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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2024

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______

 

Commission file number: 000-55413

 

Cell Source, Inc.

 

(Exact name of registrant as specified in its charter)

 

Nevada   32-0379665

(State or other jurisdiction

of incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

57 West 57th Street, Suite 400

New York, NY 10019

(Address of principal executive offices)

 

(646) 416-7896

(Issuer’s telephone number)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol(s)   Name of each exchange on which registered
None   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
  Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any news or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of November 13, 2024, the registrant had 43,468,184 shares of $0.001 par value common stock outstanding.

 

 

 

 
 

 

CELL SOURCE, INC.

 

FORM 10-Q

 

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION  
   
Item 1. Financial Statements. 3
   
Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023 3
   
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 4
   
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficiency for the Three and Nine Months Ended September 30, 2024 and 2023 5
   
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 7
   
Notes to Unaudited Condensed Consolidated Financial Statements 8
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 14
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 17
   
Item 4. Controls and Procedures. 17
   
PART II - OTHER INFORMATION  
   
Item 1. Legal Proceedings. 18
   
Item 1A. Risk Factors. 18
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 18
   
Item 3. Defaults Upon Senior Securities. 18
   
Item 4. Mine Safety Disclosures. 18
   
Item 5. Other Information. 18
   
Item 6. Exhibits. 19
   
SIGNATURES 20

 

2
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

CELL SOURCE, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   September 30,   December 31, 
   2024   2023 
   (Unaudited)     
Assets          
Current Assets:          
Cash  $22,992   $22,203 
Prepaid expenses   241,125    160,750 
Other current assets   543    12,218 
Total Assets  $264,660   $195,171 
           
Liabilities and Stockholders’ Deficiency          
           
Current Liabilities:          
Accounts payable  $2,036,128   $1,467,052 
Accrued expenses   1,153,100    1,225,195 
Accrued expenses - related party   188,000    144,500 
Accrued interest   1,070,144    939,549 
Accrued interest - related parties   2,065,948    1,480,117 
Accrued compensation   1,048,592    960,554 
Notes payable, net of debt discount of $42,259 and $776 as of September 30, 2024 and December 31, 2023, respectively   932,584    710,317 
Notes payable - related parties, net of debt discount of $42,259 and $0 as of September 30, 2024 and December 31, 2023, respectively   401,491    150,000 
Convertible notes payable, net of debt discount of $9,188 and $16,179 as of September 30, 2024 and December 31, 2023, respectively   985,812    1,078,821 
Convertible notes payable - related parties   7,461,708    7,315,036 
Derivative liabilities   609,207    33,000 
Derivative liabilities - related party   178,064    - 
Financing liability   314,985    42,033 
Advances payable   194,375    135,000 
Advances payable - related party   200,000    100,000 
Accrued dividend payable   365,078    25,540 
Total Liabilities   19,205,216    15,806,714 
           
Commitments and contingencies (Note 9)   -     -  
           
Stockholders’ Deficiency:          
Convertible Preferred Stock, $0.001 par value, 10,000,000 shares authorized;          
Series A Convertible Preferred Stock, 1,350,000 shares designated, 1,342,195 shares issued and outstanding as of September 30, 2024 and December 31, 2023; liquidation preference of $10,294,818 and $10,066,463 as of September 30, 2024 and December 31, 2023, respectively   1,342    1,342 
Series B Convertible Preferred Stock, 2,000,000 shares designated, 210,132 and 106,668 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively; liquidation preference of $1,628,150 and $806,805 as of September 30, 2024 and December 31, 2023, respectively   210    107 
Series C Convertible Preferred Stock, 1,000,000 shares designated, 550,815 and 537,482 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively; liquidation preference of $4,214,414 and $4,049,861 as of September 30, 2024 and December 31, 2023, respectively   550    537 
Common Stock, $0.001 par value, 200,000,000 shares authorized; 43,253,897 and 39,830,802 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively   43,254    39,831 
Additional paid-in capital   26,862,811    26,014,028 
Accumulated deficit   (45,848,723)   (41,667,388)
Total Stockholders’ Deficiency   (18,940,556)   (15,611,543)
Total Liabilities and Stockholders’ Deficiency  $264,660   $195,171 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3
 

 

CELL SOURCE, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 

   2024   2023   2024   2023 
   For the Three Months Ended
September 30,		   For the Nine Months Ended
September 30,		 
   2024   2023   2024   2023 
                 
Operating Expenses:                    
Research and development  $346,357   $500,005   $1,493,581   $1,175,093 
Research and development - related party   14,500    14,500    43,500    43,500 
General and administrative   470,768    480,875    1,626,352    2,097,801 
Total Operating Expenses   831,625    995,380    3,163,433    3,316,394 
Loss From Operations   (831,625)   (995,380)   (3,163,433)   (3,316,394)
                     
Other (Expense) Income:                    
Interest expense   (95,865)   (62,463)   (136,213)   (138,937)
Interest expense - related parties   (260,921)   (199,628)   (594,326)   (496,206)
Interest expense - amortization of debt discount   (74,718)   (29,912)   (112,218)   (107,487)
Interest expense - amortization of debt discount - related parties   (73,355)   (50,755)   (111,434)   (254,205)
Change in fair value of derivative liabilities   (62,851)   -    (50,034)   - 
Change in fair value of derivative liabilities - related party   (35,699)   -    (31,570)   - 
Gain on extinguishment of note payable   17,893    -    17,893    41,920 
Total Other Expense   (585,516)   (342,758)   (1,017,902)   (954,915)
Net Loss   (1,417,141)   (1,338,138)   (4,181,335)   (4,271,309)
Dividend attributable to Series A, B, and C preferred stockholders   (350,984)   (309,150)   (1,017,520)   (907,516)
Net Loss Applicable to Common Stockholders  $(1,768,125)  $(1,647,288)  $(5,198,855)  $(5,178,825)
                     
Net Loss Per Common Share - Basic and Diluted  $(0.04)  $(0.04)  $(0.13)  $(0.14)
                     
Weighted Average Common Shares Outstanding -                    
Basic and Diluted   42,426,449    38,191,731    41,321,759    37,492,478 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4
 

 

CELL SOURCE, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY

 

(Unaudited)

 

   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Deficiency 
   FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 
   Convertible Preferred   Convertible Preferred   Convertible Preferred           Additional       Total 
   Stock - Series A   Stock - Series B   Stock - Series C   Common Stock   Paid-In   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Deficiency 
                                             
Balance, January 1, 2024   1,342,195   $1,342    106,668   $107    537,482   $537    39,830,802   $39,831   $26,014,028   $(41,667,388)  $     (15,611,543)
                                                        
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock   -    -    -    -    13,333    13    6,546    6    104,891    -    104,910 
                                                        
Series A, B and C Convertible Preferred Stock dividends:                                                       
Accrual of earned dividends   -    -    -    -    -    -    -    -    (326,665)   -    (326,665)
                                                        
Common stock issued in satisfaction of accrued compensation   -    -    -    -    -    -    180,000    180    44,820    -    45,000 
                                                        
Issuance of Series B Convertible Preferred Stock for cash, net   -    -    3,333    3    -    -    -    -    19,897    -    19,900 
                                                        
Common stock issued in satisfaction of convertible note payable interest   -    -    -    -    -    -    2,000    2    518    -    520 
                                                        
Stock-based compensation:                                                       
Warrants   -    -    -    -    -    -    -    -    29,141    -    29,141 
Common stock   -    -    -    -    -    -    1,000,000    1,000    259,000    -    260,000 
                                                        
Net loss   -    -    -    -    -    -    -    -    -    (1,275,406)   (1,275,406)
                                                        
Balance, March 31, 2024   1,342,195   $1,342    110,001   $110    550,815   $550    41,019,348   $41,019   $26,145,630   $(42,942,794)  $(16,754,143)
                                                        
Series A, B and C Convertible Preferred Stock dividends:                                                       
Accrual of earned dividends   -    -    -    -    -    -    -    -    (339,871)   -    (339,871)
Payment of dividends in kind   -    -    -    -    -    -    904,049    904    677,078    -    677,982 
                                                        
Issuance of Series B Convertible Preferred Stock for cash, net   -    -    96,798    97    -    -    -    -    571,704    -    571,801 
                                                        
Common stock issued in satisfaction of convertible note payable interest   -    -    -    -    -    -    18,000    18    4,662    -    4,680 
                                                        
Stock-based compensation:                                                       
Warrants   -    -    -    -    -    -    -    -    8,838    -    8,838 
                                                        
Net loss   -    -    -    -    -    -    -    -    -    (1,488,788)   (1,488,788)
                                                        
Balance, June 30, 2024   1,342,195   $1,342    206,799   $207    550,815   $550    41,941,397   $41,941   $27,068,041   $(44,431,582)  $(17,319,501)
                                                        
Series A, B and C Convertible Preferred Stock dividends:                                                       
Accrual of earned dividends   -    -    -    -    -    -    -    -    (350,984)   -    (350,984)
                                                        
Issuance of Series B Convertible Preferred Stock for cash, net   -    -    3,333    3    -    -    -    -    17,797    -    17,800 
                                                        
Common stock issued for cash   -    -    -    -    -    -    1,312,500    1,313    126,857    -    128,170 
                                                        
Warrant modification expense   -    -    -    -    -    -    -    -    1,100    -    1,100 
                                                        
Net loss   -    -    -    -    -    -    -    -    -    (1,417,141)   (1,417,141)
                                                        
Balance, September 30, 2024   1,342,195   $1,342    210,132   $210    550,815   $550    43,253,897   $43,254   $26,862,811   $(45,848,723)  $(18,940,556)

 

5

 

 

   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Deficiency 
   FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 
   Convertible Preferred   Convertible Preferred           Additional       Total 
   Stock - Series A   Stock - Series C   Common Stock  

 Paid-In

   Accumulated  

Stockholders’

 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Deficiency 
                                     
Balance, January 1, 2023   1,342,195   $1,342    502,776   $503    36,081,758   $36,082   $23,674,354   $(36,346,176)  $     (12,633,895)
                                              
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock   -    -    6,667    7    2,747    3    52,050    -    52,060 
                                              
Series A and Series C Convertible Preferred Stock dividends:                                             
Accrual of earned dividends   -    -    -    -    -    -    (297,517)   -    (297,517)
                                              
Issuance of warrants in connection with issuance of convertible notes payable   -    -    -    -    -    -    21,202    -    21,202 
                                              
Conversion of Series C Convertible Preferred Stock into common stock   -    -    (10,000)   (10)   100,000    100    (90)   -    - 
                                              
Stock-based compensation: Common stock   -    -    -    -    1,000,000    1,000    329,000    -    330,000 
                                              
Net loss   -    -    -    -    -    -    -    (1,691,567)   (1,691,567)
                                              
Balance, March 31, 2023   1,342,195   $1,342    499,443   $500    37,184,505   $37,185   $23,778,999   $(38,037,743)  $(14,219,717)
                                              
Series A and Series C Convertible Preferred Stock dividends:                                             
Accrual of earned dividends   -    -    -    -    -    -    (300,849)   -    (300,849)
Payment of dividends in kind   -    -    -    -    802,880    802    601,300    -    602,102 
                                              
Issuance of common stock in connection with extinguishment of note payable   -    -    -    -    176,000    176    57,904    -    58,080 
                                              
Issuance of warrants in connection with:                                             
Satisfaction of accrued interest   -    -    -    -    -    -    40,167    -    40,167 
Issuance of convertible notes payable   -    -    -    -    -    -    75,462    -    75,462 
                                              
Stock-based compensation:                                             
Warrants   -    -    -    -    -    -    40,600    -    40,600 
                                              
Net loss   -    -    -    -    -    -    -    (1,241,604)   (1,241,604)
                                              
Balance, June 30, 2023   1,342,195   $1,342    499,443   $500    38,163,385   $38,163   $24,293,583   $(39,279,347)  $(14,945,759)
                                              
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock   -    -    62,667    62    32,232    32    494,040    -    494,134 
                                              
Issuance of warrants in connection with issuance of convertible notes payable   -    -    -    -    -    -    45,008    -    45,008 
                                              
Conversion of Series C Convertible Preferred Stock into common stock   -    -    (30,000)   (30)   300,000    300    (270)   -    - 
                                              
Series A and Series C Convertible Preferred Stock dividends:                                             
Accrual of earned dividends   -    -    -    -    -    -    (309,150)   -    (309,150)
                                              
Stock-based compensation:                                             
Warrants   -    -    -    -    -    -    23,758    -    23,758 
                                              
Net loss   -    -    -    -    -    -    -    (1,338,138)   (1,338,138)
                                              
Balance, September 30, 2023   1,342,195   $1,342    532,110   $532    38,495,617   $38,495   $24,546,969   $(40,617,485)  $(16,030,147)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6
 

 

CELL SOURCE, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

   2024   2023 
   For Nine Months Ended 
   September 30, 
   2024   2023 
         
Cash Flows From Operating Activities:          
Net loss  $(4,181,335)  $(4,271,309)
Adjustments to reconcile net loss to net cash used in operating activities:          
Gain on extinguishment of note payable   (17,893)   (41,920)
Interest expense - amortization of debt discount   112,218    107,487 
Interest expense - amortization of debt discount - related parties   111,434    254,205 
Change in fair value of derivative liabilities - related party   31,570    - 
Change in fair value of derivative liabilities   50,034    - 
Non-cash interest expense - warrants   72,473    28,695 
Warrant modification expense   1,100    - 
Stock-based compensation:          
Common stock   272,493    341,269 
Warrants   36,804    63,709 
Changes in operating assets and liabilities:          
Prepaid expenses   241,125    243,300 
Other current assets   11,675    19,605 
Accounts payable   569,076    900,538 
Accrued expenses   (72,095)   53,697 
Accrued expenses - related party   43,500    43,500 
Accrued interest   108,716    165,030 
Accrued interest - related parties   546,349    441,446 
Accrued compensation   126,920    25,147 
Net Cash Used In Operating Activities   (1,935,836)   (1,625,601)
           
Cash Flows From Financing Activities:          
Proceeds from issuance of common stock and warrants   415,625    - 
Proceeds from issuance of Series B Convertible Preferred Stock and warrants   776,001    - 
Proceeds from issuance of convertible notes payable   -    919,960 
Proceeds from issuance of convertible notes payable - related party   146,672    677,018 
Proceeds from issuance of notes payable   250,000    - 
Proceeds from issuance of notes payable - related party   250,000    - 
Proceeds from advances payable   59,375    - 
Proceeds from advances payable - related party   100,000    - 
Repayment of notes payable   (6,250)   - 
Repayment of notes payable - related party   (6,250)   - 
Repayment of financing liability   (48,548)   (191,460)
Net Cash Provided By Financing Activities   1,936,625    1,405,518 
           
Net Increase (Decrease) In Cash   789    (220,083)
           
Cash - Beginning of Period   22,203    222,665 
Cash - End of Period  $22,992   $2,582 
           
Supplemental Disclosures of Cash Flow Information:          
Cash paid for:          
Interest  $-   $- 
Income taxes  $-   $949 
           
Non-cash investing and financing activities:          
Common stock issued in satisfaction of accrued compensation  $(45,000)  $- 
Common stock issued in connection with payment of Series A, B, and C Convertible Preferred Stock dividends in-kind  $677,982   $602,102 
Financing of Director and Officer insurance  $321,500   $321,500 
Conversion of Series C Convertible Preferred Stock into common stock  $-   $400 
Conversion of accrued expenses into note principal  $-   $413,018 
Accrual of warrant obligations in connection with issuance of notes payable  $-   $40,167 
Warrants issued in satisfaction of accrued warrant obligation  $-   $(40,167)
Issuance of warrants in connection with the issuance of notes payable  $200,404   $141,672 
Issuance of warrants in connection with the exchange of notes payable  $12,107   $- 
Accrual of earned preferred stock dividends  $(1,017,520)  $(907,516)
Conversion of convertible notes payable and accrued interest into Series C Preferred Stock and common stock  $104,910   $546,194 
Issuance of warrants in connection with issuance of Series B Preferred Stock  $103,900   $- 
Issuance of embedded derivative liabilities in connection with issuance of Series B Preferred Stock  $62,600   $- 
Issuance of embedded derivative liabilities in connection with issuance of Series C Preferred Stock  $1,700   $- 
Extinguishment of note payable for common stock  $-   $58,080 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

7
 

 

CELL SOURCE, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(Unaudited)

 

Note 1 - Business Organization, Nature of Operations, Risks and Uncertainties and Basis of Presentation

 

Organization and Operations

 

Cell Source, Inc. (“Cell Source”, “CSI” or the “Company”) is a Nevada corporation formed on June 6, 2012 that is the parent company of Cell Source Limited (“CSL”), a wholly owned subsidiary which was founded in Israel in 2011 in order to commercialize a suite of inventions relating to certain cancer treatments. The Company is a biotechnology company focused on developing cell therapy treatments based on the management of immune tolerance. The Company’s lead prospective product is its patented Veto Cell immune system management technology, which is an immune tolerance biotechnology that enables the selective blocking of immune responses. CSL’s Veto Cell immune system management technology is based on technologies patented, owned, and licensed to CSL by Yeda Research and Development Company Limited, an Israeli corporation (“Yeda”) (see Note 9, Commitments and Contingencies). The Company’s target indications include: lymphoma, leukemia and multiple myeloma through the facilitation of safer and more accessible stem cell (e.g. bone marrow) transplantation acceptance, treatment of end stage kidney disease and other non-malignant organ diseases through improved organ transplantation (broadened donor pool, reduced dependence on post-transplant anti-rejection therapy), and ultimately treating a variety of cancers and non-malignant diseases.

 

Risks and Uncertainties

 

On October 7, 2023, a conflict arose between Israel and Hamas militants on Israel’s southern border from the Gaza Strip. The intensity and duration of Israel’s current war against Hamas is difficult to predict, and as are such war’s economic implications on the Company’s business and operations. To the extent that any of these negative developments do occur, they may have an adverse effect on the Company’s business, results of operations and its ability to raise additional funds. As of September 30, 2024, the Company considered the impact of the war on its business and operational assumptions and estimates and determined there were no material adverse impacts on the Company’s condensed consolidated results of operations and financial position.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated 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 with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial position of the Company as of September 30, 2024 and the condensed consolidated results of its operations and cash flows for the three and nine months ended September 30, 2024 and 2023. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results for the full year ending December 31, 2024 or any other period. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2023 and for the year then ended which were included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (“SEC”) on June 24, 2024.  

 

Note 2 - Going Concern and Management Plans

 

During the nine months ended September 30, 2024, the Company had not generated any revenues, had a net loss of approximately $4,181,000 and used cash in operations of approximately $1,936,000. As of September 30, 2024, the Company had a working capital deficiency of approximately $18,941,000 and an accumulated deficit of approximately $45,849,000. As of September 30, 2024 and through the date of this filing, notes payable with principal amounts totaling approximately $5,663,000 and $1,926,000, respectively, were past due. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the date these financial statements are issued.

 

The Company is currently funding its operations on a month-to-month basis. While there can be no assurance that it will be successful, the Company is in active negotiations to raise additional capital. The Company’s primary sources of operating funds since inception have been equity and debt financings. Management’s plans include continued efforts to raise additional capital through debt and equity financings. There is no assurance that these funds will be sufficient to enable the Company to fully complete its development activities or attain profitable operations. If the Company is unable to obtain such additional financing on a timely basis or, notwithstanding any request the Company may make, if the Company’s debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes, the Company may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate. Subsequent to September 30, 2024 and as more fully described in Note 10, Subsequent Events, the Company received aggregate proceeds of $75,000 from the issuance of common stock and $300,000 from the sale of Series B Convertible Preferred Stock. The Company will continue to incur net operating losses to fund operations.

 

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

 

8
 

 

Note 3 - Summary of Significant Accounting Policies

 

There have been no material changes to the Company’s significant accounting policies included in the Annual Report on Form 10-K for the year ended December 31, 2023, except as disclosed herein.

 

Valuation of Common Stock Price

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date and is then recognized over the period the services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an option or warrant, the Company issues new shares of common stock out of its authorized shares.

 

Because the Company’s common stock historically was not actively traded on a public market, the fair value of the Company’s restricted equity instruments is estimated by management based on observations of the sales prices of both restricted and freely tradable common stock, or instruments convertible into common stock. The Company obtained a third-party valuation of its common stock as of July 1, 2024 and December 31, 2023, which was considered in management’s estimation of fair value during the three and nine months ended September 30, 2024. The third-party valuation was performed in accordance with regulation of Section 409A of the Internal Revenue Code (“IRC”) as well as FASB ASC Topic 718. The estimates used by management are considered highly complex and subjective. The Company anticipates that once its shares become more actively traded, the use of such estimates will no longer be necessary to determine the fair value of its common stock.

 

The independent appraisal utilized the market approach, specifically the Backsolve method. The Backsolve method utilizes the economics from a direct transaction in the Company’s securities in determining fair value. The Backsolve method utilizes the Black-Scholes option pricing method (“OPM”) which allocated a probability-weighted present value to the Company’s convertible securities. The following steps were applied under the OPM:

 

  ● Establishment of total enterprise or equity value;
  ● Analysis of equity rights for each class of security;
  ● Selection of appropriate model for valuation purposes;
  ● Determination of key valuation inputs; and
  ● Computation of the fair value of the subject security.

 

Under the OPM, it was determined the Company’s common stock had a fair value of $0.28 and $0.26 as of July 1, 2024 and December 31, 2023, respectively, which included a discount for lack of marketability of 25%. Furthermore, the independent appraisal determined the Company’s expected volatility was 75% and 65% as of July 1, 2024 and December 31, 2023, respectively, by evaluating historical and implied volatilities of guideline companies.

 

Loss Per Share

 

The Company computes basic net loss per share by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share includes the dilution that would occur upon the exercise or conversion of all dilutive securities into common stock using the “treasury stock” and/or “if converted” methods, as applicable.

 

The common stock equivalents associated with the following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

 

   September 30, 
   2024   2023 
         
Options   6,932,004    6,932,004 
Warrants   19,434,945    13,541,107 
Convertible notes [1]   14,977,347    13,493,270 
Convertible preferred stock   21,031,420    18,743,053 
Total   62,375,716    52,709,434 

 

 

[1]Convertible notes are assumed to be converted at the rate of $0.75 per common share, which is the conversion price as of September 30, 2024 and 2023. However, such conversion rates are subject to adjustment under certain circumstances, such as stock splits and stock dividends, which may result in the issuance of common shares greater than the amount indicated.

 

Recent Accounting Standards

 

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the ASC. These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

 

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segments Disclosures (Topic 280), which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on both an annual and interim basis. The guidance becomes effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07.

 

9
 

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

 

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The standard is intended to require more detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. This ASU is applicable to entities with a single operating segment. The Company is currently evaluating the potential impact of this adoption on the condensed consolidated financial statements and related disclosures.

 

Note 4 - Fair Value

 

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of all Level 3 liabilities measured at fair value on a recurring basis using unobservable inputs during the three and nine months ended September 30, 2024 and 2023:

 

   Accrued   Accrued   Derivative     
   Interest   Compensation   Liabilities   Total 
                 
Balance - January 1, 2024  $356,510   $97,102   $33,000   $486,612 
                     
Accrual of warrant obligation   6,666    -    -    6,666 
Accrual of common stock obligation   -    -    -    - 
Reclassification of warrant obligation to derivative liabilities   -    -    -    - 
Issuance of warrants and conversion option   -    -    5,100    5,100 
Issuance of warrants   -                
Common stock issued in satisfaction of accrued compensation   -    (45,000)   -    (45,000)
Change in fair value   (74,316)   (766)   (5,800)   (80,882)
                     
Balance - March 31, 2024  $288,860   $51,336   $32,300   $372,496 
                     
Reclassification of warrant obligation to derivative liabilities   (6,666)   -    6,666    - 
Issuance of warrants and conversion option   -    -    349,638    349,638 
Change in fair value   12,502    1,815    (11,146)   3,171 
                     
Balance - June 30, 2024  $294,696   $53,151   $377,458   $725,305 
                     
Issuance of warrants and conversion option   -    -    311,263    311,263 
Change in fair value   129,783    3,284    98,550    231,617 
                     
Balance - September 30, 2024  $424,479   $56,435   $787,271   $1,268,185 

 

   Accrued   Accrued     
   Interest   Compensation   Total 
             
Balance - January 1, 2023  $504,700   $59,220   $563,920 
                
Accrual of warrant obligation   40,167    -    40,167 
Change in fair value   (46,131)   (1,095)   (47,226)
                
Balance - March 31, 2023   498,736    58,125    556,861 
Accrual of common stock obligation   -    9,438    9,438 
Satisfaction of warrant obligation   (40,167)   -    (40,167)
Change in fair value   27,272    73    27,345 
                
Balance - June 30, 2023   485,841    67,636    553,477 
Change in fair value   47,554    2,204    49,758 
Balance - September 30, 2023  $533,395   $69,840   $603,235 

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Company’s Level 3 liabilities shown in the above table consist of accrued obligations to issue warrants and common stock to non-employees and is recorded at fair value at inception and subsequent changes in fair value are charged to the condensed consolidated statement of operations at each reporting period.

 

In applying the Black-Scholes option pricing model utilized in the valuation of Level 3 liabilities, the Company used the following approximate assumptions:

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2024   2023   2024   2023 
                 
Risk-free interest rate   3.58% - 5.33 %   4.60% - 4.70%   3.58% - 5.33%   3.60% - 4.70 %
Expected term (years)   0.82 - 10.00    4.00 - 5.00    0.82 - 10.00    4.00-5.00 
Expected volatility   75%   80%   65% - 75%   80%
Expected dividends   0.00%   0.00%   0.00%   0.00%

 

The expected term used is the contractual life of the instrument being valued. Since the Company’s stock does not have significant trading volume, the Company is utilizing an expected volatility based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

 

10
 

 

As of September 30, 2024 and December 31, 2023, the Company had an obligation to issue 183,095 and 363,095 shares of common stock to service providers that had a fair value of $51,267 and $90,774, respectively, which was a component of accrued compensation in the condensed consolidated balance sheets. The fair value of the common stock underlying this obligation has a per share value of $0.28 and $0.26 as of September 30, 2024 and December 31, 2023, respectively. Furthermore, as of September 30, 2024 and December 31, 2023, the Company has an obligation to issue warrants to purchase 42,930 shares of the Company’s common stock to service providers that had a fair value of $5,168 and $6,328, respectively, which was a component of accrued compensation in the condensed consolidated balance sheets.

 

See Note 6, Notes Payable and Note 7, Stockholders’ Deficiency for additional details associated with the issuances of common stock, warrants and embedded conversion options.

 

Note 5 – Advances Payable

 

Advances payable and advances payable – related party represent cash received from investors for working capital purposes.

 

During the three months ended September 30, 2024, the Company received aggregate proceeds of $159,375 which were included in advances payable and advances payable – related party on the condensed consolidated balance sheet.

 

Note 6 – Notes Payable

 

As of September 30, 2024 and through the date of this filing, notes and convertible notes payable with principal amounts totaling approximately $5,663,000 and $1,926,000, respectively, were past due. Such notes continue to accrue interest and all relevant penalties have been accrued as of September 30, 2024. The Company is in negotiations with certain holders of notes payable to extend the maturity dates of such notes or to convert the principal and accrued interest into equity. As of September 30, 2024, the Company had an accrued interest balance of $840,663 related to notes and convertible notes payable that were past due.

 

During the three months ended September 30, 2024 and 2023, the Company recorded interest expense of $356,786 and $262,091, respectively, and amortization of debt discount of $148,073 and $80,667, respectively. During the nine months ended September 30, 2024 and 2023, the Company recorded interest expense of $730,539 and $635,143, respectively, and amortization of debt discount of $223,652 and $361,692, respectively. As of September 30, 2024 and December 31, 2023, the Company had $3,136,092 and $2,419,666, respectively, of accrued interest (including interest in the form of warrants (see Note 4, Fair Value) and penalties related to notes payable, which is included with accrued interest and accrued interest – related parties on the condensed consolidated balance sheets.

 

Notes Payable

 

In May 2024, the Company received proceeds of $250,000 from investors and issued notes payable in the aggregate principal amount of $300,000 with a maturity date of November 22, 2024. The notes bear interest at 10% per annum and have an aggregate original issue discount of $50,000 which was recorded as a debt discount and will be amortized over the term of the note. In connection with the issuances, the Company issued ten-year immediately vested warrants to purchase an aggregate of 625,000 shares of common stock at an exercise price of $0.75 per share. The warrants had an issuance date fair value of $96,710 which was included within derivative liabilities, recorded as a debt discount and will be amortized over the term of the notes. During the nine months ended September 30, 2024, the Company repaid $6,250 of the outstanding principal balance, such that $293,750 was outstanding as of September 30, 2024.

 

On July 15, 2024, the Company entered into an exchange agreement with a note holder, whereby the parties agreed to exchange a note payable with a principal amount of $30,000 for a warrant to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.75 per share. The exchange resulted in a gain on extinguishment of notes payable of $17,893 during the three and nine months ended September 30, 2024. The warrant had an issuance date fair value of $12,107 and was recorded as a derivative liability under the Company’s sequencing policy on the condensed consolidated balance sheet as of September 30, 2024.

 

Notes Payable - Related Parties

 

In May 2024, the Company received proceeds of $250,000 from an investor and issued a note payable in the principal amount of $300,000 with a maturity date of November 22, 2024. The note bears interest at 10% per annum and has an original issue discount of $50,000 which was recorded as a debt discount and will be amortized over the term of the note. In connection with the issuance, the Company issued ten-year immediately vested warrants to purchase 625,000 shares of common stock at an exercise price of $0.75 per share. The warrants had an issuance date fair value of $96,710 which was included within derivative liabilities - related parties, recorded as a debt discount and will be amortized over the term of the note. During the nine months ended September30, 2024, the Company repaid $6,250 of the outstanding principal balance, such that $293,750 was outstanding as of September 30, 2024.

 

Convertible Notes Payable

 

During the three months ended March 31, 2024, a convertible note with $100,000 of principal outstanding was automatically converted into 13,333 shares of Series C Convertible Preferred Stock at a price of $7.50 per share and the Company elected to convert $4,910 of accrued interest under such note into 6,546 shares of common stock at a price of $0.75 per share. The embedded conversion option attributable to the Series C Convertible Preferred Stock was accounted for as derivative liability and had an issuance date fair value of $1,700.

 

On March 22, 2024, the Company completed its private offering of 8% Convertible Notes that are convertible into shares of the Company’s Series C Convertible Preferred Stock at a conversion price of $7.50 per share. Since the inception of the private offering in 2020, the Company sold $4,760,170 aggregate principal amount of notes in the offering and issued investors warrants to purchase 4,321,926 shares of common stock at an exercise price of $1.25 per share. There were no issuances during the nine months ended September 30, 2024.

 

On July 24, 2024, the Company entered into a note amendment agreement with a note holder to (i) extend the maturity date of a note in the principal amount of $50,000 from December 23, 2023 to December 23, 2024 and (ii) increase the interest rate from 8% to 10% effective July 2024. Further, in the event of an equity or debt financing transaction resulting in gross proceeds of at least $2,000,000, the Company or guarantor of the note shall repay the note in full within five days after completing the transaction. If the note is not repaid in full by December 23, 2024, any further extension will require the issuance of an additional five-year warrant to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.75 per share. Contemporaneous with the execution of this amendment, the Company (i) issued to the lender an additional five-year warrant to purchase 25,000 shares of the Company’s common stock at an exercise price of $0.75 per share and (ii) amended the holder’s previously outstanding warrant to reduce the exercise price to $0.75 per share. This transaction was accounted for as a debt modification. The warrants had an issuance date fair value of $3,000 and were accounted for as derivative liabilities under the Company’s sequencing policy on the condensed consolidated balance sheet as of September 30, 2024.

 

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On July 24, 2024, the Company entered into a note amendment agreement with a note holder to (i) extend the maturity date of a note in the principal amount of $25,000 from December 26, 2023 to December 26, 2024 and (ii) increase the interest rate from 8% to 10% effective July 2024. Further, in the event of an equity or debt financing transaction resulting in gross proceeds of at least $2,000,000, the Company or guarantor of the note shall repay the note in full within five days after completing the transaction. If the note is not repaid in full by December 26, 2024, any further extension will require the issuance of an additional five-year warrant to purchase 25,000 shares of the Company’s common stock at an exercise price of $0.75 per share. Contemporaneous with the execution of this amendment, the Company (i) issued to the lender an additional five-year warrant to purchase 12,500 shares of the Company’s common stock at an exercise price of $0.75 per share and (ii) amended the holder’s previously outstanding warrant to reduce the exercise price to $0.75 per share. The warrants had an issuance date fair value of $1,500 and were accounted for as derivative liabilities under the Company’s sequencing policy on the condensed consolidated balance sheet as of September 30, 2024.

 

On November 29, 2023, the Company and a certain investor agreed to extend the maturity date of a certain convertible note payable in the principal amount of $100,000 from December 31, 2022 to July 1, 2024. In addition, the note provides repayment terms as follows: $10,000 per month from January 1, 2024 through March 1, 2024 and $20,000 per month from April 1, 2024 through June 1, 2024. A final payment of $10,000 and all accrued and unpaid interest is due on July 1, 2024. As of September 30, 2024 and through the date of filing these payments have not been made.

 

Convertible Notes Payable - Related Parties

 

In March 2024, the Company received additional advances of $146,672 under a note originally issued to George Verstraete, a director of the Company, and assigned to a trust controlled by Darlene Soave, a director of the Company, (the “Verstraete Note”), and, as a result, increased the outstanding principal balance of the Verstraete Note to $3,736,708. In connection with the advances, the Company issued five-year immediately vested warrants to purchase an aggregate of 117,338 shares of common stock at an exercise price of $1.25 per share to the trust controlled by Ms. Soave, the holder of the note. The warrants had an issuance date fair value of $6,666 which was included within derivative liabilities - related parties, recorded as a debt discount and will be amortized over the term of the note.

 

In April 2024, the Company entered into note amendment agreements with a trust controlled by Darlene Soave to extend the maturity dates of a note originally issued to Ms. Soave and assigned to the trust (the “Soave Note”) and the Verstraete Note to October 28, 2024 and September 10, 2024, respectively. See Note 10- Subsequent Events, for additional information related to the note extensions.

 

Note 7 – Stockholders’ Deficiency

 

Preferred Stock Dividends

 

During the three months ended September 30, 2024 and 2023, the Company accrued additional preferred dividends of $350,984 and $309,150, respectively. During the nine months ended September 30, 2024 and 2023, the Company accrued additional preferred dividends of $1,017,520 and $907,516, respectively. As of September 30, 2024 and December 31, 2023, there were accrued preferred stock dividends of $365,078 and $25,540, respectively.

 

During the three months ended June 30, 2024, the Company issued an aggregate of 904,049 shares of common stock at the stated value of $0.75 per share for aggregate value of $677,982, pursuant to the terms of the Series A, B and C Convertible Preferred Stock Certificates of Designation, in connection with the partial payment of accrued dividends for Series A, Series B, and Series C Convertible Preferred Stock.

 

Series B Convertible Preferred Stock

 

During the nine months ended September 30, 2024, the Company received gross proceeds of $776,001 from investors in connection with the issuance of an aggregate of 103,464 shares of its Series B Convertible Preferred Stock and five-year warrants to purchase an aggregate of 1,164,000 shares of the Company’s common stock at an exercise price of $0.75 per share. The warrants and embedded conversion options were accounted for as derivative liabilities under the Company’s sequencing policy and had an aggregate issuance date fair value of $166,500.

 

Series C Convertible Preferred Stock

 

See Note 6, Notes Payable – Convertible Notes Payable for details associated with conversions of notes payable into 13,333 shares of Series C Convertible Preferred Stock. The embedded conversion option of the Series C Convertible Preferred Stock was accounted for as a derivative liability under the Company’s sequencing policy and had an issuance date fair value of $1,700.

 

Common Stock

 

See Note 6, Notes Payable – Convertible Notes Payable for details associated with conversions of accrued interest into 6,546 shares of common stock.

 

During the three months ended March 31, 2024, the Company issued 180,000 shares of the Company’s common stock with an issuance date fair value of $45,000 in connection with a legal settlement that was included within accrued compensation as of December 31, 2023.

 

During the three months ended March 31, 2024, the Company issued 1,000,000 immediately vested shares of the Company’s common stock to a certain consultant as compensation for services performed. The shares had a grant date fair value of $260,000 which was recognized immediately.

 

During the three and six months ended June 30, 2024, the Company issued 18,000 and 2,000 shares of the Company’s common stock to a certain investor in satisfaction of convertible note payable late fees. The shares had an issuance date fair value of $5,200 which was recognized immediately.

 

During the three months ended September 30, 2024, the Company received gross proceeds of $415,625 from investors in connection with the issuance of an aggregate of 1,312,500 shares of its common stock and ten-year warrants to purchase an aggregate of 1,312,500 shares of the Company’s common stock at an exercise price of $0.35 per share. The warrants had an issuance date fair value of $287,455 and were accounted for as derivative liabilities under the Company’s sequencing policy on the condensed consolidated balance sheet as of September 30, 2024.

 

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Stock Warrants

 

During the three months ended March 31, 2024, the Company entered into an advisory agreement with a certain advisor to perform independent advisory services in connection with business operations from January 5, 2024 to June 4, 2024. In consideration of services to be performed, the Company issued five-year warrants to purchase 100,000 shares of common stock, which vest 20% monthly during the term of the agreement at an exercise price of $1.25 per share. The warrants had a grant date fair value of $6,590 which will be recognized over the vesting term.

 

See Note 6, Notes Payable and Note 7, Stockholders’ Deficiency – Common Stock for additional details associated with the issuance of stock warrants.

 

Stock-Based Compensation

 

During the three months ended September 30, 2024, the Company recognized stock-based compensation expense of $5,070, consisting of $1,408 of expense related to warrants which was included within accrued compensation and $3,662 related to common stock which was included within accrued compensation, which was included within general and administrative expenses on the condensed consolidated statement of operations. During the three months ended September 30, 2023, the Company recognized stock-based compensation expense of $25,962, consisting of $24,130 of expense related to warrants (of which, $23,758 was included within stockholder’s deficiency and $372 was included within accrued compensation), and $1,832 of expense related to common stock issued or to be issued for consulting services (which has been included within accrued compensation) which was included within general and administrative expenses.

 

During the nine months ended September 30, 2024, the Company recognized stock-based compensation expense of $309,297, consisting of $36,804 of expense related to warrants (of which, $37,979 was included within stockholder’s deficiency and $(1,175) was included within accrued compensation) and $272,493 of expense related to common stock to be issued for consulting services (of which, $265,200 was included within stockholder’s deficiency and $7,293 was included within accrued compensation), which was included within general and administrative expenses on the condensed consolidated statement of operations. During the nine months ended September 30, 2023, the Company recognized stock-based compensation expense of $404,978 (consisting of $63,709 of expense related to warrants (of which, $64,358 was included within stockholder’s deficiency and $(649) was included within accrued compensation and $341,269 of expense related to common stock issued or to be issued for consulting services described above (of which, $330,000 has been included within stockholder’s deficiency and $11,269 has been included within accrued compensation) which was included within general and administrative expenses.

 

There was no unrecognized stock-based compensation expense as of September 30, 2024.

 

Note 8 – Related Party Transactions

 

As of September 30, 2024 and December 31, 2023, the Company was required to issue warrants to purchase an aggregate of 2,181,500 and 1,956,500, respectively, shares of common stock at an exercise price of $0.75 per share to former directors of the Company in connection with loans made to the Company in the aggregate amount of $459,000 which required certain penalties be paid in the form of warrants. As a result, the Company accrued $254,532 and $215,050 associated with the fair value of the obligations as of September 30, 2024 and December 31, 2023, respectively, which amount is included in accrued interest – related parties on the condensed consolidated balance sheets. The obligations to issue warrants are subject to changes in fair value at each reporting period. See Note 4, Fair Value for additional details.

 

See Note 6, Notes Payable – Convertible Notes Payable – Related Parties for details related to convertible notes held by directors of the Company. See Note 5, Advances Payable for details related to advances received from related parties.

 

Note 9 – Commitments and Contingencies

 

Yeda Research and License Agreement

 

During the three months ended September 30, 2024 and 2023, the Company recorded research and development expenses of $14,500 related to its Research and License Agreement with Yeda (the “Agreement”). During the nine months ended September 30, 2024 and 2023, the Company recorded research and development expenses of $43,500 related to the Agreement with Yeda. As of September 30, 2024 and December 31, 2023, the Company had $116,000 and $72,500, respectively, of accrued research and development expenses pursuant to the Agreement with Yeda.

 

MD Anderson Agreements

 

During the nine months ended September 30, 2024, the Company commenced work under the February 2019 clinical trial agreement, as amended in May 2023, under which MD Anderson agreed to perform cell production and conduct Phase 1/2 human clinical trials with a second set of 12 patients for a total of approximately $1,816,000, with payments becoming due as certain specified milestones are met by MD Anderson.

 

The Company recognized $324,000 and $429,505 of research and development expenses during the three months ended September 30, 2024 and 2023, respectively, and $1,435,872 and $1,082,193 of research and development expenses during the nine months ended September 30, 2024 and 2023, respectively, associated with services provided by The University of Texas M.D. Anderson Cancer Center (“MD Anderson”) under the two agreements with MD Anderson dated November 2018 and February 2019, respectively. As of September 30, 2024 and December 31, 2023, the Company had a liability to MD Anderson of $1,365,372 and $924,705, respectively, which was included within accounts payable on the condensed consolidated balance sheets.

 

Litigation

 

In January 2019, the holder of a promissory note in the principal amount of $250,000 due on March 16, 2016 instituted a collection action in the Supreme Court of the State of New York, County of New York. On June 12, 2019, the plaintiff served a motion for summary judgment through the Secretary of State which was heard on July 12, 2019 and granted. The Company contended that it was not given sufficient notice under the applicable statute and did not have an opportunity to oppose the motion. Judgment was entered in October 2019 in the amount of $267,680. The Company brought a motion to vacate based on the jurisdictional defect of the motion in not providing the required amount of time, but that motion was denied in February 2021 without properly addressing the jurisdictional issues raised by the Company. The Company appealed the denial and then filed a motion to Renew and Reargue the motion to vacate based on the Court’s failure to address critical issues. That motion was also denied on April 15, 2021 without addressing the Company’s arguments. The Company appealed the second denial as well and pursued both appeals in a consolidated manner so as to resolve all issues together. Each of the appeals was denied. While the Company’s motions were pending, the plaintiff commenced steps to collect judgment. During the year ended December 31, 2021, $103,088 of a deposit made with the court by a third party on behalf of the Company was released to an officer of the court and has been accounted for as partial note repayment, with an additional $146,912 due under the note repaid by a release of the remaining deposit to an officer of the court and garnishment of Company funds during the year ended December 31, 2022, which was also accounted for as a note repayment. In August 2023, a supplemental judgment of $38,838 was entered against the Company. Inasmuch, as there were no further opportunities to appeal, the Company was required to pay the remaining amount due, which was estimated to be approximately $113,000 and recorded as a liability as of December 31, 2023. As of May 31, 2024, after taking into account accrued and unpaid interest, approximately $117,000 was owed to the plaintiff and the plaintiff was seeking, among other things, additional monetary sanctions. In June 2024, the Company resolved this matter by making a final payment of $135,000, and the plaintiff agreed to cease the pursuit of additional sanctions against the Company and has since filed a satisfaction of judgment.

 

Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. Aside from the matters discussed above, there are no other known contingencies through the date of this filing.

 

Note 10 – Subsequent Events

 

The Company has evaluated events that have occurred after the balance sheet and through the date the financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed below.

 

Subsequent to September 30, 2024, the Company received gross proceeds of $300,000 from investors in connection with the issuance of an aggregate of 39,997 shares of its Series B Convertible Preferred Stock and five-year warrants to purchase an aggregate of 450,000 shares of the Company’s common stock at an exercise price of $0.75 per share.

 

Subsequent to September 30, 2024, the Company received gross proceeds of $75,000 from investors in connection with the issuance of an aggregate of 214,287 shares of its Common Stock and ten-year warrants to purchase an aggregate of 214,287 shares of the Company’s common stock at an exercise price of $0.35 per share.

 

Subsequent to September 30, 2024, the Company entered into note amendment agreements with a trust controlled by Darlene Soave to extend the maturity dates of a note originally issued to Ms. Soave and assigned to the trust and the Verstraete Note, which had an outstanding principal amount of $3,736,708 as of September 30, 2024, to April 28, 2025 and March 10, 2025, respectively.

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of the condensed consolidated results of operations and financial condition of Cell Source, Inc. (“CSI”, “Cell Source”, the “Company”, “us,” “we,” “our,”) as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 should be read in conjunction with our unaudited financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission (“SEC”) on June 24, 2024.

 

This Quarterly Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors that may affect our results include, but are not limited to, the risks and uncertainties discussed in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on June 24, 2024.

 

Overview

 

We are a cell therapy company focused on immunotherapy. Since our inception, we have been involved with the development of proprietary immune system management technology licensed from Yeda Research & Development Company Limited (“Yeda”), the commercial arm of the Weizmann Institute. We have since shifted the focus of our research and development efforts to MD Anderson.

 

This technology addresses one of the most fundamental challenges within human immunology: how to tune the immune response such that it tolerates selected desirable foreign cells, but continues to attack all other (undesirable) targets. In simpler terms, a number of potentially life-saving treatments have limited effectiveness today because the patient’s immune system rejects them. For example, while HSCT – hematopoietic stem cell transplantation (e.g. bone marrow transplantation) has become a preferred therapeutic approach for treating blood cell cancer, most patients do not have a matched family donor. Although matched unrelated donors and cord blood can each provide an option for such patients, haploidentical stem cell transplants (sourced from partially mismatched family members) are rapidly gaining favor as a treatment of choice. This is still a risky and difficult procedure primarily because of potential conflicts between host (recipient) and donor immune systems and also due to viral infections that often follow even successful HSCT while the compromised new immune system works to reconstitute itself by using the transplanted stem cells. Today, rejection is partially overcome using aggressive immune suppression treatments that leave the patient exposed to many dangers by compromising their immune system.

 

The unique advantage of Cell Source technology lies in the ability to induce sustained tolerance of transplanted cells (or organs) by the recipient’s immune system in a setting that requires only mild immune suppression, while avoiding the most common post-transplant complications. The scientific term for the result of successfully inducing such tolerance in a transplantation setting is chimerism, where the recipient’s immune system tolerates the co-existence of the (genetically different) donor type and host type cells. Attaining sustained chimerism is an important prerequisite to achieving the intrinsic GvL (graft versus leukemia) effect of HSCT and supporting the reconstitution of normal hematopoiesis (generation of blood cells, including those that protect healthy patients from cancer) in blood cancer patients. Preclinical data and initial clinical data show that Cell Source’s Veto Cell technology can provide superior results in allogeneic (donor-derived) HSCT by allowing for haploidentical stem cell transplants under a mild conditioning regimen, while avoiding the most common post-transplant complications. Combining this with CAR (Chimeric Antigen Receptor) T cell therapy as a unified VETO CAR-T treatment, we will be able to treat patients in relapse as well as those in remission and use the cancer killing power of CAR-T to protect the patient while their immune system fully reconstitutes, thus providing an end-to-end solution for blood cancer treatment by potentially delivering a fundamentally safer and more effective allogeneic HSCT: prevention of relapse; avoidance GvHD; prevention of viral infections; and enhanced persistence of GvL effect. This means that the majority of patients will be able to find a donor, and will have access to a potentially safer procedure with higher long term survival rates than what either donor-derived HSCT or autologous CAR-T each on their own currently provide.

 

The ability to induce permanent chimerism (and thus sustained tolerance) in patients – which allows the transplantation to overcome rejection without having to compromise the rest of the immune system – may open the door to effective treatment of a number of severe medical conditions, in addition to blood cancers, which are characterized by this need. These include:

 

  ● The broader set of cancers, including solid tumors, that can potentially be treated effectively using genetically modified cells such as CAR-T cell therapy, but also face efficacy and economic constraints due to limited persistence based on immune system issues (i.e., the need to be able to safely and efficiently deliver allogeneic CAR-T therapy). Inducing sustained tolerance to CAR-T cells may bring reduced cost and increased efficacy by allowing for off-the-shelf (vs. patient-derived) treatments with more persistent cancer killing capability.
     
  ● Organ failure and transplantation. A variety of conditions can be treated by the transplantation of vital organs. However, transplantation is limited both by the insufficient supply of available donor organs and the need for lifelong, daily anti-rejection treatments post-transplant. Haploidentical organ transplants, with sustained chimerism, have the potential to make life saving transplants accessible to the majority of patients, with the prospect of improved life quality and expectancy.
     
  ● Non-malignant hematological conditions (such as type one diabetes and sickle cell anemia) which could, in many cases, also be more effectively treated by stem cell transplantation if the procedure could be made safer and more accessible by inducing sustained tolerance in the stem cell transplant recipient.

 

Human Capital Resources

 

Other than our Chief Executive Officer, we currently do not have any full-time employees, but retain the services of independent contractors/consultants on a contract-employment basis.

 

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Recent Developments

 

Preclinical Results and Clinical Results

 

After two years of intensive collaboration with Professor Zelig Eshhar, the inventor of CAR-T cell therapy, preclinical data confirmed that Veto Cells can markedly extend persistence of genetically modified T cells from the same donor and that genetically modified Veto Cells can effectively inhibit tumors expressing an antigen recognized by the transgenic T cell receptor. Furthermore, human Veto Cells transfected with CAR exhibit anti-tumor activity in-vitro without losing their veto activity. These preclinical results have formed the basis of our current development of a clinical protocol for allogeneic VETO CAR-T HSCT combined therapy for blood cancer treatment. Cell Source plans to submit this protocol for approval in 2025. Recent preclinical research has determined that Veto Cells can overcome rejection from both NK (natural killer) cells and T-cells, further enhancing their potential efficacy when used for off-the-shelf CAR-T cell therapy. The Phase 1/2 clinical trial at the University of Texas MD Anderson Cancer Center, using Cell Source’s Anti-viral Veto Cells, has completed the first five treatment cohorts, with 15 patients each receiving a haploidentical HSCT under reduced intensity conditioning with Veto Cells. This trial has thus far shown that there has been no toxicity associated with the Veto Cells, with patients showing successful stem cell engraftment, in the absence of severe GvHD. The study is expected to continue with additional cohorts of patients, using the current treatment protocol.

 

Private Placement of Series B Convertible Preferred Stock

 

Beginning in October 2023, the Company entered into subscription agreements with certain accredited investors in a private placement offering. Each unit, which is sold at a price of $7.50 per unit, consists of one (1) share of Series B Convertible Preferred Stock and a five-year warrant to purchase a certain number of shares of common stock at an exercise price of $0.75 per share. For every $100,000 of units acquired, the investor will receive warrants to purchase an aggregate of 150,000 shares of common stock.

 

From October 2023 through the date of filing, the Company has sold an aggregate of 210,132 units for gross proceeds of $1,576,000 and issued warrants to purchase 2,364,000 shares of the Company’s common stock.

 

Condensed Consolidated Results of Operations

 

Three Months Ended September 30, 2024 Compared with the Three Months Ended September, 2023

 

Research and Development

 

Research and development expense was $360,857 and $514,505 for the three months ended September 30, 2024 and 2023, respectively, a decrease of $153,648, or 30%. This decrease is primarily attributable to no patients being enrolled in the three months ended September 30, 2024 by MD Anderson.

 

General and Administrative

 

General and administrative expense, which is associated with external consulting and professional fees, payroll and stock-based compensation expenses, was $470,768 and $480,875 for the three months ended September 30, 2024 and 2023, respectively, a decrease of $10,107, or 2%. This decrease is primarily attributable to decreases in legal expenses of approximately $16,000, due to various legal matters that occurred in 2023, stock-based compensation expense of $20,000 and consulting expenses of $60,000, due to a decrease in various consulting services, partially offset by increases in accounting and audit expenses of approximately $57,000, due to increased work performed, and payroll expenses of $30,000.

 

Interest Expense

 

Interest expense for the three months ended September 30, 2024 and 2023 was $356,786 and $262,091, respectively, an increase of $94,695, or 36%. This increase is primarily associated with an increase in the balance of interest bearing notes during the 2024 compared to the prior period.

 

Interest Expense - Amortization of Debt Discount

 

Amortization of debt discount was $148,073 and $80,667 for the three months ended September 30, 2024 and 2023, respectively, an increase of $67,406, or 84%. This increase is primarily associated with an increase in notes payable issued in 2024 compared to the prior year.

 

Change in Fair Value of Derivative Liabilities

 

During the three months ended September 30, 2024, we recognized a gain on the change in fair value of derivative liability of $98,550.

 

Gain on Extinguishment of Note Payable

 

During the three months ended September 30, 2024, we recognized a gain on the extinguishment of a note payable of $17,893 via the issuance of warrants. The gain on extinguishment of note payable is attributable to the exchange of a promissory note in the principal amount of $30,000 for a five-year warrant to purchase 100,000 shares of common stock.

 

Nine Months Ended September 30, 2024 Compared with the Nine Months Ended September, 2023

 

Research and Development

 

Research and development expense was $1,537,081 and $1,218,593 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $318,488, or 26%. This increase is primarily attributable to a patient enrollment milestone being achieved during the 2024 period, compared to no patient enrollment milestones being achieved during the 2023 period.

 

General and Administrative

 

General and administrative expense, which is associated with external consulting and professional fees, payroll and stock-based compensation expenses, was $1,626,352 and $2,097,801 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $471,449, or 22%. This decrease is primarily attributable to decreases in legal expenses of $367,000, due to various legal matters that occurred in 2023, stock-based compensation expense of $100,000 and consulting expenses of $150,000, due to a decrease in various consulting services, partially offset by an increase in external expenses of $84,000 and payroll expense of $72,000.

 

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Interest Expense

 

Interest expense for the nine months ended September 30, 2024 and 2023 was $730,539 and $635,143, respectively, an increase of $95,396, or 15%. This increase is primarily associated with an increase in the balance of interest bearing notes outstanding during the 2024 period compared to the prior period.

 

Interest Expense - Amortization of Debt Discount

 

Amortization of debt discount was $223,652 and $361,692 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $138,040, or 38%. This decrease is primarily associated with a majority of the debt discount being fully amortized during 2023.

 

Change in Fair Value of Derivative Liabilities

 

During the nine months ended September 30, 2024, we recognized a gain on the change in fair value of derivative liability of $81,604.

 

Gain on Extinguishment of Note Payable

 

Gain on extinguishment of note payable was $17,893 and $41,920 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $24,027, or 57%. This decrease is primarily attributable to the exchange of a $100,000 note occurring during the 2023 period as compared to a $30,000 note during the 2024 period.

 

Liquidity and Going Concern

 

We measure our liquidity in a number of ways, including the following:

 

   September 30,2024   December 31, 2023 
         
Cash  $22,992   $22,203 
Working capital deficiency  $(18,940,556)  $(15,611,543)

 

During the nine months ended September 30, 2024, we had not generated any revenues, had a net loss of approximately $4,181,000 and had used cash in operations of approximately $1,936,000. As of September 30, 2024, we had a working capital deficiency of approximately $18,941,000 and an accumulated deficit of approximately $45,849,000. As of September 30, 2024 and through the date of this filing, notes payable with principal amounts totaling $5,663,000 and $1,926,093, respectively, were past due. We will continue to incur net operating losses to fund operations. These conditions raise substantial doubt about our ability to continue as a going concern for at least one year from the date these financial statements are issued.

 

We are currently funding our operations on a month-to-month basis. While there can be no assurance that we will be successful, we are in active negotiations to raise additional capital. Our primary sources of operating funds since inception have been equity and debt financings. Management’s plans include continued efforts to raise additional capital through debt and equity financings. There is no assurance that these funds will be sufficient to enable us to fully complete our development activities or attain profitable operations. If we are unable to obtain such additional financing on a timely basis or, notwithstanding any request we may make, if our debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes, we may have to curtail our development, marketing and promotional activities, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately we could be forced to discontinue our operations and liquidate. Subsequent to September 30, 2024 and as more fully described in Note 10, Subsequent Events, the Company received aggregate proceeds of $75,000 from the issuance of common stock and $300,000 from the sale of Series B Convertible Preferred Stock. The Company will continue to incur net operating losses to fund operations

 

There can be no assurances that we will be successful in generating additional cash from equity or debt financings or other sources to be used for operations. Should we not be successful in obtaining the necessary financing to fund our operations, we would need to curtail certain or all operational activities and/or contemplate the sale of our assets, if necessary.

 

During the nine months ended September 30, 2024, our sources and uses of cash were as follows:

 

Net Cash Used in Operating Activities

 

We experienced negative cash flows from operating activities for the nine months ended September 30, 2024 and 2023 in the amounts of approximately $1,936,000 and $1,626,000, respectively. The net cash used in operating activities for the nine months ended September 30, 2024 was primarily due to cash used to fund a net loss of approximately $4,181,000, adjusted for net non-cash expenses in the aggregate amount of approximately $670,000, partially offset by $1,575,000 of net cash provided by changes in the levels of operating assets and liabilities. The net cash used in operating activities for the nine months ended September 30, 2023 was primarily due to cash used to fund a net loss of approximately $4,271,000, adjusted for non-cash expenses in the aggregate amount of approximately $753,000, partially offset by $1,892,000 of net cash provided by changes in the levels of operating assets and liabilities.

 

Net Cash Provided by Financing Activities

 

Net cash provided by financing activities for the nine months ended September 30, 2024 and 2023 was approximately $1,937,000 and $1,406,000, respectively. The net cash provided by financing activities during the nine months ended September 30, 2024 was attributable to $416,000 of proceeds from issuance of common stock and warrants, $776,000 of proceeds from the issuance of Series B Convertible Preferred Stock and warrants, approximately $647,000 of proceeds from the issuance of notes and convertible notes payable, proceeds from advances payable and a related party advance of 159,000 partially offset by the repayment of a financing liability in the amount of $49,000 and $13,000 related to the repayment of notes payable. The net cash provided by financing activities during the nine months ended September 30, 2023 was attributable to $677,000 of proceeds from the issuance of convertible notes to a related party director and $920,000 of proceeds from the issuance of convertible notes payable, partially offset by $191,000 of repayments towards the financing of the Company’s Director’s and Officer’s Insurance.

 

16
 

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Critical Accounting Estimates

 

The preparation of financial statements and related disclosures are in conformity with U.S. GAAP. These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expense during the periods presented. We believe that the estimates and judgments upon which we rely are reasonable based upon information available to us at the time that we make these estimates and judgments. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.

 

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

 

There have been no material changes to the Company’s critical accounting estimates since the 2023 Form 10-K except as described below.

 

Valuation of the Company’s Common Stock Price

 

Because the Company’s common stock historically was not actively traded on a public market, the fair value of the Company’s restricted equity instruments is estimated by management based on observations of the sales prices of both restricted and freely tradable common stock, or instruments convertible into common stock. The Company obtained a third-party valuation of its common stock as of July 1, 2024 and December 31, 2023, which was considered in management’s estimation of fair value during the three and nine months ended September 30, 2024. The third-party valuation was performed in accordance with regulation of Section 409A of the Internal Revenue Code (“IRC”) as well as FASB ASC Topic 718.

 

The independent appraisal utilized the market approach, specifically the Backsolve method. The Backsolve method utilizes the economics from a direct transaction in the Company’s securities in determining fair value. The Backsolve method utilizes the Black-Scholes option pricing method (“OPM”) which allocated a probability-weighted present value to the Company’s convertible securities. The following steps were applied under the OPM:

 

  ● Establishment of total enterprise or equity value;
  ● Analysis of equity rights for each class of security;
  ● Selection of appropriate model for valuation purposes;
  ● Determination of key valuation inputs; and
  ● Computation of the fair value of the subject security.

 

Under the OPM, it was determined the Company’s common stock had a fair value of $0.28 and $0.26 as of July 1, 2024 and December 31, 2023, respectively, which included a discount for lack of marketability of 25%. Furthermore, the independent appraisal determined the Company’s expected volatility was 75% and 65% as of July 1, 2024 and December 31, 2023, respectively, by evaluating historical and implied volatilities of guideline companies.

 

Item 3. Quantitative And Qualitative Disclosures About Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Principal Executive and Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Internal controls are procedures which are designed with the objective of providing reasonable assurance that (1) our transactions are properly authorized, recorded and reported; and (2) our assets are safeguarded against unauthorized or improper use, to permit the preparation of our condensed consolidated financial statements in conformity with United States generally accepted accounting principles.

 

In connection with the preparation of this Quarterly Report, management, with the participation of our Principal Executive and Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)). Based upon that evaluation, our Principal Executive and Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures were effective.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

17
 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We are not currently involved in any pending legal proceeding or litigations and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.

 

Item 1A. Risk Factors.

 

There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on June 24, 2024.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

In August 2024, we sold 1,312,500 shares of common stock to four (4) accredited investors at a purchase price of $0.317 per share. In connection with this transaction, we issued the investors ten-year warrants to purchase 1,312,500 shares of our common stock at an exercise price of $0.35 per share. We relied upon the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), in connection with these issuances.

 

In July 2024, we issued we issued five-year warrants to purchase a total of 37,500 shares of our common stock at an exercise price of $0.75 per share to holders of promissory notes in exchange for their agreement to extend the maturity dates and amend certain other terms of the notes. We relied upon the exemption provided by Section 4(a)(2) of the Securities Act in connection with these transactions.

 

In July 2024, we issued a warrant to purchase 100,000 shares of our common stock at an exercise price of $0.35 per share to a holder of a promissory note in the principal amount of $30,000 in exchange for the cancellation of the promissory note. We relied upon the exemption provided by Section 3(a)(9) of the Securities Act in connection with this transaction.

 

Item 3. Defaults Upon Senior Securities.

 

As of September 30, 2024 and through the date of this filing, notes payable and convertible notes payable with face values totaling approximately $5,663,000 and $1,926,093, respectively, were past due. Such notes continue to accrue interest and all relevant penalties have been accrued as of September 30, 2024. Of such past due notes payable, a holder of a note with principal amount of $250,000 issued a notice of default. See Item 1 above for additional details. We are in negotiations with all holders to extend the maturity dates of such notes or to convert the principal and accrued interest into equity.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

In October 2024, our common stock was re-listed on the OTCQB Market.

 

18
 

 

Item 6. Exhibits.

 

10.73   Common Stock Purchase Agreement, dated as of August 20, 2024, between Cell Source, Inc. and the investors identified therein.
     
31*   Certification of principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32*   Certification of principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS*   Inline XBRL Instance Document
     
101.SCH*   Inline XBRL Taxonomy Extension Schema Document
     
101.CAL*   Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF*   Inline XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB*   Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE*   Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
104*   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith

 

19
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  CELL SOURCE, INC.
     
Dated: November 14, 2024 By: /s/ Itamar Shimrat
  Name: Itamar Shimrat
  Title:

Chief Executive Officer and

Chief Financial Officer (Principal

Executive, Financial and Accounting

Officer)

 

20

 

EXHIBIT 10.73

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (the “Agreement”) is made as of this 20th day of August, 2024 by and among Cell Source, Inc., a Delaware corporation (the “Company”), and David Zolty Investment ULC, a Canadian Unlimited Liability Corporation, Solomon Zolty Investment ULC, a Canadian Unlimited Liability Corporation, Honey Kamenetsky Investment ULC, a Canadian Unlimited Liability Corporation, Helen Samuel Investment ULC, a Canadian Unlimited Liability Corporation, and Phyllis Friedman Investment ULC, a Canadian Unlimited Liability Corporation (the “Buyer”).

 

WHEREAS, the Company wishes to issue and sell to Buyers and the Buyers wish to purchase from the Company a total of One Million Five Hundred Thousand (1,500,000) shares of the Company’s Common Stock, $.001 par value (the “Common Stock”);

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and of other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

1.Purchase of Shares. The Company does hereby sell to each Buyer and each Buyer does hereby purchase from the Company the number of shares (the “Shares”) of the Company’s Common Stock set forth next to such Buyer’s name below for the purchase price set forth next to such Buyer’s name below (the “Purchase Price”).

 

Name of Buyer  No. of Shares   Purchase Price 
David Zolty Investment ULC   187,500   $59,375 
Solomon Zolty Investment ULC   187,500   $59,375 
Honey Kamenetsky Investment ULC   187,500   $59,375 
Helen Samuel Investment ULC   187,500   $59,375 
Phyllis Friedman Investment ULC   750.000   $237,500 

 

Contemporaneous with the execution and delivery of this Agreement, each Buyer is delivering by wire transfer of immediately available the applicable Purchase Price to the account set forth on Exhibit A hereto and the Company is instructing the transfer agent and registrar of its Common Stock to register the applicable number of Shares in each Buyer’s name in book entry form.

 

 
 

 

2.

Warrant. As an inducement to each Buyer to purchase the Shares, the Company, upon the execution and delivery of this Agreement shall issue to each Buyer a ten (10) year warrant to purchase the number of shares of the Company’s Common Stock (the “Warrant Shares”) set forth next to such Buyer’s name below at an exercise price of $0.35 per share.

 

Name of Buyer  No. of Warrant Shares 
David Zolty Investment ULC   187,500 
Solomon Zolty Investment ULC   187,500 
Honey Kamenetsky Investment ULC   187,500 
Helen Samuel Investment ULC   187,500 
Phyllis Friedman Investment ULC   750.000 

 

3.Representations of the Company. The Company hereby represents and warrants to the Buyers as follows:

 

(a)The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of Nevada.

 

(b)The Company has the full corporate power and authority to enter into this Agreement and to perform its obligations hereunder.

 

(c)The Shares of Common Stock sold and issued to Buyer pursuant to this Agreement are duly authorized, validly issued and non-assessable.

 

(d)When issued pursuant to the terms of the Warrant, the shares of Common Stock issuable upon the exercise of the Warrant (the “Warrant”) will be duly authorized, validly issued and non-assessable.

 

2
 

 

4.Representations of Buyer. Each Buyer hereby represents and warrants to the Company as follows:

 

(a)The Shares and Warrant (collectively, the “Securities”) are being been acquired for investment and not with a view to the resale or distribution of such Shares. Such Shares are being acquired by the Buyer for its own account.

 

(b)The Buyer understands that neither the Securities nor the Warrant Shares the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on an exemption for private offerings. Because the Company has no obligation to effect such registration, the Buyer may have to continue to bear the economic risk of his investment in the Shares for an indefinite period.

 

(c)The Buyer has relied only on the good faith information provided by the Company, has been given ample time and has had the opportunity to ask questions and has been given access to full and complete information regarding the Company. The Buyer has been provided access to all information requested by the Buyer.

 

(d)The Buyer believes that an investment in the Company is suitable based upon the Buyer’s investment objectives and financial needs, and the Buyer has no need for liquidity of the investment contemplated by this Agreement.

 

(e)The Buyer has the requisite knowledge to assess the relative merits and risks, is capable of interpreting financial statements, or has relied upon the advice of counsel, accountants and/or purchaser representative(s) with regard to tax aspects, risks and other considerations involved in the investment, and fully understands that the Buyer must look to the Buyer’s own advisors with respect to the tax consequences, risks and other considerations in connection with investing in the Company and consult with the Buyer’s own independent counsel or advisors regarding the tax consequences, risks and other considerations involved in the investment.

 

(f)The Buyer is acquiring the Securities for long-term investment and not with a view toward resale, fractionalization or division or distribution thereof.

 

(g)The Securities are being purchased by the Buyer in the Buyer’s name solely for the Buyer’s own beneficial interest and not as nominee for, or on behalf of, or for the beneficial interest of, or with the intention to transfer to, any other person, trust or organization.

 

(h)The Buyer is aware that there are certain specific informational requirements which the Company must meet in connection with an offering to any person who is not an Accredited Investor (as defined in Rule 501), pursuant to Rule 501 of Regulation D of the rules and regulations of the Securities and Exchange Commission (“Rule 501”). There are no such specific informational requirements for offerings to Accredited Investors (as defined in Rule 501). The Company is making the offer and sale of the Securities to the Buyer in reliance on the representations by the Buyer that the Buyer is an Accredited Investor (as defined in Rule 501), and the Buyer so acknowledges and reaffirms that the Buyer is an Accredited Investor (as defined in Rule 501).

 

3
 

 

(i)The Buyer is willing and able to bear the economic risk and loss of an investment in the Company in an amount equal to the total purchase price of the Securities. In making this statement, consideration has been given to whether the Buyer could afford a complete loss of the Buyer’s investment.

 

5.Governing Law. This Agreement and its validity, construction and performance shall be governed in all respects by the laws of the State of New York, without giving effect to principles of conflict of laws. Further, in the event that any dispute arises between the parties to this Agreement, unless otherwise set forth herein, such dispute shall be settled by a court of competent jurisdiction of the State of New York or the United States District Court for the Southern District of New York and the parties hereto agree to submit to the jurisdiction of the Courts of the State of New York or the United States District Court for the Southern District of New York.

 

6.Severability. If any provisions of this Agreement or the application of any provision hereof to any person or circumstance is held invalid, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected unless the provision held invalid shall substantially impair the benefits of the remaining portions of this Agreement.

 

7.Benefit of Parties, Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and assigns. This Agreement may not be assigned by any party hereto except with the prior written consent of the other party hereto.

 

8.Headings. The headings in the sections of this Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

 

9.Construction. As used in this Agreement, words in the singular shall be construed as including the plural and vice versa and words in one gender shall include all genders unless the context shall clearly require otherwise.

 

10.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

 

4
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed by their duly authorized corporate officers as of the day and year first above written.

 

  THE COMPANY
     
  CELL SOURCE, INC.
     
  By: /s/ Itamar Shimrat
  Name: Itamar Shimrat
  Title: President

 

  BUYERS:
     
  DAVID ZOLTY INVESTMENT ULC
     
  By: /s/ David Zolty
  Name: David Zolty
  Title:  

 

  SOLOMON ZOLTY INVESTMENT ULC
     
  By: /s/ Solomon Zolty
  Name: Solomon Zolty
  Title:  

 

  HONEY KAMENETSKY INVESTMENT ULC
     
  By:  
  Name: Honey Kamenetsky
  Title:  

 

  HELEN SAMUEL INVESTMENT ULC
     
  By: /s/ Helen Samuel
  Name: Helen Samuel
  Title:  

 

  PHYLLIS FRIEDMAN INVESTMENT ULC
     
  By: /s/ Benzion Friedman
  Name: Benzion Friedman
  Title:  

 

5
 

 

EXHIBIT A

 

WIRE INSTRUCTIONS

 

Bank: TD Bank

 

Address: 224 West 57th Street, New York, NY 10019

 

Account in name of: Cell Source, Inc.

 

Account address: 57 West 57th Street, Suite 400, New York, NY 10019

 

Account #: 4313121115

 

ABA#: 026013673

 

6

 

 

 

 

Exhibit 31

 

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Itamar Shimrat, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Cell Source, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15I and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2024  
   
/s/ Itamar Shimrat  
Itamar Shimrat  
Chief Executive Officer and Chief Financial Officer  
(Principal Executive, Financial, and Accounting Officer)  

 

 

 

 

Exhibit 32

 

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Cell Source, Inc., a Nevada corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

 

The Quarterly Report for the quarter ended September 30, 2024 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 14, 2024  
   
/s/ Itamar Shimrat  
Itamar Shimrat  
Chief Executive Officer and Chief Financial Officer  
(Principal Executive, Financial, and Accounting Officer)  

 

 

 

v3.24.3
Cover - $ / shares
 9 Months Ended
Sep. 30, 2024
Nov. 13, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2024  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 000-55413  
Entity Registrant Name Cell Source, Inc.  
Entity Central Index Key 0001569340  
Entity Tax Identification Number 32-0379665  
Entity Incorporation, State or Country Code NV  
Entity Address, Address Line One 57 West 57th Street  
Entity Address, Address Line Two Suite 400  
Entity Address, City or Town New York  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 10019  
City Area Code (646)  
Local Phone Number 416-7896  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   43,468,184
Entity Listing, Par Value Per Share $ 0.001  
v3.24.3
Condensed Consolidated Balance Sheets - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Current Assets:    
Cash $ 22,992 $ 22,203
Prepaid expenses 241,125 160,750
Other current assets 543 12,218
Total Assets 264,660 195,171
Current Liabilities:    
Accounts payable 2,036,128 1,467,052
Accrued compensation 1,048,592 960,554
Financing liability 314,985 42,033
Accrued dividend payable 365,078 25,540
Total Liabilities 19,205,216 15,806,714
Commitments and contingencies (Note 9)
Stockholders’ Deficiency:    
Common Stock, $0.001 par value, 200,000,000 shares authorized; 43,253,897 and 39,830,802 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively 43,254 39,831
Additional paid-in capital 26,862,811 26,014,028
Accumulated deficit (45,848,723) (41,667,388)
Total Stockholders’ Deficiency (18,940,556) (15,611,543)
Total Liabilities and Stockholders’ Deficiency 264,660 195,171
Series A Convertible Preferred Stock [Member]    
Stockholders’ Deficiency:    
Preferred stock, value 1,342 1,342
Series B Convertible Preferred Stock [Member]    
Stockholders’ Deficiency:    
Preferred stock, value 210 107
Series C Convertible Preferred Stock [Member]    
Stockholders’ Deficiency:    
Preferred stock, value 550 537
Nonrelated Party [Member]    
Current Liabilities:    
Accrued expenses 1,153,100 1,225,195
Accrued interest 1,070,144 939,549
Notes payable 932,584 710,317
Convertible notes payable 985,812 1,078,821
Derivative liabilities 609,207 33,000
Advances payable 194,375 135,000
Related Party [Member]    
Current Liabilities:    
Accrued expenses 188,000 144,500
Accrued interest 2,065,948 1,480,117
Notes payable 401,491 150,000
Convertible notes payable 7,461,708 7,315,036
Derivative liabilities 178,064
Advances payable $ 200,000 $ 100,000
v3.24.3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares designated 10,000,000 10,000,000
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 43,253,897 39,830,802
Common stock, shares outstanding 43,253,897 39,830,802
Series A Convertible Preferred Stock [Member]    
Preferred stock, shares designated 1,350,000 1,350,000
Preferred stock, shares issued 1,342,195 1,342,195
Preferred stock, shares outstanding 1,342,195 1,342,195
Preferred stock liquidation preference value $ 10,294,818 $ 10,066,463
Series B Convertible Preferred Stock [Member]    
Preferred stock, shares designated 2,000,000 2,000,000
Preferred stock, shares issued 210,132 106,668
Preferred stock, shares outstanding 210,132 106,668
Preferred stock liquidation preference value $ 1,628,150 $ 806,805
Series C Convertible Preferred Stock [Member]    
Preferred stock, shares designated 1,000,000 1,000,000
Preferred stock, shares issued 550,815 537,482
Preferred stock, shares outstanding 550,815 537,482
Preferred stock liquidation preference value $ 4,214,414 $ 4,049,861
Notes Payable [Member] | Nonrelated Party [Member]    
Debt discount 42,259 776
Notes Payable [Member] | Related Party [Member]    
Debt discount 42,259 0
Convertible Notes Payable [Member] | Nonrelated Party [Member]    
Debt discount $ 9,188 $ 16,179
v3.24.3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Operating Expenses:        
General and administrative $ 470,768 $ 480,875 $ 1,626,352 $ 2,097,801
Total Operating Expenses 831,625 995,380 3,163,433 3,316,394
Loss From Operations (831,625) (995,380) (3,163,433) (3,316,394)
Other (Expense) Income:        
Gain on extinguishment of note payable 17,893 17,893 41,920
Total Other Expense (585,516) (342,758) (1,017,902) (954,915)
Net Loss (1,417,141) (1,338,138) (4,181,335) (4,271,309)
Dividend attributable to Series A, B, and C preferred stockholders (350,984) (309,150) (1,017,520) (907,516)
Net Loss Applicable to Common Stockholders $ (1,768,125) $ (1,647,288) $ (5,198,855) $ (5,178,825)
Net Loss Per Common Share - Basic $ (0.04) $ (0.04) $ (0.13) $ (0.14)
Net Loss Per Common Share - Diluted $ (0.04) $ (0.04) $ (0.13) $ (0.14)
Weighted Average Common Shares Outstanding - Basic 42,426,449 38,191,731 41,321,759 37,492,478
Weighted Average Common Shares Outstanding - Diluted 42,426,449 38,191,731 41,321,759 37,492,478
Nonrelated Party [Member]        
Operating Expenses:        
Research and development $ 346,357 $ 500,005 $ 1,493,581 $ 1,175,093
Other (Expense) Income:        
Interest expense (95,865) (62,463) (136,213) (138,937)
Interest expense - amortization of debt discount (74,718) (29,912) (112,218) (107,487)
Change in fair value of derivative liabilities (62,851) (50,034)
Related Party [Member]        
Operating Expenses:        
Research and development 14,500 14,500 43,500 43,500
Other (Expense) Income:        
Interest expense (260,921) (199,628) (594,326) (496,206)
Interest expense - amortization of debt discount (73,355) (50,755) (111,434) (254,205)
Change in fair value of derivative liabilities $ (35,699) $ (31,570)
v3.24.3
Condensed Consolidated Statements of Changes in Stockholders' Deficiency (Unaudited) - USD ($)
 3 Months Ended 6 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Sep. 30, 2024
Sep. 30, 2023
Balance $ (17,319,501) $ (16,754,143) $ (15,611,543) $ (14,945,759) $ (14,219,717) $ (12,633,895) $ (15,611,543) $ (15,611,543) $ (12,633,895)
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock     104,910 494,134   52,060      
Series A and Series C Convertible Preferred Stock dividends:                  
Accrual of earned dividends (350,984) (339,871) (326,665) (309,150) (300,849) (297,517)      
Payment of dividends in kind   677,982     602,102        
Common stock issued in satisfaction of accrued compensation     45,000            
Issuance of Series B Convertible Preferred Stock for cash, net 17,800 571,801 19,900            
Common stock issued in satisfaction of convertible note payable interest   4,680 520            
Issuance of common stock in connection with extinguishment of note payable         58,080        
Issuance of warrants in connection with:                  
Satisfaction of accrued interest         40,167        
Issuance of warrants in connection with issuance of convertible notes payable       45,008 75,462 21,202      
Conversion of Series C Convertible Preferred Stock into common stock              
Stock-based compensation:                  
Warrants   8,838 29,141 23,758 40,600        
Common stock     260,000     330,000      
Net loss (1,417,141) (1,488,788) (1,275,406) (1,338,138) (1,241,604) (1,691,567)   (4,181,335) (4,271,309)
Common stock issued for cash 128,170                
Warrant modification expense 1,100                
Balance (18,940,556) (17,319,501) (16,754,143) (16,030,147) (14,945,759) (14,219,717) (17,319,501) (18,940,556) (16,030,147)
Preferred Stock [Member] | Series A Convertible Preferred Stock [Member]                  
Balance $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342
Balance, shares 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock            
Series A and Series C Convertible Preferred Stock dividends:                  
Accrual of earned dividends      
Payment of dividends in kind              
Common stock issued in satisfaction of accrued compensation                
Issuance of Series B Convertible Preferred Stock for cash, net            
Common stock issued in satisfaction of convertible note payable interest              
Issuance of common stock in connection with extinguishment of note payable                
Issuance of warrants in connection with:                  
Satisfaction of accrued interest                
Issuance of warrants in connection with issuance of convertible notes payable            
Conversion of Series C Convertible Preferred Stock into common stock              
Stock-based compensation:                  
Warrants          
Common stock              
Net loss      
Common stock issued for cash                
Warrant modification expense                
Balance $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342 $ 1,342
Balance, shares 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195 1,342,195
Preferred Stock [Member] | Series B Convertible Preferred Stock [Member]                  
Balance $ 207 $ 110 $ 107       $ 107 $ 107  
Balance, shares 206,799 110,001 106,668       106,668 106,668  
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock                
Series A and Series C Convertible Preferred Stock dividends:                  
Accrual of earned dividends            
Payment of dividends in kind                
Common stock issued in satisfaction of accrued compensation                
Issuance of Series B Convertible Preferred Stock for cash, net $ 3 $ 97 $ 3            
Issuance of Series B Convertible Preferred Stock for cash, net, shares 3,333 96,798 3,333            
Common stock issued in satisfaction of convertible note payable interest              
Stock-based compensation:                  
Warrants              
Common stock                
Net loss            
Common stock issued for cash                
Warrant modification expense                
Balance $ 210 $ 207 $ 110       $ 207 $ 210  
Balance, shares 210,132 206,799 110,001       206,799 210,132  
Preferred Stock [Member] | Series C Convertible Preferred Stock [Member]                  
Balance $ 550 $ 550 $ 537 $ 500 $ 500 $ 503 $ 537 $ 537 $ 503
Balance, shares 550,815 550,815 537,482 499,443 499,443 502,776 537,482 537,482 502,776
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock     $ 13 $ 62   $ 7      
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock, shares     13,333 62,667   6,667      
Series A and Series C Convertible Preferred Stock dividends:                  
Accrual of earned dividends      
Payment of dividends in kind              
Common stock issued in satisfaction of accrued compensation                
Issuance of Series B Convertible Preferred Stock for cash, net            
Common stock issued in satisfaction of convertible note payable interest              
Issuance of common stock in connection with extinguishment of note payable                
Issuance of warrants in connection with:                  
Satisfaction of accrued interest                
Issuance of warrants in connection with issuance of convertible notes payable            
Conversion of Series C Convertible Preferred Stock into common stock       $ (30)   $ (10)      
Conversion of Series C Convertible Preferred Stock into common stock, shares       (30,000)   (10,000)      
Stock-based compensation:                  
Warrants          
Common stock              
Net loss      
Common stock issued for cash                
Warrant modification expense                
Balance $ 550 $ 550 $ 550 $ 532 $ 500 $ 500 $ 550 $ 550 $ 532
Balance, shares 550,815 550,815 550,815 532,110 499,443 499,443 550,815 550,815 532,110
Common Stock [Member]                  
Balance $ 41,941 $ 41,019 $ 39,831 $ 38,163 $ 37,185 $ 36,082 $ 39,831 $ 39,831 $ 36,082
Balance, shares 41,941,397 41,019,348 39,830,802 38,163,385 37,184,505 36,081,758 39,830,802 39,830,802 36,081,758
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock     $ 6 $ 32   $ 3      
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock, shares     6,546 32,232   2,747      
Series A and Series C Convertible Preferred Stock dividends:                  
Accrual of earned dividends      
Payment of dividends in kind   $ 904     $ 802        
Payment of dividends in kind, shares   904,049     802,880        
Common stock issued in satisfaction of accrued compensation     $ 180            
Common stock issued in satisfaction of accrued compensation, shares     180,000            
Issuance of Series B Convertible Preferred Stock for cash, net            
Common stock issued in satisfaction of convertible note payable interest   $ 18 $ 2            
Common stock issued in satisfaction of convertible note payable interest, shares   18,000 2,000            
Issuance of common stock in connection with extinguishment of note payable         $ 176        
Issuance of common stock in connection with extinguishment of note payable, shares         176,000        
Issuance of warrants in connection with:                  
Satisfaction of accrued interest                
Issuance of warrants in connection with issuance of convertible notes payable            
Conversion of Series C Convertible Preferred Stock into common stock       $ 300   $ 100      
Conversion of Series C Convertible Preferred Stock into common stock, shares       300,000   100,000      
Stock-based compensation:                  
Warrants          
Common stock     $ 1,000     $ 1,000      
Common stock, shares     1,000,000     1,000,000      
Net loss      
Common stock issued for cash $ 1,313                
Common stock issued for cash, shares 1,312,500                
Warrant modification expense                
Balance $ 43,254 $ 41,941 $ 41,019 $ 38,495 $ 38,163 $ 37,185 $ 41,941 $ 43,254 $ 38,495
Balance, shares 43,253,897 41,941,397 41,019,348 38,495,617 38,163,385 37,184,505 41,941,397 43,253,897 38,495,617
Additional Paid-in Capital [Member]                  
Balance $ 27,068,041 $ 26,145,630 $ 26,014,028 $ 24,293,583 $ 23,778,999 $ 23,674,354 $ 26,014,028 $ 26,014,028 $ 23,674,354
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock     104,891 494,040   52,050      
Series A and Series C Convertible Preferred Stock dividends:                  
Accrual of earned dividends (350,984) (339,871) (326,665) (309,150) (300,849) (297,517)      
Payment of dividends in kind   677,078     601,300        
Common stock issued in satisfaction of accrued compensation     44,820            
Issuance of Series B Convertible Preferred Stock for cash, net 17,797 571,704 19,897            
Common stock issued in satisfaction of convertible note payable interest   4,662 518            
Issuance of common stock in connection with extinguishment of note payable         57,904        
Issuance of warrants in connection with:                  
Satisfaction of accrued interest         40,167        
Issuance of warrants in connection with issuance of convertible notes payable       45,008 75,462 21,202      
Conversion of Series C Convertible Preferred Stock into common stock       (270)   (90)      
Stock-based compensation:                  
Warrants   8,838 29,141 23,758 40,600        
Common stock     259,000     329,000      
Net loss      
Common stock issued for cash 126,857                
Warrant modification expense 1,100                
Balance 26,862,811 27,068,041 26,145,630 24,546,969 24,293,583 23,778,999 27,068,041 26,862,811 24,546,969
Retained Earnings [Member]                  
Balance (44,431,582) (42,942,794) (41,667,388) (39,279,347) (38,037,743) (36,346,176) (41,667,388) (41,667,388) (36,346,176)
Conversion of convertible notes payable and accrued interest into Series C Convertible Preferred Stock and common stock            
Series A and Series C Convertible Preferred Stock dividends:                  
Accrual of earned dividends      
Payment of dividends in kind              
Common stock issued in satisfaction of accrued compensation                
Issuance of Series B Convertible Preferred Stock for cash, net            
Common stock issued in satisfaction of convertible note payable interest              
Issuance of common stock in connection with extinguishment of note payable                
Issuance of warrants in connection with:                  
Satisfaction of accrued interest                
Issuance of warrants in connection with issuance of convertible notes payable            
Conversion of Series C Convertible Preferred Stock into common stock              
Stock-based compensation:                  
Warrants          
Common stock              
Net loss (1,417,141) (1,488,788) (1,275,406) (1,338,138) (1,241,604) (1,691,567)      
Common stock issued for cash                
Warrant modification expense                
Balance $ (45,848,723) $ (44,431,582) $ (42,942,794) $ (40,617,485) $ (39,279,347) $ (38,037,743) $ (44,431,582) $ (45,848,723) $ (40,617,485)
v3.24.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Cash Flows From Operating Activities:    
Net loss $ (4,181,335) $ (4,271,309)
Adjustments to reconcile net loss to net cash used in operating activities:    
Gain on extinguishment of note payable (17,893) (41,920)
Non-cash interest expense - warrants 72,473 28,695
Warrant modification expense 1,100
Stock-based compensation:    
Stock-based compensation 309,297 404,978
Changes in operating assets and liabilities:    
Prepaid expenses 241,125 243,300
Other current assets 11,675 19,605
Accounts payable 569,076 900,538
Accrued compensation 126,920 25,147
Net Cash Used In Operating Activities (1,935,836) (1,625,601)
Cash Flows From Financing Activities:    
Proceeds from issuance of common stock and warrants 415,625
Proceeds from issuance of Series B Convertible Preferred Stock and warrants 776,001
Repayment of financing liability (48,548) (191,460)
Net Cash Provided By Financing Activities 1,936,625 1,405,518
Net Increase (Decrease) In Cash 789 (220,083)
Cash - Beginning of Period 22,203 222,665
Cash - End of Period 22,992 2,582
Supplemental Disclosures of Cash Flow Information:    
Interest
Income taxes 949
Non-cash investing and financing activities:    
Common stock issued in satisfaction of accrued compensation (45,000)
Common stock issued in connection with payment of Series A, B, and C Convertible Preferred Stock dividends in-kind 677,982 602,102
Financing of Director and Officer insurance 321,500 321,500
Conversion of Series C Convertible Preferred Stock into common stock 400
Conversion of accrued expenses into note principal 413,018
Accrual of warrant obligations in connection with issuance of notes payable 40,167
Warrants issued in satisfaction of accrued warrant obligation (40,167)
Issuance of warrants in connection with the issuance of notes payable 200,404 141,672
Issuance of warrants in connection with the exchange of notes payable 12,107
Accrual of earned preferred stock dividends (1,017,520) (907,516)
Conversion of convertible notes payable and accrued interest into Series C Preferred Stock and common stock 104,910 546,194
Issuance of warrants in connection with issuance of Series B Preferred Stock 103,900
Issuance of embedded derivative liabilities in connection with issuance of Series B Preferred Stock 62,600
Issuance of embedded derivative liabilities in connection with issuance of Series C Preferred Stock 1,700
Extinguishment of note payable for common stock 58,080
Common Stock [Member]    
Stock-based compensation:    
Stock-based compensation 272,493 341,269
Warrant [Member]    
Stock-based compensation:    
Stock-based compensation 36,804 63,709
Nonrelated Party [Member]    
Adjustments to reconcile net loss to net cash used in operating activities:    
Interest expense - amortization of debt discount 112,218 107,487
Change in fair value of derivative liabilities 50,034
Changes in operating assets and liabilities:    
Accrued expenses (72,095) 53,697
Accrued interest 108,716 165,030
Cash Flows From Financing Activities:    
Proceeds from issuance of convertible notes payable 919,960
Proceeds from issuance of notes payable 250,000
Proceeds from advances payable 59,375
Repayment of notes payable (6,250)
Related Party [Member]    
Adjustments to reconcile net loss to net cash used in operating activities:    
Interest expense - amortization of debt discount 111,434 254,205
Change in fair value of derivative liabilities 31,570
Changes in operating assets and liabilities:    
Accrued expenses 43,500 43,500
Accrued interest 546,349 441,446
Cash Flows From Financing Activities:    
Proceeds from issuance of convertible notes payable 146,672 677,018
Proceeds from issuance of notes payable 250,000
Proceeds from advances payable 100,000
Repayment of notes payable $ (6,250)
v3.24.3
Business Organization, Nature of Operations, Risks and Uncertainties and Basis of Presentation
 9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Organization, Nature of Operations, Risks and Uncertainties and Basis of Presentation

Note 1 - Business Organization, Nature of Operations, Risks and Uncertainties and Basis of Presentation

 

Organization and Operations

 

Cell Source, Inc. (“Cell Source”, “CSI” or the “Company”) is a Nevada corporation formed on June 6, 2012 that is the parent company of Cell Source Limited (“CSL”), a wholly owned subsidiary which was founded in Israel in 2011 in order to commercialize a suite of inventions relating to certain cancer treatments. The Company is a biotechnology company focused on developing cell therapy treatments based on the management of immune tolerance. The Company’s lead prospective product is its patented Veto Cell immune system management technology, which is an immune tolerance biotechnology that enables the selective blocking of immune responses. CSL’s Veto Cell immune system management technology is based on technologies patented, owned, and licensed to CSL by Yeda Research and Development Company Limited, an Israeli corporation (“Yeda”) (see Note 9, Commitments and Contingencies). The Company’s target indications include: lymphoma, leukemia and multiple myeloma through the facilitation of safer and more accessible stem cell (e.g. bone marrow) transplantation acceptance, treatment of end stage kidney disease and other non-malignant organ diseases through improved organ transplantation (broadened donor pool, reduced dependence on post-transplant anti-rejection therapy), and ultimately treating a variety of cancers and non-malignant diseases.

 

Risks and Uncertainties

 

On October 7, 2023, a conflict arose between Israel and Hamas militants on Israel’s southern border from the Gaza Strip. The intensity and duration of Israel’s current war against Hamas is difficult to predict, and as are such war’s economic implications on the Company’s business and operations. To the extent that any of these negative developments do occur, they may have an adverse effect on the Company’s business, results of operations and its ability to raise additional funds. As of September 30, 2024, the Company considered the impact of the war on its business and operational assumptions and estimates and determined there were no material adverse impacts on the Company’s condensed consolidated results of operations and financial position.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated 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 with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial position of the Company as of September 30, 2024 and the condensed consolidated results of its operations and cash flows for the three and nine months ended September 30, 2024 and 2023. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results for the full year ending December 31, 2024 or any other period. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2023 and for the year then ended which were included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (“SEC”) on June 24, 2024.  

 
v3.24.3
Going Concern and Management Plans
 9 Months Ended
Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern and Management Plans

Note 2 - Going Concern and Management Plans

 

During the nine months ended September 30, 2024, the Company had not generated any revenues, had a net loss of approximately $4,181,000 and used cash in operations of approximately $1,936,000. As of September 30, 2024, the Company had a working capital deficiency of approximately $18,941,000 and an accumulated deficit of approximately $45,849,000. As of September 30, 2024 and through the date of this filing, notes payable with principal amounts totaling approximately $5,663,000 and $1,926,000, respectively, were past due. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the date these financial statements are issued.

 

The Company is currently funding its operations on a month-to-month basis. While there can be no assurance that it will be successful, the Company is in active negotiations to raise additional capital. The Company’s primary sources of operating funds since inception have been equity and debt financings. Management’s plans include continued efforts to raise additional capital through debt and equity financings. There is no assurance that these funds will be sufficient to enable the Company to fully complete its development activities or attain profitable operations. If the Company is unable to obtain such additional financing on a timely basis or, notwithstanding any request the Company may make, if the Company’s debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes, the Company may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate. Subsequent to September 30, 2024 and as more fully described in Note 10, Subsequent Events, the Company received aggregate proceeds of $75,000 from the issuance of common stock and $300,000 from the sale of Series B Convertible Preferred Stock. The Company will continue to incur net operating losses to fund operations.

 

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

 

 
v3.24.3
Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 3 - Summary of Significant Accounting Policies

 

There have been no material changes to the Company’s significant accounting policies included in the Annual Report on Form 10-K for the year ended December 31, 2023, except as disclosed herein.

 

Valuation of Common Stock Price

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date and is then recognized over the period the services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an option or warrant, the Company issues new shares of common stock out of its authorized shares.

 

Because the Company’s common stock historically was not actively traded on a public market, the fair value of the Company’s restricted equity instruments is estimated by management based on observations of the sales prices of both restricted and freely tradable common stock, or instruments convertible into common stock. The Company obtained a third-party valuation of its common stock as of July 1, 2024 and December 31, 2023, which was considered in management’s estimation of fair value during the three and nine months ended September 30, 2024. The third-party valuation was performed in accordance with regulation of Section 409A of the Internal Revenue Code (“IRC”) as well as FASB ASC Topic 718. The estimates used by management are considered highly complex and subjective. The Company anticipates that once its shares become more actively traded, the use of such estimates will no longer be necessary to determine the fair value of its common stock.

 

The independent appraisal utilized the market approach, specifically the Backsolve method. The Backsolve method utilizes the economics from a direct transaction in the Company’s securities in determining fair value. The Backsolve method utilizes the Black-Scholes option pricing method (“OPM”) which allocated a probability-weighted present value to the Company’s convertible securities. The following steps were applied under the OPM:

 

  ● Establishment of total enterprise or equity value;
  ● Analysis of equity rights for each class of security;
  ● Selection of appropriate model for valuation purposes;
  ● Determination of key valuation inputs; and
  ● Computation of the fair value of the subject security.

 

Under the OPM, it was determined the Company’s common stock had a fair value of $0.28 and $0.26 as of July 1, 2024 and December 31, 2023, respectively, which included a discount for lack of marketability of 25%. Furthermore, the independent appraisal determined the Company’s expected volatility was 75% and 65% as of July 1, 2024 and December 31, 2023, respectively, by evaluating historical and implied volatilities of guideline companies.

 

Loss Per Share

 

The Company computes basic net loss per share by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share includes the dilution that would occur upon the exercise or conversion of all dilutive securities into common stock using the “treasury stock” and/or “if converted” methods, as applicable.

 

The common stock equivalents associated with the following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

 

   September 30, 
   2024   2023 
         
Options   6,932,004    6,932,004 
Warrants   19,434,945    13,541,107 
Convertible notes [1]   14,977,347    13,493,270 
Convertible preferred stock   21,031,420    18,743,053 
Total   62,375,716    52,709,434 

 

 

[1]Convertible notes are assumed to be converted at the rate of $0.75 per common share, which is the conversion price as of September 30, 2024 and 2023. However, such conversion rates are subject to adjustment under certain circumstances, such as stock splits and stock dividends, which may result in the issuance of common shares greater than the amount indicated.

 

Recent Accounting Standards

 

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the ASC. These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

 

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segments Disclosures (Topic 280), which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on both an annual and interim basis. The guidance becomes effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07.

 

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

 

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The standard is intended to require more detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. This ASU is applicable to entities with a single operating segment. The Company is currently evaluating the potential impact of this adoption on the condensed consolidated financial statements and related disclosures.

 
v3.24.3
Fair Value
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value

Note 4 - Fair Value

 

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of all Level 3 liabilities measured at fair value on a recurring basis using unobservable inputs during the three and nine months ended September 30, 2024 and 2023:

 

   Accrued   Accrued   Derivative     
   Interest   Compensation   Liabilities   Total 
                 
Balance - January 1, 2024  $356,510   $97,102   $33,000   $486,612 
                     
Accrual of warrant obligation   6,666    -    -    6,666 
Accrual of common stock obligation   -    -    -    - 
Reclassification of warrant obligation to derivative liabilities   -    -    -    - 
Issuance of warrants and conversion option   -    -    5,100    5,100 
Issuance of warrants   -                
Common stock issued in satisfaction of accrued compensation   -    (45,000)   -    (45,000)
Change in fair value   (74,316)   (766)   (5,800)   (80,882)
                     
Balance - March 31, 2024  $288,860   $51,336   $32,300   $372,496 
                     
Reclassification of warrant obligation to derivative liabilities   (6,666)   -    6,666    - 
Issuance of warrants and conversion option   -    -    349,638    349,638 
Change in fair value   12,502    1,815    (11,146)   3,171 
                     
Balance - June 30, 2024  $294,696   $53,151   $377,458   $725,305 
                     
Issuance of warrants and conversion option   -    -    311,263    311,263 
Change in fair value   129,783    3,284    98,550    231,617 
                     
Balance - September 30, 2024  $424,479   $56,435   $787,271   $1,268,185 

 

   Accrued   Accrued     
   Interest   Compensation   Total 
             
Balance - January 1, 2023  $504,700   $59,220   $563,920 
                
Accrual of warrant obligation   40,167    -    40,167 
Change in fair value   (46,131)   (1,095)   (47,226)
                
Balance - March 31, 2023   498,736    58,125    556,861 
Accrual of common stock obligation   -    9,438    9,438 
Satisfaction of warrant obligation   (40,167)   -    (40,167)
Change in fair value   27,272    73    27,345 
                
Balance - June 30, 2023   485,841    67,636    553,477 
Change in fair value   47,554    2,204    49,758 
Balance - September 30, 2023  $533,395   $69,840   $603,235 

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Company’s Level 3 liabilities shown in the above table consist of accrued obligations to issue warrants and common stock to non-employees and is recorded at fair value at inception and subsequent changes in fair value are charged to the condensed consolidated statement of operations at each reporting period.

 

In applying the Black-Scholes option pricing model utilized in the valuation of Level 3 liabilities, the Company used the following approximate assumptions:

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2024   2023   2024   2023 
                 
Risk-free interest rate   3.58% - 5.33 %   4.60% - 4.70%   3.58% - 5.33%   3.60% - 4.70 %
Expected term (years)   0.82 - 10.00    4.00 - 5.00    0.82 - 10.00    4.00-5.00 
Expected volatility   75%   80%   65% - 75%   80%
Expected dividends   0.00%   0.00%   0.00%   0.00%

 

The expected term used is the contractual life of the instrument being valued. Since the Company’s stock does not have significant trading volume, the Company is utilizing an expected volatility based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

 

 

As of September 30, 2024 and December 31, 2023, the Company had an obligation to issue 183,095 and 363,095 shares of common stock to service providers that had a fair value of $51,267 and $90,774, respectively, which was a component of accrued compensation in the condensed consolidated balance sheets. The fair value of the common stock underlying this obligation has a per share value of $0.28 and $0.26 as of September 30, 2024 and December 31, 2023, respectively. Furthermore, as of September 30, 2024 and December 31, 2023, the Company has an obligation to issue warrants to purchase 42,930 shares of the Company’s common stock to service providers that had a fair value of $5,168 and $6,328, respectively, which was a component of accrued compensation in the condensed consolidated balance sheets.

 

See Note 6, Notes Payable and Note 7, Stockholders’ Deficiency for additional details associated with the issuances of common stock, warrants and embedded conversion options.

 
v3.24.3
Advances Payable
 9 Months Ended
Sep. 30, 2024
Other Liabilities Disclosure [Abstract]  
Advances Payable

Note 5 – Advances Payable

 

Advances payable and advances payable – related party represent cash received from investors for working capital purposes.

 

During the three months ended September 30, 2024, the Company received aggregate proceeds of $159,375 which were included in advances payable and advances payable – related party on the condensed consolidated balance sheet.

 
v3.24.3
Notes Payable
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Notes Payable

Note 6 – Notes Payable

 

As of September 30, 2024 and through the date of this filing, notes and convertible notes payable with principal amounts totaling approximately $5,663,000 and $1,926,000, respectively, were past due. Such notes continue to accrue interest and all relevant penalties have been accrued as of September 30, 2024. The Company is in negotiations with certain holders of notes payable to extend the maturity dates of such notes or to convert the principal and accrued interest into equity. As of September 30, 2024, the Company had an accrued interest balance of $840,663 related to notes and convertible notes payable that were past due.

 

During the three months ended September 30, 2024 and 2023, the Company recorded interest expense of $356,786 and $262,091, respectively, and amortization of debt discount of $148,073 and $80,667, respectively. During the nine months ended September 30, 2024 and 2023, the Company recorded interest expense of $730,539 and $635,143, respectively, and amortization of debt discount of $223,652 and $361,692, respectively. As of September 30, 2024 and December 31, 2023, the Company had $3,136,092 and $2,419,666, respectively, of accrued interest (including interest in the form of warrants (see Note 4, Fair Value) and penalties related to notes payable, which is included with accrued interest and accrued interest – related parties on the condensed consolidated balance sheets.

 

Notes Payable

 

In May 2024, the Company received proceeds of $250,000 from investors and issued notes payable in the aggregate principal amount of $300,000 with a maturity date of November 22, 2024. The notes bear interest at 10% per annum and have an aggregate original issue discount of $50,000 which was recorded as a debt discount and will be amortized over the term of the note. In connection with the issuances, the Company issued ten-year immediately vested warrants to purchase an aggregate of 625,000 shares of common stock at an exercise price of $0.75 per share. The warrants had an issuance date fair value of $96,710 which was included within derivative liabilities, recorded as a debt discount and will be amortized over the term of the notes. During the nine months ended September 30, 2024, the Company repaid $6,250 of the outstanding principal balance, such that $293,750 was outstanding as of September 30, 2024.

 

On July 15, 2024, the Company entered into an exchange agreement with a note holder, whereby the parties agreed to exchange a note payable with a principal amount of $30,000 for a warrant to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.75 per share. The exchange resulted in a gain on extinguishment of notes payable of $17,893 during the three and nine months ended September 30, 2024. The warrant had an issuance date fair value of $12,107 and was recorded as a derivative liability under the Company’s sequencing policy on the condensed consolidated balance sheet as of September 30, 2024.

 

Notes Payable - Related Parties

 

In May 2024, the Company received proceeds of $250,000 from an investor and issued a note payable in the principal amount of $300,000 with a maturity date of November 22, 2024. The note bears interest at 10% per annum and has an original issue discount of $50,000 which was recorded as a debt discount and will be amortized over the term of the note. In connection with the issuance, the Company issued ten-year immediately vested warrants to purchase 625,000 shares of common stock at an exercise price of $0.75 per share. The warrants had an issuance date fair value of $96,710 which was included within derivative liabilities - related parties, recorded as a debt discount and will be amortized over the term of the note. During the nine months ended September30, 2024, the Company repaid $6,250 of the outstanding principal balance, such that $293,750 was outstanding as of September 30, 2024.

 

Convertible Notes Payable

 

During the three months ended March 31, 2024, a convertible note with $100,000 of principal outstanding was automatically converted into 13,333 shares of Series C Convertible Preferred Stock at a price of $7.50 per share and the Company elected to convert $4,910 of accrued interest under such note into 6,546 shares of common stock at a price of $0.75 per share. The embedded conversion option attributable to the Series C Convertible Preferred Stock was accounted for as derivative liability and had an issuance date fair value of $1,700.

 

On March 22, 2024, the Company completed its private offering of 8% Convertible Notes that are convertible into shares of the Company’s Series C Convertible Preferred Stock at a conversion price of $7.50 per share. Since the inception of the private offering in 2020, the Company sold $4,760,170 aggregate principal amount of notes in the offering and issued investors warrants to purchase 4,321,926 shares of common stock at an exercise price of $1.25 per share. There were no issuances during the nine months ended September 30, 2024.

 

On July 24, 2024, the Company entered into a note amendment agreement with a note holder to (i) extend the maturity date of a note in the principal amount of $50,000 from December 23, 2023 to December 23, 2024 and (ii) increase the interest rate from 8% to 10% effective July 2024. Further, in the event of an equity or debt financing transaction resulting in gross proceeds of at least $2,000,000, the Company or guarantor of the note shall repay the note in full within five days after completing the transaction. If the note is not repaid in full by December 23, 2024, any further extension will require the issuance of an additional five-year warrant to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.75 per share. Contemporaneous with the execution of this amendment, the Company (i) issued to the lender an additional five-year warrant to purchase 25,000 shares of the Company’s common stock at an exercise price of $0.75 per share and (ii) amended the holder’s previously outstanding warrant to reduce the exercise price to $0.75 per share. This transaction was accounted for as a debt modification. The warrants had an issuance date fair value of $3,000 and were accounted for as derivative liabilities under the Company’s sequencing policy on the condensed consolidated balance sheet as of September 30, 2024.

 

 

On July 24, 2024, the Company entered into a note amendment agreement with a note holder to (i) extend the maturity date of a note in the principal amount of $25,000 from December 26, 2023 to December 26, 2024 and (ii) increase the interest rate from 8% to 10% effective July 2024. Further, in the event of an equity or debt financing transaction resulting in gross proceeds of at least $2,000,000, the Company or guarantor of the note shall repay the note in full within five days after completing the transaction. If the note is not repaid in full by December 26, 2024, any further extension will require the issuance of an additional five-year warrant to purchase 25,000 shares of the Company’s common stock at an exercise price of $0.75 per share. Contemporaneous with the execution of this amendment, the Company (i) issued to the lender an additional five-year warrant to purchase 12,500 shares of the Company’s common stock at an exercise price of $0.75 per share and (ii) amended the holder’s previously outstanding warrant to reduce the exercise price to $0.75 per share. The warrants had an issuance date fair value of $1,500 and were accounted for as derivative liabilities under the Company’s sequencing policy on the condensed consolidated balance sheet as of September 30, 2024.

 

On November 29, 2023, the Company and a certain investor agreed to extend the maturity date of a certain convertible note payable in the principal amount of $100,000 from December 31, 2022 to July 1, 2024. In addition, the note provides repayment terms as follows: $10,000 per month from January 1, 2024 through March 1, 2024 and $20,000 per month from April 1, 2024 through June 1, 2024. A final payment of $10,000 and all accrued and unpaid interest is due on July 1, 2024. As of September 30, 2024 and through the date of filing these payments have not been made.

 

Convertible Notes Payable - Related Parties

 

In March 2024, the Company received additional advances of $146,672 under a note originally issued to George Verstraete, a director of the Company, and assigned to a trust controlled by Darlene Soave, a director of the Company, (the “Verstraete Note”), and, as a result, increased the outstanding principal balance of the Verstraete Note to $3,736,708. In connection with the advances, the Company issued five-year immediately vested warrants to purchase an aggregate of 117,338 shares of common stock at an exercise price of $1.25 per share to the trust controlled by Ms. Soave, the holder of the note. The warrants had an issuance date fair value of $6,666 which was included within derivative liabilities - related parties, recorded as a debt discount and will be amortized over the term of the note.

 

In April 2024, the Company entered into note amendment agreements with a trust controlled by Darlene Soave to extend the maturity dates of a note originally issued to Ms. Soave and assigned to the trust (the “Soave Note”) and the Verstraete Note to October 28, 2024 and September 10, 2024, respectively. See Note 10- Subsequent Events, for additional information related to the note extensions.

 
v3.24.3
Stockholders’ Deficiency
 9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
Stockholders’ Deficiency

Note 7 – Stockholders’ Deficiency

 

Preferred Stock Dividends

 

During the three months ended September 30, 2024 and 2023, the Company accrued additional preferred dividends of $350,984 and $309,150, respectively. During the nine months ended September 30, 2024 and 2023, the Company accrued additional preferred dividends of $1,017,520 and $907,516, respectively. As of September 30, 2024 and December 31, 2023, there were accrued preferred stock dividends of $365,078 and $25,540, respectively.

 

During the three months ended June 30, 2024, the Company issued an aggregate of 904,049 shares of common stock at the stated value of $0.75 per share for aggregate value of $677,982, pursuant to the terms of the Series A, B and C Convertible Preferred Stock Certificates of Designation, in connection with the partial payment of accrued dividends for Series A, Series B, and Series C Convertible Preferred Stock.

 

Series B Convertible Preferred Stock

 

During the nine months ended September 30, 2024, the Company received gross proceeds of $776,001 from investors in connection with the issuance of an aggregate of 103,464 shares of its Series B Convertible Preferred Stock and five-year warrants to purchase an aggregate of 1,164,000 shares of the Company’s common stock at an exercise price of $0.75 per share. The warrants and embedded conversion options were accounted for as derivative liabilities under the Company’s sequencing policy and had an aggregate issuance date fair value of $166,500.

 

Series C Convertible Preferred Stock

 

See Note 6, Notes Payable – Convertible Notes Payable for details associated with conversions of notes payable into 13,333 shares of Series C Convertible Preferred Stock. The embedded conversion option of the Series C Convertible Preferred Stock was accounted for as a derivative liability under the Company’s sequencing policy and had an issuance date fair value of $1,700.

 

Common Stock

 

See Note 6, Notes Payable – Convertible Notes Payable for details associated with conversions of accrued interest into 6,546 shares of common stock.

 

During the three months ended March 31, 2024, the Company issued 180,000 shares of the Company’s common stock with an issuance date fair value of $45,000 in connection with a legal settlement that was included within accrued compensation as of December 31, 2023.

 

During the three months ended March 31, 2024, the Company issued 1,000,000 immediately vested shares of the Company’s common stock to a certain consultant as compensation for services performed. The shares had a grant date fair value of $260,000 which was recognized immediately.

 

During the three and six months ended June 30, 2024, the Company issued 18,000 and 2,000 shares of the Company’s common stock to a certain investor in satisfaction of convertible note payable late fees. The shares had an issuance date fair value of $5,200 which was recognized immediately.

 

During the three months ended September 30, 2024, the Company received gross proceeds of $415,625 from investors in connection with the issuance of an aggregate of 1,312,500 shares of its common stock and ten-year warrants to purchase an aggregate of 1,312,500 shares of the Company’s common stock at an exercise price of $0.35 per share. The warrants had an issuance date fair value of $287,455 and were accounted for as derivative liabilities under the Company’s sequencing policy on the condensed consolidated balance sheet as of September 30, 2024.

 

 

Stock Warrants

 

During the three months ended March 31, 2024, the Company entered into an advisory agreement with a certain advisor to perform independent advisory services in connection with business operations from January 5, 2024 to June 4, 2024. In consideration of services to be performed, the Company issued five-year warrants to purchase 100,000 shares of common stock, which vest 20% monthly during the term of the agreement at an exercise price of $1.25 per share. The warrants had a grant date fair value of $6,590 which will be recognized over the vesting term.

 

See Note 6, Notes Payable and Note 7, Stockholders’ Deficiency – Common Stock for additional details associated with the issuance of stock warrants.

 

Stock-Based Compensation

 

During the three months ended September 30, 2024, the Company recognized stock-based compensation expense of $5,070, consisting of $1,408 of expense related to warrants which was included within accrued compensation and $3,662 related to common stock which was included within accrued compensation, which was included within general and administrative expenses on the condensed consolidated statement of operations. During the three months ended September 30, 2023, the Company recognized stock-based compensation expense of $25,962, consisting of $24,130 of expense related to warrants (of which, $23,758 was included within stockholder’s deficiency and $372 was included within accrued compensation), and $1,832 of expense related to common stock issued or to be issued for consulting services (which has been included within accrued compensation) which was included within general and administrative expenses.

 

During the nine months ended September 30, 2024, the Company recognized stock-based compensation expense of $309,297, consisting of $36,804 of expense related to warrants (of which, $37,979 was included within stockholder’s deficiency and $(1,175) was included within accrued compensation) and $272,493 of expense related to common stock to be issued for consulting services (of which, $265,200 was included within stockholder’s deficiency and $7,293 was included within accrued compensation), which was included within general and administrative expenses on the condensed consolidated statement of operations. During the nine months ended September 30, 2023, the Company recognized stock-based compensation expense of $404,978 (consisting of $63,709 of expense related to warrants (of which, $64,358 was included within stockholder’s deficiency and $(649) was included within accrued compensation and $341,269 of expense related to common stock issued or to be issued for consulting services described above (of which, $330,000 has been included within stockholder’s deficiency and $11,269 has been included within accrued compensation) which was included within general and administrative expenses.

 

There was no unrecognized stock-based compensation expense as of September 30, 2024.

 
v3.24.3
Related Party Transactions
 9 Months Ended
Sep. 30, 2024
Related Party Transactions [Abstract]  
Related Party Transactions

Note 8 – Related Party Transactions

 

As of September 30, 2024 and December 31, 2023, the Company was required to issue warrants to purchase an aggregate of 2,181,500 and 1,956,500, respectively, shares of common stock at an exercise price of $0.75 per share to former directors of the Company in connection with loans made to the Company in the aggregate amount of $459,000 which required certain penalties be paid in the form of warrants. As a result, the Company accrued $254,532 and $215,050 associated with the fair value of the obligations as of September 30, 2024 and December 31, 2023, respectively, which amount is included in accrued interest – related parties on the condensed consolidated balance sheets. The obligations to issue warrants are subject to changes in fair value at each reporting period. See Note 4, Fair Value for additional details.

 

See Note 6, Notes Payable – Convertible Notes Payable – Related Parties for details related to convertible notes held by directors of the Company. See Note 5, Advances Payable for details related to advances received from related parties.

 
v3.24.3
Commitments and Contingencies
 9 Months Ended
Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 9 – Commitments and Contingencies

 

Yeda Research and License Agreement

 

During the three months ended September 30, 2024 and 2023, the Company recorded research and development expenses of $14,500 related to its Research and License Agreement with Yeda (the “Agreement”). During the nine months ended September 30, 2024 and 2023, the Company recorded research and development expenses of $43,500 related to the Agreement with Yeda. As of September 30, 2024 and December 31, 2023, the Company had $116,000 and $72,500, respectively, of accrued research and development expenses pursuant to the Agreement with Yeda.

 

MD Anderson Agreements

 

During the nine months ended September 30, 2024, the Company commenced work under the February 2019 clinical trial agreement, as amended in May 2023, under which MD Anderson agreed to perform cell production and conduct Phase 1/2 human clinical trials with a second set of 12 patients for a total of approximately $1,816,000, with payments becoming due as certain specified milestones are met by MD Anderson.

 

The Company recognized $324,000 and $429,505 of research and development expenses during the three months ended September 30, 2024 and 2023, respectively, and $1,435,872 and $1,082,193 of research and development expenses during the nine months ended September 30, 2024 and 2023, respectively, associated with services provided by The University of Texas M.D. Anderson Cancer Center (“MD Anderson”) under the two agreements with MD Anderson dated November 2018 and February 2019, respectively. As of September 30, 2024 and December 31, 2023, the Company had a liability to MD Anderson of $1,365,372 and $924,705, respectively, which was included within accounts payable on the condensed consolidated balance sheets.

 

Litigation

 

In January 2019, the holder of a promissory note in the principal amount of $250,000 due on March 16, 2016 instituted a collection action in the Supreme Court of the State of New York, County of New York. On June 12, 2019, the plaintiff served a motion for summary judgment through the Secretary of State which was heard on July 12, 2019 and granted. The Company contended that it was not given sufficient notice under the applicable statute and did not have an opportunity to oppose the motion. Judgment was entered in October 2019 in the amount of $267,680. The Company brought a motion to vacate based on the jurisdictional defect of the motion in not providing the required amount of time, but that motion was denied in February 2021 without properly addressing the jurisdictional issues raised by the Company. The Company appealed the denial and then filed a motion to Renew and Reargue the motion to vacate based on the Court’s failure to address critical issues. That motion was also denied on April 15, 2021 without addressing the Company’s arguments. The Company appealed the second denial as well and pursued both appeals in a consolidated manner so as to resolve all issues together. Each of the appeals was denied. While the Company’s motions were pending, the plaintiff commenced steps to collect judgment. During the year ended December 31, 2021, $103,088 of a deposit made with the court by a third party on behalf of the Company was released to an officer of the court and has been accounted for as partial note repayment, with an additional $146,912 due under the note repaid by a release of the remaining deposit to an officer of the court and garnishment of Company funds during the year ended December 31, 2022, which was also accounted for as a note repayment. In August 2023, a supplemental judgment of $38,838 was entered against the Company. Inasmuch, as there were no further opportunities to appeal, the Company was required to pay the remaining amount due, which was estimated to be approximately $113,000 and recorded as a liability as of December 31, 2023. As of May 31, 2024, after taking into account accrued and unpaid interest, approximately $117,000 was owed to the plaintiff and the plaintiff was seeking, among other things, additional monetary sanctions. In June 2024, the Company resolved this matter by making a final payment of $135,000, and the plaintiff agreed to cease the pursuit of additional sanctions against the Company and has since filed a satisfaction of judgment.

 

Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. Aside from the matters discussed above, there are no other known contingencies through the date of this filing.

 
v3.24.3
Subsequent Events
 9 Months Ended
Sep. 30, 2024
Subsequent Events [Abstract]  
Subsequent Events

Note 10 – Subsequent Events

 

The Company has evaluated events that have occurred after the balance sheet and through the date the financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed below.

 

Subsequent to September 30, 2024, the Company received gross proceeds of $300,000 from investors in connection with the issuance of an aggregate of 39,997 shares of its Series B Convertible Preferred Stock and five-year warrants to purchase an aggregate of 450,000 shares of the Company’s common stock at an exercise price of $0.75 per share.

 

Subsequent to September 30, 2024, the Company received gross proceeds of $75,000 from investors in connection with the issuance of an aggregate of 214,287 shares of its Common Stock and ten-year warrants to purchase an aggregate of 214,287 shares of the Company’s common stock at an exercise price of $0.35 per share.

 

Subsequent to September 30, 2024, the Company entered into note amendment agreements with a trust controlled by Darlene Soave to extend the maturity dates of a note originally issued to Ms. Soave and assigned to the trust and the Verstraete Note, which had an outstanding principal amount of $3,736,708 as of September 30, 2024, to April 28, 2025 and March 10, 2025, respectively.
v3.24.3
Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Valuation of Common Stock Price

Valuation of Common Stock Price

 

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date and is then recognized over the period the services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an option or warrant, the Company issues new shares of common stock out of its authorized shares.

 

Because the Company’s common stock historically was not actively traded on a public market, the fair value of the Company’s restricted equity instruments is estimated by management based on observations of the sales prices of both restricted and freely tradable common stock, or instruments convertible into common stock. The Company obtained a third-party valuation of its common stock as of July 1, 2024 and December 31, 2023, which was considered in management’s estimation of fair value during the three and nine months ended September 30, 2024. The third-party valuation was performed in accordance with regulation of Section 409A of the Internal Revenue Code (“IRC”) as well as FASB ASC Topic 718. The estimates used by management are considered highly complex and subjective. The Company anticipates that once its shares become more actively traded, the use of such estimates will no longer be necessary to determine the fair value of its common stock.

 

The independent appraisal utilized the market approach, specifically the Backsolve method. The Backsolve method utilizes the economics from a direct transaction in the Company’s securities in determining fair value. The Backsolve method utilizes the Black-Scholes option pricing method (“OPM”) which allocated a probability-weighted present value to the Company’s convertible securities. The following steps were applied under the OPM:

 

  ● Establishment of total enterprise or equity value;
  ● Analysis of equity rights for each class of security;
  ● Selection of appropriate model for valuation purposes;
  ● Determination of key valuation inputs; and
  ● Computation of the fair value of the subject security.

 

Under the OPM, it was determined the Company’s common stock had a fair value of $0.28 and $0.26 as of July 1, 2024 and December 31, 2023, respectively, which included a discount for lack of marketability of 25%. Furthermore, the independent appraisal determined the Company’s expected volatility was 75% and 65% as of July 1, 2024 and December 31, 2023, respectively, by evaluating historical and implied volatilities of guideline companies.

 
Loss Per Share

Loss Per Share

 

The Company computes basic net loss per share by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share includes the dilution that would occur upon the exercise or conversion of all dilutive securities into common stock using the “treasury stock” and/or “if converted” methods, as applicable.

 

The common stock equivalents associated with the following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

 

   September 30, 
   2024   2023 
         
Options   6,932,004    6,932,004 
Warrants   19,434,945    13,541,107 
Convertible notes [1]   14,977,347    13,493,270 
Convertible preferred stock   21,031,420    18,743,053 
Total   62,375,716    52,709,434 

 

 

[1]Convertible notes are assumed to be converted at the rate of $0.75 per common share, which is the conversion price as of September 30, 2024 and 2023. However, such conversion rates are subject to adjustment under certain circumstances, such as stock splits and stock dividends, which may result in the issuance of common shares greater than the amount indicated.

 
Recent Accounting Standards

Recent Accounting Standards

 

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” to amend certain disclosure and presentation requirements for a variety of topics within the ASC. These amendments align the requirements in the ASC to the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

 

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segments Disclosures (Topic 280), which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on both an annual and interim basis. The guidance becomes effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07.

 

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

 

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The standard is intended to require more detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. This ASU is applicable to entities with a single operating segment. The Company is currently evaluating the potential impact of this adoption on the condensed consolidated financial statements and related disclosures.

 
v3.24.3
Summary of Significant Accounting Policies (Tables)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Schedule of Securities Excluded From Calculation of Weighted Average Dilutive Common Shares

The common stock equivalents associated with the following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

 

   September 30, 
   2024   2023 
         
Options   6,932,004    6,932,004 
Warrants   19,434,945    13,541,107 
Convertible notes [1]   14,977,347    13,493,270 
Convertible preferred stock   21,031,420    18,743,053 
Total   62,375,716    52,709,434 

 

 

[1]Convertible notes are assumed to be converted at the rate of $0.75 per common share, which is the conversion price as of September 30, 2024 and 2023. However, such conversion rates are subject to adjustment under certain circumstances, such as stock splits and stock dividends, which may result in the issuance of common shares greater than the amount indicated.
v3.24.3
Fair Value (Tables)
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Schedule of Changes in Fair Value of Liabilities Measured at Fair Value on a Recurring Basis

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of all Level 3 liabilities measured at fair value on a recurring basis using unobservable inputs during the three and nine months ended September 30, 2024 and 2023:

 

   Accrued   Accrued   Derivative     
   Interest   Compensation   Liabilities   Total 
                 
Balance - January 1, 2024  $356,510   $97,102   $33,000   $486,612 
                     
Accrual of warrant obligation   6,666    -    -    6,666 
Accrual of common stock obligation   -    -    -    - 
Reclassification of warrant obligation to derivative liabilities   -    -    -    - 
Issuance of warrants and conversion option   -    -    5,100    5,100 
Issuance of warrants   -                
Common stock issued in satisfaction of accrued compensation   -    (45,000)   -    (45,000)
Change in fair value   (74,316)   (766)   (5,800)   (80,882)
                     
Balance - March 31, 2024  $288,860   $51,336   $32,300   $372,496 
                     
Reclassification of warrant obligation to derivative liabilities   (6,666)   -    6,666    - 
Issuance of warrants and conversion option   -    -    349,638    349,638 
Change in fair value   12,502    1,815    (11,146)   3,171 
                     
Balance - June 30, 2024  $294,696   $53,151   $377,458   $725,305 
                     
Issuance of warrants and conversion option   -    -    311,263    311,263 
Change in fair value   129,783    3,284    98,550    231,617 
                     
Balance - September 30, 2024  $424,479   $56,435   $787,271   $1,268,185 

 

   Accrued   Accrued     
   Interest   Compensation   Total 
             
Balance - January 1, 2023  $504,700   $59,220   $563,920 
                
Accrual of warrant obligation   40,167    -    40,167 
Change in fair value   (46,131)   (1,095)   (47,226)
                
Balance - March 31, 2023   498,736    58,125    556,861 
Accrual of common stock obligation   -    9,438    9,438 
Satisfaction of warrant obligation   (40,167)   -    (40,167)
Change in fair value   27,272    73    27,345 
                
Balance - June 30, 2023   485,841    67,636    553,477 
Change in fair value   47,554    2,204    49,758 
Balance - September 30, 2023  $533,395   $69,840   $603,235 
Schedule of Assumptions Used for Valuation of Level 3 Liabilities

In applying the Black-Scholes option pricing model utilized in the valuation of Level 3 liabilities, the Company used the following approximate assumptions:

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2024   2023   2024   2023 
                 
Risk-free interest rate   3.58% - 5.33 %   4.60% - 4.70%   3.58% - 5.33%   3.60% - 4.70 %
Expected term (years)   0.82 - 10.00    4.00 - 5.00    0.82 - 10.00    4.00-5.00 
Expected volatility   75%   80%   65% - 75%   80%
Expected dividends   0.00%   0.00%   0.00%   0.00%
v3.24.3
Going Concern and Management Plans (Details Narrative) - USD ($)
 1 Months Ended 3 Months Ended 9 Months Ended
Nov. 14, 2024
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
May 31, 2024
Dec. 31, 2023
Nov. 29, 2023
Dec. 31, 2022
Net Income (Loss) Attributable to Parent   $ 1,417,141 $ 1,488,788 $ 1,275,406 $ 1,338,138 $ 1,241,604 $ 1,691,567 $ 4,181,335 $ 4,271,309        
Net Cash Provided by (Used in) Operating Activities               1,935,836 1,625,601        
Equity, Attributable to Parent   18,940,556 $ 17,319,501 $ 16,754,143 $ 16,030,147 $ 14,945,759 $ 14,219,717 18,940,556 $ 16,030,147   $ 15,611,543   $ 12,633,895
Retained Earnings (Accumulated Deficit)   45,848,723           45,848,723     $ 41,667,388    
Investor [Member]                          
Debt Instrument, Face Amount                   $ 300,000      
Subsequent Event [Member] | Investor [Member]                          
Proceeds from issuance of common stock $ 75,000                        
Subsequent Event [Member] | Investor [Member] | Series B Convertible Preferred Stock [Member]                          
Proceeds from issuance of preferred stock 300,000                        
Convertible Notes Payable [Member]                          
Debt Instrument, Face Amount   $ 5,663,000           $ 5,663,000          
Convertible Notes Payable [Member] | Investor [Member]                          
Debt Instrument, Face Amount                       $ 100,000  
Convertible Notes Payable [Member] | Subsequent Event [Member]                          
Debt Instrument, Face Amount $ 1,926,000                        
v3.24.3
Schedule of Securities Excluded From Calculation of Weighted Average Dilutive Common Shares (Details) - shares
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Weighted average dilutive common shares 62,375,716 52,709,434
Share-Based Payment Arrangement, Option [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Weighted average dilutive common shares 6,932,004 6,932,004
Warrant [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Weighted average dilutive common shares 19,434,945 13,541,107
Convertible Notes Payable [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Weighted average dilutive common shares [1] 14,977,347 13,493,270
Convertible Preferred Stock [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Weighted average dilutive common shares 21,031,420 18,743,053
[1] Convertible notes are assumed to be converted at the rate of $0.75 per common share, which is the conversion price as of September 30, 2024 and 2023. However, such conversion rates are subject to adjustment under certain circumstances, such as stock splits and stock dividends, which may result in the issuance of common shares greater than the amount indicated.
v3.24.3
Schedule of Securities Excluded From Calculation of Weighted Average Dilutive Common Shares (Details) (Parenthetical) - $ / shares
Sep. 30, 2024
Sep. 30, 2023
Convertible Notes Payable [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Conversion price per share $ 0.75 $ 0.75
v3.24.3
Summary of Significant Accounting Policies (Details Narrative) - Option Pricing Method [Member]
Jul. 01, 2024
$ / shares
Dec. 31, 2023
$ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Common stock fair value per share $ 0.28 $ 0.26
Measurement Input, Discount for Lack of Marketability [Member]    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Options pricing method, measurement input 25 25
Measurement Input, Option Volatility [Member]    
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]    
Options pricing method, measurement input 75 65
v3.24.3
Schedule of Changes in Fair Value of Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Inputs, Level 3 [Member] - Fair Value, Recurring [Member] - USD ($)
 3 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]            
Beginning balance $ 725,305 $ 372,496 $ 486,612 $ 553,477 $ 556,861 $ 563,920
Accrual of warrant obligation     6,666     40,167
Accrual of common stock obligation         9,438  
Reclassification of warrant obligation to derivative liabilities          
Issuance of warrants and conversion option 311,263 349,638 5,100      
Satisfaction of warrant obligation         (40,167)  
Common stock issued in satisfaction of accrued compensation     (45,000)      
Change in fair value 231,617 3,171 (80,882) 49,758 27,345 (47,226)
Ending balance 1,268,185 725,305 372,496 603,235 553,477 556,861
Accrued Interest [Member]            
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]            
Beginning balance 294,696 288,860 356,510 485,841 498,736 504,700
Accrual of warrant obligation     6,666     40,167
Accrual of common stock obligation        
Reclassification of warrant obligation to derivative liabilities   (6,666)      
Issuance of warrants and conversion option      
Satisfaction of warrant obligation       (40,167)  
Common stock issued in satisfaction of accrued compensation          
Change in fair value 129,783 12,502 (74,316) 47,554 27,272 (46,131)
Ending balance 424,479 294,696 288,860 533,395 485,841 498,736
Accrued Compensation [Member]            
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]            
Beginning balance 53,151 51,336 97,102 67,636 58,125 59,220
Accrual of warrant obligation        
Accrual of common stock obligation         9,438  
Reclassification of warrant obligation to derivative liabilities          
Issuance of warrants and conversion option      
Satisfaction of warrant obligation          
Common stock issued in satisfaction of accrued compensation     (45,000)      
Change in fair value 3,284 1,815 (766) 2,204 73 (1,095)
Ending balance 56,435 53,151 51,336 $ 69,840 $ 67,636 $ 58,125
Derivative Liability [Member]            
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]            
Beginning balance 377,458 32,300 33,000      
Accrual of warrant obligation          
Reclassification of warrant obligation to derivative liabilities   6,666        
Issuance of warrants and conversion option 311,263 349,638 5,100      
Common stock issued in satisfaction of accrued compensation          
Change in fair value 98,550 (11,146) (5,800)      
Ending balance $ 787,271 $ 377,458 $ 32,300      
v3.24.3
Schedule of Assumptions Used for Valuation of Level 3 Liabilities (Details)
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member]        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Derivative liabilities , Risk-free interest rate 3.58% 4.60% 3.58% 3.60%
Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member]        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Derivative liabilities , Risk-free interest rate 5.33% 4.70% 5.33% 4.70%
Measurement Input, Expected Term [Member] | Minimum [Member]        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Derivative liability, Expected term (years) 9 months 25 days 4 years 9 months 25 days 4 years
Measurement Input, Expected Term [Member] | Maximum [Member]        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Derivative liability, Expected term (years) 10 years 5 years 10 years 5 years
Measurement Input, Price Volatility [Member]        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Derivative liability, Expected volatility 75.00% 80.00%   80.00%
Measurement Input, Price Volatility [Member] | Minimum [Member]        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Derivative liability, Expected volatility     65.00%  
Measurement Input, Price Volatility [Member] | Maximum [Member]        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Derivative liability, Expected volatility     75.00%  
Measurement Input, Expected Dividend Rate [Member]        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Derivative liability, Expected dividends 0.00% 0.00% 0.00% 0.00%
v3.24.3
Fair Value (Details Narrative) - Service Providers [Member] - USD ($)
 9 Months Ended 12 Months Ended
Sep. 30, 2024
Dec. 31, 2023
Obilgation to issue common stock to service providers, shares 183,095 363,095
Obilgation to issue common stock to service providers, value $ 51,267 $ 90,774
Fair value per share of common stock $ 0.28 $ 0.26
Warrants to purchase shares 42,930 42,930
Fair value of warrants issued $ 5,168 $ 6,328
v3.24.3
Advances Payable (Details Narrative)
 9 Months Ended
Sep. 30, 2024
USD ($)
Other Liabilities Disclosure [Abstract]  
Proceeds from advances payable to related party $ 159,375
v3.24.3
Notes Payable (Details Narrative) - USD ($)
 1 Months Ended 2 Months Ended 3 Months Ended 9 Months Ended
Jul. 24, 2024
Jul. 15, 2024
Nov. 29, 2023
May 31, 2024
Apr. 30, 2024
Mar. 31, 2024
Jun. 01, 2024
Sep. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Nov. 14, 2024
Jul. 01, 2024
Mar. 22, 2024
Dec. 31, 2023
Short-Term Debt [Line Items]                                
Accrued interest and penalties       $ 117,000                        
Gain on extinguishment of notes payble               $ 17,893   $ 17,893 $ 41,920        
Fair value of warrants                     12,107          
Convertible Notes Payable [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance                             $ 4,760,170  
Warrants to purchase shares                             4,321,926  
Warrants exercise share price                             $ 1.25  
Convertible Notes Payable [Member] | George Verstraete [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance           $ 3,736,708     $ 3,736,708              
Proceeds from investors           $ 146,672                    
Note maturity date         Oct. 28, 2024 Sep. 10, 2024                    
Warrants term           5 years     5 years              
Warrants to purchase shares           117,338     117,338              
Warrants exercise share price           $ 1.25     $ 1.25              
Fair value of warrants           $ 6,666     $ 6,666              
Convertible Notes Payable [Member] | Common Stock [Member]                                
Short-Term Debt [Line Items]                                
Shares issued upon debt conversion                 6,546              
Accrued interest converted                 $ 4,910              
Exercise price of shares           $ 0.75     $ 0.75              
Fair value               3,000     3,000          
Convertible Notes Payable [Member] | Common Stock [Member] | Note Amendment Agreement Two [Member]                                
Short-Term Debt [Line Items]                                
Fair value               1,500     1,500          
Convertible Notes Payable [Member] | Series C Convertible Preferred Stock [Member]                                
Short-Term Debt [Line Items]                                
Principal amount converted                 $ 100,000              
Shares issued upon debt conversion                 13,333              
Conversion price per share           $ 7.50     $ 7.50           $ 7.50  
Fair value           $ 1,700     $ 1,700              
Accrue interest rate                             8.00%  
Investor [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance       300,000                        
Proceeds from investors       $ 250,000                        
Note maturity date       Nov. 22, 2024                        
Interest rate       10.00%                        
Original issue discount       $ 50,000                        
Warrants term       10 years                        
Warrants to purchase shares       625,000                        
Warrants exercise share price       $ 0.75                        
Fair value of warrants       $ 96,710                        
Outstanding principal repiad                     6,250          
Outstanding principal balance               $ 293,750     $ 293,750          
Investor [Member] | Common Stock [Member]                                
Short-Term Debt [Line Items]                                
Warrants term               5 years     5 years          
Warrants to purchase shares               1,312,500     1,312,500          
Warrants exercise share price               $ 0.35     $ 0.35          
Fair value of warrants               $ 287,455     $ 287,455          
Noteholder [Member]                                
Short-Term Debt [Line Items]                                
Warrants to purchase shares   100,000                            
Warrants exercise share price   $ 0.75                            
Principal amount converted   $ 30,000                            
Noteholder [Member] | Convertible Notes Payable [Member] | Note Amendment Agreement One [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance $ 50,000                              
Warrants term 5 years                              
Warrants to purchase shares 50,000                              
Warrants exercise share price $ 0.75                              
Notes payable maturity date from December 23, 2023 to December 23, 2024                              
Gross proceeds $ 2,000,000                              
Noteholder [Member] | Convertible Notes Payable [Member] | Note Amendment Agreement One [Member] | Minimum [Member]                                
Short-Term Debt [Line Items]                                
Interest rate 8.00%                              
Noteholder [Member] | Convertible Notes Payable [Member] | Note Amendment Agreement One [Member] | Maximum [Member]                                
Short-Term Debt [Line Items]                                
Interest rate 10.00%                              
Noteholder [Member] | Convertible Notes Payable [Member] | Note Amendment Agreement Two [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance $ 25,000                              
Warrants term 5 years                              
Warrants to purchase shares 25,000                              
Warrants exercise share price $ 0.75                              
Notes payable maturity date from December 26, 2023 to December 26, 2024                              
Gross proceeds $ 2,000,000                              
Noteholder [Member] | Convertible Notes Payable [Member] | Note Amendment Agreement Two [Member] | Minimum [Member]                                
Short-Term Debt [Line Items]                                
Interest rate 8.00%                              
Noteholder [Member] | Convertible Notes Payable [Member] | Note Amendment Agreement Two [Member] | Maximum [Member]                                
Short-Term Debt [Line Items]                                
Interest rate 10.00%                              
Lender [Member] | Convertible Notes Payable [Member] | Note Amendment Agreement One [Member]                                
Short-Term Debt [Line Items]                                
Warrants term 5 years                              
Warrants to purchase shares 25,000                              
Warrants exercise share price $ 0.75                              
Exercise price of shares $ 0.75                              
Lender [Member] | Convertible Notes Payable [Member] | Note Amendment Agreement Two [Member]                                
Short-Term Debt [Line Items]                                
Warrants to purchase shares 12,500                              
Warrants exercise share price $ 0.75                              
Exercise price of shares $ 0.75                              
Subsequent Event [Member] | Investor [Member]                                
Short-Term Debt [Line Items]                                
Warrants term                         10 years      
Warrants to purchase shares                         214,287      
Warrants exercise share price                         $ 0.35      
Notes and Convertible Notes Payable [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance               5,663,000     5,663,000          
Interest Payable               840,663     840,663          
Interest expense               356,786   262,091 730,539 635,143        
Amortization of debt discount               148,073   $ 80,667 223,652 $ 361,692        
Notes and Convertible Notes Payable [Member] | Subsequent Event [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance                         $ 1,926,000      
Notes Payable [Member]                                
Short-Term Debt [Line Items]                                
Accrued interest and penalties               3,136,092     3,136,092         $ 2,419,666
Notes Payable [Member] | Investor [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance       300,000                        
Proceeds from investors       $ 250,000                        
Note maturity date       Nov. 22, 2024                        
Interest rate       10.00%                        
Original issue discount       $ 50,000                        
Warrants term       10 years                        
Warrants to purchase shares       625,000                        
Warrants exercise share price       $ 0.75                        
Fair value of warrants       $ 96,710                        
Outstanding principal repiad                     6,250          
Outstanding principal balance               293,750     293,750          
Convertible Notes Payable [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance               $ 5,663,000     $ 5,663,000          
Convertible Notes Payable [Member] | Investor [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance     $ 100,000                          
Notes payable maturity date     December 31, 2022 to July 1, 2024                          
Periodic payment             $ 20,000   $ 10,000              
Accrued and unpaid interest                           $ 10,000    
Convertible Notes Payable [Member] | Subsequent Event [Member]                                
Short-Term Debt [Line Items]                                
Outstanding principal balance                         $ 1,926,000      
v3.24.3
Stockholders’ Deficiency (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Jun. 30, 2024
Sep. 30, 2024
Sep. 30, 2023
May 31, 2024
Mar. 22, 2024
Dec. 31, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Accrued dividend payable $ 365,078           $ 365,078       $ 25,540
Common stock, stated value $ 0.001           $ 0.001       $ 0.001
Value of common stock issued for legal settlement     $ 45,000                
Common stock issued in satisfaction of convertible note payable interest   $ 4,680 $ 520                
Stock-based compensation expense $ 5,070     $ 25,962     $ 309,297 $ 404,978      
Unrecognized stock-based compensation expense $ 0           0        
Convertible Notes Payable [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Warrants to purchase common stock                   4,321,926  
Exercise price                   $ 1.25  
Investor [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Warrants term                 10 years    
Warrants to purchase common stock                 625,000    
Exercise price                 $ 0.75    
Fair value of warrants                 $ 96,710    
Series A, B and C Convertible Preferred Stock [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Number of common stock issued   904,049                  
Common stock, stated value   $ 0.75       $ 0.75          
Aggregate value convertible preferred stock   $ 677,982                  
Series B Convertible Preferred Stock [Member] | Investor [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Proceeds from issuance of convertible preferred stock             $ 776,001        
Common stock, shares             103,464        
Warrants term 5 years           5 years        
Warrants to purchase common stock 1,164,000           1,164,000        
Exercise price $ 0.75           $ 0.75        
Fair value of warrants $ 166,500           $ 166,500        
Series C Convertible Preferred Stock [Member] | Convertible Notes Payable [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Shares issued upon debt conversion     13,333                
Fair value     $ 1,700                
Preferred Stock [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Additional accrued dividend payable 350,984     309,150     1,017,520 907,516      
Accrued dividend payable $ 365,078           365,078       $ 25,540
Preferred Stock [Member] | Series B Convertible Preferred Stock [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Common stock, shares 3,333 96,798 3,333                
Value of common stock issued for legal settlement                    
Common stock issued in satisfaction of convertible note payable interest                  
Preferred Stock [Member] | Series C Convertible Preferred Stock [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Value of common stock issued for legal settlement                    
Common stock issued in satisfaction of convertible note payable interest                  
Common Stock [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Number of common stock issued   904,049     802,880            
Number of common stock issued for legal settlement     180,000                
Value of common stock issued for legal settlement     $ 180                
Common stock issued in satisfaction of convertible note payable interest, shares   18,000 2,000                
Common stock issued in satisfaction of convertible note payable interest   $ 18 $ 2                
Common Stock [Member] | Consulting Services [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Stock-based compensation expense       1,832     272,493 341,269      
Stock-based compensation expense included in accrued compensation             7,293 11,269      
Stock-based compensation expense included in stockholder's deficiency             265,200 330,000      
Common Stock [Member] | Convertible Notes Payable [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Common stock issued in satisfaction of convertible note payable interest, shares   18,000       2,000          
Common stock issued in satisfaction of convertible note payable interest           $ 5,200          
Common Stock [Member] | Convertible Notes Payable [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Shares issued upon debt conversion     6,546                
Fair value $ 3,000           $ 3,000        
Common Stock [Member] | Investor [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Proceeds from issuance of convertible preferred stock $ 415,625                    
Common stock, shares 1,312,500                    
Warrants term 5 years           5 years        
Warrants to purchase common stock 1,312,500           1,312,500        
Exercise price $ 0.35           $ 0.35        
Fair value of warrants $ 287,455           $ 287,455        
Common Stock [Member] | Consultants [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Stock issued for service     1,000,000                
Stock issued for service, value     $ 260,000                
Warrant [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Stock-based compensation expense 1,408     24,130     36,804 63,709      
Stock-based compensation expense included in accrued compensation $ 3,662     372     (1,175) (649)      
Stock-based compensation expense included in stockholder's deficiency       $ 23,758     $ 37,979 $ 64,358      
Warrant [Member] | Advisory Agreement [Member]                      
Accumulated Other Comprehensive Income (Loss) [Line Items]                      
Warrants term     5 years                
Warrants to purchase common stock     100,000                
Exercise price     $ 1.25                
Fair value of warrants     $ 6,590                
Warrant vesting percentage     20.00%                
v3.24.3
Related Party Transactions (Details Narrative) - Former Director [Member] - USD ($)
Sep. 30, 2024
Dec. 31, 2023
Warrants purchase for common stock 2,181,500 1,956,500
Warrant exercise price per share $ 0.75 $ 0.75
Loan amount $ 459,000 $ 459,000
Fair value of loan obligations $ 254,532 $ 215,050
v3.24.3
Commitments and Contingencies (Details Narrative) - USD ($)
 1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Aug. 31, 2023
Oct. 31, 2019
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Dec. 31, 2022
Dec. 31, 2021
Jun. 30, 2024
May 31, 2024
Dec. 31, 2023
Jan. 31, 2019
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Accounts payable     $ 2,036,128   $ 2,036,128           $ 1,467,052  
Loss contingency, damages sought, value   $ 267,680                    
Repayments of related party debt             $ 146,912          
Litigation settlement expense $ 38,838                      
Loss contingency accrual at carrying value                     113,000  
Accrued and unpaid interest                   $ 117,000    
Final payment resolved                 $ 135,000      
Court Officer [Member]                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Repayments of notes payable               $ 103,088        
Promissory Note [Member]                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Principal amount                       $ 250,000
Yeda Research and License Agreement [Member]                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Research and development expenses     14,500 $ 14,500 43,500 $ 43,500            
Accrued research and development expenses     116,000   116,000           72,500  
MD Anderson Agreements [Member]                        
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]                        
Research and development expenses     324,000 $ 429,505 1,435,872 $ 1,082,193            
Payments amount         1,816,000              
Accounts payable     $ 1,365,372   $ 1,365,372           $ 924,705  
v3.24.3
Subsequent Events (Details Narrative) - USD ($)
 1 Months Ended 9 Months Ended
Nov. 14, 2024
Sep. 30, 2024
May 31, 2024
Note Amendment Agreement [Member]      
Subsequent Event [Line Items]      
Outstanding principal balance   $ 3,736,708  
Investor [Member]      
Subsequent Event [Line Items]      
Warrant term     10 years
Warrants to purchase shares     625,000
Warrants exercise share price     $ 0.75
Outstanding principal balance     $ 300,000
Investor [Member] | Series B Convertible Preferred Stock [Member]      
Subsequent Event [Line Items]      
Number of shares issued   103,464  
Warrant term   5 years  
Warrants to purchase shares   1,164,000  
Warrants exercise share price   $ 0.75  
Subsequent Event [Member] | Investor [Member]      
Subsequent Event [Line Items]      
Number of shares issued 214,287    
Warrant term 10 years    
Warrants to purchase shares 214,287    
Warrants exercise share price $ 0.35    
Proceeds from issuance of common stock $ 75,000    
Subsequent Event [Member] | Investor [Member] | Series B Convertible Preferred Stock [Member]      
Subsequent Event [Line Items]      
Proceeds from issuance of preferred stock $ 300,000    
Number of shares issued 39,997    
Warrant term 5 years    
Warrants to purchase shares 450,000    
Warrants exercise share price $ 0.75    
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