  | 656,220 |
Issuance of shares for services and licenses |  |  | 39,000 |  |  |  | 39 |  |  |  | - |  |  |  | 155,961 |  |  |  | - |  |  |  | 156,000 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,367,526 |  |  |  | - |  |  |  | 3,367,526 |
Warrants issued with notes |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 32,657 |  |  |  | - |  |  |  | 32,657 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (5,689,237 | ) |  |  | (5,689,237 | )
Balance December 31, 2018 |  |  | 3,763,925 |  |  | $ | 3,764 |  |  | $ | - |  |  | $ | 4,361,725 |  |  | $ | (5,902,223 | ) |  | $ | (1,536,734 | )
Issuance of shares for cash, net of issuance costs |  |  | 131,475 |  |  |  | 131 |  |  |  | - |  |  |  | 470,046 |  |  |  | - |  |  |  | 470,177 |
Issuance of shares for services and licenses |  |  | 20,500 |  |  |  | 21 |  |  |  | - |  |  |  | 81,979 |  |  |  | - |  |  |  | 82,000 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,616,422 |  |  |  | - |  |  |  | 3,616,422 |
Modification of options |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 533,311 |  |  |  | - |  |  |  | 533,311 |
Treasury stock |  |  | (94,813 | ) |  |  | - |  |  |  | (189,625 | ) |  |  | - |  |  |  | - |  |  |  | (189,625 | )
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (5,827,728 | ) |  |  | (5,827,728 | )
Balance December 31, 2019 |  |  | 3,821,087 |  |  | $ | 3,916 |  |  | $ | (189,625 | ) |  | $ | 9,063,483 |  |  | $ | (11,729,951 | ) |  | $ | (2,852,177 | )
Issuance of shares for services and licenses |  |  | 104,750 |  |  |  | 105 |  |  |  | - |  |  |  | 418,895 |  |  |  | - |  |  |  | 419,000 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 110,437 |  |  |  | - |  |  |  | 110,437 |
Treasury stock |  |  | (5,990 | ) |  |  | - |  |  |  | (11,980 | ) |  |  | - |  |  |  | - |  |  |  | (11,980 | )
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,189,363 | ) |  |  | (1,189,363 | )
Balance March 31, 2020 (unaudited) |  |  | 3,919,847 |  |  | $ | 4,021 |  |  | $ | (201,605 | ) |  | $ | 9,592,815 |  |  | $ | (12,919,314 | ) |  | $ | (3,524,083 | )
Exercise of warrants |  |  | 30,975 |  |  |  | 31 |  |  |  | - |  |  |  | 185,819 |  |  |  | - |  |  |  | 185,850 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 77,138 |  |  |  | - |  |  |  | 77,138 |
Issuance of shares for services |  |  | 17,500 |  |  |  | 18 |  |  |  | - |  |  |  | 83,174 |  |  |  | - |  |  |  | 83,192 |
Adjustment to Common Shares due to reverse stock split |  |  | (10 | ) |  |  | (1 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1 | )
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (534,317 | ) |  |  | (534,317 | )
Balance June 30, 2020 (unaudited) |  |  | 3,968,312 |  |  | $ | 4,069 |  |  | $ | (201,605 | ) |  | $ | 9,938,946 |  |  | $ | (13,453,631 | ) |  | $ | (3,712,221 | )

See accompanying notes to the financial statements.

F-5

ADITX THERAPEUTICS, INC.

STATEMENTS OF CASH FLOWS

|  | For the six months ended |  |  | For the six months ended |  |  | For the Year Ended |  |  | For the Year Ended |
|  | June 30, 2020 |  |  | June 30, 2019 |  |  | December 31, 2019 |  |  | December 31, 2018 |
|  | (unaudited) |  |  | (unaudited) |  |  |  |  |  |  |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |
Net loss |  | $ | (1,723,680 | ) |  | $ | (3,756,241 | ) |  | $ | (5,827,728 | ) |  | $ | (5,689,237 | )
Adjustments to reconcile net loss to net cash used in operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Stock-based compensation |  |  | 689,766 |  |  |  | 2,822,367 |  |  |  | 3,698,422 |  |  |  | 3,523,526 |
Amortization of offering costs |  |  |  |  |  |  |  |  |  |  | - |  |  |  | 273,750 |
Amortization of debt discount |  |  | 300,000 |  |  |  | - |  |  |  | - |  |  |  | 76,757 |
Modification of options |  |  | - |  |  |  | - |  |  |  | 533,311 |  |  |  | - |
Changes in operating assets and liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prepaid expenses |  |  | (25,083 | ) |  |  | - |  |  |  | - |  |  |  | - |
Accounts payable and accrued expenses |  |  | 95,429 |  |  |  | 365,653 |  |  |  | 601,607 |  |  |  | 1,047,660 |
Accrued compensation to related parties |  |  | 257,978 |  |  |  | 259,014 |  |  |  | 530,036 |  |  |  | 381,281 |
Net Cash Used in Operating Activities |  |  | (405,590 | ) |  |  | (309,207 | ) |  |  | (464,352 | ) |  |  | (386,263 | )
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from note payable - related party |  |  | - |  |  |  | 10,000 |  |  |  | 10,000 |  |  |  | 117,502 |
Proceeds from note payable |  |  | 375,000 |  |  |  | - |  |  |  | 50,000 |  |  |  | 182,000 |
Repayments of note payable - related party |  |  | - |  |  |  | (42,502 | ) |  |  | (42,502 | ) |  |  | (75,000 | )
Repayments of note payable |  |  | - |  |  |  | (5,000 | ) |  |  | (15,500 | ) |  |  | (105,000 | )
Common stock issued for cash, net of issuance costs |  |  | - |  |  |  | 235,464 |  |  |  | 470,177 |  |  |  | 631,220 |
Deferred offering costs |  |  | (109,425 | ) |  |  | - |  |  |  | (119,442 | ) |  |  | (273,750 | )
Exercise of warrants |  |  | 185,850 |  |  |  | - |  |  |  | - |  |  |  | - |
Net Cash Provided by Financing Activities |  |  | 451,425 |  |  |  | 197,962 |  |  |  | 352,733 |  |  |  | 476,972 |
NET INCREASE (DECREASE) IN CASH |  |  | 45,835 |  |  |  | (111,245 | ) |  |  | (111,619 | ) |  |  | 90,709 |
CASH AT BEGINNING OF YEAR |  |  | 4,090 |  |  |  | 115,709 |  |  |  | 115,709 |  |  |  | 25,000 |
CASH AT END OF YEAR |  | $ | 49,925 |  |  | $ | 4,464 |  |  | $ | 4,090 |  |  | $ | 115,709 |
Supplemental cash flow information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash paid for income taxes |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Cash paid for interest expense |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
NONCASH INVESTING AND FINANCING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liabilities assumed for common stock |  | $ | 11,980 |  |  | $ | 90,712 |  |  | $ | 189,625 |  |  | $ | - |
Deferred offering costs accrued and payable |  |  | 313,714 |  |  | $ | - |  |  |  | - |  |  |  | - |
Fair value of warrants issued with notes payable |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 32,657 |
Common stock issued for deposit on private placement |  | $ |  |  |  | $ |  |  |  | $ | - |  |  | $ | 25,000 |
Original issuance discount on notes payable |  | $ | 300,000 |  |  | $ | - |  |  | $ | - |  |  | $ | - |

See accompanying notes to the financial statements.

F-6

ADITX THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

(unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Company Background

Aditx Therapeutics, Inc. (“Aditxt” or the “Company”) was incorporated on September 28, 2017 under the laws of the State of Delaware. The Company is a pre-clinical stage, life sciences company with a mission of prolonging life and enhancing its quality by improving the health of the immune system. Aditxt is developing technologies specifically focused on improving the health of the immune system through immune reprogramming and monitoring. Aditxt’s immune reprogramming technology is currently at the pre-clinical stage and is designed to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases, and allergies. Aditxt’s immune monitoring technology is designed to provide a personalized comprehensive profile of the immune system and the Company plans to utilize in its upcoming clinical trials to monitor subjects’ immune response before, during and after drug administration. Aditxt is also evaluating plans to obtain approval from the U.S. Food and Drug Administration (“FDA”) for this monitoring tool’s use as a clinical assay.

On July 2, 2020, the Company completed its initial public offering (“IPO”). In connection therewith, the Company issued 1,226,668 Units (the “Units”), excluding the underwriters’ option to cover overallotments, at an offering price of $9.00 per Unit, resulting in gross proceeds of approximately $11.0 million. The Units issued in the IPO consisted of one share of common stock, one Series A warrant, and one Series B warrant. The Series A warrants have an exercise price of $4.50 and a term of 5 years. The Series B warrants have exercise price of $11.25, a term of 5 years and contain a cashless exercise option upon certain criteria being met. Subsequent to quarter end, substantially all of the Series B warrants issued in the IPO have been exercised pursuant to a cashless provision therein.

Risks and Uncertainties

The Company has a limited operating history and has not generated revenue from intended operations. The Company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide along with local, state, and federal governmental policy decisions. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include: changes in biotechnology regulatory environment, technological advances that render our technologies obsolete, availability of resources for clinical trials, acceptance of technologies into the medical community, and competition from larger, more well-funded companies. These adverse conditions could affect the Company’s financial condition and the results of its operations.

On January 30, 2020, the World Health Organization declared the COVID-19 novel coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The COVID-19 coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last and what the financial impact will be to the Company, it is reasonably possible that future capital raise efforts and additional development of our technologies may be negatively affected.

NOTE 2 – GOING CONCERN ANALYSIS

Management Plans

The Company was incorporated on September 28, 2017 and has not generated revenues to date. During the six months ended June 30, 2020, the Company had a net loss of $1,723,680 and cash of $49,925. However, subsequent to June 30, 2020, the Company received approximately $9.5 million in cash as net proceeds from the IPO (See Note 1). The Company will be conducting medical research and development, and the time at which the Company will begin generating revenue is unknown. The Company believes, however, that the funds raised by the IPO will be sufficient to fund the Company’s operation for at least the next 12 months. Because of these factors, the Company believes that this alleviates issues in connection with the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

F-7

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein. While we believe in the viability of our strategy to generate sufficient revenue, control costs and raise additional funds when necessary, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon the ability to complete clinical studies and implement the business plan, generate sufficient revenues and to control operating expenses.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, the accompanying financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended June 30, 2020 and 2019. Although management believes that the disclosures in these unaudited financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements that have been prepared in accordance U.S. GAAP have been or omitted pursuant to the rules and regulations of the SEC.

The accompanying unaudited financial statements should be read in conjunction with the Company’s financial statements for the year ended December 31, 2019, which contain the audited financial statements and notes thereto, contained herein and included in the Company’s Prospectus, dated June 29, 2020, filed with the SEC pursuant to Rule 424(b). The interim results for the six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ended December 31, 2020 or for any future interim periods.

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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Significant estimates underlying the financial statements include the fair value of stock options and warrants.

Fair Value Measurements and Fair Value of Financial Instruments

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements. ASC Topic 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance with ASC Topic 820.

F-8

Due to the short-term nature of all financial assets and liabilities, their carrying value approximates their fair value as of the balance sheet dates.

Concentrations of Credit Risk

The Company maintains its cash accounts at financial institutions which are insured by the Federal Deposit Insurance Corporation. At times, the Company may have deposits in excess of federally insured limits.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of June 30, 2020 and December 31, 2019, the Company did not have any cash equivalents.

Offering Costs

The Company accounts for offering costs in accordance with ASC 340, Other Assets and Deferred Costs. Prior to the completion of an offering, offering costs were capitalized as deferred offering costs on the balance sheet. The deferred offering costs are netted against the proceeds of the offering in stockholders’ deficit or the related debt, as applicable. Costs related to unsuccessful offerings are expensed.

Debt Issued with Warrants

Debt issued with warrants is accounted for under the guidelines established by ASC 470-20, Accounting for Debt with Conversion or Other Options. We record the relative fair value of warrants related to the issuance of convertible debt as a debt discount or premium. The discount or premium is subsequently amortized to interest expense over the expected term of the convertible debt.

Stock-Based Compensation

The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC. 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services.

Patents

The Company incurs fees from patent licenses. During the years ended December 31, 2019 and 2018, the Company had a licensing fee for the patents of $18,396 and $525,000, respectively. During the six months ended June 30, 2020 and 2019, the Company had a licensing fee for the patents of $126,670 and $15,181, respectively.

Revenue Recognition

The adoption of ASC 606, Revenue From Contracts With Customers, represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps: Identify the contract with a customer; Identify the performance obligations in the contract; Determine the transaction price; Allocate the transaction price to performance obligations in the contract; Recognize revenue when or as the Company satisfies a performance obligation. The Company has not recognized any revenue to date.

F-9

Research and Development

We incur research and development costs during the process of researching and developing our technologies and future offerings. Our research and development costs mainly consist of licensing costs. We expense these costs as incurred unless such costs qualify for capitalization under applicable guidance.

Basic and Diluted Net Loss per Common Share

Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding for each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of December 31, 2019, 1,102,500 stock options and 1,382,478 warrants were excluded from dilutive earnings per share as their effects were anti-dilutive. As of December 31, 2018, 502,500 stock options and 987,175 warrants were excluded from dilutive earnings per share as their effects were anti-dilutive. As of June 30, 2020, 1,110,000 stock options and 1,291,503 warrants were excluded from dilutive earnings per share as their effects were anti-dilutive. As of June 30, 2019, 1,102,500 stock options and 1,077,173 warrants were excluded from dilutive earnings per share as their effects were anti-dilutive.

Recent Accounting Pronouncements

In February 2016, FASB issued Accounting Standards Update (“ASU”) 2016-02: Leases (Topic 842). The new guidance generally requires an entity to recognize on its balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The new standard requires a modified retrospective transition for existing leases to each prior reporting period presented. The Company has elected to utilize the extended adoption period available to the Company as an emerging growth company and has not currently adopted this standard. This standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2020. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial position, results of operations and cash flows once adopted.

The FASB issues ASUs to amend the authoritative literature in ASC. There have been several ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements.

NOTE 4 – RELATED PARTY TRANSACTIONS

The Company’s Chief Executive Officer (“CEO”) has provided certain periods of service without payment. Accordingly, the Company has accrued $15,000 in compensation per month for services rendered during the year ended December 31, 2018. This amount was increased to $21,000 per month for the year ended December 31, 2019. As of June 30, 2020 and December 31, 2019, the CEO is owed $375,500 and $309,500, respectively, related to compensation. Subsequent to the period, the Company issued 38,055 Units consisting of 1 share of common stock and 1 Series A warrant and 1 Series B warrant to settle $342,500 in accrued compensation.

The Company’s Chief Innovation Officer (“CIO”) has provided certain periods of service without payment. Accordingly, the Company has accrued $15,000 in compensation per month for services rendered during the year ended December 31, 2018. This amount was increased to $17,000 per month for the year ended December 31, 2019. The amount was increased to $17,500 during 2020. As of June 30, 2020 and December 31, 2019, the CIO is owed $476,000 and $377,000, respectively, related to compensation. Subsequent to the period, the Company issued 47,222 Units consisting of 1 share of common stock and 1 Series A warrant and 1 Series B warrant to settle $425,000 in accrued compensation.

F-10

Effective July 10, 2020, the Board of Directors appointed the Company’s Chief Operations Officer (“COO”). Prior to the appointment, the COO was an independent operations consultant and had provided certain periods of service without payment based on an agreement for $15,000 per month. The amount was increased to $17,000 during 2020. As of June 30, 2020 and December 31, 2019, the COO is owed $365,000 and $275,000, respectively, related to compensation. Subsequent to the period, the Company issued 35,555 Units consisting of 1 share of common stock, 1 Series A warrant, and 1 Series B warrant to settle $320,000 in accrued compensation.

Notes Payable – Related Parties

On January 22, 2018, the Company issued an unsecured promissory note to a related party for $40,000 that accrued interest of 4% annually. The note was due on the earlier of July 22, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.

On February 12, 2018, the Company issued an unsecured promissory note to a related party for $50,000 that accrued interest of 4% annually. The note was due on the earlier of August 12, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.

On March 2, 2018, the Company issued an unsecured promissory note to a related party for $10,000 that accrued interest of 4% annually. The note was due on the earlier of September 2, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019

On June 18, 2018, the Company issued an unsecured promissory note with a related party for $17,502 that accrued interest of 4% annually. The note was due on the earlier of December 18, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.

On March 21, 2019, the Company entered into a note with a related party. The note had a principal of $10,000, a maturity date of September 21, 2019, and an interest rate of 4% per year. The note remained outstanding on June 30, 2020. This note was paid in full subsequent to June 30, 2020.

Other Related Party Transactions

During the six months ended June 30, 2020, the Company assumed $11,980 of liabilities from a related party in exchange for the return of 5,990 shares of the Company’s common stock. During the year ended December 31, 2019, the Company assumed $189,625 of liabilities from a related party in exchange for the return of 94,813 shares of the Company’s common stock.

License Agreement with Loma Linda University

On March 8, 2018, we entered into an Assignment Agreement (the “Assignment Agreement”) with Sekris Biomedical, Inc. (“Sekris”). Sekris was party to a License Agreement with Loma Linda University (“LLU”), entered into and made effective on May 25, 2011, and amended on June 24, 2011, July 16, 2012, and December 27, 2012 (the “Original Agreement,” and together with the Assignment Agreement, the “Sekris Agreements”). Pursuant to the Assignment Agreement, Sekris transferred and assigned all of its rights and obligations in and to and liabilities under the Original Agreement, of whatever kind or nature, to us. (See Note 9 for amended agreement)

NOTE 5 – STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company is authorized to issue 3,000,000 shares of preferred stock, par value $0.001 per share.

Common Stock

The Company is authorized to issue 27,000,000 shares of common stock, par value $0.001 per share.

F-11

In November 2017, the Company commenced a private placement for the sale of 500,000 shares of common stock for gross proceeds of $2,000,000. The terms of the private placement were such that a minimum of $250,000 was to be raised before funds could be drawn on, and that the technology licensing agreement (Note 4) must be executed. During the first quarter of 2018, the Company received $237,500 in cash, and with $25,000 received prior to December 31, 2017, the aggregate raised was $262,500 for which the Company issued 65,625 shares of common stock under the private placement at $4.00 per share. The Company also agreed to issue one warrant to purchase a share of common stock for each share purchased in the private placement. The warrant is exercisable at $4.00 per share and has a term of three years.

In October 2018, the Company commenced a private placement for the sale of 500,000 shares of common stock for gross proceeds of $2,000,000. During the year ended December 31, 2018, the Company received $437,200 in cash for which the Company issued 109,300 shares of common stock under the private placement at $4.00 per share. The Company also paid total issuance costs of $43,480, for net proceeds of $393,720. During the year ended December 31, 2019, the Company received $525,900 in cash for which the Company issued 131,475 shares of common stock under the private placement at $4.00 per share. The Company also paid total issuance costs of $55,723, for net proceeds of $470,177. The Company also agreed to issue one warrant to purchase a share of common stock for each share purchased in the private placement. The warrants are exercisable at $9.00 per share and have a term of three years.

During the year ended December 31, 2018, the Company issued 39,000 shares of common stock for services and recognized expense of $156,000 in stock compensation and license fees. These shares were valued based on the price which common shares were being sold in the above private placements.

During the year ended December 31, 2019, the Company issued 20,500 shares of common stock for services and recognized expense of $82,000 in stock compensation and license fees. During year ended December 31, 2018, the Company issued 39,000 shares of common stock for services and recognized expense of $156,000 in stock compensation and licenses fees. These shares were valued based on the price which common shares were being sold in the above private placements.

During the six months ended June 30, 2020, the Company issued 122,250 shares of common stock and recognized expense of $502,192 in stock compensation for consulting services. The Company also issued 30,975 shares of commons stock for the exercise of warrants and received $185,850 for the exercise of the warrants. The compensation was valued based on prior private placements or based on management’s estimates of value immediately prior to the IPO.

Reverse Stock Split

On June 29, 2020, the Company effectuated a 1-for-2 reverse stock split of its issued and outstanding shares of common stock by filing a certificate of amendment to its amended and restated certificate of incorporation with the Secretary of State of the State of Delaware. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split.

Stock-Based Compensation

In October 2017, our Board of Directors adopted the Aditx Therapeutics, Inc. 2017 Equity Incentive Plan (the “2017 Plan”). The 2017 Plan provides for the grant of equity awards to employees, and consultants. Up to 2,500,000 shares of our common stock may be issued pursuant to awards granted under the 2017 Plan. The 2017 Plan is administered by our Board of Directors, and expires ten years after adoption, unless terminated earlier by the Board.

During the year ended December 31, 2018, the Company granted 412,500 stock options with exercise prices of $4.00 per share vesting on issuance or vesting yearly. The total grant date fair value was determined to be $1,507,232.

During the year ended December 31, 2019, the Company granted 700,000 stock options with exercise prices of $4.00 per share vesting on issuance, of which 550,000 was to related parties. The total grant date fair value was determined to be $2,495,556.

During the six months ended June 30, 2020, the Company granted 7,500 stock options to a related party with exercise prices of $11.00 per share vesting on issuance. The total grant date fair value was determined to be $27,799.

F-12

For all period presented the total grant date fair value was determined to be $1,960,831. For all periods presented, the fair value of each stock option granted was estimated using the Black-Scholes assumption ranges and or factors as follows:

Exercise price |  | $ | 4.00-11.00 |
Expected dividend yield |  |  | 0 | %
Risk free interest rate |  |  | 0.39% - 2.65 | %
Expected life in years |  |  | 2.79-7.52 |
Expected volatility |  |  | 141-151 | %

The risk-free interest rate assumption for options granted is based upon observed interest rates on the United States government securities appropriate for the expected term of stock options.

The expected term of stock options is calculated using either the simplified method for employee options which takes into consideration the contractual life and vesting terms of the options, unless the options are expected to vest in which case the contractual term of the options.

The Company determined the expected volatility assumption for options granted using the historical volatility of comparable public companies’ common stock. The Company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future stock option grants, until such time that the Company’s common stock has enough market history to use historical volatility.

The dividend yield assumption for options granted is based on the Company’s history and expectation of dividend payouts. The Company has never declared or paid any cash dividends on its common stock, and the Company does not anticipate paying any cash dividends in the foreseeable future.

Management estimated the fair value of common stock by looking at a market approach which takes into consideration past sales of stock to third parties and Company developments to date.

The Company recognizes stock option forfeitures as they occur as there is insufficient historical data to accurately determine future forfeitures rates.

The following is an analysis of the stock option grant activity under the Plan:

|  |  |  |  | Weighted Average |  |  | Weighted Average |
|  | Number |  |  | Exercise Price |  |  | Remaining Life |
Stock Options |  |  |  |  |  |  |  |  |
Outstanding December 31, 2017 |  |  | 120,000 |  |  | $ | 4.00 |  |  |  | 4.82 |
Granted |  |  | 412,500 |  |  |  | 4.00 |  |  |  | 5.00 |
Expired or forfeited |  |  | (30,000 | ) |  |  | 4.00 |  |  |  | - |
Outstanding December 31, 2018 |  |  | 502,500 |  |  | $ | 4.00 |  |  |  | 4.11 |
Granted |  |  | 700,000 |  |  |  | 4.00 |  |  |  | 7.77 |
Expired or forfeited |  |  | (100,000 | ) |  |  | 4.00 |  |  |  | - |
Outstanding December 31, 2019 |  |  | 1,102,500 |  |  | $ | 4.00 |  |  |  | 7.77 |
Granted |  |  | 7,500 |  |  |  | 11.00 |  |  |  | 7.52 |
Expired or forfeited |  |  | - |  |  |  | - |  |  |  | - |
Outstanding June 30, 2020 (unaudited) |  |  | 1,110,000 |  |  | $ | 4.05 |  |  |  | 7.25 |

F-13

Nonvested Options |  | Shares |  |  | Weighted- Average Exercise Price |
Nonvested at December 31, 2017 |  |  | 97,500 |  |  | $ | 4.00 |
Granted |  |  | 412,500 |  |  |  | 4.00 |
Vested |  |  | (380,000 | ) |  |  | 4.00 |
Forfeited |  |  | (30,000 | ) |  |  | 4.00 |
Nonvested at December 31, 2018 |  |  | 100,000 |  |  | $ | 4.00 |
Granted |  |  | 700,000 |  |  |  | 4.00 |
Vested |  |  | (700,000 | ) |  |  | 4.00 |
Forfeited |  |  | (100,000 | ) |  |  | 4.00 |
Nonvested at December 31, 2019 |  |  | - |  |  | $ | - |
Granted |  |  | 7,500 |  |  |  | 11.00 |
Vested |  |  | (7,500 | ) |  |  | 11.00 |
Forfeited |  |  | - |  |  |  | - |
Nonvested at June 30, 2020 (unaudited) |  |  | - |  |  | $ | - |

There were 402,500 options exercisable at December 31, 2018 with a weighted average exercise price of $4.00 and a weighted average life remaining of 4.09 years. There are 1,102,500 options exercisable at December 31, 2019 with a weighted average exercise price of $4.00 and a weighted average life remaining of 7.77 years.

On December 18, 2019, the Company extended the expiration date for 1,102,500 options to purchase shares of the Company’s common stock issued to ten individuals. These options have had their expiration date extended to October 5, 2027. Related to this option modification, the Company valued the affected options immediately before and after the modification using inputs to the Black-Scholes model similar to those described above, adjusting for the expected life modified. Accordingly, compensation expense of $533,311 was recorded in general and administrative expense for the incremental value of the options upon modification.

The Company recognized compensation expense related to options issued and vesting of $27,799 during the six months ended June 30, 2020, which is included in general and administrative expenses in the accompanying statements of operations. There is no additional expense to be recognized on previously granted options as of June 30, 2020.

The Company recognized compensation expense related to options issued and vesting of $2,513,826 during the year ended December 31, 2019, which is included in general and administrative expenses in the accompanying statements of operations. The remaining value to be expensed is $0 with a weighted average vesting life of 0 years as of December 31, 2019. The Company recognized compensation expense related to options issued and vesting of $1,369,824 during the period ended December 31, 2018, which is included in general and administrative expenses in the accompanying statements of operations.

Warrants

A summary of warrant issuances are as follows:

|  | Number |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Life |
Warrants |  |  |  |  |  |  |  |  |
Outstanding December 31, 2017 |  |  | - |  |  | $ | - |  |  |  | - |
Granted |  |  | 987,176 |  |  |  | 4.32 |  |  |  | 4.53 |
Outstanding December 31, 2018 |  |  | 987,176 |  |  | $ | 4.32 |  |  |  | 3.89 |
Granted |  |  | 414,380 |  |  |  | 4.82 |  |  |  | 3.09 |
Forfeited |  |  | (19,078 | ) |  |  | 6.00 |  |  |  | - |
Outstanding December 31, 2019 |  |  | 1,382,478 |  |  | $ | 4.44 |  |  |  | 2.84 |
Granted |  |  | 5,000 |  |  |  | 11.00 |  |  |  | 3.00 |
Forfeited |  |  | (65,000 | ) |  |  | 6.00 |  |  |  | - |
Exercised |  |  | (30,975 | ) |  |  | 6.00 |  |  |  | - |
Outstanding June 30, 2020 (unaudited) |  |  | 1,291,503 |  |  | $ | 4,46 |  |  |  | 2.32 |

F-14

Nonvested Warrants |  | Shares |  |  | Weighted- Average Exercise Price |
Nonvested at December 31, 2017 |  |  | - |  |  | $ | - |
Granted |  |  | 987,176 |  |  |  | 4.32 |
Vested |  |  | (687,176 | ) |  |  | 4.46 |
Forfeited |  |  | - |  |  |  | - |
Nonvested at December 31, 2018 |  |  | 300,000 |  |  | $ | 4.00 |
Granted |  |  | 414,335 |  |  |  | 4.82 |
Vested |  |  | (514,335 | ) |  |  | 4.66 |
Forfeited |  |  | - |  |  |  | - |
Nonvested at December 31, 2019 |  |  | 200,000 |  |  | $ | 4.00 |
Granted |  |  | 5,000 |  |  |  | - |
Vested |  |  | - |  |  |  | - |
Forfeited |  |  | (65,000 | ) |  |  | - |
Nonvested at June 30, 2020 (unaudited) |  |  | 140,000 |  |  | $ | 4.00 |

The warrants are valued using similar inputs as noted in the stock options section above, with the exception of the expected life which is the contractual life.

The Company recognized compensation expense related to warrants issued and vesting of $159,777 and $226,541 during the six months ended June 30, 2020 and 2019, which is included in general and administrative in the accompanying Statements of Operations. The remaining value to be expensed is $212,093 with a weighted average vesting term of 0.97 years as of June 30, 2020.

There are 687,176 warrants exercisable at December 31, 2018 with a weighted average exercise price of $4.46 and a weighted average life remaining of 3.77 years. There are 1,182,478 warrants exercisable at December 31, 2019 with a weighted average exercise price of $4.52 and a weighted average life remaining of 2.84 years.

During the six months ended June 30, 2020, 30,975 warrants were exercised for 30,975 shares of common stock. The Company recognized proceeds of $185,850 related to the exercises.

During the three months ended June 30, 2020, the Company issued 5,000 warrants with an exercise price of $11.00 and a term of 3 years.

On April 10, 2020, the Company terminated a consulting agreement dated December 1, 2018. As part of this termination agreement the consultant forfeited 65,000 non-vested. The consultant holds 25,000 warrants which were previously vested.

NOTE 6 – AGREEMENTS

Effective March 1, 2018, the Company entered into a consulting agreement with a company for project management services for $13,000 per month plus any additional fees. The term of this agreement commenced on March 1, 2018 and remained in effect, as provided in the agreement, until May 31, 2018. The Company entered into a new agreement with the consultant on November 16, 2018 with the same terms.

On March 14, 2018, the Company entered into an agreement with a company to provide financial advisory and placement agent services. On March 14, 2018, an initial retainer fee of $55,000 was due for the Non-Accountable Expense Allowance with an additional $10,000 due upon filing of an offering statement as defined by the agreement.

On August 23, 2018, the Company entered into a consulting agreement with a company for investor relations for $7,500 per month. This agreement also issued 10,000 shares of the Company’s common stock to the consultant at the signing of the agreement. The service period for this agreement was from August 23, 2018 to February 22, 2019.

F-15

On December 1, 2018, the Company entered into an independent director agreement. As part of this agreement the Company issued 2,500 shares of its common stock to the director and issued an additional 5,000 shares of its common stock on June 30, 2019.

On December 1, 2018, the Company entered into a consulting agreement. As part of this agreement the Company agreed to pay the consultant $3,000 per month and a 3% success fee for all payments received by the Company from qualified agreements. The Company has also issued 90,000 warrants to purchase shares of common stock to the consultant. These warrants have an exercise price of $4.00, an expiration date of December 1, 2022, and vest 30,000 options per year starting on December 1, 2019.

On January 1, 2019, the Company entered into a consulting agreement with a company for business advisory services. As part of this agreement, the Company agreed to pay a monthly fee of $3,500. The Company also issued 3,000 shares of its common stock and a warrant to purchase 6,000 shares of its common stock with an exercise price of $4.00 and an expiration date of January 1, 2022.

On January 1, 2019, the Company entered into a consulting agreement with a company for business advisory services. As part of this agreement, the Company agreed to pay the consultant $14,700 per month. This agreement replaces the prior agreement with this consultant dated November 16, 2018. On July 1, 2019, the Company entered into another agreement with this consultant to extend the term of the agreement to December 31, 2019.

On February 1, 2019, the Company entered into a consulting agreement with a company for investor relations for $7,500 per month. This agreement replaces the prior agreement with this consultant dated August 23, 2018.

On February 1, 2019, the Company entered into a consulting agreement. As part of this agreement, the Company agreed to pay the consultant $3,000 per month and issued the consultant 2,500 warrants to purchase shares of the Company’s common stock.

On February 1, 2019, the Company entered into a consulting agreement. As part of this agreement, the Company paid the consultant $6,500 per month which increased to $10,000 per month in July 2019. The Company also issued 10,000 shares of its common stock within business 10 days of the agreement being executed.

On March 11, 2019, the Company entered into a six-month lease for office space at $3,900 per month.

On April 15, 2019, the Company entered into an option agreement to license a patent. The term of this option was until October 15, 2019. The Company paid a fee of $5,000 on the signing of the agreement. The Company also issued 2,500 shares of its common stock valued at $4.00 per share to the patent holder.

On October 1, 2019, the Company entered into an agreement for accounting services. As part of this agreement the Company issued 25,000 warrants to purchase share of the Company’s common stock to the consultant. The agreement expired on December 31, 2019.

On October 1, 2019, the Company entered into an agreement for consulting services. As part of this agreement the Company has issued 10,000 warrants to purchase share of the Company’s common stock to the consultant. The agreement expired on December 31, 2019.

On December 27, 2019, the Company entered into a consulting agreement for advisory services that requires a monthly retainer payment of $2,000. The Company issued 10,000 shares of its common stock during January 2020. Additionally, the Company issued 15,000 shares of its common stock within ten business days of the Company’s IPO and will issue 15,000 shares of its common stock within ten business days of December 31, 2020.

On December 27, 2019, the Company entered into a consulting agreement for advisory services. As part of this agreement the Company paid a one-time retainer of $15,000. Additionally, the Company paid a $7,500 success fee and issued 5,000 shares of its common stock within ten business days of the Company’s IPO.

On January 9, 2020, the Company entered into a consulting agreement for advisory services that requires a monthly retainer payment of $4,000. In addition, the Company issued 10,000 shares of its common stock during January 2020. Additionally, the Company issued 15,000 shares of its commons stock in June 2020 and will be required to issue 15,000 shares of its common stock within ten business days after December 17, 2020.

F-16

On January 10, 2020, the Company entered into a consulting agreement for advisory services, which was amended in May 2020. As part of this agreement the Company issued 55,000 shares of its common stock during January 2020. Additionally, the Company issued 55,000 shares of its common stock within ten business days of the Company’s IPO.

On January 22, 2020, as amended August 9, 2020, effective July 1, 2020, the Company entered into a consulting agreement for investor relations and capital market advisory services. As part of this agreement the Company will pay a fee of $10,000 per month and issue 30,000 shares of the Company’s common stock.

On February 3, 2020, the Company entered into a patent licensing agreement. As part of this agreement the Company is required to pay a fee of $25,000. The Company also issued 18,750 shares of the Company’s common stock to the patent holder. The Company is required to pay an annual licensing fee on the anniversary of the agreement in the amount of $40,000 for 2021 through 2024 and $60,000 in starting in 2025 until the license expires. The Company will also pay milestone fees of $50,000 on the first commercial sales of a licensed product and $25,000 at the beginning of any clinical study for regulatory clearance of an in vitro diagnostic product developed and a potential licensed product. The Company will be responsible for paying royalty fees on the Company’s net sales. These royalty fees are set at a rate of 4% when net sales are below or equal to $5 million annually or 6% when net sales are above $5 million annually.

On February 23, 2020, the Company entered into a consulting agreement for business development services. As part of this agreement the Company issued 5,000 shares of its common stock. The Company also issued an additional 3,000 shares of its common stock upon the completion of its IPO. Subsequent to the IPO the Company will pay a monthly fee of $8,000. The Company will also pay a success fee equal to 4% of transaction proceeds in connection with qualified transactions.

On March 30, 2020, the Company entered into an employment agreement for a permanent, full-time Chief Financial Officer that is effective upon the closing of the Company’s IPO. As part of the employment agreement the Company agreed to pay the employee $225,000 per year. The Company also granted stock options to purchase shares of the Company’s common stock. An initial grant of 7,500 options was made upon the signing of the agreement and a subsequent grant of 165,000 options was made upon the completion of the IPO. The initial grant has an exercise price of $11.00 and expires on October 5, 2027, the subsequent grant was issued at the IPO price. The initial grant vested immediately and the subsequent grant vests 1/3 on the first anniversary of the agreement and the remaining 2/3 vests quarterly over the next two years.

On April 30, 2020, the Company entered into an employment agreement for a Vice President of Preclinical Research and Development that is effective upon the closing of the Company’s IPO. As part of the employment agreement, the Company agreed to pay the employee $200,000 per year. The Company granted 90,000 stock options to purchase shares of the Company’s common stock upon the completion of the IPO. The initial grant has an exercise price of equal to that of the IPO and expires on October 5, 2027. The grant vests 1/3 on the first anniversary of the start date of the employee and the remaining 2/3 vests quarterly over the following two years starting on the end of the 15th month following the start date.

On May 16, 2020, the Company entered into an employment agreement for a Vice President of Innovation Portfolio and Development that is effective upon the closing of the Company’s IPO. As part of the employment agreement, the Company agreed to pay the employee $200,000 per year. The Company granted 90,000 stock options to purchase shares of the Company’s common stock upon the completion of the IPO. The initial grant has an exercise price of equal to that of the IPO and expires on October 5, 2027. The grant vests 1/3 on the first anniversary of the start date of the employee and the remaining 2/3 vests quarterly over the following two years starting on the end of the 15th month following the start date.

On June 15, 2020 the Company entered into a consulting agreement for advisory services that required a fee equivalent to 3,000 shares of the Company’s common stock which were issued in July 2020.

F-17

NOTE 7 – NOTES PAYABLE

On April 12, 2018, the Company issued an unsecured promissory note for $35,000 that accrued interest of 4% annually. The note was due on the earlier of November 12, 2018 or in the event of default, as defined in the agreement. This note was paid in full subsequent to June 30, 2020.

On July 10, 2018, the Company entered into a bridge loan with a principal of $15,600. The note was due on the earlier of October 8, 2018 or in the event of default, as defined in the agreement. This note was paid in full subsequent to June 30, 2020.

On July 18, 2018, the Company entered into a bridge loan with a principal of $130,000. The note was due on the earlier of October 16, 2018 or in the event of default, as defined in the agreement. This note was paid in full subsequent to June 30, 2020.

On November 1, 2019, the Company entered into a bridge loan with a principal of $50,000. This loan did not accrue any interest. The note was due on the earlier of April 28, 2020 or in the event of default, as defined in the agreement. The note was convertible into the same class of securities as those sold in the public offering with a conversion price of $2.00 per share. On July 24, 2020, the Company entered into an exchange agreement with respect to the previously issued note to exchange the note into Units on the same terms as the securities offered by the Company in its IPO. The note was converted in full subsequent to June 30, 2020.

On January 10, 2020, the Company entered into a bridge loan with a principal amount of $75,000. This Note carried an original issue discount of $40,000. This loan did not accrue any interest. The note was due on the earlier of July 8, 2020 or in the event of default, as defined in the agreement, as amended. The note was convertible into the same class of securities as those sold in the public offering with a conversion price of $2.00 per share. The note was converted in full subsequent to June 30, 2020.

During the first quarter of 2020, the Company entered into six bridge loans with a total principal amount of $600,000. These notes carried a total original issue discount of $300,000. The notes were due on the earlier of April 19, 2020 or ten days after the close of the Company’s IPO. These notes were paid in full subsequent to June 30, 2020.

NOTE 8 – INCOME TAX

The Tax Cuts and Jobs Act

At December 31, 2019, the Company has available for U.S. federal income tax purposes a net operating loss (“NOL”) carry-forwards of approximately $3,736,000 that may be used to offset future taxable income. These NOLs begin to expire in 2038. If not used, these NOLs may be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations. The Company plans on undertaking a detailed analysis of any historical and/or current Section 382 ownership changes that may limit the utilization of the net operating loss carryovers. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements since the Company believes that the realization of its net deferred tax asset of approximately $473,000 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a valuation allowance of $473,000.

For the year ended December 31, 2019, the Company has a current tax provision of $0 and deferred tax benefit of approximately $473,000 with a corresponding valuation allowance of approximately $473,000. For the period ended December 31, 2018, the Company has a current tax provision of $0 and deferred tax benefit of $641,000 with a corresponding valuation allowance of $641,000.

Components of deferred tax assets are as follows:

|  | December 31, 2019 |  |  | December 31, 2018 |
Net deferred tax assets – Non-current: |  |  |  |  |  |
Expected income tax benefit from NOL carry-forwards |  | $ | 473,264 |  |  | $ | 659,490 |
Less valuation allowance |  |  | (473,264 | ) |  |  | (659,490 | )
Deferred tax assets, net of valuation allowance |  | $ | - |  |  | $ | - |

F-18

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:

|  | For the year ended December 31, 2019 |  |  | For the year ended December 31, 2018 |
Federal and state statutory income tax rate |  |  | 29.84 | % |  |  | 29.84 | %
Permanent difference |  |  | 72.79 | % |  |  | 62.93 | %
Change in valuation allowance on net operating loss carry-forwards |  |  | (102.63 | )% |  |  | (92.77 | )%
Effective income tax rate |  |  | 0.0 | % |  |  | 0.0 | %

Permanent differences are primarily related to equity-based compensation and other non-deductible expenses.

NOTE 9 – SUBSEQUENT EVENTS

On July 1, 2020, the Company entered into an amendment to patent and technology licensing agreement with Loma Linda University (“LLU”), dated March 15, 2018. Pursuant to the amendment, the Company was to pay LLU $455,000 within four days of the signing of such amendment. The amendment also updated the milestone payment dates to be $175,000 on March 31, 2022; $100,000 on March 31, 2024; $500,000 on March 31, 2026; and $500,000 on March 31, 2027.

Effective on July 1, 2020, the Company entered into a consulting agreement for investor relations and public relations services. As part of this agreement the Company will pay a fee of $8,000 per month and issue 20,000 shares of the Company’s common stock.

On July 2, 2020, the Company completed its IPO. (See Note 1).

On July 2, 2020, the Company settled outstanding compensation with certain related parties. (See Note 4).

See Note 6 for descriptions of agreements that required shares to be issued or options to be granted upon completion of the Company’s IPO. Such shares have been issued and options granted.

Subsequent to June 30, 2020, the Company repaid or exchanged for shares all debt agreements described in Note 7.

F-19

ADITX THERAPEUTICS, INC.

BALANCE SHEETS

(Unaudited)

|  | September 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
ASSETS |  |  |  |  |  |  |  |
CURRENT ASSETS: |  |  |  |  |  |  |  |
Cash |  | $ | 13,715,534 |  |  | $ | 4,090 |
Prepaid expenses |  |  | 238,308 |  |  |  | - |
ROU asset - short term |  |  | 324,289 |  |  |  | - |
TOTAL CURRENT ASSETS |  |  | 14,278,131 |  |  |  | 4,090 |
Fixed Assets |  |  | 157,738 |  |  |  | - |
Deferred offering costs |  |  | - |  |  |  | 119,442 |
ROU asset - long term |  |  | 870,311 |  |  |  | - |
Deposits |  |  | 61,586 |  |  |  | - |
TOTAL ASSETS |  | $ | 15,367,766 |  |  | $ | 123,532 |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |  |  |  |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 422,601 |  |  | $ | 1,847,458 |
Accrued compensation to related parties |  |  | 3,668 |  |  |  | 962,651 |
Notes payable - related party |  |  | - |  |  |  | 10,000 |
Notes payable, net of discount |  |  | - |  |  |  | 155,600 |
Deferred rent |  |  | 2,615 |  |  |  | - |
Lease liability - short term |  |  | 326,904 |  |  |  | - |
TOTAL CURRENT LIABILITIES |  |  | 755,788 |  |  |  | 2,975,709 |
Lease liability - long term |  |  | 865,081 |  |  |  | - |
TOTAL LIABILITIES |  |  | 1,620,869 |  |  |  | 2,975,709 |
COMMITMENTS AND CONTINGENCIES |  |  |  |  |  |  |  |
STOCKHOLDERS’ EQUITY (DEFICIT) |  |  |  |  |  |  |  |
Preferred stock, $0.001 par value, 3,000,000 shares authorized, zero shares issued and outstanding, respectively |  |  | - |  |  |  | - |
Common stock, $0.001 par value, 27,000,000 shares authorized, 11,823,545 and 3,915,900 shares issued and 11,722,742 and 3,821,087 shares outstanding, respectively |  |  | 11,827 |  |  |  | 3,916 |
Treasury stock, 100,803 and 94,813 shares, respectively |  |  | (201,605 | ) |  |  | (189,625 | )
Additional paid-in capital |  |  | 30,134,728 |  |  |  | 9,063,483 |
Accumulated deficit |  |  | (16,198,053 | ) |  |  | (11,729,951 | )
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) |  |  | 13,746,897 |  |  |  | (2,852,177 | )
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |  | $ | 15,367,766 |  |  | $ | 123,532 |

See accompanying notes to the financial statements.

F-20

ADITX THERAPEUTICS, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

|  | Three Months Ended |  |  | Three Months Ended |  |  | Nine Months Ended |  |  | Nine Months Ended |
|  | September 30, 2020 |  |  | September 30, 2019 |  |  | September 30, 2020 |  |  | September 30, 2019 |
OPERATING EXPENSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General and administrative expenses, $874,363, $720,649, $1,564,129, and $3,543,016, in stock-based compensation |  | $ | 2,453,725 |  |  | $ | 1,060,346 |  |  | $ | 3,677,490 |  |  | $ | 4,771,567 |
Research and development, includes $0, $0, $0, and $0 in stock-based compensation |  |  | 285,813 |  |  |  | 19,603 |  |  |  | 514,478 |  |  |  | 108,449 |
Sales and marketing $0, $0, $0, and $0 in stock-based compensation |  |  | 5,000 |  |  |  | - |  |  |  | 7,848 |  |  |  | 147 |
Total Operating Expenses |  |  | 2,744,538 |  |  |  | 1,079,949 |  |  |  | 4,199,816 |  |  |  | 4,880,163 |
NET LOSS FROM OPERATIONS |  |  | (2,744,538 | ) |  |  | (1,079,949 | ) |  |  | (4,199,816 | ) |  |  | (4,880,163 | )
OTHER INCOME (EXPENSE) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | - |  |  |  | (454 | ) |  |  | (902 | ) |  |  | (1,481 | )
Interest income |  |  | 116 |  |  |  | - |  |  |  | 116 |  |  |  | - |
Gain on forgiveness of debt |  |  | - |  |  |  | - |  |  |  | 32,500 |  |  |  | 45,000 |
Amortization of debt discount |  |  | - |  |  |  | - |  |  |  | (300,000 | ) |  |  | - |
Total Other Income (Expense) |  |  | 116 |  |  |  | (454 | ) |  |  | (268,286 | ) |  |  | 43,519 |
Net loss before income taxes |  |  | (2,744,422 | ) |  |  | (1,080,403 | ) |  |  | (4,468,102 | ) |  |  | (4,836,644 | )
Income tax provision |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
NET LOSS |  | $ | (2,744,422 | ) |  | $ | (1,080,403 | ) |  | $ | (4,468,102 | ) |  | $ | (4,836,644 | )
Net loss per share - basic and diluted |  | $ | (0.37 | ) |  | $ | (0.28 | ) |  | $ | (0.88 | ) |  | $ | (1.26 | )
Weighted average number of shares outstanding during the period - basic and diluted |  |  | 7,439,225 |  |  |  | 3,866,751 |  |  |  | 5,091,854 |  |  |  | 3,836,659 |

See accompanying notes to the financial statements.

F-21

ADITX THERAPEUTICS, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Unaudited)

|  | Common Shares |  |  | Par |  |  | Preferred Shares |  |  | Preferred Shares Par |  |  | Treasury Shares |  |  | Additional Paid-in Capital |  |  | Accumulated Deficit |  |  | Total Stockholders’ Equity (Deficit) |
Balance December 31, 2019 |  |  | 3,821,087 |  |  | $ | 3,916 |  |  |  | - |  |  | $ | - |  |  | $ | (189,625 | ) |  | $ | 9,063,483 |  |  | $ | (11,729,951 | ) |  | $ | (2,852,177 | )
Issuance of shares for services |  |  | 104,750 |  |  |  | 105 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 418,895 |  |  |  | - |  |  |  | 419,000 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 110,437 |  |  |  | - |  |  |  | 110,437 |
Treasury stock |  |  | (5,990 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (11,980 | ) |  |  | - |  |  |  | - |  |  |  | (11,980 | )
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,189,363 | ) |  |  | (1,189,363 | )
Balance March 31, 2020 (unaudited) |  |  | 3,919,847 |  |  | $ | 4,021 |  |  |  | - |  |  | $ | - |  |  | $ | (201,605 | ) |  | $ | 9,592,815 |  |  | $ | (12,919,314 | ) |  | $ | (3,524,083 | )
Exercise of warrants |  |  | 30,975 |  |  |  | 31 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 185,819 |  |  |  | - |  |  |  | 185,850 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 77,138 |  |  |  | - |  |  |  | 77,138 |
Issuance of shares for services |  |  | 17,500 |  |  |  | 18 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 83,174 |  |  |  | - |  |  |  | 83,192 |
Adjustment to Common Shares due to reverse stock split |  |  | (10 | ) |  |  | (1 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1 | )
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (534,317 | ) |  |  | (534,317 | )
Balance June 30, 2020 (unaudited) |  |  | 3,968,312 |  |  | $ | 4,069 |  |  |  | - |  |  | $ | - |  |  | $ | (201,605 | ) |  | $ | 9,938,946 |  |  | $ | (13,453,631 | ) |  | $ | (3,712,221 | )
Exercise of warrants |  |  | 3,709,778 |  |  |  | 3,712 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 20,982 |  |  |  | - |  |  |  | 24,694 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 63,621 |  |  |  | - |  |  |  | 63,621 |
Issuance of shares for services |  |  | 208,666 |  |  |  | 209 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 810,533 |  |  |  | - |  |  |  | 810,742 |
Issuance of shares for the settlement of accrued compensation and accounts payable |  |  | 146,818 |  |  |  | 147 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,221,878 |  |  |  | - |  |  |  | 1,222,025 |
Issuance of shares and warrants for IPO, net of offering costs |  |  | 1,226,668 |  |  |  | 1,227 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 9,429,455 |  |  |  | - |  |  |  | 9,430,682 |
Issuance of shares and warrants for offering, net of offering costs |  |  | 1,150,000 |  |  |  | 1,150 |  |  |  | 1,250,000 |  |  |  | 1,250 |  |  |  | - |  |  |  | 8,524,376 |  |  |  | - |  |  |  | 8,526,776 |
Issuance of shares for the conversion of debt |  |  | 62,500 |  |  |  | 63 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 124,937 |  |  |  | - |  |  |  | 125,000 |
Exercise conversion of preferred shares |  |  | 1,250,000 |  |  |  | 1,250 |  |  |  | (1,250,000 | ) |  |  | (1,250 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,744,422 | ) |  |  | (2,744,422 | )
Balance September 30, 2020 (unaudited) |  |  | 11,722,742 |  |  |  | 11,827 |  |  |  | - |  |  | $ | - |  |  |  | (201,605 | ) |  |  | 30,134,728 |  |  |  | (16,198,053 | ) |  |  | 13,746,897 |

F-22

|  | Common Shares |  |  | Par |  |  | Preferred Shares |  |  | Preferred Shares Par |  |  | Treasury Shares |  |  | Additional Paid-in Capital |  |  | Accumulated Deficit |  |  | Total Stockholders’ Equity (Deficit) |
Balance December 31, 2018 |  |  | 3,763,925 |  |  | $ | 3,764 |  |  |  | - |  |  | $ | - |  |  | $ | - |  |  | $ | 4,361,725 |  |  | $ | (5,902,223 | ) |  | $ | (1,536,734 | )
Issuance of shares for cash, net of offering costs |  |  | 60,250 |  |  |  | 60 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 198,594 |  |  |  | - |  |  |  | 198,654 |
Issuance of shares for services and licenses |  |  | 13,000 |  |  |  | 13 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 51,987 |  |  |  | - |  |  |  | 52,000 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 671,608 |  |  |  | - |  |  |  | 671,608 |
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,200,268 | ) |  |  | (1,200,268 | )
Balance March 31, 2019 (unaudited) |  |  | 3,837,175 |  |  | $ | 3,837 |  |  |  | - |  |  | $ | - |  |  | $ | - |  |  | $ | 5,283,914 |  |  | $ | (7,102,491 | ) |  | $ | (1,814,740 | )
Issuance of shares for cash, net of offering costs |  |  | 11,250 |  |  |  | 11 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 36,799 |  |  |  | - |  |  |  | 36,810 |
Issuance of shares for services and licenses |  |  | 7,500 |  |  |  | 8 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 29,992 |  |  |  | - |  |  |  | 30,000 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,068,759 |  |  |  | - |  |  |  | 2,068,759 |
Treasury stock |  |  | (45,356 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (90,712 | ) |  |  | - |  |  |  | - |  |  |  | (90,712 | )
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,555,973 | ) |  |  | (2,555,973 | )
Balance June 30, 2019 (unaudited) |  |  | 3,810,569 |  |  | $ | 3,856 |  |  |  | - |  |  | $ | - |  |  | $ | (90,712 | ) |  | $ | 7,419,464 |  |  | $ | (9,658,464 | ) |  | $ | (2,325,856 | )
Issuance of shares for cash, net of offering costs |  |  | 34,975 |  |  |  | 35 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 134,678 |  |  |  | - |  |  |  | 134,713 |
Stock option and warrant compensation |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 720,649 |  |  |  | - |  |  |  | 720,649 |
Treasury stock |  |  | (55,447 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (110,893 | ) |  |  | - |  |  |  | - |  |  |  | (110,893 | )
Net loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,080,403 | ) |  |  | (1,080,403 | )
Balance September 30, 2019 (unaudited) |  | $ | 3,790,097 |  |  | $ | 3,891 |  |  |  | - |  |  | $ | - |  |  | $ | (201,605 | ) |  | $ | 8,274,791 |  |  | $ | (10,738,867 | ) |  | $ | (2,661,790 | )

See accompanying notes to the financial statements.

F-23

ADITX THERAPEUTICS, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

|  | Nine Months Ended |  |  | Nine Months Ended |
|  | September 30, 2020 |  |  | September 30, 2019 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |
Net loss |  | $ | (4,468,102 | ) |  | $ | (4,836,644 | )
Adjustments to reconcile net loss to net cash used in operating activities |  |  |  |  |  |  |  |
Stock-based compensation |  |  | 1,564,129 |  |  |  | 3,543,016 |
Depreciation expense |  |  | 2,796 |  |  |  | - |
Amortization of debt discount |  |  | 300,000 |  |  |  | - |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Security deposit |  |  | (61,586 | ) |  |  | - |
Prepaid expenses |  |  | (238,308 | ) |  |  | - |
Accounts payable and accrued expenses |  |  | (1,302,192 | ) |  |  | 477,185 |
Accrued compensation to related parties |  |  | 128,396 |  |  |  | 401,036 |
Net cash used in operating activities |  |  | (4,074,867 | ) |  |  | (415,407 | )
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |  |
Fixed Assets |  |  | (160,534 | ) |  |  | - |
Net Cash Used In Investing Activities |  |  | (160,534 | ) |  |  | - |
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Proceeds from notes payable - related party |  |  | - |  |  |  | 10,000 |
Proceeds from notes payable |  |  | 375,000 |  |  |  | - |
Repayments of notes payable - related party |  |  | - |  |  |  | (42,502 | )
Repayments of notes payable |  |  | (715,600 | ) |  |  | (5,000 | )
Common stock issued for cash, net of offering costs |  |  | 18,500,039 |  |  |  | 370,177 |
Deferred offering costs |  |  | (423,139 | ) |  |  | - |
Exercise of warrants |  |  | 210,546 |  |  |  | - |
Net cash provided by financing activities |  |  | 17,946,845 |  |  |  | 332,675 |
NET INCREASE (DECREASE) IN CASH |  |  | 13,711,444 |  |  |  | (82,732 | )
CASH AT BEGINNING OF PERIOD |  |  | 4,090 |  |  |  | 115,709 |
CASH AT END OF PERIOD |  | $ | 13,715,534 |  |  | $ | 32,977 |
Supplemental cash flow information: |  |  |  |  |  |  |  |
Cash paid for income taxes |  | $ | - |  |  | $ | - |
Cash paid for interest expense |  | $ | 5,842 |  |  | $ | - |
NON-CASH INVESTING AND FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Liabilities assumed for common stock |  | $ | 11,980 |  |  | $ | 189,625 |
Issuance of shares for the conversion of notes payable |  | $ | 125,000 |  |  | $ | - |
Issuance of units for the settlement of accrued compensation and accounts payable |  | $ | 1,222,025 |  |  | $ | - |
Original offering discount on notes payable |  | $ | 300,000 |  |  | $ | - |
Lease liability recognized from right of use asset |  | $ | 1,191,985 |  |  | $ | - |

See accompanying notes to the financial statements.

F-24

ADITX THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

(unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Company Background

Overview

Aditx Therapeutics, Inc. (“Aditxt” or the “Company”) was incorporated in the State of Delaware on September 28, 2017 and our headquarters are located in Mountain View, CA. The Company is a life sciences company with a mission of prolonging life and enhancing its quality by improving the health of the immune system.

We are developing biotechnologies specifically focused on improving the health of the immune system through immune reprogramming and monitoring. Our immune reprogramming technologies are currently at the pre-clinical stage and are designed to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases, and allergies. Our immune monitoring technologies are designed to provide a personalized comprehensive profile of the immune system and we plan to utilize them in our upcoming reprogramming clinical trials to monitor subjects’ immune response before, during and after drug administration.

Offerings

On July 2, 2020, the Company completed its initial public offering (“IPO”). In connection therewith, the Company issued 1,226,668 Units (the “Units”), excluding the underwriters’ option to cover overallotments, at an offering price of $9.00 per Unit, resulting in gross proceeds of approximately $11.0 million. The Units issued in the IPO consisted of one share of common stock, one Series A warrant, and one Series B warrant. The Series A warrants originally had an exercise price of $9.00 and a term of 5 years. In addition, the Company issued a Unit Purchase Option at an exercise price of $11.25 per unit to the underwriters to purchase up to 67,466 units, with each unit consisting of (i) one share of common stock and (ii) one Series A Warrant. On August 19, 2020 the Company modified the exercise price of the Series A Warrants from $9.00 per share to $4.50 per share. The term of the Series A Warrants was not modified. The Series B warrants have an exercise price of $11.25 per share, a term of 5 years and contain a cashless exercise option upon certain criteria being met. As of September 30, 2020, substantially all of the Series B warrants issued in the IPO have been exercised pursuant to a cashless provision therein.

On September 10, 2020, the Company completed a follow-on public offering (“September 2020 Offering”). In connection therewith, the Company issued 2,400,000 Units (the “Follow-On Units”), excluding the underwriters’ option to cover overallotments, at an offering price of $4.00 per Follow-On Unit, resulting in gross proceeds to the Company of approximately $9.6 million. The Follow-On Units issued in the September 2020 Offering consisted of one share of common stock (or Series A Preferred Stock for investors who would own more than 4.99% of the Company if they invested in common stock), one Series A-1 warrant, and one Series B-1 warrant. The Series A-1 warrants have an exercise price of $3.19 per share and a term of 5 years. The Series B-1 warrants have exercise price of $5.00 per share, a term of 5 years and contain a cashless exercise option upon certain criteria being met. In addition, the Company issued a warrant to the underwriters to purchase up to 60,000 shares of common stock at an exercise price of $5.00 per share. Subsequent to quarter end, substantially all of the Series B-1 warrants issued in the September 2020 Offering have been exercised pursuant to a cashless provision therein.

Risks and Uncertainties

The Company has a limited operating history and has not generated revenue from intended operations. The Company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide along with local, state, and federal governmental policy decisions. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include: changes in biotechnology regulatory environment, technological advances that render our technologies obsolete, availability of resources for clinical trials, acceptance of technologies into the medical community, and competition from larger, more well-funded companies. These adverse conditions could affect the Company’s financial condition and the results of its operations.

F-25

On January 30, 2020, the World Health Organization declared the COVID-19 novel coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The COVID-19 coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last and what the financial impact will be to the Company, it is reasonably possible that future capital raise efforts and additional development of our technologies may be negatively affected.

NOTE 2 – GOING CONCERN ANALYSIS

Management Plans

The Company was incorporated on September 28, 2017 and has not generated revenues to date. During the nine months ended September 30, 2020, the Company had a net loss of $4,468,102 and cash of $13,715,534. The Company will be conducting medical research and development, and the time at which the Company will begin generating revenue is unknown. The Company believes, however, that the funds raised by the IPO and the September 2020 Offering will be sufficient to fund the Company’s operation for at least the next 12 months. Because of these factors, the Company believes that this alleviates issues in connection with the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

The financial statements included in this report do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein. While we believe in the viability of our strategy to generate sufficient revenue, control costs and raise additional funds when necessary, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon the ability to complete clinical studies and implement the business plan, generate sufficient revenues and to control operating expenses.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, the accompanying financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended September 30, 2020 and 2019. Although management believes that the disclosures in these unaudited financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in financial statements that have been prepared in accordance U.S. GAAP have been or omitted pursuant to the rules and regulations of the SEC.

The accompanying unaudited financial statements should be read in conjunction with the Company’s financial statements for the year ended December 31, 2019, which contain the audited financial statements and notes thereto, included in the Company’s Prospectus, dated September 1, 2020, filed with the SEC pursuant to Rule 424(b). The interim results for the nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ended December 31, 2020 or for any future interim periods.

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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Significant estimates underlying the financial statements include the fair value of stock options and warrants.

F-26

Fair Value Measurements and Fair Value of Financial Instruments

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements. ASC Topic 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance with ASC Topic 820.

Due to the short-term nature of all financial assets and liabilities, their carrying value approximates their fair value as of the balance sheet dates.

Concentrations of Credit Risk

The Company maintains its cash accounts at financial institutions which are insured by the Federal Deposit Insurance Corporation. At times, the Company may have deposits in excess of federally insured limits.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments. As of September 30, 2020 and December 31, 2019, $12,760,084 and $0 was invested in the J.P. Morgan U.S. Government Money Market Fund, respectively.

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation. Cost includes expenditures for furniture, office equipment, laboratory equipment, and other assets. Maintenance and repairs are charged to expense as incurred. When assets are sold, retired, or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations. The cost of fixed assets are depreciated using the straight-line method over the estimated useful lives of the related assets. Depreciation expense was $2,796 for the three and nine months ended September 30, 2020 and zero for the three and nine months ended for September 30, 2019.

Offering Costs

The Company accounts for offering costs in accordance with ASC 340, Other Assets and Deferred Costs. Prior to the completion of an offering, offering costs were capitalized as deferred offering costs on the balance sheet. The deferred offering costs are netted against the proceeds of the offering in stockholders’ equity (deficit) or the related debt, as applicable. Costs related to unsuccessful offerings are expensed.

Leases

Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has operating leases consisting of office and laboratory space with remaining lease terms of 46 months. Rent and Lease costs were $46,698 and $23,731 for the nine months ended September 30, 2020 and 2019. There was no sublease rental income for the nine months ended September 30, 2020 and 2019. Rent and Lease costs were $43,573 and $9,467 for the three months ended September 30, 2020 and 2019. There was no sublease rental income for the three months ended September 30, 2020 and 2019.

Leases with an initial term of twelve months or less are not recorded on the balance sheet. For lease agreements entered into or reassessed after the adoption of Topic 842, we combine the lease and non-lease components in determining the lease liabilities and right of use (“ROU”) assets.

F-27

Our lease agreements generally do not provide an implicit borrowing rate, therefore an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. We used the incremental borrowing rate on September 30, 2020 and December 31, 2019 for all leases that commenced prior to that date. In determining this rate, which is used to determine the present value of future lease payments, we estimate the rate of interest we would pay on a collateralized basis, with similar payment terms as the lease and in a similar economic environment.

Lease Costs

|  | Nine Months Ended September 30, 2020 |  |  | Nine Months Ended September 30, 2019 |
Components of total lease costs: |  |  |  |  |  |  |  |
Operating lease expense |  | $ | 46,698 |  |  | $ | - |
Total lease costs |  | $ | 46,698 |  |  | $ | - |

Lease Positions as of September 30, 2020

ROU lease assets and lease liabilities for our operating leases were recorded in the balance sheet as follows:

|  | September 30, 2020 |  |  | December 31, 2019 |
Assets |  |  |  |  |  |  |  |
Right of use asset – short term |  | $ | 324,289 |  |  | $ | - |
Right of use asset – long term |  |  | 870,311 |  |  |  | - |
Total assets |  | $ | 1,194,600 |  |  | $ | - |
Liabilities |  |  |  |  |  |  |  |
Operating lease liabilities – short term |  | $ | 326,904 |  |  | $ | - |
Operating lease liabilities – long term |  |  | 865,081 |  |  |  | - |
Total lease liability |  | $ | 1,191,985 |  |  | $ | - |

Lease Terms and Discount Rate

Weighted average remaining lease term (in years) – operating lease |  |  | 3.83 |
Weighted average discount rate – operating lease |  |  | 8.00 | %

The future minimum lease payments under the leases are as follows:

2020 (remainder) |  | $ | 84,536 |
2021 |  |  | 342,500 |
2022 |  |  | 352,958 |
2023 |  |  | 363,416 |
2024 |  |  | 215,551 |
Total future minimum lease payments |  |  | 1,358,961 |
Less: Lease imputed interest |  |  | 166,976 |
Total |  | $ | 1,191,985 |

F-28

Stock-Based Compensation

The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC. 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services.

Patents

The Company incurs fees from patent licenses. During the nine months ended September 30, 2020 and 2019, the Company had a licensing fee for the patents of $258,635 and $18,071, respectively.

Research and Development

We incur research and development costs during the process of researching and developing our technologies and future offerings. Our research and development costs mainly consist of licensing costs. We expense these costs as incurred unless such costs qualify for capitalization under applicable guidance.

Basic and Diluted Net Loss per Common Share

Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding for each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. As of September 30, 2020, 1,110,000 stock options and 6,237,296 warrants were excluded from dilutive earnings per share as their effects were anti-dilutive. As of September 30, 2019, 2,205,000 stock options and 2,632,456 warrants were excluded from dilutive earnings per share as their effects were anti-dilutive.

Recent Accounting Pronouncements

In February 2016, FASB issued Accounting Standards Update (“ASU”) 2016-02: Leases (Topic 842). The new guidance generally requires an entity to recognize on its balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The new standard requires a modified retrospective transition for existing leases to each prior reporting period presented. The Company has elected to early adopt this standard. This standard will be effective for the interim period beginning July 1, 2020. The adoption of this standard is not expected to have a significant impact our financial statements other than the presentation of right of use asset and lease liability on the balance sheet.

The FASB issues ASUs to amend the authoritative literature in ASC. There have been several ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements.

NOTE 4 – RELATED PARTY TRANSACTIONS

The Company’s Chief Executive Officer (“CEO”) has provided certain periods of service without payment. As of September 30, 2020 and December 31, 2019, the CEO is owed $0 and $309,500, respectively, related to compensation. During the three months ended September 30, 2020, the Company issued 38,055 Units consisting of one share of common stock and one Series A warrant and one Series B warrant to settle $342,500 in accrued compensation.

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The Company’s Chief Innovation Officer (“CIO”) has provided certain periods of service without payment. As of September 30, 2020 and December 31, 2019, the CIO is owed $0 and $377,000, respectively, related to compensation. During the three months ended September 30, 2020, the Company issued 47,222 Units consisting of one share of common stock, one Series A warrant, and one Series B warrant to settle $425,000 in accrued compensation.

Effective July 10, 2020, the Board of Directors appointed the Company’s Chief Operations Officer (“COO”). Prior to the appointment, the COO was an independent operations consultant and had provided certain periods of service without payment. As of September 30, 2020 and December 31, 2019, the COO is owed $0 and $275,000, respectively, related to compensation. During the three months ended September 30, 2020, the Company issued 35,555 Units consisting of one share of common stock, one Series A warrant, and one Series B warrant to settle $320,000 in accrued compensation.

On March 21, 2019, the Company entered into a note with a related party. The note had a principal of $10,000, a maturity date of September 21, 2019, and an interest rate of 4% per year. During the three months ended September 30, 2020, this note was paid in full.

During the nine months ended September 30, 2020, the Company assumed $11,980 of liabilities from a related party in exchange for the return of 5,990 shares of the Company’s common stock.

NOTE 5 – STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

The Company is authorized to issue 3,000,000 shares of preferred stock, par value $0.001 per share.

Common Stock

The Company is authorized to issue 27,000,000 shares of common stock, par value $0.001 per share.

During the nine months ended September 30, 2020, the Company issued 330,916 shares of common stock and recognized expense of $1,312,930 in stock compensation for consulting services. The Company also issued 3,740,753 shares of commons stock for the exercise of warrants and received $210,546 for the exercise of the warrants. The Company issued 1,250,000 shares of common stock for the exercise of 1,250,000 shares of Series A Preferred Stock. The Company issued 146,818 shares of common stock for the settlement of accounts payable and issued 62,500 shares of common stock for the settlement of debt. The Company issued 1,226,668 shares of common stock related to the IPO and issued 1,150,000 shares of common stock related to the September 2020 Offering. The stock compensation for the period was valued based on prior private placements or based on management’s estimates of value immediately prior to the IPO and the value of the shares based on public information post IPO.

During nine months ended September 30, 2019, the Company issued 20,500 shares of common stock for services and recognized expense of $82,000 in stock compensation, issued 106,475 shares of common stock for $370,177 in cash, net of offering costs, and received 100,803 shares of the Company’s common stock in exchange for the assumption of $201,605 in liabilities. Shares issued for compensation were valued based on the price which common shares were being sold in the above private placements.

Reverse Stock Split

On June 29, 2020, the Company effectuated a 1-for-2 reverse stock split of its issued and outstanding shares of common stock by filing a certificate of amendment to its amended and restated certificate of incorporation with the Secretary of State of the State of Delaware. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split.

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Stock-Based Compensation

In October 2017, our Board of Directors adopted the Aditx Therapeutics, Inc. 2017 Equity Incentive Plan (the “2017 Plan”). The 2017 Plan provides for the grant of equity awards to employees, and consultants. Up to 2,500,000 shares of our common stock may be issued pursuant to awards granted under the 2017 Plan. The 2017 Plan is administered by our Board of Directors, and expires ten years after adoption, unless terminated earlier by the Board.

During the nine months ended September 30, 2020, the Company granted 7,500 stock options with an exercise price of $11.00 per share vesting on issuance. The total grant date fair value was determined to be $27,799.

During the nine months ended September 30, 2019, the Company granted 700,000 stock options with exercise prices of $4.00 per share vesting on issuance. The total grant date fair value was determined to be $2,495,556. For all periods presented, the fair value of each stock option granted was estimated using the Black-Scholes assumption ranges and or factors as follows:

Exercise price |  | $ 4.00-11.00 |  |
Expected dividend yield |  | 0 | % |
Risk free interest rate |  | 0.39%-2.65 | % |
Expected life in years |  | 2.54-7.27 |  |
Expected volatility |  | 141-146 | % |

The risk-free interest rate assumption for options granted is based upon observed interest rates on the United States government securities appropriate for the expected term of stock options.

The expected term of stock options is calculated using either the simplified method for employee options which takes into consideration the contractual life and vesting terms of the options, unless the options are expected to vest in which case the contractual term of the options.

The Company determined the expected volatility assumption for options granted using the historical volatility of comparable public companies’ common stock. The Company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future stock option grants, until such time that the Company’s common stock has enough market history to use historical volatility.

The dividend yield assumption for options granted is based on the Company’s history and expectation of dividend payouts. The Company has never declared or paid any cash dividends on its common stock, and the Company does not anticipate paying any cash dividends in the foreseeable future.

Management estimated the fair value of common stock by looking at a market approach which takes into consideration past sales of stock to third parties and Company developments to date.

The Company recognizes stock option forfeitures as they occur as there is insufficient historical data to accurately determine future forfeitures rates.

The following is an analysis of the stock option grant activity under the Plan:

|  |  |  |  | Weighted Average |  |  | Weighted Average |
Stock Options |  | Number |  |  | Exercise Price |  |  | Remaining Life |
Outstanding December 31, 2019 |  |  | 1,102,500 |  |  | $ | 4.00 |  |  |  | 7.77 |
Granted |  |  | 7,500 |  |  |  | 11.00 |  |  |  | 4.47 |
Expired or forfeited |  |  | - |  |  |  | - |  |  |  | - |
Outstanding September 30, 2020 (unaudited) |  |  | 1,110,000 |  |  | $ | 4.05 |  |  |  | 7.00 |

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Nonvested Options |  | Shares |  |  | Weighted- Average Exercise Price |
Nonvested at December 31, 2019 |  |  | - |  |  | $ | - |
Granted |  |  | 7,500 |  |  |  | 11.00 |
Vested |  |  | (7,500 | ) |  |  | 11.00 |
Expired or forfeited |  |  | - |  |  |  | - |
Nonvested at September 30, 2020 (unaudited) |  |  | - |  |  | $ | - |

The Company recognized compensation expense related to options issued and vesting of $27,799 during the nine months ended September 30, 2020, which is included in general and administrative expenses in the accompanying statements of operations. There is no additional expense to be recognized on previously granted options as of September 30, 2020. The Company recognized compensation expense related to options issued and vesting of $2,513,826 during the period ended September 30, 2019, which is included in general and administrative expenses in the accompanying statements of operations.

Warrants

A summary of warrant issuances are as follows:

|  | Number |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Life |
Warrants |  |  |  |  |  |  |  |  |  |  |  |
Outstanding December 31, 2019 |  |  | 1,382,478 |  |  |  | 4.44 |  |  |  | 2.84 |
Granted |  |  | 8,786,381 |  |  |  | 6.30 |  |  |  | 5.00 |
Expired or forfeited |  |  | (190,810 | ) |  |  | 8.12 |  |  |  | - |
Exercised |  |  | (3,740,753 | ) |  |  | 7.53 |  |  |  | - |
Outstanding September 30, 2020 (unaudited) |  |  | 6,237,296 |  |  | $ | 5.10 |  |  |  | 4.30 |

Nonvested Warrants |  | Shares |  |  | Weighted- Average Exercise Price |
Nonvested at December 31, 2019 |  |  | 200,000 |  |  |  | 4.00 |
Granted |  |  | 65,000 |  |  |  | 6.30 |
Vested |  |  | - |  |  |  | - |
Expired or forfeited |  |  | (65,000 | ) |  |  | 4.00 |
Nonvested at September 30, 2020 (unaudited) |  |  | 200,000 |  |  | $ | 4.30 |

The warrants granted for compensation are valued using similar inputs as noted in the stock options section above, with the exception of the expected life which is the contractual life.

The Company recognized compensation expense related to warrants issued and vesting of $223,398 and $947,190 during the nine months ended September 30, 2020 and 2019, which is included in general and administrative in the accompanying Statements of Operations. The remaining value to be expensed is $148,472 with a weighted average vesting term of 0.52 years as of September 30, 2020.

During the nine months ended September 30, 2020, 3,740,753 warrants were exercised for 3,740,753 shares of common stock. The Company recognized proceeds of $210,546 related to the exercises.

During the three months ended September 30, 2020, the Company issued 60,000 warrants to the underwriters related to the September 2020 Offering. These warrants have an exercise price of $5.00, a term of five years, and become exercisable beginning on March 1, 2021. The value of these warrants were both an increase and decrease to additional paid in capital as a cost of the offering for net a zero impact on the financial statements.

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NOTE 6 – AGREEMENTS

On July 1, 2020, the Company entered into an amendment to patent and technology licensing agreement with Loma Linda University (“LLU”), dated March 15, 2018. Pursuant to the amendment, the Company paid LLU $455,000 within four days of the signing of such amendment. The amendment also updated the milestone payment dates to be $175,000 on March 31, 2022; $100,000 on March 31, 2024; $500,000 on March 31, 2026; and $500,000 on March 31, 2027.

During the three months ended September 30, 2020, the Company entered in to three consulting agreements that required the Company to issue a total of 62,000 shares of the Company’s common stock to the consultants.

NOTE 7 – NOTES PAYABLE

On April 12, 2018, the Company issued an unsecured promissory note for $35,000 that accrued interest of 4% annually. The note was due on the earlier of November 12, 2018 or in the event of default, as defined in the agreement. During the three months ended September 30, 2020, this note was paid in full.

On July 10, 2018, the Company entered into a bridge loan with a principal of $15,600. The note was due on the earlier of October 8, 2018 or in the event of default, as defined in the agreement. During the three months ended September 30, 2020, this note was paid in full.

On July 18, 2018, the Company entered into a bridge loan with a principal of $130,000. The note was due on the earlier of October 16, 2018 or in the event of default, as defined in the agreement. During the three months ended September 30, 2020, this note was paid in full.

On November 1, 2019, the Company entered into a bridge loan with a principal of $50,000. This loan did not accrue any interest. The note was due on the earlier of April 28, 2020 or in the event of default, as defined in the agreement. The note was convertible into the same class of securities as those sold in the public offering with a conversion price of $2.00 per share. During the three months ended September 30, 2020, the note was converted into securities of the Company in full.

On January 10, 2020, the Company entered into a bridge loan with a principal amount of $75,000. This Note carried an original issue discount of $40,000. This loan did not accrue any interest. The note was due on the earlier of July 8, 2020 or in the event of default, as defined in the agreement, as amended. The note was convertible into the same class of securities as those sold in the public offering with a conversion price of $2.00 per share. During the three months ended September 30, 2020, the note was converted into securities of the Company in full.

During the first quarter of 2020, the Company entered into six bridge loans with a total principal amount of $600,000. These notes carried a total original issue discount of $300,000. The notes were due on the earlier of April 19, 2020 or ten days after the close of the Company’s IPO. During the three months ended September 30, 2020, these notes were paid in full.

NOTE 8 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this Form 10-Q and has determined that there have been no events that have occurred that would require adjustments to the Company’s disclosures in the consolidated financial statements except for the following:

During October 2020, the Company entered into a 24 month financing agreement for lab equipment. The aggregate cost of this financing agreement will be $467,691.

During November 2020, the Company entered into a 24 month financing agreement for lab equipment. The aggregate cost of this financing agreement will be $215,192.

On October 6, 2020, the Board of Directors approved the issuance of an aggregate of 40,000 stock options as compensation for the non-employee members of the Board of Directors under the Company’s 2017 Equity Incentive Plan. The options are subject to certain vesting provisions.

On November 2, 2020 the Compensation Committee approved the issuance of an aggregate of 883,000 stock options to employees and service providers under the 2017 Equity Incentive Plan.

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6,798,122 Shares of Common Stock

PROSPECTUS

We have not authorized any dealer, salesperson, or other person to give you written information other than this prospectus or to make representations as to matters not stated in this prospectus. You must not rely on unauthorized information. This prospectus is not an offer to sell these securities or our solicitation of your offer to buy these securities in any jurisdiction where that would not be permitted or legal. Neither the delivery of this prospectus nor any sales made hereunder after the date of this prospectus shall create an implication that the information contained herein or the affairs of the Company have not changed since the date of this prospectus.