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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

  ☒ Quarterly Report UNDER Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2024

 

OR

 

  ☐ Transition Report UNDER Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from ______________ to ______________

 

Commission file number 001-41488

 

SHUTTLE PHARMACEUTICALS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   82-5089826
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification Number)

 

401 Professional Drive, Suite 260

Gaithersburg, MD 20879

(Address of principal executive offices) (Zip Code)

 

(240) 403-4212

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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   SHPH   The Nasdaq Stock Market LLC

 

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

 

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

 

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

 

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

 

The number of shares outstanding of the registrant’s common stock on May 13, 2024 was 16,794,893.

 

 

 

 

 

 

Shuttle Pharmaceuticals Holdings, Inc.

 

TABLE OF CONTENTS

 

    Page No.
     
  PART I. Financial Information  
     
Item 1. Unaudited Condensed Consolidated Financial Statements 3
     
  Unaudited Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 3
     
  Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 4
     
  Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2024 and 2023 5
     
  Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 6
     
  Notes to Unaudited Condensed Consolidated Financial Statements 7
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
     
Item 4. Controls and Procedures 24
     
  PART II. Other Information  
     
Item 1. Legal Proceedings 25
     
Item 1A. Risk Factors 25
     
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds 25
     
Item 3. Defaults Upon Senior Securities 25
     
Item 4. Mine Safety Disclosures 25
     
Item 5. Other Information 25
     
Item 6. Exhibits 25
     
  Signatures 26

 

2

 

 

PART I. Financial Information

 

Item 1. Unaudited Condensed Consolidated Financial Statements

 

Shuttle Pharmaceuticals Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

   March 31,   December 31, 
   2024   2023 
Assets        
Current assets          
Cash and cash equivalents  $1,398,628   $2,576,416 
Prepaid expenses   129,642    114,473 
Marketable securities   2,789,251    2,887,215 
Accrued interest income   11,964    14,901 
Other current assets   81,534    - 
Total Current Assets   4,411,019    5,593,005 
           
Property and equipment, net   22,915    24,827 
Operating lease right-of-use asset   319,987    333,904 
Total Assets  $4,753,921   $5,951,736 
           
Liabilities and Stockholders’ Equity          
Current Liabilities          
Accounts payable and accrued expenses  $347,556   $282,860 
Accounts payable and accrued expenses related party   -    446 
Accrued interest payable   143,676    110,453 
Convertible notes payable, net   941,398    595,999 
Derivative liability   2,035    - 
Operating lease liability   54,552    52,479 
Total Current Liabilities   1,489,217    1,042,237 
           
Convertible notes payable non-current, net   -    135,089 
Derivative liability non-current   214,615    414,512 
Operating lease liability non-current   288,602    304,127 
Total Liabilities   1,992,434    1,895,965 
           
Stockholders’ Equity          
Series A Convertible Preferred Stock, $0.00001 par value; $1,000 per share liquidation value; 20,000,000 shares authorized; no shares outstanding   -    - 
Common stock, $0.00001 par value; 100,000,000 shares authorized; 16,819,893 and 16,069,320 shares issued and outstanding, respectively   168    161 
Additional paid in capital   19,979,962    19,543,222 
Accumulated deficit   (17,218,643)   (15,487,612)
Total Stockholders’ Equity   2,761,487    4,055,771 
Total Liabilities and Stockholders’ Equity  $4,753,921   $5,951,736 

 

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

 

3

 

 

Shuttle Pharmaceuticals Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

    2024     2023  
    Three Months Ended  
    March 31,  
    2024     2023  
             
Revenue   $ -     $ -  
                 
Operating expenses                
Research and development     586,104       921,801  
General and administrative     324,609       255,355  
Legal and professional     474,134       367,624  
Total operating expenses     1,384,847       1,544,780  
                 
Loss from operations     (1,384,847 )     (1,544,780 )
                 
Other income (expense)                
Interest expense - related parties     -       (4,237 )
Interest expense     (497,515 )     (599,331 )
Interest income     21,453       16,688  
Finance fee     -       (104,245 )
Change in fair value of derivative liabilities     197,862       1,241,000  
Gain on sale of marketable securities     4,037       -  
Change in fair value of marketable securities     (706 )     38,062  
Loss on settlement of convertible debt     (71,315 )     (18,254 )
Total other income (expense)     (346,184 )     569,683  
                 
Net loss attributable to common stockholders   $ (1,731,031 )   $ (975,097 )
                 
Weighted average common shares outstanding - basic and diluted     16,572,527       13,635,994  
Net loss per shares - basic and diluted   $ (0.10 )   $ (0.07 )

 

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

 

4

 

 

Shuttle Pharmaceuticals Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

(Unaudited)

 

For the Three Months Ended March 31, 2024

 

           Additional       Total 
   Common Stock   Paid in   Accumulated   Stockholders’ 
   Shares   Amount   Capital   Deficit   Equity 
                     
Balance - December 31, 2023   16,069,320   $161   $19,543,222   $(15,487,612)  $4,055,771 
                          
Common stock issued for conversion of accrued interest and principal   625,573    6    325,292    -    325,298 
Common stock issued for restricted stock units   125,000    1    (1)   -    - 
Stock-based compensation   -    -    111,449    -    111,449 
Net loss   -    -    -    (1,731,031)   (1,731,031)
Balance - March 31, 2024   16,819,893   $168   $19,979,962   $(17,218,643)  $2,761,487 

 

For the Three Months Ended March 31, 2023

 

           Additional       Total 
   Common Stock   Paid in   Accumulated   Stockholders’ 
   Shares   Amount   Capital   Deficit   Equity (Deficit) 
                     
Balance - December 31, 2022   13,603,129   $136   $16,572,622   $(8,894,889)  $7,677,869 
                          
Warrants issued for financing costs   -    -    99,543    -    99,543 
Financing fees allocated to warrants   -    -    (8,727)   -    (8,727)
Common stock issued for conversion of accrued interest and principal   50,998    1    104,546    -    104,547 
Stock-based compensation   -    -    8,333    -    8,333 
Net loss   -    -    -    (975,097)   (975,097)
Balance - March 31, 2023   13,654,127    137   $16,776,317   $(9,869,986)  $6,906,468 

 

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

 

5

 

 

Shuttle Pharmaceuticals Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   2024   2023 
   Three Months Ended 
   March 31, 
   2024   2023 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(1,731,031)  $(975,097)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   1,912    1,488 
Change in fair value of derivative liabilities   (197,862)   (1,241,000)
Amortization of debt discount and finance fees   445,509    567,297 
Gain on marketable securities   (4,037)   - 
Change in fair value of marketable securities   706    (38,062)
Accrued interest settled with common stock   18,783    20,142 
Loss on settlement of convertible debt   71,315    18,254 
Stock-based compensation   111,449    8,333 
Changes in operating assets and liabilities:          
Accrued interest income   2,937    (7,023)
Prepaid expenses   (15,169)   (42,687)
Accounts payable and accrued expenses   23,162    330,729 
Accounts payable and accrued expenses - related parties   (446)   (12,500)
Accrued interest payable   33,223    116,051 
Accrued interest payable - related parties   -    (74,807)
Other assets   -    (7,206)
Change in operating lease asset and liability   466    (1,894)
Net cash used in operating activities   (1,239,083)   (1,337,982)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Investment in marketable securities   (18,705)   (2,953,709)
Proceeds from disposition of marketable securities   120,000    - 
Net cash used in investing activities   101,295    (2,953,709)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Repayment of note payable-related party   -    (546,244)
Proceeds from convertible notes payable and warrants   -    3,935,000 
Payment for finance costs related to convertible note payable   -    (345,000)
Payment for finance costs   (40,000)   - 
Net cash provided by financing activities   (40,000)   3,043,756 
           
           
Net change in cash and cash equivalents   (1,177,788)   (1,247,935)
Cash and cash equivalents, beginning of period   2,576,416    8,417,203 
Cash and cash equivalents, end of period  $1,398,628   $7,169,268 
           
Cash paid for:          
Interest  $-   $79,044 
Income taxes  $-   $- 
           
Supplemental non-cash financing activities:          
Common stock issued for settlement of debt  $325,298   $104,547 
Finance costs accrued in accounts payable  $41,534   $- 
Warrants issued for financing fees, net of issuance fees of $0 and $8,727, respectively  $-   $90,816 

 

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

 

6

 

 

Shuttle Pharmaceuticals Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2024

 

Note 1 – Organization and Liquidity

 

Organization and Line of Business

 

Shuttle Pharmaceuticals Holdings, Inc. (“we”, “us”, “our”, the “Company”) was originally formed as Shuttle Pharmaceuticals, LLC in the State of Maryland on December 18, 2012. On August 12, 2016, the Company filed articles of conversion with the State of Maryland to convert from an LLC to a C corporation, at which time the Company changed its name to Shuttle Pharmaceuticals, Inc. (“Shuttle”). In connection with the conversion the Company issued 45,000,000 shares of common stock in exchange for 100% of the outstanding membership interests in Shuttle prior to conversion. On June 4, 2018, Shuttle completed a reverse merger with Shuttle Pharmaceuticals Holdings, Inc. (then known as Shuttle Pharma Acquisition Corp, Inc.), a Delaware corporation, pursuant to which Shuttle, our operating entity, became a wholly owned subsidiary of the Company.

 

The Company’s primary purpose is to develop and commercialize unique drugs for the sensitization of cancers and protection of normal tissues, with the goal of improving outcomes for cancer patients receiving radiation therapy. Shuttle has deployed its proprietary technology to develop novel cancer immunotherapies, producing a pipeline of selective HDAC inhibitors for cancer and immunotherapy applications. The Company’s HDAC platform is designed to target candidate molecules with potential roles in therapeutics beyond cancer, including autoimmune, inflammatory, metabolic, neurological and infectious diseases. The Company’s Ropidoxuridine product, which is used with radiation therapy to sensitize cancer cells, was initially funded by a Small Business Innovation Research (“SBIR”) contract provided by the National Cancer Institute (“NCI”), a unit of the National Institutes of Health (“NIH”). Ropidoxuridine has been further developed though the Company’s collaborations with scientists at the University of Virginia for use in combination with proton therapy to improve patient survival. Historically, and prior to the Company’s initial public offering in September 2022, the Company has obtained funding to develop products through NIH grants, including a product to predict late effects of radiation with metabolite biomarkers and develop prostate cancer cell lines in health disparities research.

 

The production and marketing of the Company’s products and its ongoing research and development activities will be and are subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United States, any products or combination of products developed by the Company must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive regulatory approval process implemented by the Food and Drug Administration (“FDA”) under the Food, Drug and Cosmetic Act. There can be no assurance that the Company will not encounter problems in its clinical trials that will cause the Company or the FDA to delay or suspend the 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 in other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company now or in the future.

 

Liquidity and Going Concern

 

Our condensed consolidated financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred losses since inception and has a net loss of approximately $1.7 million and no revenues for the three months ended March 31, 2024 and has working capital of approximately $2.9 million as of March 31, 2024. In addition, the convertible note payable outstanding at March 31, 2024 includes covenants and certain cash payment requirements. These conditions, and the Company’s ability to comply with such conditions, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

 

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In September 2022, the Company completed its IPO, generating net proceeds of approximately $10.0 million. Additionally, in January 2023, the Company entered into a securities purchase agreement with an institutional investor through which the Company sold a convertible note with a principal value of $4.3 million, along with a four-year warrant to purchase 1,018,079 shares of common stock, exercisable at $2.35 per share, providing the Company with approximately $3.6 million in net proceeds. To date, the warrant has not yet been exercised. However, the Company’s existing cash resources, marketable securities and the cash received from the equity offering and convertible note are not expected to provide sufficient funds to carry out the Company’s operations and clinical trials through the next 12 months.

 

The IPO and subsequent capital raise have supported operations leading up to the manufacture of drug product and FDA approval of the IND for the Phase II clinical trial of Ropidoxuridine and radiation therapy in glioblastoma. The FDA recommended and the Company agreed to an expansion of the clinical trial, necessitating additional capital to complete the trial as well as fund ongoing operations. As a result, management is in the process of initiating a $4.5 million rights offering and has submitted an application for a Small Business Innovation Research (“SBIR”) grant for non-dilutive funding for pre-clinical project through the National Institutes of Health (“NIH”). The ability of the Company to continue as a going concern is dependent upon its ability to successfully raise additional equity or debt financing to allow it to fund ongoing operations, conduct clinical trials and bring a drug candidate to commercialization to generate revenues.

 

The accompanying condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities if the Company is unable to continue as a going concern.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and notes required by accounting principles generally accepted in the United States of America for annual financial statements. A complete discussion of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all of the adjustments necessary to present the financial position of the Company as of March 31, 2024 and the results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the year-end condensed consolidated balance sheet was derived from audited financial statements. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2024.

 

Basis of Consolidation

 

The unaudited condensed consolidated financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned subsidiaries, Shuttle Pharmaceuticals, Inc. and Shuttle Diagnostics Inc. All intercompany transactions and balances have been eliminated.

 

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Correction of an Immaterial Error in the Prior Period Financial Statements

 

During the fourth quarter of 2023, the Company determined that the prior year consolidated financial statements had a misstatement caused by an immaterial classification error of certain research and development expenses in accordance with ASC 730. As a result, certain prior year amounts have been corrected for consistency with the current year presentation. The Company assessed the materiality of this change in presentation on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” (ASC Topic 250, Accounting Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections in its Condensed Consolidated Statements of Operations are not material to any previously presented financial statements based upon overall considerations of both quantitative and qualitative factors. The corrections had no impact on the Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Cash Flows, or Condensed Consolidated Statement of Changes in Stockholders’ Equity, to these financial statements, or for any previously presented interim or annual financial statements. Further, the corrections did not result in a change in quarterly or year-to-date operating losses, basic or diluted earnings per share, or working capital. The quarterly correction required for March 31, 2023 was $89,007. Accordingly, the Company corrected the previously reported immaterial error for the three months ended March 31, 2023 in this Quarterly Report on Form 10-Q.

 

   March 31, 2023   Correction   Corrected
March 31, 2023		 
Research and development expense  $1,010,808   $(89,007)  $921,801 
General and administrative expense   166,348    89,007    255,355 
Net Loss  $1,177,156   $-   $1,177,156 

 

Use of Estimates

 

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates are contained in the accompanying condensed consolidated financial statements for the valuation of derivatives, share-based compensation, and initial measurement of equity-based warrants.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in bank accounts and money market funds with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. As of March 31, 2024 and December 31, 2023, cash and cash equivalents consisted of the following:

 

   March 31,   December 31, 
   2024   2023 
Cash  $364,069   $1,550,098 
Money market funds   1,034,559    1,026,318 
Total cash and cash equivalents  $1,398,628   $2,576,416 

 

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Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000 per institution. The amount in excess of the FDIC insurance as of March 31, 2024 was approximately $1.1 million. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

 

Marketable Securities

 

Our investments in debt securities are carried at fair value. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading of debt securities are charged to income.

 

The marketable securities held by the Company, which are classified as trading marketable securities, consisted of an outstanding balance of $2,789,251 and $2,887,215 as of March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024 and 2023, the Company recognized interest income of $13,651 and $16,688, realized gains of $4,037 and $0, and unrealized loss of $706 and gain of $38,062, respectively.

 

Fair Value of Financial Instruments

 

The Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair Value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:

 

  ● Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.
     
  ● Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.
     
  ● Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires a significant judgment or estimation.

 

Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.

 

The carrying amounts of the Company’s financial instruments including cash and cash equivalents, prepaid expenses, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments.

 

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Set out below are the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of March 31, 2024 and December 31, 2023:

 

March 31, 2024  Level 1   Level 2   Level 3   Carrying Value 
Assets                    
Marketable Securities:                    
United States Treasury Bonds  $2,789,251   $-   $-   $2,789,251 
Total Assets  $2,789,251   $-   $-   $2,789,251 
Liabilities                    
Derivative Liability - Warrants  $-   $-   $214,615   $- 
Derivative Liability - Accelerated feature   -    -    2,035    - 
Total Liabilities  $-   $-   $216,650   $- 

 

December 31, 2023  Level 1   Level 2   Level 3   Carrying Value 
Assets                    
Marketable Securities:                    
United States Treasury Bonds  $2,887,215   $-   $-   $2,887,215 
Total Assets  $2,887,215   $-   $-   $2,887,215 
Liabilities                    
Derivative Liability - Warrants  $-   $-   $410,660   $410,660 
Derivative Liability - Accelerated feature   -    -    3,852    3,852 
Total Liabilities  $-   $-   $414,512   $414,512 

 

Derivative Financial Instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For our liability classified derivative financial instruments, the Company used a Monte Carlo valuation model to value the derivative instruments at inception and on subsequent valuation dates. For our equity classified derivative financial instruments, we used a Black-Scholes option-pricing model at the grant date to value the derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the condensed consolidated balance sheet sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date.

 

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Warrants

 

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

 

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations. The fair value of the warrants is estimated using a Black-Scholes pricing model or a Monte Carlo simulation.

 

Research and Development Expenses

 

Research and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, which include a certain portion of our chief executive officer, chief operating officer, chief financial officer and directors’ compensation. For the three months ended March 31, 2024 and 2023, a portion of personnel-related expenses and stock-based compensation expense for these individuals totaling $165 thousand and $385 thousand, respectively, was included within research and development due to their active involvement in the research and development activities, materials, supplies, related subcontract expenses, and consulting costs.

 

Regarding the accounting treatment for reimbursements, GAAP provides limited guidance on the accounting for government grants received by for-profit companies. In accordance with ASC Topic 832, Government Assistance, as adopted January 1, 2022, we disclose certain types of government assistance received in the notes to the consolidated financial statements that includes: a) the nature of the transaction including the nature of the assistance being given, b) the accounting policies being used to account for the transaction and c) other provisions of relevance, where required. Depending on the type of grant or contract, we understand there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred credit to be amortized, revenue or other income. The Company has concluded that reimbursements received for R&D expenses incurred, are more akin to a reduction of costs and applies reimbursements against incurred research costs. There were no reimbursements received for the three months ended March 31, 2024 and 2023.

 

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Net Loss Per Common Stock

 

Net loss per share of common stock requires presentation of basic earnings per share on the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation. In the accompanying condensed consolidated financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants unless the result would be antidilutive.

 

The dilutive effect of restricted stock units subject to vesting and other stock-based payment awards is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting shares of common stock are included in the denominator of the diluted calculation for the entire period being presented.

 

For the three months ended March 31, 2024 and 2023, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

 

   March 31,   March 31, 
   2024   2023 
Convertible notes (Note 6)   859,428    1,893,128 
Warrants   1,446,155    1,446,155 
Restricted stock units   272,855    23,724 
    2,578,438    3,363,007 

 

Deferred Offering Costs

 

Pursuant to ASC 340-10-S99-1, costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to the proposed public offering. Should the proposed public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be expensed.

 

Recent Accounting Pronouncements

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting Topic 280, “Segment Reporting-Improvements to Reportable Segment Disclosures,” which allows disclosure of one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires enhanced disclosures of significant segment expenses and other segment items, as well as incremental qualitative disclosures on both an annual and interim basis. This guidance is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods after December 15, 2024. Early adoption is permitted and retrospective application is required for all periods presented. The Company is currently evaluating the impact of adopting this guidance on its Consolidated and Condensed Financial Statements and disclosures included within Notes to Consolidated and Condensed Financial Statements.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes Topic 740, “Income Tax-Improvements to Income Tax Disclosures,” which requires enhanced disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. This guidance is effective for annual reporting periods beginning after December 15, 2024. Early adoption is permitted and should be applied on a prospective basis, however retrospective application is permitted. The Company is currently evaluating the impact of adopting this guidance on its Consolidated and Condensed Financial Statements and disclosures included within Notes to Consolidated and Condensed Financial Statements.

 

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Note 3 – Leases

 

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the present value of the future lease payments as of the lease commencement date. Operating lease expense is recognized on a straight-line basis over the lease term.

 

During the three months ended March 31, 2023, the Company had a lease agreement which allowed for the use of a laboratory facility for a monthly payment of $6,480. The laboratory lease commenced on October 1, 2018 and expired on October 31, 2023.

 

The Company currently has a lease agreement which allows for the use of a laboratory facility, entered into on February 16, 2023, with base rent of $7,206 per month for a period of 64 months, which increases at the rate of 3% per year, that commenced June 1, 2023. The lease included a six-month 50% rent abatement upon commencement. Additional common area maintenance (“CAM”) fees are charged monthly and revised annually. The estimated monthly CAM fees are $3,300 per month for the first year of the lease, which are being expensed as incurred. An irrevocable letter of credit (“LOC”) for the security deposit of $43,234 and base rent of $3,891, including 50% abatement, and $3,315 of CAM cost, was due and paid on execution of the lease agreement. Alexandria Real Estate (ARE-QRS-CORP) is the beneficiary of the LOC, and the expiry date of the LOC is March 1, 2025.

 

The following summarizes the right-of use asset and lease information for the Company’s operating leases:

 

   2024   2023 
   Three Months Ended 
   March 31, 
   2024   2023 
         
Operating lease cost  $22,947   $17,544 
Variable lease cost   10,440    - 
Sublease income   (2,163)   (2,121)
Total lease cost  $31,224   $15,423 
           
Other information          
Operating cash flows from operating leases  $22,482   $19,440 
           
Weighted-average remaining lease term — operating leases (year)   4.42    0.56 
Weighted-average discount rate — operating leases   10.48%   10%

 

Future non-cancelable minimum lease payments under the operating lease liability as of March 31, 2024, are as follows:

 

Years Ended December 31,    
2024 (excluding the three months ended March 31, 2024)  $69,020 
2025   94,246 
2026   97,074 
2027   99,986 
2028   68,235 
Total future minimum lease payments   428,561 
Less: imputed interest   (85,407)
Present value of payments  $343,154 

 

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Note 4 – Notes Payable-Related Party

 

During the three months ended March 31, 2024 and 2023 the Company incurred $0 and $4,237 in interest expense. During the three months ended March 31, 2024 and 2023 principal payments of $0 and $546,244 and accrued interest of $0 and $79,044 were paid, respectively, on notes to related parties. The principal and accrued interest for these notes were fully paid by December 31, 2023.

 

Note 5 – Convertible Notes and Notes Payable

 

Alto Opportunity Master Fund, SPC

 

On January 11, 2023, the Company entered into a securities purchase agreement (the “SPA”) with Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B, a Cayman entity (the “Investor”), pursuant to which the Company sold to the Investor a $4,300,000 convertible note (the “Alto Convertible Note”) and warrant (the “Warrant”) to purchase 1,018,079 shares of common stock, exercisable at $2.35 per share, in exchange for gross proceeds of $3,935,000 million (the “Investment Amount”) (See Note 7). The Company determined that the Warrant contains a net cash settlement feature at inception and categorized the Warrant as a liability in the accompanying condensed consolidated financial statements. The Alto Convertible Note matures on March 11, 2025, but may be extended at the option of the noteholder. The Alto Convertible Note amortizes on a monthly basis and the Company can make such monthly amortization payments in cash or, subject to certain equity conditions, in registered shares of common stock or a combination thereof. Installments may be deferred by the noteholder, resulting in a variable interest rate. However, the effective interest rate is approximately 244% based on the internal rate of return calculated on a series of cash flows that occur at regular intervals. For equity repayment, the Alto Convertible Note is convertible into shares of common stock at a price per share equal to the lower of (i) $2.35, (ii) 90% of the three lowest daily VWAPs of the 15 trading days prior to the payment date, or (iii) 90% of the VWAP of the trading day prior to payment date. The noteholder may convert at any time at a fixed price of $2.35 per share. The noteholder has an acceleration of installment amount conversion option (the “Acceleration Option”), whereby the noteholder, with certain share percentage limitations, can convert to common stock any outstanding installment amount at an amount equal to the installment amount plus five times (5x) the installment amount at any time. The Company has determined the Acceleration Option is an embedded derivative within the host instrument and has bifurcated it from the host instrument and recorded it as a derivative liability valued at $1,442,000 at inception, using a Monte Carlo simulation model (Note 7). The Convertible Note is repayable over 26 months and bears interest at the rate of 5% per annum. Additionally, the note contains certain redemption options and “Make Whole” provisions.

 

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In conjunction with entry into the SPA, the Company entered into a series of related agreements, including a security agreement (the “Security Agreement”), an intellectual property security agreement (the “IP Security Agreement”) and a subsidiary guaranty (the “Subsidiary Guaranty”). The security agreements and guaranty allow, among other things, for the Investor to have a security interest in and place a lien on all of the Company’s assets and intellectual property until such time as the Alto Convertible Note is paid off. In addition, the SPA called for the Company to enter into a springing deposit account control agreement (the “Springing DACA”), which, in the event the Company defaults on its repayment of the Alto Convertible Note, would allow the Investor to assume control of the Company’s bank account only with regard to any funds remaining outstanding under the Alto Convertible Note. As such, in conjunction with entry into the SPA, the Company established a separate bank account in which it deposited the Investment Amount and pursuant to which the Company, the Investor and the bank holding the Investment Amount, First Republic Bank, entered into the Springing DACA agreement. As the Investment Amount had been held at First Republic Bank, in light of certain banking crises then affecting smaller banks, on March 12, 2023, the Company and the Investor moved the Investment Amount from First Republic Bank, after which time the Springing DACA was no longer in effect. Further, pursuant to amendments to the SPA entered into in May and June of 2023, the Company and the Investor agreed that all of the Investment Amount would be released to the Company and the relevant provision of the SPA which required the Springing DACA would no longer be deemed applicable. In addition, the Company granted the Investor the option to purchase up to an additional $10 million in convertible notes and warrants on substantially the same terms as the Alto Convertible Note and Warrant, excluding the Springing DACA requirement, with such option to be effective through December 31, 2025. The agreement offers the investor an opportunity to participate in future capital raises at substantially similar terms as the January 11, 2023 agreement. The Company expects that such subsequent convertible notes and warrants would be issued on substantially similar terms as the January 11, 2023 initial agreement, as amended, thus providing the Company the opportunity to negotiate certain aspects of the agreement.

 

Boustead Securities, LLC (“Boustead”) served as a placement agent for the Alto Convertible Note and Warrant offering and received $345,000 cash compensation and a warrant to purchase 71,266 shares of common stock, exercisable at $2.35 per share. The Boustead warrant was determined to be an equity instrument valued on a non-recurring basis. The Company used the Black Scholes valuation model using a term of five years, volatility of 110%, a risk-free rate of 3.53% for a value of $99,543.

 

The Company allocated the finance costs related to the Boustead placement agent fee of $345,000, based on the relative fair market values of the Convertible Note and warrants issued. The allocation of the financing costs applied $232,027 to the debt component as a debt discount that is being amortized to interest expense over the term of the Convertible Note, $104,245 to the warrant derivative liability component, expensed as a finance fee, and $8,727 to the equity warrant as a reduction in additional paid in capital.

 

The Company allocated to the debt component of the note an original discount of $300,000, legal fees of $65,000, $215,000 for additional interest fees on day one added to note principal, $1,442,000 for the accelerated conversion feature, and $1,288,543 for the fair value of warrants, resulting in an additional $3,310,543 debt discount that is being amortized to interest expense over the term of the Alto Convertible Note.

 

During the three months ended March 31, 2024, the Company recorded interest expense of $497,515, which included amortization of debt discount as interest expense of $445,509. During the three months ended March 31, 2024, the Company settled $235,200 of principal, and settled $18,783 of accrued interest, which settlements were made in the form of 625,573 shares of common stock, during the three months ended March 31, 2024.

 

During the three months ended March 31, 2023, the Company recorded interest expense of $599,331, which included amortization of debt discount of $463,052 as interest expense and settlement of $20,142 of accrued interest and $66,150 of principal by issuing 50,998 shares of Common Stock.

 

As of March 31, 2024, the outstanding principal for the convertible note was $2,019,656 and the debt discount remaining was $1,078,258, with a net convertible note carrying value of $941,398 as of March 31, 2024.

 

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Note 6 – Stockholders’ Equity

 

Common Stock

 

During the three months ended March 31, 2024, the Company issued:

 

  ● 625,573 shares of common stock to settle $235,200 of principal and $18,783 of interest on a convertible note and incurred $71,315 of loss on settlement.
  ● 125,000 shares of common stock issued for vesting of restricted stock units.

 

During the three months ended March 31, 2023, the Company issued:

 

  ● 50,998 shares of Common Stock to settle $66,150 of principal and $20,142 of interest on a convertible note and incurred $18,254 of loss on settlement.

 

Warrants

 

In connection with the January 2023 Alto Convertible Note, Boustead was granted warrants to purchase 71,266 shares of common stock, at an exercise price of $2.35 per share (Note 5). In addition, Alto was granted warrants to purchase 1,018,079 shares of common stock, at an exercise price of $2.35 per share (Note 5, 7).

 

A summary of activity regarding all warrants issued for the three months ended March 31, 2024 were as follows:

 

   Number of   Weighted Average   Average 
   warrants   Exercise Price   Life (years) 
Outstanding, December 31, 2023   1,446,155   $2.74    2.77 
Granted   -    -    - 
Outstanding, March 31, 2024   1,446,155   $2.74    2.53 

 

The intrinsic value of the warrants as of March 31, 2024 is $0. All of the outstanding warrants are exercisable as of March 31, 2024.

 

Equity Incentive Plan

 

Our 2018 Equity Incentive Plan (the “2018 Plan”) provides for equity incentives to be granted to our employees, executive officers, directors and key advisers and consultants. Equity incentive grants may be made in the form of stock options with an exercise price of not less than the fair market value of the underlying shares as determined pursuant to the 2018 Equity Incentive Plan, restricted stock awards, other stock-based awards, or any combination of the foregoing. The 2018 Equity Incentive Plan is administered by the Company’s compensation committee. We have reserved 3,000,000 shares of our common stock for issuance under the 2018 Equity Incentive Plan. As of March 31, 2024, 878,180 shares have been granted under the 2018 Equity Incentive Plan, of which 605,325 shares have vested.

 

Restricted Stock Units

 

We may grant restricted stock units (“RSU”) under our 2018 Plan. RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Subject to the provisions of our 2018 Plan, the administrator determines the terms and conditions of RSUs, including the vesting criteria and the form and timing of payment. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. RSUs granted typically vest annually in one third increments from the date of appointment.

 

During the three months ended March 31, 2024 and 2023, pursuant to agreements with officers and consultants, 200,000 and 0 RSUs with a value of $41,840 and $0 were granted and compensation expense for RSUs of $111,449 and $8,333, respectively, was incurred. During the three months ended March 31, 2024 and 2023, $33,953 and $0, respectively, was included in compensation under Research and Development.

 

As of March 31, 2024, there was $161,941 of unrecognized RSU compensation cost related to non-vested share-based compensation arrangements which is expected to be recognized over a weighted-average period of 0.92 years.

 

A summary of activity regarding the Restricted Stock Units issued follows:

 

   Number of RSU   Weighted Average Fair Value Per RSU 
Outstanding, December 31, 2023   197,855   $1.47 
Granted   200,000    0.21 
Vested   (125,000)   0.73 
Outstanding, March 31, 2024   272,855   $0.89 

 

Rights Offering and Financing Commitment

 

On February 7, 2024, the Company and its wholly-owned subsidiary, Shuttle Diagnostics, Inc., entered into a securities purchase agreement (the “Purchase Agreement”) with SRO, LLC, a Nevada limited liability company, pursuant to which SRO LLC agreed to commit to purchasing from the Company $2,250,000 of units from the Company, with each Unit consisting of (i) one share of the Company’s common stock, (ii) a warrant to purchase one share of the Company’s common stock exercisable at a purchase price of $2.35 per share, and (iii) a percentage of equity interest in Diagnostics such that, assuming the sale of all $2,250,000 of Units, SRO LLC will own a 22% interest in Diagnostics. Pursuant to the terms of the Purchase Agreement, the Units will be sold at a per Unit price equal to 90% of the VWAP of the Company’s common stock for the five trading days immediately preceding closing. The parties entered into the Purchase Agreement in anticipation of the Company commencing a rights offering (the “Rights Offering”) pursuant to which the Company intends to offer a total of $4,500,000 of Units to existing stockholders, which includes the $2,250,000 of Units being sold to SRO LLC, an entity which is controlled by Keith Moore, Executive Chairman of Boustead & Company Limited, an affiliate of Boustead Securities, LLC (“BSL”).

 

The Company filed an initial registration statement on Form S-1 (the “Form S-1”) with the SEC in April 2024 related to the registration of subscription rights to purchase the Units to be sold in the Rights Offering. The Form S-1 has not been declared effective as of the date these condensed consolidated financial statements were issued. Upon the Form S-1 being declared effective, the Purchase Agreement allows SRO LLC up to 60 days to raise the initial $2,250,000, which funds will be placed in escrow with Sutter Securities, Inc. (“SSI”), an affiliate of BSL, pursuant to the terms of an escrow agreement entered into between the Company, Shuttle Diagnostics, Inc., BSL and SSI on February 7, 2024 (the “Escrow Agreement”). The funds will remain in escrow up until closing on the Rights Offering. In addition, in the event the Company fails to raise the full $4,500,000 in the Rights Offering, SRO LLC agreed to a backstop commitment pursuant to which it would have the right to purchase any remaining Units not purchased by existing Company stockholders in the Rights Offering, up to an additional $2,250,000 (the “Back-up Contingency”). Unless the parties waive the conditions to closing, in the event the full $4,500,000 is not raised, whether through SRO LLC or through the Company’s existing stockholders, the Company will not close on the offering and any funds raised and held in escrow will be returned to investors.

 

In conjunction with its entry into the Purchase Agreement, on February 7, 2024, the Company entered into a placement agent and advisory services agreement (the “Placement Agent Agreement”) with BSL, pursuant to which BSL and BSL’s affiliates will provide the Company with regular and customary financial consulting advice and will act as placement agent, on a best efforts basis, for the Rights Offering. In exchange for its services, BSL will receive a commitment fee equal to $112,500 upon the earlier of the Company filing the registration statement on Form S-1 registering the Rights Offering or upon such date as the Company terminates the Rights Offering, a commission equal 8% of the gross proceeds disbursed to the Company upon closing the Rights Offering, and $40,000 in diligence and related expenses.

 

As of March 31, 2024, the Company has incurred $82,000 in costs directly related to the planned Rights Offering. The Company has deferred these costs as other current assets in the condensed consolidated balance sheet and will recognize the deferred costs as a reduction in proceeds obtained upon the closing of the Rights Offering, or as an expense in the event the Rights Offering is not consummated.

 

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Note 7 – Derivative Liabilities

 

Fair Value Assumptions Used in Accounting for Derivative Liabilities

 

ASC 815 requires us to assess the fair market value of derivative liabilities at the end of each reporting period and recognize any change in the fair market value as other income or expense.

 

In January 2023, in connection with the Alto Convertible Note, the Company issued warrants to purchase 1,018,079 shares of common stock, with an exercise price of $2.35 per share, valued at inception at $1,189,000 and as of March 31, 2024, at $214,615. The Company determined our derivative liabilities from the warrants issued in relation to the Alto Convertible Note do not satisfy the classification as equity instruments due to the existence of a certain net cash settlement provision that is not within the sole control of the Company. In addition, there are certain down round provisions that could reduce the exercise price if the Company issues securities at lower prices in the future.

 

The Company determined our derivative liability from the noteholder’s Acceleration Option for the Alto Convertible Note is not clearly and closely related to the host and should be thus accounted for as a bifurcated derivative liability.

 

We classified these derivative liabilities as a Level 3 fair value measurement and used the Monte Carlo pricing model to calculate the fair value as of January 11, 2023 ($2,631,000 included in debt discount) and March 31, 2024 ($216,650). Key inputs for the simulation are summarized below. The Monte Carlo simulation uses an implied VWAP for the January 11, 2023 valuation date. The implied VWAP was backsolved by setting the summation of the parts (e.g., derivatives and debt without derivatives) equal to the cash proceeds. The simulation was then iterated and manipulated to solve for the implied share price, which was approximately $1.58 per share (or an approximate 14% discount to the quoted market VWAP on January 11, 2023).

 

The key inputs for the Monte Carlo simulation as of March 31, 2024, were as follows:

 

Net cash settlement and down round key valuation inputs – warrants*    
Annualized volatility   67.19% - 72.53%
Risk-free interest rate   4.40% - 5.47%
Quoted VWAP  $0.41 
Exercise price  $2.35 
Probability assessment   5% - 25%
Illiquidity discount   -16%
Time period (years)   0.17 - 2.79 

 

*Based on a Monte Carlo simulation analysis of 250,000 iterations

 

 

Acceleration option key valuation inputs*    
Annualized volatility   48.36% - 54.75%
Risk-free interest rate   4.94% - 5.49%
Quoted VWAP  $0.41 
Illiquidity discount   -16%
Time period (years)   0 - 0.95 

 

*Based on a Monte Carlo simulation analysis of 250,000 iterations

 

The following table summarizes the changes in the derivative liabilities:

 

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
   Warrants   Accelerated Feature 
Balance - December 31, 2023  $410,660   $3,852 
Gain on change in fair value   (196,045)   (1,817)
Balance - March 31, 2024  $214,615   $2,035 

 

Note 8 – Related Party transactions

 

On September 14, 2022, we entered into a manufacturing agreement with TCG GreenChem, Inc. (“TCG GreenChem”), the U.S. subsidiary of TCG Lifesciences Pvt Ltd., a global contract research and manufacturing services company located in India. Dr. Chis Senanayake, one of our independent directors, is CEO and CSO of TCG GreenChem and CSO of TCG Lifesciences Pvt Ltd. TCG GreenChem was contracted for process research, development and cGMP compliant manufacture of IPdR. During the three months ended March 31, 2024 and 2023, the Company expensed $0 and $300,000, respectively.

 

Note 9 – Subsequent Events

 

On May 3, 2024, the SEC entered an order (the “SEC Order”) against our former auditor, BF Borgers CPA PC and its sole audit partner, Benjamin F. Borgers (together “BF Borgers”), instituting settled administrative and cease-and-desist proceedings against BF Borgers.  The SEC Order denies BF Borgers the privilege of appearing or practicing before the SEC as an accountant, and has resulted in BF Borgers being unable to issue consents related to BF Borgers’ audit of our 2022 financial statements. As we are in the process of filing a registration statement on Form S-1 related to our planned Rights Offering, we will need to have our 2022 financial statements re-audited by a licensed PCAOB accounting firm. As a result, the Company is implementing plans to re-audit the 2022 financial statements.

 

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

 

The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Annual Report. The Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Annual Report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors including, but not limited to, those noted under “Risk Factors” in this Annual Report.

 

We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report, except as required by U.S. federal securities laws.

 

Overview

 

Founded by Georgetown University Medical School faculty members, Shuttle Pharmaceuticals Holdings, Inc. is a discovery and development stage pharmaceutical company leveraging our proprietary technology to develop novel therapies that are designed to cure cancer. Originally formed as Shuttle Pharmaceuticals, LLC in 2012, our goal is to extend the benefits of cancer treatments by leveraging insights into cancer therapy with surgery, radiation therapy, chemotherapy and immunotherapy. While there are several therapies being developed with the goal of curing cancer, one of the most effective and proven approaches to this is radiation therapy (RT). We are developing a pipeline of products designed to address the limitations of the current standard of cancer therapies. We believe that our product candidates will enable us to deliver cancer treatments that are safer, more reliable and at a greater scale than that available with the current standard of care.

 

Operations to date have focused on continuing our research and development efforts to advance Ropidoxuridine clinical testing and improved drug formulation, to advance HDAC6 inhibitor (SP-2-225) preclinical development and explore new SBIR contract work on predictive biomarkers of radiation response, as well as prostate cell lines for health disparities research. We have received Small Business Innovation Research (“SBIR”) contract funding from the National Institutes of Health (“NIH”) for the aforementioned projects. The clinical development of Ropidoxuridine has shown drug bioavailability and a maximum tolerated dose has been established for use in Phase II clinical trials. TCG GreenChem, Inc. (“TCG GreenChem”), with whom we have contracted for process research, development and cGMP compliant manufacture of IPdR, has successfully completed the manufacturing campaign for the active pharmaceutical ingredient (API) of Ropidoxuridine for use in the Company’s upcoming Phase II clinical trial in brain cancer patients undergoing radiation therapy. Shuttle also worked with University of Iowa Pharmaceuticals to develop the formulation and produce the capsules, which have been shipped to contract research organization (CRO) Theradex Oncology for distribution to clinical trial sites. Both activities have now been completed. In addition, Shuttle received approval from the FDA to begin the clinical trial. The FDA made recommendations to expand the clinical trial and we agreed with the recommendation. Meetings with clinical sites to review the protocol documents have occurred and FDA required Institutional Review Board approval has been received from the central internal review board, or IRB. With FDA recommended changes incorporated into the revised protocol, the Company believes it remains on track to commence its Phase II clinical study in the second quarter of 2024. The radiation biomarker project and the health disparities project have been completed and the company is following up with plans for clinical validation and potential commercialization. Changes in operational, administrative, legal and professional expenses related to our operations are set forth in more detail in the discussion below.

 

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Results of Operations

 

Comparison of the three months ended March 31, 2024 and 2023

 

The following table summarizes the results of our operations:

 

   Three Months Ended         
   March 31,         
   2024   2023   Change   % 
Revenue  $-   $-   $-    - 
Operating expenses:                    
Research and development   586,104    921,801    (335,697)   (36%)
General and administrative   324,609    255,355    69,254    27%
Legal and professional   474,134    367,624    106,510    29%
Total operating expenses and loss of operations   1,384,847    1,544,780    (159,933)   (10%)
Other income (expense):                    
Interest expense - related parties   -    (4,237)   4,237    (100%)
Interest expense   (497,515)   (599,331)   101,816    (17%)
Interest income   21,453    16,688    4,765    29%
Finance fee   -    (104,245)   104,245    (100%)
Change in fair value of derivative liabilities   197,862    1,241,000    (1,043,138)   (84%)
Gain on sale of marketable securities   4,037    -    4,037    100%
Change in fair value of marketable securities   (706)   38,062    (38,768)   (102%)
Loss on settlement of convertible debt   (71,315)   (18,254)   (53,061)   291%
Total other expense   (346,184)   569,683    (915,867)   (161%)
Net loss  $(1,731,031)  $(975,097)  $(755,934)   78%

 

Research and Development. Research and development (“R&D”) expense was $0.6 million for the three months ended March 31, 2024, as compared to $0.9 million for three months ended March 31, 2023. The decrease of $0.3 million, or 36%, is primarily related to the Company having completed production of the drug product and waiting for the initiation of trials.

 

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R&D compensation related expenses were $0.3 million in the three months ended March 31, 2024 as compared to $0.6 million in the three months ended March 31, 2023. Compensation related expenses were 56% for the three months ended March 31, 2024, representing a decrease from 61% of total R&D in the three months ended March 31, 2023. Subcontract work made up 34% of total R&D expenses in the three months ended March 31, 2024 and 37% of total R&D expenses during the three months ended March 31, 2023.

 

General and Administrative Expenses. General and Administrative expenses in the three months ended March 31, 2024 increased by $0.1 million, or 27% to $0.3 million in the three months ended March 31, 2024. The increase in general and administrative expenses was primarily due to a restricted stock-based grant to an officer of the Company valued at $41,840.

 

Legal and Professional Expenses. During the three months ended March 31, 2024, legal and professional expenses increased by $0.1 million or 29%. The increase in legal and professional fees was primarily due to increases in our expenses related to our public filing requirements, contracts and financing related work.

 

Other Income Expense. Other expense was $0.3 million for the three months ended March 31, 2024, which consisted of $0.5 million in interest expense on convertible loans, interest income of $21 thousand, loss on settlement of convertible debt of $71 thousand, change in marketable securities of $4 thousand, and a gain on change in fair value of derivative liabilities of $0.2 million. Other income was $0.6 million for the three months ended March 31, 2023, which consisted of $0.6 million in interest expense on convertible loans, $4 thousand in interest expense on related party loans, interest income of $17 thousand, finance fee on convertible loans of $0.1 million, loss on settlement of convertible debt of $18 thousand, unrealized gain on marketable securities of $38 thousand, and a gain on change in fair value of derivative liability of $1.2 million. The $1.0 million gain in fair value of derivative liability resulted from the fair value measurement using the Monte Carlo pricing model and the impact of the decrease in the market price of warrant shares.

 

Liquidity and Capital Resources

 

Our condensed consolidated financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred losses since inception and had a net loss of approximately $1.7 million and no revenues for the three months ended March 31, 2024 and has working capital of approximately $2.9 million as of March 31, 2024. In addition, the convertible note payable outstanding at March 31, 2024 includes covenants and certain cash payment requirements. These conditions, and the Company’s ability to comply with such conditions, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

 

In September 2022, the Company completed its IPO, generating net proceeds of approximately $10.0 million. Additionally, in January 2023, the Company entered into a securities purchase agreement with an institutional investor through which the Company sold a convertible note with a principal value of $4.3 million, along with a four-year warrant to purchase 1,018,079 shares of common stock, exercisable at $2.35 per share, providing the Company with approximately $3.6 million in net proceeds. To date, the warrant has not yet been exercised. However, the Company’s existing cash resources, marketable securities and the cash received from the equity offering and convertible note are not expected to provide sufficient funds to carry out the Company’s operations and clinical trials through the next twelve months.

 

The IPO and subsequent capital raise have supported operations leading up to the manufacture of drug product and FDA approval of the IND for the Phase II clinical trial of Ropidoxuridine and radiation therapy in glioblastoma. The FDA recommended and the Company agreed to an expansion of the clinical trial, necessitating additional capital to complete the trial as well as fund ongoing operations. As a result, management is in the process of initiating a $4.5 million rights offering and has submitted an application for a Small Business Innovation Research (“SBIR”) grant for non-dilutive funding for pre-clinical project through the National Institutes of Health (“NIH”). The ability of the Company to continue as a going concern is dependent upon its ability to successfully raise additional equity or debt financing to allow it to fund ongoing operations, conduct clinical trials and bring a drug candidate to commercialization to generate revenues.

 

The accompanying condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities if the Company is unable to continue as a going concern.

 

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Balance Sheet Data:

 

   March 31,   December 31,         
   2024   2023   Change   % 
Current assets  $4,411,019   $5,593,005   $(1,181,986)   (21%)
Current liabilities   1,489,217    1,042,237    446,980    43%
Working capital  $2,921,802   $4,550,768   $(1,628,966)   (36%)

 

As of March 31, 2024, total current assets were $4.4 million and total current liabilities were $1.5 million, resulting in working capital of $2.9 million. As of December 31, 2023, total current assets were $5.6 million and total current liabilities were $1.0 million, resulting in a working capital of $4.6 million. As of March 31, 2024, the current assets primarily resulted from $1.4 million cash and $2.8 million marketable securities, with the decrease from December 31, 2023 being primarily due to ongoing cash burn from our R&D programs, filing expenses and general operations. The increase in current liabilities is primarily due to the current portion of the $4,300,000 convertible note and accrued interest that increased $0.4 million and an increase in accounts payable of $65 thousand.

 

Cash Flows from Operating Activities

 

   Three Months Ended         
   March 31,         
   2024   2023   Change   % 
Cash used in operating activities  $(1,239,083)  $(1,337,982)  $98,899    (7%)
Cash provided by (used in) investing activities  $101,295   $(2,953,709)  $3,055,004    (103%)
Cash provided by (used in) financing activities  $(40,000)  $3,043,756   $(3,083,756)   (101%)
Cash on hand  $1,398,628   $7,169,268   $(5,770,640)   (80%)

 

To date, we have not generated positive cash flows from operating activities. For the three months ended March 31, 2024, net cash flows used in operating activities was $1.2 million, consisting of a net loss of $1.7 million, increased by a gain on change in derivative liabilities of $0.2 million, offset by amortization of debt discount of $0.4 million, loss on settlement of convertible debt of $71 thousand, accrued interest settled with common stock of $19 thousand, stock-based compensation of $111 thousand and increased by a net change in working capital of $50 thousand. For the three months ended March 31, 2023, net cash flows used in operating activities was $1.3 million, consisting of a net loss of $1.0 million, increased by a gain on change in derivative liability of $1.2 million, offset by amortization of debt discount of $0.6 million, and further reduced by a net change in working capital of $0.3 million.

 

Cash Flows from Investing Activities

 

For the three months ended March 31, 2024, we invested in trading marketable securities for $19 thousand and received $120 thousand in proceeds from disposition of marketable securities. For the three months ended March 31, 2023, we invested in trading marketable securities for $3.0 million.

 

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Cash Flows from Financing Activities

 

For the three months ended March 31, 2024, we paid $40,000 related to financing activities. For the three months ended March 31, 2023, we received a net of $3,590,000 from the sale and issuance of convertible notes payable and warrants and repaid $546,244 in related party notes payable.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Critical Accounting Policies and Significant Judgments and Estimates

 

This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our condensed consolidated financial statements included elsewhere in this report, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

 

Our most critical accounting policies and estimates relate to the following:

 

  ● Research and Development Expenses
  ● Fair Value of Derivative Financial Instruments
  ● Initial Measurement of Equity-Based Warrants

 

Research and Development

 

Research and development expenses are expensed as incurred and, prior to our initial public offering in September 2022, have historically been offset by contract receivable payments from an NIH SBIR contract that has supported our scientific research. This is stated in the financials as research and development-net of contract expense reimbursements.

 

Fair Value of Financial Instruments

 

We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities are evaluated at the end of each reporting period.

 

For our derivative financial instruments classified as a liability, the Company uses a Monte Carlo valuation model to value the derivative instruments at inception and on subsequent valuation dates. The model requires the use of simulations that are weighted based on significant unobservable inputs including the average volatility of a population set and probabilities assigned. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average. The Monte Carlo simulation uses an implied VWAP for valuation. The implied VWAP was backsolved by setting the summation of the parts (e.g., derivatives and debt without derivatives) equal to the cash proceeds and is updated each period.

 

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The use of Monte Carlo valuation models require key inputs, some of which are based on estimates and judgements by management and/or external consultants. Any change to these key inputs could produce significantly higher or lower fair value measurements.

 

Initial Measurement of Equity-Based Warrants

 

We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as equity, the derivative instrument is initially recorded at its fair value and recorded to additional paid in capital. The classification of derivative instruments, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period.

 

For our derivative financial instruments classified as equity, the Company used a Black Scholes valuation model, to calculate the fair value on issuance date, without revaluation.

 

The use of Black Scholes valuation model requires the input of highly subjective assumptions, including the expected price volatility, that is based on an analysis of the historical volatility of the common stock of a group of comparable entities. Any change to these inputs could produce significantly higher or lower fair value measurements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company,” we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures (as defined in Exchange Act Rule 15d-15(e)) are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As of March 31, 2024, our management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Such evaluation was carried out under the supervision of our Chief Executive Officer with the participation of our President and Chief Operating Officer, our Chief Financial Officer, and our third party financial service provider. Based on this evaluation, management concluded that our disclosure controls and procedures were, and continue to be, ineffective as of March 31, 2024. Based on the foregoing, our management concluded that our internal controls over the following financial reporting areas to be material weaknesses:

 

  ● Our written accounting policies and documentation of management’s contemplation of the accounting treatment and implications over significant unusual transactions, including complex accounting associated with debt and equity transactions, was limited and resulted in ineffective monitoring of financial reporting.
  ● Due to our size and stage of development, segregation of all conflicting duties may not always be possible and may not be economically feasible. During the year, we lacked sufficient review procedures and segregation of duties such that a proper review had not been performed by someone other than a preparer, including manual journal entries, and that process documentation is lacking for review and monitoring controls over financial statements close process and financial reporting.
  ● As a result of the Company’s evolution since the date of our initial formation, when we were focused on NIH SBIR research contracts with related costing allocation allowances until when we completed our IPO and continued our development process, management has lacked a formal process to identify and properly classify operating expenses such as Research and Development (“R&D”).
  ● We identified findings related to overall information technology general controls (“ITGCs”) including issues with access and segregation of duties for systems supporting the Company’s internal control processes and controls.

 

There has been no change in the Company’s internal control over financial reporting during the three months ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting. Management will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional improvements as necessary.

 

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PART II — OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Currently, there are no legal proceedings pending or threatened against us. We are not presently party to any pending or other threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results, although from time to time, we may become involved in legal proceedings in the ordinary course of business.

 

ITEM 1A. RISK FACTORS

 

As a smaller reporting company, we are not required to provide the information required by this item.

 

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not Applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

Item 6. Exhibits

 

The following exhibits are filed or furnished with this report:

 

Exhibit No.   Description of Exhibit
3.1   Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (File No. 333-265429) filed on June 3, 2022).
3.2   Certificate of Amendment to Amended and Restated Certificate of Incorporation, effective March 30, 2022 (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (File No. 333-265429) filed on June 3, 2022).
3.3   Certificate of Amendment to Amended and Restated Certificate of Incorporation, effective June 22, 2022 (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-1/A (File No. 333-265429) filed on June 23, 2022).
3.4   Second Amended and Restated By-Laws (incorporated by reference to Exhibit 3.1 to the current Report on Form 8-K filed on November 1, 2022).
4.1   Form of Convertible Note, dated January 11, 2023, issued by Shuttle Pharmaceuticals Holdings, Inc. to Alto Capital Master Fund, SPC – Segregated Master Portfolio B (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed January 12, 2023).
4.2   Form of Warrant, dated January 11, 2023, issued by Shuttle Pharmaceuticals Holdings, Inc. to Alto Capital Master Fund, SPC – Segregated Master Portfolio B (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed January 12, 2023).
10.1   Asset Purchase Agreement, dated January 30, 2024, by and between Shuttle Pharmaceuticals Holdings, Inc., Alan Kozikowski and Werner Tueckmantel (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on February 5, 2024).
10.2   Securities Purchase Agreement, dated February 7, 2024, between Shuttle Pharmaceuticals Holdings, Inc., Shuttle Diagnostics, Inc. and SRO, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on February 13, 2024).
10.3   Placement Agent and Advisory Services Agreement, dated February 7, 2024, between Shuttle Pharmaceuticals Holdings, Inc. and Boustead Securities, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on February 13, 2024).
10.4   Offering Deposit Account Agency Agreement, dated February 7, 2024, between Shuttle Pharmaceuticals Holdings, Inc., Boustead Securities, LLC and Sutter Securities Inc. (incorporated by reference to Exhibit 10.3 to the Current Report on From 8-K filed on February 13, 2024).
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1   Certification of Chief 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 Chief 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 – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH   Inline XBRL Taxonomy Schema Document
101.CAL   Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF   Inline XBRL Taxonomy Definition Linkbase Data
101.LAB   Inline XBRL Taxonomy Label Linkbase Document
101.PRE   Inline XBRL Taxonomy Presentation Linkbase Document
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

**Furnished herewith.

 

25

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  SHUTTLE PHARMACEUTICALS HOLDINGS, INC.
     
May 13, 2024 By: /s/ Anatoly Dritschilo
    Anatoly Dritschilo, M.D.
    Chief Executive Officer
     
May 13, 2024 By: /s/ Michael Vander Hoek
   

Michael Vander Hoek

Chief Financial Officer

 

26

 

Exhibit 31.1

 

CERTIFICATION

 

I, Anatoly Dritschilo, M.D., certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q Pursuant to Rule 15d-2 under the Securities Exchange Act of 1934 for the period ended March 31, 2024 of Shuttle Pharmaceuticals Holdings, Inc. (the “registrant”);

 

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 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 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: May 13, 2024 /s/ Anatoly Dritschilo
  Anatoly Dritschilo, M.D.
 

Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

Exhibit 31.2

 

CERTIFICATION

 

I, Michael Vander Hoek, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q Pursuant to Rule 15d-2 under the Securities Exchange Act of 1934 for the period ended March 31, 2024 of Shuttle Pharmaceuticals Holdings, Inc. (the “registrant”);

 

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 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 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: May 13, 2024 /s/ Michael Vander Hoek
  Michael Vander Hoek
 

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

 

Exhibit 32.1

 

CERTIFICATION 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 Quarterly Report of Shuttle Pharmaceuticals Holdings, Inc. (the “Company”) on Form 10-Q pursuant to Rule 15d-2 under the Securities Exchange Act of 1934 for the period ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anatoly Dritschilo, M.D., Chief 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:

 

(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.

 

Date: May 13, 2024

 

  /s/ Anatoly Dritschilo
  Anatoly Dritschilo, M.D.
 

Chief Executive Officer

(Principal Executive Officer)

 

 

 

Exhibit 32.2

 

CERTIFICATION 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 Quarterly Report of Shuttle Pharmaceuticals Holdings, Inc. (the “Company”) on Form 10-Q pursuant to Rule 15d-2 under the Securities Exchange Act of 1934 for the period ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Vander Hoek, Chief 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:

 

(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.

 

Date: May 13, 2024

 

  /s/ Michael Vander Hoek
  Michael Vander Hoek
 

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 
v3.24.1.1.u2
Cover - shares
 3 Months Ended
Mar. 31, 2024
May 13, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Mar. 31, 2024  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 001-41488  
Entity Registrant Name SHUTTLE PHARMACEUTICALS HOLDINGS, INC.  
Entity Central Index Key 0001757499  
Entity Tax Identification Number 82-5089826  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 401 Professional Drive  
Entity Address, Address Line Two Suite 260  
Entity Address, City or Town Gaithersburg  
Entity Address, State or Province MD  
Entity Address, Postal Zip Code 20879  
City Area Code (240)  
Local Phone Number 403-4212  
Title of 12(b) Security Common Stock  
Trading Symbol SHPH  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company true  
Elected Not To Use the Extended Transition Period false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   16,794,893
v3.24.1.1.u2
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Current assets    
Cash and cash equivalents $ 1,398,628 $ 2,576,416
Prepaid expenses 129,642 114,473
Marketable securities 2,789,251 2,887,215
Accrued interest income 11,964 14,901
Other current assets 81,534
Total Current Assets 4,411,019 5,593,005
Property and equipment, net 22,915 24,827
Operating lease right-of-use asset 319,987 333,904
Total Assets 4,753,921 5,951,736
Current Liabilities    
Accrued interest payable 143,676 110,453
Convertible notes payable, net 941,398 595,999
Derivative liability 2,035
Operating lease liability 54,552 52,479
Total Current Liabilities 1,489,217 1,042,237
Convertible notes payable non-current, net 135,089
Derivative liability non-current 214,615 414,512
Operating lease liability non-current 288,602 304,127
Total Liabilities 1,992,434 1,895,965
Stockholders’ Equity    
Series A Convertible Preferred Stock, $0.00001 par value; $1,000 per share liquidation value; 20,000,000 shares authorized; no shares outstanding
Common stock, $0.00001 par value; 100,000,000 shares authorized; 16,819,893 and 16,069,320 shares issued and outstanding, respectively 168 161
Additional paid in capital 19,979,962 19,543,222
Accumulated deficit (17,218,643) (15,487,612)
Total Stockholders’ Equity 2,761,487 4,055,771
Total Liabilities and Stockholders’ Equity 4,753,921 5,951,736
Nonrelated Party [Member]    
Current Liabilities    
Accounts payable and accrued expenses 347,556 282,860
Related Party [Member]    
Current Liabilities    
Accounts payable and accrued expenses $ 446
v3.24.1.1.u2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Mar. 31, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.00001 $ 0.00001
Preferred stock, liquidation preference per share $ 1,000 $ 1,000
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.00001 $ 0.00001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 16,819,893 16,069,320
Common stock, shares outstanding 16,819,893 16,069,320
v3.24.1.1.u2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Revenue
Operating expenses    
Research and development 586,104 921,801
General and administrative 324,609 255,355
Legal and professional 474,134 367,624
Total operating expenses 1,384,847 1,544,780
Loss from operations (1,384,847) (1,544,780)
Other income (expense)    
Interest income 21,453 16,688
Finance fee (104,245)
Change in fair value of derivative liabilities 197,862 1,241,000
Gain on sale of marketable securities 4,037
Change in fair value of marketable securities (706) 38,062
Loss on settlement of convertible debt (71,315) (18,254)
Total other income (expense) (346,184) 569,683
Net loss attributable to common stockholders $ (1,731,031) $ (975,097)
Weighted average common shares outstanding - basic 16,572,527 13,635,994
Weighted average common shares outstanding - diluted 16,572,527 13,635,994
Net loss per shares - basic $ (0.10) $ (0.07)
Net loss per shares - diluted $ (0.10) $ (0.07)
Related Party [Member]    
Other income (expense)    
Interest expense $ (4,237)
Nonrelated Party [Member]    
Other income (expense)    
Interest expense $ (497,515) $ (599,331)
v3.24.1.1.u2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balance at Dec. 31, 2022 $ 136 $ 16,572,622 $ (8,894,889) $ 7,677,869
Balance, shares at Dec. 31, 2022 13,603,129      
Common stock issued for conversion of accrued interest and principal $ 1 104,546 104,547
Common stock issued for conversion of accrued interest and principal, shares 50,998      
Stock-based compensation 8,333 8,333
Net loss (975,097) (975,097)
Warrants issued for financing costs 99,543 99,543
Financing fees allocated to warrants (8,727) (8,727)
Balance at Mar. 31, 2023 $ 137 16,776,317 (9,869,986) 6,906,468
Balance, shares at Mar. 31, 2023 13,654,127      
Balance at Dec. 31, 2023 $ 161 19,543,222 (15,487,612) 4,055,771
Balance, shares at Dec. 31, 2023 16,069,320      
Common stock issued for conversion of accrued interest and principal $ 6 325,292 325,298
Common stock issued for conversion of accrued interest and principal, shares 625,573      
Common stock issued for restricted stock units $ 1 (1)
Common stock issued for restricted stock units, shares 125,000      
Stock-based compensation 111,449 111,449
Net loss (1,731,031) (1,731,031)
Balance at Mar. 31, 2024 $ 168 $ 19,979,962 $ (17,218,643) $ 2,761,487
Balance, shares at Mar. 31, 2024 16,819,893      
v3.24.1.1.u2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (1,731,031) $ (975,097)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 1,912 1,488
Change in fair value of derivative liabilities (197,862) (1,241,000)
Amortization of debt discount and finance fees 445,509 567,297
Gain on marketable securities (4,037)
Change in fair value of marketable securities 706 (38,062)
Accrued interest settled with common stock 18,783 20,142
Loss on settlement of convertible debt 71,315 18,254
Stock-based compensation 111,449 8,333
Changes in operating assets and liabilities:    
Accrued interest income 2,937 (7,023)
Prepaid expenses (15,169) (42,687)
Accounts payable and accrued expenses 23,162 330,729
Accounts payable and accrued expenses - related parties (446) (12,500)
Accrued interest payable 33,223 116,051
Accrued interest payable - related parties (74,807)
Other assets (7,206)
Change in operating lease asset and liability 466 (1,894)
Net cash used in operating activities (1,239,083) (1,337,982)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Investment in marketable securities (18,705) (2,953,709)
Proceeds from disposition of marketable securities 120,000
Net cash used in investing activities 101,295 (2,953,709)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Repayment of note payable-related party (546,244)
Proceeds from convertible notes payable and warrants 3,935,000
Payment for finance costs related to convertible note payable (345,000)
Payment for finance costs (40,000)
Net cash provided by financing activities (40,000) 3,043,756
Net change in cash and cash equivalents (1,177,788) (1,247,935)
Cash and cash equivalents, beginning of period 2,576,416 8,417,203
Cash and cash equivalents, end of period 1,398,628 7,169,268
Cash paid for:    
Interest 79,044
Income taxes
Supplemental non-cash financing activities:    
Common stock issued for settlement of debt 325,298 104,547
Finance costs accrued in accounts payable 41,534
Warrants issued for financing fees, net of issuance fees of $0 and $8,727, respectively $ 90,816
v3.24.1.1.u2
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Statement of Cash Flows [Abstract]    
Warrants issuance fees $ 0 $ 8,727
v3.24.1.1.u2
Organization and Liquidity
 3 Months Ended
Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Liquidity

Note 1 – Organization and Liquidity

 

Organization and Line of Business

 

Shuttle Pharmaceuticals Holdings, Inc. (“we”, “us”, “our”, the “Company”) was originally formed as Shuttle Pharmaceuticals, LLC in the State of Maryland on December 18, 2012. On August 12, 2016, the Company filed articles of conversion with the State of Maryland to convert from an LLC to a C corporation, at which time the Company changed its name to Shuttle Pharmaceuticals, Inc. (“Shuttle”). In connection with the conversion the Company issued 45,000,000 shares of common stock in exchange for 100% of the outstanding membership interests in Shuttle prior to conversion. On June 4, 2018, Shuttle completed a reverse merger with Shuttle Pharmaceuticals Holdings, Inc. (then known as Shuttle Pharma Acquisition Corp, Inc.), a Delaware corporation, pursuant to which Shuttle, our operating entity, became a wholly owned subsidiary of the Company.

 

The Company’s primary purpose is to develop and commercialize unique drugs for the sensitization of cancers and protection of normal tissues, with the goal of improving outcomes for cancer patients receiving radiation therapy. Shuttle has deployed its proprietary technology to develop novel cancer immunotherapies, producing a pipeline of selective HDAC inhibitors for cancer and immunotherapy applications. The Company’s HDAC platform is designed to target candidate molecules with potential roles in therapeutics beyond cancer, including autoimmune, inflammatory, metabolic, neurological and infectious diseases. The Company’s Ropidoxuridine product, which is used with radiation therapy to sensitize cancer cells, was initially funded by a Small Business Innovation Research (“SBIR”) contract provided by the National Cancer Institute (“NCI”), a unit of the National Institutes of Health (“NIH”). Ropidoxuridine has been further developed though the Company’s collaborations with scientists at the University of Virginia for use in combination with proton therapy to improve patient survival. Historically, and prior to the Company’s initial public offering in September 2022, the Company has obtained funding to develop products through NIH grants, including a product to predict late effects of radiation with metabolite biomarkers and develop prostate cancer cell lines in health disparities research.

 

The production and marketing of the Company’s products and its ongoing research and development activities will be and are subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United States, any products or combination of products developed by the Company must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive regulatory approval process implemented by the Food and Drug Administration (“FDA”) under the Food, Drug and Cosmetic Act. There can be no assurance that the Company will not encounter problems in its clinical trials that will cause the Company or the FDA to delay or suspend the 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 in other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company now or in the future.

 

Liquidity and Going Concern

 

Our condensed consolidated financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred losses since inception and has a net loss of approximately $1.7 million and no revenues for the three months ended March 31, 2024 and has working capital of approximately $2.9 million as of March 31, 2024. In addition, the convertible note payable outstanding at March 31, 2024 includes covenants and certain cash payment requirements. These conditions, and the Company’s ability to comply with such conditions, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

 

 

In September 2022, the Company completed its IPO, generating net proceeds of approximately $10.0 million. Additionally, in January 2023, the Company entered into a securities purchase agreement with an institutional investor through which the Company sold a convertible note with a principal value of $4.3 million, along with a four-year warrant to purchase 1,018,079 shares of common stock, exercisable at $2.35 per share, providing the Company with approximately $3.6 million in net proceeds. To date, the warrant has not yet been exercised. However, the Company’s existing cash resources, marketable securities and the cash received from the equity offering and convertible note are not expected to provide sufficient funds to carry out the Company’s operations and clinical trials through the next 12 months.

 

The IPO and subsequent capital raise have supported operations leading up to the manufacture of drug product and FDA approval of the IND for the Phase II clinical trial of Ropidoxuridine and radiation therapy in glioblastoma. The FDA recommended and the Company agreed to an expansion of the clinical trial, necessitating additional capital to complete the trial as well as fund ongoing operations. As a result, management is in the process of initiating a $4.5 million rights offering and has submitted an application for a Small Business Innovation Research (“SBIR”) grant for non-dilutive funding for pre-clinical project through the National Institutes of Health (“NIH”). The ability of the Company to continue as a going concern is dependent upon its ability to successfully raise additional equity or debt financing to allow it to fund ongoing operations, conduct clinical trials and bring a drug candidate to commercialization to generate revenues.

 

The accompanying condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities if the Company is unable to continue as a going concern.

 
v3.24.1.1.u2
Summary of Significant Accounting Policies
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and notes required by accounting principles generally accepted in the United States of America for annual financial statements. A complete discussion of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all of the adjustments necessary to present the financial position of the Company as of March 31, 2024 and the results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the year-end condensed consolidated balance sheet was derived from audited financial statements. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2024.

 

Basis of Consolidation

 

The unaudited condensed consolidated financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned subsidiaries, Shuttle Pharmaceuticals, Inc. and Shuttle Diagnostics Inc. All intercompany transactions and balances have been eliminated.

 

 

Correction of an Immaterial Error in the Prior Period Financial Statements

 

During the fourth quarter of 2023, the Company determined that the prior year consolidated financial statements had a misstatement caused by an immaterial classification error of certain research and development expenses in accordance with ASC 730. As a result, certain prior year amounts have been corrected for consistency with the current year presentation. The Company assessed the materiality of this change in presentation on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” (ASC Topic 250, Accounting Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections in its Condensed Consolidated Statements of Operations are not material to any previously presented financial statements based upon overall considerations of both quantitative and qualitative factors. The corrections had no impact on the Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Cash Flows, or Condensed Consolidated Statement of Changes in Stockholders’ Equity, to these financial statements, or for any previously presented interim or annual financial statements. Further, the corrections did not result in a change in quarterly or year-to-date operating losses, basic or diluted earnings per share, or working capital. The quarterly correction required for March 31, 2023 was $89,007. Accordingly, the Company corrected the previously reported immaterial error for the three months ended March 31, 2023 in this Quarterly Report on Form 10-Q.

 

   March 31, 2023   Correction   Corrected
March 31, 2023		 
Research and development expense  $1,010,808   $(89,007)  $921,801 
General and administrative expense   166,348    89,007    255,355 
Net Loss  $1,177,156   $-   $1,177,156 

 

Use of Estimates

 

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates are contained in the accompanying condensed consolidated financial statements for the valuation of derivatives, share-based compensation, and initial measurement of equity-based warrants.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in bank accounts and money market funds with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. As of March 31, 2024 and December 31, 2023, cash and cash equivalents consisted of the following:

 

   March 31,   December 31, 
   2024   2023 
Cash  $364,069   $1,550,098 
Money market funds   1,034,559    1,026,318 
Total cash and cash equivalents  $1,398,628   $2,576,416 

 

 

Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000 per institution. The amount in excess of the FDIC insurance as of March 31, 2024 was approximately $1.1 million. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

 

Marketable Securities

 

Our investments in debt securities are carried at fair value. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading of debt securities are charged to income.

 

The marketable securities held by the Company, which are classified as trading marketable securities, consisted of an outstanding balance of $2,789,251 and $2,887,215 as of March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024 and 2023, the Company recognized interest income of $13,651 and $16,688, realized gains of $4,037 and $0, and unrealized loss of $706 and gain of $38,062, respectively.

 

Fair Value of Financial Instruments

 

The Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair Value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:

 

  ● Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.
     
  ● Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.
     
  ● Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires a significant judgment or estimation.

 

Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.

 

The carrying amounts of the Company’s financial instruments including cash and cash equivalents, prepaid expenses, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments.

 

 

Set out below are the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of March 31, 2024 and December 31, 2023:

 

March 31, 2024  Level 1   Level 2   Level 3   Carrying Value 
Assets                    
Marketable Securities:                    
United States Treasury Bonds  $2,789,251   $-   $-   $2,789,251 
Total Assets  $2,789,251   $-   $-   $2,789,251 
Liabilities                    
Derivative Liability - Warrants  $-   $-   $214,615   $- 
Derivative Liability - Accelerated feature   -    -    2,035    - 
Total Liabilities  $-   $-   $216,650   $- 

 

December 31, 2023  Level 1   Level 2   Level 3   Carrying Value 
Assets                    
Marketable Securities:                    
United States Treasury Bonds  $2,887,215   $-   $-   $2,887,215 
Total Assets  $2,887,215   $-   $-   $2,887,215 
Liabilities                    
Derivative Liability - Warrants  $-   $-   $410,660   $410,660 
Derivative Liability - Accelerated feature   -    -    3,852    3,852 
Total Liabilities  $-   $-   $414,512   $414,512 

 

Derivative Financial Instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For our liability classified derivative financial instruments, the Company used a Monte Carlo valuation model to value the derivative instruments at inception and on subsequent valuation dates. For our equity classified derivative financial instruments, we used a Black-Scholes option-pricing model at the grant date to value the derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the condensed consolidated balance sheet sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date.

 

 

Warrants

 

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

 

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations. The fair value of the warrants is estimated using a Black-Scholes pricing model or a Monte Carlo simulation.

 

Research and Development Expenses

 

Research and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, which include a certain portion of our chief executive officer, chief operating officer, chief financial officer and directors’ compensation. For the three months ended March 31, 2024 and 2023, a portion of personnel-related expenses and stock-based compensation expense for these individuals totaling $165 thousand and $385 thousand, respectively, was included within research and development due to their active involvement in the research and development activities, materials, supplies, related subcontract expenses, and consulting costs.

 

Regarding the accounting treatment for reimbursements, GAAP provides limited guidance on the accounting for government grants received by for-profit companies. In accordance with ASC Topic 832, Government Assistance, as adopted January 1, 2022, we disclose certain types of government assistance received in the notes to the consolidated financial statements that includes: a) the nature of the transaction including the nature of the assistance being given, b) the accounting policies being used to account for the transaction and c) other provisions of relevance, where required. Depending on the type of grant or contract, we understand there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred credit to be amortized, revenue or other income. The Company has concluded that reimbursements received for R&D expenses incurred, are more akin to a reduction of costs and applies reimbursements against incurred research costs. There were no reimbursements received for the three months ended March 31, 2024 and 2023.

 

 

Net Loss Per Common Stock

 

Net loss per share of common stock requires presentation of basic earnings per share on the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation. In the accompanying condensed consolidated financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants unless the result would be antidilutive.

 

The dilutive effect of restricted stock units subject to vesting and other stock-based payment awards is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting shares of common stock are included in the denominator of the diluted calculation for the entire period being presented.

 

For the three months ended March 31, 2024 and 2023, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

 

   March 31,   March 31, 
   2024   2023 
Convertible notes (Note 6)   859,428    1,893,128 
Warrants   1,446,155    1,446,155 
Restricted stock units   272,855    23,724 
    2,578,438    3,363,007 

 

Deferred Offering Costs

 

Pursuant to ASC 340-10-S99-1, costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to the proposed public offering. Should the proposed public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be expensed.

 

Recent Accounting Pronouncements

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting Topic 280, “Segment Reporting-Improvements to Reportable Segment Disclosures,” which allows disclosure of one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires enhanced disclosures of significant segment expenses and other segment items, as well as incremental qualitative disclosures on both an annual and interim basis. This guidance is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods after December 15, 2024. Early adoption is permitted and retrospective application is required for all periods presented. The Company is currently evaluating the impact of adopting this guidance on its Consolidated and Condensed Financial Statements and disclosures included within Notes to Consolidated and Condensed Financial Statements.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes Topic 740, “Income Tax-Improvements to Income Tax Disclosures,” which requires enhanced disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. This guidance is effective for annual reporting periods beginning after December 15, 2024. Early adoption is permitted and should be applied on a prospective basis, however retrospective application is permitted. The Company is currently evaluating the impact of adopting this guidance on its Consolidated and Condensed Financial Statements and disclosures included within Notes to Consolidated and Condensed Financial Statements.

 

 
v3.24.1.1.u2
Leases
 3 Months Ended
Mar. 31, 2024
Leases  
Leases

Note 3 – Leases

 

Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the present value of the future lease payments as of the lease commencement date. Operating lease expense is recognized on a straight-line basis over the lease term.

 

During the three months ended March 31, 2023, the Company had a lease agreement which allowed for the use of a laboratory facility for a monthly payment of $6,480. The laboratory lease commenced on October 1, 2018 and expired on October 31, 2023.

 

The Company currently has a lease agreement which allows for the use of a laboratory facility, entered into on February 16, 2023, with base rent of $7,206 per month for a period of 64 months, which increases at the rate of 3% per year, that commenced June 1, 2023. The lease included a six-month 50% rent abatement upon commencement. Additional common area maintenance (“CAM”) fees are charged monthly and revised annually. The estimated monthly CAM fees are $3,300 per month for the first year of the lease, which are being expensed as incurred. An irrevocable letter of credit (“LOC”) for the security deposit of $43,234 and base rent of $3,891, including 50% abatement, and $3,315 of CAM cost, was due and paid on execution of the lease agreement. Alexandria Real Estate (ARE-QRS-CORP) is the beneficiary of the LOC, and the expiry date of the LOC is March 1, 2025.

 

The following summarizes the right-of use asset and lease information for the Company’s operating leases:

 

   2024   2023 
   Three Months Ended 
   March 31, 
   2024   2023 
         
Operating lease cost  $22,947   $17,544 
Variable lease cost   10,440    - 
Sublease income   (2,163)   (2,121)
Total lease cost  $31,224   $15,423 
           
Other information          
Operating cash flows from operating leases  $22,482   $19,440 
           
Weighted-average remaining lease term — operating leases (year)   4.42    0.56 
Weighted-average discount rate — operating leases   10.48%   10%

 

Future non-cancelable minimum lease payments under the operating lease liability as of March 31, 2024, are as follows:

 

Years Ended December 31,    
2024 (excluding the three months ended March 31, 2024)  $69,020 
2025   94,246 
2026   97,074 
2027   99,986 
2028   68,235 
Total future minimum lease payments   428,561 
Less: imputed interest   (85,407)
Present value of payments  $343,154 

 

 
v3.24.1.1.u2
Notes Payable-Related Party
 3 Months Ended
Mar. 31, 2024
Notes Payable-related Party  
Notes Payable-Related Party

Note 4 – Notes Payable-Related Party

 

During the three months ended March 31, 2024 and 2023 the Company incurred $0 and $4,237 in interest expense. During the three months ended March 31, 2024 and 2023 principal payments of $0 and $546,244 and accrued interest of $0 and $79,044 were paid, respectively, on notes to related parties. The principal and accrued interest for these notes were fully paid by December 31, 2023.

 
v3.24.1.1.u2
Convertible Notes and Notes Payable
 3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
Convertible Notes and Notes Payable

Note 5 – Convertible Notes and Notes Payable

 

Alto Opportunity Master Fund, SPC

 

On January 11, 2023, the Company entered into a securities purchase agreement (the “SPA”) with Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B, a Cayman entity (the “Investor”), pursuant to which the Company sold to the Investor a $4,300,000 convertible note (the “Alto Convertible Note”) and warrant (the “Warrant”) to purchase 1,018,079 shares of common stock, exercisable at $2.35 per share, in exchange for gross proceeds of $3,935,000 million (the “Investment Amount”) (See Note 7). The Company determined that the Warrant contains a net cash settlement feature at inception and categorized the Warrant as a liability in the accompanying condensed consolidated financial statements. The Alto Convertible Note matures on March 11, 2025, but may be extended at the option of the noteholder. The Alto Convertible Note amortizes on a monthly basis and the Company can make such monthly amortization payments in cash or, subject to certain equity conditions, in registered shares of common stock or a combination thereof. Installments may be deferred by the noteholder, resulting in a variable interest rate. However, the effective interest rate is approximately 244% based on the internal rate of return calculated on a series of cash flows that occur at regular intervals. For equity repayment, the Alto Convertible Note is convertible into shares of common stock at a price per share equal to the lower of (i) $2.35, (ii) 90% of the three lowest daily VWAPs of the 15 trading days prior to the payment date, or (iii) 90% of the VWAP of the trading day prior to payment date. The noteholder may convert at any time at a fixed price of $2.35 per share. The noteholder has an acceleration of installment amount conversion option (the “Acceleration Option”), whereby the noteholder, with certain share percentage limitations, can convert to common stock any outstanding installment amount at an amount equal to the installment amount plus five times (5x) the installment amount at any time. The Company has determined the Acceleration Option is an embedded derivative within the host instrument and has bifurcated it from the host instrument and recorded it as a derivative liability valued at $1,442,000 at inception, using a Monte Carlo simulation model (Note 7). The Convertible Note is repayable over 26 months and bears interest at the rate of 5% per annum. Additionally, the note contains certain redemption options and “Make Whole” provisions.

 

 

In conjunction with entry into the SPA, the Company entered into a series of related agreements, including a security agreement (the “Security Agreement”), an intellectual property security agreement (the “IP Security Agreement”) and a subsidiary guaranty (the “Subsidiary Guaranty”). The security agreements and guaranty allow, among other things, for the Investor to have a security interest in and place a lien on all of the Company’s assets and intellectual property until such time as the Alto Convertible Note is paid off. In addition, the SPA called for the Company to enter into a springing deposit account control agreement (the “Springing DACA”), which, in the event the Company defaults on its repayment of the Alto Convertible Note, would allow the Investor to assume control of the Company’s bank account only with regard to any funds remaining outstanding under the Alto Convertible Note. As such, in conjunction with entry into the SPA, the Company established a separate bank account in which it deposited the Investment Amount and pursuant to which the Company, the Investor and the bank holding the Investment Amount, First Republic Bank, entered into the Springing DACA agreement. As the Investment Amount had been held at First Republic Bank, in light of certain banking crises then affecting smaller banks, on March 12, 2023, the Company and the Investor moved the Investment Amount from First Republic Bank, after which time the Springing DACA was no longer in effect. Further, pursuant to amendments to the SPA entered into in May and June of 2023, the Company and the Investor agreed that all of the Investment Amount would be released to the Company and the relevant provision of the SPA which required the Springing DACA would no longer be deemed applicable. In addition, the Company granted the Investor the option to purchase up to an additional $10 million in convertible notes and warrants on substantially the same terms as the Alto Convertible Note and Warrant, excluding the Springing DACA requirement, with such option to be effective through December 31, 2025. The agreement offers the investor an opportunity to participate in future capital raises at substantially similar terms as the January 11, 2023 agreement. The Company expects that such subsequent convertible notes and warrants would be issued on substantially similar terms as the January 11, 2023 initial agreement, as amended, thus providing the Company the opportunity to negotiate certain aspects of the agreement.

 

Boustead Securities, LLC (“Boustead”) served as a placement agent for the Alto Convertible Note and Warrant offering and received $345,000 cash compensation and a warrant to purchase 71,266 shares of common stock, exercisable at $2.35 per share. The Boustead warrant was determined to be an equity instrument valued on a non-recurring basis. The Company used the Black Scholes valuation model using a term of five years, volatility of 110%, a risk-free rate of 3.53% for a value of $99,543.

 

The Company allocated the finance costs related to the Boustead placement agent fee of $345,000, based on the relative fair market values of the Convertible Note and warrants issued. The allocation of the financing costs applied $232,027 to the debt component as a debt discount that is being amortized to interest expense over the term of the Convertible Note, $104,245 to the warrant derivative liability component, expensed as a finance fee, and $8,727 to the equity warrant as a reduction in additional paid in capital.

 

The Company allocated to the debt component of the note an original discount of $300,000, legal fees of $65,000, $215,000 for additional interest fees on day one added to note principal, $1,442,000 for the accelerated conversion feature, and $1,288,543 for the fair value of warrants, resulting in an additional $3,310,543 debt discount that is being amortized to interest expense over the term of the Alto Convertible Note.

 

During the three months ended March 31, 2024, the Company recorded interest expense of $497,515, which included amortization of debt discount as interest expense of $445,509. During the three months ended March 31, 2024, the Company settled $235,200 of principal, and settled $18,783 of accrued interest, which settlements were made in the form of 625,573 shares of common stock, during the three months ended March 31, 2024.

 

During the three months ended March 31, 2023, the Company recorded interest expense of $599,331, which included amortization of debt discount of $463,052 as interest expense and settlement of $20,142 of accrued interest and $66,150 of principal by issuing 50,998 shares of Common Stock.

 

As of March 31, 2024, the outstanding principal for the convertible note was $2,019,656 and the debt discount remaining was $1,078,258, with a net convertible note carrying value of $941,398 as of March 31, 2024.

 

 
v3.24.1.1.u2
Stockholders’ Equity
 3 Months Ended
Mar. 31, 2024
Equity [Abstract]  
Stockholders’ Equity

Note 6 – Stockholders’ Equity

 

Common Stock

 

During the three months ended March 31, 2024, the Company issued:

 

  ● 625,573 shares of common stock to settle $235,200 of principal and $18,783 of interest on a convertible note and incurred $71,315 of loss on settlement.
  ● 125,000 shares of common stock issued for vesting of restricted stock units.

 

During the three months ended March 31, 2023, the Company issued:

 

  ● 50,998 shares of Common Stock to settle $66,150 of principal and $20,142 of interest on a convertible note and incurred $18,254 of loss on settlement.

 

Warrants

 

In connection with the January 2023 Alto Convertible Note, Boustead was granted warrants to purchase 71,266 shares of common stock, at an exercise price of $2.35 per share (Note 5). In addition, Alto was granted warrants to purchase 1,018,079 shares of common stock, at an exercise price of $2.35 per share (Note 5, 7).

 

A summary of activity regarding all warrants issued for the three months ended March 31, 2024 were as follows:

 

   Number of   Weighted Average   Average 
   warrants   Exercise Price   Life (years) 
Outstanding, December 31, 2023   1,446,155   $2.74    2.77 
Granted   -    -    - 
Outstanding, March 31, 2024   1,446,155   $2.74    2.53 

 

The intrinsic value of the warrants as of March 31, 2024 is $0. All of the outstanding warrants are exercisable as of March 31, 2024.

 

Equity Incentive Plan

 

Our 2018 Equity Incentive Plan (the “2018 Plan”) provides for equity incentives to be granted to our employees, executive officers, directors and key advisers and consultants. Equity incentive grants may be made in the form of stock options with an exercise price of not less than the fair market value of the underlying shares as determined pursuant to the 2018 Equity Incentive Plan, restricted stock awards, other stock-based awards, or any combination of the foregoing. The 2018 Equity Incentive Plan is administered by the Company’s compensation committee. We have reserved 3,000,000 shares of our common stock for issuance under the 2018 Equity Incentive Plan. As of March 31, 2024, 878,180 shares have been granted under the 2018 Equity Incentive Plan, of which 605,325 shares have vested.

 

Restricted Stock Units

 

We may grant restricted stock units (“RSU”) under our 2018 Plan. RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Subject to the provisions of our 2018 Plan, the administrator determines the terms and conditions of RSUs, including the vesting criteria and the form and timing of payment. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. RSUs granted typically vest annually in one third increments from the date of appointment.

 

During the three months ended March 31, 2024 and 2023, pursuant to agreements with officers and consultants, 200,000 and 0 RSUs with a value of $41,840 and $0 were granted and compensation expense for RSUs of $111,449 and $8,333, respectively, was incurred. During the three months ended March 31, 2024 and 2023, $33,953 and $0, respectively, was included in compensation under Research and Development.

 

As of March 31, 2024, there was $161,941 of unrecognized RSU compensation cost related to non-vested share-based compensation arrangements which is expected to be recognized over a weighted-average period of 0.92 years.

 

A summary of activity regarding the Restricted Stock Units issued follows:

 

   Number of RSU   Weighted Average Fair Value Per RSU 
Outstanding, December 31, 2023   197,855   $1.47 
Granted   200,000    0.21 
Vested   (125,000)   0.73 
Outstanding, March 31, 2024   272,855   $0.89 

 

Rights Offering and Financing Commitment

 

On February 7, 2024, the Company and its wholly-owned subsidiary, Shuttle Diagnostics, Inc., entered into a securities purchase agreement (the “Purchase Agreement”) with SRO, LLC, a Nevada limited liability company, pursuant to which SRO LLC agreed to commit to purchasing from the Company $2,250,000 of units from the Company, with each Unit consisting of (i) one share of the Company’s common stock, (ii) a warrant to purchase one share of the Company’s common stock exercisable at a purchase price of $2.35 per share, and (iii) a percentage of equity interest in Diagnostics such that, assuming the sale of all $2,250,000 of Units, SRO LLC will own a 22% interest in Diagnostics. Pursuant to the terms of the Purchase Agreement, the Units will be sold at a per Unit price equal to 90% of the VWAP of the Company’s common stock for the five trading days immediately preceding closing. The parties entered into the Purchase Agreement in anticipation of the Company commencing a rights offering (the “Rights Offering”) pursuant to which the Company intends to offer a total of $4,500,000 of Units to existing stockholders, which includes the $2,250,000 of Units being sold to SRO LLC, an entity which is controlled by Keith Moore, Executive Chairman of Boustead & Company Limited, an affiliate of Boustead Securities, LLC (“BSL”).

 

The Company filed an initial registration statement on Form S-1 (the “Form S-1”) with the SEC in April 2024 related to the registration of subscription rights to purchase the Units to be sold in the Rights Offering. The Form S-1 has not been declared effective as of the date these condensed consolidated financial statements were issued. Upon the Form S-1 being declared effective, the Purchase Agreement allows SRO LLC up to 60 days to raise the initial $2,250,000, which funds will be placed in escrow with Sutter Securities, Inc. (“SSI”), an affiliate of BSL, pursuant to the terms of an escrow agreement entered into between the Company, Shuttle Diagnostics, Inc., BSL and SSI on February 7, 2024 (the “Escrow Agreement”). The funds will remain in escrow up until closing on the Rights Offering. In addition, in the event the Company fails to raise the full $4,500,000 in the Rights Offering, SRO LLC agreed to a backstop commitment pursuant to which it would have the right to purchase any remaining Units not purchased by existing Company stockholders in the Rights Offering, up to an additional $2,250,000 (the “Back-up Contingency”). Unless the parties waive the conditions to closing, in the event the full $4,500,000 is not raised, whether through SRO LLC or through the Company’s existing stockholders, the Company will not close on the offering and any funds raised and held in escrow will be returned to investors.

 

In conjunction with its entry into the Purchase Agreement, on February 7, 2024, the Company entered into a placement agent and advisory services agreement (the “Placement Agent Agreement”) with BSL, pursuant to which BSL and BSL’s affiliates will provide the Company with regular and customary financial consulting advice and will act as placement agent, on a best efforts basis, for the Rights Offering. In exchange for its services, BSL will receive a commitment fee equal to $112,500 upon the earlier of the Company filing the registration statement on Form S-1 registering the Rights Offering or upon such date as the Company terminates the Rights Offering, a commission equal 8% of the gross proceeds disbursed to the Company upon closing the Rights Offering, and $40,000 in diligence and related expenses.

 

As of March 31, 2024, the Company has incurred $82,000 in costs directly related to the planned Rights Offering. The Company has deferred these costs as other current assets in the condensed consolidated balance sheet and will recognize the deferred costs as a reduction in proceeds obtained upon the closing of the Rights Offering, or as an expense in the event the Rights Offering is not consummated.

 

 
v3.24.1.1.u2
Derivative Liabilities
 3 Months Ended
Mar. 31, 2024
Derivative Liabilities  
Derivative Liabilities

Note 7 – Derivative Liabilities

 

Fair Value Assumptions Used in Accounting for Derivative Liabilities

 

ASC 815 requires us to assess the fair market value of derivative liabilities at the end of each reporting period and recognize any change in the fair market value as other income or expense.

 

In January 2023, in connection with the Alto Convertible Note, the Company issued warrants to purchase 1,018,079 shares of common stock, with an exercise price of $2.35 per share, valued at inception at $1,189,000 and as of March 31, 2024, at $214,615. The Company determined our derivative liabilities from the warrants issued in relation to the Alto Convertible Note do not satisfy the classification as equity instruments due to the existence of a certain net cash settlement provision that is not within the sole control of the Company. In addition, there are certain down round provisions that could reduce the exercise price if the Company issues securities at lower prices in the future.

 

The Company determined our derivative liability from the noteholder’s Acceleration Option for the Alto Convertible Note is not clearly and closely related to the host and should be thus accounted for as a bifurcated derivative liability.

 

We classified these derivative liabilities as a Level 3 fair value measurement and used the Monte Carlo pricing model to calculate the fair value as of January 11, 2023 ($2,631,000 included in debt discount) and March 31, 2024 ($216,650). Key inputs for the simulation are summarized below. The Monte Carlo simulation uses an implied VWAP for the January 11, 2023 valuation date. The implied VWAP was backsolved by setting the summation of the parts (e.g., derivatives and debt without derivatives) equal to the cash proceeds. The simulation was then iterated and manipulated to solve for the implied share price, which was approximately $1.58 per share (or an approximate 14% discount to the quoted market VWAP on January 11, 2023).

 

The key inputs for the Monte Carlo simulation as of March 31, 2024, were as follows:

 

Net cash settlement and down round key valuation inputs – warrants*    
Annualized volatility   67.19% - 72.53%
Risk-free interest rate   4.40% - 5.47%
Quoted VWAP  $0.41 
Exercise price  $2.35 
Probability assessment   5% - 25%
Illiquidity discount   -16%
Time period (years)   0.17 - 2.79 

 

*Based on a Monte Carlo simulation analysis of 250,000 iterations

 

 

Acceleration option key valuation inputs*    
Annualized volatility   48.36% - 54.75%
Risk-free interest rate   4.94% - 5.49%
Quoted VWAP  $0.41 
Illiquidity discount   -16%
Time period (years)   0 - 0.95 

 

*Based on a Monte Carlo simulation analysis of 250,000 iterations

 

The following table summarizes the changes in the derivative liabilities:

 

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
   Warrants   Accelerated Feature 
Balance - December 31, 2023  $410,660   $3,852 
Gain on change in fair value   (196,045)   (1,817)
Balance - March 31, 2024  $214,615   $2,035 

 
v3.24.1.1.u2
Related Party transactions
 3 Months Ended
Mar. 31, 2024
Related Party Transactions [Abstract]  
Related Party transactions

Note 8 – Related Party transactions

 

On September 14, 2022, we entered into a manufacturing agreement with TCG GreenChem, Inc. (“TCG GreenChem”), the U.S. subsidiary of TCG Lifesciences Pvt Ltd., a global contract research and manufacturing services company located in India. Dr. Chis Senanayake, one of our independent directors, is CEO and CSO of TCG GreenChem and CSO of TCG Lifesciences Pvt Ltd. TCG GreenChem was contracted for process research, development and cGMP compliant manufacture of IPdR. During the three months ended March 31, 2024 and 2023, the Company expensed $0 and $300,000, respectively.

 
v3.24.1.1.u2
Subsequent Events
 3 Months Ended
Mar. 31, 2024
Subsequent Events [Abstract]  
Subsequent Events

Note 9 – Subsequent Events

 

On May 3, 2024, the SEC entered an order (the “SEC Order”) against our former auditor, BF Borgers CPA PC and its sole audit partner, Benjamin F. Borgers (together “BF Borgers”), instituting settled administrative and cease-and-desist proceedings against BF Borgers.  The SEC Order denies BF Borgers the privilege of appearing or practicing before the SEC as an accountant, and has resulted in BF Borgers being unable to issue consents related to BF Borgers’ audit of our 2022 financial statements. As we are in the process of filing a registration statement on Form S-1 related to our planned Rights Offering, we will need to have our 2022 financial statements re-audited by a licensed PCAOB accounting firm. As a result, the Company is implementing plans to re-audit the 2022 financial statements.
v3.24.1.1.u2
Summary of Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and notes required by accounting principles generally accepted in the United States of America for annual financial statements. A complete discussion of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all of the adjustments necessary to present the financial position of the Company as of March 31, 2024 and the results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the year-end condensed consolidated balance sheet was derived from audited financial statements. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2024.

 
Basis of Consolidation

Basis of Consolidation

 

The unaudited condensed consolidated financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned subsidiaries, Shuttle Pharmaceuticals, Inc. and Shuttle Diagnostics Inc. All intercompany transactions and balances have been eliminated.

 

 
Correction of an Immaterial Error in the Prior Period Financial Statements

Correction of an Immaterial Error in the Prior Period Financial Statements

 

During the fourth quarter of 2023, the Company determined that the prior year consolidated financial statements had a misstatement caused by an immaterial classification error of certain research and development expenses in accordance with ASC 730. As a result, certain prior year amounts have been corrected for consistency with the current year presentation. The Company assessed the materiality of this change in presentation on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” (ASC Topic 250, Accounting Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections in its Condensed Consolidated Statements of Operations are not material to any previously presented financial statements based upon overall considerations of both quantitative and qualitative factors. The corrections had no impact on the Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Cash Flows, or Condensed Consolidated Statement of Changes in Stockholders’ Equity, to these financial statements, or for any previously presented interim or annual financial statements. Further, the corrections did not result in a change in quarterly or year-to-date operating losses, basic or diluted earnings per share, or working capital. The quarterly correction required for March 31, 2023 was $89,007. Accordingly, the Company corrected the previously reported immaterial error for the three months ended March 31, 2023 in this Quarterly Report on Form 10-Q.

 

   March 31, 2023   Correction   Corrected
March 31, 2023		 
Research and development expense  $1,010,808   $(89,007)  $921,801 
General and administrative expense   166,348    89,007    255,355 
Net Loss  $1,177,156   $-   $1,177,156 

 
Use of Estimates

Use of Estimates

 

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates are contained in the accompanying condensed consolidated financial statements for the valuation of derivatives, share-based compensation, and initial measurement of equity-based warrants.

 
Cash and Cash Equivalents

Cash and Cash Equivalents

 

Cash and cash equivalents include cash in bank accounts and money market funds with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. As of March 31, 2024 and December 31, 2023, cash and cash equivalents consisted of the following:

 

   March 31,   December 31, 
   2024   2023 
Cash  $364,069   $1,550,098 
Money market funds   1,034,559    1,026,318 
Total cash and cash equivalents  $1,398,628   $2,576,416 

 

 

Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000 per institution. The amount in excess of the FDIC insurance as of March 31, 2024 was approximately $1.1 million. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

 
Marketable Securities

Marketable Securities

 

Our investments in debt securities are carried at fair value. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading of debt securities are charged to income.

 

The marketable securities held by the Company, which are classified as trading marketable securities, consisted of an outstanding balance of $2,789,251 and $2,887,215 as of March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024 and 2023, the Company recognized interest income of $13,651 and $16,688, realized gains of $4,037 and $0, and unrealized loss of $706 and gain of $38,062, respectively.

 
Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair Value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:

 

  ● Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.
     
  ● Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.
     
  ● Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires a significant judgment or estimation.

 

Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.

 

The carrying amounts of the Company’s financial instruments including cash and cash equivalents, prepaid expenses, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments.

 

 

Set out below are the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of March 31, 2024 and December 31, 2023:

 

March 31, 2024  Level 1   Level 2   Level 3   Carrying Value 
Assets                    
Marketable Securities:                    
United States Treasury Bonds  $2,789,251   $-   $-   $2,789,251 
Total Assets  $2,789,251   $-   $-   $2,789,251 
Liabilities                    
Derivative Liability - Warrants  $-   $-   $214,615   $- 
Derivative Liability - Accelerated feature   -    -    2,035    - 
Total Liabilities  $-   $-   $216,650   $- 

 

December 31, 2023  Level 1   Level 2   Level 3   Carrying Value 
Assets                    
Marketable Securities:                    
United States Treasury Bonds  $2,887,215   $-   $-   $2,887,215 
Total Assets  $2,887,215   $-   $-   $2,887,215 
Liabilities                    
Derivative Liability - Warrants  $-   $-   $410,660   $410,660 
Derivative Liability - Accelerated feature   -    -    3,852    3,852 
Total Liabilities  $-   $-   $414,512   $414,512 

 
Derivative Financial Instruments

Derivative Financial Instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For our liability classified derivative financial instruments, the Company used a Monte Carlo valuation model to value the derivative instruments at inception and on subsequent valuation dates. For our equity classified derivative financial instruments, we used a Black-Scholes option-pricing model at the grant date to value the derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the condensed consolidated balance sheet sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date.

 

 
Warrants

Warrants

 

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

 

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated statements of operations. The fair value of the warrants is estimated using a Black-Scholes pricing model or a Monte Carlo simulation.

 
Research and Development Expenses

Research and Development Expenses

 

Research and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, which include a certain portion of our chief executive officer, chief operating officer, chief financial officer and directors’ compensation. For the three months ended March 31, 2024 and 2023, a portion of personnel-related expenses and stock-based compensation expense for these individuals totaling $165 thousand and $385 thousand, respectively, was included within research and development due to their active involvement in the research and development activities, materials, supplies, related subcontract expenses, and consulting costs.

 

Regarding the accounting treatment for reimbursements, GAAP provides limited guidance on the accounting for government grants received by for-profit companies. In accordance with ASC Topic 832, Government Assistance, as adopted January 1, 2022, we disclose certain types of government assistance received in the notes to the consolidated financial statements that includes: a) the nature of the transaction including the nature of the assistance being given, b) the accounting policies being used to account for the transaction and c) other provisions of relevance, where required. Depending on the type of grant or contract, we understand there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred credit to be amortized, revenue or other income. The Company has concluded that reimbursements received for R&D expenses incurred, are more akin to a reduction of costs and applies reimbursements against incurred research costs. There were no reimbursements received for the three months ended March 31, 2024 and 2023.

 

 
Net Loss Per Common Stock

Net Loss Per Common Stock

 

Net loss per share of common stock requires presentation of basic earnings per share on the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation. In the accompanying condensed consolidated financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants unless the result would be antidilutive.

 

The dilutive effect of restricted stock units subject to vesting and other stock-based payment awards is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting shares of common stock are included in the denominator of the diluted calculation for the entire period being presented.

 

For the three months ended March 31, 2024 and 2023, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

 

   March 31,   March 31, 
   2024   2023 
Convertible notes (Note 6)   859,428    1,893,128 
Warrants   1,446,155    1,446,155 
Restricted stock units   272,855    23,724 
    2,578,438    3,363,007 

 
Deferred Offering Costs

Deferred Offering Costs

 

Pursuant to ASC 340-10-S99-1, costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to the proposed public offering. Should the proposed public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be expensed.

 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting Topic 280, “Segment Reporting-Improvements to Reportable Segment Disclosures,” which allows disclosure of one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires enhanced disclosures of significant segment expenses and other segment items, as well as incremental qualitative disclosures on both an annual and interim basis. This guidance is effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods after December 15, 2024. Early adoption is permitted and retrospective application is required for all periods presented. The Company is currently evaluating the impact of adopting this guidance on its Consolidated and Condensed Financial Statements and disclosures included within Notes to Consolidated and Condensed Financial Statements.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes Topic 740, “Income Tax-Improvements to Income Tax Disclosures,” which requires enhanced disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. This guidance is effective for annual reporting periods beginning after December 15, 2024. Early adoption is permitted and should be applied on a prospective basis, however retrospective application is permitted. The Company is currently evaluating the impact of adopting this guidance on its Consolidated and Condensed Financial Statements and disclosures included within Notes to Consolidated and Condensed Financial Statements.
v3.24.1.1.u2
Summary of Significant Accounting Policies (Tables)
 3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Schedule of the Error Correction

 

   March 31, 2023   Correction   Corrected
March 31, 2023		 
Research and development expense  $1,010,808   $(89,007)  $921,801 
General and administrative expense   166,348    89,007    255,355 
Net Loss  $1,177,156   $-   $1,177,156 
Schedule of Cash and Cash Equivalents

 

   March 31,   December 31, 
   2024   2023 
Cash  $364,069   $1,550,098 
Money market funds   1,034,559    1,026,318 
Total cash and cash equivalents  $1,398,628   $2,576,416 
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Set out below are the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of March 31, 2024 and December 31, 2023:

 

March 31, 2024  Level 1   Level 2   Level 3   Carrying Value 
Assets                    
Marketable Securities:                    
United States Treasury Bonds  $2,789,251   $-   $-   $2,789,251 
Total Assets  $2,789,251   $-   $-   $2,789,251 
Liabilities                    
Derivative Liability - Warrants  $-   $-   $214,615   $- 
Derivative Liability - Accelerated feature   -    -    2,035    - 
Total Liabilities  $-   $-   $216,650   $- 

 

December 31, 2023  Level 1   Level 2   Level 3   Carrying Value 
Assets                    
Marketable Securities:                    
United States Treasury Bonds  $2,887,215   $-   $-   $2,887,215 
Total Assets  $2,887,215   $-   $-   $2,887,215 
Liabilities                    
Derivative Liability - Warrants  $-   $-   $410,660   $410,660 
Derivative Liability - Accelerated feature   -    -    3,852    3,852 
Total Liabilities  $-   $-   $414,512   $414,512 
Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

For the three months ended March 31, 2024 and 2023, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

 

   March 31,   March 31, 
   2024   2023 
Convertible notes (Note 6)   859,428    1,893,128 
Warrants   1,446,155    1,446,155 
Restricted stock units   272,855    23,724 
    2,578,438    3,363,007 
v3.24.1.1.u2
Leases (Tables)
 3 Months Ended
Mar. 31, 2024
Leases  
Schedule of Right-of Use Asset and Lease Information about Operating Lease

The following summarizes the right-of use asset and lease information for the Company’s operating leases:

 

   2024   2023 
   Three Months Ended 
   March 31, 
   2024   2023 
         
Operating lease cost  $22,947   $17,544 
Variable lease cost   10,440    - 
Sublease income   (2,163)   (2,121)
Total lease cost  $31,224   $15,423 
           
Other information          
Operating cash flows from operating leases  $22,482   $19,440 
           
Weighted-average remaining lease term — operating leases (year)   4.42    0.56 
Weighted-average discount rate — operating leases   10.48%   10%
Schedule of Future Non-cancelable Minimum Lease Payments Under Operating Lease Liability

Future non-cancelable minimum lease payments under the operating lease liability as of March 31, 2024, are as follows:

 

Years Ended December 31,    
2024 (excluding the three months ended March 31, 2024)  $69,020 
2025   94,246 
2026   97,074 
2027   99,986 
2028   68,235 
Total future minimum lease payments   428,561 
Less: imputed interest   (85,407)
Present value of payments  $343,154 
v3.24.1.1.u2
Stockholders’ Equity (Tables)
 3 Months Ended
Mar. 31, 2024
Equity [Abstract]  
Schedule of Warrants Activity

A summary of activity regarding all warrants issued for the three months ended March 31, 2024 were as follows:

 

   Number of   Weighted Average   Average 
   warrants   Exercise Price   Life (years) 
Outstanding, December 31, 2023   1,446,155   $2.74    2.77 
Granted   -    -    - 
Outstanding, March 31, 2024   1,446,155   $2.74    2.53 
Schedule of Restricted Stock Units (RSUs)

A summary of activity regarding the Restricted Stock Units issued follows:

 

   Number of RSU   Weighted Average Fair Value Per RSU 
Outstanding, December 31, 2023   197,855   $1.47 
Granted   200,000    0.21 
Vested   (125,000)   0.73 
Outstanding, March 31, 2024   272,855   $0.89 
v3.24.1.1.u2
Derivative Liabilities (Tables)
 3 Months Ended
Mar. 31, 2024
Derivative Liabilities  
Schedule of Monte Carlo Simulation Assumption

The key inputs for the Monte Carlo simulation as of March 31, 2024, were as follows:

 

Net cash settlement and down round key valuation inputs – warrants*    
Annualized volatility   67.19% - 72.53%
Risk-free interest rate   4.40% - 5.47%
Quoted VWAP  $0.41 
Exercise price  $2.35 
Probability assessment   5% - 25%
Illiquidity discount   -16%
Time period (years)   0.17 - 2.79 

 

*Based on a Monte Carlo simulation analysis of 250,000 iterations

 

 

Acceleration option key valuation inputs*    
Annualized volatility   48.36% - 54.75%
Risk-free interest rate   4.94% - 5.49%
Quoted VWAP  $0.41 
Illiquidity discount   -16%
Time period (years)   0 - 0.95 

 

*Based on a Monte Carlo simulation analysis of 250,000 iterations
Schedule of Derivative Liabilities

The following table summarizes the changes in the derivative liabilities:

 

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
   Warrants   Accelerated Feature 
Balance - December 31, 2023  $410,660   $3,852 
Gain on change in fair value   (196,045)   (1,817)
Balance - March 31, 2024  $214,615   $2,035 
v3.24.1.1.u2
Organization and Liquidity (Details Narrative) - USD ($)
 1 Months Ended 3 Months Ended
Aug. 12, 2016
Jan. 31, 2023
Sep. 30, 2022
Mar. 31, 2024
Mar. 31, 2023
Jan. 11, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Net loss       $ 1,731,031 $ 975,097  
Revenues        
Working capital       2,900,000    
Proceeds from issuance or sale of equity     $ 10,000,000.0      
Exercisable price per share   $ 2.35        
Initiated a capital offering   $ 4,500,000        
Securities Purchase Agreement [Member]            
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Exercisable price per share           $ 2.35
Institutional Investor [Member] | Securities Purchase Agreement [Member]            
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Debt instrument, face amount   4,300,000        
Net proceeds from warrants   $ 3,600,000        
Common Stock [Member]            
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Number of shares issued 45,000,000          
Sale of stock membership percentage 100.00%          
Net loss        
Common Stock [Member] | Institutional Investor [Member] | Securities Purchase Agreement [Member]            
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Warrant to purchase common stock   1,018,079        
Exercisable price per share   $ 2.35        
v3.24.1.1.u2
Schedule of the Error Correction (Details) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Research and development expense $ 586,104 $ 921,801
General and administrative expense $ 324,609 255,355
Net Loss   1,177,156
Previously Reported [Member]    
Research and development expense   1,010,808
General and administrative expense   166,348
Net Loss   1,177,156
Revision of Prior Period, Error Correction, Adjustment [Member]    
Research and development expense   (89,007)
General and administrative expense   89,007
Net Loss  
v3.24.1.1.u2
Schedule of Cash and Cash Equivalents (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Accounting Policies [Abstract]    
Cash $ 364,069 $ 1,550,098
Money market funds 1,034,559 1,026,318
Total cash and cash equivalents $ 1,398,628 $ 2,576,416
v3.24.1.1.u2
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Assets    
Total Assets $ 2,789,251 $ 2,887,215
Derivative Liability 2,035
Total Liabilities 414,512
Warrant [Member]    
Assets    
Derivative Liability 410,660
Accelerated Feature [Member]    
Assets    
Derivative Liability 3,852
US Treasury Securities [Member]    
Assets    
United States Treasury Bonds 2,789,251 2,887,215
Fair Value, Inputs, Level 1 [Member]    
Assets    
Total Assets 2,789,251 2,887,215
Total Liabilities
Fair Value, Inputs, Level 1 [Member] | Warrant [Member]    
Assets    
Derivative Liability
Fair Value, Inputs, Level 1 [Member] | Accelerated Feature [Member]    
Assets    
Derivative Liability
Fair Value, Inputs, Level 1 [Member] | US Treasury Securities [Member]    
Assets    
United States Treasury Bonds 2,789,251 2,887,215
Fair Value, Inputs, Level 2 [Member]    
Assets    
Total Assets
Total Liabilities
Fair Value, Inputs, Level 2 [Member] | Warrant [Member]    
Assets    
Derivative Liability
Fair Value, Inputs, Level 2 [Member] | Accelerated Feature [Member]    
Assets    
Derivative Liability
Fair Value, Inputs, Level 2 [Member] | US Treasury Securities [Member]    
Assets    
United States Treasury Bonds
Fair Value, Inputs, Level 3 [Member]    
Assets    
Total Assets
Total Liabilities 216,650 414,512
Fair Value, Inputs, Level 3 [Member] | Warrant [Member]    
Assets    
Derivative Liability 214,615 410,660
Fair Value, Inputs, Level 3 [Member] | Accelerated Feature [Member]    
Assets    
Derivative Liability 2,035 3,852
Fair Value, Inputs, Level 3 [Member] | US Treasury Securities [Member]    
Assets    
United States Treasury Bonds
v3.24.1.1.u2
Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Anti-dilutive securities 2,578,438 3,363,007
Convertible Debt Securities [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Anti-dilutive securities 859,428 1,893,128
Warrant [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Anti-dilutive securities 1,446,155 1,446,155
Restricted Stock Units (RSUs) [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Anti-dilutive securities 272,855 23,724
v3.24.1.1.u2
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Quarterly reclassifications   $ 89,007  
Cash FDIC insured amount $ 250,000    
Cash, uninsured amount 1,100,000    
Marketable securities, outstanding balance 2,789,251   $ 2,887,215
Interest income 13,651 16,688  
Marketable securities realized gain loss 4,037 0  
Marketable securities unrealized gain loss 706 38,062  
Share based compensation 111,449 8,333  
Research and Development Expense [Member]      
Share based compensation $ 165,000 $ 385,000  
v3.24.1.1.u2
Schedule of Right-of Use Asset and Lease Information about Operating Lease (Details) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Leases    
Operating lease cost $ 22,947 $ 17,544
Variable lease cost 10,440
Sublease income (2,163) (2,121)
Total lease cost 31,224 15,423
Other information    
Operating cash flows from operating leases $ 22,482 $ 19,440
Weighted-average remaining lease term - operating leases (year) 4 years 5 months 1 day 6 months 21 days
Weighted-average discount rate - operating leases 10.48% 10.00%
v3.24.1.1.u2
Schedule of Future Non-cancelable Minimum Lease Payments Under Operating Lease Liability (Details)
Mar. 31, 2024
USD ($)
Leases  
2024 (excluding the three months ended March 31, 2024) $ 69,020
2025 94,246
2026 97,074
2027 99,986
2028 68,235
Total future minimum lease payments 428,561
Less: imputed interest (85,407)
Present value of payments $ 343,154
v3.24.1.1.u2
Leases (Details Narrative) - USD ($)
 3 Months Ended
Feb. 16, 2023
Mar. 31, 2023
Lessee, Lease, Description [Line Items]    
Lease payment   $ 6,480
Lease expiration term   Oct. 31, 2023
Lease Agreement [Member]    
Lessee, Lease, Description [Line Items]    
Payments for rent $ 7,206  
Lease term 64 months  
Rent variable rate 3.00%  
Lease commencement commenced June 1, 2023  
Estimated monthly common area maintenance cost $ 3,300  
Lease Agreement [Member] | Letter of Credit [Member]    
Lessee, Lease, Description [Line Items]    
Payments for rent 3,891  
Security deposit 43,234  
Common area maintenance cost $ 3,315  
v3.24.1.1.u2
Notes Payable-Related Party (Details Narrative) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Defined Benefit Plan Disclosure [Line Items]    
Interest paid $ 79,044
Related Party [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Interest Expense, Operating and Nonoperating 4,237
Officers Spouse [Member]    
Defined Benefit Plan Disclosure [Line Items]    
Principal payments of related paty debt 0 546,244
Interest paid $ 0 $ 79,044
v3.24.1.1.u2
Convertible Notes and Notes Payable (Details Narrative)
 3 Months Ended
Jan. 11, 2023
USD ($)
$ / shares
shares
Mar. 31, 2024
USD ($)
$ / shares
shares
Mar. 31, 2023
USD ($)
shares
Dec. 31, 2023
USD ($)
Jan. 31, 2023
USD ($)
$ / shares
shares
Short-Term Debt [Line Items]          
Convertible debt   $ 2,019,656      
Warrants to purchase common stock | shares         1,018,079
Warrants exerciable shares | $ / shares         $ 2.35
Proceeds from convertible note payable   $ 3,935,000    
Convertible notes payable   10,000,000      
Allocation of financing costs   40,000    
Warrant derivative liability   214,615   $ 414,512 $ 1,189,000
Legal fees   474,134 367,624    
Interest expense debt   $ 445,509 $ 463,052    
Common stock issued for conversion of convertible debt, shares | shares   625,573 50,998    
Amortization of Debt Issuance Costs   $ 1,078,258      
Convertible note payable   941,398      
Common Stock [Member]          
Short-Term Debt [Line Items]          
Debt, principal   $ 235,200 $ 66,150    
Stock Issued During Period, Shares, New Issues | shares   625,573      
Accrued interest settled with common stock   $ 18,783 $ 20,142    
Common stock issued for conversion of convertible debt, shares | shares     50,998    
Measurement Input, Expected Term [Member]          
Short-Term Debt [Line Items]          
Expected years   5 years      
Measurement Input, Price Volatility [Member]          
Short-Term Debt [Line Items]          
Warrants and rights outstanding measurement input   110      
Measurement Input, Risk Free Interest Rate [Member]          
Short-Term Debt [Line Items]          
Warrants and rights outstanding measurement input   3.53      
Boustead Securities LLC [Member]          
Short-Term Debt [Line Items]          
Warrants to purchase common stock | shares   71,266      
Warrants exerciable shares | $ / shares   $ 2.35      
Payment for placement agent   $ 345,000      
Fair value of warrants   99,543      
Allocation of financing costs   232,027      
Warrant derivative liability   104,245      
Equity warrant as reduction in additional paid in capital   8,727      
Interest expense debt   497,515 $ 599,331    
Debt, principal   235,200 66,150    
Accrued interest   18,783      
Accrued interest settled with common stock     $ 20,142    
Boustead Securities LLC [Member] | Convertible Note [Member]          
Short-Term Debt [Line Items]          
Fair value of warrants   1,288,543      
Debt discount   300,000      
Legal fees   65,000      
Interest fee   215,000      
Debt principal amount   1,442,000      
Interest expense debt   $ 3,310,543      
Securities Purchase Agreement [Member]          
Short-Term Debt [Line Items]          
Convertible debt $ 4,300,000        
Warrants to purchase common stock | shares 1,018,079        
Warrants exerciable shares | $ / shares $ 2.35        
Proceeds from convertible note payable $ 3,935,000        
Effective interest rate 244.00%        
Debt description the Alto Convertible Note is convertible into shares of common stock at a price per share equal to the lower of (i) $2.35, (ii) 90% of the three lowest daily VWAPs of the 15 trading days prior to the payment date, or (iii) 90% of the VWAP of the trading day prior to payment date. The noteholder may convert at any time at a fixed price of $2.35 per share.        
Derivative liability $ 1,442,000        
Debt interest rate 5.00%        
v3.24.1.1.u2
Schedule of Warrants Activity (Details) - Warrant [Member] - $ / shares
 3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]    
Number of Warrants Outstanding, Beginning Balance 1,446,155  
Weighted Average Exercise Price, Outstanding Beginning Balance $ 2.74  
Weighted Average Life (Years), Outstanding Ending 2 years 6 months 10 days 2 years 9 months 7 days
Number of Warrants Outstanding, Beginning Balance  
Weighted Average Exercise Price, Outstanding Beginning Balance  
Number of Warrants Outstanding, Ending Balance 1,446,155 1,446,155
Weighted Average Exercise Price, Outstanding Ending Balance $ 2.74 $ 2.74
v3.24.1.1.u2
Schedule of Restricted Stock Units (RSUs) (Details) - Restricted Stock Units (RSUs) [Member]
 3 Months Ended
Mar. 31, 2024
$ / shares
shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Number of RSUs, Outstanding, Beginning Balance | shares 197,855
Weighted Average Grant Date Fair Value Per RSU, Beginning Balance | $ / shares $ 1.47
Number of Stock Option Outstanding, Granted | shares 200,000
Weighted Average Exercise Price, Granted | $ / shares $ 0.21
Number of RSUs, Vested | shares (125,000)
Weighted Average Grant Date Fair Value Per RSU, Vested | $ / shares $ 0.73
Number of RSUs, Outstanding, Ending Balance | shares 272,855
Weighted Average Grant Date Fair Value Per RSU, Ending Balance | $ / shares $ 0.89
v3.24.1.1.u2
Stockholders’ Equity (Details Narrative) - USD ($)
 3 Months Ended
Feb. 07, 2024
Mar. 31, 2024
Mar. 31, 2023
Jan. 31, 2023
Dec. 31, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Common stock issued for conversion of convertible debt, shares   625,573 50,998    
Loss on settlement of convertible debt   $ 71,315 $ 18,254    
Number of warrants to purchase       1,018,079  
Exercise price per share       $ 2.35  
Aggregate intrinsic value of warrants   $ 0      
Number of shares vested under plan   605,325      
Restricted stock award granted value        
Share based compensation   111,449 8,333    
Sale of stock consideration received per transaction $ 2,250,000        
Share based compensation arrangement by share based payment award description (i) one share of the Company’s common stock, (ii) a warrant to purchase one share of the Company’s common stock exercisable at a purchase price of $2.35 per share, and (iii) a percentage of equity interest in Diagnostics such that, assuming the sale of all $2,250,000 of Units, SRO LLC will own a 22% interest in Diagnostics        
Proceeds from issuance of common stock $ 4,500,000        
Direct cost   82,000      
Purchase Agreement [Member]          
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Escrow deposit 2,250,000        
Right offering 4,500,000        
Escrow deposit $ 2,250,000        
Initial public offering description Unless the parties waive the conditions to closing, in the event the full $4,500,000 is not raised, whether through SRO LLC or through the Company’s existing stockholders, the Company will not close on the offering and any funds raised and held in escrow will be returned to investors        
Commitment fee $ 112,500        
Related expense $ 40,000        
Research and Development Expense [Member]          
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Share based compensation   165,000 385,000    
Compensation under research and development   $ 33,953 0    
2018 Equity Incentive Plan [Member]          
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Common stock reserved for future issuance         3,000,000
Share granted under equity incentive plan   878,180      
Alto Convertible Note [Member]          
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Number of warrants to purchase       71,266  
Exercise price per share       $ 2.35  
Restricted Stock [Member]          
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Common stock issued for conversion of convertible debt, shares   125,000      
Restricted Stock Units (RSUs) [Member]          
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Share based compensation   $ 111,449 $ 8,333    
Unrecognized compensation cost   $ 161,941      
Weighted average term   11 months 1 day      
Restricted Stock Units (RSUs) [Member] | Directors and Officers [Member]          
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Restricted stock award granted shares   200,000 0    
Restricted stock award granted value   $ 41,840 $ 0    
Common Stock [Member]          
Accumulated Other Comprehensive Income (Loss) [Line Items]          
Common stock issued for conversion of convertible debt, shares     50,998    
Debt, principal   235,200 $ 66,150    
Accrued interest settled with common stock   18,783 20,142    
Loss on settlement of convertible debt   $ 71,315 $ 18,254    
Restricted stock award granted shares   125,000      
Restricted stock award granted value   $ 1      
v3.24.1.1.u2
Schedule of Monte Carlo Simulation Assumption (Details)
 3 Months Ended
Mar. 31, 2024
$ / shares
Jan. 11, 2023
$ / shares
Measurement Input, Price Volatility [Member] | Minimum [Member] | Equity Option [Member]    
Debt Instrument, Measurement Input [1] 48.36  
Measurement Input, Price Volatility [Member] | Minimum [Member] | Warrant [Member]    
Debt Instrument, Measurement Input [1],[2] 67.19  
Measurement Input, Price Volatility [Member] | Maximum [Member] | Equity Option [Member]    
Debt Instrument, Measurement Input [1] 54.75  
Measurement Input, Price Volatility [Member] | Maximum [Member] | Warrant [Member]    
Debt Instrument, Measurement Input [1],[2] 72.53  
Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | Equity Option [Member]    
Debt Instrument, Measurement Input [1] 4.94  
Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | Warrant [Member]    
Debt Instrument, Measurement Input [1],[2] 4.40  
Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | Equity Option [Member]    
Debt Instrument, Measurement Input [1] 5.49  
Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | Warrant [Member]    
Debt Instrument, Measurement Input [1],[2] 5.47  
Measurement Input Volume Weighted Average Price [Member] | Equity Option [Member]    
Debt Instrument, Measurement Input [1] 0.41  
Measurement Input Volume Weighted Average Price [Member] | Warrant [Member]    
Debt Instrument, Measurement Input 0.41 [1],[2] 1.58
Measurement Input, Exercise Price [Member] | Warrant [Member]    
Debt Instrument, Measurement Input [1],[2] 2.35  
Measurement Input, Default Rate [Member] | Minimum [Member] | Warrant [Member]    
Debt Instrument, Measurement Input [1],[2] 5  
Measurement Input, Default Rate [Member] | Maximum [Member] | Warrant [Member]    
Debt Instrument, Measurement Input [1],[2] 25  
Illiquidity Discount [Member] | Equity Option [Member]    
Debt Instrument, Measurement Input [1] 16  
Illiquidity Discount [Member] | Warrant [Member]    
Debt Instrument, Measurement Input [1],[2] 16  
Measurement Input, Expected Term [Member] | Minimum [Member] | Equity Option [Member]    
Time period (years) [1] 0 years  
Measurement Input, Expected Term [Member] | Minimum [Member] | Warrant [Member]    
Time period (years) [1],[2] 2 months 1 day  
Measurement Input, Expected Term [Member] | Maximum [Member] | Equity Option [Member]    
Time period (years) [1] 11 months 12 days  
Measurement Input, Expected Term [Member] | Maximum [Member] | Warrant [Member]    
Time period (years) [1],[2] 2 years 9 months 14 days  
[1] Based on a Monte Carlo simulation analysis of 250,000 iterations
[2] Based on a Monte Carlo simulation analysis of 250,000 iterations
v3.24.1.1.u2
Schedule of Derivative Liabilities (Details)
 3 Months Ended
Mar. 31, 2024
USD ($)
Accelerated Feature [Member]  
Platform Operator, Crypto Asset [Line Items]  
Beginning balance $ 3,852
Gain on change in fair value of the derivative (1,817)
Ending balance 2,035
Fair Value, Inputs, Level 3 [Member]  
Platform Operator, Crypto Asset [Line Items]  
Beginning balance 410,660
Gain on change in fair value of the derivative (196,045)
Ending balance $ 214,615
v3.24.1.1.u2
Derivative Liabilities (Details Narrative)
Mar. 31, 2024
USD ($)
$ / shares
Dec. 31, 2023
USD ($)
Jan. 31, 2023
USD ($)
$ / shares
shares
Jan. 11, 2023
USD ($)
$ / shares
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Number of shares warrant to purchase | shares     1,018,079  
Exercise price per share | $ / shares     $ 2.35  
Derivative liability non-current | $ $ 214,615 $ 414,512 $ 1,189,000  
Derivative fair value | $ $ 216,650     $ 2,631,000
Measurement Input Volume Weighted Average Price [Member] | Warrant [Member]        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Share price | $ / shares 0.41 [1],[2]     1.58
Derivative discount percentage       14.00%
[1] Based on a Monte Carlo simulation analysis of 250,000 iterations
[2] Based on a Monte Carlo simulation analysis of 250,000 iterations
v3.24.1.1.u2
Related Party transactions (Details Narrative) - USD ($)
 3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Related Party Transactions [Abstract]    
Research, development expense $ 0 $ 300,000
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