false Q3 --12-31 0001419554 0001419554 2023-01-01 2023-09-30 0001419554 BBLG:CommonStock0.001ParValuePerShareMember 2023-01-01 2023-09-30 0001419554 BBLG:WarrantsToPurchaseCommonStock0.001ParValuePerShareMember 2023-01-01 2023-09-30 0001419554 2023-11-10 0001419554 2023-09-30 0001419554 2022-12-31 0001419554 2023-07-01 2023-09-30 0001419554 2022-07-01 2022-09-30 0001419554 2022-01-01 2022-09-30 0001419554 us-gaap:CommonStockMember 2022-12-31 0001419554 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001419554 us-gaap:RetainedEarningsMember 2022-12-31 0001419554 us-gaap:CommonStockMember 2023-03-31 0001419554 us-gaap:AdditionalPaidInCapitalMember 2023-03-31 0001419554 us-gaap:RetainedEarningsMember 2023-03-31 0001419554 2023-03-31 0001419554 us-gaap:CommonStockMember 2023-06-30 0001419554 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001419554 us-gaap:RetainedEarningsMember 2023-06-30 0001419554 2023-06-30 0001419554 us-gaap:CommonStockMember 2021-12-31 0001419554 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001419554 us-gaap:RetainedEarningsMember 2021-12-31 0001419554 2021-12-31 0001419554 us-gaap:CommonStockMember 2022-03-31 0001419554 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001419554 us-gaap:RetainedEarningsMember 2022-03-31 0001419554 2022-03-31 0001419554 us-gaap:CommonStockMember 2022-06-30 0001419554 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001419554 us-gaap:RetainedEarningsMember 2022-06-30 0001419554 2022-06-30 0001419554 us-gaap:CommonStockMember 2023-01-01 2023-03-31 0001419554 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-03-31 0001419554 us-gaap:RetainedEarningsMember 2023-01-01 2023-03-31 0001419554 2023-01-01 2023-03-31 0001419554 us-gaap:CommonStockMember 2023-04-01 2023-06-30 0001419554 us-gaap:AdditionalPaidInCapitalMember 2023-04-01 2023-06-30 0001419554 us-gaap:RetainedEarningsMember 2023-04-01 2023-06-30 0001419554 2023-04-01 2023-06-30 0001419554 us-gaap:CommonStockMember 2023-07-01 2023-09-30 0001419554 us-gaap:AdditionalPaidInCapitalMember 2023-07-01 2023-09-30 0001419554 us-gaap:RetainedEarningsMember 2023-07-01 2023-09-30 0001419554 us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001419554 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001419554 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001419554 2022-01-01 2022-03-31 0001419554 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001419554 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001419554 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001419554 2022-04-01 2022-06-30 0001419554 us-gaap:CommonStockMember 2022-07-01 2022-09-30 0001419554 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0001419554 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0001419554 us-gaap:CommonStockMember 2023-09-30 0001419554 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0001419554 us-gaap:RetainedEarningsMember 2023-09-30 0001419554 us-gaap:CommonStockMember 2022-09-30 0001419554 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001419554 us-gaap:RetainedEarningsMember 2022-09-30 0001419554 2022-09-30 0001419554 BBLG:FDASpineInterbodyFusionMember 2023-01-01 2023-09-30 0001419554 2023-06-16 2023-06-16 0001419554 us-gaap:FairValueMeasurementsRecurringMember 2023-09-30 0001419554 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2023-09-30 0001419554 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2023-09-30 0001419554 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2023-09-30 0001419554 us-gaap:WarrantMember 2023-01-01 2023-09-30 0001419554 us-gaap:WarrantMember 2022-01-01 2022-09-30 0001419554 us-gaap:EmployeeStockOptionMember 2023-01-01 2023-09-30 0001419554 us-gaap:EmployeeStockOptionMember 2022-01-01 2022-09-30 0001419554 2022-10-01 2022-10-31 0001419554 us-gaap:MeasurementInputRiskFreeInterestRateMember us-gaap:WarrantMember 2023-09-30 0001419554 us-gaap:MeasurementInputRiskFreeInterestRateMember us-gaap:WarrantMember 2022-12-31 0001419554 BBLG:MeasurementInputExpectedVolatilityMember us-gaap:WarrantMember 2023-09-30 0001419554 BBLG:MeasurementInputExpectedVolatilityMember us-gaap:WarrantMember 2022-12-31 0001419554 us-gaap:MeasurementInputExpectedTermMember us-gaap:WarrantMember 2023-09-30 0001419554 us-gaap:MeasurementInputExpectedTermMember us-gaap:WarrantMember 2022-12-31 0001419554 BBLG:MeasurementInputExpectedDividendYieldMember us-gaap:WarrantMember 2023-09-30 0001419554 BBLG:MeasurementInputExpectedDividendYieldMember us-gaap:WarrantMember 2022-12-31 0001419554 us-gaap:WarrantMember 2023-09-30 0001419554 us-gaap:WarrantMember 2022-12-31 0001419554 BBLG:SeriesCWarrantMember 2023-02-28 0001419554 BBLG:SeriesCWarrantMember us-gaap:CommonStockMember 2023-02-01 2023-02-28 0001419554 BBLG:SeriesCWarrantMember 2023-05-31 0001419554 BBLG:SeriesCWarrantMember us-gaap:CommonStockMember 2023-05-01 2023-05-31 0001419554 us-gaap:CommonStockMember BBLG:UnderwritingAgreementMember 2023-06-14 2023-06-14 0001419554 us-gaap:CommonStockMember BBLG:UnderwritingAgreementMember 2023-06-14 0001419554 BBLG:UnderwritingAgreementMember 2023-06-16 2023-06-16 0001419554 BBLG:OctoberTwoThousandTwentyOneMember BBLG:VestedAndUnexercisedCommonStockWarrantsMember 2023-09-30 0001419554 BBLG:OctoberTwoThousandTwentyTwoMember BBLG:VestedAndUnexercisedCommonStockWarrantsMember 2023-09-30 0001419554 BBLG:OctoberTwoThousandTwentyTwoOneMember BBLG:VestedAndUnexercisedCommonStockWarrantsMember 2023-09-30 0001419554 BBLG:OctoberTwoThousandTwentyTwoTwoMember BBLG:VestedAndUnexercisedCommonStockWarrantsMember 2023-09-30 0001419554 BBLG:TwoThousandFifteenEquityIncentivePlanMember 2023-09-30 0001419554 BBLG:TwoThousandFifteenEquityIncentivePlanMember 2023-01-01 2023-09-30 0001419554 us-gaap:EmployeeStockOptionMember 2023-09-30 0001419554 us-gaap:EmployeeStockOptionMember 2023-01-01 2023-09-30 0001419554 2022-01-01 2022-12-31 0001419554 BBLG:AugustTwoThousandFifteenMember 2023-09-30 0001419554 BBLG:AugustTwoThousandFifteenMember 2023-01-01 2023-09-30 0001419554 BBLG:SeptemberTwoThousandFifteenMember 2023-09-30 0001419554 BBLG:SeptemberTwoThousandFifteenMember 2023-01-01 2023-09-30 0001419554 BBLG:NovemberTwoThousandFifteenMember 2023-09-30 0001419554 BBLG:NovemberTwoThousandFifteenMember 2023-01-01 2023-09-30 0001419554 BBLG:DecemberTwoThousandFifteenMember 2023-09-30 0001419554 BBLG:DecemberTwoThousandFifteenMember 2023-01-01 2023-09-30 0001419554 BBLG:JanuaryTwoThousandSixteenMember 2023-09-30 0001419554 BBLG:JanuaryTwoThousandSixteenMember 2023-01-01 2023-09-30 0001419554 BBLG:MayTwoThousandSixteenMember 2023-09-30 0001419554 BBLG:MayTwoThousandSixteenMember 2023-01-01 2023-09-30 0001419554 BBLG:SeptemberTwoThousandSixteenMember 2023-09-30 0001419554 BBLG:SeptemberTwoThousandSixteenMember 2023-01-01 2023-09-30 0001419554 BBLG:JanuaryTwoThousandSeventeenMember 2023-09-30 0001419554 BBLG:JanuaryTwoThousandSeventeenMember 2023-01-01 2023-09-30 0001419554 BBLG:JanuaryTwoThousandEighteenMember 2023-09-30 0001419554 BBLG:JanuaryTwoThousandEighteenMember 2023-01-01 2023-09-30 0001419554 BBLG:JanuaryTwoThousandNineteenMember 2023-09-30 0001419554 BBLG:JanuaryTwoThousandNineteenMember 2023-01-01 2023-09-30 0001419554 BBLG:OctoberTwoThousandTwentyOneMember 2023-09-30 0001419554 BBLG:OctoberTwoThousandTwentyOneMember 2023-01-01 2023-09-30 0001419554 BBLG:JanuaryTwoThousandTwentyTwoMember 2023-09-30 0001419554 BBLG:JanuaryTwoThousandTwentyTwoMember 2023-01-01 2023-09-30 0001419554 BBLG:JanuaryTwoThousandTwentyTwoOneMember 2023-09-30 0001419554 BBLG:JanuaryTwoThousandTwentyTwoOneMember 2023-01-01 2023-09-30 0001419554 BBLG:JanuaryTwoThousandTwentyTwoTwoMember 2023-09-30 0001419554 BBLG:JanuaryTwoThousandTwentyTwoTwoMember 2023-01-01 2023-09-30 0001419554 BBLG:AugustTwoThousandTwentyTwoMember 2023-09-30 0001419554 BBLG:AugustTwoThousandTwentyTwoMember 2023-01-01 2023-09-30 0001419554 BBLG:JanuaryTwoThousandTwentyThreeMember 2023-09-30 0001419554 BBLG:JanuaryTwoThousandTwentyThreeMember 2023-01-01 2023-09-30 0001419554 BBLG:SeptemberTwoThousandTwentyThreeMember 2023-09-30 0001419554 BBLG:SeptemberTwoThousandTwentyThreeMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:FirstCommercialSaleMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:AfterFirstCommercialSaleMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:ThirdPartyMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember srt:MinimumMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember srt:MaximumMember 2023-01-01 2023-09-30 0001419554 BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember BBLG:LicenseAgreementMember BBLG:FirstSubjectInFeasibilityStudyMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember BBLG:FirstSubjectInPivotalStudyMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember BBLG:PreMarketApprovalOfLicensedProductOrLicensedMethodMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember BBLG:FirstCommercialSaleOfLicensedProductOrLicensedMethodMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember BBLG:ScenarioOneMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember BBLG:ScenarioTwoMember 2023-01-01 2023-09-30 0001419554 BBLG:LicenseAgreementMember BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember BBLG:ScenarioThreeMember 2023-01-01 2023-09-30 0001419554 BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember 2023-01-01 2023-09-30 0001419554 BBLG:AmendedLicenseAgreementMember 2023-01-01 2023-09-30 0001419554 BBLG:UniversityOfCaliforniaLosAngelesTechnologyDevelopmentGroupMember BBLG:LicenseAgreementMember 2022-01-01 2022-09-30 0001419554 BBLG:OneVendorMember 2023-09-30 0001419554 us-gaap:AccountsPayableMember us-gaap:SupplierConcentrationRiskMember BBLG:OneVendorMember 2023-01-01 2023-09-30 0001419554 2022-11-17 0001419554 2023-09-27 2023-09-27 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended September 30, 2023

 

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

 

For the transition period from _________ to _________

 

Commission File No. 001-40899

 

Bone Biologics Corporation

(Exact name of registrant as specified in its charter)

 

Delaware   42-1743430

(State or other jurisdiction of

incorporation or formation)

 

(I.R.S. employer

identification number)

 

2 Burlington Woods Drive, Ste 100, Burlington, MA 01803

(Address of principal executive offices and Zip Code)

 

(781) 552-4452

(Registrant’s telephone number, including area code)

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common stock, $0.001 par value per share   BBLG   The Nasdaq Capital Market
Warrants to Purchase Common stock, $0.001 par value per share   BBLGW   The Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes ☐ No

 

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

 

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

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

☐ Yes ☒ No

 

As of November 10, 2023, there were 3,134,391 shares of the issuer’s common stock, $0.001 par value, outstanding.

 

 

 

 

 

 

Bone Biologics Corporation

- INDEX -

 

  Page
PART I – FINANCIAL INFORMATION:  
   
Item 1. Financial Statements. F-1
   
Unaudited Condensed Consolidated Financial Statements  
   
Unaudited Condensed Consolidated Balance Sheets F-1
   
Unaudited Condensed Consolidated Statements of Operations F-2
   
Unaudited Condensed Consolidated Statements of Stockholders’ Equity F-3
   
Unaudited Condensed Consolidated Statements of Cash Flows F-5
   
Notes to Unaudited Condensed Consolidated Financial Statements F-6
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
   
Item 4. Controls and Procedures 9
   
PART II – OTHER INFORMATION: 10
   
Item 1. Legal Proceedings 10
   
Item 1A. Risk Factors 10
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 10
   
Item 3. Defaults Upon Senior Securities 10
   
Item 4. Mine Safety Disclosures 10
   
Item 5. Other Information 10
   
Item 6. Exhibits 11
   
Signatures 12

 

2

 

 

NOTE ON FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. For a more detailed listing of some of the risks and uncertainties facing the Company, please see our Current Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 30, 2023 and subsequent Quarterly Reports on Form 10-Q or other reports filed with the SEC.

 

All statements other than historical facts contained in this report, including statements regarding our future financial position, capital expenditures, cash flows, business strategy and plans and objectives of management for future operations are forward-looking statements. The words “anticipated,” “believe,” “expect,” “plan,” “intend,” “seek,” “estimate,” “project,” “could,” “may,” and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management’s current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, our ability to raise additional capital to fund our operations, inflation, rising interest rates, governmental responses there to and possible recession caused thereby, obtaining Food and Drug Administration (“FDA”) and other regulatory authorization to market our drug and biological products, successful completion of our clinical trials, our ability to achieve regulatory authorization to market our lead product NELL-1, our reliance on third party manufacturers for our drug products, market acceptance of our products, our dependence on licenses for certain of our products, our reliance on the expected growth in demand for our products, exposure to product liability and defect claims, development of a public trading market for our securities, and various other matters, many of which are beyond our control.

 

Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this Annual Report are qualified by these cautionary statements and accordingly there can be no assurances made with respect to the actual results or developments. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

Unless expressly indicated or the context requires otherwise, the terms “Company,” “we,” “us,” and “our” in this document refer to Bone Biologics Corporation, a Delaware corporation, and, its wholly owned subsidiary as defined under the heading “Management’s Discussion and Analysis” in this Form 10-Q.

 

3

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

Bone Biologics Corporation

 

Condensed Consolidated Balance Sheets

 

   September 30, 2023   December 31, 2022 
   (unaudited)     
Assets          
           
Current Assets          
Cash  $4,452,586   $7,538,312 
Prepaid expenses   523,758    956,925 
           
Total assets  $4,976,344   $8,495,237 
           
Liabilities and Stockholders’ Equity          
           
Current Liabilities          
Accounts payable and accrued expenses  $1,102,721   $888,461 
Warrant liability   80,514    1,659,468 
           
Total current liabilities   1,183,235    2,547,929 
           
Total liabilities   1,183,235    2,547,929 
           
Commitments and Contingencies   -    - 
           
Stockholders’ Equity          
Preferred Stock, $0.001 par value per share; 20,000,000 shares authorized; none issued or outstanding at September 30, 2023 and December 31, 2022   -    - 
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 3,134,391 and 510,065 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively   3,135    510 
Additional paid-in capital   83,149,047    77,907,025 
Accumulated deficit   (79,359,073)   (71,960,227)
           
Total stockholders’ equity   3,793,109    5,947,308 
           
Total liabilities and stockholders’ equity  $4,976,344   $8,495,237 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

F-1

 

 

Bone Biologics Corporation

 

Condensed Consolidated Statements of Operations

 

                 
  

Three Months Ended

September 30, 2023

   Three Months Ended
September 30, 2022
  

Nine Months Ended

September 30, 2023

   Nine Months Ended
September 30, 2022
 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
Revenues  $-   $-   $-   $- 
                     
Cost of revenues   -    -    -    - 
                     
Gross profit   -    -    -    - 
                     
Operating expenses                    
Research and development   1,574,850    769,410    6,460,747    823,410 
General and administrative   506,040    449,867    1,807,548    1,554,670 
                     
Total operating expenses   2,080,890    1,219,277    8,268,295    2,378,080 
                     
Loss from operations   (2,080,890)   (1,219,277)   (8,268,295)   (2,378,080)
                     
Other expenses                    
Change in fair value of warrant liability   160,645    -    867,930    - 
Interest income   536    -    1,519    - 
                     
Net Loss  $(1,919,709)  $(1,219,277)  $(7,398,846)  $(2,378,080)
                     
Loss per share – basic and diluted  $(0.61)  $(3.53)  $(4.68)  $(6.89)

 

Weighted average shares outstanding – basic and diluted   3,134,391    345,019    1,582,397    345,019 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

F-2

 

 

Bone Biologics Corporation

 

Consolidated Statement of Stockholders’ Equity

For the Three and Nine Months ended September 30, 2023

(unaudited)

 

   Shares   Amount   Capital   Equity   Equity 
   Common Stock   Additional
Paid-in
   Accumulated   Total
Stockholders’
 
   Shares   Amount   Capital   Equity   Equity 
                     
Balance at December 31, 2022   510,065   $510   $77,907,025   $(71,960,227)  $     5,947,308 
                          
Fair value of vested stock options issued to employees and directors   -    -    44,764    -    44,764 
                          
Exercise of warrants   46,698    47    (47)   -    - 
                          
Extinguishment of warrant liability upon exercise of warrants   -    -    490,226    -    490,226 
                          
Net Loss   -    -    -    (3,709,899)   (3,709,899)
                          
Balance at March 31, 2023   556,763    557    78,441,968    (75,670,126)   2,772,399 
                          
Fair value of vested stock options issued to employees and directors   -    -    16,670    -    16,670 
                          
Exercise of warrants   39,506    40    (40)   -    - 
                          
Extinguishment of warrant liability upon exercise of warrants   -    -    220,798    -    220,798 
                          
Proceeds from sale of common stock in public offering, net of offering costs $547,837   2,538,071    2,538    4,449,625    -    4,452,163 
                          
Share adjustment for stock split rounding   51    -    -    -    - 
                          
Net Loss   -    -    -    (1,769,238)   (1,769,238)
                          
Balance at June 30, 2023   3,134,391    3,135    83,129,021    (77,439,364)   5,692,792 
                          
Fair value of vested stock options issued to employees and directors   -    -    20,026    -    20,026 
                          
Net Loss   -    -    -    (1,919,709)   (1,919,709) 
                          
Balance at September 30, 2023   3,134,391   $3,135   $83,149,047   $(79,359,073)  $3,793,109 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

F-3

 

 

Bone Biologics Corporation

 

Consolidated Statement of Stockholders’ Equity

For the Three and Nine Months ended September 30, 2022

(unaudited)

 

   Common Stock   Additional
Paid-in
   Accumulated   Total
Stockholders’
 
   Shares   Amount   Capital   Deficit   Equity 
                     
Balance at December 31, 2021   10,350,574   $10,350   $77,040,713   $(70,475,607)  $     6,575,456 
                          
Fair value of vested stock options issued to employees and directors   -    -    152,844    -    152,844 
                          
Share adjustment for October 2021 stock split rounding   5    -    -    -    - 
                          
Net Loss   -    -    -    (689,499)   (689,499)
                          
Balance at March 31, 2022   10,350,579    10,350    77,193,557    (71,165,106)   6,038,801 
                          
Fair value of vested stock options issued to employees and directors   -    -    18,748    -    18,748 
                          
Net Loss   -    -    -    (469,304)   (469,304)
                          
Balance at June 30, 2022   10,350,579    10,350    77,212,305    (71,634,410)   5,588,245 
                          
Fair value of vested stock options issued to employees and directors   -    -    32,534    -    32,534 
                          
Net Loss   -    -    -    (1,219,277)   (1,219,277)
                          
Balance at September 30, 2022   10,350,579   $10,350   $77,244,839   $(72,853,687)  $4,401,502 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

F-4

 

 

Bone Biologics Corporation

 

Condensed Consolidated Statements of Cash Flows

 

  

Nine Months Ended

September 30, 2023

   Nine Months Ended
September 30, 2022
 
   (unaudited)   (unaudited) 
Cash flows from operating activities          
Net loss  $(7,398,846)  $(2,378,080)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock-based compensation   81,460    204,126 
Change in fair value of warrant liability   (867,930)   - 
Changes in operating assets and liabilities:          
Prepaid expenses and other current assets   433,167    (141,734)
Accounts payable and accrued expenses   214,260    699,566 
           
Net cash used in operating activities   (7,537,889)   (1,616,122)
           
Cash flows from financing activities          
Proceeds from sale of common stock in public offering, net of offering costs   4,452,163    - 
           
Net cash provided by financing activities   4,452,163    - 
           
Net decrease in cash   (3,085,726)   (1,616,122)
           
Cash, beginning of period   7,538,312    6,675,365 
Cash, end of period  $4,452,586   $5,059,243 
           
Supplemental information          
Income taxes paid  $-   $- 
           
Non-cash financing activities          
Extinguishment of warrant liability upon exercise of warrants  $711,024   $- 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

F-5

 

 

Bone Biologics Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months ended September 30, 2023 and 2022

 

1. The Company

 

Bone Biologics Corporation (the “Company”) was incorporated under the laws of the State of Delaware on October 18, 2007 as AFH Acquisition X, Inc. Pursuant to a Merger Agreement, dated September 19, 2014, by and among the Company, its wholly-owned subsidiary, Bone Biologics Acquisition Corp., (“Merger Sub”), and Bone Biologics, Inc., Merger Sub merged with and into Bone Biologics Inc., with Bone Biologics Inc. remaining as the surviving corporation. On September 22, 2014, the Company changed its name to “Bone Biologics Corporation” and Bone Biologics, Inc. became a wholly owned subsidiary of the Company. Bone Biologics, Inc. was incorporated in California on September 9, 2004.

 

The Company is a medical device company that is currently focused on bone regeneration in spinal fusion using the recombinant human protein known as NELL-1. NELL-1 in combination with DBM, demineralized bone matrix, is an osteopromotive recombinant protein that provides target specific control over bone regeneration. The NELL-1 technology platform has been licensed exclusively for worldwide applications to the Company through a technology transfer from the UCLA Technology Development Group on behalf of UC Regents (“UCLA TDG”). UCLA TDG and the Company received guidance from the Food and Drug Administration that NELL-1/DBM will be classified as a device/drug combination product with a pre-market approval filing (“PMA”).

 

The production and marketing of the Company’s products and its ongoing research and development activities are subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United States, any combination product developed by the Company must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive regulatory approval process implemented by the FDA under the Food, Drug and Cosmetic Act. There can be no assurance that the Company will not encounter problems in clinical trials that will cause the Company or the FDA to delay or suspend clinical trials.

 

The Company’s success will depend in part on its ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated, rendered unenforceable, or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company.

 

On June 5, 2023, an amendment to the Company’s certificate of incorporation for a reverse split of the Company’s outstanding common stock at a ratio of 1-for-30 became effective. All share and per share amounts have been retro-actively restated as if the reverse split occurred at the beginning of the earliest period presented.

 

Going Concern

 

The Company has no significant operating history and since inception to September 30, 2023 has incurred accumulated losses of approximately $79.4 million. The Company will continue to incur significant expenses for development activities for its product NELL-1/DBM. Operating expenditures for the next twelve months are estimated at $5.1 million. The accompanying unaudited condensed consolidated financial statements for the nine months ended September 30, 2023, have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As reflected in the financial statements, during the nine months ended September 30, 2023, the Company incurred a net loss of $7.4 million, and used net cash in operating activities of $7.5 million. These factors raise substantial doubt about the Company’s ability to continue as a going concern within a reasonable period of time, which is considered to be one year from the issuance date of these financial statements. In addition, our independent registered public accounting firm, in its audit report to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, expressed substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

At September 30, 2023, we had cash of $4.5 million. Available cash is expected to fund our operations until the second quarter of 2024 when we expect to announce data reporting from our pilot clinical study.

 

We anticipate that we will require approximately $5.9 million to complete first in man studies, and an estimated additional $27 million to achieve FDA approval for a spine interbody fusion indication.

 

On June 16, 2023, the Company completed a public offering generating net proceeds to the Company of $4.5 million.

 

The Company will continue to attempt to raise additional debt and/or equity financing to fund future operations and to provide additional working capital. However, there is no assurance that such financing will be consummated or obtained in sufficient amounts necessary to meet the Company’s needs. If cash resources are insufficient to satisfy the Company’s on-going cash requirements, the Company will be required to scale back or discontinue its product development programs, or obtain funds if available (although there can be no certainties) through strategic alliances that may require the Company to relinquish rights to its technology, substantially reduce or discontinue its operations entirely. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.

 

F-6

 

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The interim condensed consolidated financial statements included herein reflect all material adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) which, in the opinion of management, are ordinary and necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under the accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated balance sheet information as of December 31, 2022 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2023 (the “2022 Annual Report”). These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2022 and notes thereto included in the 2022 Annual Report.

 

The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the entire fiscal year ended December 31, 2023 or for any other period.

 

Use of Estimates

 

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period.

 

Significant estimates include the assumptions used in the accrual for potential liabilities, the valuation of the warrant liability, the valuation of debt and equity instruments, the valuation of stock options and warrants issued for services, and deferred tax valuation allowances. Actual results could differ from those estimates.

 

Inflation

 

Macroeconomic factors such as inflation, rising interest rates, governmental responses there to and possible recession caused thereby also add significant uncertainty to our operations and possible effects to the amount and type of financing available to the Company in the future.

 

Cash

 

Cash primarily consists of bank demand deposits maintained by a major financial institution. The Company’s policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the “FDIC”) and/or by the Securities Investor Protection Corporation (the “SIPC”). The Company may periodically have cash balances in financial institutions in excess of the FDIC and SIPC insurance limits of $250,000 and $500,000, respectively. The Company has not experienced any losses to date resulting from this policy.

 

F-7

 

 

Fair Value of Financial Instruments

 

Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last is considered unobservable:

 

Level 1: Quoted prices in active markets for identical assets or liabilities.

 

Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 assumptions: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including liabilities resulting from embedded derivatives associated with certain warrants to purchase common stock.

 

The fair value of financial instruments measured on a recurring basis was as follows as of September 30, 2023:

 

                 
   As of September 30, 2023 
Description  Total   Level 1   Level 2   Level 3 
Liabilities:                    
Warrant liability  $80,514           $80,514 
Total liabilities at fair value  $80,514           $80,514 

 

The following table provides a roll-forward of the warrant liability measured at fair value on a recurring basis using unobservable level 3 inputs for the nine period ended September 30, 2023 as follows:

 

   September 30, 2023 
Warrant liability     
Balance as of beginning of period – December 31, 2022  $1,659,468 
Extinguishment of warrant liability upon exercise of warrants   (711,024)
Change in fair value   (867,930)
Balance as of September 30, 2023  $80,514 

 

The Company believes the carrying amount of certain financial instruments, including cash and accounts payable approximate their values based on their short-term nature and are excluded from the fair value tables above.

 

Prepaid Expenses

 

At September 30, 2023, prepaid expenses consist of prepaid insurance and prepaid services. Prepaid expenses are amounts paid to secure the use of assets or the receipt of services at a future date or continuously over one or more future periods. When the prepaid expenses are eventually consumed, they are charged to expense. The Company had $523,758 and $956,925 in prepaid expenses as of September 30, 2023 and December 31, 2022, respectively.

 

Stock Based Compensation

 

ASC 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions to employees and non-employees. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.

 

F-8

 

 

Loss per Common Share

 

Basic loss per share is computed by dividing the loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted loss per common share reflects the potential dilution that could occur if options and warrants were to be exercised or converted or otherwise resulted in the issuance of common stock that then shared in the earnings of the entity.

 

Since the effects of outstanding options and warrants are anti-dilutive for the nine months ended September 30, 2023 and 2022, shares of common stock underlying these instruments have been excluded from the computation of loss per common share.

 

The following sets forth the number of shares of common stock underlying outstanding options and warrants as of September 30, 2023 and 2022:

 

   2023   2022 
   September 30, 
   2023   2022 
Warrants   375,296    60,922 
Stock options   274,284    15,094 
Anti dilutive securities   649,580    76,016 

 

New Accounting Standards

 

The Company’s management has evaluated all the recently issued, but not yet effective, accounting standards and guidance that have been issued or proposed by the FASB or other standards-setting bodies through the filing date of these financial statements and does not believe the future adoption of any such pronouncements will have a material effect on the Company’s financial position and results of operations.

 

3. Warrant Liability

 

In October 2022, the Company completed a public equity offering, which included the issuance of 433,382 warrants. Upon the occurrence of certain transactions (“Fundamental Transactions,” as defined in the warrant agent agreement), the warrants provide for a value determined using a Black Scholes model with inputs calculated as described in the warrant agreement which includes a 100% floor on the volatility input to be utilized. The Company has determined that this provision introduces leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815, the Company has classified the fair value of the warrants as a liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

 

F-9

 

 

The warrant liability was valued at the following dates using a Black-Scholes model with the following assumptions:

 

   September 30, 2023   December 31, 2022 
Warrant liability:          
Risk-free interest rate   4.74%   4.26%
Expected volatility   134.17%   112.58%
Expected life (in years)   4.03    4.78 
Expected dividend yield   -    - 
           
Fair Value of warrant liability  $80,514   $1,659,468 

 

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. We determine expected volatility based upon the historical volatility of our common stock since listing on The Nasdaq Capital Market. We do not believe that the future volatility of our common stock over an option’s expected term is likely to differ significantly from the past. The expected term of the warrants granted are determined based on the duration of time the warrants are expected to be outstanding. The dividend yield on the Company’s warrants is assumed to be zero as the Company has not historically paid dividends.

 

4. Stockholders’ Equity

 

Preferred Stock

 

The Company’s amended and restated certificate of incorporation authorizes the Company to issue a total of 20,000,000 shares of preferred stock. No shares have been issued as of September 30, 2023 and December 31, 2022.

 

Common Stock

 

The Company’s amended and restated certificate of incorporation authorizes the Company to issue a total of 100,000,000 shares of common stock. As of September 30, 2023 and December 31, 2022, the Company had an aggregate of 3,134,391 and 510,065 shares of common stock outstanding, respectively.

 

In February 2023, 46,698 Series C warrants were exchanged for 46,698 shares of common stock.

 

In May 2023, 39,506 Series C warrants were exchanged for 39,506 shares of common stock.

 

On June 14, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”) acting as representatives of the several underwriters in connection with a public offering (the “Offering”) of an aggregate of 2,538,071 shares of its common stock. The public offering price was $1.97 per share and the underwriters agreed to purchase 2,538,071 shares at a 7% discount to the public offering price. The Company granted EF Hutton a 45-day option to purchase up to 380,710 additional shares, to cover over-allotments, if any, which was not exercised. The Offering closed on June 16, 2023, resulting in gross proceeds of $5 million, before deducting underwriting discounts and commissions and other offering expenses. The net proceeds in relation to the Offering were $4,452,163.

 

5. Common Stock Warrants

 

A summary of warrant activity for the nine months ended September 30, 2023 is presented below:

 

Subject to Exercise  Number of
Warrants
   Weighted
Average
Exercise Price
   Weighted
Average Life
(Years)
 
Outstanding as of December 31, 2022   461,500   $53.40    4.65 
Granted – 2023   -    -    - 
Forfeited/Expired – 2023   -    -    - 
Exercised – 2023   (86,204)   -    4.29 
Outstanding as of September 30, 2023   375,296   $65.66    3.87 

 

F-10

 

 

As of September 30, 2023, the Company had outstanding vested and unexercised Common Stock Warrants as follows:

 

Date Issued  Exercise Price   Number of
Warrants
   Expiration date
October 2021  $189.00    60,934   October 13, 2026
October 2022  $48,60    144,464   October 12, 2027
October 2022  $40.50    150,761   October 12, 2027
October 2022  $0.00    19,137   October 12, 2027
Total outstanding warrants at September 30, 2023        375,296    

 

Based on a fair market value of $0.71 per share on September 30, 2023, there 19,137 exercisable but unexercised in-the-money common stock warrants on that date. Accordingly, the intrinsic value attributed to exercisable but unexercised common stock warrants at September 30, 2023 was $13,587.

 

6. Stock-based Compensation

 

2015 Equity Incentive Plan

 

The Company has 5,035,918 shares of Common Stock authorized and reserved for issuance under our 2015 Equity Incentive Plan for option awards. This reserve may be increased by the Board each year by up to the number of shares of stock equal to 5% of the number of shares of stock issued and outstanding on the immediately preceding December 31. In September 2023, the Company’s stockholders approved an amendment to the 2015 Equity Incentive Plan that, among other items, increased the number of shares available under the 2015 Equity Incentive Plan by 5,000,000 shares. Appropriate adjustments were made in the number of authorized shares and other numerical limits in our 2015 Equity Incentive Plan and in outstanding awards to prevent dilution or enlargement of participants’ rights in the event of a stock split or other change in our capital structure. Shares subject to awards granted under our 2015 Equity Incentive Plan which expire, are repurchased or are cancelled or forfeited will again become available for issuance under our 2015 Equity Incentive Plan. The shares available will not be reduced by awards settled in cash. Shares withheld to satisfy tax withholding obligations will not again become available for grant. The gross number of shares issued upon the exercise of stock appreciation rights or options exercised by means of a net exercise or by tender of previously owned shares will be deducted from the shares available under our 2015 Equity Incentive Plan.

 

Awards may be granted under our 2015 Equity Incentive Plan to our employees, including officers, director or consultants, and our present or future affiliated entities. While we may grant incentive stock options only to employees, we may grant non-statutory stock options, stock appreciation rights, restricted stock purchase rights or bonuses, restricted stock units, performance shares, performance units and cash-based awards or other stock based awards to any eligible participant.

 

The 2015 Equity Incentive Plan is administered by our compensation committee. Subject to the provisions of our 2015 Equity Incentive Plan, the compensation committee determines, in its discretion, the persons to whom, and the times at which, awards are granted, as well as the size, terms and conditions of each award. All awards are evidenced by a written agreement between us and the holder of the award. The compensation committee has the authority to construe and interpret the terms of our 2015 Equity Incentive Plan and awards granted under our 2015 Equity Incentive Plan.

 

A summary of stock option activity for the nine months ended September 30, 2023 is presented below:

 

Subject to Exercise  Number of
Options
  

Weighted

Average
Exercise
Price

   Weighted
Average
Life (Years)
   Aggregate
Intrinsic
Value
 
Outstanding as of December 31, 2022   15,106   $505.20    5.60   $- 
Granted – 2023   259,178    0.68    9.94    18,010 
Forfeited/Expired – 2023   -    -    -    - 
Exercised – 2023   -    -    -    - 
Outstanding as of September 30, 2023   274,284   $29.08    8.62   $18,010 
Options vested and exercisable at September 30, 2023   16,995   $459.70    4.32   $- 

 

F-11

 

 

As of September 30, 2023, the Company had outstanding stock options as follows:

 

Date Issued  Exercise Price   Number of
Options
   Expiration date
August 2015  $1,192.50    1,387   December 27, 2025
September 2015  $1,192.50    268   December 27, 2025
November 2015  $1,192.50    1,634   December 27, 2025
December 2015  $1,192.50    75   December 27, 2025
January 2016  $1,192.50    1,701   January 9, 2026
May 2016  $1,537.50    359   May 26, 2026
September 2016  $1,537.50    135   May 31, 2026
January 2017  $1,537.50    72   January 1, 2027
January 2018  $1,477.50    53   January 1, 2028
January 2019  $70.50    732   January 1, 2029
October 2021  $157.50    1,630   October 26, 2031
January 2022  $105.60    873   January 1, 2032
January 2022  $111.60    1,667   January 1, 2024
January 2022  $111.60    833   January 3, 2024
August 2022  $48.30    3,687   August 23, 2032
January 2023  $7.20    1,889   January 25, 2025
September 2023  $0.64    257,289   September 12, 2033
              
Total outstanding options at September 30, 2023        274,284    

 

Based on a fair value of $0.71 per share on September 30, 2023. There were no exercisable but unexercised in-the-money common stock warrants on that date.

 

There were 259,178 options granted during the nine months ended September 30, 2023 with a fair value of $161,948. Vesting of options differs based on the terms of each option. During the nine months ended September 30, 2023 and 2022, the Company had stock-based compensation expense of $81,460 and $204,126, respectively, related to the vesting of stock options granted to the Company’s employees and directors included in our reported net loss. Our policy is to account for forfeitures of the unvested portion of option grants when they occur; therefore, these forfeitures are recorded as a reversal to expense, which can result in a credit balance in the statement of operations.

 

The Company utilized the Black-Scholes option-pricing model. The assumptions used for the nine months ended September 30, 2023 are as follows:

 

   September 30, 2023 
Risk free interest rate   4.39%
Expected Volatility   135.49%
Expected life (in years)   5.86 
Expected dividend yield   0%

 

The expected volatility is a measure of the amount by which our stock price is expected to fluctuate during the expected term of options granted. We determine the expected volatility based upon the historical volatility of our common stock since listing on The Nasdaq Capital Market. We do not believe that the future volatility of our common stock over an option’s expected term is likely to differ significantly from the past. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The expected life of the options used was based on the contractual life of the option granted. Stock-based compensation is a non-cash expense because we settle these obligations by issuing shares of our common stock from our authorized shares instead of settling such obligations with cash payments.

 

As of September 30, 2023, total unrecognized compensation cost related to unvested stock options was $135,445. The cost is expected to be recognized over a weighted average period of 0.38 years.

 

F-12

 

 

7. Commitments and Contingencies

 

UCLA TDG Exclusive License Agreement

 

Effective April 9, 2019, we entered into an Amended and Restated Exclusive License Agreement dated as of March 21, 2019, which was subsequently amended through three sets of amendments (as so amended the “Amended License Agreement”) with the UCLA TDG. The Amended License Agreement amends and restates the Amended and Restated Exclusive License Agreement, dated as of June 19, 2017 (the “2017 Agreement”). The 2017 Agreement amended and restated the Exclusive License Agreement, effective March 15, 2006, between the Company and UCLA TDG, as amended by ten amendments. Under the terms of the Amended License Agreement, the Regents have continued to grant us exclusive rights to develop and commercialize NELL-1 (the “Licensed Product”) for spinal fusion by local administration, osteoporosis and trauma applications. The Licensed Product is a recombinant human protein growth factor that is essential for normal bone development.

 

We have agreed to pay an annual maintenance fee to UCLA TDG of $10,000 as well as pay certain royalties to UCLA TDG under the Amended License Agreement at the rate of 3.0% of net sales of licensed products or licensed methods. We must pay the royalties to UCLA TDG on a quarterly basis. Upon a first commercial sale, we also must pay a minimum annual royalty between $50,000 and $250,000, depending on the calendar year which is after the first commercial sale. If we are required to pay any third party any royalties as a result of us making use of UCLA TDG patents, then we may reduce the royalty owed to UCLA TDG by 0.333% for every percentage point paid to a third party. If we grant sublicense rights to a third party to use the UCLA TDG patent, then we will pay UCLA TDG 10% to 20% of the sublicensing income we receive from such sublicense.

 

We are obligated to make the following milestone payments to UCLA TDG for each Licensed Product or Licensed Method:

 

  $100,000 upon enrollment of the first subject in a Feasibility Study;
     
  $250,000 upon enrollment of the first subject in a Pivotal Study:
     
  $500,000 upon Pre-Market Approval of a Licensed Product or Licensed Method; and
     
  $1,000,000 upon the First Commercial Sale of a Licensed Product or Licensed Method.

 

We are also obligated pay to UCLA TDG a fee (the “Diligence Fee”) of $8,000,000 upon the sale of any Licensed Product (the “Triggering Sale Date”) in accordance with the payment schedule below:

 

  Due upon cumulative Net Sales equaling $50,000,000 following the Triggering Sale Date - $2,000,000;
     
  Due upon cumulative Net Sales equaling $100,000,000 following the Triggering Sale Date - $2,000,000; and
     
  Due upon cumulative Net Sales equaling $200,000,000 following the Triggering Sale Date - $4,000,000.

 

Our obligation to pay the Diligence Fee will survive termination or expiration of the Amended License Agreement and we are prohibited from assigning, selling, or otherwise transferring any of its assets related to any Licensed Product unless our Diligence Fee obligation is assigned, sold, or transferred along with such assets, or unless we pay UCLA TDG the Diligence Fee within ten (10) days of such assignment, sale or other transfer of such rights to any Licensed Product.

 

We are also obligated to pay UCLA TDG a cash milestone payment within thirty (30) days of a Liquidity Event (including a Change of Control Transaction and a payment election by UCLA TDG exercisable after December 22, 2016) such payment to equal the greater of:

 

  $500,000; or
     
  2% of all proceeds in connection with a Change of Control Transaction.

 

F-13

 

 

As of September 30, 2023, none of the above milestones have been met.

 

We are obligated to diligently proceed with developing and commercializing licensed products under UCLA TDG patents set forth in the Amended License Agreement. We are required to meet certain diligence milestone deadlines pursuant to the Amended License Agreement. Applicable for the current year, we are required to spend at least $1,000,000 per calendar year on pre-clinical or clinical development until the date that we complete a Phase III pivotal study. If we fail to meet this or the other diligence milestone deadlines, UCLA TDG has the right to either terminate the license or reduce the license to a non-exclusive license.

 

We must reimburse or pre-pay UCLA TDG for patent prosecution and maintenance costs incurred during the term of the Amended License Agreement. We have the right to bring infringement actions against third party infringers of the Amended License Agreement, UCLA TDG may join voluntarily, at its own expense, or, at our expense, be joined involuntarily to the action. We are required to indemnify UCLA TDG against any third party claims arising out of our exercise of the rights under the Amended License Agreement or any sublicense.

 

Payments to UCLA TDG under the Amended License Agreement for the nine months ended September 30, 2023 and 2022 were $23,238 and $35,235, respectively.

 

Development Contracts

 

The Company has two contracts with one vendor for development activities of NELL-1. As of September 30, 2023, there were no prepaid expenses and $955,076 in accounts payable for this vendor. Amounts remaining for services contained within the contracts was $487,640 as of September 30, 2023.

 

At September 30, 2023 there exists a concentration of payables to one vendor of approximately 98% of the Company’s payables.

 

Contingencies

 

The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company’s management does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

 

In July 2019, Dr. Bessie (Chia) Soo and Dr. Kang (Eric) Ting (“Plaintiffs”) filed a complaint (the “Complaint”) in federal court in Massachusetts against the Company, Bruce Stroever (“Stroever”), John Booth (“Booth”), Stephen LaNeve (“LaNeve”, and together with Stroever and Booth, the “Individual Defendants”), and MTF Biologics (f/k/a The Musculoskeletal Transplant Foundation, Inc.) (“MTF”). The Complaint alleges claims for breach of contract against the Company and tortious interference with contract against the Individual Defendants and MTF arising from the termination of the Professional Service Agreements, dated as of January 8, 2016, between the Company and each of the Plaintiffs. The Individual Defendants have been sued for actions taken by them in connection with their service to the Company as directors and/or officers of the Company. As such, the Company has certain indemnification obligations to the Individual Defendants. The Company and the Individual Defendants intend to vigorously defend against the allegations in the Complaint. Although the Complaint was filed several years ago, due to the Covid-19 Pandemic and long delays in the court ruling on various motions to dismiss, in terms of case progression the case is still in its early stages with the claims in the case not being set until April 2022 and preliminary discovery starting since then. Based on the early stage of the litigation, it is not possible to estimate the amount or range of any possible loss arising from the expenditure of defense fees, a judgment or settlement of the matter.

 

NASDAQ Notices

 

On November 17, 2022, the Company received a deficiency letter from The Nasdaq Stock Market LLC’s (“Nasdaq”) notifying it that, because the bid price of its common stock closed below $1.00 per share for 30 consecutive business days, it was no longer in compliance with Nasdaq’s minimum bid price rule, which is a requirement for continued listing on the Nasdaq Capital Market. On June 28, 2023, the Company received a letter from Nasdaq confirming the decision of a Nasdaq Hearings Panel, that while the Company demonstrated compliance with the minimum bid price at that time, based on its recent bid price history the panel imposed a “Panel Monitor,” as defined by Nasdaq Listing Rule 5815(d)(4)(A), through June 27, 2024.

 

On September 27, 2023, the Company received a written notice (the “Notice”) from the staff of Nasdaq notifying the Company that it failed to comply with the $1.00 per share minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2). As a result of the imposition of a mandatory Panel Monitor, the Company is not eligible for a compliance period to regain compliance with the minimum bid price requirement. Accordingly, the Nasdaq staff has determined to delist the Company’s securities from Nasdaq (the “Staff Determination”).

 

The Company timely requested a hearing before a Nasdaq Hearings Panel (the “Panel”), to appeal the Staff Determination, which request stayed any delisting action pending the issuance of the Panel’s determination. The Panel hearing is scheduled for November 30, 2023.

 

At the hearing, the Company expects to present its plan for regaining and sustaining compliance with all applicable requirements for continued listing on The Nasdaq Capital Market. There can be no assurance that the Panel will grant the Company any additional time to regain compliance or that the Company will ultimately regain and sustain compliance for listing of its securities on Nasdaq. In the event the Company’s securities are delisted from Nasdaq, the Company expects that its securities should be eligible to trade on the over-the-counter OTC Markets platform. The Company is evaluating several alternatives to regain compliance with the minimum bid price requirement.

 

8. Subsequent Events

 

The Company has evaluated subsequent events through November 14, 2023, the date which the consolidated financial statements were available to be issued. There were no additional subsequent events noted that would require adjustment to or disclosure in these consolidated financial statements.

 

F-14

 

 

Item 2. Management’s Discussion and Analysis.

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and audited consolidated financial statements for the years ended December 31, 2022 and 2021 and the related notes included in our Annual Report on Form 10-K filed for the fiscal year ended December 31, 2022, with the SEC on March 30, 2023. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors.

 

Overview

 

We are a medical device company that is currently focused on bone regeneration in spinal fusion using the recombinant human protein known as NELL-1. NELL-1 in combination with DBM, demineralized bone matrix, is an osteopromotive recombinant protein that provides target specific control over bone regeneration. The NELL-1 technology platform has been licensed exclusively for worldwide applications to us through a technology transfer from the UCLA Technology Development Group on behalf of UC Regents (“UCLA TDG”). UCLA TDG and the Company received guidance from the FDA that NELL-1/DBM will be classified as a device/drug combination product with a pre-market approval filing (“PMA”).

 

We were founded by University of California professors in collaboration with an Osaka University professor and a University of Southern California surgeon in 2004 as a privately-held company with proprietary, patented technology that has been validated in sheep and non-human primate models to facilitate bone growth. We believe our platform technology has application in delivering improved outcomes in the surgical specialties of spinal, orthopedic, general orthopedic, plastic reconstruction, neurosurgery, interventional radiology, and sports medicine. Lead product development and clinical studies are targeted on spinal fusion surgery, one of the larger segments in the orthopedic market.

 

We are a development stage entity. The production and marketing of our products and ongoing research and development activities are subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United States, any combination product developed by us must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive regulatory approval process implemented by the FDA under the Food, Drug and Cosmetic Act. There can be no assurance that we will not encounter problems in clinical trials that will cause us or the FDA to delay or suspend the clinical trials.

 

Our success will depend in part on our ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by us will not be challenged, invalidated, rendered unenforceable, or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to us.

 

4

 

 

UCLA TDG Exclusive License Agreement

 

Effective April 9, 2019, we entered into an Amended and Restated Exclusive License Agreement dated as of March 21, 2019, which was subsequently amended through three sets of amendments (as so amended the “Amended License Agreement”) with the UCLA TDG. The Amended License Agreement amends and restates the Amended and Restated Exclusive License Agreement, dated as of June 19, 2017 (the “2017 Agreement”). The 2017 Agreement amended and restated the Exclusive License Agreement, effective March 15, 2006, between the Company and UCLA TDG, as amended by ten amendments. Under the terms of the Amended License Agreement, the Regents have continued to grant us exclusive rights to develop and commercialize NELL-1 (the “Licensed Product”) for spinal fusion by local administration, osteoporosis and trauma applications. The Licensed Product is a recombinant human protein growth factor that is essential for normal bone development.

 

We have agreed to pay an annual maintenance fee to UCLA TDG of $10,000 as well as pay certain royalties to UCLA TDG under the Amended License Agreement at the rate of 3.0% of net sales of licensed products or licensed methods. We must pay the royalties to UCLA TDG on a quarterly basis. Upon a first commercial sale, we also must pay a minimum annual royalty between $50,000 and $250,000, depending on the calendar year which is after the first commercial sale. If we are required to pay any third party any royalties as a result of us making use of UCLA TDG patents, then we may reduce the royalty owed to UCLA TDG by 0.333% for every percentage point paid to a third party. If we grant sublicense rights to a third party to use the UCLA TDG patent, then we will pay UCLA TDG 10% to 20% of the sublicensing income we receive from such sublicense.

 

We are obligated to make the following milestone payments to UCLA TDG for each Licensed Product or Licensed Method:

 

  $100,000 upon enrollment of the first subject in a Feasibility Study;
     
  $250,000 upon enrollment of the first subject in a Pivotal Study:
     
  $500,000 upon Pre-Market Approval of a Licensed Product or Licensed Method; and
     
  $1,000,000 upon the First Commercial Sale of a Licensed Product or Licensed Method.

 

We are also obligated pay to UCLA TDG a fee (the “Diligence Fee”) of $8,000,000 upon the sale of any Licensed Product (the “Triggering Sale Date”) in accordance with the payment schedule below:

 

  Due upon cumulative Net Sales equaling $50,000,000 following the Triggering Sale Date - $2,000,000;
     
  Due upon cumulative Net Sales equaling $100,000,000 following the Triggering Sale Date - $2,000,000; and
     
  Due upon cumulative Net Sales equaling $200,000,000 following the Triggering Sale Date - $4,000,000.

 

Our obligation to pay the Diligence Fee will survive termination or expiration of the Amended License Agreement and we are prohibited from assigning, selling, or otherwise transferring any of its assets related to any Licensed Product unless our Diligence Fee obligation is assigned, sold, or transferred along with such assets, or unless we pay UCLA TDG the Diligence Fee within ten (10) days of such assignment, sale or other transfer of such rights to any Licensed Product.

 

5

 

 

We are also obligated to pay UCLA TDG a cash milestone payment within thirty (30) days of a Liquidity Event (including a Change of Control Transaction and a payment election by UCLA TDG exercisable after December 22, 2016) such payment to equal the greater of:

 

  $500,000; or
     
  2% of all proceeds in connection with a Change of Control Transaction.

 

As of September 30, 2023, none of the above milestones have been met.

 

We are obligated to diligently proceed with developing and commercializing licensed products under UCLA TDG patents set forth in the Amended License Agreement. We are required to meet certain diligence milestone deadlines pursuant to the Amended License Agreement. Applicable for the current year, we are required to spend at least $1,000,000 per calendar year on pre-clinical or clinical development until the date that we complete a Phase III pivotal study. If we fail to meet this or the other diligence milestone deadlines, UCLA TDG has the right to either terminate the license or reduce the license to a non-exclusive license.

 

We must reimburse or pre-pay UCLA TDG for patent prosecution and maintenance costs incurred during the term of the Amended License Agreement. We have the right to bring infringement actions against third party infringers of the Amended License Agreement, UCLA TDG may join voluntarily, at its own expense, or, at our expense, be joined involuntarily to the action. We are required to indemnify UCLA TDG against any third party claims arising out of our exercise of the rights under the Amended License Agreement or any sublicense.

 

Payments to UCLA TDG under the Amended License Agreement for the nine months ended September 30, 2023 and 2022 were $ $23,238 and $35,235, respectively.

 

NASDAQ Notices

 

On November 17, 2022, we received a deficiency letter from The Nasdaq Stock Market LLC’s (“Nasdaq”) notifying us that, because the bid price of our common stock closed below $1.00 per share for 30 consecutive business days, we were no longer in compliance with Nasdaq’s minimum bid price rule, which is a requirement for continued listing on the Nasdaq Capital Market. On June 28, 2023, the Company received a letter from Nasdaq confirming the decision of a Nasdaq Hearings Panel that while the Company demonstrated compliance with the minimum bid price rule at that time, based on our recent bid price history the panel imposed a “Panel Monitor,” as defined by Nasdaq Listing Rule 5815(d)(4)(A), through June 27, 2024.

 

On September 27, 2023, the Company received a written notice (the “Notice”) from the staff of Nasdaq notifying the Company that it failed to comply with the $1.00 per share minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2). As a result of the imposition of a mandatory Panel Monitor, the Company is not eligible for a compliance period to regain compliance with the minimum bid price requirement. Accordingly, the Nasdaq staff has determined to delist the Company’s securities from Nasdaq (the “Staff Determination”).

 

The Company timely requested a hearing before a Nasdaq Hearings Panel (the “Panel”), to appeal the Staff Determination, which request stayed any delisting action pending the issuance of the Panel’s determination. The Panel hearing is scheduled for November 30, 2023.

 

At the hearing, the Company expects to present its plan for regaining and sustaining compliance with all applicable requirements for continued listing on The Nasdaq Capital Market. There can be no assurance that the Panel will grant the Company any additional time to regain compliance or that the Company will ultimately regain and sustain compliance for listing of its securities on Nasdaq. In the event the Company’s securities are delisted from Nasdaq, the Company expects that its securities should be eligible to trade on the over-the-counter OTC Markets platform. The Company is evaluating several alternatives to regain compliance with the minimum bid price requirement.

 

6

 

 

Results of Operations

 

Since our inception, we devoted substantially all of our efforts and funding to the development of the NELL-1 protein and raising capital. We have not yet generated revenues from our planned operations.

 

Three Months ended September 30, 2023 compared to the Three Months ended September 30, 2022

 

  

Three-months ended

September 30, 2023

   Three-months ended
September 30, 2022
   % Change 
Operating expenses               
Research and development  $1,574,850   $769,410    104.68%
General and administrative   506,040    449,867    12.49%
                
Total operating expenses   2,080,890    1,219,277    70.67%
                
Loss from operations   (2,080,890)   (1,219,277)   70.67%
                
Change in fair value of warrant liability   160,645    -    100.00%
                
Interest income   536    -    100.00%
                
Net loss  $(1,919,709)  $(1,219,277)   57.45%

 

Research and Development

 

Our research and development costs increased from $769,410 during the three months ended September 30, 2022 to $1,574,850 during the three months ended September 30, 2023. The increase of $805,440 is primarily due to development activities for our Nell-1 protein as we prepare for our pilot clinical study. We will continue to incur significant expenses for development activities for NELL-1 in the future.

 

General and Administrative

 

Our general and administrative expenses increased from $449,867 during the three months ended September 30, 2022 to $506,040 during the three months ended September 30, 2023. The $56,173 increase was primarily due to consultants for the annual proxy and to assist with the NASDAQ notice. The incentive bonus accruals were based on performance targets established for each fiscal year.

 

Change in fair value of warrant liability

 

In October 2022, we completed a public equity offering, which included the issuance of 433,382 warrants. The warrants provide for a Black Scholes value calculation in the event of certain transactions (“Fundamental Transactions,” as defined), which includes a floor on volatility utilized in the value calculation at 100% or greater. We have determined that this provision introduces leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815, we have classified the fair value of the warrants as a liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

 

The change in fair value of warrant liability represents the re-measurement of the outstanding warrants at September 30, 2023.

 

7

 

 

Nine Months ended September 30, 2023 compared to the Nine Months ended September 30, 2022

 

  

Nine-months Ended

September 30, 2023

   Nine-months Ended
September 30, 2022
   % Change 
Operating expenses               
Research and development  $6,460,747   $823,410    684.63%
General and administrative   1,807,548    1,554,670    16.27%
                
Total operating expenses   8,268,295    2,378,080    247.69%
                
Loss from operations   (8,268,295)   (2,378,080)   247.69%
                
Change in fair value of warrant liability   867,930    -    100.00%
                
Interest income   1,519    -    100.00%
                
Net loss  $(7,398,846)  $(2,378,080)   211.13%

 

Research and Development

 

Our research and development costs increased from $823,410 during the nine months ended September 30, 2022 to $6,460,747 during the nine months ended September 30, 2023. The increase of $5,637,337 is primarily due to development activities for our Nell-1 protein as we prepare for our pilot clinical study. We will continue to incur significant expenses for development activities for NELL-1 in the future.

 

General and Administrative

 

Our general and administrative expenses increased from $1,554,670 during the nine months ended September 30, 2022 to $1,807,548 during the nine months ended September 30, 2023. The $252,878 increase was due to increased legal expenditures offset by a decrease in the fair value of options issued in 2023 verses 2022.

 

Change in fair value of warrant liability

 

In October 2022, we completed a public equity offering, which included the issuance of 433,382 warrants. The warrants provide for a Black Scholes value calculation in the event of certain transactions (“Fundamental Transactions,” as defined), which includes a floor on volatility utilized in the value calculation at 100% or greater. We have determined that this provision introduces leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815, we have classified the fair value of the warrants as a liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

 

The change in fair value of warrant liability represents the re-measurement of the outstanding warrants at September 30, 2023.

 

Liquidity and Capital Resources

 

Since inception to September 30, 2023 we have incurred accumulated losses of approximately $79.4 million. We will continue to incur significant expenses for development activities for its product NELL-1/DBM. Operating expenditures for the next twelve months are estimated at $5.1 million. The accompanying consolidated financial statements for the nine months ended September 30, 2023 have been prepared assuming the Company will continue as a going concern. As reflected in the financial statements, we incurred a net loss of $7.4 million, and used net cash in operating activities of $7.5 million during the nine months ended September 30, 2023. These factors raise substantial doubt about the Company’s ability to continue as a going concern within a reasonable period of time, which is considered to be one year from the issuance date of these financial statements. In addition, our independent registered public accounting firm, in its audit report to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, expressed substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

8

 

 

We will continue to attempt to raise additional debt and/or equity financing to fund future operations and to provide additional working capital. However, there is no assurance that such financing will be consummated or obtained in sufficient amounts necessary to meet our needs. If cash resources are insufficient to satisfy our on-going cash requirements, we will be required to scale back or discontinue our product development programs, or obtain funds if available (although there can be no certainties) through strategic alliances that may require us to relinquish rights to our technology or substantially reduce or discontinue our operations entirely. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.

 

On June 14, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”) acting as representatives of the several underwriters in connection with a public offering (the “Offering”) of an aggregate of 2,538,071 shares of its common stock. The public offering price was $1.97 per share and the underwriters agreed to purchase 2,538,071 shares at a 7% discount to the public offering price. The Company granted EF Hutton a 45-day option to purchase up to 380,710 additional shares, to cover over-allotments, if any, which was not exercised. The Offering closed on June 16, 2023, resulting in gross proceeds of $5 million, before deducting underwriting discounts and commissions and other offering expenses. The net proceeds in relation to the Offering were $4,452,163 thousand.

 

At September 30, 2023 and December 31, 2022, we had cash of $4,452,586 and $7,538,312, respectively.

 

Available cash is expected to fund our operations through the second quarter of 2024.

 

We anticipate that we will require approximately $5.9 million to complete first in man studies, and an estimated additional $27 million to achieve FDA approval for a spine interbody fusion indication.

 

Cash Flows

 

Operating activities

 

During the nine months ended September 30, 2023 and 2022, cash used in operating activities was $7,537,889 and $1,616,122, respectively. Cash expenditures for the nine months ended September 30, 2023 increased primarily due to development activities for our Nell-1 protein as we prepare for our pilot clinical study.

 

Financing activities

 

During the nine months ended September 30, 2023, cash provided by financing activities of $4,452,163 resulted from the net proceeds of our June 14, 2023 public offering of common stock.

 

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies and Use of Estimates

 

See our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a discussion of our critical accounting policies and use of estimates. There have been no material changes to our critical accounting policies and use of estimates discussed in such report.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Financial Officer and Chief Executive Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) as of September 30, 2023. Based upon that evaluation, our Chief Financial Officer and Chief Executive Officer concluded that as of September 30, 2023, our disclosure controls and procedures were effective.

 

Changes in Internal Controls

 

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

9

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There have been no material developments with respect to the information previously reported under Part I, Item 3 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

 

Item 1A. Risk Factors.

 

For a discussion of the Company’s potential risks or uncertainties, please see “Part I—Item 1A—Risk Factors” and “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC, and “Part I—Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein. There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent Quarterly Reports on Form 10-Q, except as noted herein.

 

We ceased to be in compliance with the Nasdaq minimum bid price rule while subject to a Nasdaq Panel Monitor and have requested a hearing with a Nasdaq Hearing Panel in response to a delisting notice. If the Hearing Panel does not grant us additional time to regain compliance with the minimum bid price rule,, and if we are unable to regain and maintain compliance with the Nasdaq listing rules, our common stock may be delisted from trading on the Nasdaq Stock Market, which could have a material adverse effect on us and our stockholders.

 

On November 17, 2022, we received a deficiency letter from Nasdaq notifying us that, because the bid price of our common stock closed below $1.00 per share for 30 consecutive business days, we were no longer in compliance with Nasdaq’s minimum bid price rule, which is a requirement for continued listing on the Nasdaq Capital Market. We filed an expedited review request and on June 28, 2023, we received a letter from Nasdaq confirming the decision of a Nasdaq Hearing Panel that while the Company demonstrated compliance with the minimum bid price rule at that time, based on our recent bid price history, the panel imposed a “Panel Monitor,” as defined by Nasdaq Listing Rule 5815(d)(4)(A), through June 27, 2024.

 

On September 27, 2023, the Company received a written notice (the “Notice”) from the staff of Nasdaq notifying the Company that it failed to comply with the $1.00 per share minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2). As a result of the imposition of a mandatory Panel Monitor, the Company is not eligible for a compliance period to regain compliance with the minimum bid price requirement. Accordingly, the Nasdaq staff has determined to delist the Company’s securities from Nasdaq (the “Staff Determination”).

 

The Company timely requested a hearing before a Nasdaq Hearings Panel (the “Panel”), to appeal the Staff Determination, which request stayed any delisting action pending the issuance of the Panel’s determination. The Panel hearing is scheduled for November 30, 2023.

 

If the Company is delisted from Nasdaq, its common stock may be eligible for trading on an over-the-counter market. If the Company is not able to obtain a listing on another stock exchange or quotation service for its common stock, it may be extremely difficult or impossible for stockholders to sell their shares of common stock. Moreover, if the Company is delisted from Nasdaq, but obtains a substitute listing for its common stock, it will likely be on a market with less liquidity, and therefore experience potentially more price volatility than experienced on Nasdaq. Stockholders may not be able to sell their shares of common stock on any such substitute market in the quantities, at the times, or at the prices that could potentially be available on a more liquid trading market. As a result of these factors, if the Company’s common stock is delisted from Nasdaq, the value and liquidity of the Company’s common stock, warrants and pre-funded warrants would likely be significantly adversely affected. A delisting of the Company’s common stock from Nasdaq could also adversely affect the Company’s ability to obtain financing for its operations and/or result in a loss of confidence by investors, employees and/or business partners.

 

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

 

None

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

Not Applicable

 

Item 5. Other Information.

 

During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

 

10

 

 

Item 6. Exhibits.

 

(a) Exhibits required by Item 601 of Regulation S-K.

 

Exhibit   Description
10.1   First Amendment to the Bone Biologics Corporation 2015 Equity Incentive Plan (Incorporated by reference to Annex B to the registrant’s Proxy Statement on Schedule 14A filed August 3, 2023).
     
31.1   Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Report on Form 10-Q for the quarter ended September 30, 2023.*
     
31.2   Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Report on Form 10-Q for the quarter ended September 30, 2023.*
     
32.1   Certification of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
     
32.2   Certification of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
     
101.INS   Inline XBRL Instance Document*
101.SCH   Inline XBRL Taxonomy Extension Schema Document*
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed Herewith

** Furnished Herewith

 

11

 

 

SIGNATURES

 

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

 

  BONE BIOLOGICS CORPORATION
     
Dated: November 14, 2023 By: /s/ Jeffrey Frelick
  Name: Jeffrey Frelick
  Title: Chief Executive Officer

 

12

 

 

Exhibit 31.1

 

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Securities and Exchange Commission Release 34-46427

 

I, Jeffrey Frelick, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Bone Biologics Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

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

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2023 /s/ Jeffrey Frelick
  Jeffrey Frelick
  Principal Executive Officer

 

 

 

 

Exhibit 31.2

 

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Securities and Exchange Commission Release 34-46427

 

I, Deina H. Walsh, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Bone Biologics Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

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

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2023 /s/ Deina H. Walsh
  Deina H. Walsh
  Principal Financial Officer

 

 

 

 

Exhibit 32.1

 

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Report of Bone Biologics Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey Frelick, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

  /s/ Jeffrey Frelick
  Jeffrey Frelick
  Principal Executive Officer
   
  November 14, 2023

 

 

 

 

Exhibit 32.2

 

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Report of Bone Biologics Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Deina H. Walsh, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

  /s/ Deina H. Walsh
  Deina H. Walsh
  Principal Financial Officer
   
  November 14, 2023

 

 

 

v3.23.3
Cover - shares
9 Months Ended
Sep. 30, 2023
Nov. 10, 2023
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2023  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --12-31  
Entity File Number 001-40899  
Entity Registrant Name Bone Biologics Corporation  
Entity Central Index Key 0001419554  
Entity Tax Identification Number 42-1743430  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 2 Burlington Woods Drive  
Entity Address, Address Line Two Ste 100  
Entity Address, City or Town Burlington  
Entity Address, State or Province MA  
Entity Address, Postal Zip Code 01803  
City Area Code (781)  
Local Phone Number 552-4452  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   3,134,391
Common stock, $0.001 par value per share    
Title of 12(b) Security Common stock, $0.001 par value per share  
Trading Symbol BBLG  
Security Exchange Name NASDAQ  
Warrants to purchase common stock, $0.001 par value per share    
Title of 12(b) Security Warrants to Purchase Common stock, $0.001 par value per share  
Trading Symbol BBLGW  
Security Exchange Name NASDAQ  
v3.23.3
Condensed Consolidated Balance Sheets - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current Assets    
Cash $ 4,452,586 $ 7,538,312
Prepaid expenses 523,758 956,925
Total assets 4,976,344 8,495,237
Current Liabilities    
Accounts payable and accrued expenses 1,102,721 888,461
Warrant liability 80,514 1,659,468
Total current liabilities 1,183,235 2,547,929
Total liabilities 1,183,235 2,547,929
Commitments and Contingencies
Stockholders’ Equity    
Preferred Stock, $0.001 par value per share; 20,000,000 shares authorized; none issued or outstanding at September 30, 2023 and December 31, 2022
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 3,134,391 and 510,065 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 3,135 510
Additional paid-in capital 83,149,047 77,907,025
Accumulated deficit (79,359,073) (71,960,227)
Total stockholders’ equity 3,793,109 5,947,308
Total liabilities and stockholders’ equity $ 4,976,344 $ 8,495,237
v3.23.3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 3,134,391 510,065
Common stock, shares outstanding 3,134,391 510,065
v3.23.3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Income Statement [Abstract]        
Revenues
Cost of revenues
Gross profit
Operating expenses        
Research and development 1,574,850 769,410 6,460,747 823,410
General and administrative 506,040 449,867 1,807,548 1,554,670
Total operating expenses 2,080,890 1,219,277 8,268,295 2,378,080
Loss from operations (2,080,890) (1,219,277) (8,268,295) (2,378,080)
Other expenses        
Change in fair value of warrant liability 160,645 867,930
Interest income 536 1,519
Net Loss $ (1,919,709) $ (1,219,277) $ (7,398,846) $ (2,378,080)
Loss per share - basic $ (0.61) $ (3.53) $ (4.68) $ (6.89)
Loss per share - diluted $ (0.61) $ (3.53) $ (4.68) $ (6.89)
Weighted average shares outstanding - basic 3,134,391 345,019 1,582,397 345,019
Weighted average shares outstanding - diluted 3,134,391 345,019 1,582,397 345,019
v3.23.3
Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance at Dec. 31, 2021 $ 10,350 $ 77,040,713 $ (70,475,607) $ 6,575,456
Balance, shares at Dec. 31, 2021 10,350,574      
Fair value of vested stock options issued to employees and directors 152,844 152,844
Net Loss (689,499) (689,499)
Share adjustment for stock split rounding
Share adjustment for stock split rounding, shares 5      
Balance at Mar. 31, 2022 $ 10,350 77,193,557 (71,165,106) 6,038,801
Balance, shares at Mar. 31, 2022 10,350,579      
Balance at Dec. 31, 2021 $ 10,350 77,040,713 (70,475,607) 6,575,456
Balance, shares at Dec. 31, 2021 10,350,574      
Net Loss       (2,378,080)
Balance at Sep. 30, 2022 $ 10,350 77,244,839 (72,853,687) 4,401,502
Balance, shares at Sep. 30, 2022 10,350,579      
Balance at Mar. 31, 2022 $ 10,350 77,193,557 (71,165,106) 6,038,801
Balance, shares at Mar. 31, 2022 10,350,579      
Fair value of vested stock options issued to employees and directors 18,748 18,748
Net Loss (469,304) (469,304)
Balance at Jun. 30, 2022 $ 10,350 77,212,305 (71,634,410) 5,588,245
Balance, shares at Jun. 30, 2022 10,350,579      
Fair value of vested stock options issued to employees and directors 32,534 32,534
Net Loss (1,219,277) (1,219,277)
Balance at Sep. 30, 2022 $ 10,350 77,244,839 (72,853,687) 4,401,502
Balance, shares at Sep. 30, 2022 10,350,579      
Balance at Dec. 31, 2022 $ 510 77,907,025 (71,960,227) 5,947,308
Balance, shares at Dec. 31, 2022 510,065      
Fair value of vested stock options issued to employees and directors 44,764 44,764
Exercise of warrants $ 47 (47)
Exercise of warrants, shares 46,698      
Extinguishment of warrant liability upon exercise of warrants 490,226 490,226
Net Loss (3,709,899) (3,709,899)
Balance at Mar. 31, 2023 $ 557 78,441,968 (75,670,126) 2,772,399
Balance, shares at Mar. 31, 2023 556,763      
Balance at Dec. 31, 2022 $ 510 77,907,025 (71,960,227) 5,947,308
Balance, shares at Dec. 31, 2022 510,065      
Net Loss       (7,398,846)
Balance at Sep. 30, 2023 $ 3,135 83,149,047 (79,359,073) 3,793,109
Balance, shares at Sep. 30, 2023 3,134,391      
Balance at Mar. 31, 2023 $ 557 78,441,968 (75,670,126) 2,772,399
Balance, shares at Mar. 31, 2023 556,763      
Fair value of vested stock options issued to employees and directors 16,670 16,670
Exercise of warrants $ 40 (40)
Exercise of warrants, shares 39,506      
Extinguishment of warrant liability upon exercise of warrants 220,798 220,798
Net Loss (1,769,238) (1,769,238)
Proceeds from sale of common stock in public offering, net of offering costs $547,837 $ 2,538 4,449,625 4,452,163
Proceeds from sale of common stock in public offering, net of offering costs, shares 2,538,071      
Share adjustment for stock split rounding
Share adjustment for stock split rounding, shares 51      
Balance at Jun. 30, 2023 $ 3,135 83,129,021 (77,439,364) 5,692,792
Balance, shares at Jun. 30, 2023 3,134,391      
Fair value of vested stock options issued to employees and directors 20,026 20,026
Net Loss (1,919,709) (1,919,709)
Balance at Sep. 30, 2023 $ 3,135 $ 83,149,047 $ (79,359,073) $ 3,793,109
Balance, shares at Sep. 30, 2023 3,134,391      
v3.23.3
Consolidated Statement of Stockholders' Equity (Unaudited) (Parenthetical)
3 Months Ended
Jun. 30, 2023
USD ($)
Common Stock [Member]  
Offering costs $ 547,837
v3.23.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Cash flows from operating activities        
Net loss $ (1,919,709) $ (1,219,277) $ (7,398,846) $ (2,378,080)
Adjustments to reconcile net loss to net cash used in operating activities:        
Stock-based compensation     81,460 204,126
Change in fair value of warrant liability (160,645) (867,930)
Changes in operating assets and liabilities:        
Prepaid expenses and other current assets     433,167 (141,734)
Accounts payable and accrued expenses     214,260 699,566
Net cash used in operating activities     (7,537,889) (1,616,122)
Cash flows from financing activities        
Proceeds from sale of common stock in public offering, net of offering costs     4,452,163
Net cash provided by financing activities     4,452,163
Net decrease in cash     (3,085,726) (1,616,122)
Cash, beginning of period     7,538,312 6,675,365
Cash, end of period $ 4,452,586 $ 5,059,243 4,452,586 5,059,243
Supplemental information        
Income taxes paid    
Non-cash financing activities        
Extinguishment of warrant liability upon exercise of warrants     $ 711,024