Matinas BioPharma(MTNB) - 2023 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls Item 1. Financial Statements This section presents Matinas BioPharma Holdings, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flow, along with detailed notes explaining significant accounting policies, liquidity, and specific financial line items for the periods ended September 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets The condensed consolidated balance sheets provide a snapshot of the company's financial position, showing a decrease in total assets and stockholders' equity from December 31, 2022, to September 30, 2023, primarily driven by a reduction in marketable debt securities and an accumulated deficit Condensed Consolidated Balance Sheets Summary (in thousands) | Metric | September 30, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--------------------------------- | :----------------------------- | :-------------------------- | | Cash and cash equivalents | $6,407 thousand | $6,830 thousand | | Marketable debt securities | $11,809 thousand | $21,933 thousand | | Total current assets | $19,989 thousand | $34,532 thousand | | Total assets | $29,791 thousand | $44,819 thousand | | Total current liabilities | $3,229 thousand | $4,286 thousand | | Total liabilities | $6,641 thousand | $8,182 thousand | | Total stockholders' equity | $23,150 thousand | $36,637 thousand | | Accumulated deficit | $(170,259) thousand | $(152,631) thousand | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss for both the three and nine months ended September 30, 2023, with contract revenue decreasing significantly compared to the prior year, and research and development expenses also showing a decline Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Contract Revenue | $— | $1,063 | $1,096 | $2,125 | | Research and development | $3,295 | $3,707 | $10,824 | $12,811 | | General and administrative | $2,839 | $2,818 | $8,151 | $8,424 | | Total costs and expenses | $6,134 | $6,525 | $18,975 | $21,235 | | Net loss | $(6,055) | $(5,462) | $(17,628) | $(17,363) | | Net loss per share | $(0.03) | $(0.03) | $(0.08) | $(0.08) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $36,637 thousand at December 31, 2022, to $23,150 thousand at September 30, 2023, primarily due to the net loss incurred during the period, partially offset by stock-based compensation and other comprehensive income Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Balance, December 31, 2022 | Stock-based compensation | Other comprehensive income | Net loss | Balance, September 30, 2023 | | :-------------------- | :------------------------- | :----------------------- | :------------------------- | :------- | :-------------------------- | | Total Stockholders' Equity | $36,637 | $3,676 | $465 | $(17,628) | $23,150 | Condensed Consolidated Statements of Cash Flow For the nine months ended September 30, 2023, the company experienced a net decrease in cash, cash equivalents, and restricted cash, driven by cash used in operating activities, partially offset by cash provided by investing activities Condensed Consolidated Statements of Cash Flow (in thousands) | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(10,699) | $(14,857) | | Net cash provided by investing activities | $10,282 | $4,919 | | Net cash (used in)/provided by financing activities | $(6) | $84 | | Net decrease in cash, cash equivalents and restricted cash | $(423) | $(9,854) | | Cash, cash equivalents and restricted cash at end of period | $6,657 | $11,426 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed disclosures on the company's business, liquidity, accounting policies, financial instruments, leases, revenue recognition, income taxes, stockholders' equity, stock-based compensation, and subsequent events, offering crucial context to the condensed consolidated financial statements Note 1 – Description of Business Matinas BioPharma Holdings Inc. is a clinical-stage biopharmaceutical company focused on identifying and developing novel pharmaceutical products, utilizing its lipid nanocrystal (LNC) platform delivery technology - Matinas BioPharma Holdings Inc. is a clinical-stage biopharmaceutical company focused on identifying and developing novel pharmaceutical products, utilizing its lipid nanocrystal ("LNC") platform delivery technology[22][24] Note 2 – Liquidity, Plan of Operations and Going Concern The company faces significant liquidity challenges, with an accumulated deficit and limited cash, raising substantial doubt about its ability to continue as a going concern - The Company has experienced net losses and negative cash flows from operations since inception, with an accumulated deficit of $170,259 thousand as of September 30, 2023[23] - Cash and cash equivalents ($6,407 thousand) and marketable debt securities ($11,809 thousand) are expected to fund operations only into the third quarter of 2024, leading to substantial doubt about the Company's ability to continue as a going concern[26] - Future operations are dependent on controlling expenses, proceeds from common stock sales via an At-The-Market Sales Agreement (ATM), and securing additional financing, though success is not assured[27] Note 3 – Summary of Significant Accounting Policies This note outlines the company's financial statement preparation in accordance with U.S. GAAP, including consolidation principles and the impact of recent accounting pronouncements - The financial statements are prepared in accordance with U.S. GAAP and include consolidated accounts of Holdings and its wholly-owned subsidiaries, BioPharma and Nanotechnologies, with all intercompany transactions eliminated[28] - Management believes recent accounting pronouncements will not materially affect the Company's financial statements[29] Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Debt Securities This note details the composition and changes in cash, cash equivalents, restricted cash, and marketable debt securities, including unrealized gains and losses Cash, Cash Equivalents, and Restricted Cash (in thousands) | Metric (in thousands) | September 30, 2023 | December 31, 2022 | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | :----------------- | :---------------- | | Cash and cash equivalents | $6,407 | $6,830 | $11,176 | $21,030 | | Restricted cash | $250 | $250 | $250 | $250 | | Total cash, cash equivalents and restricted cash | $6,657 | $7,080 | $11,426 | $21,280 | Marketable Debt Securities Fair Value (in thousands) | Marketable Debt Securities (in thousands) | Amortized Cost | Unrealized Gain | Unrealized (Loss) | Fair Value | | :---------------------------------------- | :------------- | :-------------- | :---------------- | :--------- | | As of September 30, 2023: | | | | | | U.S. Treasury Bonds | $998 | $— | $(13) | $985 | | U.S. Government Notes | $11,170 | $— | $(346) | $10,824 | | Total | $12,168 | $— | $(359) | $11,809 | | As of December 31, 2022: | | | | | | U.S. Treasury Bonds | $993 | $— | $(34) | $959 | | U.S. Government Notes | $16,324 | $— | $(721) | $15,603 | | Corporate Debt Securities | $5,440 | $— | $(69) | $5,371 | | Total | $22,757 | $— | $(824) | $21,933 | - The Company recorded unrealized gains of $155 thousand and $465 thousand for the three and nine months ended September 30, 2023, respectively, on marketable debt securities, compared to unrealized losses of $181 thousand and $790 thousand for the same periods in 2022[33] Note 5 - Fair Value Measurements This note describes the classification of financial instruments within the fair value hierarchy, distinguishing between Level 1 and Level 2 assets - The Company classifies U.S. Treasury Bonds as Level 1 in the fair value hierarchy due to quoted market prices in active markets[39] - U.S. Government Notes and Corporate Debt Securities are classified as Level 2, valued using quoted market prices in less active markets[39] Note 6 – Leasehold Improvements and Equipment This note provides a breakdown of leasehold improvements and equipment, including their net book value and associated depreciation and amortization expenses Leasehold Improvements and Equipment (in thousands) | Category (in thousands) | September 30, 2023 | December 31, 2022 | | :---------------------- | :----------------- | :---------------- | | Equipment | $2,523 | $2,305 | | Leasehold improvements | $1,155 | $1,155 | | Total | $3,678 | $3,460 | | Less: accumulated depreciation and amortization | $1,657 | $1,369 | | Net | $2,021 | $2,091 | - Depreciation and amortization expense for leasehold improvements and equipment was $288 thousand for the nine months ended September 30, 2023, compared to $244 thousand for the same period in 2022[40] Note 7 – Accrued Expenses and Other Liabilities This note details the composition of accrued expenses and other liabilities, including payroll, general and administrative, research and development, and deferred revenue Accrued Expenses and Other Liabilities (in thousands) | Category (in thousands) | September 30, 2023 | December 31, 2022 | | :---------------------- | :----------------- | :---------------- | | Payroll and incentives | $1,290 | $1,705 | | General and administrative expenses | $407 | $455 | | Research and development expenses | $60 | $130 | | Deferred revenue | $— | $721 | | Other deferred liabilities | $— | $88 | | Total | $1,757 | $3,099 | Note 8 – Leases This note presents the company's lease expenses and liabilities, distinguishing between operating and finance leases, along with weighted-average lease terms and discount rates Lease Expense (in thousands) | Lease Expense (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating lease expense | $225 | $194 | $677 | $646 | | Finance lease interest expense | $0 | $0 | $2 | $1 | Lease Liabilities (in thousands) | Lease Liabilities (in thousands) | Operating Lease Liabilities (Sep 30, 2023) | Finance Lease Liabilities (Sep 30, 2023) | Operating Lease Liabilities (Dec 31, 2022) | Finance Lease Liabilities (Dec 31, 2022) | | :------------------------------- | :----------------------------------------- | :--------------------------------------- | :----------------------------------------- | :--------------------------------------- | | Total undiscounted lease payments | $4,584 | $30 | $5,265 | $38 | | Present value of lease liabilities | $3,684 | $24 | $4,095 | $29 | | Weighted average remaining lease term (years) | 4.6 | 4.2 | 5.3 | 4.5 | | Weighted average discount rate | 9.2% | 11.6% | 9.2% | 11.1% | Note 9 – Revenue Recognition, Collaboration Agreements and Other This note outlines revenue recognition from collaboration agreements, including the expiration of the BioNTech collaboration and the discontinuation of MAT2501 development - The BioNTech research collaboration, which provided a $2,750 thousand exclusivity fee, expired on April 8, 2023, with all contract research revenue recognized by March 31, 2023[49][51] - The Company discontinued development of MAT2501 in Q4 2022, ceasing further obligations to the Cystic Fibrosis Foundation (CFF) and will not receive the remaining balance of the $4.5 million award[53] - Obligations under the Genentech Feasibility Study Agreement for the development of oral formulations were completed during the three months ended March 31, 2023[54] Note 10 – Income Taxes This note details the income from the sale of New Jersey net operating losses and tax credits for the reported periods Income from Sale of New Jersey NOLs & Tax Credits (in thousands) | Item | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :----------------------------- | :----------------------------- | | Sale of New Jersey net operating losses & tax credits | $0 | $1,734 thousand | Note 11 – Stockholders' Equity This note provides information on outstanding common stock, the expiration of warrants, and potentially dilutive securities, including stock options - As of September 30, 2023, the Company had 217,264,526 shares of common stock outstanding, unchanged from December 31, 2022[12] - The Company had no outstanding warrants to purchase common stock as of September 30, 2023, following the expiration of 238 thousand warrants during the nine months ended September 30, 2023[58] Potentially Dilutive Securities (in thousands) | Potentially Dilutive Securities (in thousands) | As of September 30, 2023 | As of September 30, 2022 | | :--------------------------------------------- | :----------------------- | :----------------------- | | Stock options | 33,234 | 27,729 | | Warrants | — | 988 | | Total | 33,234 | 28,717 | Note 12 – Accumulated Other Comprehensive Loss This note details the changes in accumulated other comprehensive loss, primarily driven by net unrealized gains or losses on available-for-sale securities Accumulated Other Comprehensive Loss (in thousands) | Component (in thousands) | Balance, December 31, 2022 | Net unrealized gain/(loss) on securities available-for-sale | Balance, September 30, 2023 | | :----------------------- | :------------------------- | :---------------------------------------------------------- | :-------------------------- | | Accumulated Other Comprehensive Loss | $(824) | $465 | $(359) | Note 13 – Stock-based Compensation This note presents stock-based compensation expenses by category and details unrecognized compensation costs related to unvested awards Stock-based Compensation Expense (in thousands) | Expense Category (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and Development | $507 | $554 | $1,576 | $1,660 | | General and Administrative | $689 | $859 | $2,100 | $2,228 | | Total | $1,196 | $1,413 | $3,676 | $3,888 | - As of September 30, 2023, total unrecognized compensation costs related to unvested awards were $6,204 thousand, with a weighted-average recognition period of 2.2 years[63] Note 14 – Subsequent Events This note discloses the stockholders' approval of a reverse stock split amendment to the Certificate of Incorporation, to be exercised by November 1, 2024 - Stockholders approved an amendment to the Certificate of Incorporation on November 1, 2023, to effect a reverse stock split at a ratio between 1-for-2 and 1-for-50, at the Board's discretion, to be exercised by November 1, 2024[65] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting its strategic focus on the LNC platform and MAT2203, ongoing operating losses, liquidity challenges, and the going concern risk. It also details revenue, expenses, and cash flow trends for the periods presented Overview Matinas BioPharma, a clinical-stage biopharmaceutical company, focuses on its LNC platform and MAT2203, facing ongoing net losses and significant going concern risks - Matinas BioPharma is a clinical-stage biopharmaceutical company focused on its lipid nanocrystal (LNC) platform delivery technology, developing an internal portfolio including MAT2203 (oral amphotericin B) and exploring applications for nucleic acids (mRNA, DNA, ASOs)[71] - The company's strategy includes advancing the LNC Platform, positioning MAT2203 for an NDA filing (seeking non-dilutive funds for Phase 3), and building external collaborations with pharmaceutical companies like Genentech and National Resilience[73][74] - The company incurred net losses of $17,628 thousand and $17,363 thousand for the nine months ended September 30, 2023 and 2022, respectively, and expects to continue incurring losses, with current funds sufficient only into Q3 2024, raising substantial doubt about its ability to continue as a going concern[74] Financial Operations Overview This section analyzes the company's revenue, research and development, general and administrative expenses, and other income, highlighting key changes and trends Revenue Contract research revenue significantly decreased for the nine months ended September 30, 2023, compared to the prior year, stemming from collaborations with BioNTech SE and Genentech Inc Contract Revenue (in thousands) | Revenue (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Contract Revenue | $0 | $1,063 | $1,096 | $2,125 | - Contract research revenue for the nine months ended September 30, 2023, resulted from collaborations with BioNTech SE and Genentech Inc., while the prior year's revenue was solely from BioNTech SE[75] Research and Development Expenses R&D expenses decreased for both the three and nine months ended September 30, 2023, primarily due to reduced manufacturing and clinical trial consulting costs as the company focuses on MAT2203 Research and Development Expenses (in thousands) | R&D Expense (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Manufacturing process development | $349 | $417 | $942 | $1,988 | | Preclinical trials | $101 | $86 | $350 | $711 | | Clinical development | $314 | $492 | $1,183 | $1,702 | | Regulatory | $133 | $160 | $463 | $562 | | Internal staffing, overhead and other | $2,398 | $2,552 | $7,886 | $7,848 | | Total R&D | $3,295 | $3,707 | $10,824 | $12,811 | - R&D expenses decreased for both the three and nine months ended September 30, 2023, primarily due to reduced manufacturing costs for clinical trial materials and clinical trial consulting costs, as the company pauses MAT2501 development to focus on MAT2203[78][89][93] General and Administrative Expenses General and administrative expenses remained relatively consistent for the three-month period, with a slight decrease for the nine-month period, influenced by legal fees, stock-based compensation, and consulting costs General and Administrative Expenses (in thousands) | G&A Expense (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | General and administrative | $2,839 | $2,818 | $8,151 | $8,424 | - General and administrative expenses remained relatively consistent for the three-month periods, with higher legal fees offset by lower stock-based compensation, insurance, and consulting costs; for the nine-month period, a slight decrease was noted due to lower consulting fees, insurance, and stock-based compensation, partially offset by increased legal fees and headcount costs[90][94] Sale of Net Operating Losses (NOLs) & Tax Credits The company reported no income from the sale of New Jersey net operating losses and tax credits for the nine months ended September 30, 2023 Income from Sale of New Jersey NOLs & Tax Credits (in thousands) | Item | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :----------------------------- | :----------------------------- | | Income from NOLs & tax credits sale | $0 | $1,734 thousand | Other Income, net Other income, net, primarily comprises interest income, interest expense, and dividends for the reported periods - Other income, net, primarily consists of interest income/(expense) and dividends[81] Application of Critical Accounting Policies and Accounting Estimates This section identifies critical accounting policies requiring significant management judgment, including stock-based compensation, fair value measurements, research and development costs, and goodwill and other intangible assets - Critical accounting policies requiring significant management judgment include Stock-based compensation, Fair value measurements, Research and development costs, and Goodwill and other intangible assets[83] Current Operating Trends Current R&D efforts focus on advancing MAT2203 and expanding the LNC Platform, with R&D expenses expected to be lower in 2023 due to a pause in MAT2501 development, though clinical trial uncertainties remain - Current R&D efforts are focused on advancing MAT2203 through clinical development for cryptococcal meningitis (CM) and expanding the LNC Platform through internal efforts and third-party collaborations[85] - R&D expenses are expected to increase over time for later-stage clinical development but are anticipated to be lower in 2023 than in 2022 due to the pause in MAT2501 development[78][86] - The commencement and completion of clinical trials face uncertainties, including efficacy, safety, participant recruitment, funding, and regulatory delays, making specific timing and cost estimates difficult[87] Results of Operations This section provides a comparative analysis of the company's financial performance for the three and nine months ended September 30, 2023, versus 2022, detailing changes in revenues and operating expenses Comparison of the three months ended September 30, 2023 to the three months ended September 30, 2022 Revenues decreased by 100% and R&D expenses decreased by 11.1% for the three months ended September 30, 2023, compared to the prior year, primarily due to lower manufacturing and clinical trial consulting costs Financial Performance Comparison (Three Months Ended September 30) (in thousands) | Metric (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | :--------- | | Revenues | $0 | $1,063 | $(1,063) | -100.0% | | Research and development | $3,295 | $3,707 | $(412) | -11.1% | | General and administrative | $2,839 | $2,818 | $21 | 0.7% | | Operating Expenses | $6,134 | $6,525 | $(391) | -6.0% | - The decrease in R&D expense was primarily due to lower manufacturing costs of clinical trial materials, clinical trial consulting costs, and headcount costs[89] Comparison of the nine months ended September 30, 2023 to the nine months ended September 30, 2022 Revenues decreased by 48.4% and R&D expenses decreased by 15.5% for the nine months ended September 30, 2023, compared to the prior year, driven by reduced manufacturing and consulting costs Financial Performance Comparison (Nine Months Ended September 30) (in thousands) | Metric (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Revenues | $1,096 | $2,125 | $(1,029) | -48.4% | | Research and development | $10,824 | $12,811 | $(1,987) | -15.5% | | General and administrative | $8,151 | $8,424 | $(273) | -3.2% | | Operating Expenses | $18,975 | $21,235 | $(2,260) | -10.6% | | Sale of New Jersey net operating losses (NOLs) and tax credits | $0 | $1,734 | $(1,734) | -100.0% | - The decrease in R&D expense was primarily due to decreases in manufacturing costs of clinical trial materials and clinical trial consulting costs, partially offset by an increase in headcount costs[93] - The decrease in G&A expense was primarily due to decreases in consulting fees, insurance premiums, and stock-based compensation expense, partially offset by increases in legal fees and headcount costs[94] Liquidity and Capital Resources This section discusses the company's liquidity sources, cash flow activities, and future funding requirements, highlighting the going concern risk due to limited capital Sources of Liquidity Since inception, the company has raised $156.7 million in gross proceeds from equity sales, with $18,216 thousand in cash, cash equivalents, and marketable debt securities as of September 30, 2023 - Since inception, the company has raised $156.7 million in gross proceeds and $143.9 million net from equity security sales[96] - As of September 30, 2023, the company had $18,216 thousand in cash, cash equivalents, and marketable debt securities[97] Cash Flows The company experienced a net decrease in cash, cash equivalents, and restricted cash, with cash used in operating activities partially offset by cash provided by investing activities Cash Flow Activities (in thousands) | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash used in operating activities | $(10,699) | $(14,857) | | Cash provided by investing activities | $10,282 | $4,919 | | Cash (used in)/provided by financing activities | $(6) | $84 | | Net decrease in cash and cash equivalents and restricted cash | $(423) | $(9,854) | - Net cash provided by investing activities increased by $5,363 thousand, primarily due to a $9,481 thousand decrease in purchases of marketable debt securities and a $632 thousand decrease in purchases of leasehold improvements and equipment, partially offset by a $4,750 thousand decrease in maturities of marketable debt securities[100] - Net cash used in financing activities decreased by $90 thousand, mainly due to a $99 thousand decrease in proceeds from stock option exercises[101] Funding Requirements and Other Liquidity Matters Existing capital is expected to fund operations only into Q3 2024, raising substantial doubt about the company's going concern ability, necessitating future funding from equity, debt, or collaborations - Existing cash, cash equivalents, and marketable debt securities are expected to fund operations only into the third quarter of 2024, leading to substantial doubt about the company's ability to continue as a going concern[102] - Future funding will likely come from equity offerings, debt financing, government funding, collaborations, and licensing arrangements, which may result in stockholder dilution or restrictive covenants[103][104] - The company anticipates significant increases in expenses for further preclinical and clinical studies of MAT2203, development of additional product candidates, regulatory approvals, manufacturing, intellectual property, and personnel[103] Off-Balance Sheet Arrangements The company confirms it had no off-balance sheet arrangements during the reported periods and currently has none - The Company did not have any off-balance sheet arrangements during the periods presented and does not currently have any[106] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company - This item is not applicable to the Company[107] Item 4. Controls and Procedures Management, including the principal executive and financial officers, evaluated the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the third quarter - The Company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of September 30, 2023[108] - No changes in internal control over financial reporting were identified during the third quarter of 2023 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[110] PART II - OTHER INFORMATION This section details legal proceedings, updated risk factors, equity sales, senior security defaults, mine safety, other disclosures, and a list of exhibits Item 1. Legal Proceedings This section states that there are no legal proceedings to report - There are no legal proceedings to report[111] Item 1A. Risk Factors This section updates the risk factors, specifically addressing the potential for delisting from the NYSE American due to non-compliance with minimum bid price requirements and the uncertainties surrounding the effectiveness of a reverse stock split to address this issue and improve market appeal - The Company is not in compliance with NYSE American's minimum bid price requirement and must regain compliance by March 21, 2024, to avoid delisting, which could harm stock liquidity and capital raising ability[113][116] - Shareholders approved a reverse stock split (1-for-2 to 1-for-50) to potentially regain NYSE American compliance and enhance market appeal, but there is no assurance it will achieve these intended benefits or prevent a decrease in overall market value[114][115] - A reverse stock split could increase shares available for future issuance, potentially leading to significant dilution of current stockholders' ownership interests[117] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms that there were no unregistered sales of equity securities during the reporting period - There were no unregistered sales of equity securities and use of proceeds to report[118] Item 3. Defaults Under Senior Securities This section states that there were no defaults under senior securities - There were no defaults under senior securities to report[119] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - This item is not applicable to the Company[120] Item 5. Other Information This section discloses a new incentive bonus arrangement for the Chief Financial Officer, Keith Kucinski, involving two payments contingent on his active employment - On November 7, 2023, the Company entered into an arrangement to pay its CFO, Keith Kucinski, incentive bonuses of $40,000 by December 31, 2023, and $60,000 by April 1, 2024, contingent on his active employment[122] - Mr. Kucinski is required to return the incentive bonus payment if he resigns (other than for Good Reason) or is terminated for Cause within 60 days of the payment date[122] Item 6. Exhibits This section refers to the Exhibit Index for a comprehensive list of documents filed or furnished with this Quarterly Report on Form 10-Q - The Exhibit Index, following the signature page, lists all exhibits filed or furnished with this Quarterly Report on Form 10-Q[123]