| 2. | Clinical Trial Candidate Manufacturing and Experimentation: $668,600 increase in spending during the nine months ended September 30, 2022, from manufacturing expanded GDTs in the recently expanded cGMP facilities. |
| 3. | Facilities Construction and Expansion: We amended our lease agreement at our Houston, TX facility and completed construction on our cGMP facility during the nine months ended September 30, 2022, which resulted in increased depreciation expenses and rent payments compared to the nine months ended September 30, 2021. This resulted in an increase of $1,216,300 in facilities related costs. |
General and administrative expenses. Our general and administrative expenses increased by $6,581,900, or 93.20%, to $13,437,500 for the nine months ended September 30, 2022, from $7,040,700 for the nine months ended September 30, 2021.
During the nine months ended September 30, 2022, the increase primarily resulted from an increase in legal fees of $3,862,400, and an increase in employee related expenses of $3,052,000.
The increase in legal expenses was primarily related to the Internal Review. Between October 1 2021 and September 30, 2022, we incurred $6,249,700 in legal fees and other professional fees directly related to the Internal Review and related matters.
Employee related expenses were impacted by increases to headcount. During the nine months September 30, 2022 and 2021, the headcount for employees allocated to general and administrative purposes increased to 13.5 employees from 10 employees, respectively.
Gain on loan extinguishment. Gain on loan extinguishment was $0 and $105,800 for the nine months ended September 30, 2022 and 2021, respectively. During the year ended December 31, 2020, we applied for forgiveness of the SBA Loan in accordance with the terms of the CARES Act. On February 16, 2021 the SBA granted forgiveness of the SBA Loan and all applicable interest. On the date of forgiveness, the principal and accrued interest totaled $105,800.
Litigation settlement loss contingency. We began settlement discussion with the Sabby Entities and Empery Entities during September 2022. We reached a settlement agreement in principle with both Sabby Entities and Empery Entities on September 26, 2022, which the Company’s board of directors approved on September 27, 2022. The settlement contained a cash component of $75,000 payable to Sabby Entities and $75,000 to Empery Entities. As part of the settlement, the Company also agreed to issue convertible notes (the “Settlement Notes”) in the aggregate principal amount of $1,656,720 to each of the Empery Entities and the Sabby Entities. The Settlement Notes are convertible into shares (the “Conversion Shares”) of the Company’s common stock at an initial conversion price per share of $0.3068 and can be convertible into a maximum of 5,400,000 shares of the Company’s common stock to each of the Empery Entities and Sabby Entities, subject to the adjustment of the conversion price and a beneficial ownership limitation equivalent to 9.99%.
Net loss. As a result of the cumulative effect of the factors described above, our net loss increased to $27,663,200 during the nine months ended September 30, 2022, compared to $14,953,600 during the nine months ended September 30, 2021.
Liquidity and Capital Resources
As of September 30, 2022, we had cash and cash equivalents of $432,700. As of October 31, 2022, we had cash and cash equivalents of $1,325,300. We do not currently have any approved products and have never generated any revenue from product sales. To date, we have financed our operations primarily with proceeds from the sale of our convertible promissory notes, preferred stock, common stock from the initial public offering and follow-on offering.
We have known material contractual obligations which will require cash to meet their requirements. These applicable obligations include our facility lease agreement, our employment contracts, and our financing arrangement for our Director and Officer Insurance Policy. We also plan to deploy cash for other research and development and general and