CLCS 10-K & 10-Q changes, risk factors and insider trading

To satisfy FDA or foreign regulatory approval standards for the commercial sale of our product candidates, we must demonstrate in adequate and controlled clinical trials that our product candidates are safe and effective. Success in early clinical trials, including Phase 2 trials, does not ensure that later clinical trials will be successful. Our initial results from Phase ½1/2 clinical trials also may may not be confirmed by later analysis or subsequent larger clinical trials. A number of companies in the pharmaceutical industry have suffered suffered significant setbacks in advanced clinical trials, even after obtaining promising results in earlier clinical trials.

Because we have limited financial and managerial resources, we focus on research programs, therapeutic platforms, and product candidates that we identify for specific indications. Additionally, we have contractual commitments under our collaboration agreements to use commercially reasonable efforts to develop certain programs and, thus, do not have unilateral discretion to vary from such agreed to efforts. In addition, we have contractual commitments to conduct certain development plans,plans and thus may not have discretion to modify such development plans, including clinical trial designs, without agreement from our collaboration partners. As a result, we may forego or delay pursuit of opportunities with other therapeutic platforms or product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs, therapeutic platforms, and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights.

From time to time, we may publicly disclose interim, topline, or preliminary data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. Further, modifications or improvements to our manufacturing processes for a therapy may result in changes to the characteristics or behavior of the product candidate that could cause our product candidates to perform differently and affect the results of our ongoing clinical trials. As a result, the topline results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remainremains subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data areis available.

From time to time, we may also disclose preliminary or interim data from our preclinical studies and clinical trials. Preliminary or interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data becomebecomes available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. Additionally, disclosure of preliminary or interim data by us or by our competitors could result in volatility in the price of our common stock.

Our business exposes us to potential product liability risks, which are inherent in the testing, manufacturing, marketing and sale of therapeutic products. Human therapeutic products involve an inherent risk of product liability claims and associated adverse publicity. While we will continue to take precautions we deem appropriate, there can be no assurance that we will be able to avoid significant product liability exposure. We do not currently maintain liability insurance coverage as such insurance is expensive and difficult to obtain. As we move forward with our own clinical trials, we plan to obtain liability insurance coverage in the jurisdictions applicable to such clinical trials. However, when we seek such insurance, it may not be available on acceptable terms, if at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit our ability to conduct clinical trials in certain jurisdiction or the commercialization of our current or potential products. A product liability claim brought against us in a clinical trial or a product withdrawal could have a material adverse effect upon us and our financial condition. Should the insurance coverage be insufficient in amount or scope to address multiple and diverse claims, liabilities not covered by insurance could represent a significant financial liability for Cell Source. Since Yeda does not conduct human trials, there is no need for Cell Source to have insurance for trials there. As Cell Source continues to contract facilities at hospitals to conduct human trials on its behalf, it will ensure that full and proper insurance coverage will be in place with respect to such clinical facilities. Cell Source plans to insureensure its direct participation in clinical trials, above and beyond whatever insurance coverage is already held by the institutions and facilities providing services with respect to such clinical trials, as may be required.

Our ability to raise additional funds will depend on financial, economic, political and market conditions and other factors, over which we may have no or limited control. Market volatility resulting from other factors could also adversely impact our ability to access capital as as and when needed. Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we could be required to:

The Russia-Ukraine Russia-Ukraine, Israel-Hamas and Israel-HamasUnited States/Israel-Iran wars have disrupted global markets and my adversely impact our ability to obtain financing.

On February 24, 2022, Russian military forces invaded Ukraine, and the length, impact, and outcome of the ongoing war in Ukraine is highly unpredictable. On October 7, 2023, Hamas terrorists infiltrated Israel’s border with the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas has also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks have resulted in extensive deaths, injuries and kidnapping. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. Although there is currently a cease fire in the Israel-Hamas conflict, no assurance can be given that the cease fire will continue. On February 28, 2026, United States and Israeli forces conducted a series of attacks in Iran, and Iran responded by launching retaliatory attacks on Israel and United States military bases in the Middle East. The intensity and duration of Israel’sthe currentUnited States/Israel war against HamasIran is similarly difficult to predict. As a result of the Russia-UkraineRussia-Ukraine, Israel-Hamas and Israel-HamasUnited States/Israel-Iran wars and other geopolitical and macroeconomic events, the global credit and financial markets have experienced volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly or more dilutive.

As of December 31, 2023,2024, we had a working capital deficitdeficiency and accumulated deficit of $15,611,543$18,537,836 and $41,667,388,$46,180,030, respectively. During the the year ended December 31, 2023,2024, we incurred a net loss of $5,321,212.$4,512,642 and experienced negative cash flows from operating activities in the amount of $2,684,162. We have historically incurred operating losses and may continue to incur operating losses for the foreseeable future. We believe that 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. This may hinder our future ability to obtain financing or may force us to obtain financing on less favorable terms than would otherwise be available. We have not generated revenues to-date. Our primary source of operating funds since inception has been equity and debt financings. Our 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. There can be no assurance that we will be able to continue as a going concern.

As of December 31, 20232024 and through the date of this filing, notes payable with principal amounts totaling $1,876,093$2,588,593 and $1,906,093,$11,015,939, respectively, were past due. Although onlyno onecollection holderactions ofare acurrently note with the principal amount of $250,000 has elected to pursue remediespending against us, no assurance can be given that the other holders of these notes will not dopursue soremedies against us in the future. The institution of collection actions could have a material adverse effect on our business and could force us to seek relief through insolvency or other proceedings.

Our Articles of Incorporation permit us to issue up to 10,000,000 shares of preferred stock and our board of directors has authorized 1,350,000 shares of Series A Convertible Preferred, 2,000,000 shares of Series B Convertible Preferred, and 1,000,000 shares of Series C Convertible Preferred Stock, for issuance. Our board of directors could authorize the issuance of additional series of preferred stock in the future and such preferred stock could grant holders preferred rights on parity with the Series A Preferred, Series B Preferred and Series C Preferred as to dividend payments and liquidation preference. The issuancesissuance of other series of preferred stock could have the effect of reducing the amounts available to the holders Series A Preferred, Series B Preferred and Series C Preferred in the event of our liquidation, winding-up or dissolution. It may also reduce cash dividend payments on the Series A Preferred if we do not have sufficient funds to pay dividends on all Series A Preferred, Series B Preferred and Series C Preferred outstanding and outstanding parity preferred stock.

The Company is required to report under the Exchange Act and its Common Stock is eligible for quotation on the OTC MarketsMarkets. Expert Market. Quotations in Expert Market securities are restricted from public viewing. In addition,However, there is no regular active trading market in the Company’s Common Stock, and we cannot give anany assurance that an active trading market will develop. If an active market for the Company’s Common Stock develops, there is a significant risk that the Company’s stock price may fluctuate dramatically in the future in response to any of the following factors, some of which are beyond our control:

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person,person and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

Our officers, directors and affiliates currently own or have rights to acquiresacquire shares of common stock and preferred stock representing approximately 28% 20.4% of the voting power of our outstanding securities.securities stock. Such concentrated control of the Company may adversely affect the value of our sharesordinary of common stock.shares. If you acquire shares of our common stock, you may have no effective voice in our management. Sales by our insiders or affiliates, along with any other market transactions, could affect the value of our ordinary shares.

We have paid no dividends on our Common Stock to datedate, and it is not anticipated that any dividends will be paid to holders of our Common Stock in the foreseeable future. While our future dividend policy will be based on the operating results and capital needs of the business, it is currently anticipated that any earnings will be retained to finance our future expansion and for the implementation of our business plan. As an investor, you should take note of the fact that a lack of a dividend can further affect the market value of our stock and could significantly affect the value of any investment in our Company.

InWe the past, our management identified weaknesses in our internal controls and although our management believes such weaknesses have been remediated, our internal control over financial reporting may still or could in the future have weaknesses and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of our common stock. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition condition or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify weaknesses weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting reporting or disclosure of management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.

In addition, the stock market in general and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. If the market price of our common stock after this offering does not exceed the initial public offering price, you may not realize any return on,on and may lose some or all of,of your investment.

The unique advantage of Cell Source technology lies in the ability to induce sustained tolerance of transplanted cells (or organs) by the the recipient’s immune system in a setting that requires only mild immune suppression, while avoiding the most common post-transplant post-transplant complications. The scientific term for inducing such tolerance in a transplantation setting is chimerism, where the recipient’s recipient’s immune system tolerates the co-existence of the (genetically different) donor type and host (recipient) 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 (currently in a clinical trial in the US) 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 plan 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 of 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.

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 byin the2025. endRecent ofpreclinical 2024.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 successfully completed the first threefive treatment cohorts, with 1215 patients each receiving a haploidentical HSCT under reduced intensity conditioning with Veto Cells. This firsttrial in human dose optimization trial has thus far shown that thethere initialhas dosebeen isno intoxicity factassociated with the optimalVeto dose,Cells, as all ninewith patients had successfulshowing consistent stem cell engraftment after 42 days,engraftment, in the absence of severe GvHD. CellThe Sourcestudy hasis continuedexpected theto trial as it proceedscontinue with the nextadditional cohorts of patients, using the higher dosecurrent level,treatment in order to complete the dose finding process.protocol.

Research and development expense was $1,577,995$1,898,081 and $1,996,173$1,577,995 for the years ended December 31, 20232024 and 2022,2023, respectively, aan decreaseincrease of $418,178,$320,086, or 21%.20%. This decreaseincrease is mainly attributable to the achievement of five patient enrollment milestones of $448,247 being achieved induring 2022 for $527,525 under the sponsored2024 researchperiod, agreement with MD Andersen, whereascompared to one $105,505 enrollment milestone was achieved in the 2023 period.

General and administrative expense was $2,604,751$1,942,163 and $2,179,160$2,604,751 for the years ended December 31, 20232024 and 2022,2023, respectively, ana increasedecrease of $425,591,$662,588, or 20%.25%. GeneralThis anddecrease administrative expenses are primarily comprised of external consulting and professional fees, payroll and stock-based compensation expenses. The increase wasis primarily attributable to andecreases increasein legal expenses of $219,000$441,856, due to various legal matters that occurred in 2023, stock-based compensation expense of $142,545 and consulting expenses recorded inof 2023$210,000, due to increaseda financialdecrease advisoryin servicesvarious duringconsulting services. theThis 2023was period,partially andoffset by an increase in stock-basedexternal compensationexpenses of $351,259$72,403, mainlyand aspayroll a resultexpense of an aggregate of 1,150,000 shares of the Company’s common stock issued in consideration for consulting services, partially offset by a decrease in legal fees of $41,458.$78,577.

Interest expense for the years ended December 31, 20232024 and 20222023 was $668,117$778,386 and $707,115,$668,117, respectively, aan decreaseincrease of $38,998,$110,269, or 6%.17%. 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.

Amortization of debt discount was $380,569$309,914 and $285,300$380,569 for the years ended December 31, 20232024 and 2022,2023, respectively, ana increasedecrease of $95,269,$70,655, or 33%.19%. TheThis increasedecrease is primarily dueassociated towith greatera amountmajority of notes outstanding and relatedthe debt discount amortization.being fully amortized during 2023.

DuringFor the yearyears ended December 31, 2024 and 2023, we recognized a gain on the change in fair value of derivative liability of $10,900.$398,009 and $10,900, respectively, an increase of $387,109. The change in fair value of derivative liability is attributable to the decrease in fair value of the Company’s common stock during 2023.2024.

During the year ended December 31, 2023,2024, we haddid not generatedgenerate any revenues, had a net loss of $5,321,212$4,512,642 and had used cash in operations of $2,347,891.$2,684,162. As of December 31, 2023,2024, we had a working capital deficiency of $15,611,543$18,537,836 and an accumulated deficit of $41,667,388.$46,180,030. As As of December 31, 20232024, and through the date of this filing, notes payable with principal amounts totaling $1,876,093$2,588,593 and $11,015,939, $1,906,093, respectively, were past duedue. Subsequent to December 31, 2024 and are classified as currentmore liabilitiesfully ondescribed in Note 14, Subsequent Events, the consolidatedCompany balancereceived aggregate sheet asproceeds of December$3,171,751 from the issuance of notes payable, $310,000 from the issuance of Series B Convertible Preferred Stock 31,and 2023.$250,000 from the issuance of Common Stock. 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. Our ability to continue our operations is dependent on the execution of management’s plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. Subsequent to December 31, 2023 and as more fully described in Note 13, Subsequent Events, the Company received aggregate proceeds of $646,672 from the issuance of notes payable and convertible notes payable- related parties and $751,000 from the sale of Series B Preferred Stock. We may need to incur additional liabilities with certain related parties to sustain our existence. If we were not to continue as a going concern, we would likely not be able to realize our assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of our financial statements.

Net cash provided by financing activities for the years ended December 31, 20232024 and 20222023 was $2,147,429$2,736,590 and $3,268,256,$2,147,429, respectively. The net cash provided by financing activities during the year ended December 31, 2024 was attributable to $640,626 of proceeds from issuance of common stock and warrants, $1,151,000 of proceeds from the issuance of Series B Convertible Preferred Stock and warrants, approximately $846,637 of proceeds from the issuance of notes, related party and convertible notes payable, proceeds from advances payable and advances payable – related party of $159,675 partially offset by the repayment of a financing liability in the amount of $48,548 and $12,500 related to the repayment of notes payable. The net cash provided by financing activities during the year ended December 31, 2023 was attributable to $1,596,978 of proceeds from the issuance of convertible notes payable, $799,918 of proceeds received from Convertible Series B Preferred stock subscriptions, and $30,000 of proceeds from the issuance of notes payable, offset by $279,467 of repayments of financing liability. The net cash provided by financing activities during the year ended December 31, 2022 was attributable to $3,275,000 of proceeds from the issuance of convertible notes payable and $168,094 of proceeds from the issuance of notes payable, partially offset by the$279,467 of repayments of notes payable in the amount of $146,912,financing and $27,926 of repayment of financing liability.

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, specifically, issuances of convertible notes and Series B Convertible Preferred Stock during 2024 and 2023, in determining fair value. When applying the Backsolve method, the Company evaluated the below valuation valuation inputs:

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, 2023,2024, which was filed with the SEC on JuneApril 24,6, 2024.2026.

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 SeptemberMarch 30,31, 2024 2025 and for the three and nine months ended SeptemberMarch 30,31, 2025 and 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, 20232024 as filed with the Securities and Exchange Commission (“SEC”) on JuneApril 24,6, 2024.2026.

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, 2023,2024, filed with the SEC on JuneApril 24, 2024.6, 2026.

The unique advantage of Cell Source technology lies in the ability to induce sustained tolerance of transplanted cells (or organs) by the the recipient’s immune system in a setting that requires only mild immune suppression, while avoiding the most common post-transplant 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 of 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.

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 2025.2026. 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 consistently 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.

Three Months Ended SeptemberMarch 30,31, 20242025 Compared with the Three Months Ended September,March 202331, 2024

Research and development expense was $360,857$515,183 and $514,505$356,213 for the three months ended SeptemberMarch 30,31, 20242025 and 2023,2024, respectively, aan decrease increase of $153,648, $158,970, or 30%.45%. This decreaseincrease is primarily attributabledue to noadditional patientsincurred beingexpenses enrolledas ina result of the threeexecution monthsof endednew Septemberamendments 30, 2024 bywith MD Anderson.

General and administrative expense, which is associated with external consulting and professional fees, payroll and stock-based compensation expenses, was $470,768$483,404 and $480,875$781,916 for the three months ended March September31, 30, 20242025 and 2023,2024, respectively, a decrease of $10,107,$298,512, or 2%. This38%. The decrease iswas primarily attributable to decreases in legal consulting expenses of approximately $16,000, due to various legal matters that occurred in 2023,$30,000, stock-based compensation expense of $20,000$200,600 and consultingexternal expenses of $60,000,$111,000, due to a decrease in various consultingexternal services, partially offset by increases in accounting and audit expenses of approximately $57,000,$46,000, due to increased work performed, and payroll expenses of $30,000.performed.

Interest expense for the three months ended SeptemberMarch 31, 30,2025 and 2024 and 2023 was $356,786$427,237 and $262,091,$222,814, respectively, an increase of $94,695,$204,423, or 36%. 92%. This increase is primarily associated with an increase in the balance of interest bearinginterest-bearing notes during the 2024three months ended March 31, 2025 as compared to the prior period.

Amortization of debt discount was $148,073$86,637 and $80,667 $5,956 for the three months ended SeptemberMarch 30,31, 20242025 and 2023,2024, respectively, an increase of $67,406, $80,681, or 84%.1,354%. This increase is primarily associated with an increase in notes payable issued in 20242025 compared to the prior year.

Change in Fair Value of Derivative and Warrant Liabilities

During the ninethree months ended SeptemberMarch 30,31, 2024,2025, we haddid not generatedgenerate any revenues, hadincurred a net loss of approximately $4,181,000$1,482,000 and hadused used cash in operations of approximately $1,936,000.$600,000. As of SeptemberMarch 30,31, 2024, 2025, we had a working capital deficiency of approximately $18,941,000 $20,136,000 and an accumulated deficit of approximately $45,849,000.$47,662,000. As of SeptemberMarch 31, 30, 20242025 and through the date of this filing, notes payable with principal amounts totaling $5,663,000approximately $6,328,000 and $1,926,093, $11,116,000, 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 SeptemberMarch 30,31, 20242025 and as more fully described in Note 10, Subsequent Events, the Company received aggregate proceeds of $75,000approximately $2,839,000 from the issuance of commonnotes stockpayable, and $300,000$310,000 from the saleissuance of Series B Convertible Preferred Stock and $100,000 from the issuance of Common 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 ninethree months ended SeptemberMarch 30,31, 2024,2025, our sources and uses of cash were as follows:

We experienced negative cash flows from operating activities for the ninethree months ended SeptemberMarch 30,31, 20242025 and 20232024 in the amounts of approximately $1,936,000 $600,000 and $1,626,000,$174,000, respectively. The net cash used in operating activities for the ninethree months ended SeptemberMarch 30,31, 20242025 was primarily due to cash used to fund a net loss of approximately $4,181,000, $1,482,000, adjusted for net non-cash expenses in the aggregate amount of approximately $670,000, $211,000, partially offset by $1,575,000$671,000 of net cash provided by changes in the levels of operating assets and liabilities. The net cash used in operating activities for the ninethree months ended SeptemberMarch 30,31, 20232024, was primarily due to cash used to fund a net loss of approximately $4,271,000, $1,275,000, adjusted for non-cash expenses in the aggregate amount of approximately $753,000,$215,000, partially offset by $1,892,000$887,000 of net cash provided by changes in the levels of operating assets and liabilities.

There have have been no material changes to the Company’s critical accounting estimates since the 20232024 Form 10-K except as described below.10-K.

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 obtainedobtains a third-party valuation of its common stock as of December 31, 2024 and July 1, 20242024, and utilizes the December 31, 2023,2024 whichvaluation was considered infor management’s estimation of fair value during the three and nine months ended SeptemberMarch 31, 2025. 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.

Under the OPM, it was determined the Company’s common stock had a fair value of $0.28$0.19 and $0.26$0.28 as of JulyDecember 1,31, 2024 and DecemberJuly 31,1, 2023, 2024, respectively, which included a discount for lack of marketability of 25%. Furthermore, the independent appraisal determined the Company’s expected volatility was 75%70% and 65%75% as of JulyDecember 1,31, 2024 and DecemberJuly 31,1, 2023,2024, respectively, by evaluating historical and implied volatilities of guideline companies.