As filed with the Securities and Exchange Commission
January 18, 2024
Registration Statement No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ADITXT, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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23219 |
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82-3204328 |
(State or other jurisdiction of
incorporation or organization) |
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(Primary Standard Industrial
Classification Code Number) |
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(I.R.S. Employer
Identification Number) |
737 N. Fifth Street, Suite 200
Richmond, VA 23219
(650) 870-1200
(Address and telephone number of registrant’s principal executive offices)
Amro Albanna
Aditxt, Inc.
Chief Executive Officer
737 N. Fifth Street, Suite 200
Richmond, VA 23219
(650) 870-1200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Richard A. Friedman, Esq. |
Sean F. Reid, Esq. |
Sheppard, Mullin, Richter & Hampton LLP |
30 Rockefeller Plaza |
New York, NY 10112 |
Tel: (212) 653-8700 |
Fax: (212) 653-8701 |
Approximate date of commencement of proposed sale
to the public:
As soon as practicable after the effective date
of this registration statement becomes effective.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check
the following box: ☒
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
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.
Large accelerated filer ☐ |
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Accelerated filer ☐ |
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Non-accelerated filer ☒ |
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Smaller reporting company ☒ |
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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 new or revised financial
accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
The information in this
preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS |
SUBJECT
TO COMPLETION |
DATED
JANUARY 18, 2024 |
Aditxt, Inc.
Up to 3,785,569 Shares of Common
Stock
Pursuant to this prospectus, the
selling stockholder identified herein (the “Selling Stockholder”) is offering on a resale basis an aggregate of 3,785,569
shares of common stock, par value $0.001 per share (the “Common Stock”) of Aditxt, Inc. (the “Company,” “we,”
“us” or “our”) consisting of (i) 1,237,114 shares of Common Stock that are issuable upon exercise of pre-funded
warrants (the “Pre-Funded Warrants”) issued pursuant to a securities purchase agreement entered into by and between us and
the Selling Stockholder dated December 29, 2023 (the “Purchase Agreement”), (ii) up to 2,474,228 shares of Common Stock issuable
upon exercise of warrants (the “Common Warrants”) issued pursuant to the Purchase Agreement, and (iii) up to 74,227 shares
of Common Stock issuable upon exercise of warrants (the “Placement Agent Warrants”, together with the Pre-Funded Warrants
and the Common Warrants, the “Warrants”) issued pursuant to the engagement letter dated as of December 3, 2023, as amended
on December 29, 2023, by and between the Company and H.C. Wainwright & Co., LLC (the “Placement Agent”).
We will not receive any of the
proceeds from the sale by the Selling Stockholders of the Common Stock. Upon any exercise of the Warrants by payment of cash, however,
we will receive the exercise price of the Warrants, which, if exercised in cash with respect to the 3,785,569 shares of Common Stock offered
hereby, would result in gross proceeds to us of approximately $12.3 million. However, we cannot predict when and in what amounts or if
the Warrants will be exercised by payments of cash and it is possible that the Warrants may expire and never be exercised, in which case
we would not receive any cash proceeds.
The Selling Stockholders may sell
or otherwise dispose of the Common Stock covered by this prospectus in a number of different ways and at varying prices. We provide more
information about how the Selling Stockholders may sell or otherwise dispose of the Common Stock covered by this prospectus in the section
entitled “Plan of Distribution” on page 86. Discounts, concessions, commissions and similar selling expenses attributable
to the sale of Common Stock covered by this prospectus will be borne by the Selling Stockholders. We will pay all expenses (other than
discounts, concessions, commissions and similar selling expenses) relating to the registration of the Common Stock with the Securities
and Exchange Commission (the “SEC”).
Our Common stock is listed
on The Nasdaq Capital Market under the symbol “ADTX”. On January 16, 2024, the closing price as reported on The Nasdaq Capital
Market was $4.59 per share. There is no established public trading market for the Pre-Funded Warrants and the Common Warrants, and we
do not expect a market to develop. Without an active trading market, the liquidity of the Pre-Funded Warrants and Warrants will be limited.
In addition, we do not intend to list the Pre-Funded Warrants or the Warrants on The Nasdaq Capital Market, any other national securities
exchange or any other trading system.
We are an “emerging growth
company” under the federal securities laws and, as such, are subject to reduced public company reporting requirements.
Investing in our Common Stock
involves a high degree of risk. See “Risk Factors” beginning on page 13 of this prospectus.
Neither the Securities and
Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is
, 2023
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus relates to the
resale by the Selling Stockholders identified in this prospectus under the caption “Selling Stockholders,” from time to time,
of up to an aggregate of 3,785,569 shares of Common Stock. We are not selling any shares of Common Stock under this prospectus, and we
will not receive any proceeds from the sale of shares of Common Stock offered hereby by the Selling Stockholders, although we may receive
cash from the exercise of the Warrants.
You should rely only on the information
provided in this prospectus, including any information incorporated by reference. We have not authorized anyone to provide you with any
other information and we take no responsibility for, and can provide no assurances as to the reliability of, any other information that
others may give you. The information contained in this prospectus speaks only as of the date set forth on the cover page and may not reflect
subsequent changes in our business, financial condition, results of operations and prospects.
We are not, and the Selling Stockholders
are not, making offers to sell these securities in any jurisdiction in which an offer or solicitation is not authorized or permitted or
in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an
offer or solicitation. You should read this prospectus, including any information incorporated by reference, in its entirety before making
an investment decision.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking
statements, which reflect the views of our management with respect to future events and financial performance. These forward-looking statements
are subject to a number of uncertainties and other factors that could cause actual results to differ materially from such statements.
Forward-looking statements are identified by words such as “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “plans,” “projects,” “targets,” and similar expressions.
Such forward-looking statements may be contained in the sections “Risk Factors,” and “Business,” among other places
in this prospectus. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on the information
available to management at this time and which speak only as of this date. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise. For a discussion of some of the factors that may cause
actual results to differ materially from those suggested by the forward-looking statements, please read carefully the information under
“Risk Factors.”
The identification in this document
of factors that may affect future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means
exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You may rely only
on the information contained in this prospectus.
We have not authorized anyone
to provide information different from that contained in this prospectus. Neither the delivery of this prospectus nor the sale of our Common
Stock means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer
to sell or solicitation of an offer to buy these securities in any circumstances under which the offer or solicitation is unlawful.
PROSPECTUS SUMMARY
This summary highlights certain
information about us, this offering and selected information contained elsewhere in this prospectus and in the documents incorporated
by reference. This summary is not complete and does not contain all the information that you should consider before deciding whether to
invest in our securities. For a more complete understanding of our company and this offering, we encourage you to read and consider carefully
the more detailed information contained in or incorporated by reference in this prospectus, including the information contained under
the heading “Risk Factors” beginning on page 13 of this prospectus.
Overview and Mission
We believe the world needs—and
deserves—a new approach to innovating that harnesses the power of large groups of stakeholders who work together to ensure that
the most promising innovations make it into the hands of people who need them most.
We were incorporated in the State
of Delaware on September 28, 2017, and our headquarters are in Richmond, Virginia. The company was founded with a mission of bringing
stakeholders together, to transform promising innovations into products and services that could address some of the most challenging needs.
The socialization of innovation through engaging stakeholders in every aspect of it, is key to transforming more innovations, more rapidly,
and more efficiently.
At inception, the first innovation
we took on was an immune modulation technology titled ADI/Adimune with a focus on prolonging life and enhancing life quality of patients
that have undergone organ transplants. Since then, we expanded our portfolio of innovations, and we continue to evaluate a variety of
promising health innovations.
Our Model
Aditxt is not about a single idea
or a single molecule. It is about making sure the right innovation is made possible. Our business model has three main components as follows:
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Securing an Innovation: Our process begins with identifying and securing innovations through licensing or acquisition of an innovation asset. Assets come from a variety of sources including research institutions, government agencies, and private organizations. |
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Growing an Innovation: Once an innovation is secured, we surround it with activation resources that take a systemized approach to bringing that idea to life. Our activation resources include innovation, operations, commercialization, finance, content and engagement, personnel, and administration. |
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Monetizing an Innovation: Our goal is for each innovation to become commercial-stage and financially and operationally self-sustainable, to create shareholder value. |
We engage various stakeholders
for each of our programs on every level. This includes identifying researchers and research institution partners, such as Stanford University;
leading health institutions to get critical trials underway, such as Mayo Clinic; manufacturing partners who enable us to take innovations
from preclinical to clinical; municipalities and governments, such as the city of Richmond and the state of Virginia and public health
agencies who work with us to launch our program, Pearsanta’s laboratory; and thousands of shareholders around the globe. We seek
to enable promising innovation to become purposeful products that have the power to change lives.
Our Value Proposition
We believe that far too often,
promising treatment or technology does not reach commercialization due to lack of expertise, key resources, or efficiency. As a result,
potentially life-changing and lifesaving treatments are not available to the individuals who so desperately need them.
Aditxt seeks to bring the holistic
concept of an efficient, socialized ecosystem for advancing and accelerating innovations. Our process: We seek to license or acquire promising
innovations. We will then form and build out a subsidiary around each innovation and support the subsidiaries through innovation, operation,
commercialization, content and engagement, finance, personnel, and administration to thrive and grow as a successful, monetizable business.
Since our inception, we have built
infrastructure consisting of innovation, operation, commercialization, content and engagement, finance, personnel, and administration,
to support the rapid transformation of untapped innovations. Each of the main components of our infrastructure has established global
access to partnerships with industry leaders, top-rated research and medical institutions, universities, manufacturing and distribution
companies, and critical infrastructure such as CLIA-certified state-of-the art labs and GMP manufacturing.
The Shifting Landscape of Innovation
Innovation
in general, and health innovations specifically, require significant resources. The convergence of biotech, high-tech, and media offers
new possibilities of accelerating breakthrough innovations faster and more efficiently. This approach reflects our mission of “Making
Promising Innovations Possible, Together”.
People deserve innovative solutions,
which have never been more within reach. We believe the best idea, best product and the best solution will come from creating an ecosystem
where all stakeholders, such as vendors, customers, municipalities, and shareholders contribute. When we disrupt the way we’re innovating,
through our collaborative model, we believe we can move faster and more efficiently to activate viable solutions that have the potential
to make a measurable impact.
Our Growth Strategy
We believe that the era of precision
and personalized medicine is here and that people around the globe would benefit from health diagnostics and treatments that more accurately
pinpoint the problems and more precisely treat the condition. In addition to our current programs, Adimune and Pearsanta, we look to bring
in future health innovations in the areas of software and AI, medical devices, therapeutics, and other technologies that take a fundamentally
different approach to health because they prioritize personalized precision medicine, timely disease root cause analysis, and targeted
treatments.
Year over year, we plan to continue
building our infrastructure and securing more personalized and precision health innovations that align with our mission. These opportunities
may come in different forms such as IP, an early-stage company, or a late-stage company. We will continue to scale our systemized approach
to the innovation process, making large-scale automation and enterprise systems available to our portfolio companies at every stage of
their growth. Specifically, certain subsidiaries will need to grow through further M&A activities, operational infrastructure implementation,
and development or acquisition of critical technologies.
Our Team
Aditxt is led by an entrepreneurial
team with passion for transforming promising innovations into successful businesses. Our leadership come from a variety of different industries,
with collective expertise in founding startup innovation companies, developing and marketing biopharmaceutical and diagnostic products,
designing clinical trials, manufacturing, and management of private and public companies. We have deep experience in identifying and accessing
promising health innovations and developing them into products and services with the ability to scale. We understand the capital markets,
both public and private, as well as M&A and facilitating complex IPOs.
The following are profiles of three subsidiaries we have formed, including the terms of the intellectual property licenses that have been
sublicensed from Aditxt to help build each of the businesses.
THE ADITXT PROGRAMS
ADIMUNE, INC.
Formed in January 2023, Adimune™,
Inc. (“Adimune”) is focused on leading our immune modulation therapeutic programs. Adimune’s proprietary immune modulation
product Apoptotic DNA Immunotherapy™, or ADI-100™, utilizes a novel approach that mimics the way our bodies naturally induce
tolerance to our own tissues. It includes two DNA molecules designed to deliver signals to induce tolerance. ADI-100 has been successfully
tested in several preclinical models (e.g., skin grafting, psoriasis, type 1 diabetes, multiple sclerosis).
In May 2023, Adimune entered into
a clinical trial agreement with Mayo Clinic to advance clinical studies targeting autoimmune diseases of the central nervous system (“CNS”)
with the initial focus on the rare, but debilitating, autoimmune disease Stiff Person Syndrome (“SPS”). According to the National
Organization of Rare Diseases, the exact incidence and prevalence of SPS is unknown; however, one estimate places the incidence at approximately
one in one million individuals in the general population.
Pending approval by the International
Review Board, a human trial for SPS is expected get underway in the second half of 2023 or the first half of 2024 with enrollment of 10-15
patients, some of whom may also have type 1 diabetes. ADI-100 will initially be tested for safety and efficacy. ADI-100 is designed to
tolerize against an antigen known as glutamic acid decarboxylase (“GAD”), which is implicated in type-1 diabetes, psoriasis,
and in many autoimmune diseases of the CNS.
Background
The discovery
of immunosuppressive (anti-rejection and monoclonal) drugs over 40 years ago has made possible life-saving organ transplantation procedures
and blocking of unwanted immune responses in autoimmune diseases. However, immune suppression leads to significant undesirable side effects,
such as increased susceptibility to life-threatening infections and cancers, because it indiscriminately and broadly suppresses immune
function throughout the body. While the use of these drugs has been justifiable because they prevent or delay organ rejection, their use
for treatment of autoimmune diseases and allergies may not be acceptable because of the aforementioned side effects. Furthermore, often
transplanted organs ultimately fail despite the use of immune suppression, and about 40% of transplanted organs survive no more than five
years.
Through
Aditxt, Adimune has the right of use to the exclusive worldwide license for commercializing ADI nucleic acid-based technology (which is
currently at the pre-clinical stage) from Loma Linda University. ADI uses a novel approach that mimics the way the body naturally induces
tolerance to our own tissues (“therapeutically induced immune tolerance”). While immune suppression requires continuous administration
to prevent rejection of a transplanted organ, induction of tolerance has the potential to retrain the immune system to accept the organ
for longer periods of time. ADI may allow patients to live with transplanted organs with significantly reduced immune suppression. ADI
is a technology platform which we believe can be engineered to address a wide variety of indications.
Advantages
ADI™
is a nucleic acid-based technology (e.g., DNA-based), which we believe selectively suppresses only those immune cells involved
in attacking or rejecting self and transplanted tissues and organs. It does so by tapping into the body’s natural process of cell
turnover (i.e., apoptosis) to retrain the immune system to stop unwanted attacks on self or transplanted tissues. Apoptosis is a natural
process used by the body to clear dying cells and to allow recognition and tolerance to self-tissues. ADI triggers this process by enabling
the cells of the immune system to recognize the targeted tissues as “self.” Conceptually, it is designed to retrain the immune
system to accept the tissues, similar to how natural apoptosis reminds our immune system to be tolerant to our own “self”
tissues.
While
various groups have promoted tolerance through cell therapies and ex vivo manipulation of patient cells (i.e., takes
place outside the body), to our knowledge, we will be unique in our approach of using in-body induction of apoptosis to promote tolerance
to specific tissues. In addition, ADI treatment itself will not require additional hospitalization but only an injection of minute
amounts of the therapeutic drug into the skin.
Moreover,
preclinical studies have demonstrated that ADI treatment significantly and substantially prolongs graft survival, in addition to successfully
“reversing” other established immune-mediated inflammatory processes.
License Agreement with Loma Linda University (“LLU”)
On March 15, 2018, we entered
into a License Agreement with LLU, which was subsequently amended on July 1, 2020. Pursuant to the LLU License Agreement, we obtained
the exclusive royalty-bearing worldwide license to all intellectual property, including patents, technical information, trade secrets,
proprietary rights, technology, know-how, data, formulas, drawings, and specifications, owned or controlled by LLU and/or any of its affiliates
(the “LLU Patent and Technology Rights”) and related to therapy for immune-mediated inflammatory diseases (the Adi™
technology). In consideration for the LLU License Agreement, we issued 625 shares of Common Stock to LLU.
PEARSANTA, INC.
Formed in January 2023, our
subsidiary Pearsanta™, Inc. (“Pearsanta”) seeks to take personalized medicine to a whole new level by delivering “Health
by the Numbers.” On November 22, 2023, Pearsanta entered into an assignment agreement with FirstVitals LLC, an entity controlled
by Pearsanta’s CEO, Ernie Lee (“FirstVitals”), pursuant to which FirstVitals assigned its rights in certain intellectual
property and website domain to Pearsanta in consideration of the issuance of 500,000 shares of Pearsanta common stock to FirstVitals.
On December 18, 2023, the board of directors of Pearsanta adopted the Pearsanta 2023 Omnibus Equity Incentive Plan (the “Pearsanta
Omnibus Incentive Plan”), pursuant to which it reserved 15 million shares of common stock of Pearsanta for future issuance under
the Pearsanta Omnibus Incentive Plan and the Pearsanta 2023 Parent Service Provider Equity Incentive Plan (the “Pearsanta Parent
Service Provider Plan”) and approved the issuance of 9.32 million shares of Pearsanta common stock under the Pearsanta Parent Service
Provider Plan.
Since its founding, Pearsanta has been building the platform for enabling our vision of lab quality testing, anytime,
anywhere. Our plan for Pearsanta’s platform is for it to be the transactional backbone for sample collection, sample processing
(on- and off-site), and reporting. This will require the development and convergence of multiple components developed by Pearsanta, or
through transactions with third parties, including collection devices, “lab-on-a-chip” technologies, Lab Developed Test (LDT)
assays, a data-driven analysis engine, and telemedicine. According to a comprehensive research report by Market Research Future, the clinical
and consumer diagnostic market is estimated to hit $429.3 billion by 2030.
We believe that timely and personalized
testing enables far more informed treatment decisions. Pearsanta’s platform is being developed as a seamless digital healthcare
solution. This platform will integrate at-location sample collection, Point-of-Care (“POC”) and LDT assays, and an analytical
reporting engine, with telemedicine-enabled visits with licensed physicians to review test results and, if necessary, order a prescription.
Pearsanta’s goal of extending its platform to enable consumers to monitor their health more proactively as the goal is to provide
a more complete picture about someone’s dynamic health status, factoring in genetic makeup and their response to medication. The
POC component of Pearsanta would enable diagnostic testing at-home, at work, in pharmacies, and more to generate results quickly so that
an individual can access necessary treatment faster. With certain infections, prescribing the most effective treatment according to one’s
numbers can prevent hospital emergency room admissions and potentially life-threatening consequences.
Examples of indication-focused
tests for the Test2Treat platform will include the evaluation for advanced urinary tract infections (“UTIs”), COVID-19/flu/respiratory
syncytial virus, sexually transmitted infections, gut health, pharmacogenomics (i.e., how your genes affect the way your body responds
to certain therapeutics), and sepsis. We believe that these offerings are novel and needed as the current standard of care using broad
spectrum antibiotic treatment can be ineffective and potentially life-threatening. For example, improperly prescribed antibiotics may
approach 50% of outpatient cases. Further, according to an article published in Physician’s Weekly, only 1% of board-certified critical
care medicine physicians are trained in infectious disease.
Licensed Technologies – AditxtScoreTM
We intend
to sublicense to Pearsanta an exclusive worldwide sub-license for commercializing the AditxtScore™ technology which provides a personalized
comprehensive profile of the immune system. AditxtScore is intended to detect individual immune responses to viruses, bacteria, peptides,
drugs, supplements, bone marrow and solid organ transplants, and cancer. It has broad applicability to many other agents of clinical interest
impacting the immune system, including those not yet identified such as emerging infectious agents.
AditxtScore
is being designed to enable individuals and their healthcare providers to understand, manage and monitor their immune profiles and to
stay informed about attacks on or by their immune system. We believe AditxtScore can also assist the medical community and individuals
by being able to anticipate the immune system’s potential response to viruses, bacteria, allergens, and foreign tissues such as
transplanted organs. This technology may be able to serve as a warning signal, thereby allowing for more time to respond appropriately.
Its advantages include the ability to provide simple, rapid, accurate, high throughput assays that can be multiplexed to determine the
immune status with respect to several factors simultaneously, in approximately 3-16 hours. In addition, it can determine and differentiate
between distinct types of cellular and humoral immune responses (e.g., T and B cells and other cell types). It also provides for simultaneous
monitoring of cell activation and levels of cytokine release (i.e., cytokine storms).
We are
actively involved in the regulatory approval process for AditxtScore assays for clinical use and securing manufacturing, marketing, and
distribution partnerships for application in the various markets. To obtain regulatory approval to use AditxtScore as a clinical assay,
we have conducted validation studies to evaluate its performance in detection of antibodies and plan to continue conducting additional
validation studies for new applications in autoimmune diseases.
Advantages
The sophistication
of the AditxtScore technology includes the following:
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greater sensitivity/specificity. |
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20-fold higher dynamic range, greatly reducing signal to noise compared to conventional assays. |
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ability to customize assays and multiplex a large number of analytes with speed and efficiency. |
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ability to test for cellular immune responses (i.e., T and B cells and cytokines). |
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proprietary reporting algorithm. |
License Agreement with Leland Stanford Junior University (“Stanford”)
On February 3, 2020, we entered
into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford with regard to a patent concerning
a method for detection and measurement of specific cellular responses. Pursuant to the February 2020 License Agreement, we received an
exclusive worldwide license to Stanford’s patent with regard to use, import, offer, and sale of Licensed Products (as defined in
the agreement). The license to the patented technology is exclusive, including the right to sublicense, beginning on the effective date
of the agreement, and ending when the patent expires. Under the exclusivity agreement, we acknowledged that Stanford had already granted
a non-exclusive license in the Nonexclusive Field of Use, under the Licensed Patents in the Licensed Field of Use in the Licensed Territory
(as those terms are defined in the “February 2020 License Agreement”). However, Stanford agreed not to grant further licenses
under the Licensed Patents in the Licensed Field of Use in the Licensed Territory. On December 29, 2021, we entered into an amendment
to the February 2020 License Agreement which extended our exclusive right to license the technology deployed in AditxtScoreTM and
securing worldwide exclusivity in all fields of use of the licensed technology.
ADIVIR, INC.
Formed in April of 2023, Adivir™,
Inc., is Aditxt’s most recently formed wholly owned subsidiary, dedicated to the clinical and commercial development efforts of
innovative antiviral products. These products have the potential to address a wide range of infectious diseases, including those that
currently lack viable treatment options.
Background
On April
18, 2023, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Cellvera Global Holdings LLC (“Cellvera
Global”), Cellvera Holdings Ltd. (“BVI Holdco”), Cellvera, Ltd. (“Cellvera Ltd.”), Cellvera Development
LLC (“Cellvera Development” and together with Cellvera Global, BVI Holdco, Cellvera Ltd. and Cellvera Development (the “Sellers”),
AiPharma Group Ltd. (“Seller Owner” and collectively with the Sellers, “Cellvera”), and the legal representative
of Cellvera, pursuant to which, the Company will purchase Cellvera’s 50% ownership interest in G Response Aid FZE (“GRA”),
certain other intellectual property and all goodwill related thereto (the “Acquired Assets”). Unless
expressly stated otherwise herein, capitalized terms used but not defined herein have the meanings ascribed to them in the Asset Purchase
Agreement. Pursuant to the Asset Purchase Agreement, the consideration for the Acquired Assets consists of (A) $24.5 million,
comprised of: (i) the forgiveness of the Company’s $14.5 million loan to Cellvera Global, and (ii) approximately $10 million in
cash, and (B) future revenue sharing payments for a term of seven years. GRA holds an exclusive, worldwide license for the antiviral medication,
Avigan® 200mg, excluding Japan, China and Russia. The other 50% interest in GRA is held by Agility, Inc. (“Agility”).
Additionally,
upon the closing, the Share Exchange Agreement previously entered into as of December 28, 2021, between Cellvera Global Holdings, LLC
f/k/a AiPharma Global Holdings, LLC (together with other affiliates and subsidiaries) and the Company, and all other related agreements
will be terminated.
The obligations
of the Company to consummate the Closing are subject to the satisfaction or waiver, at or prior to the Closing of certain conditions,
including but not limited to, the following:
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Satisfactory completion of due diligence; |
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Completion by the Company of financing sufficient to consummate the transactions contemplated by the Asset Purchase Agreement; |
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Receipt by the Company of all required Consents from Governmental Bodies for the Acquisition, including but not limited to, any consents required to complete the transfer and assignment of Cellvera’s membership interests in GRA; |
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Receipt of executed payoff letters reflecting the amount required to be fully pay all of each of Seller’s and Seller Owner’s Debt to be paid at Closing; |
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Receipt by the Company of a release from Agility; |
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Execution of an agreement acceptable to the Company with respect to the acquisition by the Company of certain intellectual property presently held by a third party; |
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Execution of an amendment to an asset purchase agreement previously entered into by Cellvera with a third party that effectively grants the Company the rights to acquire the intellectual property from the third party under such agreement; |
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Receipt of a fairness opinion by the Company with respect to the transactions contemplated by the Asset Purchase Agreement; and |
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Receipt by the Company from the Seller Owner of written consent, whether through its official liquidator or the Board of Directors of Seller Owner, to the sale and purchase of the Acquired Assets and Assumed Liabilities pursuant to the Assert Purchase Agreement. |
There
can be no assurance that the conditions to closing will be satisfied or that the proposed acquisition will be completed as proposed or
at all.
Our commitment to building our
antiviral portfolio is strategic and timely. We believe that there has never has there been a more important time to address the growing
global need to uncover new treatments or commercialize existing ones that treat life-threatening global viral infections.
Recent Developments
Merger Agreement with Evofem Biosciences, Inc.
As previously reported in a Current
Report on Form 8-K, on December 11, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Adicure,
Inc., a majority owned subsidiary of the Company (“Merger Sub”) and Evofem Biosciences, Inc. (“Evofem”), pursuant
to which, Merger Sub will be merged into and with Evofem (the “Merger”), with Evofem surviving the Merger as a wholly
owned subsidiary of the Company. Evofem is a commercial-stage women’s health company with a strong focus on innovation. Evofem is
the creator of an FDA-approved hormone-fee contraceptive gel, Phexxi®.
At the effective time of the
Merger (the “Effective Time”), (i) all issued and outstanding shares of common stock of Evofem (“Evofem Common Stock”),
other than any shares of Evofem Common Stock held by the Company or Merger Sub immediately prior to the Effective Time, will be converted
into the right to receive an aggregate of 610,000 shares of our Common Stock; and (ii) all issued and outstanding shares of Series E-1
Preferred Stock of Evofem (the “Evofem Unconverted Preferred Stock”), other than any shares of Evofem Unconverted Preferred
Stock held by the Company or Merger Sub immediately prior to the Effective Time, will be converted into the right to receive an aggregate
of 2,327 shares of our Series A-1 Convertible Preferred Stock, having such rights, powers, and preferences set forth in the form of Certificate
of Designation of Series A-1 Convertible Preferred Stock, the form of which is attached as Exhibit C to the Merger Agreement. For
additional information regarding the rights, powers and preferences of the Series A-1 Convertible Preferred Stock, see “Description
of Capital Stock—Series A-1 Convertible Preferred Stock”.
The
closing of the Merger is subject to the satisfaction or waiver of a number of conditions. Including but not limited to: (i) approval by
our shareholders and the Evofem shareholders of the transactions contemplated by the Merger Agreement; (ii) the registration statement
on Form S-4 pursuant to which the shares of our Common Stock issuable in the Merger having been declared effective by the SEC; (iii) all
preferred stock of Evofem subject to certain exceptions shall have been converted to Evofem common stock; (iv) Evofem shall have received
agreements from all holders of Evofem warrants which provide: (a) waivers with respect to any fundamental transaction, change in control
or other similar rights that such warrant holder may have under any such Evofem warrants, and (b) an agreement to such Evofem warrants
to exchange such warrants for not more than an aggregate (for all holders of Evofem warrants) of 551 shares of our preferred stock of
Evofem; (v) the Company shall have obtained agreements from the holders of certain convertible notes and purchase rights of Evofem
to exchange such convertible notes and purchase rights for not more than an aggregate (for all holders of Evofem convertible notes) of
86,153 shares of our preferred stock; and (vi) we shall have received waivers form the holders of certain of our securities which contain
prohibitions on variable rate transactions.
The
Merger Agreement may be terminated at any time prior to the consummation of the Closing by mutual written consent of us and Evofem. The
Merger Agreement may also be terminated by us or Evofem if (i) the Merger shall not have been consummated on or before 5:00 p.m. Eastern
Time on May 8, 2024; (ii) if any judgment, law or order prohibiting the Merger or the transactions contemplated in connection therewith
has become final and non-appealable; (iii) the required vote of Evofem stockholders was not obtained; or (iv) in the event of any
Terminable Breach (as defined in the Merger Agreement). We may also terminate the Merger Agreement if (i) prior to approval by the required
vote of Evofem’s shareholders if the Evofem board of directors shall have effected a change in recommendation with respect to the
Merger; or (ii) in the event that we determine, in our reasonable discretion, that the acquisition of Evofem could result in a material
adverse amount of cancellation of indebtedness income to us. Evofem may terminate the Merger Agreement if (i) prior to approval by the
required vote of Evofem’s shareholders if the Evofem board of directors determines to terminate the Merger Agreement in connection
with a superior proposal in order to enter into a definitive agreement for such superior proposal provided that Evofem has paid the termination
fee of $4 million; (ii) our Common Stock is no longer listed for trading on Nasdaq; or (iii) we have not made a loan to Evofem of no less
than $3 million prior to January 31, 2024.
In
connection with the Merger Agreement, we entered into an Assignment Agreement dated December 11, 2023 (the “Assignment Agreement”),
with Evofem and the holders (the “Holders”) of certain senior indebtedness of Evofem (the “Notes”), pursuant to
which the Holders assigned the Notes to us in consideration for the issuance by us of (i) an aggregate principal amount of $5 million
in our secured notes due on January 2, 2024 (the “January 2024 Secured Notes”), (ii) an aggregate principal amount of $8 million
in secured notes of the Company due on September 30, 2024 (the “September 2024 Secured Notes”), (iii) an aggregate principal
amount of $5 million in ten-year unsecured notes (the “Unsecured Notes”), and (iv) payment of $154,480 in respect of net sales
of Phexxi in respect of the calendar quarter ended September 30, 2023, which amount is due and payable on December 14, 2023. The January
2024 Secured Notes are secured by certain intellectual property assets of the Company and its subsidiaries pursuant to an Intellectual
Property Security Agreement entered into in connection with the Assignment Agreement. The September 2024 Secured Notes are secured by
the Notes and certain associated security documents pursuant to a Security Agreement entered into in connection with the Assignment Agreement.
On January 2, 2024, we
entered into amendments to the January 2024 Secured Notes (“Amendment No. 1 to January 2024 Secured Notes”) with the
Holders, pursuant to which the maturity date of the January 2024 Notes was extended to January 5, 2024. On January 5, 2024, we entered
into amendments to the January 2024 Secured Notes (“Amendment No. 2 to January 2024 Secured Notes”) and amendments
to the September 2024 Secured Notes (“Amendment No. 1 to September 2024 Secured Notes”) with the Holders, pursuant
to which the Company and the Holders agreed that in consideration of a principal payment in the aggregate amount of $1 million on the
January 2024 Secured Notes and in increase in the aggregate principal balance of $250,000 on the September 2024 Secured Notes, that the
maturity date of the January 2024 Secured Notes would be further extended to January 31, 2024.
In
connection with the Merger Agreement and the transactions contemplated thereby, on December 22, 2023, we entered into an Exchange Agreement
(the “Exchange Agreement”) with the holders of an aggregate of 22,280 shares of Series F-1 Convertible Preferred Stock of
Evofem, pursuant to which such holders agreed to exchange their respective shares of Evofem Series F-1 Preferred Stock for an aggregate
of 22,280 shares of a new series of our convertible preferred stock of the Company designated as Series A-1 Convertible Preferred Stock.
On December 26, 2023, in connection with the Exchange Agreement, we entered into a Registration Rights Agreement with the holders, pursuant
to which we agreed to prepare and file with the SEC covering the resale of the shares of our Common Stock issuable upon conversion of
the Series A-1 Convertible Preferred Stock (i) on the later of (x) the 15th calendar day after the closing date, or (y)
the 2nd business day following the Stockholder Approval Date (as defined in the Exchange Agreement”), with respect
to the initial registration statement and (ii) on the date on which the Company is required to file any additional Registration Statement
pursuant to the terms of the Registration Rights Agreement with respect to any additional Registration Statements that may be required
to be filed by the Company (the “Filing Deadline”). Pursuant to the Registration Rights Agreement, we are required (i) to
have the initial Registration Statement declared effective by the SEC on the earlier of (x) the 60th calendar day after the
Filing Deadline (or the 90th calendar day after the Filing Deadline if subject to a full review by the SEC), and (y)
the 2nd business day after the date we are notified by the SEC that such Registration Statement will not be reviewed,
and (ii) with respect to any additional Registration Statements that may be required to be filed, the earlier of (x) the 60th calendar
day following the date on which we were required to file such additional Registration Statement (or the 90th calendar
day if subject to a full review by the SEC), and (y) the 2nd business day after the date we are notified by the SEC that
such Registration Statement will not be reviewed. In the event that we fail to file the Registration Statement by the Filing Deadline,
have it declared effective by the Effectiveness Deadline, or the prospectus contained therein is not available for use or the investor
is not otherwise able to sell its Warrant Shares pursuant to Rule 144, we will be required to pay the investor an amount equal to 2%
of the stated value of such Holder’s Series A-1 Preferred Stock on the date of such failure and on every thirty date anniversary
until such failure is cured. For additional information regarding the rights, powers and preferences of the Series A-1 Convertible
Preferred Stock, see “Description of Capital Stock—Series A-1 Convertible Preferred Stock”.
Asset Purchase Agreement
with MDNA Life Sciences, Inc.
As previously
reported in a Current Report on Form 8-K, on December 17, 2023, the Company entered into an Asset Purchase Agreement (the “Purchase
Agreement”) with Pearsanta, Inc., our majority owned subsidiary (“Pearsanta”)
and MDNA Life Sciences, Inc. (“MDNA”), pursuant to which Pearsanta agreed to acquire certain intellectual property and other
specified assets relating to MDNA’s early cancer detection platform (the “Acquired Assets”). MDNA’s Mitomic™
technology provides a tool for identifying biomarkers associated with various diseases that lead to mtDNA mutations. The Acquired Assets
include, but are not limited to, the following:
| ● | The
Mitomic Endometriosis Test (MET™) is in development as a blood-based assay for diagnosis
of endometriosis. This test aims to provide early diagnostic insights, potentially reducing
delays in diagnosing endometriosis. |
| ● | The
Mitomic Prostate Test (MPT™) is currently under development as a blood-based assay
for diagnosis of prostate cancer. We believe that this test holds the potential to provide
more specific and clinically informative data especially in the prostate-specific antigen
(PSA) grey zone. It aims to address the challenges of over-diagnosis and mitigate risks associated
with low-grade cancers. |
Pursuant
to the Purchase Agreement, the consideration for the transaction was to consist of: (i) an upfront working capital payment of $500,000
(the “Upfront Working Capital Payment”), which is payable upon the satisfaction of certain conditions set forth in the Purchase
Agreement, (ii) a working capital payment at closing of $500,000, (iii) 50,000 shares of
our Common Stock, (iv) a warrant to purchase 50,000 shares of our Common Stock exercisable for a term of 5 years at an exercise price
equal to the opening price per share of our Common Stock as of the Closing Date (as defined below), and (v) 5,000 shares of Pearsanta
Series A Preferred Stock, par value $0.001 per share (the “Pearsanta Preferred Stock”), provided, however, that if the value
of such Pearsanta Preferred Stock, on an as-converted basis, at the time of the pricing of the Pearsanta common stock in connection with
the sale of shares of Pearsanta common stock to the public in a firm-commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended does not equal $25,000,000, an additional amount of Pearsanta Preferred
Stock (“Additional Pearsanta Preferred Stock”) so that the sum of the value of the Pearsanta Preferred Stock plus the Additional
Pearsanta Preferred Stock (if any) shall equal $25,000,000. The Pearsanta Preferred Stock shall have such rights, powers, and preferences
as set forth in the form of Certificate of Designation of Series A Preferred Stock, the form of which is attached as Exhibit D to the
Purchase Agreement.
On January
4, 2024, we entered into a First Amendment to Asset Purchase Agreement with Pearsanta and MDNA, pursuant to which the parties agreed to:
(i) the removal of the Upfront Working Capital Payment, (ii) the removal of the Closing Working Capital Payment (as defined in the Purchase
Agreement”), and (iii) to increase the maximum amount of payments to be made by us under the Transition Services Agreement (as defined
below) from $2.2 million to $3.2 million.
On January
4, 2024, Pearsanta and MDNA entered into a Transition Services Agreement (the “Transition Services Agreement”), pursuant to
which MDNA agreed that it would perform, or cause certain of its affiliates or third parties to perform, certain services as described
in the Transition Services Agreement for a term of three months in consideration for the payment by Pearsanta of certain fees as provided
in the Transition Services Agreement, in an amount not to exceed $3.2 million.
On January 4,
2024, we completed its acquisition of the Acquired Assets and issued to MDNA 50,000 shares of our Common Stock, a warrant to purchase
50,000 shares of our Common Stock, and the Pearsanta Preferred Stock.
Set forth below is a summary
of the rights, powers and preferences of the Pearsanta Series A Convertible Preferred Stock:
Series A Convertible Preferred Stock
On
January 2, 2024, we filed a Certificate of Designations for the Pearsanta Series A Preferred Stock with the Secretary of State of Delaware
(the “Series A Certificate of Designations”). The following is only a summary of the Series A Certificate of Designations,
and is qualified in its entirety by reference to the full text of the Series A Certificate of Designations, a copy of which is filed as
an exhibit to the Purchase Agreement.
Designation,
Amount, and Par Value. The number of Series A Preferred Stock designated is 5,000 shares. The shares of Series A Preferred
Stock have a par value of $0.001 per share and a stated value of $5,000 per share.
a)
Conversion. each outstanding share of Series A Preferred Stock shall be mandatorily and automatically converted, with no
further action on the part of the holders thereof, into 1,000 fully paid and nonassessable shares of Common Stock (1:1,000) (the “Conversion
Ratio”) upon the consummation of a firm underwritten initial public offering of the Common Stock for cash effected pursuant
to a registration statement or similar document filed by or on behalf of the Company under the Securities Act (a “Qualifying
IPO”). If the product of (i) the number of shares of Common Stock issued upon conversion based on the Conversion Ratio and (ii)
the initial trading price upon a Qualifying IPO (“IPO Price”), is less than $25,000,000 then the Conversion Ratio shall
be adjusted to 1:X (such ratio, the “Adjusted Conversion Ratio”) where:
X = (25,000,000/ IPO Price) / 5000
and
the number of shares of Common Stock issued or issuable upon conversion of the Series A Preferred Stock shall be determined based on such
Adjusted Conversion Ratio.
Dividends.
Holders of Series A Preferred Stock shall be entitled to receive, and the Corporation shall pay, dividends on shares of Series
A Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of
the Common Stock
Liquidation. In
the event of a liquidation, the holders the Series A Preferred Stock shall be entitled to receive in cash out of the assets of the Company,
the same amount that a holder of Common Stock would receive if the Series A Preferred Stock were fully converted (disregarding for such
purposes any conversion limitations hereunder) to Common Stock which amounts shall be paid pari passu with all holders of Common
Stock.
Company
Redemption. At any time prior to a Qualified IPO, the Company may redeem all, or any portion, of the Series A Preferred Stock
for cash, at a price per share of Series A Preferred Stock equal to the Stated Value per share.
Voting
Rights. The holders of the Series A Preferred Stock shall have no voting power and no right to vote on any matter at any
time, either as a separate series or class or together with any other series or class of share of capital stock, and shall not be entitled
to call a meeting of such holders for any purpose nor shall they be entitled to participate in any meeting of the holders of Common Stock,
except as expressly provided in the Series A Certificate of Designations and where required by the DGCL.
December 2023 PIPE
As previously reported in a Current
Report on Form 8-K, on December 29, 2023, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with
the Selling Stockholder for the issuance and sale in a private placement of (i) pre-funded warrants
(the “Pre-Funded Warrants”) to purchase up to 1,237,114 shares of our Common Stock at an exercise price of $0.001 per share,
and (ii) warrants (the “Common Warrants”) to purchase up to 2,474,228 shares of our Common Stock, at a purchase price of $4.85
per share. The Common Warrants are exercisable immediately upon issuance at an exercise price of $4.60 per share and have a term of exercise
equal to three years from the date of issuance. The Pre-Funded Warrants are exercisable immediately and may be exercised at any time until
the Pre-Funded Warrants are exercised in full. A holder of Pre-Funded Warrants or Warrants (together with its affiliates) may not exercise
any portion of a warrant to the extent that the holder would own more than 4.99% (or, at the election of the holder 9.99%) of the Company’s
outstanding common stock immediately after exercise.
Pursuant
to the Purchase Agreement, we also agreed to reduce the exercise price of 106,594 outstanding warrants to purchase Common Stock of the
Company (“Outstanding Warrants”) held by the Purchaser to $4.60 per share in consideration for the cash payment by the Purchaser
of $0.125 per share of Common Stock underlying the Outstanding Warrants, effective immediately. As of the date of this prospectus, none
of the repriced Outstanding Warrants have been exercised.
In connection with the Private
Placement, we entered into a registration rights agreement (the “Registration Rights Agreement”), dated as of December 29,
2023, with the Selling Stockholder, pursuant to which we agreed to prepare and file a registration statement with the Securities and Exchange
Commission (the “SEC”) registering the resale of the shares of Common Stock underlying the Pre-Funded Warrants and
the Common Warrants no later than 10 trading days after the date of the Registration Rights Agreement, and to use best efforts to have
the registration statement declared effective as promptly as practical thereafter, and in any event no later than 45 days following the
date of the Registration Rights Agreement (or 75 days following the date of the Registration Rights Agreement in the event of a “full
review” by the SEC).
On
January 3, 2024, we entered into a settlement agreement and general release with the Selling Stockholder, pursuant to which we agreed
to settle an action filed in the United States District Court in the Southern District of New York by the Selling Stockholder against
the Company (the “Action”) in consideration of the issuance by us of shares of our Common Stock (the “Settlement
Shares”), which will be issued within two business days following court approval of a joint motion to be filed by the Selling Stockholder
and the Company. The number of Settlement Shares to be issued will be equal to $1.6 million divided by the closing price of our Common
Stock on the day prior to court approval of the joint motion. On January 17, 2024, we issued 296,296 Settlement Shares. Following the
issuance of the Settlement Shares, the Selling Stockholder will file a dismissal stipulation in the Action.
The
private placement closed on January 4, 2024. The net proceeds to us from the private placement were approximately $5.5 million, after
deducting placement agent fees and expenses and estimated offering expenses payable by us. The Company used a portion of the proceeds
from the December 2023 PIPE to repay outstanding loans from our Chief Executive Officer, including accrued interest. In addition, the
Company also used a portion of the proceeds to satisfy outstanding obligations under the August Loan Agreement and the October MCA Agreement.
As of the date of this prospectus, we are one payment in arrears on the August Loan Agreement.
Note Exchange
On
December 29, 2023, we entered into an Exchange Agreement with the holder of our secured promissory note in the principal amount of $2.625
million (the “Note”), pursuant to which the holder agreed, subject to the terms and conditions set forth therein, to exchange
the Note, including all accrued but unpaid interest thereon, for an aggregate of 2,625 shares of a new series of convertible preferred
stock of the Company, designated as Series B-2 Convertible Preferred Stock. For additional information regarding the rights, powers
and preferences of the Series B-2 Convertible Preferred Stock, see “Description of Capital Stock—Series A-1 Convertible
Preferred Stock”.
Nasdaq Compliance
As
previously reported in a Current Report on Form 8-K, on September 29, 2023, we received written notice from The Nasdaq Capital Market
(“Nasdaq”) that the Hearing Panel had granted us an exception through December 26, 2023 to allow us to complete its
plan to demonstrate compliance with Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Rule”) and Nasdaq Listing
Rule 5550(a)(4) (the “Public Float Rule”). On November 21, 2023, we received written notice from Nasdaq that we had regained
compliance with the Public Float Rule. On December 29, 2023, we received written notice from Nasdaq that we had regained compliance with
the Stockholders’ Equity Rule, but will be subject to a Mandatory Panel Monitor for a period of one year.
Corporate Information
We were incorporated as a Delaware
corporation on September 28, 2017. Our principal executive offices are located at 737 N. Fifth Street, Suite 200 Richmond, VA 23219, and
our telephone number is (650) 870-1200.
Our Common Stock trades on The
Nasdaq Capital Market under the symbol “ADTX.”
THE OFFERING
Common Stock to be offered by the Selling Stockholder |
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Up to 3,785,569 shares of Common Stock |
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Common stock outstanding prior to this offering |
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1,665,214 shares of Common Stock. |
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Common stock to be outstanding after this offering |
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5,154,487 shares of Common Stock, assuming the exercise of all of the Warrants |
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Use of proceeds |
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We
will not receive any proceeds from the sale of the shares of Common Stock by the Selling Stockholders, except for the Warrant
exercise price paid for the Common Stock offered hereby and issuable upon the exercise of the Warrants. See “Use of
Proceeds” on page 40 of this prospectus. |
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Risk Factors |
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See “Risk Factors” beginning on page 13 of this prospectus, as well as other information included in this prospectus, for a discussion of factors you should read and consider carefully before investing in our securities. |
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Nasdaq Capital Markets symbol |
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Our common stock is listed on The Nasdaq Capital Markets under the symbol “ADTX”. There is no established trading market for the Common Warrants or the Pre-Funded Warrants, and we do not expect a trading market to develop. We do not intend to list the Common Warrants or the Pre-Funded Warrants on any securities exchange or other trading market. Without a trading market, the liquidity of the Common Warrants and Pre-Funded Warrants will be extremely limited. |
The number of shares of our
Common Stock to be outstanding after this offering as shown above is based on 1,665,214 shares outstanding as of January 17, 2023 and
excludes as of that date:
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5,097,451 shares of our Common Stock issuable upon exercise of warrants, subject to vesting having a weighted average exercise price of $14.03 per share; and |
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45,573 shares of our Common Stock issuable upon exercise of outstanding options under our 2017 Equity Incentive Plan and 2021 Equity Incentive Plan or the 2017 Plan and the 2021 plan, respectively, subject to vesting; |
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5,018,019 shares of our Common Stock issuable upon conversion of outstanding Series A-1 Convertible Preferred Stock; and |
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557,325 shares of our Common Stock issuable upon conversion of outstanding Series B-2 Convertible Preferred Stock;. |
RISK FACTORS
An investment in our securities
involves a high degree of risk. This prospectus contains a discussion of the risks applicable to an investment in our securities. Prior
to deciding about investing in our securities, you should carefully consider the specific factors discussed within this prospectus. The
risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial may also affect our operations. The occurrence of any of these known or unknown risks might cause
you to lose all or part of your investment in the offered securities.
Risks Related to Our Financial Position and Need
for Capital
Our financial situation creates doubt whether
we will continue as a going concern.
We were incorporated in September
2017 and have a limited operating history and our business is subject to all the risks inherent in the establishment of a new business
enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently
encountered in connection with development and expansion of a new business enterprise. Since inception, we have incurred losses and expect
to continue to operate at a net loss for at least the next several years as we commence our research and development efforts, conduct
clinical trials, and develop manufacturing, sales, marketing, and distribution capabilities. Our net loss attributable to common stockholders
for the years ended December 31, 2022 and 2021 was $27,612,199 and $46,269,097, respectively, and our accumulated deficit as of December
31, 2022 was $95,040,362. Our net loss attributable to common stockholders for the nine months ended September 30, 2023 and 2022 was $21,579,795
and $19,466,710, respectively, and our accumulated deficit as of September 30, 2023 was $116,620,157. There can be no assurance that the
products under development by us will be approved for sale in the U.S. or elsewhere. Furthermore, there can be no assurance that if such
products are approved, they will be successfully commercialized, and the extent of our future losses and the timing of our profitability
are highly uncertain. If we are unable to achieve profitability, we may be unable to continue our operations. There can be no assurances
that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or additional financing
through private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent
that funds generated from any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional
working capital. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms.
These conditions raise substantial doubt about our ability to continue as a going concern. If adequate working capital is not available,
we may be forced to discontinue operations, which would cause investors to lose their entire investment.
If we fail to obtain the capital necessary to
fund our operations, we will be unable to continue or complete our product development and you will likely lose your entire investment.
We will need to continue to seek
capital from time to time to continue development of our lead drug candidate beyond our initial combined Phase I/IIa clinical trial and
to acquire and develop other product candidates. Once approved for commercialization, we cannot provide any assurances that any revenues
it may generate in the future will be sufficient to fund our ongoing operations.
Our business or operations may
change in a manner that would consume available funds more rapidly than anticipated and substantial additional funding may be required
to maintain operations, fund expansion, develop new or enhance products, acquire complementary products, business or technologies, or
otherwise respond to competitive pressures and opportunities, such as a change in the regulatory environment or a change in preferred
treatment modalities. In addition, we may need to accelerate the growth of our sales capabilities and distribution beyond what is currently
envisioned, and this would require additional capital. However, we may not be able to secure funding when we need it or on favorable terms.
We may not be able to raise sufficient funds to commercialize the product candidates we intend to develop.
If we cannot raise adequate funds
to satisfy our capital requirements, we will have to delay, scale back or eliminate our research and development activities, clinical
studies, or future operations. We may also be required to obtain funds through arrangements with collaborators, which arrangements may
require us to relinquish rights to certain technologies or products that we otherwise would not consider relinquishing, including rights
to future product candidates or certain major geographic markets. This could result in sharing revenues which we might otherwise retain
for ourselves. Any of these actions may harm our business, financial condition, and results of operations.
The amount of capital we may need
depends on many factors, including the progress, timing and scope of our product development programs; the progress, timing and scope
of our preclinical studies and clinical trials; the time and cost necessary to obtain regulatory approvals; the time and cost necessary
to further develop manufacturing processes and arrange for contract manufacturing; our ability to enter into and maintain collaborative,
licensing and other commercial relationships; and our partners’ commitment of time and resources to the development and commercialization
of our products.
Our obligations to
certain of our creditors are secured by security interests in our assets, so if we default on those obligations, our creditors could foreclose
on some or all of our assets.
Our obligations
to certain of our creditors are secured by security interests in our assets. As of December 31, 2023, approximately $24 million was owed
to such secured creditors. Of this amount, $5 million has a maturity date of January 31, 2024. In addition, under certain other agreements,
we are required to pay $248,000 on a weekly basis to such creditors. If we default on our obligations under these agreements, our secured
creditors could foreclose on its security interests and liquidate some or all of these assets, which would harm our financial condition
and results of operations and would require us to reduce or cease operations and possibly seek Bankruptcy Protection.
In the event we pursue
Bankruptcy Protection, we will be subject to the risks and uncertainties associated with such proceedings.
In the event we file for relief
under the United States Bankruptcy Code, our operations, our ability to develop and execute our business plan and our continuation as
a going concern will be subject to the risks and uncertainties associated with bankruptcy proceedings, including, among others: our ability
to execute, confirm and consummate a plan of reorganization; the additional, significant costs of bankruptcy proceedings and related fees;
our ability to obtain sufficient financing to allow us to emerge from bankruptcy and execute our business plan post-emergence, and our
ability to comply with terms and conditions of that financing; our ability to continue our operations in the ordinary course; our ability
to maintain our relationships with our consumers, business partners, counterparties, employees and other third parties; our ability to
obtain, maintain or renew contracts that are critical to our operations on reasonably acceptable terms and conditions; our ability to
attract, motivate and retain key employees; the ability of third parties to use certain limited safe harbor provisions of the United States
Bankruptcy Code to terminate contracts without first seeking Bankruptcy Court approval; the ability of third parties to force us to into
Chapter 7 proceedings rather than Chapter 11 proceedings and the actions and decisions of our stakeholders and other third parties who
have interests in our bankruptcy proceedings that may be inconsistent with our operational and strategic plans. Any delays in our bankruptcy
proceedings would increase the risks of our being unable to reorganize our business and emerge from bankruptcy proceedings and may increase
our costs associated with the bankruptcy process or result in prolonged operational disruption for us. Also, we would need the prior approval
of the bankruptcy court for transactions outside the ordinary course of business during the course of any bankruptcy proceedings, which
may limit our ability to respond timely to certain events or take advantage of certain opportunities. Because of the risks and uncertainties
associated with any bankruptcy proceedings, we cannot accurately predict or quantify the ultimate impact of events that could occur during
any such proceedings. There can be no guarantees that if we seek Bankruptcy Protection we will emerge from Bankruptcy Protection as a
going concern or that holders of our Common Stock will receive any recovery from any bankruptcy proceedings.
In the event we are
unable to pursue Bankruptcy Protection under Chapter 11 of the United States Bankruptcy Code, or, if pursued, successfully emerge from
such proceedings, it may be necessary to pursue Bankruptcy Protection under Chapter 7 of the United States Bankruptcy Code for all or
a part of our businesses.
In the event we are unable to
pursue Bankruptcy Protection under Chapter 11 of the United States Bankruptcy Code, or, if pursued, successfully emerge from such proceedings,
it may be necessary for us to pursue Bankruptcy Protection under Chapter 7 of the United States Bankruptcy Code for all or a part of our
businesses. In such event, a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution in accordance with
the priorities established by the United States Bankruptcy Code. We believe that liquidation under Chapter 7 would result in significantly
smaller distributions being made to our stakeholders than those we might obtain under Chapter 11 primarily because of the likelihood that
the assets would have to be sold or otherwise disposed of in a distressed fashion over a short period of time rather than in a controlled
manner and as a going concern.
We will need to raise substantial additional
capital, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us
to delay, limit or terminate our product development efforts or cease operations.
We do not expect that our current
cash position will be sufficient to fund our current operations for the next 12 months. Our operating plan may change because of many
factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt
financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances
and licensing arrangements or a combination of these approaches. In any event, we will require additional capital to obtain regulatory
approval for, and to commercialize, our product candidates. Raising funds in the current economic environment may present additional challenges.
Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions
are favorable or if we have specific strategic considerations.
Any additional fundraising efforts
may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product
candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us,
if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of
additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to
decline. The sale of additional equity or convertible securities may dilute our existing stockholders. The incurrence of indebtedness
would result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations
on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other
operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through
arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to
relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have
a material adverse effect on our business, operating results and prospects.
If we are unable to obtain funding
on a timely basis, we may be required to significantly curtail, delay, or discontinue one or more of our research or development programs
or the commercialization of any product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities,
as desired, which could materially affect our business, financial condition and results of operations.
Even if we can raise additional funding, we
may be required to do so on terms that are dilutive to you.
The capital markets have been
unpredictable in the past for unprofitable companies such as ours. In addition, it is generally difficult for development stage companies
to raise capital under current market conditions. The amount of capital that a company such as ours is able to raise often depends on
variables that are beyond our control. As a result, we may not be able to secure financing on terms attractive to us, or at all. If we
can consummate a financing arrangement, the amount raised may not be sufficient to meet our future needs. If adequate funds are not available
on acceptable terms, or at all, our business, including our results of operations, financial condition and our continued viability will
be materially adversely affected.
Risks Related to Product Development, Regulatory
Approval, Manufacturing and Commercialization
The regulatory approval process is expensive,
time-consuming, and uncertain and may prevent us from obtaining approvals for the commercialization of our future product candidates,
if any.
We will not be permitted to market
our product candidates in the United States until we receive approval from the FDA, or in any foreign countries until we receive the requisite
approval from corresponding agencies in such countries. The testing, manufacturing, labeling, approval, selling, marketing and distribution
of health and life science-related products are subject to extensive regulation, which regulations differ from country to country.
Successfully completing our clinical program and obtaining
approval of a Biologics License Application (“BLA”) is a complex, lengthy, expensive and uncertain process, and the FDA or
other applicable foreign regulator may delay, limit or deny approval of our product candidates for many reasons, including, among others,
because:
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we may not be able to demonstrate that our product candidates are safe and effective in treating patients to the satisfaction of the FDA or foreign regulator; |
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the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or foreign regulator for marketing approval; |
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the FDA or foreign regulator may disagree with the number, design, size, conduct or implementation of our clinical trials; |
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the FDA or foreign regulator may require that we conduct additional clinical trials; |
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the FDA or foreign regulator may not approve the formulation, labeling or specifications of our product candidates; |
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the contract research organizations (CROs) and other contractors that we may retain to conduct our clinical trials may take actions outside of our control that materially adversely impact our clinical trials; |
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the FDA or foreign regulator may find the data from preclinical studies and clinical trials insufficient to demonstrate that our product candidate(s) are safe and effective for their proposed indications; |
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the FDA or foreign regulator may disagree with our interpretation of data from our preclinical studies and clinical trials; |
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the FDA or foreign regulator may not accept data generated at our clinical trial sites or may disagree with us over whether to accept efficacy results from clinical trial sites outside the United States or outside the EU, as applicable, where the standard of care is potentially different from that in the United States or in the EU, as applicable; |
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if and when our BLAs or foreign equivalents are submitted to the applicable regulatory authorities, such agencies may have difficulties scheduling the necessary review meetings in a timely manner, may recommend against approval of our application or may recommend or require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions; |
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the FDA or foreign regulator may require development of a Risk Evaluation and Mitigation Strategy (REMS), which would use risk minimization strategies to ensure that the benefits of certain prescription drugs outweigh their risks, as a condition of approval or post-approval; |
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the FDA or other applicable foreign regulatory agencies may not approve the manufacturing processes or facilities of third-party manufacturers with which we contract; or |
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the FDA or the other applicable foreign regulatory agencies may change their approval policies or adopt new regulations. |
We may encounter substantial delays in completing
our clinical studies which in turn will require additional costs, or we may fail to demonstrate adequate safety and efficacy to the satisfaction
of applicable regulatory authorities.
It is difficult to predict if
or when any of our product candidates, will prove safe or effective in humans or will receive regulatory approval. Before obtaining
marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies to demonstrate
the safety and efficacy of the product candidates in humans. Clinical testing is expensive, time-consuming, and uncertain as to outcome.
We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more
clinical studies can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include:
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delays in reaching, or failing to reach, a consensus with regulatory agencies on study design; |
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delays in reaching, or failing to reach, agreement on acceptable terms with a sufficient number of prospective contract research organizations (“CROs”) and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; |
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delays in obtaining required Institutional Review Board (“IRB”) or Ethics Committee (“EC”) approval at each clinical study site; |
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delays in recruiting a sufficient number of suitable patients to participate in our clinical studies including, but not limited to, recruitment challenges due to COVID-19; |
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imposition of a clinical hold by regulatory agencies, after an inspection of our clinical study operations or study sites; |
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failure by our CROs, other third parties or us to adhere to the clinical study, regulatory or legal requirements; |
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failure to perform in accordance with the FDA’s good clinical practices (“GCP”) or applicable regulatory guidelines in other countries; |
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delays in the testing, validation, manufacturing, and delivery of sufficient quantities of our product candidates to the clinical sites; |
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delays in having patients’ complete participation in a study or return for post-treatment follow-up; |
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clinical study sites or patients dropping out of a study; |
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delay or failure to address any patient safety concerns that arise during the course of a trial; |
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unanticipated costs or increases in costs of clinical trials of our product candidates; |
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occurrence of serious adverse events associated with the product candidates that are viewed to outweigh their potential benefits; or |
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changes in regulatory requirements and guidance that require amending or submitting new clinical protocols. |
We could also encounter delays
if a clinical trial is suspended or terminated by us, by the IRBs or ECs of the institutions in which such trials are being conducted,
by an independent Safety Review Board (“SRB”) for such trial or by the FDA, European Medicines Agency (“EMA”),
or other regulatory authorities. Such authorities may suspend or terminate a clinical trial due to a number of factors, including
failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical
trial operations or trial site by the FDA, EMA, or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen
safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative
actions or lack of adequate funding to continue the clinical trial.
Any inability to successfully
complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenues from product
sales, regulatory and commercialization milestones, and royalties. In addition, if we make manufacturing or formulation changes to our
product candidates, we may need to conduct additional studies to bridge our modified product candidates to earlier versions.
Clinical study delays could also
shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring
products to market before we do, which could impair our ability to successfully commercialize our product candidates. In addition,
any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval
process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may significantly harm our
business, financial condition, and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or
completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
The outcome of preclinical studies
and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not
necessarily predict final results. Further, preclinical and clinical data are often susceptible to various interpretations and analyses,
and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have,
nonetheless, failed to obtain marketing approval. If the results of our clinical studies are inconclusive or if there are safety
concerns or adverse events associated with our other product candidates, we may:
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be delayed in obtaining marketing approval for our product candidates, if approved at all; |
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obtain approval for indications or patient populations that are not as broad as intended or desired; |
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obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; |
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be required to change the way the product is administered; |
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be required to perform additional clinical studies to support approval or be subject to additional post-marketing testing requirements; |
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have regulatory authorities withdraw their approval of a product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy; |
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be sued; or |
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experience damage to our reputation. |
If we, ours collaborators, or
our contract manufacturing organizations (“CMOs”) fail to comply with applicable regulatory requirements at any stage during
the regulatory process, such noncompliance could result in, among other things delays in the approval of applications or supplements to
approved applications; refusal of a regulatory authority, including the FDA, to review pending market approval applications or supplements
to approved applications; warning letters; fines; import and/or export restrictions; product recalls or seizures; injunctions; total or
partial suspension of production; civil penalties; withdrawals of previously approved marketing applications or licenses; recommendations
by the FDA or other regulatory authorities against governmental contracts; and/or criminal prosecutions.
Additionally, our product candidates
could potentially cause other adverse events that have not yet been predicted. The inclusion of ill patients in our clinical studies may
result in deaths or other adverse medical events due to other therapies or medications that such patients may be using. As described above,
any of these events could prevent us from achieving or maintaining market acceptance of our product candidates and impair our ability
to commercialize our products.
We may not be able to meet requirements for
the chemistry, manufacturing, and control of our drug product candidates.
To receive approval of our products
by the FDA and comparable foreign regulatory authorities, we must show that we and our contract manufacturing partners are able to characterize,
control and manufacture our drug products safely and in accordance with regulatory requirements. This includes synthesizing the active
ingredient, developing an acceptable formulation, performing tests to adequately characterize the formulated product, documenting a repeatable
manufacturing process, and demonstrating that our drug products meet stability requirements. Meeting these chemistry, manufacturing and
control (“CMC”) requirements is a complex task that requires specialized expertise. If we are not able to meet the CMC requirements,
we may not be successful in getting our products approved.
Enrollment and retention
of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple
factors outside our control.
We may encounter delays or difficulties
in enrolling, or be unable to enroll, a sufficient number of patients to complete any of our clinical trials on its current timelines,
or at all, and even once enrolled we may be unable to retain a sufficient number of patients to complete any of our trials. Enrollment
in our clinical trials may be slower than we anticipate, leading to delays in our development timelines. For example, we may face difficulty
enrolling or maintaining a sufficient number of patients in our clinical trials due to the existing alternative treatments approved for
any of our targeted indications as patients may decline to enroll or decide to withdraw from our clinical trials due to the risk of receiving
placebo. Patient enrollment and retention in clinical trials depends on many factors, including the size of the patient population, the
nature of the trial protocol, our ability to recruit clinical trial investigators with the appropriate competencies and experience, the
existing body of safety and efficacy data with respect to the study drug, the number and nature of competing treatments and ongoing clinical
trials of competing drugs for the same indication, the proximity of patients to clinical sites, the eligibility criteria for the trial
and the proportion of patients screened that meets those criteria, our ability to obtain and maintain patient consents, and our ability
to successfully complete prerequisite studies before enrolling certain patient populations.
Furthermore, any negative results
or new safety signals we may report in clinical trials of our product candidates may make it difficult or impossible to recruit and retain
patients in other clinical trials. Similarly, negative results reported by our competitors about their drug candidates may negatively
affect patient recruitment in our clinical trials. Also, marketing authorization of competitors in this same class of drugs may impair
our ability to enroll patients into our clinical trials, delaying or potentially preventing it from completing recruitment of one or more
of our trials.
Delays or failures in planned
patient enrollment or retention may result in increased costs, program delays or both, which could have a harmful effect on our ability
to develop our product candidates or could render further development impossible. In addition, we expect to rely on CROs and clinical
trial sites to ensure proper and timely conduct of our future clinical trials, and, while we intend to enter into agreements governing
their services, we will be limited in our ability to compel their actual performance.
If our future pre-clinical development or future
clinical Phase I/II studies are unsuccessful, we may be unable to obtain regulatory approval of, or commercialize, our product candidates
on a timely basis or at all.
The successful completion of pre-clinical
development and multiple clinical trials is critical to the success of our future products. If the pre-clinical development and clinical
trials are unsuccessful or produce inconsistent results or unanticipated adverse side effects, or if we are unable to collect reliable
data, regulatory approval of our products could be delayed or not given and as a result we may be unable to commercialize our products.
Generally, we expect to engage third parties such as consultants, universities or other collaboration partners to conduct clinical trials
on our behalf. Incompatible practices or misapplication of our products by these third parties could impair the success of our clinical
trials.
Even if we receive regulatory approval for any
of our product candidates, we may not be able to successfully commercialize the product and the revenue that we generate from their sales,
if any, may be limited.
If approved for marketing, the
commercial success of our product candidates will depend upon each product’s acceptance by the medical community, including physicians,
patients, and health care payors. The degree of market acceptance for any of our product candidates will depend on a number of factors,
including:
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demonstration of clinical safety and efficacy; |
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relative convenience, dosing burden and ease of administration; |
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the prevalence and severity of any adverse effects; |
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the willingness of physicians to prescribe our product candidates, and the target patient population to try new therapies; |
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efficacy of our product candidates compared to competing products; |
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the introduction of any new products that may in the future become available targeting indications for which our product candidates may be approved; |
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new procedures or therapies that may reduce the incidences of any of the indications in which our product candidates may show utility; |
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pricing and cost-effectiveness; |
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the inclusion or omission of our product candidates in applicable therapeutic and vaccine guidelines; |
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the effectiveness of our own or any future collaborators’ sales and marketing strategies; |
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limitations or warnings contained in approved labeling from regulatory authorities; |
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our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers and other third-party payors or to receive the necessary pricing approvals from government bodies regulating the pricing and usage of therapeutics; and |
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the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals. |
If any of our product candidates
are approved, but do not achieve an adequate level of acceptance by physicians, health care payors, and patients, we may not generate
sufficient revenues and we may not be able to achieve or sustain profitability. Our efforts to educate the medical community and third-party
payors on the benefits of our product candidates may require significant resources and may never be successful.
In addition, even if we obtain
regulatory approvals, the timing or scope of any approvals may prohibit or reduce our ability to commercialize our product candidates
successfully. For example, if the approval process takes too long, we may miss market opportunities and give other companies the ability
to develop competing products or establish market dominance. Any regulatory approval we ultimately obtain may be limited or subject to
restrictions or post-approval commitments that render our product candidates not commercially viable. For example, regulatory authorities
may approve any of our product candidates for fewer or more limited indications than we request, may grant approval contingent on the
performance of costly post-marketing clinical trials, or may approve any of our product candidates with a label that does not include
the labeling claims necessary or desirable for the successful commercialization for that indication. Further, the FDA or comparable foreign
regulatory authorities may place conditions on approvals or require risk management plans or a Risk Evaluation and Mitigation Strategy
(“REMS”) to assure the safe use of the drug. If the FDA or applicable foreign regulatory agency concludes a REMS is needed,
the sponsor of the BLA must submit a proposed REMS; the regulatory agencies will not approve the BLA without an approved REMS, if required.
A REMS could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution
methods, patient registries and other risk minimization tools. The regulatory agencies may also require a REMS for approved product when
new safety information emerges. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution,
prescription or dispensing of our product candidates. Moreover, product approvals may be withdrawn for non-compliance with regulatory
standards or if problems occur following the initial marketing of the product. Any of the foregoing scenarios could materially harm the
commercial success of our product candidates.
Adverse events involving our products may lead
the FDA or applicable foreign regulatory agency to delay or deny clearance for our products or result in product recalls that could harm
our reputation, business and financial results.
Once a product receives regulatory
clearance or approval, the agency has the authority to require the recall of commercialized products in the event of adverse side effects,
material deficiencies or defects in design or manufacture. The authority to require a recall must be based on a regulatory finding that
there is a reasonable probability that the product would cause serious injury or death. Manufacturers may, under their own initiative,
recall a product if any material deficiency in a product is found. A government-mandated or voluntary recall by us or one of our distributors
could occur because of adverse side effects, impurities or other product contamination, manufacturing errors, design or labeling defects
or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and have an adverse effect
on our financial condition and results of operations. The regulatory agencies require that certain classifications of recalls be reported
to them within ten (10) working days after the recall is initiated. Companies are required to maintain certain records of recalls, even
if they are not reportable to the regulatory agency. We may initiate voluntary recalls involving our products in the future that we determine
do not require notification of the regulatory agencies. If the regulatory agency disagrees with our determinations, they could require
us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect our
sales. In addition, the regulatory agency could take enforcement action for failing to report the recalls when they were conducted.
The in-licensing of technologies and the successful
testing and early development of technologies in the laboratory may not be indicative of future results and may not result in commercially
viable technologies or products. Further, our future products may have to be modified from their originally conceived versions in order
to reach or be successful in the market.
Positive results from laboratory
testing and early developmental successes, may not be predictive of future successful development, commercialization and sales results
and should not be relied upon as evidence that products developed from our technologies will become commercially viable and successful.
Further, the products we plan to develop in the future may have to be significantly modified from their originally conceived versions
in order for us to control costs, compete with similar products, receive market acceptance, meet specific development and commercialization
timeframes, avoid potential infringement of the proprietary rights of others, or otherwise succeed in developing our business and earning
ongoing revenues. This can be a costly and resource draining activity. What appear to be promising technologies when we license them may
not lead to viable technologies or products, or to commercial success.
Complying with numerous regulations pertaining
to our business is an expensive and time-consuming process, and any failure to comply could result in substantial penalties.
We are subject to the Clinical
Laboratory Improvement Amendment of 1988, or CLIA, which is a federal law regulating clinical laboratories that perform testing on specimens
derived from humans for the purpose of providing information for the diagnosis, prevention, or treatment of disease. Our clinical laboratory
is in Richmond, Virginia and must be certified under CLIA for us to perform testing on human specimens. CLIA is intended to ensure the
quality and reliability of clinical laboratories in the United States by mandating specific standards in the areas of personnel qualifications,
administration, and participation in proficiency testing, patient test management, quality control, quality assurance and inspections.
We currently hold a CLIA certificate to perform high-complexity testing. Laboratories performing high complexity testing are required
to meet more stringent requirements than laboratories performing fewer complex tests. CLIA regulations require clinical laboratories like
ours to comply with various operational, personnel, facilities administration, quality, and proficiency testing requirements intended
to ensure that testing services are accurate, reliable, and timely. CLIA certification is a prerequisite for reimbursement eligibility
for services provided to state and federal health care program beneficiaries. CLIA is user-fee funded. Therefore, all costs of administering
the program must be covered by the regulated facilities, including certification and survey costs. To renew this certificate, we are subject
to survey and inspection every two years. Moreover, CLIA inspectors may make periodic inspections of our clinical laboratory outside of
the renewal process. The failure to comply with CLIA requirements can result in enforcement actions, including the revocation, suspension,
or limitation of our CLIA certificate of compliance, as well as a directed plan of correction, state on-site monitoring, civil money penalties,
civil injunctive suit and/or criminal penalties. We must maintain CLIA compliance and certification to be eligible to bill for assays
provided to Medicare beneficiaries. If we were to be found out of compliance with CLIA program requirements and subjected to sanctions,
our business and reputation could be harmed. Even if it were possible for us to bring our laboratory back into compliance, we could incur
significant expenses and potentially lose revenue in doing so.
Additionally, certain states require
laboratory licenses to test specimens from patients in those states or received from ordering physicians in those states. We may also
be subject to regulation in foreign jurisdictions if we seek to expand international distribution of our assays outside the United States.
If we were to lose our CLIA certification
or state laboratory licenses, whether because of a revocation, suspension or limitation, we would no longer be able to offer our assays
(including our AditxtScore™ platform), which would limit our revenues and harm our business. If we were to lose, or fail to obtain,
a license in any other state where we are required to hold a license, we would not be able to test specimens from those states.
Our AditxtScore™ tests are currently being
offered as a LDTs. Should the FDA disagree that AditxtScore™ tests are LDTs, if our LDTs do not receive the required emergency use
authorizations, or if the FDA’s regulatory approach to LDTs should change in the future, our commercialization strategy may be adversely
affected, which would negatively affect our results of operations and financial condition.
The FDA has historically asserted
its authority to regulate Laboratory Developed Tests (LDTs) as medical devices under the Federal Food, Drug, and Cosmetic Act (the “FDCA”),
but it has generally exercised enforcement discretion regarding LDTs. This means that even though the FDA believes it can impose regulatory
requirements on LDTs, such as requirements to obtain premarket approval, de novo classification, or clearance of LDTs,
it has generally chosen not to enforce those requirements. The FDA has, on occasion, sent warning letters to laboratories offering LDTs
that the agency believed were not eligible for enforcement discretion because of how they were developed, validated, performed or marketed
and consequent risks to the public.
The FDA considers an LDT to be
a test that is developed, validated, and performed within a single laboratory. We are providing AditxtScore™ as a service as a Laboratory
Developed Test (LDT) to assess immunity status to COVID-19. Our AditxtScore™ tests are currently manufactured in our Mountain
View, CA facility and performed in our Richmond, VA facility. If the FDA believes that the AditxtScore™ is not regulated as an LDT,
we may be forced to stop performing AditxtScore™ while we worked to obtain the appropriate FDA authorizations which could negative
affect our business, results of operations and financial condition.
On November 15, 2021, FDA revised
its guidance document titled “Policy for Coronavirus Disease-2019 Tests During the Public Health Emergency (Revised)” (“FDA
COVID-19 Testing Guidance”) to require all COVID-19 diagnostic assays conducted as LDTs to apply for EUA authorization within a
60-day period from the revised guidance’s issuance date. The FDA COVID-19 Testing Guidance states that FDA does not intend
to object to continued offering of LDTs that are the subject of submitted EUA requests while FDA reviews the EUA requests. The FDA COVID-19
Testing Guidance further states that if FDA declines to issue an EUA or otherwise decides not to authorize a test for any reason, including
a determination that there is a lack of adequate data to support authorization, FDA generally expects developers to cease marketing and
offering their test within 15 calendar days. Moreover, if FDA identifies a significant problem or concern with a test, based either on
the provided information or external reports, FDA generally expects the developer to take appropriate steps to address such problems,
which could include a recall of the test and/or notification concerning corrected test reports indicating prior test results may not be
accurate. We have submitted EUA requests for our SARS-CoV-2 LDTs, and the applications are pending before FDA. There can be
no assurance that the EUA requests that we submitted for our SARS-CoV-2 LDTs will be granted on a timely basis or at all. If
FDA declines to issue a EUAs for our SARS-CoV-2 LDTs, we may be required to cease marketing the tests and our business, results of
operations and financial condition could be negatively affected. Regardless of if our EUA applications are granted by FDA, we may recall,
replace, or make corrections to our LDTs if we become aware of a product concern, which could negatively impact manufacturing, supply,
and customer relationships, and may result in adverse regulatory action, including revision or revocation of an EUA.
In addition, there have been numerous
legislative proposals to clarify the FDA’s regulatory authority over medical devices. These include two bills reintroduced in 2021:
the VALID Act, which would expressly grant the FDA authority to regulate LDTs under a risk-based framework; and the VITAL Act, which would
assign LDTs to regulation solely under CLIA and would direct CMS to update its CLIA regulations. We cannot predict if either of these
bills will be enacted in their current (or any other) form and cannot quantify the effect of these bills on our business. In the meantime,
the regulation by the FDA of LDTs remains uncertain. If FDA premarket review, classification or approval is required for AditxtScore™,
our laboratory could be forced to stop performing AditxtScore™ while we worked to obtain the appropriate FDA authorizations
which could negative affect our business, results of operations and financial condition.
We are subject to various
governmental regulations relating to the labeling, marketing and sale of our products.
Both before and after a product
is commercially released, we have ongoing responsibilities under regulations promulgated by the FDA, the Federal Trade Commission, and
similar U.S. and foreign regulations governing product labeling and advertising, distribution, sale, and marketing of our products.
Manufacturers of medical devices
are permitted to promote products solely for the uses and indications set forth in the device’s authorization. A number of enforcement
actions have been taken against manufacturers that promote products for “off-label” uses (i.e., uses that are not
described in the device’s authorization), including actions alleging that claims submitted to government healthcare programs for
reimbursement of products that were promoted for “off-label” uses are fraudulent in violation of the Federal False
Claims Act or other federal and state statutes and that the submission of those claims was caused by off-label promotion. The
failure to comply with prohibitions on “off-label” promotion can result in significant monetary penalties, revocation
or suspension of a company’s business license, suspension of sales of certain products, product recalls, civil or criminal sanctions,
exclusion from participating in federal healthcare programs, or other enforcement actions. In the United States, allegations of such wrongful
conduct could also result in a corporate integrity agreement with the U.S. government that imposes significant administrative obligations
and costs.
We and our employees and contractors are subject,
directly, or indirectly, to federal, state and foreign healthcare fraud and abuse laws, including false claims laws. If we are unable
to comply, or have not fully complied, with such laws, we could face substantial penalties.
Our operations are subject to
various federal, state, and foreign fraud and abuse laws. These laws may constrain our operations, including the financial arrangements
and relationships through which we market, sell and distribute our products.
U.S. federal and state laws that
affect our ability to operate include, but are not limited to:
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the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind in return for, the purchase, recommendation, leasing or furnishing of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; |
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federal physician self-referral law, which prohibits a physician from referring a patient to an entity with which the physician (or an immediate family member) has a financial relationship, for the furnishing of certain designated health services for which payment may be made by Medicare or Medicaid, unless an exception applies; |
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federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals, or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other government payers that are false or fraudulent; |
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Section 242 of HIPAA codified at 18 U.S.C. § 1347, which created new federal criminal statutes that prohibit a person from knowingly and willfully executing a scheme or from making false or fraudulent statements to defraud any healthcare benefit program (i.e., public or private); |
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federal transparency laws, including the Physician Payments Sunshine Act which requires the tracking and disclosure to the federal government by pharmaceutical and medical device manufacturers of payments and other transfers of value to physicians and teaching hospitals as well as ownership and investment interests that are held by physicians and their immediate family members; and |
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state law equivalents of each of these federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers; state laws that require pharmaceutical and medical device companies to comply with their industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict certain payments that may be made to healthcare providers and other potential referral sources; state laws that require drug and medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws that prohibit giving gifts to licensed healthcare professionals; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states. |
In particular, activities and
arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, waste and other abusive
practices. These laws and regulations may restrict or prohibit a wide range of activities or other arrangements related to the development,
marketing or promotion of products, including pricing and discounting of products, provision of customer incentives, provision of reimbursement
support, other customer support services, provision of sales commissions or other incentives to employees and independent contractors
and other interactions with healthcare practitioners, other healthcare providers and patients.
Because of the breadth of these
laws and the narrow scope of the statutory or regulatory exceptions and safe harbors available, our business activities could be challenged
under one or more of these laws.
Government expectations and industry
best practices for compliance continue to evolve and past activities may not always be consistent with current industry best practices.
Further, there is a lack of government guidance as to whether various industry practices comply with these laws, and government interpretations
of these laws continue to evolve, all of which create compliance uncertainties. Any non-compliance could result in regulatory sanctions,
criminal or civil liability and serious harm to our reputation. It is not always possible to identify and deter misconduct concerning
applicable laws, regulations, guidelines, policies and standards, and the precautions we take to detect and prevent this activity may
not be effective in preventing such conduct, mitigating risks, or reducing the chance of governmental investigations or other actions
or lawsuits stemming from a failure to comply with these laws or regulations.
If a government entity opens an
investigation into possible violations of any of these laws (which may include the issuance of subpoenas or civil investigative demands),
we would have to expend significant resources to defend ourselves against the allegations. Allegations that we, our officers, or our employees
violated any one of these laws can be made by individuals called “whistleblowers” who may be our employees, customers, competitors
or other parties. Government policy is to encourage individuals to become whistleblowers and file a complaint in federal court alleging
wrongful conduct. The government is required to investigate all of these complaints and decide whether to intervene. If the government
intervenes and we are required to pay money back to the government, the whistleblower, as a reward, is awarded a percentage of the collection.
If the government declines to intervene, the whistleblower may proceed on their own and, if they are successful, they will receive a percentage
of any judgment or settlement amount the company is required to pay. The government may also initiate an investigation on its own. Such
actions could have a significant impact on our business, including the imposition of significant fines, and other sanctions that may materially
impair our ability to run a profitable business. In particular, if our operations are found to be in violation of any of the laws described
above or if we agree to settle with the government without admitting to any wrongful conduct or if we are found to be in violation of
any other governmental regulations that apply to us, we, our officers and employees may be subject to sanctions, including civil and criminal
penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment,
the curtailment or restructuring of our operations and the imposition of a corporate integrity agreement, any of which could adversely
affect our business, results of operations and financial condition.
Risks Related to our Company and our Business
Our technology is subject to licenses from LLU
and Stanford, each of which are revocable in certain circumstances, including in the event we do not achieve certain payments and milestone
deadlines. Without these licenses, we may not be able to continue to develop our product candidates.
The LLU License Agreement may
be terminated by LLU in the event of a breach by us of any non-payment provision (including the provision that requires us to meet certain
deadlines for milestone events (each, a “Milestone Deadline”)) not cured within 90 days after delivery of written notice by
LLU. Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate first-in-human
clinical trials on or before March 31, 2022, (ii) the completion of first-in-human (phase I/II) clinical trials by March 31, 2024, (iii)
the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing approval (BLA) by the FDA by March 31, 2027.
If the LLU License Agreement were to be terminated by LLU, we would lose our most significant asset and may no longer be able to develop
our product candidates, which would have a material adverse effect on our operations.
The February 2020 License Agreement
with Stanford may be terminated by Stanford if we (i) are delinquent on any report or payments; (ii) are not diligently developing and
commercializing Licensed Product (as defined in the February 2020 License Agreement); (iii) miss a milestone described in the agreement;
(iv) are in breach of any other provision of the agreement; or (v) if we provide a false report to Stanford. The Termination discussed
above will take effect only upon 30 days written notice by Stanford unless we remedy the breach within a 30-day cure period. If the February
2020 License Agreement were to be terminated by Stanford, we would lose a significant asset and may no longer be able to develop our product
candidates, which would have a material adverse effect on our operations.
Our results of operations will be affected by
the level of royalty and milestone payments that we are required to pay to third parties.
The LLU License Agreement and
February 2020 License Agreement with Stanford each require us to remit royalty payments and meet certain performance milestones related
to in-licensed intellectual property. Any failure on our part to pay royalties owed or meet milestones could lead to us losing rights
under our licenses and could thereby adversely affect our business. As our product sales increase, we may, from time-to-time, disagree
with our third-party collaborators as to the appropriate royalties owed and the resolution of such disputes may be costly and may consume
management’s time. Furthermore, we may enter into additional license agreements in the future, which may also include royalty payments.
We face substantial competition, which may result
in others discovering, developing or commercializing products before or more successfully than we do.
The development and commercialization
of drugs is highly competitive. We compete with a variety of multinational pharmaceutical companies and specialized biotechnology companies,
as well as products and processes being developed at universities and other research institutions. Our competitors have developed, are
developing or will develop product candidates and processes competitive with our product candidates. Competitive therapeutic treatments
include those that have already been approved and accepted by the medical community and any new treatments that may enter the market.
We believe that a significant number of products are currently available, under development, and may become commercially available in
the future, for the treatment of indications for which we may try to develop product candidates.
More established companies may
have a competitive advantage over us due to their greater size, cash flows and institutional experience. Compared to us, many of our competitors
may have significantly greater financial, technical and human resources. As a result of these factors, our competitors may have an advantage
in marketing their approved products and may obtain regulatory approval of their product candidates before we are able to, which may limit
our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are safer, more effective,
more widely used and less expensive than ours, and may also be more successful than us in manufacturing and marketing their products.
Mergers and acquisitions in the
pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors.
Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements
with large and established companies. These companies compete with us in recruiting and retaining qualified scientific, management and
commercial personnel, establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies
complementary to, or necessary for, our programs.
Our technologies and products under development,
and our business, may fail if we are not able to successfully commercialize them and ultimately generate significant revenues as a result.
Successful development of technologies
and our product candidates will require significant additional investment, including costs associated with additional development, completing
trials and obtaining regulatory approval, as well as the ability to manufacture or have others manufacture our products in sufficient
quantities at acceptable costs while also preserving product quality. Difficulties often encountered in scaling up production include
problems involving production yields, quality control and assurance, shortage of qualified personnel, production costs and process controls.
In addition, we are subject to inherent risks associated with new technologies and products. These risks include the possibility that
any of our technologies or future products may:
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be ineffective or less effective than anticipated; |
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fail to receive necessary regulatory approvals; |
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be difficult to competitively price relative to alternative solutions; |
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be harmful to consumers or the environment; |
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be difficult to manufacture on an economically viable scale; |
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be subject to supply chain constraints for raw materials; |
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fail to be developed and accepted by the market prior to the successful marketing of alternative products by competitors; |
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be difficult to market because of infringement on the proprietary rights of third parties; or |
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be too expensive for commercial use. |
Furthermore, we may be faced with
lengthy market partner or distributor evaluation and approval processes. Consequently, we may incur substantial expenses and devote significant
management effort to customize products for market partner or distributor acceptance, though there can be no assurance of such acceptance.
As a result, we cannot accurately predict the volume or timing of any future sales.
Customers may not adopt our products quickly,
or at all.
Customers in the sector in which
we operate can be generally cautious in their adoption of new products and technologies. In addition, given the relative novelty of our
future planned products (including our AditxtScore™ platform), customers of those products may require education regarding their
utility and use, which may delay their adoption. There can be no assurance that customers will adopt our products quickly, or at all.
The significant level of competition in the
markets for our products developed in the future may result in pricing pressure, reduced margins or the inability of our future products
to achieve market acceptance.
The markets for our future products
are intensely competitive and rapidly changing. We may be unable to compete successfully, which may result in price reductions, reduced
margins and the inability to achieve market acceptance for our products.
Our competitors may have longer
operating histories, significantly greater resources, greater brand recognition and large customer bases than we do. As a result, they
may be able to devote greater resources to the manufacture, promotion or sale of their products, receive greater resources and support
from market partners and independent distributors, initiate or withstand substantial price competition or more readily take advantage
of acquisition or other opportunities.
We rely on third parties for the distribution
of our current and future products, including our AditxtScore™ platform. If these parties do not distribute our products in
a satisfactory or timely manner, in sufficient quantities or at an acceptable cost, our sales and development efforts could be delayed
or otherwise negatively affected.
We rely on third parties for the
distribution of our current and future products, including our AditxtScore™ platform. Our reliance on third parties to distribute
products may present significant risks to us, including the risk that should any of these third parties fail to adequately distribute
our products and services to end consumers and other market participants, our business may be materially harmed. Additionally, if we need
to enter into agreements for the distribution of our future products with other third parties, there can be no assurance we will be able
to do so on favorable terms, if at all.
We may rely on third parties to produce our
future products. If these parties do not produce our products at a satisfactory quality, in a timely manner, in sufficient quantities
or at an acceptable cost, our sales and development efforts could be delayed or otherwise negatively affected.
We may rely on third parties for
the manufacture of our future products. Our reliance on third parties to manufacture our future products may present significant risks
to us, including the following:
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reduced control over delivery schedules, yields and product reliability; |
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manufacturing deviations from internal and regulatory specifications; |
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the failure of a key manufacturer to perform as we require for technical, market or other reasons; |
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difficulties in establishing additional manufacturer relationships if we are presented with the need to transfer our manufacturing process technologies to them; |
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misappropriation of our intellectual property; and |
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other risks in potentially meeting our product development schedule or satisfying the requirements of our market partners, distributors, direct customers and end users. |
If we need to enter into agreements
for the manufacturing of our future products, there can be no assurance we will be able to do so on favorable terms, if at all.
If we are unable to establish successful relations
with third-party market partners or distributors, or these market partners or distributors do not focus adequate resources on selling
our products or are otherwise unsuccessful in selling them, sales of our products may not develop.
We anticipate relying on independent
market partners and distributors to distribute and assist us with the marketing and sale of our products. Our future revenue generation
and growth will depend in large part on our success in establishing and maintaining this sales and distribution channel. If our market
partners and distributors are unable to sell our products, or receive negative feedback from end users, they may not continue to purchase
or market our products. In addition, there can be no assurance that our market partners and distributors will focus adequate resources
on selling our products to end users or will be successful in selling them. Many of our potential market partners and distributors are
in the business of distributing and sometimes manufacturing other, possibly competing, products. As a result, these market partners
and distributors may perceive our products as a threat to various product lines currently being distributed or manufactured by them. In
addition, these market partners and distributors may earn higher margins by selling competing products or combinations of competing products.
If we are unable to establish successful relationships with independent market partners and distributors, we will need to further develop
our own sales and distribution capabilities, which would be expensive and time-consuming and might not be successful.
If we are not able to attract and retain highly
skilled employees and contractors, we may not be able to implement our business model successfully.
We will rely upon employees and
third-party consultant/contractors to effectively establish, manage and grow our business. Consequently, we believe that our future viability
will depend largely on our ability to attract and retain highly skilled personnel. In order to do so, we may need to pay higher compensation,
fees, and/or other incentives to our employees or consultants than we currently expect, and such higher compensation payments would have
a negative effect on our operating results. Competition for experienced, high-quality employees, consultants and contractors is intense
and we cannot assure that we will be able to recruit and retain such personnel. We may not be able to hire or retain the necessary personnel
to implement our business strategy. Our failure to hire and retain such personnel could impair our ability to develop new products and
manage our business effectively.
The loss of our management team or other key
personnel would have an adverse impact on our future development and impair our ability to succeed.
In the early stages of development,
our business will be significantly dependent on the Company’s management team and other key personnel. Our success will be particularly
dependent upon Mr. Amro Albanna and Dr. Shahrokh Shabahang. The loss of any one of these individuals or any other future key personnel
could have a material adverse effect on the Company and our ability to further execute our intended business.
The use of our products may be limited by regulations,
and we may be exposed to product liability and remediation claims.
The use of our planned products
may be regulated by various local, state, federal and foreign regulators. Even if we are able to comply with all such regulations
and obtain all necessary registrations, we cannot provide assurance that our future products will not cause injury to the environment,
people, or animals and/or otherwise have unintended adverse consequences, under all circumstances. For example, our products may be improperly
combined with other chemicals or, even when properly combined, our products may be blamed for damage caused by those other chemicals.
The costs of remediation or products liability could materially adversely affect our results, financial condition and operations.
We may be held liable for, or incur costs to
settle, liability and remediation claims if any products we develop, or any products that use or incorporate any of our technologies,
cause injury or are found unsuitable during product testing, manufacturing, marketing, sale or use. These risks exist even with respect
to products that have received, or may in the future receive, regulatory approval, registration or clearance for commercial use. We cannot
guarantee that we will be able to avoid product liability exposure.
At the stage customary to do so,
we expect to maintain product liability insurance at levels we believe are sufficient and consistent with industry standards for like
companies and products. However, we cannot guarantee that our product liability insurance will be sufficient to help us avoid product
liability-related losses. In the future, it is possible that meaningful insurance coverage may not be available on commercially reasonable
terms or at all. In addition, a product liability claim could result in liability to us greater than our assets or insurance coverage.
Moreover, even if we have adequate insurance coverage, product liability claims or recalls could result in negative publicity or force
us to devote significant time and attention to these matters, which could harm our business.
There may be limitations on the effectiveness
of our internal controls, and a failure of our control systems to prevent error or fraud may materially harm our Company.
We do not expect that internal
control over financial accounting and disclosure, even if timely and well established, will prevent all error and all fraud. A control
system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s
objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits
of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Failure of our control systems
to prevent error or fraud could materially adversely affect our business.
COVID-19 may impact our operations.
On January 30, 2020, the World
Health Organization declared the COVID-19 coronavirus outbreak a “Public Health Emergency of International Concern” and on
March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions
on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The COVID-19 coronavirus
and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets
of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last
and what the complete financial effect will be to the Company, capital raise efforts and additional development of our technologies may
be negatively affected.
Risks Related to Our Acquisition Strategy
Our acquisition strategy exposes us to substantial
risk.
Our acquisition of companies is
subject to substantial risk, including but not limited to the failure to identify material problems during due diligence (for which we
may not be indemnified post-closing), the risk of over-paying for assets (or not making acquisitions on an accretive basis), the ability
to obtain or retain customers and the risks of entering markets where we have limited experience. While we perform due diligence on prospective
acquisitions, we may not be able to discover all potential operational deficiencies in such entities.
Our acquisition
targets may not perform as expected or the returns from such businesses may not support the financing utilized to acquire them or maintain
them. Furthermore, integration and consolidation of acquired businesses requires substantial human, financial and other resources and
may divert management’s attention from our existing business concerns, disrupt our ongoing business or not be successfully integrated.
Even if we consummate businesses that we believe will be accretive, those businesses may in fact result in a decrease in revenues as a
result of incorrect assumptions in our evaluation of such businesses, unforeseen consequences, or other external events beyond our control.
Furthermore, if we consummate any future acquisitions, our capitalization and results of operations may change significantly, and stockholders
will generally not have the opportunity to evaluate the economic, financial, and other relevant information that we will consider in determining
the application of these funds and other resources. As a result, the consummation of acquisitions may have a material adverse effect on
our business, financial condition, results of operations and cash flows.
We may experience difficulty as we evaluate,
acquire and integrate businesses that we may acquire, which could result in drains on our resources, including the attention of our management,
and disruptions of our on-going business.
We acquire small to mid-sized
businesses in various industry segments. Generally, because such businesses are privately held, we may experience difficulty in evaluating
potential target businesses as much of the information concerning these businesses is not publicly available. Therefore, our estimates
and assumptions used to evaluate the operations, management and market risks with respect to potential target businesses may be subject
to various risks and uncertainties. Further, the time and costs associated with identifying and evaluating potential target businesses
may cause a substantial drain on our resources and may divert our management team’s attention away from the operations of our businesses
for significant periods of time.
In addition, we may have difficulty
effectively integrating and managing acquisitions. The management or improvement of businesses we acquire may be hindered by a number
of factors, including limitations in the standards, controls, procedures and policies implemented in connection with such acquisitions.
Further, the management of an acquired business may involve a substantial reorganization of the business’ operations resulting in
the loss of employees and customers or the disruption of our ongoing businesses. We may experience greater than expected costs or difficulties
relating to an acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition.
We may not be able to effectively integrate
the businesses that we acquire.
Our ability to realize the anticipated
benefits of acquisitions will depend on our ability to integrate those businesses with our own. The combination of multiple independent
businesses is a complex, costly and time-consuming process and there can be no assurance that we will be able to successfully integrate
businesses into our business, or if such integration is successfully accomplished, that such integration will not be costlier or take
longer than presently contemplated. Integration of future acquisitions may include various risks and uncertainties, including the factors
discussed in the paragraph below. If we cannot successfully integrate and manage the businesses within a reasonable time, we may not be
able to realize the potential and anticipated benefits of such acquisitions, which could have a material adverse effect on our stock price,
business, cash flows, results of operations and financial position.
We will consider acquisitions
that we believe will complement, strengthen and enhance our growth. We evaluate opportunities on a preliminary basis from time to time,
but these transactions may not advance beyond the preliminary stages or be completed. Such acquisitions are subject to various risks and
uncertainties, including:
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the inability to integrate effectively the operations, products, technologies and personnel of the acquired companies (some of which are in diverse geographic regions) and achieve expected synergies; |
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the potential disruption of existing business and diversion of management’s attention from day-to-day operations; |
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the inability to maintain uniform standards, controls, procedures and policies; |
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the need or obligation to divest portions of the acquired companies; |
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the potential failure to identify material problems and liabilities during due diligence review of acquisition targets; |
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the potential failure to obtain sufficient indemnification rights to fully offset possible liabilities associated with acquired businesses; and |
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the challenges associated with operating in new geographic regions. |
The integration of
our acquisitions may result in significant accounting charges that adversely affect the announced results of our Company.
The financial results of our Company
may be adversely affected by cash expenses and non-cash accounting charges incurred in connection with our recent acquisitions. In addition
to the anticipated cash charges, costs associated with the amortization of intangible assets are expected. The price of our Common Stock
could decline to the extent our financial results are materially affected by the foregoing charges or if the foregoing charges are larger
than anticipated.
Our planned acquisitions
may result in unexpected consequences to our business and results of operations.
Although we believe that our planned
acquisitions will generally be subject to risks similar to those to which we are subject to in our existing operations, we may not have
discovered all risks applicable to these businesses during the due diligence process. Some of these risks could produce unexpected and
unwanted consequences for us. Undiscovered risks may result in us incurring financial liabilities, which could be material and have a
negative impact on our business operations.
Failure to manage our growing and changing business
could have a material adverse effect on our business, prospects, financial condition, and results of operations.
As we grow, we expect to encounter
additional challenges to our internal processes, capital commitment process, and acquisition funding and financing capabilities. Our existing
operations, personnel, systems, and internal control may not be adequate to support our growth and expansion and may require us to make
additional unanticipated investments in our infrastructure. To manage the future growth of our operations, we will be required to improve
our administrative, operational, and financial systems, procedures, and controls, and maintain, expand, train, and manage our growing
employee base. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, execute
our business strategies successfully or respond to competitive pressures. As a result, our business, prospects, financial condition, and
results of operations could be materially and adversely affected.
We face competition for businesses that fit
our acquisition strategy and, therefore, we may have to acquire targets at sub-optimal prices or, alternatively, forego certain acquisition
opportunities.
Our acquisition strategy is focused
on the acquisition of small to mid-sized businesses. In pursuing such acquisitions, we expect to face strong competition from a wide range
of other potential purchasers. Although the pool of potential purchasers for such businesses is typically smaller than for larger businesses,
those potential purchasers can be aggressive in their approach to acquiring such businesses. Furthermore, we expect that we will need
to use third-party financing in order to fund some or all of these potential acquisitions, thereby increasing our acquisition costs. To
the extent that other potential purchasers do not need to obtain third-party financing or are able to obtain such financing on more favorable
terms, they may be in a position to be more aggressive with their acquisition proposals. As a result, in order to be competitive, our
acquisition proposals may need to be aggressively priced, including at price levels that exceed what we originally determined to be fair
or appropriate. Alternatively, we may determine that we cannot pursue on a cost-effective basis what would otherwise be an attractive
acquisition opportunity.
We may not be able to successfully fund acquisitions
due to the unavailability of equity or debt financing on acceptable terms, which could impede the implementation of our acquisition strategy.
We intend to finance acquisitions
primarily through additional debt and equity financings. Because the timing and size of acquisitions cannot be readily predicted, we may
need to be able to obtain funding on short notice to benefit fully from attractive acquisition opportunities. The sale of additional shares
of any class of equity will be subject to market conditions and investor demand for such shares at prices that may not be in the best
interest of our stockholders. The sale of additional equity securities could also result in dilution to our stockholders. The incurrence
of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants
that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. These risks may
materially adversely affect our ability to pursue our acquisition strategy.
We may change our management and acquisition
strategies without the consent of our stockholders, which may result in a determination by us to pursue riskier business activities.
We may change our strategy at
any time without the consent of our stockholders, which may result in our acquiring businesses or assets that are different from, and
possibly riskier than, the strategy described in this prospectus. A change in our strategy may increase our exposure to interest rate
and currency fluctuations, subject us to regulation under the Investment Company Act or subject us to other risks and uncertainties
that affect our operations and profitability.
In the future, we may seek to enter into credit
facilities to help fund our acquisition capital and working capital needs. These credit facilities may expose us to additional risks associated
with leverage and may inhibit our operating flexibility.
We may seek to enter into credit
facilities with third-party lenders to help fund our acquisitions. Such credit facilities will likely require us to pay a commitment fee
on the undrawn amount and will likely contain a number of affirmative and restrictive covenants. If we violate any such covenants, our
lenders could accelerate the maturity of any debt outstanding. Such debt may be secured by our assets, including the stock we may own
in businesses that we acquire. Our ability to meet our debt service obligations may be affected by events beyond our control and will
depend primarily upon cash produced by businesses that we currently manage and may acquire in the future and distributed or paid to us.
Any failure to comply with the terms of our indebtedness may have a material adverse effect on our financial condition.
In addition, we expect that such credit facilities
will bear interest at floating rates which will generally change as interest rates change. We will bear the risk that the rates that we
are charged by our lenders will increase faster than we can grow the cash flow from our businesses or businesses that we may acquire in
the future, which could reduce profitability, materially adversely affect our ability to service our debt, cause us to breach covenants
contained in our third-party credit facilities and reduce cash flow available for distribution.
If, in the future, we cease to control and operate
our businesses or other businesses that we acquire in the future or engage in certain other activities, we may be deemed to be an investment
company under the Investment Company Act.
We have the ability to make investments
in businesses that we will not operate or control. If we make significant investments in businesses that we do not operate or control,
or that we cease to operate or control, or if we commence certain investment-related activities, we may be deemed to be an investment
company under the Investment Company Act. Our decision to sell a business will be based upon financial, operating and other considerations
rather than a plan to complete a sale of a business within any specific time frame. If we were deemed to be an investment company, we
would either have to register as an investment company under the Investment Company Act, obtain exemptive relief from the Securities
and Exchange Commission, or the SEC, or modify our investments or organizational structure or our contract rights to fall outside the
definition of an investment company. Registering as an investment company could, among other things, materially adversely affect our financial
condition, business and results of operations, materially limit our ability to borrow funds or engage in other transactions involving
leverage and require us to add directors who are independent of us and otherwise will subject us to additional regulation that will be
costly and time-consuming.
If intangible assets
and goodwill that we recorded in connection with our acquisitions become impaired, we may have to take significant charges against earnings.
In connection
with the accounting for our completed acquisitions, we may be required to record a significant amount of intangible assets, including
developed technology, in-process research and development, and customer relationships relating to the acquired product lines, and goodwill.
Under generally accepted accounting principles in the United States, we must assess, at least annually and potentially more frequently,
whether the value of indefinite-lived intangible assets and goodwill have been impaired. Intangible assets and goodwill are assessed for
impairment in the event of an impairment indicator. Any reduction or impairment of the value of intangible assets and goodwill will result
in a charge against earnings, which could materially adversely affect our results of operations and shareholders’ equity in future
periods.
While we have entered into a Merger Agreement
with Evofem, we cannot assure you that the transactions contemplated by the Merger Agreement will be consummated or, that if such
transactions are consummated, they will be accretive to stockholder value.
The Merger Agreement may be
terminated by us or Evofem if the merger has not been consummated by May 8, 2023. We can provide no assurance that the conditions to the
closing of the merger, including but not limited to, the approval of the transaction by our stockholders, will be completed in the time
frame or in the manner currently anticipated, or that we will recognize the anticipated benefits of the transaction.
In connection with
the Merger Agreement, we entered into an Assignment Agreement with the holders of certain senior indebtedness of Evofem, pursuant to which
we issued secured notes to such holders in the aggregate principal amount of $13 million, which we will remain obligated on whether or
not the merger closes.
In
connection with the Merger Agreement, we entered into an Assignment Agreement dated December 11, 2023 (the “Assignment Agreement”)
with the holders of certain senior indebtedness of Evofem, pursuant to which such holders assigned their notes to the Company in consideration
for the issuance by us of (i) an aggregate principal amount of $5 million in secured notes of the Company which are due on January 31,
2024, (ii) an aggregate principal amount of $8 million in secured notes of the Company which are due on September 30, 2024, (iii) an aggregate
principal amount of $5 million in ten-year unsecured notes (the “Unsecured Notes”), and (iv) payment of $154,480 in
respect of net sales of Phexxi in respect of the calendar quarter ended September 30, 2023, which was paid on December 14, 2023.
We will remain obligated on such amounts whether or not the merger closes.
Risks Relating to Our Intellectual Property Rights
The failure to obtain or maintain patents, licensing
agreements and other intellectual property could materially impact our ability to compete effectively.
In order for our business to be
viable and to compete effectively, we need to develop and maintain, and we will heavily rely on, a proprietary position with respect to
our technologies and intellectual property. However, there are significant risks associated with our actual or proposed intellectual property.
The risks and uncertainties that we face with respect to our rights principally include the following:
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pending patent applications, we have filed or will file may not result in issued patents or may take longer than we expect to result in issued patents; |
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we may be subject to interference proceedings; |
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we may be subject to reexamination proceedings; |
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we may be subject to post grant review proceedings; |
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we may be subject to inter partes review proceedings; |
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we may be subject to derivation proceedings; |
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we may be subject to opposition proceedings in the U.S. or in foreign countries; |
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any patents that are issued to us may not provide meaningful protection; |
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we may not be able to develop additional proprietary technologies that are patentable; |
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other companies may challenge patents licensed or issued to us; |
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other companies may have independently developed and patented (or may in the future independently develop and patent) similar or alternative technologies, or duplicate our technologies; |
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other companies may design around technologies we have licensed or developed; |
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enforcement of patents is complex, uncertain, and very expensive and we may not be able to secure, enforce and defend our patents; and |
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if we were to ever seek to enforce our patents in ligation, there is some risk that they could be deemed invalid, not infringed, or unenforceable. |
We cannot be certain that any
patents will be issued because of any pending or future applications, or that any patents, once issued, will provide us with adequate
protection from competing products. For example, issued patents may be circumvented or challenged, declared invalid or unenforceable,
or narrowed in scope. In addition, since publication of discoveries in scientific or patent literature often lags actual discoveries,
we cannot be certain that we or our licensors were the first to invent or to file patent applications covering them.
It is also possible that others
may have or may obtain issued patents that could prevent us from commercializing our products or require us to obtain licenses requiring
the payment of significant fees or royalties to enable us to conduct our business. There is no guarantee that such licenses will be available
based on commercially reasonable terms. As to those patents that we have licensed, our rights depend on maintaining our obligations to
the licensor under the applicable license agreement, and we may be unable to do so.
If we are unable to obtain and maintain patent
protection for our products, or if the scope of the patent protection obtained is not sufficiently broad, competitors could develop and
commercialize products similar or identical to ours, and our ability to successfully commercialize our products could be impaired.
The patent prosecution process
is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable
cost, in a timely manner, or in all jurisdictions. It is also possible that we will fail to identify patentable aspects of our development
output before it is too late to obtain patent protection.
The patent position of life science
companies generally is highly uncertain, involves complex legal and factual questions and has in past years been the subject of much litigation.
In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States and we may fail
to seek or obtain patent protection in all major markets. For example, unlike the U.S., European patent law restricts the patentability
of methods of treatment of the human body. Our pending and future patent applications may not result in patents being issued which protect
our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and
products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish
the value of our patents or narrow the scope of our patent protection, even post-grant.
Recent patent reform legislation
has increased the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued
patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act
includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications
are prosecuted and may also affect patent litigation. The U.S. Patent and Trademark Office, or USPTO, recently developed new regulations
and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the
Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear
what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation
could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our
issued patents, all of which could have a material adverse effect on our business and financial condition.
Moreover, we may be subject to
a third-party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter
partes review, post-grant review or interference proceedings challenging our patent rights (whether licensed or otherwise held)
or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or
invalidate, our patent rights (whether licensed or otherwise held), allow third parties to commercialize our technology or products and
compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing
third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications (whether
licensed or otherwise held) is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize
current or future product candidates.
Even if our patent applications
(whether licensed or otherwise held) result in the issuance of patents, they may not issue in a form that will provide us with any meaningful
protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be
able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.
The issuance of a patent is not
conclusive as to its inventorship, scope, validity or enforceability, and our licensed or owned patents may be challenged in the courts
or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent
claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit our ability to stop others from using
or commercializing similar or identical products, or limit the duration of the patent protection of our products. Given the amount of
time required for the development, testing and regulatory review of new life science product candidates, patents protecting such candidates
might expire before or shortly after such candidates are commercialized. As a result, our intellectual property rights portfolio may not
provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
We may become involved in lawsuits to protect
or enforce our intellectual property rights, which could be expensive, time-consuming, and ultimately unsuccessful.
Competitors may infringe our intellectual
property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming.
Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe
their intellectual property or that our intellectual property is invalid or unenforceable. In addition, in a patent infringement proceeding,
a court may decide that a licensed or owned patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s
claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover that
technology. Moreover, lawsuits to protect or enforce our intellectual property rights could be expensive, time-consuming, and ultimately
unsuccessful.
Third parties may initiate legal proceedings
alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain.
Our commercial success depends
upon our ability to develop, manufacture, market and sell our product candidates without infringing the proprietary rights of third parties.
There is considerable intellectual property litigation in the life sciences industry. We cannot guarantee that our product candidates
will not infringe third-party patents or other proprietary rights. We may become party to, or threatened with, future adversarial proceedings
or litigation regarding intellectual property rights with respect to our products and technology, including inter partes review,
interference, or derivation proceedings before the USPTO and similar bodies in other countries. Third parties may assert infringement
claims against us based on existing intellectual property rights and intellectual property rights that may be granted in the future.
If we are found to infringe a
third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing
and marketing our products. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even
if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed
to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could
be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a
patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business
operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets
of third parties could have a similar negative impact on our business.
Obtaining and maintaining our
patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental
patent agencies, and our own patent protection could be reduced or eliminated for noncompliance with these requirements.
Periodic maintenance fees and
annuities on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the
patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment
and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of
a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment
or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance
events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond
to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In
such an event, our competitors might be able to enter our markets, which could have a material adverse effect on our business.
We may be subject to claims by third parties
asserting that our employees or we have misappropriated their intellectual property or claiming ownership of what we regard as our own
intellectual property.
Certain employees and contractors
were previously employed at universities or other companies, including potential competitors. Although we try to ensure that our employees
and contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these
employees or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s
former employer. Litigation may be necessary to defend against these claims, and any such litigation could have an unfavorable outcome.
In addition, while it is our policy
to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning
such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual
property that we regard as our own. Our and their assignment agreements may not be self-executing or may be breached, and we may be forced
to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our
intellectual property.
If we fail in prosecuting or defending
any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are
successful in prosecuting or defending against such claims, litigation could result in substantial costs and adverse results, and be a
distraction to management.
Some intellectual property which we own or have
licensed may have been discovered through government funded programs such as, for example, the government funded programs referenced in
intellectual property licensed under the LLU License Agreement, and thus may be subject to federal regulations such as “march-in”
rights, certain reporting requirements, and a preference for United States industry. Compliance with such regulations may limit our exclusive
rights, subject us to expenditure of resources with respect to reporting requirements and limit our ability to contract with non-U.S.
manufacturers.
Some of the intellectual property
rights we own or have licensed have been generated using United States government funding and may therefore be subject to certain federal
regulations. As a result, the United States government may have certain rights to intellectual property embodied in our current or future
products and product candidates pursuant to the Bayh-Dole Act of 1980. These United States government rights in certain inventions developed
under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental
purpose. In addition, the United States government has the right to require us to grant exclusive, partially exclusive, or non-exclusive
licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize
the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary
to meet requirements for public use under federal regulations (also referred to as “march-in rights”). The United States government
also has the right to take title to these inventions if we fail to disclose the invention to the government and fail to file an application
to register the intellectual property within specified time limits. In addition, the United States government may acquire title to these
inventions in any country in which a patent application is not filed within specified time limits. Intellectual property generated under
a government funded program is also subject to certain reporting requirements, compliance with which may require us to expend substantial
resources. In addition, the United States government requires that any products embodying the subject invention or produced using the
subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be waived if the owner
of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential
licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture
is not commercially feasible. This preference for United States manufacturers may limit our ability to contract with non-U.S. product
manufacturers for products covered by such intellectual property. Any exercise by the government of any of the foregoing rights could
harm our competitive position, business, financial condition, results of operations and prospects.
Intellectual property litigation could cause
us to spend substantial resources and distract our personnel from their normal responsibilities.
Even if resolved in our favor,
litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract
our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results
of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be
negative, it could have an adverse effect on the price of our Common Stock. Such litigation or proceedings could increase our operating
losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may
not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be
able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to
compete in the marketplace.
We may spend considerable resources developing
and maintaining patents, licensing agreements and other intellectual property that may later be abandoned or may otherwise never result
in products brought to market.
Not all technologies and candidate
products that initially show potential as the basis for future products ultimately meet the rigors of our development process and as a
result may be abandoned and/or never otherwise result in products brought to market. In some cases, prior to abandonment we may be
required to incur significant costs developing and maintaining intellectual property and/or maintaining license agreements and our business
could be harmed by such costs.
We rely on information technology, and if we
are unable to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, our operations
could be disrupted, and our business could be negatively affected.
We rely on information technology
networks and systems to process, transmit and store electronic and financial information; to coordinate our business; and to communicate
within our Company and with customers, suppliers, partners and other third parties. These information technology systems may be susceptible
to damage, disruptions or shutdowns, hardware or software failures, power outages, computer viruses, cyber-attacks, telecommunication
failures, user errors or catastrophic events. If our information technology systems suffer severe damage, disruption or shutdown, and
our business continuity plans do not effectively resolve the issues in a timely manner, our operations could be disrupted, and our business
could be negatively affected. In addition, cyber-attacks could lead to potential unauthorized access and disclosure of confidential information,
and data loss and corruption. There is no assurance that we will not experience these service interruptions or cyber-attacks in the future.
Risks Related to Our Common Stock
We received a written notice from Nasdaq that
we regained compliance with the filing requirement in Listing Rule 5550(b)(1) (the “Equity Rule”), however, we will remain
subject to a Mandatory Panel Monitor for a period of one year ending on December 29, 2024. If, within that one-year monitoring period,
we are unable to maintain compliance with the Equity Rule, it may result in our Common Stock being delisted from the Nasdaq Stock Market.
On
September 29, 2023, we received written notice from Nasdaq that the Hearing Panel had granted the Company an exception through December
26, 2023 to allow the Company to complete its plan to demonstrate compliance with the Equity Rule and Nasdaq Listing Rule 5550(a)(4) (the
“Public Float Rule”). On November 21, 2023, we received written notice from Nasdaq that we had regained compliance with the
Public Float Rule. On December 29, 2023, we received written notice from Nasdaq that we had regained compliance with the Stockholders’
Equity Rule, but will be subject to a Mandatory Panel Monitor for a period of one year. If, within that one-year monitoring period,
we are unable to maintain compliance with the Equity Rule, it may result in our Common Stock being delisted from the Nasdaq Stock Market.
We do not expect to pay dividends in the foreseeable
future.
We do not intend to declare dividends
for the foreseeable future, as we anticipate that we will reinvest any and all future earnings in the development and growth of our business.
Therefore, investors will not receive any funds unless they sell their securities, and holders may be unable to sell their securities
on favorable terms or at all. We cannot assure you of a positive return on your investment or that you will not lose the entire amount
of your investment.
Limitation of Liability and Indemnification
of Management.
The Delaware General Corporation
Law and the Company’s Amended and Restated Certificate of Incorporation provide for the limitation of the liability of directors
for monetary damages. Such provisions may discourage shareholders from bringing a lawsuit against directors for breaches of fiduciary
duty and may also have the effect of reducing the likelihood of derivative litigation against directors and officers even though such
action, if successful, might otherwise be a benefit to the Company’s shareholders. In addition, a shareholder’s investment
in the Company may be adversely affected to the extent that costs of settlement and damage awards against the Company’s officers
or directors are paid by the Company pursuant to such provisions. Additionally, in accordance with Delaware law and the Company’s
Amended and Restated Certificate of Incorporation, the Company shall indemnify, hold harmless and provide advancement of expenses, to
the fullest extent permitted by applicable law, directors, officers, employees, and agents that are made a party or threatened to be made
a party to legal proceedings by reason of the fact that such parties were working at the request of the Company. We direct you to
the Company’s Amended and Restated Certificate of Incorporation for more information.
Anti-takeover provisions under Delaware law
could discourage, delay or prevent a change in control of our Company and could affect the trading price of our securities.
We are a Delaware corporation,
and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting
us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested
stockholder, even if a change in control would be beneficial to our existing stockholders.
Our management team is required to devote substantial
time to public company compliance initiatives.
As a publicly reporting company,
we incur significant legal, accounting, and other expenses. Our management and other personnel devote a substantial amount of time to
comply with our reporting obligations. Moreover, these reporting obligations increase our legal and financial compliance costs and make
some activities more time-consuming and costly.
Failure to develop our internal controls over
financial reporting as we grow could have an adverse impact on us.
As our Company matures, we will
need to develop our current internal control systems and procedures to manage our growth. We are required to establish and maintain appropriate
internal controls over financial reporting. Failure to establish appropriate controls, or any failure of those controls once established,
could adversely impact our public disclosures regarding our business, financial condition, or results of operations. In addition, management’s
assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal
controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions
that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal
controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment
of our internal controls over financial reporting may have an adverse impact on the price of our Common Stock.
We could issue “blank check” preferred
stock without stockholder approval with the effect of diluting interests of then-current stockholders and impairing their voting
rights, and provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.
Our Amended and Restated Certificate
of Incorporation provides for the authorization to issue up to 3,000,000 shares of “blank check” preferred stock with
designations, rights and preferences as may be determined from time to time by our board of directors. Our board of directors is empowered,
without stockholder approval, to issue one or more series of preferred stock with dividend, liquidation, conversion, voting or other rights
which could dilute the interest of, or impair the voting power of, our common stockholders. The issuance of a series of preferred stock
could be used as a method of discouraging, delaying, or preventing a change in control. For example, it would be possible for our board
of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change
control of our company. In addition, advanced notice is required prior to stockholder proposals, which might further delay a change of
control.
Our Amended and Restated Certificate of Incorporation
provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes
between the Company and its stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes
with the Company or its directors, officers or employees.
Our Amended and Restated Certificate
of Incorporation provides that unless the Company consents in writing to the selection of an alternative forum, the State of Delaware
is the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting
a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s
stockholders, (iii) any action asserting a claim against the Company, its directors, officers or employees arising pursuant to any provision
of the Delaware General Corporation Law (the “DGCL”) or our Amended and Restated Certificate of Incorporation or
the Company’s Amended and Restated Bylaws, or (iv) any action asserting a claim against the Company, its directors, officers, employees
or agents governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court
of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable
party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested
in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject
matter jurisdiction. This exclusive forum provision would not apply to suits brought to enforce any liability or duty created by the Securities
Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims
may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to
enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Section 22 of the Securities Act
creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities
Act or the rules and regulations thereunder. However, our Amended and Restated Bylaws contain a federal forum provision which provides
that unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States
of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation are deemed to have notice
of and consented to this provision. The Supreme Court of Delaware has held that this type of exclusive federal forum provision is enforceable.
There may be uncertainty, however, as to whether courts of other jurisdictions would enforce such a provision, if applicable.
These choice of forum provisions
may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or
its directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.
Alternatively, if a court were to find our choice of forum provisions contained in either our Amended and Restated Certificate of Incorporation
or Amended and Restated Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving
such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
We are an “emerging growth company”
and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our Common
Stock less attractive to investors.
We are an “emerging growth
company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we intend to take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments
not previously approved. In addition, pursuant to Section 107 of the JOBS Act, as an “emerging growth company” we intend
to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new
or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting
standards until those standards would otherwise apply to private companies. As a result, our financial statements may not be comparable
to those of companies that comply with public company effective dates for complying with new or revised accounting standards.
We cannot predict if investors
will find our Common Stock less attractive because we may rely on these exemptions. If some investors find our Common Stock less attractive
as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile. We may take advantage
of these reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth
company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion
or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public
offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years;
or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
USE OF PROCEEDS
We will not receive any of the
proceeds from the sale by the Selling Stockholders of the Common Stock. Upon any exercise of the Warrants by payment of cash, however,
we will receive the exercise price of the Warrants, which, if exercised in cash with respect to the 3,785,569 shares of Common Stock offered
hereby, would result in gross proceeds to us of approximately $12.3 million. However, we cannot predict when and in what amounts or if
the Warrants will be exercised by payments of cash and it is possible that the Warrants may expire and never be exercised, in which case
we would not receive any cash proceeds.
DIVIDEND POLICY
We have
never paid cash dividends on our Common Stock and we do not anticipate paying cash dividends in the foreseeable future, but intend to
retain our capital resources for reinvestment in our business. Any future determination to pay cash dividends on our Common Stock will
be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements
and other factors as the board of directors deems relevant.
DETERMINATION OF THE OFFERING
PRICE
The prices
at which the shares of Common Stock covered by this prospectus may actually be sold will be determined by the prevailing public market
price for shares of our Common Stock or by negotiations between the Selling Stockholders and buyers of our Common Stock in private transactions
or as otherwise described in “Plan of Distribution.”
BUSINESS
Our Mission
We believe the world needs—and
deserves—a new approach to health innovation that is focused on harnessing the power of large groups of stakeholders who work together
to ensure that the most promising treatments make it into the hands of people who need them most.
We were incorporated in the State
of Delaware on September 28, 2017, and our headquarters are located in Richmond, Virginia. The company was founded with a mission of bringing
stakeholders together, to transform promising innovations into products and services that could address some of the most challenging needs.
The socialization of innovation through engaging stakeholders in every aspect of it, is key to transforming more innovations, more rapidly,
and more efficiently.
At inception,
the first innovation we took on was an immune modulation technology titled ADI/Adimune with a focus on prolonging life and enhancing life
quality of patients that have undergone organ transplants. Since then, we expanded our portfolio of innovations, and we continue to evaluate
a variety of promising health innovations.
Our Model
Our mission
is to advance promising health innovations. Our business model begins with identifying and securing innovations through licensing or acquisition.
Once an innovation is secured and becomes “An Aditxt Company,” we seek to accelerate its growth through supporting and scaling
its innovation, operations, and commercialization.
Our model
focuses on identifying promising health innovation and surrounding it with activation resources that take a systemized approach to bringing
that idea to life. We seek to engage various stakeholders for each of our programs on every level: This includes identifying researchers
and research institution partners, such as Stanford University; leading health institutions to get critical trials underway, such as the
Mayo Clinic; manufacturing partners who enable us to take innovations from preclinical to clinical; municipalities and governments, such
as the city of Richmond and the state of Virginia and public health agencies launch our programs, such as Pearsanta’s laboratory;
and thousands of shareholders around the globe. What was once a promising innovation becomes a purposeful product that has the power to
change lives.
We are
not about a single idea or a single innovation. It is about making sure the right innovation is made possible. With any type of innovation,
there is power in numbers and power in people who believe in our mission of “Making Promising Innovations Possible, Together.”
Our Value Proposition
Far too often, promising treatment or technology does
not reach commercialization due to lack of funds and critical infrastructure. As a result, potentially life-changing and lifesaving treatments
are not available to the individuals who so desperately need them.
Our mission is to make promising
innovation a reality faster and more efficiently. Since inception, we have sought to provide the critical infrastructure consisting of
a highly experienced team and stakeholders skilled in product development, operations, commercialization, engagement and content, finance
and accounting, people, and legal. Our ecosystem has established access to industry leaders, top-rated research and medical institutions,
universities, manufacturing and distribution companies, and critical infrastructure such as CLIA-certified state-of-the art labs and GMP
manufacturing.
We bring the holistic concept
of an efficient ecosystem for advancing and accelerating innovations. Our process: We seek to discover, identify, and license or acquire
promising innovations. We then form and build out a subsidiary around each innovation and support the subsidiaries through innovation,
operations, commercialization, and corporate functions that seek to thrive and grow as a successful, monetizable business.
The Shifting Landscape of Health Innovation
Health
innovation requires significant resources. The convergence of biotech and high-tech offers new possibilities of accelerating breakthrough
innovations faster and more efficiently. This approach reflects our mission of “Making Promising Innovations Possible, Together”.
People deserve innovative solutions,
which have never been more within reach. We believe the best idea, best product and the best solution will come from creating an ecosystem
where all stakeholders, such as vendors, customers, municipalities, and shareholders contribute. When we disrupt the way we’re innovating,
through our collaborative model, we believe we can move faster and more efficiently to activate viable solutions that have the potential
to make a measurable impact.
Our Growth Strategy
The era of precision and personalized
medicine is here. We believe that people around the globe would benefit from health diagnostics and treatments that more accurately pinpoint
the problems and more precisely treat the condition.
In addition to our current programs,
Adimune and Pearsanta, we look to bring in future health innovations in the areas of software and AI, medical devices, therapeutics, and
other technologies that take a fundamentally different approach to health because they prioritize precision medicine, timely disease root
cause analysis, and targeted treatments.
Year over year, we plan to continue
building our infrastructure and adding more personalized and precision health innovations that align with our mission. These opportunities
may come in different forms such as IP, an early-stage company, or a late-stage company. We will continue to scale our systemized approach
to the innovation process, making large-scale automation and enterprise systems available to Aditxt portfolio companies at every stage
of their growth. Specifically, certain subsidiaries will need to grow through further M&A activities, operational infrastructure implementation,
and development or acquisition of critical technologies.
Our Team
Aditxt has assembled an entrepreneurial
team of experts from a variety of different business, engineering, and scientific fields, and commercial backgrounds, with collective
experience that ranges from founding startup innovation companies, to developing and marketing biopharmaceutical and diagnostic products,
to designing clinical trials, and management of private and public companies. We have deep experience in identifying and accessing promising
health innovations and developing them into products and services with the ability to scale. We understand the capital markets, both public
and private, as well as M&A and facilitating complex IPOs.
THE ADITXT PROGRAMS
ADIMUNE, INC.
Formed in January 2023, Adimune™,
Inc. (“Adimune”) is focused on leading Aditxt’s immune modulation therapeutic programs. Adimune’s proprietary
immune modulation product Apoptotic DNA Immunotherapy, or ADI-100™, which utilizes a novel approach that mimics the way our bodies
naturally induce tolerance to our own tissues. It includes two DNA molecules designed to deliver signals to induce tolerance. ADI-100
has been successfully tested in several preclinical models (skin grafting, psoriasis, type 1 diabetes, multiple sclerosis).
In May 2023, Adimune and Mayo
Clinic signed a clinical trial agreement to advance clinical studies targeting autoimmune diseases of the central nervous system (“CNS”)
with the initial focus on the rare, but debilitating, autoimmune disease Stiff Person Syndrome (“SPS”). According to the National
Organization of Rare Diseases, the exact incidence and prevalence of SPS is unknown; however, one estimate places the incidence at approximately
1 in 1 million individuals in the general population.
Pending approval by the International
Review Board, a human trial for SPS will get underway in the second half of 2023 or the first half of 2024 with enrollment of 10-15 patients,
some of whom also have type 1 diabetes. ADI-100 will be tested for safety and efficacy. ADI-100 is designed to tolerize against an antigen
known as glutamic acid decarboxylase (“GAD”), which is implicated in type-1 diabetes, psoriasis, and in many autoimmune diseases
of the CNS.
Background
The discovery
of immunosuppressive (anti-rejection and monoclonal) drugs over 40 years ago has made possible life-saving organ transplantation procedures
and blocking of unwanted immune responses in autoimmune diseases. However, immune suppression leads to significant undesirable side effects,
such as increased susceptibility to life-threatening infections and cancers, because it indiscriminately and broadly suppresses immune
function throughout the body. While the use of these drugs has been justifiable because they prevent or delay organ rejection, their use
for treatment of autoimmune diseases and allergies may not be acceptable because of the aforementioned side effects. Furthermore, transplanted
organs often ultimately fail despite the use of immune suppression, and about 40% of transplanted organs survive no more than 5 years.
Through
Aditxt, Adimune has the right of use to the exclusive worldwide license for commercializing ADI nucleic acid-based technology (which is
currently at the pre-clinical stage) from Loma Linda University. (See below). ADI uses a novel approach that mimics the way the body naturally
induces tolerance to our own tissues (“therapeutically induced immune tolerance”). While immune suppression requires continuous
administration to prevent rejection of a transplanted organ, induction of tolerance has the potential to retrain the immune system to
accept the organ for longer periods of time. ADI may allow patients to live with transplanted organs with significantly reduced immune
suppression. ADI is a technology platform which we believe can be engineered to address a wide variety of indications.
We are
developing ADI™ products for organ transplantation including skin allografting, autoimmune diseases, and allergies, with the initial
focus on psoriasis, type 1 diabetes and skin allografting, indications for which we have compelling preclinical data. To submit a Biologics
License Application (“BLA”) for a biopharmaceutical product, clinical safety and efficacy must be demonstrated in clinical
studies conducted with human subjects. For products in our class of drugs, the first-in-human trials will be a combination of Phase I
(safety/tolerability) and Phase II (efficacy) in affected subjects. To obtain approval to initiate the Phase I/IIa studies, an Investigational
New Drug or Clinical Trial Application will be submitted that will include a compilation of non-clinical efficacy data as well as manufacturing
and pre-clinical safety/toxicology data. To date, we have conducted non-clinical studies in a stringent model of skin transplantation
using genetically mismatched donor and recipient animals demonstrating a 3-fold increase in the survival of the skin allograft in animals
that were tolerized with ADI™ compared to animals that receive immune suppression alone. Prolongation of graft life was observed
despite discontinuation of immune suppression after the first 5 weeks. In a non-obese diabetic mouse model of type 1 diabetes, we showed
reversal of hyperglycemia with 80% of the animals showing durable glycemic control for the 40-week study period. Additionally, in an induced
non-clinical model for psoriasis, ADI™ treatment resulted in a 69% reduction in skin thickness and a 38% decrease in skin flaking
(two clinical parameters for assessment of psoriasis skin lesions). The Phase I/IIa studies in psoriasis will evaluate the safety/tolerability
of ADI™ in patients diagnosed with psoriasis. Since the drug will be administered in subjects diagnosed with psoriasis, effectiveness
of the drug to improve psoriatic lesions will also be evaluated. In the type 1 diabetes clinical studies, newly diagnosed subjects will
receive ADI™ treatment to evaluate safety and efficacy. In another Phase I/IIa study, patients requiring skin allografts will receive
weekly intra-dermal injections of ADI™ in combination with standard immune suppression to assess safety/tolerability and possibility
of reducing levels of immunosuppressive drugs as well as prolongation of graft life.
New,
focused therapeutic approaches are needed that modulate only the immune cells involved in rejection of the transplanted organ, as this
approach can be safer for patients than indiscriminate immune suppression. Such approaches are referred to as immune tolerance, and when
therapeutically induced, may be safer for patients and potentially allow long-termer survival of transplanted tissues and organs.
In the
late 1990s, academic research on these approaches was conducted at the Transplant Center in Loma Linda University (“LLU”)
in connection with a project that secured initial grant funding from the U.S. Department of Defense. The focus of that project was induction
of tolerance for skin allografting for burn victims. Twenty years of research at LLU and an affiliated incubator led to a series of discoveries
that have been translated into a large patent portfolio of therapeutic approaches that may be applied to the modulation of the immune
system to induce tolerance to self and transplanted organs.
Advantages
ADI™
is a nucleic acid-based technology (e.g., DNA-based), which we believe selectively suppresses only those immune cells involved
in attacking or rejecting self and transplanted tissues and organs. It does so by tapping into the body’s natural process of cell
turnover (apoptosis) to retrain the immune system to stop unwanted attacks on self or transplanted tissues. Apoptosis is a natural process
used by the body to clear dying cells and to allow recognition and tolerance to self-tissues. ADI™ triggers this process by enabling
the cells of the immune system to recognize the targeted tissues as “self”. Conceptually, it is designed to retrain the immune
system to accept the tissues, similar to how natural apoptosis reminds our immune system to be tolerant to our own “self”
tissues.
While
efforts have been made by various groups to promote tolerance through cell therapies and ex vivo manipulation of patient
cells (takes place outside the body), we believe we will be unique in our approach of using in-body induction of apoptosis to promote
tolerance to specific tissues. In addition, ADI treatment itself will not require additional hospitalization, only an injection of
minute amounts of the therapeutic drug into the skin.
Reduce Chronic Rejection
Moreover,
preclinical studies have demonstrated that ADI treatment significantly and substantially prolongs graft survival, in addition to successfully
“reversing” other established immune-mediated inflammatory processes.
While
immunosuppressants control acute rejection during the early time-period after receiving an organ, chronic rejection of the organ that
occurs one or more years after the transplant procedure continues to pose a major challenge for organ recipients.
Chronic
rejection has been likened to autoimmunity (a misdirected immune response that occurs when the immune system goes awry), where specific
tissues in the transplanted organ become targets of immune attack. In other words, chronic rejection may not be caused just by differences
between the donor and the recipient, but rather by an immune response by the recipient to specific tissues in the organ. Our pre-clinical
studies suggest that ADI™ has the ability to tolerize to specific tissues in a transplanted organ, and conceivably, reduce incidences
of chronic rejection.
Reduce immune suppression
Studies
in animal models have shown that conditioning/desensitizing the animals to receive the transplant, prolongs the survival of the transplanted
tissue or organ. These studies have used repeated exposure to low doses of protein components in specific organs to reduce immunologic
recognition and attack on the transplanted organ.
Based
on some of our data, we believe that with ADI™ treatment, recipients can be conditioned/desensitized, thereby retraining the immune
system to more readily accept the organ and also reduce the levels of immunosuppressive drugs needed post-transplantation.
Preformed Antibodies
Studies
have shown that presence of preformed antibodies prior to transplantation procedures increases the rate of organ rejection. Preformed
antibodies can develop in previously transplanted patients, patients who have given birth, and patients who have previously received blood
transfusions. With more than 113,000 patients on transplant waiting lists in the U.S. alone, patients with pre-existing antibodies have
much lower chances of qualifying to receive organs due to their increased risk of rejection – even with immune suppression.
Sadly,
transplanted patients have a probability of needing re-transplantation at some point due to eventual chronic rejection of their transplanted
organ, with the possible exception of some newborn recipients. With increased incidence of preformed antibodies, these patients may never
have the opportunity to receive another organ. Based on experimental data, we believe that ADI™ may have the potential to address
this issue providing these individuals better opportunities for receiving an organ.
Technology Platform
ADI™
utilizes a novel approach that mimics the way our bodies naturally induce tolerance to our own tissues. It is a technology platform,
which we believe can be engineered to address a wide variety of indications. ADI™ includes two DNA molecules which are designed
to deliver signals to induce tolerance. The first DNA molecule encodes a pro-apoptotic protein, which induces ‘programmed’
cell death (apoptosis). This is a core component of the technology because it is intended to greatly increase the recruitment of
dendritic cells, which are implicated in regulating the immune system. The second DNA molecule encodes the protein of interest (guiding
antigen), which is modified to promote a path of tolerance. The guiding antigen is intended to result in tolerance induction specific
to the tissue where the protein is found.
ADI™
has shown efficacy in several preclinical models (skin grafting, psoriasis, type 1 diabetes, alopecia areata and multiple sclerosis)
and its efficacy can be attributed to multiple factors:
|
1. |
ADI™
does not rely on a single mechanistic approach. It has multiple components (interchangeable target antigen, apoptosis, methylated
plasmid DNA) that affect different arms of the immune system, which can be manipulated. |
|
2. |
ADI™
activates key immune cells known to maintain tolerance in test animals and humans. |
|
3. |
ADI™
has been successfully applied to a stringent transplantation model. |
|
4. |
ADI™ lends itself
to repeat dosing, which may be required to achieve its full potential therapeutic effect. |
Proof
of Concept: Skin Grafting
Results
shown are 5 weeks post-transplantation
The
proof-of-concept experiment performed in transplantation was a skin allograft transplantation procedure in which the donor skin was obtained
from white BALB/c mice and transplanted to black C57BL/6 mice. The experiment was designed to address a more challenging scenario where
the donor tissue was obtained from a donor which is genetically mismatched with the recipient. This is unlike clinical scenarios where
the donor and recipient are genetically matched as much as possible. While these experiments were repeated in several separate experiments,
the results shown here were obtained from a study conducted with 14 mice in the ADI™ treatment group and 7 mice in the control
group. Prior to submission of an Investigational New Drug or Clinical Trial Application, additional non-clinical studies will be conducted
to establish the precise protocol (e.g. timing of vaccine administration, dosing, and appropriate immunosuppressive agents that will
be used in combination with ADI™) that will be used in the clinical trials. Pre-clinical safety/toxicology studies have already
been conducted by a GLP lab to ensure product safety for clinical testing. These studies have shown no signs of toxicity to ADI™
treatment in mice.
Proof
of Concept: Psoriasis
|
● |
Psoriasis causes increased
skin thickness and scaling in an established 10-day psoriasis model |
|
● |
ADI™ treatment resulted
in a 69% reduction in skin thickening and 38% reduction in scaling over the 10-day study period |
Proof
of Concept: Type 1 Diabetes
Typically,
90% of female NOD mice developed spontaneous autoimmune diabetes. Disease progression may be different for individual animals.
ADI™
was administered once a week for 8 weeks after each animal developed hyperglycemia. All animals responded with 80% showing durable response
for the entire 40-week study period.
|
● |
Type 1 or autoimmune diabetes
is a condition where the body’s immune system mistakenly attacks cells in the pancreas resulting in diminished production of
insulin |
|
● |
ADI™ incorporates
an antigen (GAD) expressed in the pancreas |
|
● |
Administration of ADI™
using GAD as the antigen over an 8-week period in animals with T1D restores insulin production and reverses hyperglycemia |
Pre-clinical
and Clinical Plans
The
resources and efforts used for the IND-enabling work summarized below supports both the psoriasis and TID clinical programs
High-level
objectives for psoriasis clinical program:
|
● |
Completion of IND-enabling
work. Aditxt has initiated GMP manufacturing of clinical grade material that will be used for the first-in-human studies in subjects
with psoriatic lesions. Included in the manufacturing program is stability studies; the regulatory agency requires one month of stability
data for the GMP material for submission of the clinical trial application (CTA). Stability data will continue to be gathered while
the clinical trials are ongoing and up to 24 months. Aditxt has also completed the in-life portion of the toxicology studies. Safety
data have been recorded and Aditxt is now awaiting immunotoxicology data, which are forthcoming. |
|
|
|
|
● |
Upon completion of GMP
manufacturing and toxicology studies, a CTA will be submitted in Q4 2022 to initiate the Phase I/II FIH clinical trials. |
The
FIH clinical studies will combine Phase I (designed to test clinical safety) and Phase IIa (designed to obtain proof of effectiveness
in human subjects), in subjects with psoriatic skin lesions. We have selected this indication for several reasons, including:
|
1. |
Our existing preclinical
data have shown promising results in reducing scaling and skin thickness in the mouse model; |
|
2. |
The relative ease of visualization
of healing of psoriatic lesions; and |
|
3. |
The need for therapies
that suitable and justifiable in individuals with mild to moderate psoriasis (current biologic therapies are primarily used in moderate
to severe cases). |
We
have identified a contract research organization with capabilities to conduct a multi-center study and ability to recruit the needed
number of subjects to complete the clinical trials. Upon approval by the regulatory agency clinical trials will be initiated.
High-level
objectives for type 1 diabetes (T1D) clinical program:
|
● |
Completion of IND-enabling
work. Aditxt has initiated GMP manufacturing of clinical grade material that will be used for the first-in-human studies in subjects
with psoriatic lesions. Included in the manufacturing program is stability studies; the regulatory agency requires one month of stability
data for the GMP material for submission of the clinical trial application (CTA). Stability data will continue to be gathered while
the clinical trials are ongoing and up to 24 months. Aditxt has also completed the in-life portion of the toxicology studies. Safety
data have been recorded and Aditxt is now awaiting immunotoxicology data, which are forthcoming. |
|
● |
Clinical Phase I/II Study
to demonstrate safety and clinical proof-of-concept in T1D |
Our
clinical studies will combine Phase I (designed to test clinical safety) and Phase II (designed to obtain proof of effectiveness in human
subjects), in T1D patients. We have selected this indication for several reasons, including:
|
1. |
Our existing preclinical
data have shown promising results using ADI™ to reverse hyperglycemia in the mouse model; and |
|
|
|
|
2. |
There is currently no treatment
for T1D and the only option for patients suffering from T1D is insulin replacement therapy. |
We
will be identifying clinical trial centers with adequate patients. Upon approval by the FDA and/or the applicable regulatory agency clinical
trials will be initiated.
High-level
objectives for skin allograft clinical program:
|
● |
Completion of preclinical
studies to identify the appropriate protocol for dosing and combination of ADI™ with immune suppression protocols. |
|
|
|
|
● |
Completion of IND-enabling
work including GMP manufacturing and toxicology studies. |
|
|
|
|
● |
Clinical Phase I/II Study
to demonstrate safety and clinical proof-of-concept in patients requiring skin allografts. |
Our
clinical studies will combine Phase I (designed to test clinical safety) and Phase II (designed to obtain proof of effectiveness in human
subjects), in patients requiring skin allografts. We have selected this indication for several reasons, including:
|
1. |
Our existing preclinical
data have shown promising results using ADI™ to prolong skin allograft survival in mismatched mouse model; and |
|
|
|
|
2. |
The relative ease of visualization
of graft quality without the need for biopsies. |
We
will be identifying clinical trial centers with adequate patients. Upon approval by the FDA and/or the applicable regulatory agency clinical
trials will be initiated.
We
are developing our immune monitoring platforms with the objective of utilizing them as clinical assays in pre-clinical and clinical studies.
The multiplex technologies could potentially allow evaluation of more analytes with less tissue samples.
Drug
Approval Process
In
the United States, FDA approval is required before any new drugs can be introduced to the market. We currently have a product candidate
for our first-in-human studies, but as of the date of report, we have not submitted an application to the regulatory agencies for approval.
We
are working with a contract manufacturer who has the know-how, product ingredients including plasmid DNA molecules, and our patent-pending
bacterial strain. Several batch runs have been successfully completed to demonstrate our ability to produce the DNA plasmids in a GMP
facility. Based on validation studies, we are reasonably confident in our ability to produce clinical grade product candidates at larger
scales. The contract manufacturer has provided a proposal for manufacturing of our clinical grade material, which will be signed and
accepted once we are ready to initiate GMP manufacturing. We are not currently party to an agreement with this contract manufacturer.
The
product candidate selected for clinical trials must be subjected to pre-clinical safety/toxicology studies by an independent GLP (Good
Laboratory Practice) laboratory to demonstrate its suitability for clinical testing in human patients. Upon completion of manufacturing
and safety/toxicology testing, an Investigational New Drug (IND) application will be prepared for submission to the regulatory agencies.
Upon
receipt of clearance to initiate clinical testing, the ADI™ product can be tested in human patients. Our product will be tested
in clinical trials, one in patients with psoriasis and one in patients who require skin allografting. Therefore, our first-in-human studies
will be combined Phase I/Phase II studies in which safety and efficacy data will be obtained. We plan to start with in skin indications
(psoriasis and skin allografting) because we believe these indications will be most efficient in providing safety and efficacy data in
clinical trials. In parallel, we will continue to develop additional product formulations for other indications.
We
are developing our immune monitoring platforms with the objective of utilizing them as clinical assays in pre-clinical and clinical studies.
The multiplex technologies could potentially allow evaluation of more analytes with less tissue samples.
Target
Market
Psoriasis
affects close to 100 million people worldwide and presents a large market estimated at over $20 billion annually. Treatments range include
topical and systemic therapeutics including vitamin D analogs, steroids, retinoids, immunosuppressants and biologics (i.e. monoclonal
antibodies). While in more recent years, several classes of biologics have entered the market, most are primarily used for patients suffering
from moderate to severe psoriasis because of their impairment of systemic immune responsiveness to infections and cancers. Aditxt believes
that products based on the ADI™ platform will not be associated with similar side effects and can be targeted for use in mild to
moderate cases.
T1D
is one of the most common chronic disorders in children and affects nearly 2 million Americans, and has an incidence and prevalence increasing
at alarming rates in industrialized countries. Current treatment consists of daily delivery of insulin as replacement therapy, but administration
of the hormone can induce life-threatening hypoglycemia and does not completely prevent morbidity and mortality associated with the disease.
Aditxt is leveraging the ADI™ technology to develop a new class of immunotherapy designed to arrest the autoimmune destruction
of the insulin producing beta cells of the pancreas. This will be the first therapy to accomplish that long sought after goal, thus increasing
life span and quality of life for up to 40,000 of US citizens and about 300,000 people around the world who develop T1D each year, with
a 3-5% increase in yearly incidence.
In
the U.S. alone, there are over 36,000 patients who receive organ transplantations each year, with more than 113,000 on transplant waiting
lists.
The
field of organ transplantation has been made possible and continues to rely on broad-acting immunosuppressive drugs, high levels of which
can result in a compromised immune system that renders organ recipients susceptible to cancer and potentially life-threatening infections
including re-activation of latent viruses.
In
addition, immunosuppressants control acute rejection during the early time-period after receiving an organ but chronic rejection of the
organ remains an unmet challenge for surgeons and transplant recipients.
While
efforts have been made by various groups to promote tolerance through cell therapies and ex vivo manipulation of patient cells,
these procedures take place outside the body and typically require hospitalization.
Moreover,
transplanted patients will need re-transplantation at some point, with the possible exception of some newborn recipients. With increased
incidence of preformed antibodies, these patients may never have the opportunity to receive another organ. Preformed antibodies can develop
in previously transplanted patients, patients who have given birth, and patients who have previously received blood transfusions. These
patients have much lower chances at qualifying to receive organs due to their increased risk of rejection - even with immune suppression.
The potential to reduce formation of preformed antibodies in these patients will provide better opportunities for them to receive another
transplanted organ.
There
are gaps between current approaches and what the market needs. We believe that ADI™ addresses these gaps. ADI™ is easy to
administer (does not require ex-vivo treatment of patient cells), it does not appear to suppress the immune system, it may allow
patients to live with transplanted organs with significantly reduced immune suppression, it may provide for long-term survival of transplanted
tissues and organs, may be more effective because it does not rely on a single immune pathway/mechanism, and potentially provides patients
with pre-existing antibodies a chance to qualify to receive organs.
While
these advantages present opportunities for unmet medical needs in the field of organ transplantation, the industry in which we operate
is highly competitive. A small company such as us will meet significant challenges including regulatory requirements for approval of
a new class of therapeutic agents, challenges in large scale manufacturing and marketing, cost of developing a novel therapeutic agent,
which may require co-development partners who may or may not be willing to work with us, and the willingness of transplant surgeons to
adopt our therapeutic vaccines in their existing immune suppression protocols. These challenges pose risks that we may not be able to
overcome.
License
Agreement with Loma Linda University -
On
March 8, 2018, we entered into an Assignment Agreement (the “Assignment Agreement”) with Sekris Biomedical, Inc. (“Sekris”).
Sekris was a party to a License Agreement with Loma Linda University (“LLU”), entered into and made effective on May 25,
2011, and amended on June 24, 2011, July 16, 2012 and December 27, 2012 (the “Original Agreement,” and together with the
Assignment Agreement, the “Sekris Agreements”). Pursuant to the Assignment Agreement, Sekris transferred and assigned all
of its rights and obligations in and to liabilities under the Original Agreement, of whatever kind or nature, to us. In exchange, on
March 8, 2018, we issued a warrant to Sekris to purchase up to 10,000 shares of our Common Stock (the “Sekris Warrant”).
The warrant was immediately exercisable and has an exercise price of $200.00 per share. The expiration date of the warrant is March 8,
2023. On March 15, 2018, as amended on July 1, 2020, we entered into a LLU License Agreement directly with Loma Linda University, which
amends and restates the Sekris Agreements.
Pursuant
to the LLU License Agreement, we obtained the exclusive royalty-bearing worldwide license in and to all intellectual property, including
patents, technical information, trade secrets, proprietary rights, technology, know-how, data, formulas, drawings, and specifications,
owned or controlled by LLU and/or any of its affiliates (the “LLU Patent and Technology Rights”) and related to therapy for
immune-mediated inflammatory diseases (the ADI™ technology). In consideration for the LLU License Agreement, we issued 500 shares
of Common Stock to LLU.
Pursuant
to the LLU License Agreement, we are required to pay an annual license fee to LLU. Also, we paid LLU $455,000 in July 2020 for outstanding
milestone payments and license fees. We are also required to pay to LLU milestone payments in connection with certain development milestones.
Specifically, we are required to make the following milestone payments: $175,000 on March 31, 2022; $100,000 on March 31, 2024; $500,000
on March 31, 2026; and $500,000 on March 31, 2027. Additionally, as consideration for prior expenses incurred by LLU to prosecute, maintain
and defend the LLU Patent and Technology Rights, we made the following payments to LLU: $70,000 due at the end of December 2018, and
a final payment of $60,000 due at the end of March 2019. We are required to defend the LLU Patent and Technology Rights during the term
of the LLU License Agreement. Additionally, we will owe royalty payments of (i) 1.5% of Net Product Sales and Net Service Sales on any
Licensed Products (defined as any finished pharmaceutical products which utilizes the LLU Patent and Technology Rights in its development,
manufacture or supply), and (ii) 0.75% of Net Product Sales and Net Service Sales for Licensed Products and Licensed Services not covered
by a valid patent claim for technology rights and know-how for a three (3) year period beyond the expiration of all valid patent claims.
We also are required to produce a written progress report to LLU, discussing our development and commercialization efforts, within 45
days following the end of each year. All intellectual property rights in and to LLU Patent and Technology Rights shall remain with LLU
(other than improvements developed by or on our behalf).
The
LLU License Agreement shall terminate on the last day that a patent granted to us by LLU is valid and enforceable or the day that the
last patent application licensed to us is abandoned. The LLU License Agreement may be terminated by mutual agreement or by us upon 90
days written notice to LLU. LLU may terminate the LLU License Agreement in the event of (i) non-payments or late payments of royalty,
milestone and license maintenance fees not cured within 90 days after delivery of written notice by LLU, (ii) a breach of any non-payment
provision (including the provision that requires us to meet certain deadlines for milestone events (each, a “Milestone Deadline”))
not cured within 90 days after delivery of written notice by LLU and (iii) LLU delivers notice to us of three or more actual breaches
of the LLU License Agreement by us in any 12-month period. Additional Milestone Deadlines include: (i) submission of an IND/clinical
trial application to initiate first-in-human clinical trials on or before March 31, 2022, (ii) the completion of first-in-human (phase
I/II) clinical trials by March 31, 2024, (iii) the completion of Phase III clinical trials by March 31, 2026 and (iv) biologic licensing
approval by the FDA by March 31, 2027.
PEARSANTA,
INC.
Formed in January 2023, our
subsidiary PearsantaTM, Inc. (“Pearsanta”) is seeking to take personalized medicine to a whole new level by delivering
“Health by the Numbers”. On November 22, 2023, Pearsanta entered into an assignment agreement with FirstVitals LLC, an entity
controlled by Pearsanta’s CEO, Ernie Lee (“FirstVitals”), pursuant to which FirstVitals assigned its rights in certain
intellectual property and website domain to Pearsanta in consideration of the issuance of 500,000 shares of Pearsanta common stock to
FirstVitals. On December 18, 2023, the board of directors of Pearsanta adopted the Pearsanta 2023 Omnibus Equity Incentive Plan (the “Pearsanta
Omnibus Incentive Plan”), pursuant to which it reserved 15 million shares of common stock of Pearsanta for future issuance under
the Pearsanta Omnibus Incentive Plan and the Pearsanta 2023 Parent Service Provider Equity Incentive Plan (the “Pearsanta Parent
Service Provider Plan”) and approved the issuance of 9.32 million shares of Pearsanta common stock under the Pearsanta Parent Service
Provider Plan.
Since its foundation, we have been building the platform for enabling
our vision of Any-test, Anytime, Anywhere. Our plan for Pearsanta’s platform is for it to be the transactional backbone for sample
collection, sample processing (on- and off-site), and reporting. This requires the development and convergence of multiple components
developed by Pearsanta or through transactions with third parties including collection devices, Lab on Chip technologies, Lab Developed
Test (LDT) assays, data-driven analysis engine, and telemedicine. According to a comprehensive research report by Market Research Future,
the clinical and consumer diagnostic market is estimated to hit $429.3 billion by 2030.
We
believe that timely and personalized screening, enables for more informed decisions about treatments. Pearsanta’s platform is being
developed to be a seamless digital healthcare solution. This platform will integrate at-location sample collection, Point-of-Care (POC)
and LDT, and analytical reporting engine, with telemedicine enabled visits with licensed physicians to review test results and, if necessary,
order a prescription. Pearsanta’s goal of extending its platform to provide a more complete picture about someone’s health
status and how their dynamic status combined with their genetic makeup may affect their response to medication. The POC component of
Pearsanta would enable diagnostic testing at-home, at work, in pharmacies, and more to generate results quickly so that an individual
can access necessary treatment faster. With certain infections, prescribing the most effective treatment according to one’s numbers
can prevent hospital emergency room admissions and potentially life-threatening consequences.
Examples
of potential indication-focused tests for the Test2Treat platform will include the evaluation for advanced urinary tract infections (“UTIs”),
COVID-19/flu/respiratory syncytial virus, sexually transmitted infections, gut health, pharmacogenomics (i.e., how your genes affect
the way your body responds to certain therapeutics), and sepsis. These offerings are novel and needed. We believe that the current standard
of care using broad spectrum antibiotic treatment can be ineffective and life-threatening. For example, according to a recent CDC report,
improperly prescribed antibiotics are used in 50% of outpatient cases. Further, according to a recent article published in Physicans
Weekly, only 1% of board-certified critical care medicine physicians are trained in infectious disease.
Licensed
Technologies - AditxtScoreTM
We
intend to sublicense to Pearsanta an exclusive worldwide sub-license for commercializing the AditxtScore™ technology which provides
a personalized comprehensive profile of the immune system. AditxtScore is intended to detect individual immune responses to viruses,
bacteria, peptides, drugs, supplements, bone marrow and solid organ transplants and cancer. It has broad applicability to many other
agents of clinical interest impacting the immune system, including those not yet identified such as emerging infectious agents.
AditxtScore
will seek to enable individuals and their healthcare providers to understand, manage and monitor their immune profiles and to stay informed
about attacks on or by their immune system. We believe AditxtScore can also assist the medical community and individuals by being able
to anticipate the immune system’s potential response to viruses, bacteria, allergens, and foreign tissues such as transplanted
organs. This technology may be able serve as warning signal thereby allowing for more time to respond appropriately. Its advantages include
the ability to provide simple, rapid, accurate, high throughput assays that can be multiplexed to determine the immune status with respect
to several factors simultaneously, in 3-16 hours. In addition, it can determine and differentiate between distinct types of cellular
and humoral immune responses (T and B cells and other cell types). It also provides for simultaneous monitoring of cell activation and
levels of cytokine release (i.e., cytokine storms).
This
capability may be possible by having the ability to determine the body’s potential response and for developing a plan to deal with
an undesirable reaction by the immune system. Its advantages include the ability to provide a simple, rapid, accurate, high throughput
assays that can be multiplexed to determine the immune status with respect to several factors simultaneously, in 3-16 hours. In addition,
it can determine and differentiate between various types of cellular and humoral immune responses (T and B cells and other cell types).
It also provides for simultaneous monitoring of cell activation and levels of cytokine release (i.e., cytokine storms).
We
are also evaluating plans to obtain regulatory approval for AditxtScore’s use as a clinical assay and seeking to secure manufacturing,
marketing and distribution partnerships for application in the various markets. To obtain regulatory approval to use AditxtScore™
as a clinical assay, we have conducted validation studies to evaluate its performance in detection of antibodies and plan to continue
conducting additional validation studies for new applications in autoimmune diseases.
We
plan to utilize AditxtScore™ in our upcoming pre-clinical and clinical studies to monitor subjects’ immune response before,
during and after ADI™ drug administration. We are also evaluating plans to obtain regulatory approval for AditxtScore™’s
use as a clinical assay and seeking to secure manufacturing, marketing and distribution partnerships for application in the various markets.
To obtain regulatory approval to use AditxtScore™ as a clinical assay, we have conducted validation studies to evaluate its performance
in detection of antibodies and plan to continue conducting additional validation studies for new applications in autoimmune diseases
and transplantation.
(1) Organ
Rejection
Typically,
by the time a transplanted or a native organ shows signs of failure, the damage is already done, and reversal of the tissue injury becomes
challenging. Access to early warning signs of damage would be invaluable to reverse or even prevent the damage. We believe that there
are currently no practical, efficient assays available to measure cellular immune responses and available tools do not provide timely
information for patients. AditxtScore™ can be used to provide a sensitive and rapid tool for pre-transplant monitoring and to determine
T and B cell response and to differentiate between various types of cellular immune responses. It can be multiplexed providing information
about the number of cells responding as well as quantifying the amounts of various cytokines released by the cells in the same assay.
Determination of cellular response has valuable applications for prediction, monitoring, early detection, and treatment of disease, including
organ failure/rejection, as well as treatment efficacy. It can also reveal dysfunction of the immune system that can potentially contribute
to more severe disease.
(2)
Autoimmunity
Our
immune system develops to differentiate self from non-self. In autoimmunity, the body’s ability to distinguish this difference
is impaired. Detection of early signs of immune misrecognition may allow earlier intervention to reduce tissue destruction and to potential
reverse the process more effectively. Better tools are needed to recognize immune responses to our own tissues earlier, and with more
sensitivity and accuracy. We believe that AditxtScore™ harnesses the promise to develop such tools that can be used for early diagnosis,
evaluation of treatment effectiveness and determination of the need for maintenance therapies when needed.
(3) Allergies
Our
immune system protects us by acting as a barrier against foreign substances and by eliminating them when they penetrate our bodies. Once
the initial exposure has occurred, memory cells develop to prepare the body against a future exposure. This process is called immunity.
In certain situations, however, instead of immunity, the immune system develops memory cells that result in a more severe reaction during
a future exposure to the same substance. This type of response is called a hypersensitivity response, commonly known as an allergic response.
AditxtScore™ can be used to develop multiplex panels each designed to test and monitor immune response to allergens. Based on the
ability of this technology to run multiple tests in a single assay, 100 or more substances can potentially be tested simultaneously.
(4) Drug/Vaccine
Response
We
believe that there are currently no effective assays to predict and easily assess responses to drugs or vaccines. To determine whether
an individual has responded to a particular vaccine, antibody titers are measured. This process may take several days or even weeks.
Furthermore, for vaccines that require a series of injections, titers are not measured between injections and may not be known for months.
AditxtScore™ can be used to determine whether a patient is a responder or non-responder (e.g. individuals with a suppressed immune
response may be non-responders). It can provide an effective and rapid tool for potentially determining beneficial responses to a vaccine
and can be used to monitor levels of immune responsiveness post vaccination. It can allow evaluation of multiple vaccines in a single
test (for memory B cell detection). We believe that this application can be useful for vaccines, cancer therapeutics anti-rejection drugs,
anti-viral drugs, among others.
(5) Disease
Susceptibility
Disease
susceptibility can vary from one individual to another, and it can be a function of various factors, including genetic variability and
differences in human leukocyte antigens (HLA) encoded by major histocompatibility complex (MHC) and responsible for regulation of the
immune system in humans. People with certain HLA types may have higher or lower susceptibility to diseases. AditxtScore™ can be
used to develop assays to evaluate differences in HLA types in individuals to help elucidate the relationship between certain HLA types
and susceptibility to various diseases.
(6) Infectious
Diseases
We
believe that infectious diseases can cause a major predicament for scientific and medical professionals, epidemiologists, and infectious
disease specialists, who need to determine how to treat patients in real-time while efficacious therapies are still being developed.
Proper decision making requires understanding why some affected individuals show minor or no symptoms, some recover, and others die.
We feel that this is fundamental to creating effective targeted therapeutics which may differ depending on the underlying profile of
the individual at risk for, or with, disease. The immune system plays a major role in how any given individual responds to the infectious
agent. This response can be inadequate or too robust or appropriately effective. Regardless, the kinetics of the response by the cellular
and humoral (antibody) immune systems to the infectious agent are often unknown. A basic critical question, then, is what do the dynamics
of the immune response look like from exposure to and through the disease period and during convalescence for those who survive and those
who don’t; and how might vaccines and therapies alter these profiles such that predictions of vaccine/drug efficacy could be inferred
prior to vaccination/treatment and/or disease severity or progression be prognosticated. We believe that AditxtScore™ can be used
to help address these questions with multiplex assays each designed to test and monitor the immune response to infectious agents.
License
Agreement with Leland Stanford Junior University (“Stanford”)
On
February 3, 2020, we entered into an exclusive license agreement (the “February 2020 License Agreement”) with Stanford with
regard to a patent concerning a method for detection and measurement of specific cellular responses. Pursuant to the February 2020 License
Agreement, other than as described below, we received an exclusive worldwide license to Stanford’s patent with regard to use, import,
offer, and sale of Licensed Products (as defined in the agreement). The license to the patented technology is exclusive, including the
right to sublicense, beginning on the effective date of the agreement and ending when the patent expires. Under the exclusivity agreement,
we acknowledged that Stanford had already granted a non-exclusive license in the Nonexclusive Field of Use, under the Licensed Patents
in the Licensed Field of Use in the Licensed Territory (as those terms are defined in the February 2020 License Agreement”). However,
Stanford agreed to not grant further licenses under the Licensed Patents in the Licensed Field of Use in the Licensed Territory. On December
29, 2021, we entered into an amendment to the February 2020 License Agreement which extended our exclusive right to license the technology
deployed in AditxtScoreTM and securing worldwide exclusivity in all fields of use of the licensed technology.
We
were obligated to pay and paid a fee of $25,000 to Stanford within 60 days of February 3, 2020. We also issued 375 shares of the Company’s
Common Stock to Stanford. An annual licensing maintenance fee is payable by us on the first anniversary of the February 2020 License
Agreement in the amount of $40,000 for 2021 through 2024 and $60,000 starting in 2025 until the license expires upon the expiration of
the patent. The Company is required to pay and has paid $25,000 for the issuances of certain patents. The Company will pay milestone
fees of $50,000 on the first commercial sales of a licensed product and $25,000 at the beginning of any clinical study for regulatory
clearance of an in vitro diagnostic product developed and a potential licensed product. We are also required to: (i) provide a listing
of the management team or a schedule for the recruitment of key management positions by March 31, 2020 (which has been completed), (ii)
provide a business plan covering projected product development, markets and sales forecasts, manufacturing and operations, and financial
forecasts until at least $10,000,000 in revenue by June 30, 2020 (which has been completed), (iii) conduct validation studies by September
30, 2020 (which has been completed), (iv) hold a pre-submission meeting with the FDA by September 30, 2020 (which has been completed),
(v) submit a 510(k) application to the FDA, Emergency Use Authorization (“EUA”), or a Laboratory Developed Test (“LDT”)
by March 31, 2021, (which has been completed), (vi) develop a prototype assay for human profiling by December 31, 2021 (which has been
completed), (vii) execute at least one partnership for use of the technology for transplant, autoimmunity, or infectious disease purposes
by March 31, 2022, and (viii) will provide further development and commercialization milestones for specific fields of use in writing
by December 31, 2022.
In
addition to the annual license maintenance fees outlined above, we will pay Stanford royalties on Net Sales (as such term is defined
in the February 2020 License Agreement) during the of the term of the agreement as follows: 4% when Net Sales are below or equal to $5
million annually or 6% when Net Sales are above $5 million annually. The February 2020 License Agreement may be terminated upon our election
on at least 30 days advance notice to Stanford, or by Stanford if we: (i) are delinquent on any report or payment; (ii) are not diligently
developing and commercializing Licensed Product; (iii) miss certain performance milestones; (iv) are in breach of any provision of the
February 2020 License Agreement; or (v) provide any false report to Stanford. Should any events in the preceding sentence occur, we have
a thirty (30) day cure period to remedy such violation.
Plan
of Operations
The
initial application of the platform was AditxtScore™ for COVID-19, which was designed to provide a more complete assessment of
an individual’s infection and immunity status with respect to the SARS-CoV-2 virus. Infection status is determined by evaluating
the presence or absence of the virus, and immunity status by measuring levels of antibodies against viral antigens and their ability
to neutralize the virus.
In
early 2021, we established our AditxtScore™ Immune Monitoring Center in Richmond, Virginia (the “Center”). The Center
operates as a Clinical Laboratory Improvement Amendments (CLIA) certified facility for the processing of our AditxtScore™ for COVID-19
Lab Developed Test (LDT) for our prospective channel partners, including labs and hospitals.
In
August 2020, we filed for an Emergency Use Authorization (EUA) with the FDA with the ultimate objective of filing a 510(K) application.
On January 14, 2022, we submitted requests to obtain two EUAs for our antibody and neutralizing tests following an announcement on November
15, 2021 by the Department of Health and Human Services that COVID-19 related tests will require FDA review and FDA’s position
that COVID-19 tests that have been in use prior to the announcement must submit applications for EUAs but can continue to operate unless
informed otherwise. In the meantime, we are providing AditxtScore™ as a service as a Laboratory Developed Test (LDT) to assess
immunity status to COVID-19.
The
public health emergency declaration for COVID-19 ended in May 2023. Thus, COVID-related assays are no longer considered as priority for
review by FDA and will not be considered for EUAs. Assays that are not developed for evaluation of infection or immunity status to SARS-CoV-2
will continue to be offered as LDTs.
Intellectual
Property (IP)
We
strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to our business,
including seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties. Our policy is
to seek to protect our proprietary position by, among other methods, filing patent applications in the United States and in jurisdictions
outside of the United States, to protect our proprietary technology, inventions, improvements and product candidates that are important
to the development and implementation of our business. We also rely on trade secrets and know-how relating to our proprietary technology
and product candidates, continuing innovation, and in-licensing opportunities to develop, strengthen and maintain our proprietary position
in the field of immuno-therapy. We also plan to rely on data exclusivity, market exclusivity, and patent term extensions when available.
Our commercial success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our technology,
inventions, and improvements; to preserve the confidentiality of our trade secrets; to obtain and maintain licenses to use intellectual
property owned by third parties; to defend and enforce our proprietary rights, including any patents that we may own in the future; and
to operate without infringing on the valid and enforceable patents and other proprietary rights of third parties.
Our
innovation portfolio includes: (1) ADI™ immune modulation technologies, which are currently at the pre-clinical stage and are designed
to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases,
and allergies; and (2) AditxtScore™ immune monitoring technologies designed to provide a personalized comprehensive profile of
the immune system. Both categories are protected by multiple families of patents and patent applications, including several issued U.S.
and non-U.S. patents.
The
projected expiration dates for the ADI™ patents and patents issuing from pending applications extend until 2043 for some patents.
As of the date of this report, our patent portfolio for ADI™ includes both patents and patent applications licensed from LLU or
Stanford and patent applications owned solely by Aditxt, including 120 granted patents, 2 allowed patent applications and 30 pending
patient applications in U.S. and other regions. These patents and patent applications cover three different technical aspects of ADI™,
treatment of autoimmune diseases and type 1 diabetes, treatment of organ transplantation, and development of a new class of immunotherapeutics
for various indications. The patents and patent applications cover both methods of treatment for these indications as well as compositions
of matter including plasmids that are able to induce tolerance to antigens or prevention of immune attack on antigens, depending on the
indication, along with methods of producing such plasmids.
The
AditxtScore™ technology is also protected by multiple families of patents and patent applications, including several issued U.S.
and non-U.S. patents. The projected expiration dates for these AditxtScore™ patents and patents issuing from pending applications
ranges from 2037 to 2043. As of the date of this report, our patent portfolio for AditxtScore™ includes both patents and patent
applications licensed from Stanford and patent applications owned solely by Aditxt, including granted patents and 12 applications. These
patents and patent applications encompass methods, systems and kits for detection and measurement of specific immune responses.
We
also possess and/or in-license substantial know-how and trade secrets relating to the development and commercialization of our product
candidates, including related manufacturing processes and technology. We plan to continue expanding and strengthening our IP portfolio
with additional patent applications in the future.
In
March 2021, we signed an agreement with a regulatory consultant based in Munich, Germany, which will play a central role in navigating
the first ADI™ therapeutic program through the clinical trial and regulatory process. The firm has been working with the Aditxt’s
ADI™ team to submit a clinical trial application to the regulatory agency in Germany. Psoriasis is the first indication being
targeted for clinical trial in the ADI™ therapeutics pipeline. Other candidates that are advancing toward clinical trials
include ADI™ for type 1 diabetes and skin allografting.
Advantages
The
sophistication of the AditxtScore technology includes the following:
|
● |
Greater sensitivity/specificity |
|
● |
20- fold higher dynamic
range, greatly reducing signal to noise compared to conventional assays |
|
● |
Ability to customize assays
and multiplex a large number of analytes with speed and efficiency |
|
● |
Ability to test for cellular
immune responses, i.e. B & T cell, cytokines. |
|
● |
Proprietary reporting algorithm. |
ADIVIR,
INC.
Formed
in April of 2023, Adivir™, Inc., is Aditxt’s most recently formed wholly owned subsidiary, dedicated to the clinical and
commercial development efforts of innovative antiviral products. These products have the potential to address a wide range of infectious
diseases, including those that currently lack viable treatment options.
Background
On
April 18, 2023, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Cellvera Global Holdings
LLC (“Cellvera Global”), Cellvera Holdings Ltd. (“BVI Holdco”), Cellvera, Ltd. (“Cellvera Ltd.”),
Cellvera Development LLC (“Cellvera Development” and together with Cellvera Global, BVI Holdco, Cellvera Ltd. and Cellvera
Development (the “Sellers”), AiPharma Group Ltd. (“Seller Owner” and collectively with the Sellers, “Cellvera”),
and the legal representative of Cellvera, pursuant to which, the Company will purchase Cellvera’s 50% ownership interest in G Response
Aid FZE (“GRA”), certain other intellectual property and all goodwill related thereto (the “Acquired Assets”). Unless
expressly stated otherwise herein, capitalized terms used but not defined herein have the meanings ascribed to them in the Asset Purchase
Agreement. Pursuant to the Asset Purchase Agreement, the consideration for the Acquired Assets consists of (A) $24.5 million, comprised
of: (i) the forgiveness of the Company’s $14.5 million loan to Cellvera Global, and (ii) approximately $10 million in cash, and
(B) future revenue sharing payments for a term of seven years. GRA holds an exclusive, worldwide license for the antiviral medication,
Avigan® 200mg, excluding Japan, China and Russia. The other 50% interest in GRA is held by Agility, Inc. (“Agility”).
Additionally,
upon the closing, the Share Exchange Agreement previously entered into as of December 28, 2021, between Cellvera Global Holdings, LLC
f/k/a AiPharma Global Holdings, LLC (together with other affiliates and subsidiaries) and the Company, and all other related agreements
will be terminated.
The
obligations of the Company to consummate the Closing are subject to the satisfaction or waiver, at or prior to the Closing of certain
conditions, including but not limited to, the following:
|
(i) |
Satisfactory completion
of due diligence; |
|
(ii) |
Completion by the Company
of financing sufficient to consummate the transactions contemplated by the Asset Purchase Agreement; |
|
(iii) |
Receipt by the Company
of all required Consents from Governmental Bodies for the Acquisition, including but not limited to, any consents required to complete
the transfer and assignment of Cellvera’s membership interests in GRA; |
|
(iv) |
Receipt of executed payoff
letters reflecting the amount required to be fully pay all of each of Seller’s and Seller Owner’s Debt to be paid at
Closing; |
|
(v) |
Receipt by the Company
of a release from Agility; |
|
(vi) |
Execution of an agreement
acceptable to the Company with respect to the acquisition by the Company of certain intellectual property presently held by a third
party; |
|
(vii) |
Execution of an amendment
to an asset purchase agreement previously entered into by Cellvera with a third party that effectively grants the Company the rights
to acquire the intellectual property from the third party under such agreement; |
|
(viii) |
Receipt of a fairness opinion
by the Company with respect to the transactions contemplated by the Asset Purchase Agreement; and |
|
(ix) |
Receipt by the Company
from the Seller Owner of written consent, whether through its official liquidator or the Board of Directors of Seller Owner, to the
sale and purchase of the Acquired Assets and Assumed Liabilities pursuant to the Assert Purchase Agreement. |
There
can be no assurance that the conditions to closing will be satisfied or that the proposed acquisition will be completed as proposed or
at all.
Our
commitment to building our antiviral portfolio is strategic and timely. We believe that there has never has there been a more important
time to address the growing global need to uncover new treatments or commercialize existing ones that treat life-threatening global viral
infections.
MDNA
On
December 17, 2023, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with
Pearsanta, Inc., our majority owned subsidiary (“Pearsanta”) and MDNA Life Sciences, Inc. (“MDNA”), pursuant
to which Pearsanta agreed to acquire certain intellectual property and other specified assets relating to MDNA’s early cancer detection
platform (the “Acquired Assets”). MDNA’s Mitomic™ technology provides a tool for identifying biomarkers associated
with various diseases that lead to mtDNA mutations. The Acquired Assets include, but are not limited to, the following:
| ● | The Mitomic
Endometriosis Test (MET™) is in development as a blood-based assay for diagnosis of
endometriosis. This test aims to provide early diagnostic insights, potentially reducing
delays in diagnosing endometriosis. |
| ● | The Mitomic
Prostate Test (MPT™) is currently under development as a blood-based assay for diagnosis
of prostate cancer. We believe that this test holds the potential to provide more specific
and clinically informative data especially in the prostate-specific antigen (PSA) grey zone.
It aims to address the challenges of over-diagnosis and mitigate risks associated with low-grade
cancers. |
Pursuant
to the Purchase Agreement, the consideration for the transaction was to consist of: (i) an upfront working capital payment of $500,000
(the “Upfront Working Capital Payment”), which is payable upon the satisfaction of certain conditions set forth in the Purchase
Agreement, (ii) a working capital payment at closing of $500,000, (iii) 50,000 shares of our Common Stock, (iv) a warrant to purchase
50,000 shares of our Common Stock exercisable for a term of 5 years at an exercise price equal to the opening price per share of our
Common Stock as of the Closing Date (as defined below), and (v) 5,000 shares of Pearsanta Series A Preferred Stock, par value $0.001
per share (the “Pearsanta Preferred Stock”), provided, however, that if the value of such Pearsanta Preferred Stock, on an
as-converted basis, at the time of the pricing of the Pearsanta common stock in connection with the sale of shares of Pearsanta common
stock to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended does not equal $25,000,000, an additional amount of Pearsanta Preferred Stock (“Additional Pearsanta Preferred
Stock”) so that the sum of the value of the Pearsanta Preferred Stock plus the Additional Pearsanta Preferred Stock (if any) shall
equal $25,000,000. The Pearsanta Preferred Stock shall have such rights, powers, and preferences as set forth in the form of Certificate
of Designation of Series A Preferred Stock, the form of which is attached as Exhibit D to the Purchase Agreement.
On
January 4, 2024, we entered into a First Amendment to Asset Purchase Agreement with Pearsanta and MDNA, pursuant to which the parties
agreed to: (i) the removal of the Upfront Working Capital Payment, (ii) the removal of the Closing Working Capital Payment (as defined
in the Purchase Agreement”), and (iii) to increase the maximum amount of payments to be made by us under the Transition Services
Agreement (as defined below) from $2.2 million to $3.2 million.
On
January 4, 2024, Pearsanta and MDNA entered into a Transition Services Agreement (the “Transition Services Agreement”), pursuant
to which MDNA agreed that it would perform, or cause certain of its affiliates or third parties to perform, certain services as described
in the Transition Services Agreement for a term of three months in consideration for the payment by Pearsanta of certain fees as provided
in the Transition Services Agreement, in an amount not to exceed $3.2 million.
On
January 4, 2024, we completed its acquisition of the Acquired Assets and issued to MDNA 50,000 shares of our Common Stock, a warrant
to purchase 50,000 shares of our Common Stock, and the Pearsanta Preferred Stock.
Employees
We
have thirty - nine (39) full time employees. We consider the relations with our employees to be good.
MANAGEMENT
Executive
Officers and Directors
Set
forth below is certain information with respect to the individuals who are our directors and executive officers as of December 31, 2023:
Name |
|
Age |
|
Positions |
Amro Albanna |
|
54 |
|
Chief Executive
Officer, Director |
Corinne Pankovcin |
|
57 |
|
Chief Commercialization
Officer |
Shahrokh Shabahang,
D.D.S., MS, Ph.D. |
|
61 |
|
Chief Innovation
Officer, Director |
Rowena Albanna |
|
58 |
|
Chief Operating
Officer |
Thomas J. Farley |
|
50 |
|
Chief Financial
Officer |
Charles Nelson |
|
70 |
|
Director |
Brian Brady |
|
45 |
|
Director |
Jeffrey W. Runge,
M.D. |
|
68 |
|
Director |
Amro
Albanna - Chief Executive Officer
Mr.
Albanna has been our Chief Executive Officer and a Director since we were formed in 2017. He also served as our President from our inception
through September 2021. In 2010, Mr. Albanna co-founded Innovation Economy Corporation (“IEC”), formed to license and commercialize
innovations and create a group of life and health subsidiaries. From 2010 until 2017, Mr. Albanna was Chief Executive Officer and a Director
of IEC and Olfactor Laboratories, Inc., a majority-owned subsidiary of IEC. From 2010 to August 2016, he was the Chief Executive Officer
and a Director of Nano Engineered Applications, Inc., another majority-owned subsidiary of IEC. In 2003, Mr. Albanna founded Qmotions,
Inc. (subsequently renamed Deal A Day Group Corp.). He served as its Chief Executive Officer and a Director until 2011. Qmotions used
3-D spatial tracking and pattern recognition technologies to develop motion-capturing video game controllers. In 2002, Mr. Albanna was
a co-founder of Digital Angel Corporation - a company formed via the merger of three private companies (one being TTC below) into a fourth
publicly traded company (American Stock Exchange) and was placed in charge of commercializing its GPS/wireless technologies. Around that
time, Mr. Albanna co-founded an incubator for startups at the University of California, Riverside Research Park which was acquired in
2007. In 1997, he founded Timely Technology Corporation (“TTC”), which designed and developed e-commerce software for education,
retail and finance. TTC was acquired in 2000 by a Nasdaq-listed company. Mr. Albanna graduated from California State University San Bernardino
in 1991 with a B.S. in Business Administration with concentration in Computer Information Systems. He completed graduate coursework in
Computer Science and Engineering at California State University, Long Beach from 1992 to 1993. In 2019, Mr. Albanna completed coursework
in Immunology and Genetics at Harvard Medical School HMX online learning platform.
Corinne
Pankovcin — Chief Commercialization Officer
Ms.
Pankovcin has been our Chief Commercialization Officer since April 12, 2023. Ms. Pankovcin served as our President from September 2021
through April 2023. Ms. Pankovcin served as our Chief Financial Officer from July 2020 through August 2021. From December 2015 to July
2019, Ms. Pankovcin was the Chief Financial Officer and Managing Director and Treasurer of Business Development Corporation of America
(“BDCA”), a business development company. Prior thereto, from January 2011 to August 2015, Ms. Pankovcin was the Chief Financial
Officer and Treasurer of Blackrock Capital Investment Corporation (NASDAQ: BKCC), and a Managing Director of Finance at BlackRock Investment
Management LLC. Prior to joining BlackRock, Ms. Pankovcin was a senior member of Finance & Accounting of Alternative Investments
and served as Chief Financial Officer for the Global Emerging Markets products group at AIG Capital Partners. Ms. Pankovcin began her
career with PricewaterhouseCoopers LLP, where she ultimately held the role of Senior Manager of Business Assurance for Consumer Products,
Manufacturing, and Middle Market industries from 1991 to 2001. Ms. Pankovcin earned her B.S. in Accounting from Dowling College and her
Master’s Degree in Business Administration from Hofstra University. She is a Certified Public Accountant.
Shahrokh
Shabahang, D.D.S., MS, Ph.D. - Chief Innovation Officer
Dr.
Shabahang has been our Chief Innovation Officer and Director since our inception. In 2009, Dr. Shabahang co-founded Sekris Biomedical
Inc. to incubate immunotherapy technologies. He served as its Chairman of the board and Chief Executive Officer since its inception.
In 2004, Dr. Shabahang joined Genelux Corporation to lead its clinical development program and to serve as board secretary. Genelux developed
an oncolytic virus technology for treatment of cancer, co-invented by Dr. Shabahang. During his tenure from 2004-2007, Genelux raised
$20M+ and obtained regulatory approval to initiate First-In-Human clinical studies in Europe with patients who had not responded to chemotherapy.
In 2001, Dr. Shabahang became the Director of the Microbiology and Molecular Biology Lab at Loma Linda University (“LLU”).
He led the research and development of an antimicrobial therapeutic agent for treatment of dental infections, which was licensed and
marketed by one of the largest dental distribution companies. Dr. Shabahang attended the University of California, Santa Barbara from
1982 to 1984 and later received his DDS from the University of Pacific in 1987. He earned his PhD in Microbiology and Molecular Genetics
at LLU in 2001. During the same year, he established his laboratory at LLU to study infectious diseases and host immune responses.
Rowena
Albanna - Chief Operating Officer
Ms.
Albanna has been our Chief Operating Officer since July 2020. From 2017 to immediately prior to her appointment as Chief Operating Officer,
Ms. Albanna was an independent operations consultant for the Company. Prior thereto, from 2013 to 2017, Ms. Albanna was the Chief Operating
Officer of Innovation Economy Corporation (“IEC”), formed to license and commercialize innovations and create a group of
life and health subsidiaries. From 2010 to 2013, Ms. Albanna was Senior Vice President of IEC. From 2004 to 2009, Ms. Albanna was the
founder and principal of Weezies, an online-based business focused on building and operating e-commerce stores and affiliate marketing
sites. From 2003 to 2004, Ms. Albanna was the head of Product Development and Engineering of Qmotions Inc. Qmotions used 3-D spatial
tracking and pattern recognition technologies to develop motion-capturing video game controllers. In 2002, Ms. Albanna was VP of Product
Development at Digital Angel Systems where she led the development of devices which combined GPS, wireless, and biosensing. Prior to
that, Ms. Albanna held multiple product development roles with increasing responsibilities for various technology companies in the areas
of financial, medical, telecommunications, integrated circuit layout design, and defense. Ms. Albanna is a co-inventor of two patents
related to systems for localizing, monitoring, and sensing objects. Ms. Albanna received a Bachelor of Science degree in Computer Science
with a minor in Mathematics from California State University, San Bernardino in 1988. Ms. Albanna is the wife of Amro Albanna, our Chief
Executive Officer.
Thomas
J. Farley, CPA - Chief Financial Officer
Mr.
Farley has been the Chief Financial Officer since September 2021. Prior to this, Mr. Farley was the Principal Accounting Officer and
Controller from October of 2020 to September 2021. From December 2015 to June 2020, Mr. Farley was the Controller of Business Development
Corporation of America (“BDCA”), a publicly listed business development company. Prior thereto, from January 2011 to August
2015, Mr. Farley was the Senior Controller of Blackrock Capital Investment Corporation (NASDAQ: BKCC). Prior to joining BlackRock Capital
Investment Corporation, Mr. Farley was a Senior Controller for PineBridge Investments Emerging Markets practice. Mr. Farley was also
an Accounting Manager for Bessemer Venture Partners prior to his tenure at PineBridge. Mr. Farley began his career with PricewaterhouseCoopers
LLP, from 1996 to 2001. Mr. Farley earned his B.S. in Accounting from Long Island University and is a Certified Public Accountant.
Brian
Brady - Director
Mr.
Brady has served as a Director since December 1, 2018. Mr. Brady has also been the Director of Investments at a large hospital system
since March 2016, where he is responsible for the management of investment activity related to the organization and personal investments
of the family that owns that company. From December 2011 to March 2016, Mr. Brady was the Vice President/Portfolio Manager at a wealth
advisory firm, where he served in an investment advisory role, including asset and portfolio management. Mr. Brady graduated in 2001
with a Bachelor’s degree in Finance from the University of Illinois at Chicago and in 2014 with a Master of Business Administration
degree from the University of Chicago. We believe that Mr. Brady’s extensive experience with financial markets and management of
investment activities qualifies him to serve as a director of our Company.
Charles
Nelson - Director
Mr.
Nelson has served as a director since November 2023. Prior to his appointment as a member of the Board, Mr. Nelson was a consultant to
the Company from September 2020 through September 2023. He began his financial career as a market representative with American International
Group and in 1979 joined Dean Witter Reynolds as a Financial Advisor, working with high net worth and institutional clients. In 1980,
he joined Drexel Burnham and Lambert, and subsequently, at Ladenberg Thalmann and then at Auerbach Pollack and Richardson originating
equity and investment banking transactions. Over the last 20 years, Mr. Nelson has been involved with financing companies in the fintech,
healthcare and bio-pharma spaces through private equity and public financing including listings on the Nasdaq and the NYSE. We believe
that Mr. Nelson’s extensive experience in capital markets qualifies him to serve as a director of our Company.
Jeffrey
W. Runge, M.D - Director
Dr.
Runge has served as a director since July 2020. From 2008 to the present, Dr. Runge has been the President and founder of Biologue, Inc.,
which provides consulting in biodefense, medical preparedness and injury control. From 2001 through August of 2008, Dr. Runge served
in the Bush administration, first as the head of the National Highway Traffic Safety Administration, and, beginning in September 2005,
as the Department of Homeland Security’s (DHS) first Chief Medical Officer. Dr. Runge founded the DHS Office of Health Affairs
and was confirmed by the United States Senate as DHS’ first Assistant Secretary for Health Affairs in December of 2007. Dr. Runge
also served as Acting DHS Undersecretary for Science and Technology from February through August 2006. In his role at DHS, Dr. Runge
oversaw the operations of the department’s biodefense activities, medical preparedness and workforce health protection, as well
as fulfilling DHS’ responsibilities in medical countermeasure development. Prior to his government service, Dr. Runge was Assistant
Chairman and Director of Clinical Research in the Department of Emergency Medicine at Carolinas Medical Center in Charlotte, NC, from
1984 through 2001. Additionally, Dr. Runge is a Senior Advisor at The Chertoff Group, a firm providing advisory services in business
risk management, security and homeland defense. Since 2010, Dr. Runge has served on the boards of two public companies, including their
Audit and Compensation committees, both of which underwent strategic acquisitions. He has also served as President and CEO of a SEC-regulated
startup company in the health sector. Dr. Runge earned his medical degree from the Medical University of South Carolina and his undergraduate
degree from the University of the South. We believe that Dr. Runge’s experience in medicine, medical research, public service,
business and his prior service on public corporate boards qualifies him to serve as a director of our Company.
Board
Leadership Structure and Risk Oversight
The
Board oversees our business and considers the risks associated with our business strategy and decisions. The Board currently implements
its risk oversight function as a whole. Each of the Board committees, when established, will also provide risk oversight in respect of
its areas of concentration and reports material risks to the Board for further consideration.
Term
of Office
Officers
hold office until his or her successor is elected and qualified. Directors are appointed to serve for one year until the meeting of the
Board following the annual meeting of stockholders and until their successors have been elected and qualified.
Director
Independence
We
use the definition of “independence” of The Nasdaq Stock Exchange LLC (“Nasdaq”) listing rules to make this determination.
Nasdaq listing rules provide that an “independent director” is one who the board “affirmatively determines” has
no “material relationship” with the company “either directly or as a partner, shareholder or officer of an organization
that has a relationship with the Company. Nasdaq listing rules provide that a director cannot be considered independent if:
| ● | the
director is, or has been within the last three (3) years, an employee of the Company or an
immediate family member of director is, or has been within the last three (3) years, an executive
officer of the Company; |
| ● | the
director has received, or has an immediate family member who is an executive officer of the
Company and has received, during any twelve-month period within the last three (3) years,
more than $120,000 compensation directly from the Company (not including compensation received
for director service, pension plan payments or deferred compensation for prior service not
contingent on continued service); |
| ● | the
director or an immediate family member is a current partner of the Company’s internal
or external auditor; the director is a current employee of the auditor; an immediate family
member is a current employee of the auditor and personally works on the Company’s audit;
or the director or an immediate family member was within the last three (3) years a partner
or employee of the auditor and personally worked on the Company’s audit within that
time; |
| ● | the
director or an immediate family member is, or has been within the last three (3) years, employed
as an executive officer of another company where any of the Company’s present executive
officers at the same time serves or served on that company’s compensation committee;
or |
| ● | the
director is a current employee, or an immediate family member is a current executive officer,
of an organization that has made to or received from the Company payments for property or
services in an amount which, in any of the last three fiscal (3) years, exceeds greater of
2% of such other company’s consolidated gross revenues or $1 million. Charitable contributions
not considered “payments” for purposes of this prohibition but contributions
meeting these thresholds must be disclosed on the Company’s website or in its annual
proxy statement or its Annual Report on Form 10-K. |
Under
such definitions, we consider Mr. Nelson, Mr. Brady, and Dr. Runge to be “independent.” Nasdaq listing rules permits a phase-in
period of up to one year for an issuer registering securities in an initial public offering to comply with its requirement that a majority
of the board of directors be made up of independent directors. However, our common stock is not currently quoted or listed on any national
exchange or interdealer quotation system with a requirement that a majority of our Board be independent and, therefore, the Company is
not subject to any director independence requirements. We are subject to Nasdaq’s director independence requirements and are required
to structure our board of directors accordingly.
Committees
of the Board
Our
board of directors has established three standing committees: Audit, Compensation, and Nominating and Corporate Governance. Each of these
standing committees operate pursuant to its respective charter. The committee charters are reviewed annually by the Nominating and Corporate
Governance Committee. If appropriate, and in consultation with the chairs of the other committees, the Nominating and Corporate Governance
Committee may propose revisions to the charters. The responsibilities of each committee are described in more detail below.
Nasdaq
listing rules permits a phase-in period for an issuer registering securities in an initial public offering to meet the Audit Committee,
Compensation Committee and Nominating and Corporate Governance Committee independence requirements. Under the initial public offering
phase-in period, only one member of each committee is required to satisfy the heightened independence requirements at the time our registration
statement becomes effective, a majority of the members of each committee must satisfy the heightened independence requirements within
90 days following the effectiveness of our registration statement, and all members of each committee must satisfy the heightened independence
requirements within one year from the effectiveness of our registration statement.
The
composition and functions of each committee are described below.
Name | |
Independent | | |
Audit | | |
Nominating
and Corporate Governance | | |
Compensation | |
Amro Albanna | |
| | | |
| | | |
| | | |
| | |
Shahrokh Shabahang, D.D.S., MS,
Ph.D. | |
| | | |
| | | |
| | | |
| | |
Brian Brady | |
| X | | |
| X | * | |
| X | | |
| X | |
Charles Nelson | |
| X | | |
| X | | |
| X | | |
| X | * |
Jeffrey Runge, M.D. | |
| X | | |
| X | | |
| X | * | |
| X | |
| * | Chairman
of the committee |
Audit
Committee
The
Audit Committee, among other things, is responsible for:
| ● | appointing;
approving the compensation of; overseeing the work of; and assessing the independence, qualifications,
and performance of the independent auditor; |
| ● | reviewing
the internal audit function, including its independence, plans, and budget; |
| ● | approving,
in advance, audit and any permissible non-audit services performed by our independent auditor; |
| ● | reviewing
our internal controls with the independent auditor, the internal auditor, and management; |
| ● | reviewing
the adequacy of our accounting and financial controls as reported by the independent auditor,
the internal auditor, and management; |
| ● | overseeing
our financial compliance system; and |
| ● | overseeing
our major risk exposures regarding the Company’s accounting and financial reporting
policies, the activities of our internal audit function, and information technology. |
The
Board has affirmatively determined that each member of the Audit Committee meets the additional independence criteria applicable to audit
committee members under SEC rules and Nasdaq listing rules. The Board has adopted a written charter setting forth the authority and responsibilities
of the Audit Committee. The Board has affirmatively determined that each member of the Audit Committee is financially literate, and that
Mr. Brady meets the qualifications of an Audit Committee financial expert.
The
Audit Committee consists of Mr. Brady, Mr. Nelson, and Dr. Runge. Mr. Brady chairs the Audit Committee.
Compensation
Committee
The
Compensation Committee is responsible for:
| ● | reviewing
and making recommendations to the Board with respect to the compensation of our officers
and directors, including the CEO; |
| ● | overseeing
and administering the Company’s executive compensation plans, including equity-based
awards; |
| ● | negotiating
and overseeing employment agreements with officers and directors; and |
| ● | overseeing
how the Company’s compensation policies and practices may affect the Company’s
risk management practices and/or risk-taking incentives. |
The
Board has adopted a written charter setting forth the authority and responsibilities of the Compensation Committee.
The
Compensation Committee consists of Mr. Brady, Mr. Nelson, and Dr. Runge. Mr. Nelson serves as chairman of the Compensation Committee.
The Board has affirmatively determined that each member of the Compensation Committee meets the independence criteria applicable to compensation
committee members under SEC rules and Nasdaq listing rules.
Nominating
and Corporate Governance Committee
The
Nominating and Corporate Governance Committee, among other things, is responsible for:
| ● | reviewing
and assessing the development of the executive officers and considering and making recommendations
to the Board regarding promotion and succession issues; |
| ● | evaluating
and reporting to the Board on the performance and effectiveness of the directors, committees
and the Board as a whole; |
| ● | working
with the Board to determine the appropriate and desirable mix of characteristics, skills,
expertise and experience, including diversity considerations, for the full Board and each
committee; |
| ● | annually
presenting to the Board a list of individuals recommended to be nominated for election to
the Board; |
| ● | reviewing,
evaluating, and recommending changes to the Company’s Corporate Governance Principles
and Committee Charters; |
| ● | recommending
to the Board individuals to be elected to fill vacancies and newly created directorships; |
| ● | overseeing
the Company’s compliance program, including the Code of Conduct; and |
| ● | overseeing
and evaluating how the Company’s corporate governance and legal and regulatory compliance
policies and practices, including leadership, structure, and succession planning, may affect
the Company’s major risk exposures. |
The
Board of Directors has adopted a written charter setting forth the authority and responsibilities of the Nominating and Corporate Governance
Committee.
The
Nominating and Corporate Governance Committee consists of Dr. Runge, Mr. Brady, and Mr. Kiaie. Dr. Runge serves as chairman of the Nominating
and Corporate Governance Committee. The Company’s Board of Directors has determined that each member of the Nominating and Corporate
Governance Committee is independent within the meaning of the independent director guidelines of Nasdaq listing rules.
Compensation
Committee Interlocks and Insider Participation
None
of the Company’s executive officers serves, or in the past has served, as a member of the board of directors or compensation committee,
or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of the
Company’s board of directors or its compensation committee. None of the members of the Company’s compensation committee is,
or has ever been, an officer or employee of the Company.
Code
of Business Conduct and Ethics
The
Company’s board of directors adopted a code of business conduct and ethics applicable to its employees, directors and officers,
in accordance with applicable U.S. federal securities laws and the corporate governance rules of the Nasdaq Capital Market. The code
of business conduct and ethics is publicly available on the Company’s website. Any substantive amendments or waivers of the code
of business conduct and ethics or code of ethics for senior financial officers may be made only by the Company’s board of directors
and will be promptly disclosed as required by applicable U.S. federal securities laws and the corporate governance rules of the Nasdaq
Capital Market.
Corporate
Governance Guidelines
The
Company’s board of directors has adopted corporate governance guidelines in accordance with the corporate governance rules of the
Nasdaq Capital Market.
Involvement
in Certain Legal Proceedings
To
our knowledge, none of our current directors or executive officers has, during the past ten years:
| ● | been
convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding
traffic violations and other minor offenses); |
| ● | had
any bankruptcy petition filed by or against the business or property of the person, or of
any partnership, corporation or business association of which he or she was a general partner
or executive officer, either at the time of the bankruptcy filing or within two years prior
to that time; |
| ● | been
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated,
of any court of competent jurisdiction or federal or state authority, permanently or temporarily
enjoining, barring, suspending or otherwise limiting, his involvement in any type of business,
securities, futures, commodities, investment, banking, savings and loan, or insurance activities,
or to be associated with persons engaged in any such activity; |
| ● | been
found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity
Futures Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or vacated; |
| ● | been
the subject of, or a party to, any federal or state judicial or administrative order, judgment,
decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement
of a civil proceeding among private litigants), relating to an alleged violation of any federal
or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent
cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity; or |
| ● | been
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended
or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities
Exchange Act of 1934, as amended (the Exchange Act)), any registered entity (as defined in
Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association,
entity or organization that has disciplinary authority over its members or persons associated
with a member. |
Except
as set forth above and in our discussion below in “Certain Relationships and Related Transactions,” none of our directors
or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates
which are required to be disclosed pursuant to the rules and regulations of the SEC.
Other
than as set forth below, we are not currently a party to any legal proceedings, the adverse outcome of which, individually or in the
aggregate, we believe will have a material adverse effect on our business, financial condition or operating results.
The
Company, Amro Albanna, our Chief Executive Officer, and Dr. Shahrokh Shabahang, our Chief Innovation Officer, have been named as cross-defendants
in a counterclaim filed by Christopher Sechrist in an action entitled Shahrokh Shabahang v. Christopher Sechrist, San Bernardino County
Superior Court Case No. CIVDS1831323. In a cross-complaint, Mr. Sechrist contends that he was a partner in a dental practice with Dr.
Shabahang, and that disputes arose as between those partners. Neither the Company nor Mr. Albanna were partners in, or otherwise have
an interest in, the dental practice. Notwithstanding, and seemingly based solely on the fact that Dr. Shabahang became the Chief Innovation
Officer for the Company, Mr. Sechrist has brought claims against the Company and Mr. Albanna. Both the Company and Mr. Albanna believe
that the Counterclaims filed by Mr. Sechrist have no factual or legal merit, and they intend to vigorously defend themselves in the action
and to seek a dismissal of the case as against them as soon as possible. On May 26, 2020, Mr. Sechrist filed a request for dismissal
as to the Company and Mr. Albanna with the Superior Court of California, County of San Bernardino, San Bernardino District. The clerk
of the court entered the dismissal with prejudice on May 26, 2020.
Our
Chief Executive Officer, Amro Albanna, is a party to litigation matters unrelated to the Company or any of its properties. Such litigations
relate to Innovation Economy Corporation (IEC), a company in which Mr. Albanna served as the CEO and a Director from 2010 until 2017,
and its wholly-owned subsidiaries (Innovation Economy Corporation d/b/a ieCrowd). The first litigation (ieCrowd v. Kim, et. al, Superior
Court, Riverside County) was originally commenced by IEC and its subsidiary after Mr. Albanna was no longer affiliated with IEC, against
certain third-party defendants based upon claims related to their misconduct and mismanagement. Such defendants subsequently brought
a countersuit against IEC and its subsidiary, in which they named Mr. Albanna and others as defendants, alleging that they were misled
to invest in IEC and its subsidiary based upon misrepresentations by, among others, Mr. Albanna. The cases have now been consolidated.
Mr. Albanna believes that the counteraction commenced by the third parties against him is without merit and intends to defend himself.
The second matter (Calabria v. ieCrowd) was commenced by Calabria Ventures (the “Calabria Action”) more than 2 years after
Mr. Albanna was no longer affiliated with IEC, related to uncollected rent. Mr. Albanna believes that the action commenced against him
is without merit and intends to defend himself. IEC (either directly or through its Director and officer insurance policy) has covered
all related legal costs to date. On August 5, 2020, the plaintiff in the Calabria Action filed a request for dismissal as to Mr. Albanna
with the Superior Court of California, County of Riverside. The clerk of the court entered the dismissal without prejudice on August
5, 2020.
EXECUTIVE
AND DIRECTOR COMPENSATION
The
following table represents information regarding the total compensation for the named executive officers of the Company as of December
31, 2023 and 2022:
Name
and Principal Position | |
Year | | |
Salary
($) | | |
Bonus
($) | | |
Stock
Awards ($) | | |
Option
Awards ($) | | |
Restricted
Stock Units ($) | | |
All
Other Compensation ($)(4) | | |
Total
($) | |
Amro
Albanna | |
| 2023 | | |
| 432,119 | | |
| - | | |
| - | | |
| 47,114 | | |
| - | | |
| 40,000 | | |
| 519,233 | |
Chief
Executive Officer and Director | |
| 2022 | | |
| 500,000 | | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| 500,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shahrokh
Shabahang, D.D.S., MS, Ph.D. | |
| 2023 | | |
| 293,502 | | |
| - | | |
| - | | |
| 35,336 | | |
| - | | |
| 30,000 | | |
| 358,837 | |
Chief
Innovation Officer | |
| 2022 | | |
| 325,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 325,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Corinne
Pankovcin | |
| 2023 | | |
| 346,774 | | |
| - | | |
| - | | |
| 23,557 | | |
| - | | |
| 20,000 | | |
| 390,331 | |
Chief
Commercialization Officer,
Former President(1), Former Chief Financial Officer(2) | |
| 2022 | | |
| 385,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 385,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Thomas
J. Farley | |
| 2023 | | |
| 337,894 | | |
| - | | |
| - | | |
| 23,557 | | |
| - | | |
| 20,000 | | |
| 381,451 | |
Chief
Financial Officer(4) | |
| 2022 | | |
| 360,833 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| | | |
| 360,833 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Matthew
Shatzkes | |
| 2023 | | |
| 198,670 | | |
| 890,893 | | |
| - | | |
| | | |
| - | | |
| 34,076 | | |
| 1,123,639 | |
Chief
Legal Officer & General Counsel(5) | |
| 2022 | | |
| 368,958 | | |
| 246,697 | | |
| - | | |
| - | | |
| 218,064 | | |
| - | | |
| 833,719 | |
Option
awards represent granted options at the fair market value as of the date of grant. Restricted stock units represent granted restricted
stock units at the fair market value as of the date of grant.
(1) | In
February 2023, the Company formed a subsidiary, Pearsanta, Inc. in order to accelerate the
growth of the Company’s AditxtScore program through future strategic revenue and growth
oriented transactions. In connection with the formation of Pearsanta and Corinne Pankovcin’s
anticipated role in driving such strategic revenue and growth oriented transactions, Ms.
Pankovcin’ s title was changed from President to Chief Commercialization Officer, effective
April 12, 2023. |
(2) | Ms.
Pankovcin served as the Company’s Chief Financial Officer from July 2020 through September
25, 2021. She was appointed as our President on September 25, 2021. Ms. Pankovcin’s
title was changed from President to Chief Commercialization Officer effective April 12, 2023. |
(3) | Mr.
Shatzkes joined Aditxt in January of 2022. Mr. Shatzkes departed Aditxt in July of 2023. |
| |
(4) | All
other compensation is inclusive of Pearsanta, Inc. option grants to Mr. Albanna, Dr. Shabahang,
Ms. Pankovcin, and Mr. Farley. Mr. Shatzkes received consideration in connection with the
Separation and General Release agreement. |
Employment
Agreements
Amro
Albanna, Chief Executive Officer
On
November 14, 2021, the Company entered into an Amended and Restated Employment Agreement with Mr. Amro Albanna, the Chief Executive Officer
of the Company (the “Amro Employment Agreement”). Pursuant to the Amro Employment Agreement, Mr. Albanna will receive (i)
a base salary at the annual rate of $280,000 for the remainder of calendar year 2021, and effective January 1, 2022, $500,000 (prorated
for any partial year) payable in bimonthly installments (ii) the opportunity to earn an annual bonus of 2% of the Company’s earnings
before interest, taxes, depreciation, and amortization (EBITDA) with respect to an applicable year for which the bonus is payable, provided
that such bonus will not exceed two (2) times Mr. Albanna’s base salary, and (iii) eligible to earn an annual discretionary bonus
as determined by the Board or its Compensation Committee in their sole discretion. In addition, for calendar year 2021, Mr. Albanna will
be eligible to earn an additional discretionary bonus as determined by the Company.
The
term of Mr. Albanna’s engagement under the Amro Employment Agreement commences as of the Effective Date (as defined in the Amro
Employment Agreement) and continues until November 14, 2023, unless earlier terminated in accordance with the terms of the Amro Employment
Agreement. The term of Mr. Albanna’s Employment Agreement is automatically renewed for successive one (1) year periods until terminated
by Mr. Albanna or the Company.
Under
the Amro Employment Agreement, termination of Mr. Albanna by the Company for “Cause,” “Death,” or “Disability,”
(as such terms are defined in the Amro Employment Agreement), or resignation by Mr. Albanna without “Good Reason” (as defined
in the Amro Employment Agreement), will not require the Company to pay severance to Mr. Albanna. Upon any such termination, Mr. Albanna
will be entitled to receive any Accrued Compensation (as defined in the Amro Employment Agreement), which in the case of termination
by the Company for Cause or resignation by Mr. Albanna for Good Reason will not include payment of pro rata bonus; provided,
however, if termination of Mr. Albanna by the Company without “Cause” or resignation by Mr. Albanna for “Good
Reason,” then under the Amro Employment Agreement will require the Company to pay severance to Mr. Albanna. Upon any such termination,
Mr. Albanna will be entitled to receive any Accrued Compensation and, subject to Mr. Albanna’s execution of an irrevocable release,
receive (i) on the sixtieth day (60th) day following termination, a lump sum amount equal to twelve (12) months base salary then in effect
as of the date of termination, less applicable taxes and withholdings; (ii) provide reimbursement to Mr. Albanna’s medical insurance
premiums for a period of twelve (12) months following the date of termination; and (iii) cause any equity awards granted prior to the
Effective Date (as defined in the Amro Employment Agreement), that are then outstanding and unvested to immediately vest and, with respect
to all options and stock appreciation rights, to become fully exercisable.
Notwithstanding
the foregoing, under the Amro Employment Agreement, termination of Mr. Albanna by the Company without Cause or resignation by Mr. Albanna
for Good Reason and a Change of Control (as defined in the Amro Employment Agreement) of the Company occurs within six (6) months after
such termination, or within twenty-four (24) months prior to such termination, the Company will pay severance to Mr. Albanna in connection
to such termination. Upon such termination, Mr. Albanna will be entitled to receive any Accrued Compensation, and subject to Mr. Albanna’s
execution of an irrevocable release, receive (i) on the sixtieth (60th) day of termination, a lump sum cash-payment equal to the product
of three times Mr. Albanna’s salary then in effect as of the date of termination, less applicable taxes and withholdings; (ii)
provide reimbursement to Mr. Albanna’s medical insurance premiums for a period of twenty-four (24) months following the date of
termination; and (iii) notwithstanding any provision of any stock incentive plan, stock option agreement, realization bonus, restricted
stock agreement or other agreement relating to capital stock of the Company, cause any equity awards granted prior to the that are then
outstanding and unvested to immediately vest and, with respect to all options and stock appreciation rights, to become fully exercisable
for twenty-four (24) months (but not later than when the award would otherwise expire).
The
Amro Employment Agreement also contains customary non-solicitation and non-competition covenants, which covenants remain in effect for
twelve (12) months following any cessation of employment with respect to Mr. Albanna. To the extent any of the payments or benefits provided
for under the Amro Employment Agreement or any other agreement or arrangement between Mr. Albanna and the Company (collectively, the
“Payments”), (a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section
280G”) of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject
to the excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Mr. Albanna the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments not in excess
of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Corinne
Pankovcin, Chief Commercialization Officer
On
November 14, 2021, Aditxt, Inc. (the “Company”) entered into a new employment agreement (the “Pankovcin Employment
Agreement”) with the Company’s President, Corinne Pankovcin, pursuant to which Ms. Pankovcin will continue to serve as the
Company’s President and Secretary until the date upon which Ms. Pankovcin’s employment may be terminated in accordance with
the terms of the Pankovcin Employment Agreement.
The
term of Ms. Pankovcin’s engagement under the Pankovcin Employment Agreement commences as of the Effective Date (as defined in the
Pankovcin Employment Agreement) and continues until November 14, 2023, unless earlier terminated in accordance with the terms of the
Pankovcin Employment Agreement. The term of Ms. Pankovcin’s Employment Agreement is automatically renewed for successive one (1)
year periods until terminated by Ms. Pankovcin or the Company.
Pursuant
to the Pankovcin Employment Agreement, Ms. Pankovcin will receive: (i) a base salary at the annual rate of $250,000 for the remainder
of calendar year 2021, and effective January 1, 2022, $385,000 (prorated for any partial year) payable in bimonthly installments and
(ii) eligible to earn an annual discretionary bonus with a target amount of 45% of Base Compensation, which is based on the achievement
of performance objectives, which will be determined by the Board and Compensation Committee. In addition, for calendar year 2021, Ms.
Pankovcin shall be eligible to earn an additional discretionary bonus as determined by the Company.
Under
the Pankovcin Employment Agreement, termination of Ms. Pankovcin by the Company for “Cause,” “Death,” or “Disability,”
(as such terms are defined in the Pankovcin Employment Agreement), or resignation by Ms. Pankovcin for “Good Reason” (as
defined in the Pankovcin Employment Agreement), will not require the Company to pay severance to Ms. Pankovcin. Upon any such termination,
Ms. Pankovcin will be entitled to receive any Accrued Compensation (as defined in the Pankovcin Employment Agreement), which in the case
of termination by the Company for Cause or resignation by Ms. Pankovcin for Good Reason will not include payment of pro rata bonus; provided,
however, if termination of Ms. Pankovcin by the Company without “Cause” or resignation by Ms. Pankovcin for
“Good Reason,” then under the Pankovcin Employment Agreement will require the Company to pay severance to Ms. Pankovcin.
Upon any such termination, Ms. Pankovcin will be entitled to receive any Accrued Compensation and, subject to Ms. Pankovcin’s execution
of an irrevocable release, receive: (i) on the sixtieth day (60th) day following termination, a lump sum amount equal to twelve (12)
months base salary then in effect as of the date of termination, less applicable taxes and withholdings; (ii) provide reimbursement to
Ms. Pankovcin’s medical insurance premiums for a period of twelve (12) months following the date of termination; and (iii) cause
any equity awards granted prior to the Effective Date (as defined in the Pankovcin Employment Agreement), that are then outstanding and
unvested to immediately vest and, with respect to all options and stock appreciation rights, to become fully exercisable.
Notwithstanding
the foregoing, under the Pankovcin Employment Agreement, termination of Ms. Pankovcin by the Company without Cause or resignation by
Ms. Pankovcin for Good Reason and a Change of Control (as defined in the Pankovcin Employment Agreement) of the Company occurs within
six (6) months after such termination, or within twenty-four (24) months prior to such termination, the Company will pay severance to
Ms. Pankovcin in connection to such termination. Upon such termination, Ms. Pankovcin will be entitled to receive any Accrued Compensation,
and subject to Ms. Pankovcin’s execution of an irrevocable release, receive (i) on the sixtieth (60th) day of termination, a lump
sum cash-payment equal to the sum of (A) the product of two times Ms. Pankovcin’s salary then in effect as of the date of termination,
less applicable taxes and withholdings, and (B) the product of two times Ms. Pankovcin’s Target Bonus; (ii) provide reimbursement
to Ms. Pankovcin’s medical insurance premiums for a period of twenty-four (24) months following the date of termination; and (iii)
notwithstanding any provision of any stock incentive plan, stock option agreement, realization bonus, restricted stock agreement or other
agreement relating to capital stock of the Company, cause any equity awards granted prior to the that are then outstanding and unvested
to immediately vest and, with respect to all options and stock appreciation rights, to become fully exercisable for twenty-four (24)
months (but not later than when the award would otherwise expire).
The
Pankovcin Employment Agreement also contains customary non-solicitation and non-competition covenants, which covenants remain in effect
for twelve (12) months following any cessation of employment with respect to Ms. Pankovcin. To the extent any of the payments or benefits
provided for under the Pankovcin Employment Agreement or any other agreement or arrangement between Ms. Pankovcin and the Company (collectively,
the “Payments”), (a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section
280G”) of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject
to the excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Ms. Pankovcin the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments not in excess
of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Thomas
J. Farley, Chief Financial Officer
On
November 14, 2021, Aditxt, Inc. (the “Company”) entered into a new employment agreement (the “Farley Employment Agreement”)
with the Company’s Chief Financial Officer, Thomas Farley, pursuant to which Mr. Farley will continue to serve as the Company’s
Chief Financial Officer until the date upon which Mr. Farley’s employment may be terminated in accordance with the terms of the
Farley Employment Agreement.
The
term of Mr. Farley’s engagement under the Farley Employment Agreement commences as of the Effective Date (as defined in the Farley
Employment Agreement) and continues until November 14, 2023, unless earlier terminated in accordance with the terms of the Farley Employment
Agreement. The term of Mr. Farley’s Employment Agreement is automatically renewed for successive one (1) year periods until terminated
by Mr. Farley or the Company.
Pursuant
to the Farley Employment Agreement, Mr. Farley will receive: (i) a base salary at the annual rate of $225,000 for the remainder of calendar
year 2021, and effective January 1, 2022, $355,000 (prorated for any partial year) payable in bimonthly installments and, (ii) eligible
to earn an annual discretionary bonus with a target amount of 40% of Base Compensation, which is based on the achievement of performance
objectives, which will be determined by the Board and Compensation Committee. In addition, for calendar year 2021, Mr. Farley will be
eligible to earn an additional discretionary bonus as determined by the Company.
Under
the Farley Employment Agreement, termination of Mr. Farley by the Company for “Cause,” “Death,” or “Disability,”
(as such terms are defined in the Farley Employment Agreement), or resignation by Mr. Farley without “Good Reason” (as defined
in the Farley Employment Agreement), will not require the Company to pay severance to Mr. Farley. Upon any such termination, Mr. Farley
will be entitled to receive any Accrued Compensation (as defined in the Farley Employment Agreement which in the case of termination
by the Company for Cause or resignation by Mr. Farley for Good Reason will not include payment of pro rata bonus; provided,
however, if termination of Mr. Farley by the Company without “Cause” or resignation by Mr. Farley for “Good
Reason,” then under the Farley Employment Agreement will require the Company to pay severance to Mr. Farley. Upon any such termination,
Mr. Farley will be entitled to receive any Accrued Compensation and, subject to Mr. Farley’s execution of an irrevocable release,
receive (i) on the sixtieth day (60th) day following termination, a lump sum cash-payment equal to the sum of (A) the product of two
times Mr. Farley’s salary then in effect as of the date of termination, less applicable taxes and withholdings, and (B) the product
of two times Mr. Farley’s Target Bonus (as defined in the Farley Employment Agreement); (ii) provide reimbursement to Mr. Farley’s
medical insurance premiums for a period of twelve (12) months following the date of termination; and (iii) cause any equity awards granted
prior to the Effective Date (as defined in the Farley Employment Agreement), that are then outstanding and unvested to immediately vest
and, with respect to all options and stock appreciation rights, to become fully exercisable.
Notwithstanding
the foregoing, under the Farley Employment Agreement, termination of Mr. Farley by the Company without Cause or resignation by Mr. Farley
for Good Reason and a Change of Control (as defined in the Farley Employment Agreement) of the Company occurs within six (6) months after
such termination, or within twenty-four (24) months prior to such termination, the Company will pay severance to Mr. Farley in connection
to such termination. Upon such termination, Mr. Farley will be entitled to receive any Accrued Compensation, and subject to Mr. Farley’s
execution of an irrevocable release, receive (i) on the sixtieth (60th) day of termination, a lump sum cash-payment equal to the product
of two times Mr. Farley’s salary then in effect as of the date of termination, less applicable taxes and withholdings; (ii) provide
reimbursement to Mr. Farley’s medical insurance premiums for a period of twelve (12) months following the date of termination;
and (iii) notwithstanding any provision of any stock incentive plan, stock option agreement, realization bonus, restricted stock agreement
or other agreement relating to capital stock of the Company, cause any equity awards granted prior to the that are then outstanding and
unvested to immediately vest and, with respect to all options and stock appreciation rights, to become fully exercisable (but not later
than when the award would otherwise expire).
The
Farley Employment Agreement also contains customary non-solicitation and non-competition covenants, which covenants remain in effect
for twelve (12) months following any cessation of employment with respect to Mr. Farley. To the extent any of the payments or benefits
provided for under the Farley Employment Agreement or any other agreement or arrangement between Mr. Farley and the Company (collectively,
the “Payments”), (a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section
280G”) of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject
to the excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Mr. Farley the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments not in excess
of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Shahrokh
Shabahang, Chief Innovation Officer
On
November 14, 2021, Aditxt, Inc. (the “Company”) entered into a new employment agreement (the “Shabahang Employment
Agreement”) with the Company’s Chief Innovation Officer, Shahrokh Shabahang, pursuant to which Mr. Shabahang will continue
to serve as the Company’s Chief Innovation Officer until the date upon which Mr. Shabahang’s employment may be terminated
in accordance with the terms of the Shabahang Employment Agreement.
The
term of Mr. Shabahang’s engagement under the Shabahang Employment Agreement commences as of the Effective Date (as defined in the
Shabahang Employment Agreement) and continues until November 14, 2023, unless earlier terminated in accordance with the terms of the
Shabahang Employment Agreement. The term of Mr. Shabahang’s Employment Agreement is automatically renewed for successive one (1)
year periods until terminated by Mr. Shabahang or the Company.
Pursuant
to the Shabahang Employment Agreement, Mr. Shabahang will receive: (i) a base salary at the annual rate of $210,000 for the remainder
of calendar year 2021, and effective January 1, 2022, $325,000 (prorated for any partial year) payable in bimonthly installments, and
(ii) eligible to earn an annual discretionary bonus with a target amount of 40% of Base Compensation, which is based on the achievement
of performance objectives, which will be determined by the Board and Compensation Committee. In addition, for calendar year 2021, Mr.
Shabahang will be eligible to earn an additional discretionary bonus as determined by the Company.
Under
the Shabahang Employment Agreement, termination of Mr. Shabahang by the Company for “Cause,” “Death,” or “Disability,”
(as such terms are defined in the Shabahang Employment Agreement), or resignation by Mr. Shabahang without “Good Reason”
(as defined in the Shabahang Employment Agreement), will not require the Company to pay severance to Mr. Shabahang. Upon any such termination,
Mr. Shabahang will be entitled to receive any Accrued Compensation (as defined in the Shabahang Employment Agreement), which in the case
of termination by the Company for Cause or resignation by Mr. Shabahang for Good Reason will not include payment of pro rata bonus; provided,
however, if termination of Mr. Shabahang by the Company without “Cause” or resignation by Mr. Shabahang for
“Good Reason,” then under the Shabahang Employment Agreement will require the Company to pay severance to Mr. Shabahang.
Upon any such termination, Mr. Shabahang will be entitled to receive any Accrued Compensation and, subject to Mr. Shabahang’s execution
of an irrevocable release, receive: (i) on the sixtieth day (60th) day following termination, a lump sum cash-payment equal to the sum
of (A) the product of two times Mr. Shabahangs’s salary then in effect as of the date of termination, less applicable taxes and
withholdings, and (B) the product of two times Mr. Shabahang’s Target Bonus (as defined in the Shabahang Employment Agreement);
(ii) provide reimbursement to Mr. Shabahang’s medical insurance premiums for a period of twelve (12) months following the date
of termination; and (iii) cause any equity awards granted prior to the Effective Date (as defined in the Shabahang Employment Agreement),
that are then outstanding and unvested to immediately vest and, with respect to all options and stock appreciation rights, to become
fully exercisable.
Notwithstanding
the foregoing, under the Shabahang Employment Agreement, termination of Mr. Shabahang by the Company for without Cause or resignation
by Mr. Shabahang for Good Reason and a Change of Control (as defined in the Shabahang Employment Agreement) of the Company occurs within
six (6) months after such termination, or within twenty-four (24) months prior to such termination, the Company will pay severance to
Mr. Shabahang in connection to such termination. Upon such termination, Mr. Shabahang will be entitled to receive any Accrued Compensation,
and subject to Mr. Shabahang’s execution of an irrevocable release, receive: (i) on the sixtieth (60th) day of termination, a lump
sum cash-payment equal to the product of two times Mr. Shabahang’s salary then in effect as of the date of termination, less applicable
taxes and withholdings; (ii) provide reimbursement to Mr. Shabahang’s medical insurance premiums for a period of twenty-four (24)
months following the date of termination; and (iii) notwithstanding any provision of any stock incentive plan, stock option agreement,
realization bonus, restricted stock agreement or other agreement relating to capital stock of the Company, cause any equity awards granted
prior to the that are then outstanding and unvested to immediately vest and, with respect to all options and stock appreciation rights,
to become fully exercisable for twenty-four (24) months (but not later than when the award would otherwise expire).
The
Shabahang Employment Agreement also contains customary non-solicitation and non-competition covenants, which covenants remain in effect
for twelve (12) months following any cessation of employment with respect to Mr. Shabahang. To the extent any of the payments or benefits
provided for under the Shabahang Employment Agreement or any other agreement or arrangement between Mr. Shabahang and the Company (collectively,
the “Payments”), (a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section
280G”) of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject
to the excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Mr. Shabahang the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments not in excess
of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Rowena
Albanna, Chief Operating Officer
On
November 14, 2021, Aditxt, Inc. (the “Company”) entered into a new employment agreement (the “Rowena Employment Agreement”)
with the Company’s Chief Operating Officer, Rowena Albanna, pursuant to which Ms. Albanna will continue to serve as the Company’s
Chief Operating Officer until the date upon which Ms. Albanna’s employment may be terminated in accordance with the terms of the
Rowena Employment Agreement.
The
term of Ms. Albanna’s engagement under the Rowena Employment Agreement commences as of the Effective Date (as defined in the Rowena
Employment Agreement) and continues until November 14, 2023, unless earlier terminated in accordance with the terms of the Rowena Employment
Agreement. The term of Ms. Albanna’s Employment Agreement is automatically renewed for successive one (1) year periods until terminated
by Ms. Albanna or the Company.
Pursuant
to the Rowena Employment Agreement, Ms. Albanna will receive: (i) a base salary at the annual rate of $210,000 for the remainder of calendar
year 2021 and effective January 1, 2022, $325,000 (prorated for any partial year) payable in bimonthly installments, and (ii) eligible
to earn an annual discretionary bonus with a target amount of 40% of Base Compensation, which is based on the achievement of performance
objectives, which will be determined by the Board and Compensation Committee. In addition, for calendar year 2021, Ms. Albanna will be
eligible to earn an additional discretionary bonus as determined by the Company.
Under
the Rowena Employment Agreement, termination of Ms. Albanna by the Company for “Cause,” “Death,” or “Disability,”
(as such terms are defined in the Rowena Employment Agreement), or resignation by Ms. Albanna for “Good Reason” (as defined
in the Rowena Employment Agreement), will not require the Company to pay severance to Ms. Albanna. Upon any such termination, Ms. Albanna
will be entitled to receive any Accrued Compensation (as defined in the Rowena Employment Agreement), which in the case of termination
by the Company for Cause or resignation by Ms. Albanna for Good Reason will not include payment of pro rata bonus; provided,
however, if termination of Ms. Albanna by the Company without “Cause” or resignation by Ms. Albanna for “Good
Reason” (as such terms are defined in the Rowena Employment Agreement), then under the Rowena Employment Agreement will require
the Company to pay severance to Ms. Albanna. Upon any such termination, Ms. Albanna will be entitled to receive any Accrued Compensation
and, subject to Ms. Albanna’s execution of an irrevocable release, receive: (i) on the sixtieth day (60th) day following termination,
a lump sum amount equal to twelve (12) months base salary then in effect as of the date of termination, less applicable taxes and withholdings;
(ii) provide reimbursement to Ms. Albanna’s medical insurance premiums for a period of twelve (12) months following the date of
termination; and (iii) cause any equity awards granted prior to the Effective Date (as defined in the Rowena Employment Agreement), that
are then outstanding and unvested to immediately vest and, with respect to all options and stock appreciation rights, to become fully
exercisable.
Notwithstanding
the foregoing, under the Rowena Employment Agreement, termination of Ms. Albanna by the Company without Cause or resignation by Ms. Albanna
for Good Reason and a Change of Control (as defined in the Rowena Employment Agreement) of the Company occurs within six (6) months after
such termination, or within twenty-four (24) months prior to such termination, the Company will pay severance to Ms. Albanna in connection
to such termination. Upon such termination, Ms. Albanna will be entitled to receive any Accrued Compensation, and subject to Ms. Albanna’s
execution of an irrevocable release, receive: (i) on the sixtieth (60th) day of termination, a lump sum cash-payment equal to the sum
of (A) the product of two times Ms. Albanna’s salary then in effect as of the date of termination, less applicable taxes and withholdings,
and (B) the product of two times Ms. Albanna’s Target Bonus; (ii) provide reimbursement to Ms. Albanna’s medical insurance
premiums for a period of twenty-four (24) months following the date of termination; and (iii) notwithstanding any provision of any stock
incentive plan, stock option agreement, realization bonus, restricted stock agreement or other agreement relating to capital stock of
the Company, cause any equity awards granted prior to the that are then outstanding and unvested to immediately vest and, with respect
to all options and stock appreciation rights, to become fully exercisable for twenty-four (24) months (but not later than when the award
would otherwise expire).
The
Rowena Employment Agreement also contains customary non-solicitation and non-competition covenants, which covenants remain in effect
for twelve (12) months following any cessation of employment with respect to Ms. Albanna. To the extent any of the payments or benefits
provided for under the Rowena Employment Agreement or any other agreement or arrangement between Ms. Albanna and the Company (collectively,
the “Payments”), (a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section
280G”) of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject
to the excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Ms. Albanna the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments not in excess
of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Matthew
Shatzkes, Former Chief Legal Officer and General Counsel
On
January 28, 2022, Aditxt, Inc. (the “Company”) entered into an employment agreement (the “Employment Agreement”)
with Matthew Shatzkes, the Chief Legal Officer and General Counsel of the Company. Pursuant to the Employment Agreement, Mr. Shatzkes
will (i) receive a base salary at the annual rate of $385,000 (the “Base Compensation”) payable in bimonthly installments,
(ii) receive a one-time sign-on bonus (the “Sign-on Bonus”), (iii) a minimum 2022 quarterly bonus (the “Minimum 2022
Bonus”), and (iv) will be entitled to earn an annual discretionary bonus beginning in fiscal year 2022.
Following
the first anniversary of the Employment Agreement (the “Anniversary Date”), in addition to Mr. Shatzkes’ Base Compensation,
Mr. Shatzkes will be entitled to a minimum quarterly bonus (the “Subsequent Year Minimum Bonus”). Following the Anniversary
Date, in addition to Mr. Shatzkes’ Base Compensation and Subsequent Year Minimum Bonus, Mr. Shatzkes will also be eligible to earn
an annual discretionary bonus.
Under
the Employment Agreement, Mr. Shatzkes will also receive (i) a restricted stock unit award that will entitle Mr. Shatzkes to receive
150,000 shares of the Company’s common stock which shall vest immediately, and (ii) a restricted stock unit award of an additional
330,000 shares of the Company’s common stock, which shall vest ratably over eight successive equal quarterly installments over
a two-year period commencing on March 1, 2022 and ending on December 1, 2023.
The
term of Mr. Shatzkes engagement under the Employment Agreement commences on the Effective Date (as defined in the Employment Agreement)
and continues until January 16, 2024, unless earlier terminated in accordance with the terms of the Employment Agreement. The term of
Mr. Shatzkes’ Employment Agreement is automatically renewed for successive one-year periods until terminated by Mr. Shatzkes or
the Company.
Under
the Employment Agreement, termination of Mr. Shatzkes by the Company for “Cause,” “Death,” or “Disability,”
(as such terms are defined in the Employment Agreement), or resignation by Mr. Shatzkes without “Good Reason” (as defined
in the Employment Agreement), will not require the Company to pay severance to Mr. Shatzkes. Upon any such termination, Mr. Shatzkes
will be entitled to receive any Accrued Compensation (as defined in the Employment Agreement), which in the case of termination by the
Company for Cause or resignation by Mr. Shatzkes for Good Reason will not include payment of pro rata bonus. If, however, termination
of Mr. Shatzkes by the Company without “Cause”, resignation by Mr. Shatzkes for “Good Reason” or and a Change
of Control (as defined in the Employment Agreement) event occurs, then the Employment Agreement will require the Company to pay severance
to Mr. Shatzkes. Upon any such termination, Mr. Shatzkes will be entitled to receive any Accrued Compensation and, subject to Mr. Shatzkes’
execution of an irrevocable release, (i) on the sixtieth day following termination, a lump sum amount equal (a) twelve months of his
Base Compensation, Sign-on Bonus and Minimum 2022 Bonus if his Employment Agreement is terminated prior to December 31, 2022, or (b)
his Base Compensation and Subsequent Year Minimum Bonus if his Employment Agreement is terminated after December 31, 2022; (ii) provide
reimbursement to Mr. Shatzkes’ medical insurance premiums for a period of twelve months following the date of termination; and
(iii) notwithstanding any provision of any stock incentive plan, stock option agreement, realization bonus, restricted stock agreement
or other agreement relating to capital stock of the Company, cause any equity awards granted prior to that termination that are then
outstanding and unvested to immediately vest and, with respect to all options and stock appreciation rights, to become fully exercisable.
To
the extent any of the payments or benefits provided for under the Employment Agreement or any other agreement or arrangement between
Mr. Shatzkes and the Company (collectively, the “Payments”), (a) constitute an “excess parachute payment” within
the meaning of Section 280G (“Section 280G”) of the Internal Revenue Code of 1986, as amended and restated (the “Code”),
and (b) would otherwise be subject to the excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company
will pay or provide the greater (whichever gives Mr. Shatzkes the highest net after-tax amount) of (i) all of the Payments or (ii) the
portion of Payments not in excess of the greatest amount of Payments that can be paid that would not result in the imposition of the
excise tax under Section 4999.
On
July 21, 2023, Matthew Shatzkes tendered his resignation as Chief Legal Officer, General Counsel and Corporate Secretary of the Company.
In connection with his resignation, the Company entered into a Separation Agreement and General Release (the “Separation Agreement”).
Pursuant to the Separation Agreement, Mr. Shatzkes employment with the Company terminated on August 4, 2023 (the “Termination Date”).
In addition, the Company agreed to pay Mr. Shatzkes within seven days after the Termination Date: (i) $122,292.32, representing all accrued
salary and wages (inclusive of Base Compensation and earned Subsequent Quarterly Bonus amounts, as those terms are defined in Mr. Shatzkes
employment agreement), and (ii) $32,575.84, representing Mr. Shatzkes accrued, but unused paid time off. The Company also agreed to pay
Mr. Shatzkes: (i) $385,000, representing 12 months of Mr. Shatzkes Base Compensation (as that term is defined in Mr. Shatzkes employment
agreement), and (ii) $290,000, representing Mr. Shatzkes Subsequent Year Minimum Bonus (as such term is defined in Mr. Shatzkes employment
agreement), on the 60th day following the Termination Date. In addition, the Company shall reimburse Mr. Shatzkes COBRA premium for a
period of 12 months and shall cause any restricted stock units granted to Mr. Shatzkes to immediately vest as of the Termination Date.
On
August 15, 2023, the Company entered into an Amendment to Separation Agreement and General Release with Mr. Shatzkes (the “Separation
Agreement Amendment”). Pursuant to the Separation Agreement Amendment, the Company was required to pay Mr. Shatzkes, upon the earlier
of (i) September 1, 2023 or (ii) two business days following the closing of a capital raise by the Company, an amount equal to $91,060.16,
which amount represents the balance of Mr. Shatzkes’ Accrued Salary and Wages and Accrued PTO plus an additional $1,000 to serve
as consideration for entering into the Separation Agreement Amendment. In addition, under the Separation Agreement Amendment, the Company
was required to pay Mr. Shatzkes the Severance Base Compensation and the Severance Bonus upon the earlier of (i) the 60th day
following the Termination Date or (ii) two business days following the closing of a capital raise by the Company.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Except
as described below and except for employment arrangements which are described under “executive compensation,” since January 1,
2018, there has not been, nor is there currently proposed, any transaction in which we are or were a participant, the amount involved
exceeds the lesser of $120,000 or 1% of the average of the total assets at December 31, 2022 and 2021, and any of our directors,
executive officers, holders of more than 5% of our Common Stock or any immediate family member of any of the foregoing had or will have
a direct or indirect material interest.
On
December 6, 2023, Amro Albanna, the Chief Executive Officer of the Company loaned $200,000 to the Company. The loan was evidenced by
an unsecured promissory note (the “December Note”). Pursuant to the terms of the December Note, it will accrue interest at
the Prime rate of eight and one-half percent (8.5%) per annum and is due on the earlier of June 6, 2024 or an event of default, as defined
therein.
On
November 30, 2023, Amro Albanna, the Chief Executive Officer of the Company loaned $10,000 to the Company. The loan was evidenced by
an unsecured promissory note (the “November Note”). Pursuant to the terms of the November Note, it will accrue interest at
the Prime rate of eight and one-half percent (8.5%) per annum and is due on the earlier of May 30, 2024 or an event of default, as defined
therein.
On
June 12, 2023, Amro Albanna, the Chief Executive Officer of the Company and Shahrokh Shabahang, the Chief Innovation Officer of the Company,
loaned $200,000 and $100,000, respectively, to the Company. The loans were evidenced by an unsecured promissory note (the “June
Notes”). Pursuant to the terms of the June Notes, each of the June Notes will accrue interest at the Prime rate of eight and one-quarter
percent (8.25%) per annum and is due on the earlier of December 12, 2023 or an event of default, as defined therein.
On
April 21, 2023, Amro Albanna, the Chief Executive Officer of the Company, and Shahrokh Shabahang, the Chief Innovation Officer of the
Company, loaned $87,523 and $100,000, respectively, to the Company. The loans were each evidenced by an unsecured promissory note
(the “April Note”). Pursuant to the terms each April Note, it will accrue interest at the Prime rate of eight percent (8.00%)
per annum and is due on the earlier of October 21, 2023, or an event of default, as defined therein. As of September 30, 2023, the note
was fully paid off.
On
May 25, 2023, Amro Albanna, the Chief Executive Officer of the Company, loaned $200,000 to the Company. The loan was evidenced by
an unsecured promissory note (the “May Note”). Pursuant to the terms of the May Note, it will accrue interest at a rate of
eight and one-quarter percent (8.25%) per annum, the Prime rate on the date of signing, and is due on the earlier of November 25, 2023
or an event of default, as defined therein. As of September 30, 2023, the note was fully paid off.
On
June 12, 2023, Amro Albanna, the Chief Executive Officer of the Company, and Shahrokh Shabahang, the Chief Innovation Officer of the
Company, loaned $200,000 and $100,000, respectively, to the Company. The loans were evidenced by an unsecured promissory note (the
“June Note”). Pursuant to the terms of the June Note, it will accrue interest at the Prime rate of eight and one-quarter
percent (8.25%) per annum and is due on the earlier of December 12, 2023, or an event of default, as defined therein. As of September
30, 2023, the June Note was fully paid off.
On
July 11, 2023, we entered into a Subscription and Investment Representation Agreement (the “Subscription Agreement”) with
Amro Albanna, its Chief Executive Officer, who is an accredited investor (the “Purchaser”), pursuant to which the Company
agreed to issue and sell one (1) share of the Company’s Series C Preferred Stock, par value $0.001 per share (the “Preferred
Stock”), to the Purchaser for $1,000.00 in cash. The sale closed on July 11, 2023.
On
July 19, 2022, we entered into a Subscription and Investment Representation Agreement (the “Subscription Agreement”) with
Amro Albanna, its Chief Executive Officer, who is an accredited investor (the “Purchaser”), pursuant to which the Company
agreed to issue and sell one (1) share of the Company’s Series B Preferred Stock, par value $0.001 per share (the “Preferred
Stock”), to the Purchaser for $20,000.00 in cash. The sale closed on July 19, 2022. The one share of Series B Preferred Stock was
redeemed by the Company on Pctober 7, 2022 for $20,000 following the approval of the 2022 reverse stock split.
During
the years ended December 31, 2019 and 2018, Rowena Albanna, the wife of Amro Albanna, our Chief Executive Officer, provided
the Company with operations consulting services. In July 2020, Ms. Albanna joined the Company as its Chief Operating Officer. As
of December 31, 2018, $112,000 was accrued as compensation. An additional $180,000 was expensed as compensation during the year
ended December 31, 2019, and $17,000 was paid on the accrued balance. As of December 31, 2019, $275,000 remained accrued and
outstanding.
On
January 22, 2018, the Company issued an unsecured promissory note to Sekris for $40,000 that accrued interest of 4% annually. The
note was due on the earlier of July 22, 2018 or in the event of default, as defined in the agreement. This note has been repaid
as of December 31, 2019.
On
February 12, 2018, the Company issued an unsecured promissory note to Sekris for $50,000 that accrued interest of 4% annually. The
note was due on the earlier of August 12, 2018 or in the event of default, as defined in the agreement. This note has been repaid
as of December 31, 2019.
On
March 2, 2018, the Company issued an unsecured promissory note to Sekris for $10,000 that accrued interest of 4% annually. The note
was due on the earlier of September 2, 2018 or in the event of default, as defined in the agreement. This note has been repaid as
of December 31, 2019.
On
March 8, 2018, we entered into an Assignment Agreement (the “Assignment Agreement”) with Sekris. See
“Summary — Overview — License Agreement with Loma Linda University.” Dr. Shabahang,
our Chief Innovative Officer, was the Chief Executive Officer of Sekris. Sekris was subsequently dissolved in 2019.
On
March 8, 2018, we issued a warrant to purchase up to 10,000 shares of our Common Stock to Sekris. On March 2, 2018, we
issued a 4% unsecured promissory note to Sekris in the principal amount of $10,000. Principal and interest was due on September 2,
2018 or immediately upon an event of default. On February 12, 2018, we issued a 4% unsecured promissory note to Sekris in the principal
amount of $50,000. Principal and interest was due on August 12, 2018 or immediately upon an event of default. On January 22,
2018, we issued a 4% unsecured promissory note to Sekris in the principal amount of $40,000. Principal and interest was due on July 22,
2018 or immediately upon an event of default.
On
June 18, 2018, the Company issued an unsecured promissory note to Sekris for $17,502 that accrued interest of 4% annually. The note
was due on the earlier of December 18, 2018 or in the event of default, as defined in the agreement. This note has been repaid as
of December 31, 2019.
On
January 1, 2019, we entered into a consulting agreement with Rowena Albanna, the wife of Amro Albanna, our Chief Executive Officer,
to perform operations consulting services. As part of this agreement, we pay Ms. Albanna $15,000 per month for her services. This agreement
terminated on June 30, 2020. In July 2020, Ms. Albanna joined the Company as its Chief Operating Officer.
On
March 21, 2019, we issued a promissory note to Dr. Shabahang, our Chief Innovative Officer. The note has a principal amount
of $10,000, was due on September 21, 2019, and bears an interest rate of 4% per year. This note remains outstanding.
During
the year ended December 31, 2019, we assumed an aggregate of $189,625 of liabilities from Sekris in exchange for the return of 94,813 shares
of our Common Stock.
On
January 20, 2020, we issued a promissory note to Brian Brady, a member of our board of directors. The note has a principal amount
of $50,000, was due on the earlier of April 19, 2020 or within 10 days of the closing of our initial public offering. This
note carried an original issue discount of $25,000. The note was amended on April 23, 2020 to extend the maturity date to the earlier
of June 30, 2020 or within 10 days of the closing of our initial public offering. This note was repaid in July 2020.
Review,
Approval and Ratification of Related Party Transactions
Given
our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification
of transactions, such as those described above, with our executive officer(s), Director(s) and significant stockholders. We intend to
establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional Directors, so
that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee
thereof. On a moving forward basis, our Directors will continue to approve any related party transaction.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth
certain information regarding beneficial ownership of shares of our common stock as of January 16, 2024 based on 1,665,214 shares issued
and outstanding by (i) each person known to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors,
(iii) our executive officers and (iv) all directors and executive officers as a group. Shares are beneficially owned when an individual
has voting and/or investment power over the shares or could obtain voting and/or investment power over the shares within 60 days of December
31, 2023. Except as otherwise indicated, the persons named in the table have sole voting and investment power with respect to all shares
beneficially owned, subject to community property laws, where applicable. Unless otherwise indicated, the address of each beneficial owner
listed below is c/o Aditxt, Inc., 737 N. Fifth Street, Suite 200, Richmond, VA 23219.
| |
Number
of
shares of
Common
Stock
Beneficially
Owned | | |
Percentage | |
Directors and Officers: | |
| | |
| |
Amro Albanna (1) | |
| 10,103 | | |
| * | % |
Shahrokh Shabahang, D.D.S., MS, Ph.D. (2) | |
| 7,780 | | |
| * | % |
Corinne Pankovcin (3) | |
| 4,966 | | |
| * | % |
Rowena Albanna (4) | |
| 4,956 | | |
| * | % |
Brian Brady (5) | |
| 488 | | |
| * | % |
Jeffrey Runge, M.D. (6) | |
| 483 | | |
| * | % |
Thomas J. Farley (7) | |
| 4,812 | | |
| * | % |
Charles Nelson (8) | |
| 731 | | |
| * | % |
All directors and executive
officers as a group (9 persons) | |
| 34,319 | | |
| 2.0 | % |
(1) | Includes
(i) 9,704 shares issuable pursuant to options that are fully vested; (ii) 228 shares beneficially
owned by the Albanna Family Trust, of which Mr. Albanna is the Trustee; (iii) 151 shares
directly owned by Mr. Albanna; and (iv) 20 Series A Warrants issued as part of the conversion
of outstanding accrued compensation through March 31, 2020. Mr. Albanna may be deemed to
beneficially own the securities held by his wife Rowena Albanna, the Company’s Chief
Operating Officer. |
(2) | Includes
(i) 7,108 beneficially owned by Shabahang-Hatami Family Trust, of which Shahrokh Shabahang,
D.D.S., MS, Ph.D. is the Trustee; (ii) warrants to purchase 111 shares, including 24 Series
A Warrants issued as part of the conversion of outstanding accrued compensation through March
31, 2020, and 87 warrants beneficially owned by the Shabahang-Hatami Family Trust; (iii)
561 shares directly owned by Mr. Shabahang. |
(3) | Includes
(i) 86 shares held directly by Ms. Pankovcin; and (ii) 4,880 shares issuable pursuant to
options that are fully vested. |
(4) | Includes
(i) 86 shares held directly by Ms. Albanna; (ii) 4,852 shares issuable pursuant to options
that are fully vested; and (iii) 18 Series A Warrants issued as part of the conversion of
outstanding accrued compensation through March 31, 2020. Ms. Albanna may be deemed to beneficially
own the securities held by her husband Amro Albanna, the Company’s Chief Executive
Officer. |
(5) | Includes
(i) 13 shares held directly by Mr. Brady; and (ii) 475 shares issuable pursuant to options
that are fully vested. |
(6) | Includes
(i) 2 shares held by Biologue, Inc., over which Dr. Runge has voting and dispositive control;
(ii) 6 shares held directly by Dr. Runge; and (iii) 475 shares issuable pursuant to options
that are fully vested. |
(7) | Includes
(i) 80 shares held directly by Mr. Farley and (ii) 4,732 shares issuable pursuant to options
that are fully vested. |
(8) | Includes
(i) 261 shares held by Siu Kim Athle International, LLC., over which Mr. Nelson has voting
and dispositive control and (ii) 470 shares issuable pursuant to options that are fully vested. |
DESCRIPTION
OF CAPITAL STOCK
General
The
following description of the Company’s capital stock and provisions of its Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws are summaries and are qualified by reference to the full text of the Company’s Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws.
Description
of Common Stock
The
following description of our Common Stock is a summary and does not purport to be complete. It is subject to and qualified
in its entirety by reference to our Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”)
and our Amended and Restated Bylaws (the “Bylaws”), each of which are incorporated by reference as an exhibit to our Annual
Report on Form 10-K. We encourage you to read our Certificate of Incorporation, Bylaws, and the applicable provisions of
the Delaware General Corporation Law for additional information.
Authorized
Capital Shares
Our authorized capital shares
consist of 100,000,000 shares of Common Stock, $0.001 par value per share, and 3,000,000 shares of preferred stock, $0.001 par value per
share. As of December 31, 2023, there were 1,665,214 shares of Common Stock issued and 1,665,214 shares of Common Stock outstanding. As
of December 31, 2023, there were 24,905 shares of preferred stock issued and outstanding, of which (i) 22,280 were designated as Series
A-1 Convertible Preferred Stock, and (ii) 2,625 were designated as Series B-2 Convertible Preferred Stock.
Voting
Rights
Holders
of Common Stock are entitled to one vote per share on all matters voted on by the stockholders, including the election of directors.
Our Certificate of Incorporation and Bylaws do not provide for cumulative voting in the election of directors.
Dividend
Rights
Holders
of the Company’s Common Stock are entitled to receive dividends, if any, as may be declared from time to time by the board of directors
in its discretion out of funds legally available for the payment of dividends.
Liquidation
Rights
In
the event of our liquidation, the holders of our Common Stock will be entitled to share ratably in any distribution of our assets after
payment of all debts and other liabilities and the preferences payable to holders of shares of Preferred Stock then outstanding, if any.
Applicable
Anti-Takeover Law
Set
forth below is a summary of the provisions of the Certificate of Incorporation and the Bylaws that could have the effect of delaying
or preventing a change in control of the Company. The following description is only a summary and it is qualified by refence to the Certificate
of Incorporation, the Bylaws and relevant provisions of the Delaware General Corporation Law.
Blank
Check Preferred Stock
The
Certificate of Incorporation authorizes 3,000,000 undesignated shares of Preferred Stock and permits our board of directors to issue
Preferred Stock with rights or preferences that could impede the success of any attempt to change control of the Company. For example,
our board of directors, without stockholder approval, may create or issue Preferred Stock with conversion rights that could adversely
affect the voting power of the holders of our Common Stock as well as rights to such Preferred Stock, in connection with implementing
a stockholder rights plan. This provision may be deemed to have a potential anti-takeover effect, because the issuance of such Preferred
Stock may delay or prevent a change of control of the Company. Furthermore, shares of Preferred Stock, if any are issued, may have other
rights, including economic rights, senior to Common Stock, and as a result, the issuance thereof could depress the market price of our
Common Stock.
Series
A-1 Convertible Preferred Stock
On
December 22, 2023, we filed a Certificate of Designation for its Series A-1 Preferred Stock with the Secretary of State of Delaware (the
“Series A-1 Certificate of Designations”). The following is only a summary of the Series A-1 Certificate of Designations,
and is qualified in its entirety by reference to the full text of the Series A-1 Certificate of Designations, a copy of which is filed
as Exhibit 3.1 to our Current Report on Form 8-K filed on December 26, 2023 and is incorporated by reference herein.
Designation,
Amount, and Par Value. The number of Series A-1 Preferred Stock designated is 22,280 shares. The shares of Series A-1 Preferred
Stock have a par value of $0.001 per share and a stated value of $1,000 per share.
Conversion
Price. The Series A-1 Preferred Stock will be convertible into shares of Common Stock at an initial conversion price of $4.44
(subject to adjustment pursuant to the Series A-1 Certificate of Designations) (the “Conversion Price”). The
Certificate of Designations also provides that in the event of certain Triggering Events (as defined below) any holder may, at any time,
convert any or all of such holder’s Series A-1 Preferred Stock at an alternate conversion rate equal to the product of (i) the
Alternate Conversion Price (as defined below) and (ii) the quotient of (x) the 25% redemption premium multiplied by (y) the amount of
Series A-1 Preferred Stock subject to such conversion. “Triggering Events” include, among others, (i) a suspension of trading
or the failure to be traded or listed on an eligible market for five consecutive days or more, (ii) the failure to remove restrictive
legends when required, (iii) the Company’s default in payment of indebtedness in an aggregate amount of $500,000 or more, (iv)
proceedings for a bankruptcy, insolvency, reorganization or liquidation, which are not dismissed with 30 days, (v) commencement of a
voluntary bankruptcy proceeding, and (viii) final judgments against the Company for the payment of money in excess of $100,000. “Alternate
Conversion Price” means the lowest of (i) the applicable conversion price the in effect, (ii) the greater of (x) $0.888 (the “Floor
Price”) and (y) 80% of the volume weighted average price (“VWAP”) of the Common Stock on the trading day immediately
preceding the delivery of the applicable conversion notice. Further, the Series A-1 Certificate of Designations provides that if on any
of the 90th and 180th day after each of the occurrence of any Stock Combination Event (as defined in the Series A-1 Certificate
of Designations) and the Applicable Date (as defined in the Series A-1 Certificate of Designations), the conversion price then in effect
is greater than the market price then in effect (the “Adjustment Price”), on such date then the conversion price shall automatically
lower to the Adjustment Price.
Dividends.
Holders of the Series A-1 Preferred Stock shall be entitled to receive dividends when and as declared by the Board, from time
to time, in its sole discretion, which Dividends shall be paid by the Company out of funds legally available therefor, payable, subject
to the conditions and other terms hereof, in cash, in securities of the Company or any other entity, or using assets as determined by
the Board on the Stated Value of such Preferred Share.
Liquidation. In
the event of a Liquidation Event (as defined in the Series A-1 Certificate of Designation), the holders the Series A-1 Preferred Stock
shall be entitled to receive in cash out of the assets of the Company, before any amount shall be paid to the holders of any other shares
of capital stock of the Company, equal to the greater of (A) 125% of the Conversion Amount (as defined in the Series A-1 Certificate
of Designation) on the date of such payment and (B) the amount per share such holder of Series A-1 Preferred Stock would receive if they
converted such share of Series A-1 Preferred Stock into Common Stock immediately prior to the date of such payment
Company
Redemption. The Company may redeem all, or any portion, of the Series A-1 Preferred Stock for cash, at a price per share
of Series A-1 Preferred Stock equal to 115% of the greater of (i) the Conversion Amount (as defined in the Series A-1 Certificate of
Designation)being redeemed as of the Company Optional Redemption Date (as defined in the Series A-1 Certificate of Designation) and (ii)
the product of (1) the Conversion Rate (as defined in the Series A-1 Certificate of Designation) with respect to the Conversion Amount
being redeemed as of the Company Optional Redemption Date multiplied by (2) the greatest Closing Sale Price (as defined in the Certificate
of Designation) of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Company Optional
Redemption Notice Date (as defined in the Certificate of Designation) and ending on the Trading Day immediately prior to the date the
Company makes the entire payment required to be made under the Certification of Designation.
Maximum
Percentage. Holders of Series A-1 Preferred Stock are prohibited from converting shares of Series A-1 Preferred Stock into shares
of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own in excess of 4.99%
(the “Maximum Percentage”) of the total number of shares of Common Stock issued and outstanding immediately after
giving effect to such conversion.
Voting
Rights. The holders of the Series A-1 Preferred Stock shall have no voting power and no right to vote on any matter at any
time, either as a separate series or class or together with any other series or class of share of capital stock, and shall not be entitled
to call a meeting of such holders for any purpose nor shall they be entitled to participate in any meeting of the holders of Common Stock,
except as expressly provided in the Certificate of Designations and where required by the DGCL.
Series
B-2 Convertible Preferred Stock
On
December 28, 2023, we filed a Certificate of Designations for its Series B-2 Preferred Stock with the Secretary of State of Delaware
(the “Series B-2 Certificate of Designations”). The following is only a summary of the Series B-2 Certificate of Designations,
and is qualified in its entirety by reference to the full text of the Series B-2 Certificate of Designations, a copy of which is filed
as an exhibit to our Current Report on Form 8-K filed with the SEC on January 2, 2024.
Designation,
Amount, and Par Value. The number of Series B-2 Preferred Stock designated is 2,625 shares. The shares of Series B-2 Preferred
Stock have a par value of $0.001 per share and a stated value of $1,000 per share.
Conversion
Price. The Series B-2 Preferred Stock will be convertible into shares of Common Stock at an initial conversion price of $4.71
(subject to adjustment pursuant to the Series B-2 Certificate of Designations) (the “Conversion Price”). The
Series B-2 Certificate of Designations also provides that in the event of certain Triggering Events (as defined below) any holder may,
at any time, convert any or all of such holder’s Series B-2 Preferred Stock
at an alternate conversion rate equal to the product of (i) the Alternate Conversion Price (as defined below) and (ii) the quotient of
(x) the 125% redemption premium multiplied by (y) the amount of Series B-2 Preferred
Stock subject to such conversion. “Triggering Events” include, among others, (i) a suspension of trading or the failure to
be traded or listed on an eligible market for five consecutive days or more, (ii) the failure to remove restrictive legends when required,
(iii) the Company’s default in payment of indebtedness in an aggregate amount of $500,000 or more, (iv) proceedings for a bankruptcy,
insolvency, reorganization or liquidation, which are not dismissed with 30 days, (v) commencement of a voluntary bankruptcy proceeding,
and (viii) final judgments against the Company for the payment of money in excess of $500,000. “Alternate Conversion Price”
means the lowest of (i) the applicable conversion price the in effect, (ii) the greater of (x) $0.9420 (the “Floor Price”)
and (y) 80% of the lowest volume weighted average price (“VWAP”) of the Common Stock during the five consecutive trading
day period ending and including the the trading day immediately preceding the delivery of the applicable conversion notice. Further,
the Series B-2 Certificate of Designations provides that if on any of the 90th
and 180th day after each of the occurrence of any Stock Combination Event (as defined in the Series B-2 Certificate
of Designations) and the Applicable Date (as defined in the Series B-2 Certificate
of Designations), the conversion price then in effect is greater than the market price then in effect (the “Adjustment Price”),
on such date then the conversion price shall automatically lower to the Adjustment Price.
Dividends.
Holders of the Series B-2 Preferred Stock shall be entitled to receive dividends when and as declared by the Board, from time
to time, in its sole discretion, which Dividends shall be paid by the Company out of funds legally available therefor, payable, subject
to the conditions and other terms hereof, in cash, in securities of the Company or any other entity, or using assets as determined by
the Board on the Stated Value of such Preferred Share.
Liquidation. In
the event of a Liquidation Event (as defined in the Series B-2 Certificate of Designations), the holders the Series B-2 Preferred Stock
shall be entitled to receive in cash out of the assets of the Company, before any amount shall be paid to the holders of any other shares
of capital stock of the Company, equal to the greater of (A) 125% of the Conversion Amount (as defined in the Series B-2 Certificate
of Designation) on the date of such payment and (B) the amount per share such holder of Series B-2 Preferred Stock would receive if they
converted such share of Series B-2 Preferred Stock into Common Stock immediately prior to the date of such payment.
Company
Redemption. The Company may redeem all, or any portion, of the Series B-2 Preferred Stock for cash, at a price per share
of Series B-2 Preferred Stock equal to 115% of the greater of (i) the Conversion Amount (as defined in the Series B-2 Certificate of
Designations) being redeemed as of the Company Optional Redemption Date (as defined in the Series B-2 Certificate of Designations) and
(ii) the product of (1) the Conversion Rate (as defined in the Series B-2 Certificate of Designations) with respect to the Conversion
Amount being redeemed as of the Company Optional Redemption Date multiplied by (2) the greatest Closing Sale Price (as defined in the
Series B-2 Certificate of Designations) of the Common Stock on any Trading Day during the period commencing on the date immediately preceding
such Company Optional Redemption Notice Date (as defined in the Series B-2 Certificate of Designations) and ending on the Trading Day
immediately prior to the date the Company makes the entire payment required to be made under the Certification of Designation.
Maximum
Percentage. Holders of Series B-2 Preferred Stock are prohibited from converting shares of Series B-2 Preferred Stock into shares
of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own in excess of 4.99%
(the “Maximum Percentage”) of the total number of shares of Common Stock issued and outstanding immediately after giving
effect to such conversion.
Voting
Rights. The holders of the Series B-2 Preferred Stock shall have no voting power and no right to vote on any matter at any
time, either as a separate series or class or together with any other series or class of share of capital stock, and shall not be entitled
to call a meeting of such holders for any purpose nor shall they be entitled to participate in any meeting of the holders of Common Stock,
except as expressly provided in the Series B-2 Certificate of Designations and where required by the DGCL.
No
Cumulative Voting
The
Certificate of Incorporation and the Bylaws do not provide holders of our Common Stock cumulative voting rights in the election of directors.
The absence of cumulative voting could have the effect of preventing stockholders holding a minority of our shares of Common Stock from
obtaining representation on our board of directors. The absence of cumulative voting might also, under certain circumstances, render
more difficult or discourage a merger, tender offer or proxy contest favored by a majority of our stockholders, the assumption of control
by a holder of a large block of our stock or the removal of incumbent management.
Advance
Notice Requirements for Stockholder Proposals and Director Nominees
The
Bylaws require stockholders seeking to make nominations of candidates for election as directors or to bring other business before a meeting
of our stockholders to provide timely notice of their intent in writing. To be timely, a stockholder’s notice must be delivered
to the Secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the
immediately preceding annual meeting of the stockholders; provided, however, that in the event that the date of the annual meeting is
more than 30 days before or after such anniversary date, notice by the stockholder to be timely must be so received not later than the
close of business on the tenth day following the earlier of the date on which we first give notice or publicly announce the date of the
meeting. A stockholder’s notice must include certain information about the stockholder and the nominee or proposal as specified
in the Bylaws. These advance notice provisions may restrict the ability of the stockholders to make nominations for directors at or bring
business before a meeting of the Company’s stockholders.
Listing
Our Common Stock is traded
on Nasdaq Capital Market under the trading symbol “ADTX”.
Transfer Agent
The Company’s transfer
agent is VStock Transfer, LLC.
Pre-Funded Warrants
General
The
term “pre-funded” refers to the fact that the purchase price of the pre-funded warrants in this offering includes
almost the entire exercise price that will be paid under the pre-funded warrants, except for a nominal remaining exercise price
of $0.001. The purpose of the pre-funded warrants is to enable investors that may have restrictions on their ability to beneficially
own more than 4.99% (or, at the election of such purchaser, 9.99%) of our outstanding Common Stock following the consummation of this
offering the opportunity to invest capital into the Company without triggering their ownership restrictions, by receiving pre-funded warrants
in lieu of shares of our Common Stock which would result in such ownership of more than 4.99% or 9.99%, as applicable, and receiving the
ability to exercise their option to purchase the shares underlying the pre-funded warrants at a nominal price at a later date.
The
following is a brief summary of certain terms and conditions of the pre-funded warrants being offered by us. The following
description is subject in all respects to the provisions contained in the form of pre-funded warrant, the form of which
will be filed as an exhibit to the registration statement of which this prospectus forms a part.
Exercise price
Pre-funded warrants will
have an exercise price of $0.001 per share. The exercise price is subject to appropriate adjustment in the event of certain stock dividends
and distributions, stock splits, stock combinations, reclassifications or similar events affecting our Common Stock and also upon any
distributions of assets, including cash, stock or other property to our stockholders.
Exercisability
The
pre-funded warrants are exercisable at any time after their original issuance and until exercised in full. The pre-funded warrants will
be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and by payment in
full of the exercise price in immediately available funds for the number of shares of Common Stock purchased upon such exercise. As an
alternative to payment in immediately available funds, the holder may elect to exercise the pre-funded warrant through a cashless exercise,
in which the holder would receive upon such exercise the net number of shares of Common Stock determined according to the formula set
forth in the pre-funded warrant. No fractional shares of Common Stock will be issued in connection with the exercise of a pre-funded
warrant.
Exercise limitations
The
pre-funded warrants may not be exercised by the holder to the extent that the holder, together with its affiliates, would beneficially
own, after such exercise more than 4.99% of the shares of our Common Stock then outstanding (including for such purpose the shares of
our Common Stock issuable upon such exercise). However, any holder may increase or decrease such beneficial ownership limitation upon
notice to us, provided that such limitation cannot exceed 9.99%, and provided that any increase in the beneficial ownership limitation
shall not be effective until 61 days after such notice is delivered. Purchasers of pre-funded warrants in this offering may also elect
prior to the issuance of the pre-funded warrants to have the initial exercise limitation set at 9.99% of our outstanding shares of Common
Stock.
Transferability
Subject
to applicable laws, the pre-funded warrants may be offered for sale, sold, transferred or assigned without our consent.
Exchange listing
There
is no established trading market for the pre-funded warrants and we do not expect a market to develop. In addition, we do not intend to
apply for the listing of the pre-funded warrants on any national securities exchange or other trading market. Without an active trading
market, the liquidity of the pre-funded warrants will be limited.
Fundamental transactions
In
the event of a fundamental transaction, as described in the pre-funded warrants and generally including any reorganization, recapitalization
or reclassification of our Common Stock, the sale, transfer or other disposition of all or substantially all of our properties or assets,
our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding Common Stock, or any person
or group becoming the beneficial owner of 50% of the voting power represented by our outstanding Common Stock, upon consummation of such
a fundamental transaction, the holders of the pre-funded warrants will be entitled to receive upon exercise of the pre-funded warrants
the kind and amount of securities, cash or other property that the holders would have received had they exercised the pre-funded warrants
immediately prior to such fundamental transaction without regard to any limitations on exercise contained in the pre-funded warrants.
No rights as a
stockholder
Except
as otherwise provided in the pre-funded warrant or by virtue of such holder’s ownership of shares of our Common Stock, the holder
of a pre-funded warrant does not have the rights or privileges of a holder of our Common Stock, including any voting rights, until the
holder exercises the pre-funded warrant. The pre-funded warrants will provide that holders have the right to participate in distributions
or dividends paid on our Common Stock.
SELLING STOCKHOLDERS
The Common Stock being offered
by the Selling Stockholders are those issuable to the Selling Stockholders, upon exercise of the Warrants. For additional information
regarding the issuances of those securities, see “Prospectus Summary—Recent Developments—December 2023 PIPE”
above. We are registering the shares of Common Stock in order to permit the Selling Stockholders to offer the shares for resale from time
to time. Except for the ownership of the Warrants and as noted below, the Selling Stockholders have not had any material relationship
with us within the past three years.
The table below lists the
Selling Stockholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the Selling Stockholders.
The second column lists the number of shares of Common Stock beneficially owned by each Selling Stockholder, based on its ownership of
the shares of Common Stock and Warrants, as of November 6, 2023, assuming exercise of the Warrants held by the Selling Stockholders on
that date, without regard to any limitations on exercises.
The third column lists the
shares of Common Stock being offered by this prospectus by the Selling Stockholders.
In accordance with the terms
of a registration rights agreement with the Selling Stockholders, this prospectus generally covers the resale of the maximum number of
shares of Common Stock issuable upon exercise of the Warrants, determined as if the outstanding Warrants were exercised in full as of
the trading day immediately preceding the date this registration statement was initially filed with the SEC, each as of the trading day
immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration rights agreement,
without regard to any limitations on the exercise of the Warrants. The fourth column assumes the sale of all of the shares offered by
the Selling Stockholders pursuant to this prospectus.
Under the terms of the Warrants,
a Selling Stockholder may not exercise the Warrants to the extent such exercise would cause such Selling Stockholder, together with its
affiliates and attribution parties, to beneficially own a number of shares of Common Stock which would exceed 4.99% of our then outstanding
Common Stock following such exercise, excluding for purposes of such determination shares of Common Stock issuable upon exercise of such
Warrants which have not been exercised. The number of shares in the second and fourth columns do not reflect this limitation. The Selling
Stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
Name of Selling Stockholder | |
Number of Shares of Common Stock Beneficially Owned Prior to Offering(1) | | |
Maximum Number of Shares of Common Stock to be Sold in this Offering | | |
Number of Shares of Common Stock Beneficially Owned After Offering | | |
Percentage of Shares Beneficially Owned after Offering(1) | |
Sabby Volatility Warrant Master Fund, Ltd.(2) | |
| 22,048 | | |
| 3,711,342 | | |
| 22,048 | | |
| 1.7 | % |
Michael Vasinkevich(3) | |
| 86,073 | | |
| 47,598 | | |
| 38,475 | | |
| 2.8 | % |
Michael Mirsky(3) | |
| 25,504 | | |
| 14,104 | | |
| 11,400 | | |
| * | |
Noam Rubinstein(3) | |
| 16,778 | | |
| 9,278 | | |
| 7,500 | | |
| * | |
Craig Schwabe(3) | |
| 4,530 | | |
| 2,505 | | |
| 2,025 | | |
| * | |
Charles Worthman(3) | |
| 1,342 | | |
| 742 | | |
| 600 | | |
| * | |
(1) |
The ability to exercise the Warrants held by the Selling Stockholders is subject to a beneficial ownership limitation that, at the time of initial issuance of the Warrants was capped at 4.99% beneficial ownership of the Company’s issued and outstanding Common Stock (post-exercise). These beneficial ownership limitations may be adjusted up or down, subject to providing advanced notice to the Company. Beneficial ownership as reflected in the selling stockholder table reflects the total number of shares potentially issuable underlying the Warrants, and does not give effect to these beneficial ownership limitations. Accordingly, actual beneficial ownership, as calculated in accordance with Section 13(d) and Rule 13d-3 thereunder may be lower than as reflected in the table. |
(2) |
Sabby Management, LLC is the investment manager of Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”) and shares voting and investment power with respect to these shares in this capacity. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of Sabby. Each of Sabby Management, LLC and Mr. Mintz disclaims beneficial ownership over the securities listed except to the extent of their pecuniary interest therein. Amount of shares beneficially owned by Sabby prior to the offering is based upon the Schedule 13G/A filed by Sabby on January 2, 2024. |
(3) |
The selling stockholder is affiliated with H.C. Wainwright & Co., LLC, a registered broker dealer with a registered address of H.C. Wainwright & Co., LLC, 430 Park Ave, 3rd Floor, New York, NY 10022, and has sole voting and dispositive power over the securities held. The number of shares beneficially owned prior to this offering consist of (a) shares of Common Stock issuable upon exercise of placement agent warrants, which were received as compensation in connection with the concurrent Registered Direct Offering and the Private Placements consummated by us in June 2023, and (b) shares of Common Stock issuable upon exercise of placement agent warrants, which were received as compensation in connection with the December 2023 PIPE. The selling stockholder acquired the placement agent warrants in the ordinary course of business and, at the time the placement agent warrants were acquired, the selling stockholder had no agreement or understanding, directly or indirectly, with any person to distribute such securities. |
Plan
of Distribution
Each Selling Stockholder of
the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities
covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the securities are traded
or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following
methods when selling securities:
| ● | ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block
trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction; |
| ● | purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an
exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately
negotiated transactions; |
| ● | settlement
of short sales; |
| ● | in
transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated
price per security; |
| ● | through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| ● | a
combination of any such methods of sale; or |
| ● | any
other method permitted pursuant to applicable law. |
The Selling Stockholders may
also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities
Act”), if available, rather than under this prospectus. Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth
in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance
with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.
In connection with the sale
of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling
Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities
to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer
or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution
may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and
any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning
of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities
Act. Each Selling Stockholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly,
with any person to distribute the securities.
We are required to pay certain
fees and expenses incurred by us incident to the registration of the securities. We have agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus
effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and
without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for us to be in compliance with
the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities
have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities
will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in
certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is available and is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the Common Stock for the applicable restricted period, as defined in Regulation M,
prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the Common
Stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and
have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).
LEGAL MATTERS
Sheppard, Mullin, Richter
& Hampton LLP, New York, New York, will pass upon the validity of the shares of our Common Stock offered hereby.
EXPERTS
dbbmckennon, an independent
registered public accounting firm, has audited our financial statements included in our Annual Report on Form 10-K for the year ended
December 31, 2022, as set forth in their report, which includes an explanatory paragraph as to our ability to continue as a going concern,
dated April 17, 2023, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial
statements are incorporated by reference in reliance on dbbmckennon report, given on the authority of such firm as experts in accounting
and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC
a registration statement on Form S-1 under the Securities Act with respect to the securities offered by this prospectus. This prospectus,
which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement,
some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further
information with respect to us and our securities, we refer you to the registration statement, including the exhibits filed as a part
of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document is
not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of
the contract or document that has been filed. Each statement is this prospectus relating to a contract or document filed as an exhibit
is qualified in all respects by the filed exhibit. We are subject to the informational requirements of the Exchange Act and in accordance
therewith file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet
website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The
address of that website is www.sec.gov. The registration statement and the documents referred to below under “Incorporation
of Documents By Reference” are also available on our website, www.astrotechcorp.com. We have not incorporated by reference
into this prospectus the information on our website, and you should not consider it to be a part of this prospectus.
INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus is part of
the registration statement but the registration statement includes and incorporates by reference additional information and exhibits.
The SEC permits us to “incorporate by reference” the information contained in documents we file with the SEC, which means
that we can disclose important information to you by referring you to those documents rather than by including them in this prospectus.
Information that is incorporated by reference is considered to be part of this prospectus and you should read it with the same care that
you read this prospectus. Information that we file later with the SEC will automatically update and supersede the information that is
either contained, or incorporated by reference, in this prospectus, and will be considered to be a part of this prospectus from the date
those documents are filed. We have filed with the SEC, and incorporate by reference in this prospectus:
| ● | Current
Reports on Form 8-K, filed with the SEC on January
6, 2023, January
20, 2023, February
24, 2023, March
21, 2023, April
7, 2023, April
17, 2023, April
24, 2023, April
25, 2023, April
28, 2023, May
26, 2023, May
31, 2023, June
16, 2023, June
21, 2023, June
30, 2023, July
7, 2023, July
14, 2023, July
27, 2023, July
28, 2023, August
16, 2023, August
17, 2023, August
18, 2023, August
21, 2023, August
28, 2023, September
6, 2023, September
21, 2023, October
5, 2023, October
11, 2023, November 9, 2023, December 1, 2023, December 8, 2023, December 12, 2023,
December 21, 2023, December 22, 2023, December 26, 2023, January 2, 2024, January 5, 2024,
and January 9, 2024; |
| ● | Annual
Report on Form 10-K for the year ended December 31, 2022 originally filed with the SEC on April
17, 2023 and amended on April
28, 2023; |
| ● | Quarterly
Report on Form 10-Q for the three
months ended March 31, 2023 filed with the SEC on May 15, 2023; |
| ● | Quarterly
Report on Form 10-Q for the six
months ended June 30, 2023 filed with the SEC on August 14, 2023; |
|
● |
Quarterly Report on Form 10-Q for the nine months ended September 30, 2023 filed with the SEC on November 14, 2023; |
| ● | Proxy
Statement on Schedule 14A filed
on July 20, 2023, as amended; and |
| ● | the
description of our common stock and our preferred stock contained in our Registration Statement on Form
8-A12B/A filed with the Commission on June 17, 2020, and any amendments or reports filed updating such description. |
In addition, all documents
subsequently filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, prior to the
termination of the offering (excluding any information furnished rather than filed) shall be deemed to be incorporated by reference into
this prospectus.
Notwithstanding the statements
in the preceding paragraphs, no document, report or exhibit (or portion of any of the foregoing) or any other information that we have
“furnished” to the SEC pursuant to the Securities Exchange Act of 1934, as amended shall be incorporated by reference into
this prospectus.
We will furnish without charge
to you, on written or oral request, a copy of any or all of the documents incorporated by reference in this prospectus, including exhibits
to these documents. You should direct any requests for documents to:
Aditxt, Inc.
737 N. Fifth Street, Suite 200
Richmond, VA 23219
Phone: (650) 870-1200
You also may access these
filings on our website at http://www.aditxt.com. We do not incorporate the information on our website into this prospectus or any supplement
to this prospectus and you should not consider any information on, or that can be accessed through, our website as part of this prospectus
or any supplement to this prospectus (other than those filings with the SEC that we specifically incorporate by reference into this prospectus
or any supplement to this prospectus).
Any statement contained in
a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed modified, superseded or replaced
for purposes of this prospectus to the extent that a statement contained in this prospectus modifies, supersedes or replaces such statement.
Any statement contained herein or in any document incorporated or deemed to be incorporated by reference shall be deemed to be modified
or superseded for purposes of the registration statement of which this prospectus forms a part to the extent that a statement contained
in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed to constitute a part of the registration statement of which this prospectus
forms a part, except as so modified or superseded.
Aditxt, Inc.
3,785,569 Shares of Common Stock
PRELIMINARY PROSPECTUS
, 2024
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
We estimate that expenses
in connection with the distribution described in this registration statement (other than brokerage commissions, discounts or other expenses
relating to the sale of the shares in this offering) will be as set forth below. We will pay all of the expenses with respect to the distribution,
and such amounts, with the exception of the SEC registration fee and FINRA fee, are estimates.
SEC expenses | |
$ | 2,693.17 | |
Legal fees and expenses | |
| 25,000.00 | |
Accounting fees and expenses | |
| 5,000.00 | |
Miscellaneous expenses | |
| 5,000.00 | |
Total offering expenses (other than placement agent’s fees) | |
$ | 37,693.17 | |
Item 14. Indemnification of Directors and Officers
Section 102 of Delaware General
Corporation Law (the “DGCL”) permits a corporation to eliminate the personal liability of directors of a corporation to the
corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached
his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment
of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our amended
and restated certificate of incorporation provides that no director of Aditxt shall be personally liable to it or its stockholders for
monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability, except
to the extent that the DGCL prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty.
Section 145 of the DGCL provides
that a corporation has the power to indemnify a director, officer, employee, or agent of the corporation, or a person serving at the request
of the corporation for another corporation, partnership, joint venture, trust or other enterprise in related capacities against expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection
with an action, suit or proceeding to which he was or is a party or is threatened to be made a party to any threatened, ending or completed
action, suit or proceeding by reason of such position, if such person acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall
be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but
in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
Our Certificate of Incorporation
as amended and Bylaws provide indemnification for our directors and officers to the fullest extent permitted by the DGCL.
Item 15. Recent Sales of Unregistered Securities
On January 31, 2022, the Company
issued a consultant 2 shares of Common Stock for services rendered.
On February 28, 2022, the
Company issued a consultant 2 shares of Common Stock for services rendered.
On June 27, 2022, the Company
issued a consultant 768 shares of Common Stock for services rendered.
On
December 7, 2022, the Company issued a consultant 3,729 shares of Common Stock for services rendered.
On
December 27, 2022, the Company issued a consultant 246 shares of Common Stock for services rendered.
On March 17, 2023, the Company
issued a consultant 4,675 shares of Common Stock for services rendered.
The issuances above were made
pursuant to Section 4(a)(2) of the Securities Act.
On June 15, 2022, the Company
entered into a letter agreement (the “Letter Agreement”) with a holder of certain of the Series C Warrants (the “Holder”).
Pursuant to the Letter Agreement, the Holder has agreed to exercise in cash 4,486 of its Series C Warrants at a reduced exercise price
of $300.00 per Share (reduced from $2,300.00 per Share), for gross proceeds to the Company of approximately $1.35 million. As an inducement
to such exercise, the Company has agreed to reduce the exercise price of the Holder’s remaining Series C Warrants to purchase up
to 1,229 Shares from $2,300.00 to $495.80 per share (the “Amended Series C Warrant”). The Amended Series C Warrant will be
non-exercisable for a period of six months following the closing date. In addition, the Company shall issue to the Holder a new warrant
(the “New Warrant”) to purchase up to 10,200 shares of the Company’s common stock at an exercise price of $495.80 per
share. The New Warrant will be non-exercisable for a period of six months following issuance date and have a term of five and one-half
years. The Shares of common stock issuable upon exercise of the Amended Series C Warrants are registered pursuant to the Company’s
Registration Statement on Form S-3 (Registration No. 333-257645), which was initially filed with the Securities and Exchange Commission
on July 2, 2021, and declared effective on July 13, 2021, and prospectus supplement thereto. The New Warrants were issued pursuant to
Section 4(a)(2) of the Securities Act.
On August 4, 2022, the Company
entered into a Securities Purchase Agreement (the “SPA”) with certain accredited investors providing for the issuance and
sale by the Company to the purchasers signatory thereto, of: (i) $1,477,777.78 in principal
amount 10% Senior Secured Promissory Notes (the “August 2022 Notes”), resulting in gross proceeds to the Company of $1,330,000.00,
exclusive of placement agent commission and fees and other offering expenses; (ii) 739 shares of common stock as commitment
fees (the “August 2022 Commitment Shares”); and warrants (the “Warrants”)
to purchase up to 3,138 shares (the “August 2022 Warrant Shares”) of the Company’s common stock (together with the August
2022 Notes, the August 2022 Commitment Shares and the August 2022 Warrant Shares, the “August 2022 Securities”).
The August 2022 Notes have
a maturity date of twelve (12) months from the date of issuance and are convertible at the option of the Investor at any time prior to
maturity in shares of Common Stock (the “Conversion Shares”) at an initial conversion price of $471.00 per share, subject
to adjustment under certain circumstances. The holders of the August 2022 Notes have the right, following any calendar day following the
Commencement Date (as defined therein) to convert all or any portion of the then outstanding and unpaid principal amount and interest
into fully paid and non-assessable shares of common stock at the conversion price. The Company is prohibited from effecting a conversion
of the Note to the extent that, as a result of such exercise, the Investor, together with the its affiliates, would beneficially own more
than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of such shares. In addition,
the sum of the aggregate number of shares of common stock that may be issued to all Investors under the August 2022 Securities is limited
to 19.99% of the Company’s then outstanding shares of common stock as of the date of issuance unless Shareholder Approval (as defined
in the SPA) is obtained to issue more than the 19.99%.
The August 2022 Warrants are
exercisable for a period of five (5) years from period commencing on the Commencement Date (as defined therein) and ending on 5:00 p.m.
eastern standard time on the date that is five (5) years after the date of issuance, at an exercise price of $471.00, subject to adjustment
provided therein (including cashless exercise). The Company is prohibited from effecting an exercise of the Warrants to the extent that,
as a result of such exercise, the holder of the Warrant together with the holder’s affiliates, would beneficially own more than
4.99% of the number of shares of Common Stock of the Company outstanding immediately after giving effect to the issuance of the such shares.
In addition, the sum of the aggregate number of shares of common stock that may be issued to all Investors under the August 2022 Securities
is limited to 19.99% of the Company’s then outstanding shares of common stock as of the date of issuance unless Shareholder Approval
(as defined in the SPA) is obtained to issue more than the 19.99%.
In connection with the Offering,
the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors pursuant
to which the Company shall prepare and file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement
(the “Registration Statement”) covering the Note, the Conversion Shares, the Warrant, and the Warrant Shares and any additional
shares of Common Stock issued and issuable in connection with any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing (collectively, the “Registrable Securities”) on or prior to the 90th calendar
day following the Closing Date (the “Filing Date”).
The Company shall use its
best efforts to cause the registration statement covering the Registrable Securities to be declared effective (the “Effectiveness
Date”) by the SEC within one hundred twenty (120) calendar days from the date hereof (or at the earliest possible date if prior
to one hundred twenty (120) calendar days from the date of the Registration Rights Agreement.
In connection with the Offering,
the Company will issue 157 shares (the “Placement Agent Shares”) to Crito Capital LLC.
The Company estimates that
the net proceeds from the transaction will be approximately $1,244,000 after deducting estimated transaction fees and expenses. The
net proceeds received by the Company from the transaction will be used for business development, working capital and other general
corporate purposes.
The
August 2022 Notes contain certain covenants, events of default and triggering events, which would require repayment of the obligations
outstanding pursuant to such instruments. The obligations of the Company pursuant to the August 2022 Notes are secured by certain assets
of the Company pursuant to the Security Agreement dated August 4, 2022, by and among the Company and the holders of the August 2022 Notes.
On
August 11, 2022 and September 12, 2022, the Company entered into additional SPAs with certain additional accredited investors (collectively,
the “Subsequent Investors” and together with the August Investors, the “Investors”), pursuant to which the Company
issued and sold an additional: (i) $1,111,110 in principal amount of the August 2022 Notes, resulting in gross proceeds to the Company
of $1,000,000, exclusive of placement agent fees and other offering expenses; (ii) 556 August 2022 Commitment Shares; and (iii) August
2022 Warrants to purchase 2,384 shares of the Company’s common stock.
On
August 31, 2022, the Company entered into a First Amendment and Waiver with each of the August Investors (the “August
Amendment”). Pursuant to the August Amendment, the exercise price of the August 2022 Warrants was reduced to $300.00 per share and
the Commencement Date (as defined in the SPA) was amended to mean the date on which the Company obtains shareholder approval for the issuance
of any shares of common stock upon exercise of the August 2022 Warrants. The Warrant is exercisable for a period of five (5) years from
period commencing on the Commencement Date (as defined therein) and ending on 5:00 p.m. eastern standard time on the date that is five
(5) years after the date of issuance, at an exercise price of $300.00, subject to adjustment provided therein (including cashless exercise).
The Company is prohibited from effecting an exercise of the Warrant to the extent that, as a result of such exercise, the holder of the
Warrant together with the holder’s affiliates, would beneficially own more than 4.99% of the number of shares of Common Stock of
the Company outstanding immediately after giving effect to the issuance of such shares. In addition, the sum of the aggregate number of
shares of common stock that may be issued under the Warrant is limited to 19.99% of the Company’s then outstanding shares of common
stock as of the date of issuance unless Shareholder Approval (as defined in the Agreement for the Purchase and Sale of Future Receipts)
is obtained to issue more than the 19.99%.
On August 31, 2022, the Company
entered into an Agreement for the Purchase and Sale of Future Receipts with a commercial funding source (the “Funder”) pursuant
to which the Company agreed to sell to the Funder certain future trade receipts in the aggregate amount $288,000 (the “Purchased
Amount”) for gross proceeds to the Company of $200,000, less origination fees of $20,000. Pursuant to the Agreement, the Company
granted the Funder a security interest in all of the Company’s present and future accounts receivable in an amount not to exceed
the Purchased Amount. The Purchased Amount shall be repaid by the Company in 20 weekly installments of approximately $14,400. In connection
with the Agreement, the Company also issued a warrant to purchase 667 shares of the Company’s common stock.
On
April 20, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional
investor, pursuant to which the Company agreed to sell to such investor pre-funded warrants (the “Pre-Funded Warrants”) to
purchase up to 39,634 shares of common stock of the Company (the “Common Stock”) at a purchase price of $48.76 per Pre-Funded
Warrant. The Pre-Funded Warrants (and shares of common stock underlying the Pre-Funded Warrants) were offered by the Company pursuant
to its shelf registration statement on Form S-3 (File No. 333-257645), which was declared effective by the Securities and Exchange Commission
on July 13, 2021.
Concurrently
with the sale of the Pre-Funded Warrants, pursuant to the Purchase Agreement in a concurrent private placement, for each Pre-Funded
Warrant purchased by the investor, such investor received from the Company an unregistered warrant (the “Warrant”) to purchase
two shares of Common Stock. The warrants have an exercise price of $34.40 per share, and are exercisable for a three year period. The
Warrant was issued were made pursuant to Section 4(a)(2) of the Securities Act.
On
July 3, 2023, Aditxt, Inc. we entered into a Securities Purchase Agreement (the “First Tranche Securities Purchase Agreement”)
with an accredited investor pursuant to which we issued and sold a secured promissory note in the principal amount of $375,000 (the “First
Tranche Note”) resulting in gross proceeds of $250,000. In connection with the issuance of the Note, we issued 3,907 shares of common
stock (the “First Tranche Commitment Shares”) as a commitment fee to the investor. Pursuant to the Securities Purchase Agreement,
we are obligated to obtain approval of our shareholders (“Shareholder Approval”) with respect to the issuance of any securities
in connection with the Securities Purchase Agreement and the Note in excess of 19.99% of our issued and outstanding shares on the closing
date, which is equal to 33,791 shares of our common stock. The First Tranche Note has a maturity date of December 31, 2023 and is convertible
following Shareholder Approval and the occurrence of an Event of Default (as defined in the Note) at a conversion price of $18.00 per
share.
In
connection with the Securities Purchase Agreement and the issuance of the First Tranche Note, we and certain of our subsidiaries also
entered into a Security Agreement with the investor (the “First Tranche Security Agreement”) pursuant to which we granted
the investor a security interest in certain Collateral (as defined in the First Tranche Security Agreement) to secure our obligations
under the First Tranche Note. In addition, we entered into a Registration Rights Agreement with the investor (the “First Tranche
Registration Rights Agreement”) pursuant to which we agreed to prepare and file with the U.S. Securities and Exchange Commission
a registration statement covering the resale of the First Tranche Commitment Shares and any shares of our Common Stock issuable upon conversion
of the First Tranche Note within 120 days of the closing date and to have such registration statement declared effective within 150 days
of the closing date.
On
July 3, 2023, we entered into a Business Loan and Security Agreement (the “July Loan Agreement”) with a commercial funding
source (the “July Lender”), pursuant to which we obtained a loan from the July Lender in the principal amount of $215,000,
which includes origination fees of $10,750 (the “July Loan”). Pursuant to the July Loan Agreement, we granted the Lender a
continuing secondary security interest in certain collateral (as defined in the Loan Agreement). The total amount of interest and fees
payable by us to the July Lender under the July Loan will be (i) $322,285 and will be repaid in 13 weekly installments of $24,500 with
a final payment of $3,785 in the fourteenth week.
On
July 11, 2023, we entered into a Subscription and Investment Representation Agreement (the “Subscription Agreement”) with
Amro Albanna, our Chief Executive Officer, who is an accredited investor (the “Purchaser”), pursuant to which we agreed to
issue and sell one (1) share of the Company’s Series C Preferred Stock, par value $0.001 per share (the “Preferred Stock”),
to the Purchaser for $1,000.00 in cash. The sale closed on July 11, 2023.
On
July 11, 2023, we filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of Delaware,
effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the share of Preferred Stock.
The Certificate of Designation provides that the share of Preferred Stock will have 250,000,000 votes and will vote together with the
outstanding shares of our Common Stock as a single class exclusively with respect to any proposal to amend the Company’s Amended
and Restated Certificate of Incorporation to effect a reverse stock split of our Common Stock. The Preferred Stock will be voted, without
action by the holder, on any such proposal in the same proportion as shares of Common Stock are voted. The Preferred Stock otherwise has
no voting rights except as otherwise required by the General Corporation Law of the State of Delaware.
The
Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the
Company. The Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy,
reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder
of the Preferred Stock will not be entitled to receive dividends of any kind.
The
outstanding share of Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the
Board of Directors in its sole discretion or (ii) automatically upon the effectiveness of the amendment to the Certificate of Incorporation
implementing a reverse stock split. Upon such redemption, the holder of the Preferred Stock will receive consideration of $1,000.00 in
cash.
On
July 24, 2023, we entered into a Securities Purchase Agreement (the “Second Tranche Securities Purchase Agreement”) with an
accredited investor pursuant to which the Company issued and sold a secured promissory note in the principal amount of $2,625,000 (the
“Second Tranche Note”) resulting in gross proceeds to the Company of $1,750,000. In connection with the issuance of the Note,
we agreed to issue a total of 27,344 shares of Common Stock (the “Second Tranche Commitment Shares”) as a commitment fee to
the investor. At the request of the investor, we issued 17,277 Second Tranche Commitment Shares and will issue the remaining 10,066 Second
Tranche Commitment Shares within 120 days, subject to the investor’s discretion. Pursuant to the Second Tranche Securities Purchase
Agreement, we are obligated to obtain approval of our shareholders with respect to the issuance of any securities in connection with the
Second Tranche Securities Purchase Agreement and the Second Tranche Note in excess of 19.99% of our issued and outstanding shares on the
closing date, which is equal to 38,026 shares of the Company’s Common Stock. The Second Tranche Note has a maturity date of December
31, 2023 and is convertible following shareholder approval and the occurrence of an Event of Default (as defined in the Note) at a conversion
price of $15.60 per share.
In
connection with the Second Tranche Securities Purchase Agreement and the issuance of the Second Tranche Note, we and certain of our subsidiaries
also entered into a Security Agreement with the investor (the “Second Tranche Security Agreement”) pursuant to which we granted
the investor a security interest in certain Collateral (as defined in the Second Tranche Security Agreement) to secure its obligations
under the Second Tranche Note. In addition, we entered into a Registration Rights Agreement with the investor (the “Second Tranche
Registration Rights Agreement”) pursuant to which we agreed to prepare and file with the U.S. Securities and Exchange Commission
a registration statement covering the resale of the Second Tranche Commitment Shares and any shares of our Common Stock issuable upon
conversion of the Second Tranche Note within 90 days of the closing date and to have such registration statement declared effective within
120 days of the closing date.
On
August 23, 2023, we entered into a Business Loan and Security Agreement (the “August Loan Agreement”) with a commercial funding
source (the “August Lender”) pursuant to which we obtained a loan from the August Lender in the principal amount of $1,400,000,
which will satisfy the outstanding balances on loans that we originally obtained From the August Lender in April 2023 and July 2023, and
includes origination fees of $70,000 (the “August Loan”). Pursuant to the August Loan Agreement, we granted the August Lender
a continuing secondary security interest in certain collateral (as defined in the August Loan Agreement). The total amount of interest
and fees payable by us to the August Lender under the August Loan will be $2,079,000, which will be repaid in 21 weekly installments of
$99,000.
On
August 31, 2023, we entered into a securities purchase agreement (the “Purchase Agreement”) with
an institutional investor for the issuance and sale in a private placement (the “Private Placement”) of (i) pre-funded warrants
(the “Pre-Funded Warrants”) to purchase up to 1,000,000 shares of the Company’s Common Stock, par value $0.001 (the
“Common Stock”), at an exercise price of $0.001 per share, and (ii) warrants (the “Common Warrants”) to purchase
up to 1,000,000 shares of the Company’s Common Stock at an exercise price of $10.00 per share.
The
Common Warrants are exercisable immediately upon issuance and have a term of exercise equal to five and one-half years from the date of
issuance. The Pre-Funded Warrants are exercisable immediately and may be exercised at any time until the Pre-Funded Warrants are exercised
in full. A holder of Pre-Funded Warrants or Warrants (together with its affiliates) may not exercise any portion of a warrant to the extent
that the holder would own more than 4.99% (or, at the election of the holder 9.99%) of the Company’s outstanding Common Stock immediately
after exercise.
In
connection with the Private Placement, we entered into a registration rights agreement (the “Registration Rights Agreement”),
dated as of August 31, 2023, with the investor, pursuant to which the Company agreed to prepare and file a registration statement with
the Securities and Exchange Commission (the “SEC”) registering the resale of the shares of Common Stock underlying the Pre-Funded
Warrants and the Common Warrants no later than 15 days after the date of the Registration Rights Agreement, and to use best efforts to
have the registration statement declared effective as promptly as practical thereafter, and in any event no later than 45 days following
the date of the Registration Rights Agreement (or 75 days following the date of the Registration Rights Agreement in the event of a “full
review” by the SEC).
The
Private Placement closed on September 6, 2023. We received net proceeds from the Private Placement of approximately $9 million, after
deducting placement agent fees and expenses and estimated offering expenses payable by us.
H.C.
Wainwright & Co., LLC (“Wainwright”) served as our exclusive placement agent in connection with the Private Placement,
pursuant to those certain engagement letters, dated as of March 27, 2023 and April 25, 2023, as amended, between the Company and Wainwright
(the “Engagement Letter”). Pursuant to the Engagement Letter, we paid Wainwright (i) a total cash fee equal to 7.75% of the
aggregate gross proceeds of the Private Placement, (ii) a management fee of 1.0% of the aggregate gross proceeds of the Private Placement,
(iii) a non-accountable expense allowance of $50,000, and (iv) $100,000 for legal fees and other out-of-pocket expenses. In addition,
we issued to Wainwright or its designees warrants (the “Placement Agent Warrants”) to purchase up to an aggregate of 60,000
shares of Common Stock at an exercise price equal to $12.50 per share. The Placement Agent Warrants are exercisable immediately upon issuance
and have a term of exercise equal to five and one-half years from the date of issuance.
On
December 19, 2023, we entered into a consulting agreement (the “Consulting Agreement”) with an independent consultant for
a term of ninety days. Pursuant to the Consulting Agreement, the independent consultant agreed to provide the Company with business advisory
services, guidance on growth strategies and networking with its clients on a non-exclusive basis for general business purposes (the “Services”).
In consideration for the Services, the Company will issue to the independent consultant 70,000 shares of our Common Stock. The issuance
of the Shares will not be registered under the Securities Act or the securities laws of any state, in reliance on the exemption from registration
under the Securities Act, as provided by Section 4(a)(2) thereof.
On
December 22, 2023, we entered into an Exchange Agreement with the holders of an aggregate of 22,280 shares of Series F-1 Convertible Preferred
Stock of Evofem, pursuant to which such holders agreed to exchange their respective shares of Evofem Series F-1 Preferred Stock for an
aggregate of 22,280 shares of our Series A-1 Convertible Preferred Stock, $0.001 par value. We issued the Series A-1 Convertible Preferred
in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D
promulgated thereunder.
On
December 29, 2023, we entered into an Exchange Agreement with the holder of our secured promissory note in the principal amount of $2.625
million (the “Note”), pursuant to which the holder agreed, subject to the terms and conditions set forth therein, to exchange
the Note, including all accrued but unpaid interest thereon, for an aggregate of 2,625 shares of a new series of convertible preferred
stock of the Company, designated as Series B-2 Convertible Preferred Stock. We issued the Series B-2 Convertible Preferred in reliance
upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated
thereunder.
On January 4, 2024, we completed
our acquisition of the Acquired Assets of MDNA and issued to MDNA (i) 50,000 shares of our Common Stock, (ii) warrants to purchase 50,000
shares of our Common Stock, and (iii) 5,000 shares of Series A Preferred Stock, par value $0.001
per share of Pearsanta. The securities were issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the
Securities Act
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
Exhibit No. |
|
Description |
2.1 |
|
Share Exchange Agreement, dated as of December 28, 2021 by and between AiPharma Group Ltd. and Aditxt, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 28, 2021) |
2.2 |
|
Amendment to Share Exchange Agreement by and between AiPharma Group Ltd. and Aditxt, Inc. (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on May 16, 2022) |
2.3 |
|
Second Amendment to Share Exchange Agreement by and between AiPharma Group Ltd. and Aditxt, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on June 16, 2022) |
2.4 |
|
Asset Purchase Agreement dated as of April 19, 2023 by and between the Company and Cellvera Ltd., et al. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 25, 2023) |
2.5 |
|
Agreement and Plan of Merger among Aditxt, Inc., Adicure, Inc. and Evofem Biosciences, Inc. dated as of December 11, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 12, 2023) |
2.6 |
|
Asset Purchase Agreement by and among Aditxt, Inc., Pearsanta, Inc. and MDNA Life Sciences, Inc. dated as of December 17, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 21, 2023) |
3.1 |
|
Amended and Restated Certificate of Incorporation (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
3.2 |
|
Certificate of Amendment, dated June 29, 2020 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on August 13, 2020) |
3.3 |
|
Amended and Restated Bylaws (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
3.4 |
|
Certificate of Designation Series A Preferred Stock (incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-248491) |
3.5 |
|
Certificate of Amendment, filed with the Secretary of State of the State of Delaware on May 24, 2021 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on May 25, 2021) |
3.6 |
|
Certificate of Amendment, dated July 6, 2021 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 8, 2021) |
3.7 |
|
Amendment No. 1 to Amended and Restated Bylaws of Aditxt, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 8, 2022) |
3.8 |
|
Certificate of Designation of Series B Preferred Stock, dated July 19, 2022 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 20, 2022) |
3.9 |
|
Certificate of Amendment to Certificate of Incorporation of Aditxt, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 14, 2022) |
3.10 |
|
Certificate of Designation of Series C Preferred Stock, dated July 11, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 14, 2023) |
3.11 |
|
Certificate of Amendment to Certificate of Incorporation of Aditxt, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 17, 2023) |
3.12 |
|
Series A-1 Certificate of Designation filed with the Secretary of State of Delaware (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 26, 2023) |
3.13 |
|
Series B-2 Certificate of Designation filed with the Secretary of State of Delaware (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 2, 2024) |
4.1 |
|
Description of Securities Registered Under Section 12 of the Exchange Act (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 25, 2021) |
4.2 |
|
Form the Company’s common stock certificate (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
4.3 |
|
Form of Series A-1 Warrant Agent Agreement (including the terms of the Series A-1 Warrant) (incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-248491) |
4.4 |
|
Form of Series B-1 Warrant Agent Agreement (including the terms of the Series B-1 Warrant) (incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-248491) |
4.5 |
|
Form of Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 30, 2021) |
4.6 |
|
Form of Pre-Funded Warrant (incorporated by reference to the Registrant’s filed on April 24, 2023) Current Report on Form 8-K |
4.7 |
|
Form of Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 24, 2023) |
4.8 |
|
Form of Placement Agent Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 24, 2023) |
4.9 |
|
Form of Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 6, 2023) |
4.10 |
|
Form of Placement Agent Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 6, 2023) |
4.11 |
|
Form of Pre-Funded Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 5, 2024) |
4.12 |
|
Form of Common Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 5, 2024) |
4.13 |
|
Form of Placement Agent Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 5, 2024) |
4.14 |
|
Form of Company Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 9, 2024) |
5.1* |
|
Opinion of Sheppard, Mullin, Richter & Hampton LLP |
10.1 |
|
Form of Promissory Note issued to Sekris Biomedical, Inc. (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.2 |
|
Warrant, dated March 8, 2018, issued to Sekris Biomedical, Inc. (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.3 |
|
Form of Private Placement Subscription Agreement (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.4 |
|
Patent Licensing Agreement, dated February 3, 2020 (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.5 |
|
Patent and Technology License Agreement, dated March 15, 2018 between Loma Linda University and Aditx Therapeutics, Inc. (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.6 |
|
Amendment Agreement to the Patent and Technology License Agreement, dated July 1, 2020 by and between Loma Linda University and Aditx Therapeutics, Inc. (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on August 13, 2020) |
10.7 |
|
2017 Equity Incentive Plan and forms of award agreements thereunder (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.8 |
|
Consulting Agreement, dated March 1, 2018 between Aditx Therapeutics, Inc. and Canyon Ridge Development LLC d/b/a Mission Critical Solutions International (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.9 |
|
Form of July 2018 Securities Purchase Agreement (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.10 |
|
Form of July 2018 Note (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.11 |
|
Form of April 2018 Promissory Note (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.12 |
|
Form of March 2019 Promissory Note (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.13 |
|
Form of October 2019 Securities Purchase Agreement (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.14 |
|
Form of October 2019 Note (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.15 |
|
Form of January 2020 Note Purchase Agreement (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.16 |
|
Form of January 2020 Private Placement Promissory Note (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-235933) |
10.17 |
|
Consulting Agreement by and between the Company and Salveo Diagnostics, Inc., dated November 18, 2020 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on November 23, 2020) |
10.18 |
|
Form of Senior Secured Convertible Promissory Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 26, 2021) |
10.19 |
|
Form of Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 26, 2021) |
10.20 |
|
Form of Securities Purchase Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 26, 2021) |
10.21 |
|
Form of Registration Rights Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 26, 2021) |
10.22 |
|
Employment Agreement, dated as of February 24, 2021, by and between the Company and Amro Albanna (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on February 26, 2021) |
10.23 |
|
2021 Omnibus Equity Incentive Plan (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on February 26, 2021) |
10.24 |
|
Lease Agreement, dated as of May 4, 2021, by and between LS Biotech Eight, LLC as Landlord, and Aditxt Therapeutics, Inc., as Tenant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on May 10, 2021) |
10.25 |
|
Form of Securities Purchase Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 30, 2021) |
10.26 |
|
Placement Agency Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 30, 2021) |
10.27 |
|
Form of Placement Agent Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 30, 2021) |
10.28 |
|
Waiver and Defeasance Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 30, 2021) |
10.29 |
|
Secured Credit Agreement, dated as of August 27, 2021, by and among AiPharma, AiPharma Holdings Limited, AiPharma Asia Limited and the Company (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.30 |
|
Security Agreement, dated as of August 27, 2021 by and between AiPharma Asia Limited and the Company (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.31 |
|
Security Agreement, dated as of August 27, 2021 by and between AiPharma Limited and the Company (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.32 |
|
Security Agreement – AiPharma Limited and Aditxt (BVI Law) (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.33 |
|
Floating Charge (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.34 |
|
Transaction Agreement, dated as of October 4, 2021, by and between the Company and AiPharma Global Holdings LLC (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.35 |
|
First Amendment to Secured Credit Agreement with AiPharma Global Holdings LLC dated October 18, 2021 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.36 |
|
Second Amendment to Secured Credit Agreement with AiPharma Global Holdings LLC dated October 27, 2021(incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.37 |
|
Employment Agreement, dated as of November 14, 2021 between Aditxt, Inc. and Amro Albanna, Chief Executive Officer (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.38 |
|
Employment Agreement, dated as of November 14, 2021 between Aditxt, Inc. and Corinne Pankovcin, President and Secretary (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.39 |
|
Employment Agreement, dated as of November 14, 2021 between Aditxt, Inc. and Thomas Farley, Chief Financial Officer (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.40 |
|
Employment Agreement, dated as of November 14, 2021 between Aditxt, Inc. and Shahrokh Shabahang, Chief Innovation Officer (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.41 |
|
Employment Agreement, dated as of November 14, 2021 between Aditxt, Inc. and Rowena Albanna, Chief Operating Officer (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on November 15, 2021) |
10.42 |
|
Form of Warrant Reduction and Release Agreement dated as of November 24, 2021 (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.43 |
|
First Amendment to Transaction Agreement dated November 30, 2021, by and between the Company and AiPharma Global Holdings LLC (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.44 |
|
Third Amendment to Secured Credit Agreement dated November 30, 2021, by and among AiPharma, AiPharma Holdings Limited, AiPharma Asia Limited and the Company (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.45 |
|
Second Amendment to Transaction Agreement dated December 7, 2021, by and between the Company and AiPharma Global Holdings LLC (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.46 |
|
Secured Credit Agreement, dated as of December 8, 2021, by and among the Company and the Target Company (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.47 |
|
Third Amendment to Transaction Agreement dated December 17, 2021, by and between the Company and AiPharma Global Holdings LLC (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.48 |
|
Fifth Amendment to Secured Credit Agreement dated December 22, 2021, by and among AiPharma, AiPharma Holdings Limited, AiPharma Asia Limited and the Company (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.49 |
|
Sixth Amendment to Secured Credit Agreement dated December 28, 2021, by and among AiPharma, AiPharma Holdings Limited, AiPharma Asia Limited and the Company (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.50 |
|
Employment Agreement between Aditxt, Inc. and Matthew Shatzkes, Chief Legal Officer and General Counsel (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.51 |
|
Forbearance Agreement and Seventh Amendment to Secured Credit Agreement dated as of February 14, 2022 by and among the Company, Cellvera Global Holdings LLC, Cellvera Holdings Ltd., Cellvera Asia Limited (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.52 |
|
Fourth Amendment to Transaction Agreement dated December 22,2021, by and between the Company and AiPharma Global Holdings LLC (incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on March 31, 2022) |
10.53 |
|
Series C Warrant Agent Agreement (incorporated by reference to the Registrant’s Annual Report on Form 10-K/A filed on April 15, 2022) |
10.54 |
|
Form of Placement Agent Warrant dated January 25, 2021 (incorporated by reference to the Registrant’s Annual Report on Form 10-K/A filed on April 15, 2022) |
10.55 |
|
Forbearance Agreement and Eighth Amendment to Secured Credit Agreement dated as of March 31, 2022 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on May 16, 2022) |
10.56 |
|
Security Agreement between Cellvera Holdings and Aditxt, Inc. dated as of March 31, 2022 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on May 16, 2022) |
10.57 |
|
Security Agreement between Cellvera Development LLC and Aditxt, Inc. dated as of March 31, 2022 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on May 16, 2022) |
10.58 |
|
Security Agreement between Cellvera Global Holdings and Aditxt, Inc. dated as of March 31, 2022 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on May 16, 2022) |
10.59 |
|
Amended and Restated Security Agreement between Cellvera Asia Limited and Aditxt, Inc. dated as of March 31, 2022 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on May 16, 2022) |
10.60 |
|
Revenue Sharing Agreement by and among Aditxt, Inc., Cellvera Global Holdings LLC and Cellvera Asia Limited dated as of March 31, 2022 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed on May 16, 2022) |
10.61 |
|
Form of Agreement for the Purchase and Sale of Future Receipts (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on June 3, 2022) |
10.62 |
|
Amendment No. 1 to Series C Warrant Agent Agreement dated June 15, 2022 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on June 15, 2022) |
10.63 |
|
Inducement Offer to Exercise Series C Common Stock Purchase Warrants (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on June 15, 2022) |
10.64 |
|
Form of New Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on June 15, 2022) |
10.65 |
|
Form of Placement Agent Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on June 15, 2022) |
10.66 |
|
Subscription and Investment Representation Agreement, dated July 19, 2022 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 20, 2022) |
10.67 |
|
Unsecured Promissory Note dated July 21, 2022 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 26, 2022) |
10.68 |
|
Form of Securities Purchase Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 10, 2022) |
10.69 |
|
Form of August 2022 Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 10, 2022) |
10.70 |
|
Form of August 2022 Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 10, 2022) |
10.71 |
|
Form of Registration Rights Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 10, 2022) |
10.72 |
|
Form of Security Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 10, 2022) |
10.73 |
|
Form of First Amendment and Waiver effective as of August 31, 2022 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 7, 2022) |
10.74 |
|
Form of Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 7, 2022) |
10.75 |
|
Form of Securities Purchase Agreement (incorporated by reference to the Registrant’s Registration Statement on Form S-1 filed on September 15, 2022) |
10.76 |
|
Form of Warrant (incorporated by reference to the Registrant’s Registration Statement on Form S-1 filed on September 15, 2022) |
10.77 |
|
Form of Placement Agent’s Warrant (incorporated by reference to the Registrant’s Registration Statement on Form S-1 filed on September 15, 2022) |
10.78 |
|
Form of Pre-Funded Warrant (incorporated by reference to the Registrant’s Registration Statement on Form S-1 filed on September 15, 2022) |
10.79 |
|
Amendment No. 2 to Series C Warrant Agent Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 23, 2022) |
10.80 |
|
Form of Amended and Restated Unit Purchase Option (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 23, 2022) |
10.81 |
|
Form of Consulting Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on March 21, 2023) |
10.82 |
|
Form of Business Loan and Security Agreement dated April 4, 2023(incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 7, 2023) |
10.83 |
|
Form of Securities Purchase Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 24, 2023) |
10.84 |
|
Form of Unsecured Promissory Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 25, 2023) |
10.85 |
|
Form of Business Loan and Security Agreement, dated April 24, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 25, 2023) |
10.86 |
|
Form of Agreement for the Purchase and Sale of Future Receipts (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on May 31, 2023) |
10.87 |
|
Unsecured Promissory Note dated May 25, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on May 31, 2023) |
10.88 |
|
Form of Unsecured Promissory Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on June 16, 2023) |
10.89 |
|
At The Market Offering Agreement dated December 20, 2022 between Aditxt, Inc. and H.C. Wainwright & Co., LLC (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 20, 2022) |
10.90 |
|
Form of Securities Purchase Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 7, 2023) |
10.91 |
|
Form of Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 7, 2023) |
10.92 |
|
Form of Security Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 7, 2023) |
10.93 |
|
Form of Registration Rights Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 7, 2023) |
10.94 |
|
Form of Business Loan and Security Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 7, 2023) |
10.95 |
|
Subscription and Investment Representation Agreement, dated July 11, 2023, by and between Aditxt, Inc., and the purchaser signatory thereto (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 14, 2023) |
10.96 |
|
Separation Agreement and General Release by and between Matthew Shatzkes and Aditxt, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 27, 2023) |
10.97 |
|
Form of Securities Purchase Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 28, 2023) |
10.98 |
|
Form of Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 28, 2023) |
10.99 |
|
Form of Security Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 28, 2023) |
10.100 |
|
Form of Registration Rights Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on July 28, 2023) |
10.101 |
|
Amendment to Separation Agreement and General Release dated August 15, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 21, 2023) |
10.102 |
|
Form of Business Loan and Security Agreement dated August 23, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 28, 2023) |
10.103 |
|
Form of Securities Purchase Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 6, 2023) |
10.104 |
|
Form of Registration Rights Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on September 6, 2023) |
10.105 |
|
Form of Business Loan and Security Agreement dated November 7, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on November 9, 2023) |
10.106 |
|
Form of Unsecured Promissory Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 1, 2023) |
10.107 |
|
Form of Unsecured Promissory Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 8, 2023) |
10.108 |
|
Assignment Agreement dated as of December 11, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 12, 2023) |
10.109 |
|
Form of December 2023 Secured Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 12, 2023) |
10.110 |
|
Form of September 2024 Secured Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 12, 2023) |
10.111 |
|
Form of Royalty Note (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 12, 2023) |
10.112 |
|
IP Security Agreement dated December 11, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 12, 2023) |
10.113 |
|
Security Agreement dated December 11, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 12, 2023) |
10.114 |
|
Form of Consulting Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 22, 2023) |
10.115 |
|
Form of Unsecured Promissory Note dated December 20, 2023 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 22, 2023) |
10.116 |
|
Exchange Agreement, dated December 22, 2023 by and between the Company and the holders signatory thereto (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 26, 2023) |
10.117 |
|
Registration Rights Agreement, dated December 22, 2023 by and between the Company and the holders signatory thereto (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 26, 2023) |
10.118 |
|
Exchange Agreement, dated December 28, 2023 by and between the Company and the holders signatory thereto (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 2, 2024) |
10.119 |
|
Form of Voting Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 2, 2024) |
10.120 |
|
Form of Securities Purchase Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 5, 2024) |
10.121 |
|
Form of Registration Rights Agreement (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 5, 2024) |
10.122 |
|
Form of Amendment No. 1 to January 2024 Secured Notes (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 5, 2024) |
10.123 |
|
Form of Amendment No. 2 to January 2024 Secured Notes (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 5, 2024) |
10.124 |
|
Form of Amendment No. 1 to September 2024 Secured Notes (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 5, 2024) |
10.125 |
|
First Amendment to Asset Purchase Agreement dated January 4, 2024 by and among Aditxt, Inc., Pearsanta, Inc. and MDNA Life Sciences, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 9, 2024) |
10.126 |
|
First Amendment to Agreement and Plan of Merger dated as of January 8, 2024, by and among Aditxt, Inc., Adicure, Inc. and Evofem Biosciences, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 9, 2024) |
23.1* |
|
Consent of dbbmckennon, independent registered public accounting firm |
23.2* |
|
Consent of Sheppard, Mullin, Richter & Hampton LLP (Included in Exhibit 5.1) |
24.1 |
|
Power of Attorney |
107* |
|
Filing Fee Table |
** | To
be filed by amendment |
† | Executive
Compensation Plan or Agreement |
# | Portions
of this exhibit (indicated by asterisks) have been redacted in compliance with Regulation S-K Item 601(b)(10)(iv). |
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
|
1. |
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: |
|
i. |
Include any prospectus required by Section 10(a)(3) of the Securities Act. |
|
ii. |
Reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
|
iii. |
Include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
provided, however, that paragraphs (1)(i),
(ii) and (iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained
in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to
Rule 424(b) that is part of the registration statement.
|
2. |
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof; |
|
3. |
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; |
|
4. |
That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s
annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Richmond, State of Virginia, on the 18th
day of January, 2024.
|
Aditxt, Inc. |
|
|
|
By: |
/s/ Amro Albanna |
|
|
Name: |
Amro Albanna |
|
|
Title: |
Chief Executive Officer |
POWER OF ATTORNEY
We, the undersigned officers and directors of
Aditxt, Inc., hereby severally constitute and appoint Amro Albanna, our true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for us and in our stead, in any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and all documents relating thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing necessary or advisable to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or
his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
WITNESS our hands and common seal on the dates
set forth below.
Pursuant to the requirements of the Securities
Act of 1933, as amended, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on
the dates indicated below.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Amro Albanna |
|
Chief Executive Officer |
|
January 18, 2024 |
Amro Albanna |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Thomas Farley |
|
Chief Financial Officer |
|
January 18, 2024 |
Thomas J. Farley |
|
(Principal Financial and Accounting Officer) |
|
|
|
|
|
|
|
/s/ Brian Brady |
|
Director |
|
January 18, 2024 |
Brian Brady |
|
|
|
|
|
|
|
|
|
/s/ Charles Athle Nelson |
|
Director |
|
January 18, 2024 |
Charles Athle Nelson |
|
|
|
|
|
|
|
|
|
|
|
Director |
|
January 18, 2024 |
Jeffrey W. Runge, M.D. |
|
|
|
|
|
|
|
|
|
/s/ Shahrokh Shabahang |
|
Chief Innovation Officer and Director |
|
January 18, 2024 |
Shahrokh Shabahang |
|
|
|
|
II-14
Exhibit 5.1
|
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza
New York, New York 10112-0015
212.653.8700 main
212.653.8701 fax
www.sheppardmullin.com |
January 18, 2024
VIA EDGAR
Aditxt, Inc.
737 N. Fifth Street, Suite 200
Richmond, VA 23219
| Re: | Registration Statement on Form S-1 |
Ladies and Gentlemen:
We have acted as counsel to Aditxt, Inc., a Delaware
corporation (the “Company”), in connection with the preparation and filing by the Company of a Registration
Statement on Form S-1 (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “Securities Act”), on or about the date hereof, with respect
to the resale from time to time by the selling stockholders of the Company, as detailed in the Registration Statement (collectively, the
“Selling Stockholders”), of up to 3,785,569 shares of the Company’s common stock, par value $0.001 per
share (“Common Stock”), which consists of (a) up to an aggregate of 1,237,114, shares of Common Stock (the “Pre-Funded
Warrant Shares”) that are issuable upon exercise of pre-funded warrants (the “Pre-Funded Warrants”)
purchased pursuant to securities purchase agreements by and between us and one of the Selling Stockholders, dated, December 29, 2023 (the
“Purchase Agreement”), (b) up to an aggregate of 2,474,228, shares of Common Stock (the “Common
Warrant Shares”) that are issuable upon exercise of warrants (the “Common Warrants”) purchased
pursuant to the Purchase Agreement, and (c) up to 74,227 shares of Common Stock (the “Placement Agent Warrant Shares”,
together with the Pre-Funded Warrant Shares and the Common Warrant Shares, the “Warrant Shares”) that are issuable
upon exercise of warrants (the “Placement Agent Warrants”, together with the Pre-Funded Warrants and the Common
Warrants, the “Warrants”) issued pursuant to the engagement letter dated as of December 3, 2023, as amended
on December 29, 2023, by and between the Company and the placement agent.
This opinion is being furnished in accordance
with the requirements of Item 601(b)(5)(i) of Regulation S-K.
In connection with this opinion, we have reviewed
and relied upon the following:
| ● | the Registration Statement; |
| ● | the form of Purchase Agreement; |
| ● | the form of Pre-Funded Warrant; |
| ● | the form of Common Warrant; |
| ● | the form of Placement Agent
Warrant; |
| ● | the Amended and Restated Certificate
of Incorporation of the Company in effect on the date hereof; |
| ● | the Amended and Restated Bylaws
of the Company in effect on the date hereof; |
| ● | the resolutions of the Board
of Directors of the Company, adopted on December 29, 2023 authorizing/ratifying the execution and delivery of the Purchase Agreement,
the issuance and sale of the Warrants and the Warrant Shares; |
| ● | such other documents, records,
certificates, memoranda and other instruments as we deem necessary as a basis for this opinion. |
In connection with the issuance
of this opinion letter, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such records of
the Company and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the
Company and others, and such other documents as we have deemed necessary or appropriate as a basis for the opinions stated below. As to
any facts relevant to the opinions stated herein that we did not independently establish or verify, we have relied upon statements and
representations of officers and other representatives of the Company and of public officials.
In our examination, we have
assumed (a) the genuineness of all signatures, including endorsements, (b) the legal capacity and competency of all natural persons and,
with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power
and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments
have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements
or instruments are the valid, binding and enforceable obligations of such parties, (c) the authenticity of all documents submitted to
us as originals, (d) the conformity to original documents of all documents submitted to us as facsimile, electronic, certified or photostatic
copies, and the authenticity of the originals of such copies; (e) the accuracy, completeness and authenticity of certificates of public
officials; (f) the truth, accuracy and completeness of the information, representations and warranties contained in the instruments, documents,
certificates and records we have reviewed; and (g) the legal capacity for all purposes relevant hereto of all natural persons and, with
respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power
and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments
have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements
or instruments are the valid, binding and enforceable obligations of such parties.
Based upon the foregoing and
subject to the qualifications and assumptions stated herein, we are of the opinion that the Warrant Shares have been duly authorized by
all necessary corporate action on the part of the Company and, assuming a sufficient number of authorized but unissued shares of Common
Stock are available for issuance when the Warrants are exercised, the Warrant Shares, when and if issued, delivered and paid for in accordance
with the terms of the respective Warrants, will be validly issued, fully paid and nonassessable.
Our
opinion set forth above is subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors’ rights generally, (ii) general equitable principles (whether considered
in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing.
This opinion letter is rendered
solely in connection with the registration of the Warrant Shares for resale by the Selling Stockholders under the Registration Statement.
This opinion letter is rendered as of the date hereof, and we assume no obligation to advise you or any other person with regard to any
change after the date hereof in the circumstances or the law that may bear on the matters set forth herein after the effectiveness of
the Registration Statement, even if the change may affect the legal analysis or a legal conclusion or other matters in this opinion letter.
The opinion we render herein
is limited to those matters governed by New York law as of the date hereof and we disclaim any obligation to revise or supplement the
opinion rendered herein should the above-referenced laws be changed by legislative or regulatory action, judicial decision, or otherwise.
We express no opinion as to whether, or the extent to which, the laws of any particular jurisdiction apply to the subject matter hereof.
We express no opinion as to matters governed by any laws other than New York law.
This opinion letter is rendered
as of the date first written above, and we disclaim any obligation to advise you of facts, circumstances, events, or developments that
hereafter may be brought to our attention or that may alter, affect, or modify the opinion expressed herein.
We hereby consent to the filing
of this opinion as an exhibit to the Registration Statement. We also hereby consent to the reference to our firm under the heading “Legal
Matters” in the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act or the General Rules and Regulations under the Securities Act. It is understood
that this opinion is to be used only in connection with the offer and sale of the Warrant Shares being registered while the Registration
Statement is effective under the Securities Act.
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Respectfully submitted, |
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/s/ Sheppard, Mullin, Richter & Hampton LLP |
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SHEPPARD, MULLIN, RICHTER & HAMPTON LLP |
-3-
Exhibit 23.1
Consent of Independent Registered Public Accounting
Firm
We consent to the incorporation
by reference, in this Registration Statement on Form S-1, of our report dated April 17, 2023, related to the financial statements
of Aditxt, Inc (the “Company”) as of December 31, 2022 and 2021, and for the years then ended, which includes an explanatory
paragraph regarding the substantial doubt about the Company’s ability to continue as a going concern. We also consent to the reference
to us under the heading “Experts” in such Registration Statement.
/s/ dbbmckennon
Newport Beach, California
January 18, 2024
Exhibit 107
Calculation of Filing Fee Tables
FORM S-1
(Form Type)
ADITXT, INC.
(Exact Name of Registrant as Specified in its Charter)
Table 1: Newly Registered Securities
| |
Security Type | |
Security Class Title | |
Fee Calculation Rule | | |
Amount Registered(1) | | |
Proposed Maximum
Offering Price per
Share (2) | | |
Maximum Aggregate Offering Price | | |
Amount of Registration Fee | |
Fees to Be Paid | |
Equity | |
Common Stock, $0.001 par value (2) | |
457(c) | | |
| 3,785,569 | | |
$ | 4.82 | | |
$ | 18,246,442.58 | | |
$ | 2,693.17 | |
| |
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| | | |
| | | |
| | |
| |
| |
| |
| | |
| | | |
| | | |
| | | |
| | |
| |
Total Offering Amounts | | |
| | | |
| | | |
| | | |
$ | 2,693.17 | |
| |
Total Fees Previously Paid | | |
| | | |
| | | |
| | | |
$ | 0 | |
| |
Total Fee Offsets | | |
| | | |
| | | |
| | | |
$ | 0 | |
| |
Net Fee Due | | |
| | | |
| | | |
| | | |
$ | 2,693.17 | |
(1) |
Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, this registration statement also covers any additional securities that may be offered, issued or become issuable in connection with any stock split, stock dividend or similar transaction or pursuant to anti-dilution provisions of any of the securities. |
(2) |
Estimated solely for the purpose of calculation of the registration fee pursuant to Rule 457(c) under the Securities Act based on a per share price of $4.82, the average of the high and low reported sales prices of the registrant’s common stock on the Nasdaq Capital Market on January 16, 2024. |
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