Exhibit 3.6
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from _______ to _______
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
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.
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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
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. (Check one):
| Large accelerated filer ☐ | 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 news or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of August 10, 2021, the registrant had shares of $0.001 par value common stock outstanding.
CELL SOURCE, INC. AND SUBSIDIARY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2021
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
CELL SOURCE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total Current Assets | ||||||||
| Restricted cash | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficiency | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued expenses - related parties | ||||||||
| Accrued interest | ||||||||
| Accrued interest - related parties | ||||||||
| Accrued compensation | ||||||||
| Advances payable | ||||||||
| Advances payable - related party | ||||||||
| Notes payable | ||||||||
| Notes payable - related parties | ||||||||
| Convertible
notes payable - current portion, net of debt discount of $ | ||||||||
| Convertible notes payable - related parties | ||||||||
| Accrued dividend payable | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 8) | ||||||||
| Stockholders’ Deficiency: | ||||||||
| Convertible Preferred Stock, $ par value, shares authorized; | ||||||||
| Series
A Convertible Preferred Stock, shares designated, shares issued and outstanding as of June 30, 2021 and December
31, 2020; liquidation preference of $ | ||||||||
| Series
C Convertible Preferred Stock, shares designated, shares issued and outstanding as of June 30, 2021 and December 31, 2020;
liquidation preference of $ | ||||||||
| Common Stock, $ par value, shares authorized; and shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficiency | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficiency | $ | $ |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
CELL SOURCE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For
the Three Months Ended June 30, | For
the Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| Research and development - related party | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss From Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (Expense) Income: | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense - related parties | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of debt discount | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of derivative liabilities | ||||||||||||||||
| Gain on forgiveness of accrued interest | ||||||||||||||||
| Loss on extinguishment of notes payable | ( | ) | ( | ) | ( | ) | ||||||||||
| Total Other Expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Dividend attributable to Series A preferred stockholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss Applicable to Common Stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss Per Common Share - Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Common Shares Outstanding - | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
CELL SOURCE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY
(Unaudited)
| FOR THE SIX MONTHS ENDED JUNE 30, 2021 | ||||||||||||||||||||||||||||
| Convertible Preferred | Additional | Total | ||||||||||||||||||||||||||
| Stock - Series A | Common Stock | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficiency | ||||||||||||||||||||||
| Balance, January 1, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Series A Convertible Preferred Stock dividends: | ||||||||||||||||||||||||||||
| Accrual of earned dividends | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
| Issuance of common stock pursuant to cashless warrant exercise | - | ( | ) | - | - | |||||||||||||||||||||||
| Issuance of warrants in connection with issuance of convertible notes payable | - | - | - | - | - | |||||||||||||||||||||||
| Issuance of warrants in connection with exchange of convertible notes payable | - | - | - | - | - | |||||||||||||||||||||||
| Warrants issued in satisfaction of accrued interest | - | - | - | - | - | |||||||||||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||||||
| Options | - | - | - | - | - | |||||||||||||||||||||||
| Warrants | - | - | - | - | - | |||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2021 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Series A Convertible Preferred Stock dividends: | ||||||||||||||||||||||||||||
| Accrual of earned dividends | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
| Payment of dividends in kind | - | - | ||||||||||||||||||||||||||
| Issuance of warrants in connection with issuance of convertible notes payable | - | - | - | - | - | |||||||||||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||||||
| Common stock | - | - | ||||||||||||||||||||||||||
| Warrants | - | - | - | - | - | |||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2020 | ||||||||||||||||||||||||||||
| Convertible Preferred | Additional | Total | ||||||||||||||||||||||||||
| Stock - Series A | Common Stock | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficiency | ||||||||||||||||||||||
| Balance, January 1, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of Series A Convertible Preferred Stock for cash | - | - | ||||||||||||||||||||||||||
| Series A Convertible Preferred Stock dividends: | ||||||||||||||||||||||||||||
| Accrual of earned dividends | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
| Issuance of common stock in connection with extension of notes payable | - | - | ||||||||||||||||||||||||||
| Reclassification of derivative liabilities to equity | - | - | - | - | - | |||||||||||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||||||
| Common stock | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of Series A Convertible Preferred Stock for cash | - | - | ||||||||||||||||||||||||||
| Issuance of common stock in connection with extension of notes payable | - | - | ||||||||||||||||||||||||||
| Issuance of warrants in connection with issuance of notes payable | - | - | - | - | - | |||||||||||||||||||||||
| Issuance of warrants in connection with issuance of advance payable | - | - | - | - | - | |||||||||||||||||||||||
| Series A Convertible Preferred Stock dividends: | ||||||||||||||||||||||||||||
| Accrual of earned dividends | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||
| Payment of dividends in kind | - | |||||||||||||||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||||||
| Common stock | - | - | ||||||||||||||||||||||||||
| Warrants | - | - | - | - | - | |||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
CELL SOURCE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For The Six Months Ended | ||||||||
| June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Change in fair value of derivative liabilities | - | ( | ) | |||||
| Amortization of debt discount | ||||||||
| Gain on forgiveness of accrued interest | ( | ) | - | |||||
| Loss on extinguishment of notes payable | ||||||||
| Non-cash interest expense - warrants | ||||||||
| Stock-based compensation: | ||||||||
| Options | - | |||||||
| Warrants | ||||||||
| Common Stock | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ( | ) | ( | ) | ||||
| Accrued expenses - related parties | ( | ) | ( | ) | ||||
| Accrued interest | ||||||||
| Accrued interest - related parties | ||||||||
| Accrued compensation | ||||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from advances payable | - | |||||||
| Proceeds from issuance of notes payable | - | |||||||
| Proceeds from issuance of convertible notes payable | ||||||||
| Proceeds from issuance of Series A Preferred Stock | - | |||||||
| Repayment of notes payable | ( | ) | ( | ) | ||||
| Repayment of convertible notes payable | ( | ) | ( | ) | ||||
| Repayment of advances payable | - | ( | ) | |||||
| Net Cash Provided By Financing Activities | ||||||||
| Net Decrease In Cash and Restricted Cash | ( | ) | ( | ) | ||||
| Cash and Restricted Cash - Beginning of Period | ||||||||
| Cash and Restricted Cash - End of Period | $ | $ | ||||||
| Cash and restricted cash consisted of the following: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | - | |||||||
| Cash and Restricted cash | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Original issue discount in connection with convertible note payable | $ | $ | ||||||
| Common stock issued in connection with payment of Series A Convertible Preferred Stock dividends in-kind | $ | $ | ||||||
| Reclassification of derivative liabilities to equity | $ | $ | ||||||
| Issuance of common stock pursuant to cashless warrant exercise | $ | $ | ||||||
| Accrued interest converted into notes payable | $ | $ | ||||||
| Issuance of warrants in connection with the issuance of notes payable | $ | $ | ||||||
| Issuance of warrants in satisfaction of accrued interest | $ | $ | ||||||
| Accrual of earned preferred stock dividends | $ | ( | ) | $ | ( | ) | ||
| Issuance of placement agent warrants | $ | $ | ||||||
| Issuance of common stock as debt discount in in connection with extension of notes payable | $ | $ | ||||||
| Repayment of convertible note payable and accrued interest by third party | $ | $ | ||||||
| Warrants and conversion options issued in connection with issuance and extension of notes payable | $ | $ | ||||||
| Warrants issued in connection with issuance of advance payable | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
CELL SOURCE, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Business Organization, Nature of Operations, Risks and Uncertainties and Basis of Presentation
Organization and Operations
Cell Source, Inc. (“Cell Source”, “CSI” or the “Company”) is a Nevada corporation formed on June 6, 2012 that is the parent company of Cell Source Limited (“CSL”), a wholly owned subsidiary which was founded in Israel in 2011 in order to commercialize a suite of inventions relating to certain cancer treatments. The Company is a biotechnology company focused on developing cell therapy treatments based on the management of immune tolerance. The Company’s lead prospective product is its patented Veto Cell immune system management technology, which is an immune tolerance biotechnology that enables the selective blocking of immune responses. CSL’s Veto Cell immune system management technology is based on technologies patented, owned, and licensed to CSL by Yeda Research and Development Company Limited, an Israeli corporation (“Yeda”) (see Note 8, Commitments and Contingencies). The Company’s target indications include: lymphoma, leukemia and multiple myeloma through the facilitation of safer and more accessible stem cell (e.g. bone marrow) transplantation acceptance, treatment of end stage kidney disease and other non-malignant organ diseases through improved organ transplantation (broadened donor pool, reduced dependence on post-transplant anti-rejection therapy), and ultimately treating a variety of cancers and non-malignant diseases.
Risks and Uncertainties
In March 2020, the World Health Organization declared COVID-19, a novel strain of coronavirus, a pandemic. During 2020 and continuing into 2021, the global economy has been, and continues to be, affected by COVID-19. While the Company continues to see signs of economic recovery as certain governments began to gradually ease restrictions, provide economic stimulus and vaccine distribution accelerated, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions causing reinstatement of restrictions in certain jurisdictions. The Company continues to monitor the effects of COVID-19 and its impact on the Company’s operations, financial position, cash flows and its industry in general. The Company considered the impact of COVID-19 on its business and operational assumptions and estimates, and determined there were no material adverse impacts on the Company’s results of operations and financial position at June 30, 2021.
The full extent of the future impact of COVID-19 on the Company’s operations and financial condition is uncertain. Accordingly, COVID-19 could have a material adverse effect on the Company’s business, results of operations, financial condition and prospects during 2021 and beyond, including the timing and ability of the Company to initiate and/or complete current and/or future preclinical studies and/or clinical trials, disrupt the Company’s regulatory activities, and/or have other adverse effects on the Company’s clinical development. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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 (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial position of the Company as of June 30, 2021 and the condensed consolidated results of its operations and cash flows for the three and six months ended June 30, 2021 and 2020. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the operating results for the full year ending December 31, 2021 or any other period. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2020 and for the year then ended which were included in the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (“SEC”) on April 15, 2021.
Note 2 - Going Concern and Management Plans
During
the six months ended June 30, 2021, the Company had not generated any revenues, had a net loss of approximately $and had used cash in operations of approximately
$.
As of June 30, 2021, the Company had a working capital deficiency of approximately $
| 7 |
The Company is currently funding its operations on a month-to-month basis. While there can be no assurance that it will be successful, the Company is in active negotiations to raise additional capital. The Company’s primary sources of operating funds since inception have been equity and debt financings. Management’s plans include continued efforts to raise additional capital through debt and equity financings. There is no assurance that these funds will be sufficient to enable the Company to fully complete its development activities or attain profitable operations. If the Company is unable to obtain such additional financing on a timely basis or, notwithstanding any request the Company may make, if the Company’s debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes, the Company may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate.
The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.
Note 3 - Summary of Significant Accounting Policies
Since the date of the Annual Report on Form 10-K for the year ended December 31, 2020, there have been no material changes to the Company’s significant accounting policies.
The Company computes basic net loss per share by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share includes the dilution that would occur upon the exercise or conversion of all dilutive securities into common stock using the “treasury stock” and/or “if converted” methods, as applicable. Weighted average shares outstanding for the three and six months ended June 30, 2021 and 2020 includes the weighted average impact of warrants to purchase an aggregate of and shares of common stock because their exercise price was determined to be nominal.
| June 30, | ||||||||
| 2021 | 2020 | |||||||
| Options | ||||||||
| Warrants | ||||||||
| Convertible notes [1] [2] | ||||||||
| Convertible preferred stock | ||||||||
| Total | ||||||||
| [1] |
| [2] |
Reclassifications
Certain prior period balance sheet amounts have been reclassified to conform to the fiscal 2021 presentation. These reclassifications have no impact on the previously reported net loss.
Recently Issued Accounting Standards
On May 3, 2021, the Financial Accounting Standards Board (the “FASB”) issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating this new standard and its impact on the Company’s condensed consolidated financial statements and related disclosures.
| 8 |
Note 4 - Fair Value
The following table provides a summary of the changes in fair value, including net transfers in and/or out, of all Level 3 liabilities measured at fair value on a recurring basis using unobservable inputs during the six months ended June 30, 2021:
| Accrued | Accrued | |||||||||||
| Interest | Compensation | Total | ||||||||||
| Balance - January 1, 2021 | $ | $ | $ | |||||||||
| Change in fair value | ||||||||||||
| Issuance of warrants | ( | ) | - | ( | ) | |||||||
| Balance - March 31, 2021 | ||||||||||||
| Change in fair value | ( | ) | ||||||||||
| Accrual of warrant obligation | - | |||||||||||
| Accrual of common stock obligation | - | |||||||||||
| Balance - June 30, 2021 | $ | $ | $ | |||||||||
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Company’s Level 3 liabilities shown in the above table consist of accrued obligations to issue warrants and common stock.
In applying the Black-Scholes option pricing model utilized in the valuation of Level 3 liabilities, the Company used the following approximate assumptions:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Risk-free interest rate | ||||||||||||||||
| Expected term (years) | ||||||||||||||||
| Expected volatility | % | % | % | % | ||||||||||||
| Expected dividends | % | % | % | % | ||||||||||||
The expected term used is the contractual life of the instrument being valued. Since the Company’s stock does not have significant trading volume, the Company is utilizing an expected volatility based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.
As
of June 30, 2021 and December 31, 2020, the Company had an obligation to issue and shares of common stock to service providers that
had a fair value of $
See Note 6, Stockholders’ Deficiency – Stock Warrants for additional details associated with the issuance of warrants.
Note 5 – Notes Payable
As
of June 30, 2021 and through the date of this filing, notes and convertible notes payable with principal amounts totaling $
| 9 |
During
the three months ended June 30, 2021 and 2020, the Company recorded interest expense of $
Convertible Notes Payable
During
the six months ended June 30, 2021, the Company issued convertible notes payable in the aggregate principal amount of $
On
January 28, 2021, the Company issued a convertible note payable in the amount of $
On
March 2, 2021, the Company amended a previously issued convertible note in the principal amount of $
On
March 11, 2021, the Company entered into convertible note purchase agreements with two noteholders whereby the Company agreed to repurchase
an aggregate of $
On
April 27, 2021, the Company amended the following terms of two convertible notes in the aggregate principal amount of $
Notes Payable
During
the six months ended June 30, 2021, the Company paid $
See
Note 8, Commitments and Contingencies – Litigation for details associated with the partial repayment of a note payable during
the six months ended June 30, 2021.
| 10 |
Note 6 – Stockholders’ Deficiency
Series A Convertible Preferred Stock
During
the three months ended June 30, 2021 and 2020, the Company accrued additional preferred dividends of $
During
the three months ended June 30, 2021, the Company issued shares of common stock at the stated value
of $per share for aggregate value of $
Stock Warrants
On
January 5, 2021, the Company issued
During
the six months ended June 30, 2021, the Company issued shares of common stock pursuant to a cashless
warrant exercise by a noteholder of warrants to purchase
See Note 5, Notes Payable for additional details associated with the issuance of stock warrants.
Stock Options
On March 8, 2021, the Company granted -year immediately vested options under the Company’s Equity Incentive Plan to the Chief Executive Offer of the Company (of which, were granted for service as Chief Executive Officer and were granted for service as a director) with an exercise price $per share. The options had a grant date fair value of $which was recognized during the six months ended June 30, 2021.
Stock-Based Compensation
During the three months ended June 30, 2021, the Company issued shares of immediately vested common stock to a service provided with a grant date fair value of $which was recognized immediately.
During
the three months ended June 30, 2021, the Company recognized stock-based compensation expense of $(consisting of $
During
the six months ended June 30, 2021, the Company recognized stock-based compensation expense of $(consisting of $
During the three and six months ended June 30, 2020, the Company recognized stock-based compensation expense of $and $, respectively, related to common stock and warrants, which amounts were included within general and administrative expenses on the condensed consolidated statements of operations.
As of June 30, 2021, there was $of unrecognized stock-based compensation expense to be recognized over a weighted average period of years.
| 11 |
Note 7 – Related Party Transactions
As
of June 30, 2021 and December 31, 2020, the Company was required to issue warrants to purchase an aggregate of
Note 8 – Commitments and Contingencies
Yeda Research and License Agreement
During
the three months June 30, 2021 and 2020, the Company recorded research and development expenses of approximately $
MD Anderson Sponsored Research Agreements
The
Company recognized $
Litigation
Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s condensed consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate of the range of possible losses, if determinable and material, would be disclosed.
In
January 2019, the holder of a promissory note in the principal amount of $
Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. As of June 30, 2021 and December 31, 2020, the Company had not accrued any amounts for contingencies.
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Note 9 – Subsequent Events
The Company has evaluated events that have occurred after the balance sheet and through the date the financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements, except as disclosed below.
Designation of Series C Convertible Preferred Stock
On July 26, 2021, the Company’s Board of Directors approved the designation of shares of the authorized shares of preferred stock as Series C Convertible Preferred Stock, par value $per share. On July 27, 2021, the Company filed the Certificate of Designation with the State of Nevada related to the Series C Preferred Stock. The Series C Preferred stock has a stated value of $per share.
Conversion. Each share of Series C
Preferred Stock is convertible into shares of common stock (subject to adjustment as provided in the related certificate of designation
of preferences, rights and limitations) at the option of the holder at any time. The number of shares of common stock which are issuable
upon conversion of the Series C Preferred Stock shall be equal to the number of shares of Series C Preferred Stock to be converted, multiplied
by the stated value of $ per share, divided by the conversion price in effect at the time of conversion, initially at $
Mandatory Conversion. On the earlier of (i) July 27, 2025 or (ii) any of the Company’s treatment candidates receiving approval from the U.S. or European agencies, all of the outstanding shares of Series C Preferred Stock will automatically convert to common stock.
Liquidation Preference. In the event of the liquidation, dissolution or winding-up of the Company, the Series C Preferred Stock will rank senior to common stock and any other class of capital stock which does not expressly rank senior to or pari passu with the Series C Preferred Stock and will rank pari passu with the Series A and Series B Preferred Stock.
Voting Rights.
Dividends.
Convertible Notes Payable Issuances
Subsequent
to June 30, 2021, the Company issued convertible notes payable in the aggregate principal amount of $
Convertible Notes Payable Conversions
Subsequent
to June 30, 2021, in connection with the designation of the Series C Convertible Preferred Stock, an aggregate of $
Extension of Warrants
In August 2021, the Company extended the expiration date of a warrant to purchase shares of common stock at an exercise price of $ per share from August 4, 2021 to August 4, 2025 and extended the expiration date of a warrant to purchase shares of common stock at an exercise price of $ per share from August 26, 2021 to August 26, 2025.
Issuance of Common Stock
Subsequent to June 30, 2021, the Company issued an aggregate of shares of common stock to consultants.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the condensed consolidated results of operations and financial condition of Cell Source, Inc. (“CSI”, “Cell Source”, the “Company”, “us,” “we,” “our,”) as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 should be read in conjunction with our unaudited financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the Securities and Exchange Commission (“SEC”) on April 15, 2021.
This Quarterly Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors that may affect our results include, but are not limited to, the risks and uncertainties discussed in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on April 15, 2021.
Overview
We are a cell therapy company focused on immunotherapy. Since our inception, we have been involved with the development of proprietary immune system management technology licensed from Yeda Research & Development Company Limited (“Yeda”), the commercial arm of the Weizmann Institute. We have recently shifted the focus of our research and development efforts to MD Anderson.
This technology addresses one of the most fundamental challenges within human immunology: how to tune the immune response such that it tolerates selected desirable foreign cells, but continues to attack all other (undesirable) targets. In simpler terms, a number of potentially life-saving treatments have limited effectiveness today because the patient’s immune system rejects them. For example, while HSCT - hematopoietic stem cell transplantation (e.g. bone marrow transplantation) has become a preferred therapeutic approach for treating blood cell cancer, most patients do not have a matched family donor. Although matched unrelated donors and cord blood can each provide an option for such patients, haploidentical stem cell transplants (sourced from partially mismatched family members) are rapidly gaining favor as a treatment of choice. This is still a risky and difficult procedure primarily because of potential conflicts between host and donor immune systems and also due to viral infections that often follow even successful HSCT while the compromised new immune system works to reconstitute itself by using the transplanted stem cells. Today, rejection is partially overcome using aggressive immune suppression treatments that leave the patient exposed to many dangers by compromising their immune system.
The unique advantage of Cell Source technology lies in the ability to induce sustained tolerance of transplanted cells (or organs) by the recipient’s immune system in a setting that requires only mild immune suppression, while avoiding the most common post-transplant complications. The scientific term for inducing such tolerance in a transplantation setting is chimerism, where the recipient’s immune system tolerates the co-existence of the (genetically different) donor type and host (recipient) type cells. Attaining sustained chimerism is an important perquisite to achieving the intrinsic GvL (graft versus leukemia) effect of HSCT and supporting the reconstitution of normal hematopoiesis (generation of blood cells, including those that protect healthy patients from cancer) in blood cancer patients. Preclinical data and initial clinical data show that Cell Source’s Veto Cell technology can provide superior results in allogeneic (donor-derived) HSCT by allowing for haploidentical stem cell transplants under a mild conditioning regimen, while avoiding the most common post-transplant complications. Combining this with CAR (Chimeric Antigen Receptor) T cell therapy as a unified VETO CAR-T treatment, we will be able to treat patients in relapse as well as those in remission and use the cancer killing power of CAR-T to protect the patient while their immune system fully reconstitutes, thus providing an end-to-end solution for blood cancer treatment by potentially delivering a fundamentally safer and more effective allogeneic HSCT: prevention of relapse; avoidance GvHD; prevention of viral infections; and enhanced persistence of GvL effect. This means that the majority of patients will be able to find a donor, and will have access to a potentially safer procedure with higher long term survival rates than what either donor-derived HSCT or autologous CAR-T each on their own currently provide.
The ability to induce permanent chimerism (and thus sustained tolerance) in patients – which allows the transplantation to overcome rejection without having to compromise the rest of the immune system - may open the door to effective treatment of a number of severe medical conditions, in addition to blood cancers, which are characterized by this need. These include:
| ● | The broader set of cancers, including solid tumors, that can potentially be treated effectively using genetically modified cells such as CAR-T cell therapy, but also face efficacy and economic constraints due to limited persistence based on immune system issues (i.e., the need to be able to safely and efficiently deliver allogeneic CAR-T therapy). Inducing sustained tolerance to CAR-T cells may bring reduced and cost and increased efficacy by allowing for off-the-shelf (vs. patient-derived) treatments with more persistent cancer killing capability. |
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| ● | Organ failure and transplantation. A variety of conditions can be treated by the transplantation of vital organs. However, transplantation is limited both by the insufficient supply of available donor organs and the need for lifelong, daily anti-reject treatments post-transplant. Haploidentical organ transplants, with sustained chimerism, have the potential to make life saving transplants accessible to the majority of patients, with the prospect of improved life quality and expectancy. | |
| ● | Non-malignant hematological conditions (such as type one diabetes and sickle cell anemia) which could, in many cases, also be more effectively treated by stem cell transplantation if the procedure could be made safer and more accessible by inducing sustained tolerance in the stem cell transplant recipient. |
Human Capital Resources
Other than our Chief Executive Officer, we currently do not have any full-time employees, but retain the services of independent contractors/consultants on a contract-employment basis.
Recent Developments
Preclinical Results and Clinical Results
After two years of intensive collaboration with Professor Zelig Eshhar, the inventor of CAR-T cell therapy, interim data confirmed that Veto Cells can markedly extend persistence of genetically modified T cells from the same donor and that genetically modified Veto Cells can effectively inhibit tumors expressing an antigen recognized by the transgenic T cell receptor. Furthermore, human Veto Cells transfected with CAR exhibit anti-tumor activity in-vitro without losing their veto activity. These preclinical results will form the basis of the development of a clinical protocol for allogeneic VETO CAR-T HSCT combined therapy for blood cancer treatment. Cell Source plans to submit this protocol for approval by the end of 2021. The Phase 1/2 clinical trial at the University of Texas MD Anderson Cancer Center, using Cell Source’s Anti-viral Veto Cells, has successfully completed the first treatment cohort, with 3 patients each receiving a haploidentical HSCT under reduced intensity conditioning with Veto Cells. This first in human dose optimization trial has thus far shown that the initial dose is in fact the optimal dose, as all three patients had successful stem cell engraftment after 42 days, in the absence of GvHD. Cell Source is now continuing the trial as it proceeds with the next cohort of patients, using the same dose level.
COVID-19
Recently, the outbreak of the novel coronavirus, or COVID-19, around the world has adversely impacted global commercial activity and contributed to significant volatility in financial markets and disrupted normal business operations. The global impact of the outbreak has been rapidly evolving, and many countries have reacted by instituting quarantines and restrictions on travel, and many businesses and other institutions have temporarily closed or reduced work activities at their facilities. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries, such as transportation, hospitality and entertainment. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of the novel coronavirus. Nevertheless, the novel coronavirus presents material uncertainty and its disruption of the capital markets may have a material adverse impact on our ability to raise additional capital and may slow down the pace at which research and clinical trials may be conducted on our behalf.
Designation of Series C Convertible Preferred Stock
On July 26, 2021, the Company’s Board of Directors approved the designation of 500,000 shares of the 10,000,000 authorized shares of preferred stock as Series C Convertible Preferred Stock, par value $0.001 per share. On July 27, 2021, the Company filed the Certificate of Designation with the State of Nevada related to the Series C Preferred Stock. The Series C Preferred stock has a stated value of $7.50 per share.
Conversion. Each share of Series C Preferred Stock is convertible into shares of common stock (subject to adjustment as provided in the related certificate of designation of preferences, rights and limitations) at the option of the holder at any time. The number of shares of common stock which are issuable upon conversion of the Series C Preferred Stock shall be equal to the number of shares of Series C Preferred Stock to be converted, multiplied by the stated value of $7.50 per share, divided by the conversion price in effect at the time of conversion, initially at $0.75 per share.
Mandatory Conversion. On the earlier of (i) July 27, 2025 or (ii) any of the Company’s treatment candidates receiving approval from the U.S. or European agencies, all of the outstanding shares of Series C Preferred Stock will automatically convert to common stock.
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Liquidation Preference. In the event of the liquidation, dissolution or winding-up of the Company, holders of Series C Preferred Stock will rank senior to common stock and any other class of capital stock which does not expressly rank senior to or pari passu with the Series C Preferred Stock and will rank pari passu with the Series A and Series B Preferred Stock.
Voting Rights. The holders of Series C Preferred Stock have the right to vote on any matter submitted to a vote of holders of common stock, voting together with the common stock as one class, on an as-converted basis.
Dividends. Holders of shares of Series C Preferred Stock will be entitled to receive cumulative dividends at an annual rate of 8% of the stated value. Dividends are payable semi-annually on June 30 and December 31, commencing on December 31, 2022, either by (i) issuance of shares of common stock at the rate of $0.75 per share of common stock or (ii) in cash.
Condensed Consolidated Results of Operations
Three Months Ended June 30, 2021 Compared with the Three Months Ended June 30, 2020
Research and Development
Research and development expense was $367,551 and $209,926 for the three months ended June 30, 2021 and 2020, respectively, a increase of $157,625, or 75%. The increase was primarily attributable to a milestone reached during the second quarter of 2021 which resulted in additional expense recognized related to our agreement with MD Anderson.
General and Administrative
General and administrative expense, which is associated with external consulting and professional fees, payroll and stock-based compensation expenses, was $627,548 and $693,405 for the three months ended June 30, 2021 and 2020, respectively, a decrease of $65,857, or 9%. Such decrease was primarily attributable to decreased professional fees during the 2021 period.
Interest Expense
Interest expense for the three months ended June 30, 2021 and 2020 was $162,845 and $93,879, respectively, an increase of $68,966, or 73%. The increase was primarily a result of increases in convertible notes payable outstanding during the 2021 period as well as the fair value of warrants issued as interest.
Amortization of Debt Discount
Amortization of debt discount was $155,169 and $36,228 for the three months ended June 30, 2021 and 2020, respectively, an increase of $118,941, or 328%. The increase is primarily associated with increased levels of warrants and common stock issued as debt discounts in connection with convertible notes payable in the 2021 period.
Loss on Extinguishment of Notes Payable
During the three months ended June 30, 2021 and 2020, we recognized $0 and $131,250 of loss on extinguishment of notes payable.
Six Months Ended June 30, 2021 Compared with the Six Months Ended June 30, 2020
Research and Development
Research and development expense was $638,790 and $529,138 for the six months ended June 30, 2021 and 2020, respectively, an increase of $109,652, or 21%. The increase was primarily attributable to a milestone reached during the second quarter of 2021 which resulted in additional expense recognized related to our agreement with MD Anderson.
General and Administrative
General and administrative expense, which is associated with external consulting and professional fees, payroll and stock-based compensation expenses, was $1,477,665 and $1,107,525 for the six months ended June 30, 2021 and 2020, respectively, an increase of $370,140, or 33%. The increase was primarily related to additional expenses recognized in the 2021 period as follows: approximately $78,000 of insurance expense, approximately $189,000 of legal fees, and $126,000 in accounting fees, partially offset by a decrease in other professional fees.
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Interest Expense
Interest expense for the six months ended June 30, 2021 and 2020 was $443,732 and $181,528, respectively, an increase of $262,204, or 144%. The increase was primarily a result of increases in convertible notes payable outstanding during the 2021 period as well as the fair value of warrants issued as interest.
Amortization of Debt Discount
Amortization of debt discount was $277,932 and $44,530 for the six months ended June 30, 2021 and 2020, respectively, an increase of $233,402, or 524%. The increase is primarily associated with increased levels of warrants and common stock issued as debt discounts in connection with convertible notes payable in the 2021 period.
Gain on Forgiveness of Accrued Interest
During the six months ended June 30, 2021, we recognized a gain on forgiveness of accrued interest of $49,983 in connection with the repayment of certain notes payable.
Change in Fair Value of Derivative Liabilities
The change in fair value of derivative liabilities for the six months ended June 30, 2020 was a gain of $16,977 due to the reduction in fair value of warrants and conversion options as a result of drawing closer to their expiration dates.
Loss on Extinguishment of Notes Payable
During the six months ended June 30, 2021 and 2020, we recognized $49,718 and $132,691 of loss on extinguishment of notes payable.
Liquidity and Going Concern
We measure our liquidity in a number of ways, including the following:
| June 30, 2021 | December 31, 2020 | |||||||
| Cash | $ | 81,705 | $ | 241,619 | ||||
| Restricted cash | $ | 3,500 | $ | 3,500 | ||||
| Working capital deficiency | $ | (10,030,410 | ) | $ | (7,950,882 | ) | ||
During the six months ended June 30, 2021, we had not generated any revenues, had a net loss of approximately $2,838,000 and had used cash in operations of approximately $2,258,000. As of June 30, 2021, we had a working capital deficiency of approximately $10,030,000 and an accumulated deficit of approximately $28,544,000. Subsequent to June 30, 2021, we received proceeds of $575,000 through the issuance of convertible notes payable. These conditions raise substantial doubt about our ability to continue as a going concern for at least one year from the date these financial statements are issued.
We are currently funding our operations on a month-to-month basis. Our ability to continue our operations is dependent on the execution of management’s plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. We may need to incur additional liabilities with certain related parties to sustain our existence. If we were not to continue as a going concern, we would likely not be able to realize our assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of our financial statements.
There can be no assurances that we will be successful in generating additional cash from equity or debt financings or other sources to be used for operations. Should we not be successful in obtaining the necessary financing to fund our operations, we would need to curtail certain or all operational activities and/or contemplate the sale of our assets, if necessary.
During the six months ended June 30, 2021 and 2020, our sources and uses of cash were as follows:
Net Cash Used in Operating Activities
We experienced negative cash flows from operating activities for the six months ended June 30, 2021 and 2020 in the amounts of approximately $2,258,000 and $1,154,000, respectively. The net cash used in operating activities for the six months ended June 30, 2021 was primarily due to cash used to fund a net loss of approximately $2,838,000, adjusted for net non-cash expenses in the aggregate amount of approximately $780,000, and $200,000 of net cash used in changes in the levels of operating assets and liabilities. The net cash used in operating activities for the six months ended June 30, 2020 was primarily due to cash used to fund a net loss of approximately $1,978,000, adjusted for net non-cash expenses in the aggregate amount of approximately $516,000, partially offset by $308,000 of net cash provided by changes in the levels of operating assets and liabilities.
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Net Cash Provided by Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2021 and 2020 was approximately $2,098,000 and $1,127,000, respectively. The net cash provided by financing activities during the six months ended June 30, 2021 was attributable to $2,422,250 of proceeds from the issuance of convertible notes payable, offset by the repayments of notes payable and convertible notes payable in the amount of $324,588. The net cash provided by financing activities during the six months ended June 30, 2020 was attributable to $1,075,000 of proceeds from the issuance of convertible notes payable, $125,000 of proceeds from the issuance of Series A preferred stock, $100,000 of proceeds from the issuance of notes payable and $100,000 of proceeds from advances payable, offset by the repayment of a note payable in the amount of $100,000, $105,000 of repayments of advances payable and a $68,000 repayment of a convertible note payable.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP. These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented. We believe that the estimates and judgments upon which it relies are reasonably based upon information available to us at the time that it makes these estimates and judgments. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.
The following is not intended to be a comprehensive list of all of our accounting policies or estimates. Our accounting policies are more fully described in Note 3 – Summary of Significant Accounting Policies, in our financial statements included elsewhere in this quarterly report.
Convertible Instruments
The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Embedded conversion options and any related freestanding instruments are recorded as a discount to the host instrument.
If the instrument is determined to not be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the commitment date fair value to the effective conversion price of the instrument.
The Black-Scholes option pricing model was used to estimate the fair value of the Company’s warrants and embedded conversion options. The Black-Scholes option pricing model includes subjective input assumptions that can materially affect the fair value estimates. The Company determined the fair value under the Binomial Lattice model and the Black-Scholes option pricing model to be materially the same.
Embedded conversion options within notes payable are recorded as a debt discount and are amortized as interest expense over the term of the related debt instrument.
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Fair Value of Financial Instruments
The Company measures the fair value of financial assets and liabilities based on ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 — quoted prices in active markets for identical assets or liabilities;
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable; and
Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).
The carrying amounts of the Company’s financial instruments, such as cash, other current assets, accounts payable, accrued expenses and other current liabilities approximate fair values due to the short-term nature of these instruments. The carrying amounts of Company’s credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates, are comparable to rates of returns for instruments of similar credit risk.
Stock-Based Compensation
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date and is then recognized over the period the services are required to be provided in exchange for the award, usually the vesting period. Awards granted to directors are treated on the same basis as awards granted to employees. Upon the exercise of an option or warrant, the Company issues new shares of common stock out of its authorized shares.
Because the Company’s common stock historically was not actively traded on a public market, the fair value of the Company’s restricted equity instruments is estimated by management based on observations of the sales prices of both restricted and freely tradable common stock, or instruments convertible into common stock. The Company obtained a third-party valuation of its common stock as of December 31, 2020, which was considered in management’s estimation of fair value during the six months ended June 30, 2021. The third-party valuation was performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The estimates used by management are considered highly complex and subjective. The Company anticipates that once its shares become more actively traded, the use of such estimates will no longer be necessary to determine the fair value of its common stock.
The December 2020 independent appraisal utilized the option pricing method, or OPM, as the most reliable method with the following steps being applied:
| ● | Establishment of total enterprise or equity value; | |
| ● | Analysis of equity rights for each class of security; | |
| ● | Selection of appropriate model for valuation purposes; | |
| ● | Determination of key valuation inputs; and | |
| ● | Computation of the fair value of the subject security. |
Under the OPM, it was determined the Company’s common stock a fair value of $0.47 per share, which included a discount for lack of marketability of 30%. Furthermore, the independent appraisal determined the Company’s expected volatility was 90% by evaluating historical and implied volatilities of guideline companies.
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Item 3. Quantitative And Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the Principal Executive and Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Internal controls are procedures which are designed with the objective of providing reasonable assurance that (1) our transactions are properly authorized, recorded and reported; and (2) our assets are safeguarded against unauthorized or improper use, to permit the preparation of our condensed consolidated financial statements in conformity with United States generally accepted accounting principles.
In connection with the preparation of this Quarterly Report, management, with the participation of our Principal Executive and Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)). Based upon that evaluation, our Principal Executive and Financial Officer concluded that, as of June 30, 2021, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
Except as described below, we are not involved in any pending legal proceeding or litigations and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.
In January 2019, the holder of a promissory note in the principal amount of $250,000 due on March 16, 2016 instituted a collection action in the Supreme Court of the State of New York, County of New York. A motion for summary judgement was heard on July 12, 2019 and the Company’s motion to vacate was denied in February 2021. The Company has appealed the denial and is vigorously pursuing a motion to renew and reargue the motion to vacate so that it can present factual defenses to the plaintiff’s claims. The plaintiff has commenced steps to collect judgment. During the three months ended June 30, 2021, $99,588 was released to an officer of the court, such that, as of June 30, 2021, there was $150,412 outstanding under the note. Subsequent to June 30, 2021, on behalf of the Company, a third party deposited the full amount of the unpaid judgment with the court, which will be used to resolve the matter in the event of an adverse outcome.
Item 1A. Risk Factors.
There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on April 15, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Between April 1, 2021 and June 23, 2021, we issued convertible notes in the aggregate principal amount of $562,250 to accredited investors. The notes mature six months from the date of issuance and accrue interest at a rate of eight percent (8%) per annum. The notes are convertible into shares of our Series C Preferred Stock at a conversion price of $7.50 per share at the holder’s option and automatically convert into common stock on the maturity date. The Series C Preferred Stock will convert into shares of our common stock at a rate of ten shares of common stock for each share of Series C Preferred Stock. In connection with the issuance of the notes, we issued five year warrants to purchase an aggregate of 449,800 shares of common stock at an exercise price of $1.25 per share. We relied upon the exemption provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) in connection with these transactions.
In April 2021, we amended two convertible notes in the aggregate principal amount of $150,000 with maturity dates in April 2021 to extend the maturity dates by six months and to increase the interest rate from 8% per annum to 10% per annum. In addition, the conversion feature of the note was amended to change the shares into which the notes may be converted from Series B Preferred Stock to Series C Preferred Stock. We relied upon the exemption provided by Section 3(a)(9) of the Securities Act in connection with these transactions.
In June 2021, we issued 5,405 shares of immediately vested common stock to a service provider. We relied upon the exemption provided by Section 4(2) of the Securities Act in connection with this transaction.
In June 2021, we received an additional $1,000,000 of proceeds under a previously issued convertible note by means of the payment by the lender of outstanding obligations to third parties. In June 2021, we amended and restated the convertible note and increased the principal amount from $4,000,000 to $6,000,000 and in August 2021 issued a five year warrant to purchase a total of 800,000 shares of common stock at an exercise price of $1.25 per share to the lender in accordance with the terms of the convertible note. After giving effect to the $1,000,000 advance made in June 2021, the lender had advanced an aggregate of $3,500,000 under the convertible note. We may elect to convert the amended and restated note into shares of Series B Convertible Preferred Stock at a conversion price of $7.50 per share at any time after the creation of the Series B Convertible Preferred Stock and before the maturity date. We relied upon the exemptions provided by Sections 3(a)(9) and Section 4(2) of the Securities Act in connection with these transactions.
On June 30, 2021, we issued 632,667 shares of common stock as payment of in-kind dividends to holders of Series A Convertible Preferred Stock. We relied upon the exception provided by Section 4(2) of the Securities Act in connection with this transaction.
In August 2021, we extended the expiration date of a warrant to purchase 150,000 shares of our common stock at an exercise price of $0.75 per share from August 4, 2021 to August 4, 2025 and extended the expiration date of a warrant to purchase 37,500 shares of common stock at an exercise price of $0.75 per share from August 26, 2021 to August 26, 2025. We relied upon the exemption provided by Section 3(a)(9) of the Securities Act in connection with these transactions.
| 21 |
Item 3. Defaults Upon Senior Securities.
As of June 30, 2021 and through the date of this filing, notes payable and convertible notes payable with face values totaling $1,933,412 and $2,870,634, respectively, were past due and are classified as current liabilities on the condensed consolidated balance sheet as of June 30, 2021. Such notes continue to accrue interest and all relevant penalties have been accrued as of June 30, 2021. Of such past due notes payable, a holder of a note with principal amount of $250,000 issued a notice of default. See Item 1 above for additional details. We are in negotiations with all holders to extend the maturity dates of such notes or to convert the principal and accrued interest into equity.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
* Filed herewith
| 22 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CELL SOURCE, INC. | ||
| Dated: August 12, 2021 | By: | /s/ Itamar Shimrat |
| Name: | Itamar Shimrat | |
| Title: | Chief Executive Officer and Chief Financial Officer (Principal Executive, Financial and Accounting Officer) | |
| 23 |
Exhibit 3.6
Exhibit 10.64
NEITHER THIS Note nor the securities into which this note is convertible haVE been registered under the securities act of 1933, as amended (the “act”), or under any state securities law AND NEITHER THIS NOTE NOR ANY INTEREST THEREIN NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE may be offered, sold, transferred, pledged or otherwise DISPOSED OF EXCEPT PURSUANT TO an effective Registration Statement under such act and such laws or an exemption from registration under such act and such laws which, in the opinion of counsel satisfactory to the Company, is available.
CELL SOURCE, INC.
Third Amended and Restated
10.0% Convertible Note
Maturity Date:October 31, 2021
Principal Amount:$6,000,000
This Third Amended and Restated Convertible Note (the “Note”) is issued by Cell Source, Inc., a Nevada corporation (the “Company”), effective as of the 18th day of June, 2021 (the “Issuance Date”), to Darlene D. Soave (the “Lender”) pursuant to the exemptions from registration under the Securities Act of 1933, as amended, and amends and restates the 8% Convertible Note issued by the Company to the Lender effective as of October 28, 2019, as amended by the Amended and Restated 8% Convertible Note dated June 18, 2020 and effective as of October 28, 2019, as amended by Amendment No. 1 thereto dated as of December 3, 2020, and as amended by the Amended and Restated Note dated March 2, 2021 (collectively, the “Original Note”).
ARTICLE
I
PAYMENTS OF PRINCIPAL AND INTEREST; EVENTS F DEFAULT
For value received, the Company promises to pay to Lender, or her registered assigns, the lesser of (a) Six Million Dollars ($6,000,000) or (b) the actual amount advanced to the Company by the Lender (the “Principal Amount”) pursuant to the terms, conditions and provisions of this Note. The Company shall pay interest to the Lender on the outstanding Principal Amount of this Note in accordance with Section 1.2 below and such interest shall accrue on each advance of funds from the Lender (each an “Advance”) from the date of such Advance. Schedule A hereto sets forth a list of all advances made prior to the date hereof. To the extent that any of such advances are represented by previously issued promissory notes, they will hereafter be governed by this Note.
The Company hereby expressly authorizes the Holder to record on Schedule A hereto the amount and date of each loan made hereunder after the date hereof and the date and amount of each payment of principal thereon. All such notations shall be presumptive as to the correctness thereof and the aggregate unpaid amount of loans set forth on such schedule shall be presumed to be the unpaid Principal Amount hereof, so long as the Holder has delivered to Company a copy of the schedule each time a new notation was made thereon.
Section 1.1 Interest shall accrue daily from the date of each Advance at a rate equal to ten percent (10%) per annum and shall be payable, at the Company’s option, either in cash or as payment-in-kind in shares of the Company’s Common Stock, on the Maturity Date. If the Company elects to pay interest in shares of the Company’s Common Stock, the number of shares issuable shall be determined by diving the dollar value of the interest being paid by $0.75 (as such amount shall be equitably adjusted to give effect to stock splits, stock dividends and similar transactions).
Section 1.2 All payments of principal and interest shall be made to the Lender at the address set forth in Section 3.1or such other address as the Lender shall notify the Company in writing ten (10) days prior to the due date of any payment or upon any prepayment of this Note as provided herein.
Section 1.3 The occurrence of any of the following events of default ( each an “Event of Default”) shall, at the option of the Lender, make all sums of principal and interest then remaining unpaid hereon and all other amounts payable hereunder immediately due and payable, upon demand, without presentment:
(a) the Company fails to pay the Principal Amount and all accrued and unpaid interest on or before the Maturity Date.
(b) the Company breaches any other provision of this Note and such breach is not cured within twenty (20) days after written notice thereof to the Company.
(c) bankruptcy or insolvency proceedings or other proceedings or relief under any bankruptcy law or any other law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by the Company.
ARTICLE II
CONVERSION RIGHTS; CONVERSION PRICE
Section 2.1 Conversion. The Company may elect to convert this Note into a number of fully paid and non-assessable shares of the Company’s Series B Convertible Preferred Stock (the “Series B Stock”) at a conversion price (the “Conversion Price”) equal to $7.50 per share at any time after the creation of the Series B Stock and before the Maturity Date. If the Company elects to convert this Note into Series B Stock pursuant to this Section 2.1, the Company shall deliver a notice of such conversion to the Lender. Upon receipt of such notice, the Lender shall promptly deliver this Note to the Company for cancellation and the Company shall issue and deliver to Lender the applicable number of shares of Series B Stock.
Section 2.2 Warrant. For each $500,000 of Advances provided by Lender under this Note, the Company shall issue to Lender a warrant to purchase 400,000 shares of the Company’s Common Stock at an exercise price of $1.25 per share. Each warrant will have a five (5) year term. The Lender hereby acknowledges the receipt of warrants to purchase 2,800,000 shares of Common Stock that have been issued prior to the date of this Note.
| 2 |
Section 2.3 Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Common Stock or Series B stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe or purchase any evidences of indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all of the property, assets or business of the Company to, another corporation or,
(c) there shall a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give to Lender (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (x) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock or Series B Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (y) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock or Series B Stock shall be entitled to exchange their shares of Common Stock or series B Stock for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Lender at the last address of Lender appearing on the books of the Company and delivered in accordance with Section 4.1.
Section 2.4 Restrictions on Securities. This Note has been issued by the Company pursuant to the exemption from registration under the Securities Act of 1933, as amended (the “Act”). None of this Note or the shares of Series B Stock issuable upon conversion of this Note may be offered, sold or otherwise transferred unless (i) they first shall have been registered under the Act and applicable state securities laws or (ii) the Company shall have been furnished with an opinion of legal counsel (in form, substance and scope reasonably acceptable to Company) to the effect that such sale or transfer is exempt from the registration requirements of the Act. Each certificate for shares of Series B Stock issuable upon conversion of this Note that have not been so registered and that have not been sold pursuant to an exemption that permits removal of the applicable legend, shall bear a legend substantially in the following form, as appropriate.
the securities represented hereby have not been registered under the Securities Act of 1933, as amended (the “Act”). the securities represented hereby may not be offered, sold or otherwise transferred unless they are registered under the act and applicable state securities laws, or such offers, sales and transfers are made pursuant to an available exemption from the registration requirements of those laws.
| 3 |
Upon the request of a holder of a certificate representing any shares of Series B Stock issuable upon conversion of this Note, the Company shall remove the foregoing legend from the certificate or issue to such Lender a new certificate free of any transfer legend, if (a) with such request, the Company shall have received an opinion of counsel, reasonably satisfactory to the Company in form, substance and scope, to the effect that any such legend may be removed from such certificate or (b) a registration statement under the Act covering such securities is in effect.
ARTICLE
III
MISCELLANEOUS
Section 3.1 Notices. Any notice herein required or permitted to be given shall be in writing and may be personally served or delivered by courier or sent by United States mail and shall be deemed to have been given upon receipt if personally served (which shall include telephone line facsimile transmission) or sent by courier or three (3) days after being deposited in the United States mail, certified, with postage pre-paid and properly addressed, if sent by mail. For the purposes hereof, the address of the Lender shall be 341 Lakewood Drive, Bloomfield Hills, Michigan 48304; and the address of the Company shall be 57 West 57th Street, Suite 400, New York, New York 10019. The Company shall accept electronic notice at “ishimrat@cell-source.com”. Both the Lender and the Company may change the address for service by delivery of written notice to the other as herein provided.
Section 3.2 Entire Agreement and Amendment Provision. This Note represents the entire agreement between the parties hereto with respect to the subject matter hereof and there are no representations, warranties or commitments, except as set forth herein, and replaces and is issued in substitution for the Original Note, which is hereby cancelled. This Note and any provision hereof may be amended only by an instrument in writing signed by the Company and the Lender.
Section 3.3 Assignability. This Note shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Lender and its successors and assigns; provided, however, that so long as no Event of Default has occurred, this Note shall only be transferable in whole subject to the restrictions contained in the restrictive legend on the first page of this Note.
Section 3.4 Governing Law. This Note shall be governed by the internal laws of the State of New York, without regard to conflicts of laws principles. The parties hereby submit to the exclusive jurisdiction and venue of the state or federal courts sited in the State of New Jersey with respect to any dispute arising under this Note.
Section 3.5 Replacement of Note. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Note, if mutilated, the Company will make and deliver a new Note of like tenor.
| 4 |
Section 3.6 This Note shall not entitle the Lender to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Series B Stock in accordance with the terms hereof.
Section 3.7 Severability. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
Section 3.8 Headings. The headings of the sections of this Note are inserted for convenience only and do not affect the meaning of such section.
Section 3.9. Replacement. This Note replaces and supersedes the Original Note in its entirety.
Section 3.10 Counterparts. This Note may be executed in multiple counterparts, each of which shall be an original, but all of this shall be deemed to constitute one instrument.
| 5 |
IN WITNESS WHEREOF, with the intent to be legally bound hereby, the Company has executed this Amended and Restated Note effective as of June 18, 2021.
| CELL SOURCE, INC. | ||
| By: | ||
| Name: | Itamar Shimrat | |
| Title: | Chief Executive Officer | |
| LENDER | |
| Darlene Soave |
| 6 |
Schedule A
Schedule of Loans and Payments
| Date | Amount of Loan | Amount of Principal Paid | Balance Remaining Unpaid | Notation Made By | ||||||||||||
| 10-08-2019 | $ | 500,000 | -0- | $ | 500,000 | |||||||||||
| 03-02-2020 | $ | 500,000 | -0- | $ | 500,000 | |||||||||||
| 06-019-2021 | $ | 500,000 | -0- | $ | 500,000 | |||||||||||
| 12-03-2021 | $ | 500,000 | -0- | $ | 500,000 | |||||||||||
| 03-02-2021 | $ | 500,000 | -0- | $ | 500,000 | |||||||||||
| 06-18-2021 | $ | 1,000,000 | -0- | $ | 1,000,000 | |||||||||||
| A-I |
EXHIBIT 1
CONVERSION NOTICE
(To be executed by the Lender in order to Convert the Note)
TO:
The undersigned hereby irrevocably elects to convert US $__________ of the Principal Amount outstanding under the above Note into shares of Series B Convertible Stock of Cell Source, Inc., according to the conditions stated therein. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the Lender for any conversion, except for such transfer taxes, if any.
Conversion Date:____________________________________________________________________
Applicable Conversion Price: $__________________________________________________________
Signature:________________________________________________________
Name:________________________________________________________
Address:________________________________________________________
________________________________________________________
Tax I.D. or Soc. Sec. No.:________________________________________________________
Principal Amount to be converted: US $___________________________________________________
Amount of Note unconverted: US $_______________________________________________________
Number of shares of Series B Stock to be issued:_____________________________________________
| A-II |
Exhibit 31
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Itamar Shimrat, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Cell Source, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 12, 2021 | |
| /s/ Itamar Shimrat | |
| Itamar Shimrat | |
| Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive, Financial, and Accounting Officer) |
Exhibit 32
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Cell Source, Inc., a Nevada corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
The Quarterly Report for the quarter ended June 30, 2021 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 12, 2021 | |
| /s/ Itamar Shimrat | |
| Itamar Shimrat | |
| Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive, Financial, and Accounting Officer) |