NOTE

SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form

-Q and Rule

of Regulation S-

They do

not

include all information and notes required by GAAP for complete financial statements. However, except as disclosed herein, there has been

material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form

-K of the Company for the year ended

December 31, 2020.

The year-end condensed consolidated balance sheet presented was derived from audited consolidated financial statements, but does

not

include all disclosures required by GAAP.

In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the

three

months ended

March

31,

2021,

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 31, 2021.

Use of Estimates

The preparation of 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 financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Research and Development Expense

Research and development ("R&D") costs are generally expensed as incurred. R&D expenses include, for example, manufacturing expenses for the Company's drugs under development, expenses associated with clinical trials and associated salaries and benefits. R&D expenses also include an allocation of the CEO's salary and related benefits including bonus and non-cash stock-based compensation expense based on an estimate of total hours expended on research and development activities. The Company's CEO is involved in the development of the Company's drug candidates and oversight of the related clinical trial activity.

Fair Value Measurements

The Company records financial assets and liabilities measured on a recurring and non-recurring basis as well as all non-financial assets and liabilities subject to fair value measurement at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. These fair value principles prioritize valuation inputs across

three

broad levels. Level

inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level

inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level

inputs are unobservable inputs based on the Company's assumptions used to measure assets and liabilities at fair value. An asset or liability's classification within the various levels is determined based on the lowest level input that is significant to the fair value measurement. Also refer to Note

Stock-based Payments

The Company measures and recognizes compensation expense for all stock-based payment awards made to employees, non-employee directors, and consultants, including employee stock options. Stock compensation expense is based on the estimated grant date fair value and is recognized as an expense over the requisite service period. The Company has made a policy election to recognize forfeitures when they occur.

The fair value of each option grant is estimated using the Black-Scholes option-pricing model, which requires assumptions regarding the expected volatility of the stock options, the expected life of the options, an expectation regarding future dividends on the Company's common stock, and estimation of an appropriate risk-free interest rate. The Company's expected common stock price volatility assumption is based upon the historical volatility of our stock price. The Company has elected the simplified method for the expected life assumption for stock option grants, which averages the contractual term of the options of

ten

years with the vesting term, typically

one

four

years, as the Company does

not

have sufficient history of option exercise experience. The dividend yield assumption of

zero

is based upon the fact that the Company has never paid cash dividends and presently has

intention of paying cash dividends in the future. The risk-free interest rate used for each grant was based upon prevailing short-term interest rates over the expected life of the options.

Financial Instruments with Characteristics of Both Liabilities and Equity

During

December 2020,

the Company issued certain financial instruments, including warrants to purchase common stock, which have characteristics of both liability and equity. Financial instruments such as warrants that are classified as liabilities are fair valued upon issuance and are remeasured at fair value at subsequent reporting periods with the resulting change in fair value recorded in “change in fair value of common stock warrants”. The fair value of warrants is estimated using valuation models that require the input of subjective assumptions including stock price, exercise price, stock price volatility, expected life, an expectation regarding future dividends on the Company's common stock, and estimation of an appropriate risk-free interest rate.

Recent Accounting Pronouncements

May 3,

2021,

the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")

No.

2021

04,

Issuer

s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options

— a consensus of the FASB Emerging Issues Task Force. The ASU provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The guidance will be effective for the Company for fiscal years beginning after

December 15, 2021,

and interim periods within those fiscal years.

Recently Adopted Accounting Pronouncements

January 1, 2021,

the Company early adopted ASU

No.

2020

06,

Accounting for Convertible Instruments and

Contracts in an Entity's Own Equity

(Topic

815

)

which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity's own equity. The guidance is effective for fiscal years beginning on or after

December 15, 2023,

with early adoption permitted, but

not

earlier than fiscal years beginning after

December 15, 2020.

The Company implemented this ASU using the modified retrospective approach. Upon adoption, the Company recorded a cumulative adjustment to beginning Stockholders' Equity in the amount of

$13,003,075

to reclassify the common stock warrant liability to accumulated deficit and additional paid-in capital.

The guidance removes the liability and equity separation models for convertible instruments with a cash conversion feature or beneficial conversion feature. As a result companies will more likely account for a convertible debt instruments wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e. as a single unit of account). In addition, the guidance simplifies the settlement assessment that issuers perform to determine whether a contract in their own equity qualifies for equity classification. Finally, the guidance requires entities to use the if-converted method to calculate earnings per share for all convertible instruments.

The cumulative effect of initially applying the new standard was recognized as an adjustment to accumulated deficit. Upon the adoption of the new standard we recognized the following adjustments:

	Ending Balance as of December 31, 2020			ASU 2020-06 Adjustments			Beginning Balance as of January 1, 2021
Warrant liability	$	13,003,075		$	(13,003,075	)	$	-
Additional paid-in capital		129,887,146			9,731,714			139,618,860
Accumulated deficit		(111,898,992	)		3,271,361			(108,627,631	)

The

$3,271,361

adjustment to accumulated deficit includes the reclassification of warrant financing expenses of

$938,794

and the change in fair value of common stock warrants of

$2,332,567

subsequent to initial recognition.

January 1, 2021,

the Company adopted ASU

2019

12,

Income Taxes, (Topic

740

): Simplifying the Accounting for Income Taxes

, which amends the existing guidance relating to accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of U.S. GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. This ASU did

not

have a material effect on its condensed consolidated financial statements.