As filed with the Securities and Exchange Commission on April 26, 2022

Registration Statement No. 333-____

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

*HEMOGLOBIN OXYGEN THERAPEUTICS LLC

(Exact name of registrant as specified in its charter)

674 Souder Road

Souderton, PA 18964

(267) 382-0064

(Address and telephone number of registrant’s principal executive offices)

Igor Serov

Chief Financial Officer

Hemoglobin Oxygen Therapeutics Inc.

674 Souder Road

Souderton, PA 18964

(267) 382-0064

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

* Prior to the closing of the offering to which this registration statement relates, Hemoglobin Oxygen Therapeutics LLC intends to convert into a Delaware corporation pursuant to a statutory conversion, and will change its name to Hemoglobin Oxygen Therapeutics Inc.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

Hemoglobin Oxygen Therapeutics LLC, the registrant whose name appears on the cover of this registration statement, is a Delaware limited liability company. Immediately prior to the closing of the offering to which this Registration Statement relates, Hemoglobin Oxygen Therapeutics LLC will convert into a Delaware corporation pursuant to a statutory conversion and change its name to Hemoglobin Oxygen Therapeutics Inc. as described in the section “Corporate Conversion” of the accompanying prospectus. As a result of the Corporate Conversion, all holders of membership interests and options exercisable for membership interests of Hemoglobin Oxygen Therapeutics LLC will become holders of shares of common stock and options to purchase common stock of Hemoglobin Oxygen Therapeutics Inc.

References in the accompanying prospectus to our capitalization and other matters pertaining to our common equity relate to the capitalization and common equity of Hemoglobin Oxygen Therapeutics Inc. after giving effect to the Corporate Conversion. However, the Financial Statements and summary historical financial data included in the accompanying prospectus are those of Hemoglobin Oxygen Therapeutics LLC and do not give effect to the Corporate Conversion. Shares of common stock of Hemoglobin Oxygen Therapeutics Inc. are being offered by this prospectus. The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated April 26, 2022

PRELIMINARY PROSPECTUS

This is an initial public offering of shares of our Common Stock. Prior to this offering, there has been no public market for our Common Stock. It is currently estimated that the initial public offering price per share will be between $___ and $___. We have applied for listing of our common stock on The Nasdaq Capital Market.

The actual public offering price per share will be determined between us and the underwriters at the time of pricing and may be at a discount to the current market price. Therefore, the assumed public offering price used throughout this prospectus may not be indicative of the final offering price.

Investing in our securities involves risks. See “Risk Factors” beginning on page 14.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We have granted the underwriters the option for a period of 45 days to purchase up to an additional ___ shares of common stock at the initial public offering price, less underwriting discounts and commissions, solely to cover over-allotments, if any.

The underwriter expects to deliver the shares on or about _____, 2022.

WestPark Capital, Inc.

Prospectus dated _______, 2022

TABLE OF CONTENTS

We have not, and the underwriters have not, authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give to you.

You should rely only on the information contained in this prospectus. No dealer, salesperson or other person is authorized to give information that is not contained in this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The selling stockholders are offering to sell and seeking offers to buy our common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of these securities.

All trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the ® and ^TM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

PROSPECTUS SUMMARY

The following summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. It does not contain all the information that may be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless context requires otherwise, references to “we,” “us,” “our,” “HBO2 Therapeutics” or the “Company” refer prior to the Corporate Conversion discussed herein, to Hemoglobin Oxygen Therapeutics LLC, and after the Corporate Conversion, to Hemoglobin Oxygen Therapeutics Inc. References in this prospectus to our capitalization and other matters pertaining to our common equity relate to the capitalization and common equity of Hemoglobin Oxygen Therapeutics Inc. after giving effect to the Corporate Conversion. However, the Financial Statements and summary historical financial data included in this prospectus are those of Hemoglobin Oxygen Therapeutics LLC and do not give effect to the Corporate Conversion. The terms (A) “IPO Price” means the initial public offering price of the shares offered by means of this prospectus and (B) “Debt Conversion” refer to the conversion of the following principal amount of convertible indebtedness, plus interest accrued and unpaid interest where indicated below, immediately prior to the effective date of this offering assuming an IPO Price of $____per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (i) $7,917,000 convertible into an estimated _____shares of common stock and (ii) $2,000,000 due on demand bearing no interest convertible into an estimated _____shares of common stock (a ___35% discount to the IPO Price). (iii) $486,000 due on demand bearing no interest convertible into an estimated _____shares of common stock (a 25% discount to the IPO Price).Unless otherwise indicated, all share and per share information gives effect to the “Debt Conversion”.

Company Overview

Certain Definitions

Throughout this document, the below terms shall have the following meanings:

Description of Our Operations, Principal Activities and Key Factors

We are a biotechnology company focused on the development, manufacture, and commercialization of a proprietary technology platform for oxygen-carrying solutions that address critical unmet medical needs in both human and veterinary medicine. Using our patents, proprietary technology and know-how, we develop and sell products that, under certain conditions, are a possible alternative to blood transfusions to deliver oxygen to organs and tissues. Through numerous clinical studies, our products have been shown to address many of the current limitations that exist for blood transfusion. These include the limited shelf life of blood, logistical challenges of typing/cross-matching, delays in testing for pathogens, and blood shortages during times of high need and/or insufficient donations. We have significant experience gained through extensive pre-clinical and clinical testing of these products, which have a well-understood and extensively documented safety and efficacy profile.

Management believes that our products are the only hemoglobin-based oxygen carriers (HBOCs) which have received marketing authorizations anywhere in the world. These products were acquired from OPK Biotech LLC in 2014, which had previously purchased them from Biopure Corporation in 2009. Our current products are:

Hemopure and Oxyglobin are sterile medicinal products administered via intravenous or arterial infusion that deliver oxygen to organs and tissues that could provide a potential alternative to blood transfusion. Our sterile veterinary and human products have been widely investigated in pre-clinical models, clinical trials and real-world clinical experience for more than 20 years and described in at least 250 peer-reviewed publications in the scientific literature and reference texts.

Hemopure, our human product, can address some of the logistical limitations of blood transfusions. The potential benefits are a reduction in both mortality and morbidity while offering several strategic advantages, such as universal compatibility, room temperature storage, off-the-shelf availability, readiness for use (supplied in sterile IV infusion bags) and a three-year shelf life. Clinical data suggests that Hemopure could provide a life-saving option for patients. In markets where Hemopure is not yet authorized or approved, approval(s) for Hemopure would be pursued for an indication when suitable blood transfusion is indicated, but not readily available, or an option.

Oxyglobin is the only oxygen-carrying solution approved by the US Food and Drug Administration (FDA), the European Medicines Agency (“EMA”) and the British Veterinary Medicines Directorate (“VMD”) to treat all-cause canine anemia.

We are also pursuing a medical device indication for Hemopure under the name ZK1. ZK1 is intended to act as an additive oxygen carrier solution during ex-vivo, sub-sub normothermic and normothermic machine perfusion of organs to recondition and assess organ viability prior to transplantation.

Product Portfolio Characteristics

The key characteristics of our product portfolio are:

Markets

Our immediate focus is to relaunch Hemopure and Oxyglobin under approved indications in those jurisdictions where they already have marketing authorizations. The clinical development of ZK1 and Hemopure product candidates will continue in parallel, targeting markets for future approvals.

Human Transfusion Market

Hemopure is approved in South Africa to eliminate, delay, or reduce the need for RBC s in adult surgical patients. Hemopure was also approved in the Russian Federation for the treatment of acute, all-cause anemia. When the situation normalizes in that country and sanctions are lifted, we will evaluate reactivating the license and conclude a distribution agreement.

In the United States, Hemopure is under clinical development for the treatment of life-threatening anemia when blood transfusion is unavailable, or otherwise indicated but is not an option.

Human Organ Perfusion System Market

Clinical development of ZK1 for use in sub-normothermic and normothermic organ perfusion, without the use of traditional blood products is ongoing. Under this application ZK1 would not be administered to the patient, but instead used outside the body, as an additive to perfusion solutions for the ex-vivo machine perfusion of donor organs prior to transplantation. As an ancillary medicinal product used outside the body as one component of a machine perfusion system, ZK1 would be evaluated under a medical device application.

Multiple scientific journal articles describing the use of ZK1 as an adjunct to ex-vivo machine perfusion of donor organs prior to transplantation have generated considerable interest amongst the organ transplantation community resulting in preclinical and clinical research, to evaluate donor organ resuscitation and viability at several academic hospitals in the US and Europe.

Veterinary Market

Oxyglobin is the trademark name for our veterinary drug, the only oxygen carrying solution to be approved in the United States, the European Union and the United Kingdom to treat all cause anemia in dogs. Oxyglobin has additionally been used by veterinarians in Canada through Health Canada’s Emergency Drug Release (EDR) program. We plan to distribute Oxyglobin in North America through an exclusive distribution agreement with Dechra Veterinary Products, a global veterinary pharmaceutical company, and in Europe through regional distributors specializing in the veterinary critical care market.

Under the US Department of Defense Joint Theater Trauma System (“JTTS”) Clinical Practice Guideline for emergency treatment of military working dogs (“MWD”) that sustained combat related injuries, Oxyglobin was used as a resuscitative fluid to stabilize military working dogs (“MWD”) after combat-related injuries, in preparation for removal by MEDEVAC transport to veterinarians. The guideline was first published in April 2011 for non-veterinarians (i.e., human trauma surgeons and medics).

Veterinarians have limited treatment options when it comes to treating anemia in other species, as finding a healthy same species blood donor is not always practical. Oxyglobin’s long shelf life, and the ability to provide oxygen carrying capacity while stabilizing a patient in order to treat the underlying condition, led to practitioners using the product off-label in a variety of different species. The off-label use of Oxyglobin has been extensively published in peer reviewed literature, and veterinary reference texts. Examples of other species in which Oxyglobin has been used are feline, equine, avian, and exotics. Though still less common, avian and exotic pets are becoming increasingly popular companion animal choices, and therefore require veterinary care. Once Oxyglobin is relaunched in the canine market, we will seek to expand its use, to treat non-domestic animals in captivity, such as those zoos, aquariums or wild animal sanctuaries. This would involve filing a request for MUMS (Minor Use and Minor Species) drug designation. This permits the use of a drug in minor species, or for use in major species afflicted with uncommon diseases or conditions (minor uses).

Risks Associated with Our Business

Our business is subject to a number of risks of which you should be aware of before making an investment decision. These risks are discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary. Primarily, our manufacturing facility is under construction to accommodate the additional process steps resulting from consolidation of the two other facilities. In order to do so, we must refit our newly constructed facility in Souderton, Pennsylvania with the equipment necessary for manufacturing and packaging, which has been relocated from facilities in Cambridge, Massachusetts and Ontario, Canada. Our ability to initially start manufacturing our products and generating revenues is substantially dependent upon the successful completion of the construction and re-fitting of our Souderton facility. Until it is complete, and the relevant cGMP certification is received, we will not be able release and commercially distribute any product. The proceeds of the Offering will be insufficient to fully complete the relaunch of our products into the market. We will require approximately $15 million of additional monies to complete this process. If we do not successfully raise such monies through public or private equity or debt financings or other sources, such as strategic collaborations or license and development agreements, the facility cannot be completed and we will be unable to produce and commercially distribute any product.

In addition to the risks associated with our facility, some of the risks involved with the offering include the following:

Implications of Being an Emerging Growth Company and a Smaller Reporting Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012, and we will remain an emerging growth company until the earliest to occur of: the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities; and the last day of the fiscal year ending after the fifth anniversary of our initial public offering. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In particular, in this prospectus, we have provided only two years of audited financial statements and have not included all of the executive compensation-related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result, we will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies which may make comparison of our financial statements to those of other public companies more difficult. As a result of this election, the information that we provide in this prospectus may be different than the information you may receive from other public companies in which you hold equity interests.

We are also a smaller reporting company as defined in the Securities Exchange Act of 1934, as amended. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) the market value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, similar to emerging growth companies, if we are a smaller reporting company with less than $100 million in annual revenue, we would not be required to obtain an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.

Corporate Information

We were formed as a Delaware limited liability company in February 2014. Prior to the closing of this offering, Hemoglobin Oxygen Therapeutics LLC intends to convert into a Delaware corporation pursuant to a statutory conversion, and will change its name to Hemoglobin Oxygen Therapeutics Inc. See “Corporate Conversion.”

Hemoglobin Oxygen Therapeutics LLC was organized in February 2014 in connection with the acquisition of OPK Biotech LLC through a Chapter 7 bankruptcy auction. The assets we acquired from OPK Biotech LLC consisted of equipment, intellectual property, finished product inventory and the capital stock of companies incorporated in the Netherlands and South Africa. OPK Biotech had in turn acquired certain assets from Biopure Corporation and intellectual property from Northfield Laboratories. Our principal executive offices are located at 674 Souder Road, Souderton, PA 18964 and our telephone number is (267) 382-0064. Our website address is www.hbo2therapeutics.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to invest in our common stock.

Product History

Biopure Corporation developed a veterinary (Oxyglobin) and a human (Hemopure) product and by the end of 1990’s received its veterinary product approval by the FDA (US) and the EMA (EU). The expensive production process, however, did not allow Biopure to sell the veterinary product at a profit and the Company continued its pursuit of human approval. Biopure went public in the early 2000s and traded at a market capitalization in excess of a billion dollars. The total funds spent by Biopure on the product development during its existence was around $900 million.

In the early-2000s, an ill-designed Phase 3 clinical trial protocol followed by several managerial missteps led to difficulties, and Biopure was sold in 2009 to OPK Biotech (beneficial owner Sergey Pugachev). The new owner invested an additional $100 million to improve the production process resulting in significant reductions in the cost of producing the company’s products. In 2011, Mr. Pugachev became involved in litigation with the Russian government which resulted in the expropriation of all his Russian assets. The beneficial owner’s financial difficulties in Russia and inability to financially support the company led to conflict with the management of OPK Biotech, resulting in OPK Biotech management departure from the Company in early 2013. In 2014, creditors of OPK Biotech initiated a Chapter 7 bankruptcy process, which eventually resulted in the seizure of OPK assets and the sale of such assets through an auction.

Hemoglobin Oxygen Therapeutics LLC was formed in 2014 with the sole purpose of buying the assets of OPK Biotech. HbO2 Therapeutics participated in that auction and won the bid. After purchasing those assets in late 2014, HbO2 Therapeutics elected to consolidate three production facilities and house the whole process under one roof in Souderton, PA. Currently all of the equipment is waiting to be assembled in the newly erected building in Souderton, pending the proceeds of this Offering.

THE OFFERING

The number of shares of common stock outstanding is based on _____shares of our common stock outstanding as of December 31, 2021 after giving effect to (i) the Corporate Conversion to occur immediately prior to the effective date of this offering and (ii) the issuance of _____ shares of common stock issuable upon conversion of convertible and other indebtedness immediately prior to the effective date of this offering assuming an initial public offering price of $____per share, which is the midpoint of the price range set forth on the cover page of this prospectus (the “Debt Conversion”) and excludes as of such date:

Except as otherwise indicated herein, all information in this prospectus assumes or gives effect to:

Financial Statement Presentation

The financial statements for the years ended December 31, 2021 and 2020, represent the operations of Hemoglobin Oxygen Therapeutics LLC. In connection with the closing of this offering, Hemoglobin Oxygen Therapeutics LLC will complete a Corporate Conversion into a Delaware corporation pursuant to a statutory conversion, and will change its name to Hemoglobin Oxygen Therapeutics Inc. All holders of membership interests of Hemoglobin Oxygen Therapeutics LLC will become holders of shares of common stock of Hemoglobin Oxygen Therapeutics Inc., as described under the heading “Corporate Conversion.” In this prospectus, we refer to all transactions related to our conversion to a corporation as the Corporate Conversion. We expect that the Corporate Conversion will not have a material effect on our financial statements.

Selected Summary Consolidated Financial Data

The following tables set forth selected consolidated summary financial data as of the dates and for the periods indicated. We have derived the summary statement of operations data for the years ended December 31, 2021 and 2020 from our audited financial statements included elsewhere in this prospectus. The summary statements of operations data for the years ended December 31, 2021 and 2020 and the summary balance sheet data as of December 31, 2021 have been derived from our audited financial statements included elsewhere in this prospectus. The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes and other information included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future.

¹ As presented in the unaudited pro forma financial information included within this prospectus, pro forma gives effect to (1) the Corporate Conversion; (2) the conversion of the following principal amount of convertible indebtedness, plus interest accrued and unpaid interest where indicated below, immediately prior to the effective date of this offering assuming an IPO Price of $____per share, which is the midpoint of the price range set forth on the cover page of this prospectus, (i) $6,930,000 with maturity dates ranging from July 2022 to September 2025, bearing interest at rates ranging from 5% to 10% per annum convertible into an estimated _____shares of common stock at varying conversion prices from $2.75 to $5.49 and (ii) $2,000,000 due on demand bearing [no] interest convertible into an estimated _____shares of common stock (a 25% discount to the IPO Price). (iii) $486,000 due on demand bearing [no]interest convertible into an estimated _____shares of common stock (a 25% discount to the IPO Price)

² As will be presented in the section labeled “Capitalization” included within this Prospectus, pro forma as adjusted amounts reflect the sale of shares of our common stock in this offering at the assumed public offering of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each $1.00 increase (decrease) in the assumed public offering price of $ per share , which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) each of cash, additional paid-in capital, total stockholders’ (deficit) equity and total capitalization by approximately $ million, assuming that the number of shares by us, as set forth on the cover page of this Prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1 million shares the number of shares offered by us would increase (decrease) the pro forma as adjusted amount of each of cash, additional paid-in capital, total stockholders’ (deficit) equity and total capitalization by approximately $ million, assuming that the assumed public offering price remains the same, and after deducting the estimated underwriting discounts and commissions and the estimated offering expenses payable by us. Additionally pro forma as adjusted includes $20 million of proceeds from the offering in total assets and total stockholders’ equity (deficit) related to the reassembly of the company’s facility in Souderton utilizing proceeds of this offering.

RISK FACTORS

An investment in our common stock involves a high degree of risk. Before making an investment decision, you should give careful consideration to the following risk factors, in addition to the other information included in this prospectus, including our financial statements and related notes, before deciding whether to invest in shares of our common stock. The occurrence of any of the adverse developments described in the following risk factors could materially and adversely harm our business, financial condition, results of operations or prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Financial Position and Capital Needs

We have incurred significant losses since our inception and anticipate that we will continue to incur losses for the foreseeable future. We have generated very limited revenues since our inception, which may make it difficult for you to assess our future viability.

We are not profitable and have incurred losses in each year since our founding in February 2014, following the acquisition of our assets from OPK Biotech LLC, which in turn acquired them from Biopure Corporation. Our net losses for the years ended December 31, 2021 and 2020 were $6.3 million and $3.6 million, respectively. As of December 31, 2021, we had a members’ deficit of $9.4 million. We have financed our operations primarily through the sale of equity securities and convertible debt. We continue to incur significant expenses related to our ongoing operations and expect to incur losses for the foreseeable future. We anticipate these losses will increase as we:

We have generated very limited revenues from product sales since we became the successor of Biopure and OPK Biotech, because our manufacturing facility is not currently operational. We may never be able to complete the construction or retrofit of our manufacturing facility or relaunch or commercialize our products or any product candidates to any significant degree or achieve profitability. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to achieve sustained profitability would depress the value of our Company and could impair our ability to raise capital, expand our business, diversify our research and development pipeline, market our products or product candidates we may identify and pursue, if approved, or continue our operations. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

Our management has concluded that factors raise substantial doubt about our ability to continue as a going concern and our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this Registration Document.

Our recurring losses from operations raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements for the year ended December 31, 2021 with respect to this uncertainty. Our ability to continue as a going concern will require us to obtain additional funding. We believe that the net proceeds from this Offering, together with our existing cash, will enable us to fund our operating expenses and debt service payments through April 2023. However, we will need approximately $15 million in additional funds to complete the reassembly, validation and certification of the Souderton, Pennsylvania facility. We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, or discontinue the further development and commercialization efforts of one or more of our products and/or product candidates or may be forced to reduce or terminate our operations.

Our ability to start manufacturing our products and generating revenues is dependent upon the successful completion of the construction and re-fitting of our Souderton facility. While we plan on using a significant portion of the proceeds of this offering towards the construction and re-fitting of the facility, the proceeds of this offering will not be sufficient to complete this process. We will require approximately $15 million of additional monies to complete this process. If we do not successfully raise such monies, the facility cannot be completed, and we will be unable to produce and commercially distribute any product.

In order to start manufacturing our products and generating revenues, we must successfully complete the construction and re-fitting of our Souderton facility with the equipment necessary for manufacturing and packaging, which has been relocated from facilities in Cambridge, Massachusetts and Ontario, Canada and obtain the relevant cGMP certification. While we plan on using a significant portion of the proceeds of this offering towards the construction and re-fitting of the facility, the proceeds of this offering will not be sufficient to complete this process. We will require approximately $15 million of additional monies to complete this process. We will need to seek such additional funds through public or private equity or debt financings or other sources, such as strategic collaborations or license and development agreements. If we do not successfully raise such monies, the facility cannot be completed, and we will be unable to produce and commercially distribute any product.

Such construction and re-fitting may also be subject to unforeseen delays and cost overruns which would negatively impact our business and results of operations. The construction and refit are also subject to our ability to hire sub-contractors with sufficient availability and obtain and comply with regulatory or other licenses and permits. If the construction of the Souderton facility is delayed or is not completed, we will not be able to manufacture our products and generate any material revenues, which would adversely affect our ability to operate and continue our business.

Once we begin conducting all of our manufacturing operations at the single facility in Souderton, Pennsylvania, any interruption in operations at such facility could result in our inability to satisfy demand for our approved products. Despite our efforts to safeguard this facility, including acquiring insurance on commercially reasonable terms, adopting environmental health and safety protocols and utilizing off-site storage of computer data, a number of factors could damage or destroy our manufacturing equipment or our inventory of component supplies or finished goods, cause substantial delays in our operations, result in the loss of key information, and cause us to incur additional expenses, including:

● relocation expense;

● operating restrictions, partial suspension or total shutdown of production imposed by regulatory authorities;

● equipment malfunctions or failures;

● technology malfunctions;

● work stoppages;

● damage to or destruction of the facility due to natural disasters or other events; and

● regional or local power shortages.

We will require additional funding to achieve our business goals. If we are unable to obtain this funding when needed and on acceptable terms, we would be forced to delay, limit or terminate our product development efforts or other operations. Raising additional capital may subject us to unfavorable terms, cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our approved products, product candidates, and technologies.

As mentioned above, we plan on using a significant portion of the proceeds of this offering towards the construction and re-fitting of our Souderton facility. The proceeds of this offering will not be sufficient to complete this process and we require approximately $15 million of additional monies to complete this process.

In addition, we are currently developing new indications for Oxyglobin and Hemopure, and ZK1. Developing and commercializing biopharmaceutical products and medical devices is expensive and time-consuming, and we expect our research, development and manufacturing expenses to increase substantially in connection with our ongoing activities. As of December 31, 2021, we had negative working capital of $13.5 million and capital resources consisting of cash of approximately $0.4 million. Because the outcome of any clinical development and regulatory approval process is highly uncertain, we cannot reasonably estimate the actual capital amounts necessary to successfully complete the development, regulatory approval process and commercialization of ZK1 and new indications of Oxyglobin and Hemopure.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to commercialize our approved products and develop and commercialize ZK1 or new indications of Oxyglobin and Hemopure and any other product candidates that we may identify and pursue. Moreover, such financing may result in dilution to stockholders, imposition of debt covenants and repayment obligations, or other restrictions that may affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit or terminate the commercialization or our approved products or the development of one or more of our programs for new indications of Oxyglobin and Hemopure and our product candidates or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially and adversely affect our business, prospects, financial condition and results of operations.

Risks Related to the Development and Regulatory Approval of our Product Candidates or New Indications of our Approved Products

Any biopharmaceutical products or medical devices advanced into clinical development are subject to extensive regulation, which can be costly and time consuming, cause unanticipated delays or prevent the receipt of the required approvals to commercialize such product or device.

The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of biopharmaceutical products are subject to extensive regulation by the FDA in the U.S. and by comparable health authorities in foreign markets. In the U.S., the FDA must approve the new facility and products manufactured there, as complying with Good Manufacturing Practice (‘cGMP’). The process of obtaining approval is expensive, often takes many years and can vary substantially based upon the type, complexity and novelty of the proposed new indications, with respect to Oxyglobin and Hemopure, or the product candidate involved. In addition to the significant clinical testing requirements, our ability to obtain marketing approval for these proposed new indications, with respect to Oxyglobin and Hemopure, or the product candidates depends on obtaining the final results of required non-clinical testing, including characterization of the manufactured components of such products and validation of our manufacturing processes. The FDA may determine that our manufacturing processes, testing procedures or facilities are insufficient to justify approval. Approval policies or regulations may change, and the FDA has substantial discretion in the approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed.

The FDA or another regulatory agency can delay, limit or deny approval of a proposed new indication, with respect to Oxyglobin or Hemopure, or a product candidate for many reasons, including, but not limited to:

With respect to foreign markets, approval procedures vary among countries and, in addition to the aforementioned risks, can involve additional product testing, administrative review periods and agreements with pricing authorities. Any delay in obtaining, or inability to obtain, applicable regulatory approvals with respect to new indications and new markets could prevent us from commercializing any proposed new indications, with respect to Oxyglobin and Hemopure, or our product candidates.

Any proposed new indication with respect to Oxyglobin and Hemopure, or other product candidates that we advance into clinical trials, may cause unacceptable adverse events or have other properties that may delay or prevent their regulatory approval or commercialization or limit their commercial potential.

Unacceptable adverse events caused by any proposed new indication, with respect to Oxyglobin and Hemopure, or other product candidates that we advance into clinical trials, could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications and markets. This, in turn, could prevent us from commercializing the affected proposed new indication, with respect to Oxyglobin and Hemopure, or product candidate in such indication or market and generating revenues from its sale. Hemopure remains under clinical development, and we cannot know the extent of any unexpected adverse events in future clinical trial patients. Any unforeseen safety issues with a product candidate could prevent and/or delay the regulatory approval process.

Delays in the commencement of clinical trials could result in increased costs and delay our ability to pursue regulatory approval.

The commencement of clinical trials can be delayed for a variety of reasons, including delays in:

Any delays in the commencement of clinical trials will delay our ability to pursue regulatory approval for any proposed new indications. In addition, many of the factors that cause, or lead to, a delay in the commencement of clinical trials may also ultimately lead to the denial of regulatory approval of a proposed new indication with respect to Oxyglobin and Hemopure, or a product candidate.

Suspensions or delays in the completion of clinical testing could result in increased costs to us and delay or prevent our ability to complete development of that product or generate product revenues.

Once a clinical trial has begun, patient recruitment and enrollment may be slower than we anticipate. Clinical trials may also be delayed as a result of ambiguous or negative interim results or difficulties in obtaining sufficient quantities of product manufactured in accordance with regulatory requirements. Further, a clinical trial may be modified, suspended or terminated by us, an Institutional Review Board (IRB), a hospital ethics committee, data safety monitoring oversight committee, or any regulatory authority due to a number of factors, including:

Any changes in the current regulatory requirements and guidance also may occur, and we may need to amend clinical trial protocols to reflect these changes. Amendments may require us to resubmit clinical trial protocols to IRBs and regulatory authorities for additional review, which may impact the costs, timing and the likelihood of a successful completion of a clinical trial. If we experience delays in the completion of, or if we must suspend or terminate, any clinical trial with respect to a proposed new indication or any product candidate, our ability to obtain regulatory approval will be delayed, and the commercial prospects, if any, for the proposed new indication, or approval may suffer as a result. In addition, many of these factors may also ultimately lead to the denial of regulatory approval.

We may expend our limited resources to pursue a proposed new indication or approval for a product or product candidate and fail to capitalize on product candidates or indications for which there may be a greater likelihood of success.

Because we have limited financial and managerial resources, we may forego or delay pursuit of opportunities with new indications, with respect to Oxyglobin and Hemopure, or other product candidates for which there may be a greater likelihood of success or may prove to have greater commercial potential. Research programs to identify new product candidates or pursue alternative indications for approved products require substantial technical, financial and administrative support. We may never successfully develop any proposed new indication, with respect to Oxyglobin and Hemopure, or any product candidates.

We may incur substantial product liability or indemnification claims relating to the clinical testing of Oxyglobin and Hemopure for any proposed new indication or our product candidates.

We face an inherent risk of product liability exposure related to the testing of Oxyglobin and Hemopure for any proposed new indication or our product candidates in human clinical trials, and claims could be brought against us if use or misuse of Oxyglobin and Hemopure for any proposed new indication or one of our product candidates causes, or merely appears to have caused, personal injury or death. While we have and intend to maintain product liability insurance relating to our clinical trials, our coverage may not be sufficient to cover claims that may be made, and we may be unable to maintain such insurance. Any claims, regardless of their merit, could severely harm our financial condition, strain our management and other resources or destroy the prospects for commercialization of the product which is the subject of any such claim. We are unable to predict if we will be able to obtain or maintain product liability insurance for any products that may be approved for marketing. Additionally, it is expected that we will need to enter into various agreements where we indemnify third parties for certain claims relating to the testing of Oxyglobin and Hemopure for any proposed new indication or our product candidates. These indemnification obligations may require us to pay significant sums of money for claims that are covered by these indemnifications.

Our research and development activities could be affected or delayed as a result of possible restrictions on animal testing.

Certain laws and regulations require us to test our product candidates on animals before initiating clinical trials involving human patients. Animal testing activities have been the subject of controversy and adverse publicity. Animal rights groups and other organizations and individuals have attempted to stop animal testing activities by pressing for legislation and regulation in these areas and by disrupting these activities through protests and other means. To the extent the activities of these groups are successful, our research and development activities may be interrupted, delayed or become more expensive.

We may find it difficult to enroll patients in our clinical trials which could delay or prevent the start of clinical trials for our product candidates.

Identifying and qualifying patients to participate in clinical trials of Oxyglobin and Hemopure for any proposed new indication or our product candidates is essential to our success. The timing of our clinical trials depends in part on the rate at which we can recruit patients to participate in clinical trials of Oxyglobin and Hemopure for any proposed new indication or our product candidates, and we may experience delays in our clinical trials if we encounter difficulties in enrollment. If we experience delays in our clinical trials, the timeline for obtaining regulatory approval of Oxyglobin and Hemopure for any proposed new indication or our product candidates will most likely be delayed.

Many factors may affect our ability to identify, enroll and maintain qualified patients, including the following:

We may not be able to initiate or continue to support clinical trials for any proposed new indication or of our product candidates, for one or more applications, or any future proposed new indication, with respect to Oxyglobin and Hemopure, or product candidates if we are unable to locate and enroll a sufficient number of eligible participants in these trials as required by the FDA or other regulatory authorities. Even if we are able to enroll a sufficient number of patients in our clinical trials, if the pace of enrollment is slower than we expect, the development costs for Oxyglobin and Hemopure for any proposed new indication or our product candidates may increase and the completion of our trials may be delayed, or our trials could become too expensive to complete.

If we experience delays in the completion of, or termination of, any clinical trials of Oxyglobin and Hemopure for any proposed new indication or our product candidates, the commercial prospects of these could be harmed, and our ability to generate product revenue therefrom could be delayed or prevented. In addition, any delays in completing our clinical trials would likely increase our overall costs, impair development and jeopardize our ability to obtain regulatory approval relative to our current plans. Any of these occurrences may harm our business, financial condition, and prospects significantly.

Even if we successfully complete the construction and re-fitting of our Souderton facility, if the manufacturing facility does not meet regulatory requirements or, once operational, is unable to meet our supply demands, our business will be harmed.

We are involved in the preparation of therapeutics for clinical trials or commercial sale and are therefore subject to extensive regulation. These regulations govern manufacturing processes and procedures, including recordkeeping, and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of contaminants or to inadvertent changes in the properties or stability of our products. Our failure to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, suspension of production, seizures or recalls of products or marketed drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect clinical or commercial supplies of our products.

We must supply all necessary documentation in support of a Biologics License Application (“BLA”) or Marketing Authorisation Application (“MAA”) on a timely basis and must adhere to Good Laboratory Practices (“cGLP”) and Good Manufacturing Practices (“cGMP”) regulations enforced by the FDA and other regulatory agencies through their facilities inspection program. In addition, the regulatory authorities may, at any time, audit or inspect our manufacturing facility involved with the preparation of our products or our product or the associated quality systems for compliance with the regulations applicable to the activities being conducted. If our facility does not pass a pre-approval plant inspection, regulatory approval of the products may not be granted or may be substantially delayed until any violations are corrected to the satisfaction of the regulatory authority, if ever.

The regulatory authorities also may, at any time following approval of one of our products for sale, audit our manufacturing facility, if completed. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time consuming for us to implement, and that may include the temporary or permanent suspension of commercial sales or the temporary or permanent closure of our sole manufacturing facility. Any such remedial measures imposed upon us could materially harm our business.

Risks associated with operating in foreign countries could materially adversely affect our product development.

We may conduct future studies in countries outside of the United States. Consequently, we may be subject to risks related to operating in foreign countries. Risks associated with conducting operations in foreign countries include:

Failure to obtain regulatory approval in international jurisdictions would prevent our product candidates from being marketed abroad.

In addition to regulations in the U.S., to market and sell Oxyglobin and Hemopure for any proposed new indication or our product candidates in the European Union, United Kingdom, many Asian countries and other jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the U.S. does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. The regulatory approval process outside the U.S. generally includes all of the risks associated with obtaining FDA approval as well as risks attributable to the satisfaction of local regulations in foreign jurisdictions. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. We may not be able to obtain approvals from regulatory authorities outside the U.S. on a timely basis, if at all. Clinical trials accepted in one country may not be accepted by regulatory authorities in other countries. In addition, many countries outside the U.S. require that a product be approved for reimbursement before it can be approved for sale in that country. A product candidate that has been approved for sale in a particular country may not receive reimbursement approval in that country.

We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any additional markets. If we are unable to obtain approval of Oxyglobin and Hemopure for any proposed new indication or any of our current product candidates or any future product candidates we may pursue by regulatory authorities in the European Union, United Kingdom, Asia or elsewhere, the commercial prospects of that product may be significantly diminished, our business prospects could decline and this could materially adversely affect our business, results of operations and financial condition.

Even though our current primary indications of Oxyglobin and Hemopure received regulatory approval, they may still face future development and regulatory difficulties.

Even though we have obtained regulatory approval for certain indications for Oxyglobin and Hemopure in certain markets, and if we obtain approval of any product candidate or of any new indications of Oxyglobin and Hemopure in other markets, that approval is and/or would be subject to ongoing requirements by the FDA and comparable foreign regulatory authorities governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, adverse event reporting, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-marketing information. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance by us and/or our Contract Manufacturing Organizations (“CMOs”) and CROs for any post-approval clinical trials that we may conduct. The safety profile of any product after approval continues to be closely monitored by the FDA and comparable foreign regulatory authorities. If the FDA or comparable foreign regulatory authorities become aware of new safety information after a product’s approval, they may require labeling changes or establishment of a risk evaluation and mitigation strategy, impose significant restrictions on such product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.

In addition, manufacturers of devices and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with Current Good Manufacturing Practice, Good Clinical Practice, and other regulations. If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If we or our productor at the manufacturing facilities for our product fail to comply with applicable regulatory requirements, a regulatory agency may:

The occurrence of any event or penalty described above may inhibit our ability to successfully commercialize our product and generate revenues.

Advertising and promotion of any product that obtains approval in the U.S. is heavily scrutinized by the FDA, the Department of Justice, the Office of Inspector General of Health and Human Services, state attorneys general, members of Congress and the public. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. Additionally, advertising and promotion of any product that obtains approval outside of the U.S. is heavily scrutinized by comparable foreign regulatory authorities. Violations, including actual or alleged promotion of our product for unapproved or off-label uses, are subject to enforcement letters, inquiries and investigations, and civil and criminal sanctions by the FDA, as well as prosecution under the federal False Claims Act. Any actual or alleged failure to comply with labeling and promotion requirements may have a negative impact on our business.

Risks Related to Our Dependence on Third Parties

If independent research parties perform in an unsatisfactory manner, it may harm our business.

We have relied upon and plan to continue to rely upon our independent investigators at multiple academic medical institutions, and US military, with whom we have agreements for the supply and use of our products in their laboratories and clinical research. These third parties are responsible for ensuring that their studies and trials are conducted in accordance with the applicable protocols, legal, regulatory, and scientific standards and are required to comply, where appropriate, with Good Clinical Practice (“cGCP”), and Good Laboratory Practices (“cGLP”), which are regulations and guidelines enforced by the FDA, the competent authorities of the member states of the European Economic Area, (“EEA”), and comparable foreign regulatory authorities. Regulatory authorities enforce these regulations through periodic inspections of study sponsors, principal investigators, study sites, and other contractors. If our independent research partners fail to comply with applicable regulations, these clinical trials may be delayed or terminated and may cause delay in clinical development of targeted indications, which would impair our ability to sell our products for such indications.

Our manufacturing facility is expected to be fully automated and dependent on software and other information technology to function properly. Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches or data corruption could materially disrupt our operations and adversely affect our business and operating results.

The efficient operation of our business depends on our information technology systems. If we are able to refit the facility and resume production, we will rely on our information technology systems to effectively manage our manufacturing capacity, sales and marketing data, accounting and financial functions, inventory management, product development tasks, clinical data, customer service and technical support functions. Our information technology systems are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters; terrorist attacks; cyber-based attacks; attacks by computer viruses or hackers; power losses, computer system or data network failures; security breaches and data corruption. Federal, state and international laws and regulations, such as the European Union’s General Data Protection Regulation, (“GDPR”), which took effect in May 2018, can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties and significant legal liability, if our information technology security efforts fail. In addition, our software systems include cloud-based applications that are hosted by third-party service providers with security and information technology systems subject to similar risks. The failure of either our or our service providers’ information technology could disrupt our entire operation or result in decreased sales, increased overhead costs and product shortages, all of which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

Our main raw material is bovine blood, which we intend to obtain from a single supplier located near our Souderton facility. If that supplier performs in an unsatisfactory manner, this may harm our business.

The success of our business depends in part on our ability to cost-effectively and efficiently manufacture products on a commercial scale. While we intend to manufacture all of our products at our Souderton facility, we will rely on suppliers to acquire the necessary raw materials needed for production.

We intend to obtain bovine hemoglobin from one abattoir of animals raised in several states of the United States. We cannot predict the future effect, if any, on us of the spread of bovine spongiform encephalopathy (“mad cow” disease) in the United States. Any quarantine affecting herds that supply us or a shutdown of the abattoir that we use could have a material adverse effect on us, as it would have to find, validate and obtain regulatory approval of new sources of supply.

Replacing suppliers for key materials and components could result in unexpected delays and expenses.

We intend to obtain some key materials, including membranes and chemicals, bags for packaging, and services from sole-source suppliers. All of these materials are commercially available elsewhere. If such materials were no longer available at a reasonable cost from existing suppliers, we would need to purchase substitute materials from new suppliers. If a new supplier must be located, the substitute or replacement materials or facilities would need to be tested for equivalency. Such equivalency tests could significantly delay product development, or delay or limit commercial sales of approved products and cause us to incur additional expense.

The establishment of new supply relationships involves also numerous uncertainties, including those relating to payment terms, supply adequacy of supplying capacity, quality control and timeliness of delivery. For some products we may seek to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those products. We may face significant competition as well as risks in seeking and maintaining appropriate suppliers.

Risks Related to our Intellectual Property

If we are unable to obtain and maintain sufficient intellectual property protection for our products or product candidates or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours. Our pending patent applications may be challenged, thus impairing our ability to protect our products or product candidates.

Our success notably depends on our ability to obtain and maintain protection of the intellectual property covering our products, product candidates and technology, particularly patents. Obtaining and enforcing biopharmaceutical patents is costly, time consuming and complex. It is also possible that we will fail to identify patentable aspects of our research and development programs or that we will not have the right to control the preparation, filing and prosecution of patent applications.

Our patent protecting the technology embodied in Oxyglobin and Hemopure expired on February 28, 2022. We believe that the expiry of this patent will not have a material adverse effect on our prospects or strategy given that (i) our proprietary technology is protected by a combination of trade secrets, know-how and trademarks and (ii) in view of the complexities of the processing of a biological material of animal origin, it is unlikely that competitors could manufacture product similar to Oxyglobin or Hemopure simply by reverse engineering the final product. However, as noted, we cannot be certain that we will be able to obtain and maintain sufficient intellectual property protection for Oxyglobin, Hemopure or ZK1, that the scope of protection obtained will be sufficiently broad, or that our competitors will not develop and commercialize products similar or identical to our products or product candidates (e.g., by circumventing our patent by developing similar or alternative products in a non-infringing manner).

We may not be aware of all third-party intellectual property rights potentially relating to our products or product candidates (since publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing or, in some cases, not at all). Any of our pending patent applications may become involved in opposition, derivation, reexamination, inter parties review, post-grant review or interference proceedings. Any new patents, if our applications therefor have been approved, may be challenged (as to inventorship, scope, validity or enforceability) in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products, or limit the duration of the patent protection of our products or product candidates. As a result, the ownership, inventorship, issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain.

The laws of foreign countries may not protect our rights to the same extent as the laws of the United States, or vice versa, and changes in patent policy and rules could impair our ability to protect our products or product candidates and increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patent.

Any such event could have a material adverse effect on our business.

If we are not able to prevent disclosure of our trade secrets, know-how or other proprietary information (“Confidential Information”), the value of our technology and products could be significantly diminished, which may have a material adverse effect on our business.

We have a policy of requiring our consultants, contract personnel, advisers, institutions and third-party partners to enter into confidentiality agreements and our employees to enter into invention and non-disclosure agreements. However, no assurance can be given that we have entered into appropriate agreements with all parties that have had access to our Confidential Information or that such agreements will provide meaningful protection of Confidential Information in the event of any unauthorized use or disclosure of information. In addition, despite such contractual provisions, (i) the need to share trade secrets and other confidential information, (ii) the possibility for any of our employees, consultants, contract personnel or third-party partners, either accidentally or through willful misconduct, to disclose Confidential Information and (iii) possible breaches of our physical or electronic security systems, increase the risks that our trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. A competitor’s discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business. Any action to enforce our rights against any misappropriation or unauthorized use and/or disclosure of Confidential Information is likely to be time-consuming and expensive, and may ultimately be unsuccessful, or may result in a remedy that is not commercially valuable.

We may become subject to claims alleging infringement of third parties’ patents and other intellectual property rights, which may result in costly litigation and could result in us having to pay substantial damages or limit our ability to commercialize our products.

Our commercial success depends upon our ability, and the ability of any third party with which we may partner, to develop product candidates and to manufacture, market and sell our approved products and use our patent-protected technologies without infringing the patents of third parties. There is considerable patent litigation in the biotechnology and pharmaceutical industries. As the biopharmaceutical industry expands and more patents are issued, we face greater risk that there may be patents issued to third parties that relate to our products and technology of which we are not aware or that we must challenge to continue our operations as currently contemplated.

Our current and any future approved products may infringe upon or may be alleged to infringe upon existing patents or patents that may be granted to third parties in the future Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our technologies, our products or the use of our products. As a result, we may become party to, or threatened with, future adversarial proceedings or litigation regarding patents with respect to our products and technology.

If we are sued for patent infringement, we would need to demonstrate that our products or methods either do not infringe upon the patent claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. If we are found to infringe upon a third party’s patent, we could be required to obtain a license from such third party to continue commercializing and marketing our products and technology or we may elect to enter into such a license in order to settle litigation or in order to resolve disputes prior to litigation. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we are able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us and could require us to make substantial royalty payments. We could also be forced, including by court order, to cease commercializing the infringing technology or products. A finding of infringement could prevent us from commercializing our products or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similarly negative impact on our business. Any such claims are likely to be expensive to defend, and some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Moreover, even if we are successful in defending any infringement proceedings, we may incur substantial costs and divert management’s time and attention in doing so, which could materially adversely affect our business, results of operations or financial condition.

We may be involved in lawsuits to protect or enforce our patent or other intellectual property rights, which may result in costly litigation.

Competitors may infringe upon our patent or other intellectual property rights. Although we are not currently involved in any litigation, if we initiate infringement legal proceedings, the defendant could counterclaim that the patent covering our product is invalid and/or unenforceable. The outcome following legal assertions of invalidity and unenforceability is unpredictable. Our defense of litigation may fail and, even if successful, may result in substantial costs and distract our management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs or enter into development partnerships that would help us commercialize our products or bring our product candidates to market.

Risks Relating to Commercializing of our Current Approved Products and Future Product Candidates

While we have marketing approvals for Oxyglobin and Hemopure for certain indications in certain jurisdictions, the commercial success of our products will depend upon the degree of market acceptance by clinicians, patients, third-party payors and others in the veterinary and medical community.

While we have marketing approvals for some of our products in certain jurisdictions, if our products and product candidates do not achieve an adequate level of acceptance, we may not generate significant revenue from product sales and we may not become profitable. Before granting reimbursement approval, healthcare payors may require us to demonstrate that our products, in addition to treating the target indications, also provide incremental health benefits and/or economic benefit to the payor compared to standard fluid therapy. Our efforts to educate the medical community and third-party payors about the benefits of our products may require significant resources and may never be successful. The degree of market acceptance of our products and product candidates, if approved for commercial sale, will depend on a number of factors, including:

We must continue to educate surgeons, transplant centers and private payors and demonstrate the potential merits of ZK1 compared with cold storage or new competing technologies. Even if ZK1 receives regulatory approval, surgeons, transplant centers and private payors may require additional clinical data prior to adopting or maintaining coverage of ZK1.

Directors of transplant programs are key decision-makers in the adoption of novel medical devices used in organ transplantation. An important part of our commercialization efforts is to educate transplant center program directors and other surgeons on the potential relative merits of ZK1. Our success depends on effectively marketing and educating program directors and other surgeons about the benefits of ZK1. Acceptance of ZK1 also depends on educating program directors, other surgeons and private payors as to the distinctive characteristics, perceived medical and economic benefits, safety and ease of use and cost-effectiveness of ZK1. If program directors, other surgeons and private payors do not find our body of published clinical evidence and data compelling or wish to wait for additional studies, they may choose not to use or provide coverage and reimbursement for our products.

Our long-term growth depends on our ability to expand into new indications for Oxyglobin and Hemopure and develop the next generation of product candidates.

Our long-term growth depends on our ability to expand the potential uses for Oxyglobin and Hemopure and seek to develop new product candidates. Developing such new or modified products is expensive and time-consuming and diverts management’s attention away from current operations. The success of any new product offering, or product enhancements will depend on several factors, including our ability to:

If we are not successful in expanding our indications of Oxyglobin and Hemopure and developing the next generation of product candidates, our ability to increase our revenue would be impaired, which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

We may be unsuccessful in commercializing our approved products if we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell such products.

Although some of our employees have experience with commercializing products while employed at other companies, we as a company have no experience selling and marketing our approved products and we currently have no marketing or sales organization. To successfully commercialize any approved products that may result from our development programs, we will need to rely on third-party distributors. We currently plan to sell Oxyglobin in North America through our exclusive distributor Dechra Veterinary Products, and in the European Union and elsewhere, through other regional distributors. We will also rely on blood banks and other third-party distributors for Hemopure, and on perfusion machine manufacturers for ZK1. If our product candidates receive regulatory approval, we intend to establish an internal sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize our products in major markets, which will be expensive, difficult and time consuming. Any failure or delay in the development of these distribution capabilities would adversely impact the commercialization of our products.

If our future collaborators do not commit sufficient resources to commercialize our future products, if any, and we are unable to develop the necessary marketing capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business.

The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for new or current products could limit our ability to market those products and decrease our ability to generate revenue.

Our target patient populations are small, and accordingly the pricing, coverage and reimbursement of our approved products, and our product candidates, if approved, must be adequate to support our commercial infrastructure. Sales of our approved products will depend substantially, both domestically and abroad, on the extent to which the costs of our approved products will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. Our per-patient prices must be sufficient to recover our development and manufacturing costs and potentially achieve profitability. Accordingly, the availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments, such as ours, assuming approval. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our approved products. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services (“CMS”), an agency within the U.S. Department of Health and Human Services, as CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicaid or Medicare. However, the practices and requirements relating to the payment of rebates by drug manufacturers for Medicaid purchases are determined by each state, and in some cases, if a company does not enter into a rebate agreement, its Medicaid sales will be subjected to a “prior authorization” procedure that requires state agency approval to qualify a doctor’s prescription for reimbursement.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put pressure on the pricing and usage of our approved products and any product candidates, if approved. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medicines but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our products. Accordingly, in markets outside the United States, the reimbursement for our approved products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits.

Moreover, increasing efforts by governmental and third-party payors, in the United States and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and levels of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our products. We have in the past and expect to continue to experience pricing pressures in connection with the sale of our approved products, and any product candidates, if approved, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative and political changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, drug prices are under significant scrutiny in the markets in which our products may be sold, and drug pricing and other healthcare costs continue to be subject to intense political and social pressures which we anticipate will continue and escalate on a global basis. As a result, our business and reputation may be harmed, our stock price may be adversely impacted and experience periods of volatility, we may have difficulty raising funds and our results of operations may be adversely impacted.

Risks Related to Our Business Operations

Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain and motivate qualified personnel.

We are highly dependent on the management, research and development, clinical, financial and business development expertise of our executive officers, as well as the other members of our scientific and clinical teams. Although we have employment agreements with each of our executive officers, each of them may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or employees.

Recruiting and retaining qualified scientific and clinical personnel and scaling up for commercialization, sales and marketing personnel, will also be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval for and commercialize our approved products and product candidates. Competition to hire qualified personnel in our industry and geographic market is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. Furthermore, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or that they have divulged proprietary or other confidential information, or that their former employers own their research output. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.

Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws, including the Foreign Corrupt Practices Act (“FCPA”), as well as export control laws, customs laws, sanctions laws and other laws governing our operations could result in civil or criminal penalties, other remedial measures and legal expenses

As we grow our international presence, we are increasingly exposed to trade and economic sanctions and other restrictions imposed by the United States, the European Union and other governments and organizations. The U.S. Departments of Justice, Commerce, State and U.S. Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the FCPA and other federal statutes and regulations, including those established by the Office of Foreign Assets Control (“OFAC”). In addition, the Bribery Act prohibits both domestic and international bribery, as well as bribery across both private and public sectors, where business or personnel engaged by it have a connection with the U.K. An organization with that connection and that “fails to prevent bribery” by anyone associated with the organization can be found guilty under the Bribery Act unless the organization can establish the defense of having implemented “adequate procedures” to prevent bribery. Under these laws and regulations, as well as other anti-corruption laws, anti-money laundering laws, export control laws, customs laws, sanctions laws and other laws governing our operations, various government agencies may require export licenses, may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities and modifications to compliance programs, which may increase company’s exposure to fines, penalties and other sanctions. A violation of these laws or regulations would negatively affect our business, financial condition and results of operations. Due to sales of our products to government or government-affiliated entities, we may be exposed to heightened risk of potential violations of the FCPA, the Bribery Act, or other relevant law.

We have implemented policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives, consultants and agents with the FCPA, OFAC restrictions, the Bribery Act and other export control, anti-corruption, anti-money-laundering and anti- terrorism laws and regulations. We cannot assure you, however, that our policies and procedures are or will be sufficient or that directors, officers, employees, representatives, consultants and agents have not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such conduct. Violations of the FCPA, OFAC restrictions, the Bribery Act or other export control, anti-corruption, anti-money laundering and anti-terrorism laws or regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a material adverse effect on our business, financial condition and results of operations.

There are product liability risks specifically related to ZKI.

If approved and commercialized, our medical device, ZK1, may be deemed to be defectively designed, manufactured or labeled, and we could face substantial and costly litigation by transplant centers that purchase or use ZK1 or by their patients or others claiming damages on their behalf. Because ZK1 represents a novel approach to organ transplantation, a patient or transplant center may choose to name us as a party to a lawsuit relating to the use of ZK1 in connection with a planned or completed transplant procedure regardless of whether ZK1 caused or contributed to a serious adverse event or death of a patient. Any claim, whether or not we are ultimately successful, could divert management’s attention from our core business, be expensive to defend and result in sizable damage awards against us.

Improper use, marketing or promotion of our approved products, or product candidates, if approved, or off-label use of our approved products, or product candidates, if approved, may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.

Oxyglobin has been approved by the FDA in the United States, the EMA in the European Union, and VMD in the United Kingdom, and our promotional materials and training methods must comply with regulatory requirements in the countries where they are sold. Our distributors do to not promote Oxyglobin for uses outside of the approved indications for use, known as “off-label uses.” We cannot, however, prevent customers from using Oxyglobin off-label. The use of Oxyglobin for indications other than those approved by the FDA or approved by any foreign regulatory body may lead to adverse effects, which could harm our reputation in the marketplace among surgeons and patients.

If the FDA or any foreign regulatory body determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning letter, injunction, seizure, civil fine or criminal penalties.

Misuse of our products could harm our reputation in the marketplace, lead to product liability lawsuits, or otherwise harm our business.

Surgeons may misuse Hemopure or use improper techniques if they are not adequately trained, potentially leading to unsatisfactory patient outcomes, patient injuries, negative publicity and an increased risk of product liability. If Hemopure is misused or used with improper technique, we may become subject to costly litigation by our customers or their patients.

Legislative or regulatory reforms in the United States or other jurisdictions may make it more difficult and costly for us to obtain regulatory clearances or approvals for our product candidates or to manufacture, market or distribute our products after clearance or approval is obtained.

From time to time, legislation is drafted and introduced in the U.S. Congress that could significantly change the statutory provisions governing the regulation of veterinary and human health pharmaceuticals and medical devices. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new statutes, regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of any future products or make it more difficult to obtain approval for, manufacture, market or distribute our products. We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require additional testing prior to obtaining clearance or approval; changes to manufacturing methods; recall, replacement or discontinuance of our products; or additional record keeping.

The European Parliament has adopted the Medical Devices Regulation, the European Union Medical Devices Directive and the Active Implantable Medical Devices Directive. Unlike directives, which must be implemented into the national laws of the EEA member states, regulations would be directly applicable, (i.e., without the need for adoption of EEA member state laws implementing them) in all EEA member states and are intended to eliminate current differences in the regulation of medical devices among EEA member states. The Medical Devices Regulation, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation.

The new regulations, among other things:

Our products may be affected by these rules, which may mean longer or more burdensome assessment of our products. These modifications may have an effect on the way we conduct our business in the EEA.

We recognize that our products will have to be re-certified under the Medical Devices Regulation and we are in the process of updating internal procedures to ensure compliance with the new Medical Devices Regulation and have added international regulatory personnel to assist with the transition.

In addition, there are significant concerns associated with whether EU Notified Bodies will be able to re-certify all devices in their care in time. If we do not manage to re-certify our products under this new regulation or cannot rely on the transitional provisions, we may have to take our products off the EU market until this is the case.

Failure to maintain an ethical and inclusive corporate culture, or damage to our reputation, could have a material adverse effect on our business.

We strive to create a culture in which our employees act with integrity, treat each other with respect and consider themselves empowered to report suspected misconduct. Our ability to attract and retain a high-quality workforce depends upon our commitment to a diverse and inclusive environment, along with our perceived trustworthiness and ethics. Allegations of misconduct by employees, particularly leaders, erode trust and confidence and cause reputational damage. Negative public opinion can result from actual or alleged conduct by the Company or those currently or formerly associated with the Company. Issues can arise in any number of circumstances, including employment-related offenses such as workplace harassment and discrimination, regulatory noncompliance, and failure to properly use and protect data and systems, as well as from actions taken by regulators or others in response to such conduct. Addressing allegations of misconduct detracts focus from business operations and is expensive.

We may encounter difficulties in managing our expected level of growth, which could disrupt our operations.

As our development progresses, we expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of research, drug development, regulatory affairs and, potentially, sales, marketing and distribution. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Our business may be adversely affected by the ongoing coronavirus pandemic.

The outbreak of the novel coronavirus (COVID-19) has evolved into a global pandemic. The coronavirus has spread to many regions of the world. Many research facilities around the world were closed for a prolonged period of time, and some of our clinical research and development work suffered delays. The extent to which the coronavirus impacts our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

As a result of the continuing spread of the coronavirus, our business operations could be delayed or interrupted. For instance, our clinical trials may be affected by the pandemic. Site initiation, participant recruitment and enrollment, and study monitoring and data analysis may be paused or delayed due to changes in hospital or university policies, federal, state or local regulations, prioritization of hospital resources toward pandemic efforts, or other reasons related to the pandemic. If the coronavirus continues to spread, some participants and clinical investigators may not be able to comply with clinical trial protocols. For example, quarantines or other travel limitations (whether voluntary or required) may impede participant movement, affect sponsor access to study sites, or interrupt healthcare services, and we may be unable to conduct our clinical trials. Further, if the spread of the coronavirus pandemic continues and our operations are adversely impacted, we risk a delay, default and/or non-performance under existing agreements which may increase our costs. These cost increases may not be fully recoverable or adequately covered by insurance.

Infections and deaths related to the pandemic may disrupt the United States’ healthcare and healthcare regulatory systems. Such disruptions could divert healthcare resources away from, or materially delay FDA review and/or approval with respect to, our clinical trials. It is unknown how long these disruptions could continue, were they to occur. Any elongation or de-prioritization of our clinical trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of our product candidates.

We currently utilize third parties to, among other things, manufacture raw materials. If any third-party in the supply chain for materials used in the production of our product candidates are adversely impacted by restrictions resulting from the coronavirus outbreak, our supply chain may be disrupted, limiting our ability to manufacture our product candidates for our clinical trials and research and development operations.

As a result of the shelter-in-place order and other mandated local travel restrictions, our employees conducting research and development or manufacturing activities may not be able to access their laboratory or manufacturing space which may result in our core activities being significantly limited or curtailed, possibly for an extended period of time.

While the potential economic impact brought by and the duration of the pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial markets, which may reduce our ability to access capital either at all or on favorable terms. In addition, a recession, depression or other sustained adverse market event resulting from the spread of the coronavirus could materially and adversely affect our business and the value of our common stock.

The ultimate impact of the current pandemic, or any other health epidemic, is highly uncertain and subject to change. We do not yet know the full extent of new variants, potential delays or impacts on our business, our clinical trials, our research programs, healthcare systems or the global economy as a whole. However, these effects could have a material impact on our operations, and we will continue to monitor the situation closely.

Significant disruptions of information technology systems, computer system failures or breaches of information security could adversely affect our business.

We rely to a large extent upon sophisticated information technology systems to operate our business. In the ordinary course of business, we collect, store and transmit large amounts of confidential information (including, but not limited to, personal information and intellectual property). The size and complexity of our information technology and information security systems, and those of our third-party vendors with whom we may contract, make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from malicious attacks by third parties. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives (including, but not limited to, industrial espionage and market manipulation) and expertise. While we intend to invest in the protection of data and information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches.

Our internal computer systems, and those of our CROs, our CMOs, and other business vendors on which we may rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war and telecommunication and electrical failures. We exercise little or no control over these third parties, which increases our vulnerability to problems with their systems. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs. Any interruption or breach in our systems could adversely affect our business operations or result in the loss of critical or sensitive confidential information or intellectual property, and could result in financial, legal, business and reputational harm to us or allow third parties to gain material, inside information that they use to trade in our securities. For example, the loss of clinical trial data from completed or ongoing clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, the further development of our current products and future product candidates could be delayed and our business could be otherwise adversely affected.

Risks Related to Healthcare Compliance Regulations

Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings. If we or they are unable to comply with these provisions, we may become subject to civil and criminal investigations and proceedings that could have a material adverse effect on our business, financial condition and prospects.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of approved products and of any product candidates for which we obtain regulatory approval. Our current and future arrangements with healthcare providers, healthcare entities, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, develop and will market, sell and distribute our approved products. As a pharmaceutical company, even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are applicable to our business. Restrictions under applicable federal and state healthcare laws and regulations that may affect our ability to operate include the following:

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, disgorgement, exclusion from government funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, and the curtailment or restructuring of our operations. If any physicians or other healthcare providers or entities with whom we expect to do business are found to not comply with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Privacy Provisions of HIPAA

HIPAA, among other things, protects the privacy and security of individually identifiable health information by limiting its use and disclosure. HIPAA directly regulates “covered entities” (healthcare providers, insurers and clearinghouses) and indirectly regulates “business associates” with respect to the privacy of patients’ medical information. All entities that receive and process protected health information are required to adopt certain procedures to safeguard the security of that information. It is uncertain whether we would be deemed to be a covered entity under HIPAA, and it is unlikely that we, based on our current business model, would be a business associate. Nevertheless, we may be contractually required to physically safeguard the integrity and security of any patient information that we receive, store, create or transmit. If we fail to adhere to our contractual commitments, then certain of our contract counterparties may be subject to civil monetary penalties and this could adversely affect our ability to market our approved products. If we are deemed to be a vendor, under the Health Information Technology for Economic and Clinical Health Act, enacted as part of the American Recovery and Reinvestment Act of 2009, then we will be obligated to adopt various security measures. We may also be subject to state and foreign privacy laws under which breaches could lead to substantial fines and liability.

Risks Related to Owning our Common Stock and This Offering

Internal control deficiencies have historically been identified that constituted material weaknesses in our internal control over financial reporting. If we fail to implement and maintain effective internal controls over financial reporting, we may be unable to accurately or timely report our financial condition or results of operations, which may adversely affect our business.

In connection with the audit of the Company’s consolidated financial statements for the years ended December 31, 2021 and 2020, the Company identified material weaknesses in internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that the Company had the following material weaknesses in its internal control over financial reporting:

Control Environment, Risk Assessment, and Monitoring

Management did not maintain appropriately designed entity-level controls impacting the control environment, risk assessment procedures, and effective monitoring controls to prevent or detect material misstatements to the consolidated financial statements. These deficiencies were attributed to a lack of structure and responsibility, insufficient number of qualified resources, and inadequate oversight and accountability over internal controls.

Control Activities and Information and Communication

These material weaknesses contributed to the following additional material weaknesses with certain business processes and the information technology environment:

Management intends to implement additional controls to address the material weaknesses, including:

While Management believes that these efforts will improve the Company’s internal control over financial reporting, the implementation of these procedures has not yet been implemented and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles. Management cannot be certain that these measures will successfully remediate the material weaknesses, or that other material weaknesses and control deficiencies will not be discovered in the future.

Management has not completed an assessment of the effectiveness of internal control over financial reporting and the Company’s independent registered public accounting firm has not conducted an audit of the Company’s internal control over financial reporting. Evaluation of the Company’s internal controls over financial reporting may identify additional material weaknesses. The identification of a material weakness in the Company’s internal controls or the failure to remediate existing material weaknesses in internal controls may cause the Company to be unable to report financial information on a timely basis and thereby subject the Company to adverse regulatory consequences, including sanctions by the SEC or violations of Nasdaq rules. There also could be a negative reaction in the financial markets due to a loss of investor confidence in the Company and the reliability of its financial statements. This could have a material adverse effect on business, financial condition and results of operations and could also to a decline in the price of the Company’s common stock.

Management is not currently required to comply with the SEC’s rules Section 404 of Sarbanes-Oxley and are therefore not required to make a formal assessment of the effectiveness of the Company’s internal control over financial reporting for that purpose. Upon becoming a public company, Management will be required to comply with the SEC’s rules implementing Sections 302 and 404 of Sarbanes-Oxley, which will require the Company’s management to certify financial and other information in the quarterly and annual reports and provide an annual management report on the effectiveness of the Company’s internal control over financial reporting. Though Management will be required to disclose material changes made to internal controls and procedures on a quarterly basis, Management will not be required to make the first annual assessment of the Company’s internal control over financial reporting pursuant to Section 404 until the year following the first annual report Management is required to file with the SEC. To comply with the requirements of being a public company, Management will need to implement additional internal controls, reporting systems and procedures and hire additional accounting and finance staff. For as long as Management is an “emerging growth company” under the JOBS Act, the Company’s independent registered public accounting firm will not be required to attest to the effectiveness of internal control over financial reporting pursuant to Section 404. Management could be an “emerging growth company” for up to five years. An independent assessment of the effectiveness of the Company’s internal control over financial reporting could detect problems that the management assessment might not identify. Undetected material weaknesses in the Company’s internal control over financial reporting could lead to financial statement restatements and require the Company to incur the expense of remediation.

If we fail to establish and maintain an effective system of integrated internal controls, we may not be able to report our financial results accurately, which could have a material adverse effect on our business, financial condition and results of operations.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that will need to be evaluated frequently. Section 404 of the Sarbanes-Oxley Act requires public companies to conduct an annual review and evaluation of their internal controls and requires attestations of the effectiveness of internal controls by independent auditors. We would be required to perform the annual review and evaluation of our internal controls no later than for fiscal 2027. We initially expect to qualify as an emerging growth company, and thus, we would be exempt from the auditors’ attestation requirement until such time as we no longer qualify as an emerging growth company. Regardless of whether we qualify as an emerging growth company, we will still need to implement substantial control systems and procedures in order to satisfy the reporting requirements under the Exchange Act and applicable Nasdaq requirements, among other items. Establishing these internal controls will be costly and may divert management’s attention.

Evaluation by us of our internal controls over financial reporting may identify material weaknesses that may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of Nasdaq rules. There also could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements also could suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting. This could have a material adverse effect on our business, financial condition and results of operations and could also lead to a decline in the price of our common stock.

Financial reporting obligations of being a public company in the U.S. are expensive and time-consuming, and our management will be required to devote substantial time to compliance matters.

As a publicly traded company we will incur significant additional legal, accounting and other expenses. The obligations of being a public company in the U.S. will require significant expenditures and will place significant demands on our management and other personnel, including costs resulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the listing requirements of the stock exchange on which our securities are listed. These rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain compliance with. Moreover, despite recent reforms made possible by the JOBS Act, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly, particularly after we are no longer an “emerging growth company.” In addition, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance. Our management and other personnel will need to devote a substantial amount of time to ensure that we comply with all of these requirements and to keep pace with new regulations, otherwise we may fall out of compliance and risk becoming subject to litigation or being delisted, among other potential problems.

The market price of our Common Stock may be volatile.

The market price of our Common Stock may be highly volatile. Some of the factors that may materially affect the market price of our Common Stock are beyond our control, such as changes in financial estimates by industry and securities analysts, conditions or trends in the industry in which we operate or sales of our Common Stock. These factors may materially adversely affect the market price of our Common Stock, regardless of our performance. In addition, public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our Common Stock.

We may issue more shares in a future financing or pursuant to existing agreements which will result in substantial dilution.

Our Certificate of Incorporation authorizes the issuance of a maximum of 95,000,000 shares of Common Stock and a maximum of 5,000,000 shares of Preferred Stock. Any future merger or acquisition effected by us would result in the issuance of additional securities without stockholder approval and the substantial dilution in the percentage of our Common Stock held by our then existing stockholders. Moreover, the Common Stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arm’s-length basis by our management, resulting in an additional reduction in the percentage of Common Stock held by our then existing stockholders. Additionally, we expect to seek additional financing in order to provide working capital to the operating business. Our Board of Directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of Common Stock or Preferred Stock are issued in connection with and following a business combination or otherwise, dilution to the interests of our stockholders will occur and the rights of the holders of Common Stock might be materially and adversely affected.

Our Board of Directors is authorized to issue Preferred Stock without obtaining shareholder approval.

Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of Preferred Stock with designations, rights and preferences determined from time to time by the Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue Preferred Stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the Common Stock. In the event of issuance, the Preferred Stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Although we have no present intention to issue any shares of Preferred Stock, there can be no assurance that the Company will not do so in the future.

An active trading market for our common stock may not develop, and you may not be able to sell your common stock at or above the public offering price.

Prior to the consummation of this offering, there has been no public market for our common stock. An active trading market for shares of our common stock may never develop or be sustained following this offering. If an active trading market does not develop, you may have difficulty selling your shares of common stock at an attractive price, or at all. The price for our Shares in this offering will be determined by negotiations between us and the underwriters, and it may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell your common stock at or above the public offering price or at any other price or at the time that you would like to sell. An inactive market may also impair our ability to raise capital by selling our common stock, and it may impair our ability to attract and motivate our employees through equity incentive awards and our ability to acquire other companies, products or technologies by using our common stock as consideration.

The price of our common stock may fluctuate substantially.

You should consider an investment in our common stock to be risky, and you should invest in our Shares only if you can withstand a significant loss and wide fluctuations in the market value of your investment. We expect that revenue from sales, if any, will fluctuate significantly and our future annual expenses as a percentage of our revenue may be significantly different from those we have recorded in the past. Our financial results may fluctuate from period to period due to a number of factors, including the timing of completion of our Souderton facility. After the completion of the facility, factors affecting the fluctuation of our financial results include the timing of the production and sale of Oxyglobin and Hemopure, the successful development and commercialization of new indications of Hemopure and ZK1, and foreign currency exchange rates.

Other factors that may cause the market price of our common stock to fluctuate, in addition to the other risks mentioned in this “Risk Factors” section and elsewhere in this prospectus, are:

In addition, if the market for stocks in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition and results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.

A sale or perceived sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

All of our executive officers and directors and all of our stockholders and warrant holders have agreed not to sell shares of our common stock for a period of 180 days following this offering, subject to extension under specified circumstances. See “Underwriting.” Common stock subject to these lock-up agreements will become eligible for sale in the public market upon expiration of these lock-up agreements, subject to limitations imposed by Rule 144 under the Securities Act of 1933, as amended. If our stockholders sell substantial amounts of our common stock in the public market, the market price of our common stock could fall. Moreover, the perceived risk of this potential dilution could cause stockholders to attempt to sell their shares and investors to short our common stock. These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

Market and economic conditions may negatively impact our business, financial condition and share price.

Concerns over medical epidemics, energy costs, geopolitical issues such as the conflict between Russia and Ukraine, the U.S. mortgage market, unstable global credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth, increased unemployment rates, and increased credit defaults in recent years. Our general business strategy may be adversely affected by any such economic downturns (including the current downturn related to the current COVID-19 pandemic), volatile business environments and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and share price and could require us to delay or abandon development or commercialization plans.

If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports about our business, our stock price and trading volume may decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us, our business, our markets and our competitors. We do not control these analysts. If securities analysts do not cover our common stock after the closing of this offering, the lack of research coverage may adversely affect the market price of our common stock. Furthermore, if one or more of the analysts who do cover us downgrade our stock or if those analysts issue other unfavorable commentary about us or our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fails to regularly publish reports on us, we could lose visibility in the market and interest in our stock could decrease, which in turn could cause our stock price or trading volume to decline and may also impair our ability to expand our business with existing customers and attract new customers.

Because certain of our stockholders control a significant number of shares of our common stock, they may have effective control over actions requiring stockholder approval.

Following this offering, ___ will directly or indirectly beneficially own approximately __% of our outstanding shares of common stock. As a result, ___, would have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. Accordingly, this concentration of ownership might harm the market price of our common stock by:

You will incur immediate dilution as a result of this offering.

If you purchase common stock in this offering, you will pay more for your shares than the net tangible book value of your shares. As a result, you will incur immediate dilution of $___ per share, representing the difference between the assumed public offering price of $__ per share and our estimated as adjusted net tangible book value as of December 31, 2021, of $___ per share. Accordingly, should we be liquidated at our book value, you would not receive the full amount of your investment.

We do not intend to pay cash dividends on our shares of common stock so any returns will be limited to the value of our shares.

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the increase, if any, of our share price.

We may be at risk of securities class action litigation.

We may be at risk of securities class action litigation. In the past, medical device, biotechnology and pharmaceutical companies have experienced significant stock price volatility, particularly when associated with binary events such as clinical trials and product approvals. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business and results in a decline in the market price of our common stock.

Our Certificate of Incorporation and our Bylaws, and Delaware law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our stock price to decline.

Our Certificate of Incorporation and our Bylaws, and Delaware law could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial to our stockholders. Upon consummation of this offering, we will be authorized to issue up to 5,000,000 shares of preferred stock. This preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our Board of Directors without further action by stockholders. The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. The issuance of any preferred stock could materially adversely affect the rights of the holders of our common stock, and therefore, reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management.

Provisions of our Certificate of Incorporation and our Bylaws and Delaware law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, the certificate of incorporation and bylaws and Delaware law, as applicable, among other things:

General Risks

Our ability to consummate this offering might be affected due to the uncertainty resulting from a war, civil unrest, political and economic instability, including the Russian invasion in Ukraine.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. All statements other than statements of historical facts contained in this prospectus are forward-looking statements. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. In some cases, you can identify these forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words. We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking statements include, but are not limited to, statements concerning the following:

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect

INDUSTRY AND MARKET DATA

This prospectus contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. We obtained the industry and market data in this prospectus from our own research as well as from industry and general publications, surveys and studies conducted by third parties. This data involves a number of assumptions and limitations and contains projections and estimates of the future performance of the industries in which we operate that are subject to a high degree of uncertainty, including those discussed in “Risk Factors.” We caution you not to give undue weight to such projections, assumptions and estimates. Further, industry and general publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that these publications, studies and surveys are reliable, we have not independently verified the data contained in them. In addition, while we believe that the results and estimates from our internal research are reliable, such results and estimates have not been verified by any independent source.

USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of our Common Stock in this offering will be approximately $____, based on an assumed public offering price of $__ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option to purchase additional shares in full, we estimate that the net proceeds from this offering will be approximately $___.

We intend to use the net proceeds as follows: at least $20 million toward reassembly of the company’s facility in Souderton, Pennsylvania with the remaining proceeds for general corporate expenses and working capital.

A $1.00 increase or decrease in the assumed public offering price of $___ per share would increase or decrease the net proceeds from this offering by approximately $___, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus remains the same and after deducting the estimated underwriting discounts and commissions and non-accountable expense allowance payable to the underwriters.

This expected use of the net proceeds from this offering and our existing cash represents our intentions based upon our current plans, financial condition and business conditions. The proceeds of the Offering will be insufficient to fully complete the relaunch of our products into the market. We will require approximately $15 million of additional monies to complete this process. We will need to seek such additional funds through public or private equity or debt financings or other sources, such as strategic collaborations or license and development agreements. If we do not successfully raise such monies, the facility cannot be completed and we will be unable to produce and commercially distribute any product. Further, predicting the cost necessary to develop a product candidate can be difficult and the amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our development and commercialization efforts, the status of and results from clinical trials, any collaborations that we may enter into with third parties for our products and product candidates and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering and our existing cash.

In the ordinary course of our business, we expect to from time to time evaluate the acquisition of, investment in or in-license of complementary products, technologies or businesses, and we could use a portion of the net proceeds from this offering for such activities. We currently do not have any agreements, arrangements or commitments with respect to any potential acquisition, investment or license.

Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments and government securities.

DIVIDEND POLICY

We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

CORPORATE CONVERSION

We currently operate as a Delaware limited liability company under the name Hemoglobin Oxygen Therapeutics LLC. Prior to the closing of this offering, Hemoglobin Oxygen Therapeutics LLC will convert into a Delaware corporation pursuant to a statutory conversion, and will change its name to Hemoglobin Oxygen Therapeutics Inc. In order to consummate the corporate conversion, a certificate of conversion will be filed with the Secretary of State of the State of Delaware. In this prospectus, we refer to all transactions related to our conversion to a corporation as the Corporate Conversion.

As part of the Corporate Conversion, based on the assumed initial offering price of $[     ] , which is the midpoint of the price range set forth on the cover page of this prospectus, all of our outstanding membership interests will be converted into an aggregate of           shares of our common stock [and existing options to purchase membership interests will be converted into options to purchase an aggregate of            shares of our common stock, for the same aggregate purchase price and upon the same terms and conditions].

In connection with the Corporate Conversion, Hemoglobin Oxygen Therapeutics Inc. will continue to hold all property and assets of Hemoglobin Oxygen Therapeutics LLC and will assume all of the debts and obligations of Hemoglobin Oxygen Therapeutics LLC. Hemoglobin Oxygen Therapeutics Inc. will be governed by a certificate of incorporation filed with the Secretary of State of the State of Delaware and bylaws, the material portions of which are described under the heading “Description of Capital Stock.” On the effective date of the Corporate Conversion, the members of the board of managers of Hemoglobin Oxygen Therapeutics LLC will become the initial members of Hemoglobin Oxygen Therapeutics Inc.’s board of directors, and as such are referred to throughout this prospectus as “Directors” rather than “Managers” and the officers of Hemoglobin Oxygen Therapeutics LLC will become the officers of Hemoglobin Oxygen Therapeutics Inc.

References in this prospectus to our capitalization and other matters pertaining to our equity prior to the Corporate Conversion relate to the capitalization and equity of Hemoglobin Oxygen Therapeutics LLC, and after the Corporate Conversion, to Hemoglobin Oxygen Therapeutics Inc. The financial statements included elsewhere in this prospectus are those of Hemoglobin Oxygen Therapeutics LLC. We expect that the Corporate Conversion will not have a material effect on our financial statements.

The purpose of the Corporate Conversion is to reorganize our structure so that the entity that is offering our common stock to the public in this offering is a Delaware corporation rather than a Delaware limited liability company, and so that our existing investors will own our common stock rather than equity interests in a limited liability company.

CAPITALIZATION

The following table sets forth our actual, pro forma, and pro forma as adjusted capitalization as of December 31, 2021,

The pro forma as adjusted information below is illustrative only, and our capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this information in conjunction with our financial statements and the related notes included elsewhere in this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Corporate Conversion” sections and other financial information contained in this prospectus.

The number of shares of common stock on a pro forma and pro forma as adjusted basis set forth in the table above is based on _____shares of our common stock outstanding as of December 31, 2021 after giving effect to (i) the Corporate Conversion to occur immediately prior to the effective date of this offering and (ii) the issuance of _____ shares of common stock issuable upon conversion of convertible and other indebtedness immediately prior to the effective date of this offering assuming an initial public offering price of $____per share, which is the midpoint of the price range set forth on the cover page of this prospectus (the “Debt Conversion”) and excludes as of such date:

DILUTION

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the assumed initial public offering price of $ per share (the mid-point of the range appearing on the front cover of this prospectus) and the pro forma as adjusted net tangible book value per share of our common stock immediately upon the consummation of this offering. Pro forma net tangible book value per share represents the book value of our tangible assets less the book value of our products or any product candidate, if approved;

After giving effect to the Corporate Conversion and the Debt Conversion, as of December 31, 2021, we had a pro forma historical net tangible book value of $(1,121,687), or $(0.01 ) per share of common stock, based on ___ shares of common stock deemed outstanding pro forma as of December 31, 2021.

After giving effect to the issuance and sale of ___ shares of our common stock in this offering at an assumed public offering price of $___ per share, and after deducting estimated underwriting discounts and commissions, the non-accountable expense allowance payable to the underwriters, and estimated offering costs payable by us, our pro forma as adjusted net tangible book value as of [December 31, 2021] would have been $____, or $___ per share. This represents an immediate increase in pro forma as adjusted net tangible book value per share of $___ to existing stockholders and immediate dilution of $___ in pro forma as adjusted net tangible book value per share to new investors purchasing common stock in this offering. Dilution per share to new investors is determined by subtracting pro forma as adjusted net tangible book value per share after this offering from the assumed public offering price per share paid by new investors. The following table illustrates this dilution on a per share basis:

The dilution information discussed above is illustrative only and will change based on the actual public offering price and other terms of this offering determined at pricing. A $1.00 increase in the assumed public offering price of $___ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase our pro forma net tangible book value after this offering by approximately $____ per share and the dilution to new investors purchasing common stock in this offering by approximately $___ per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discount and commissions and the non-accountable expense allowance payable to the underwriters. A $1.00 decrease in the assumed public offering price of $___ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would decrease our pro forma net tangible book value after this offering by approximately $___ per share and the dilution to new investors purchasing common stock in this offering by approximately $___ per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discount and commissions and the non-accountable expense allowance payable to the underwriters.

An increase of 500,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase our pro forma net tangible book value after this offering by approximately $___ per share and decrease the dilution to new investors purchasing common stock in this offering by approximately $___ per share, assuming no change in the assumed public offering price per share and after deducting estimated underwriting discounts and commissions and the non-accountable expense allowance payable to the underwriters. A decrease of 500,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would decrease our pro forma net tangible book value after this offering by approximately $___ per share and increase the dilution to new investors purchasing common stock in this offering by approximately $___ per share, assuming no change in the assumed public offering price per share and after deducting estimated underwriting discounts and commissions and the non-accountable expense allowance payable to the underwriters.

If the underwriters exercise their option to purchase additional shares in full, the as adjusted net tangible book value per share after giving effect to the offering would be $___ per share. This represents an increase in as adjusted net tangible book value of $___ per share to existing stockholders and dilution in as adjusted net tangible book value of $___ per share to new investors.

The following table sets forth as of December 31, 2021, on a pro forma combined basis to reflect the Corporate Conversion and the Debt Conversion, the number of shares of common stock, the total price and average price per share paid to us by our existing holders and the new investors, before deducting estimated offering and acquisition expenses payable by us, using the assumed public offering price of $___ per share (the mid-point of the range appearing on the front cover of this prospectus).

The number of shares of common stock outstanding after this offering excludes:

To the extent that stock options are exercised, or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering. In addition, if we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

UNAUDITED PRO FORMA FINANCIAL INFORMATION

Defined terms included below have the same meaning as terms defined and included elsewhere in this prospectus.

Introduction

The following unaudited pro forma financial information is provided to you to aid in your analysis of the financial aspects of the Corporate Conversion and Debt Conversion as defined elsewhere in this prospectus. The following unaudited pro forma financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786.

The following unaudited pro forma balance sheet of Hemoglobin Oxygen Therapeutics LLC (“HbO2”) as of December 31, 2021 after giving effect to the Corporate Conversion and Debt Conversion and related adjustments described in the accompanying notes. See the accompanying notes to the unaudited pro forma financial information for a discussion of assumptions made.

The unaudited pro forma financial information has been developed from and should be read in conjunction with:

Basis of Pro Forma Presentation

The unaudited pro forma balance sheet and statement of operations have presented for illustrative purposes only and do not necessarily reflect what HbO2’s financial condition would have been had the Corporate Conversion and Debt Conversion occurred on the date indicated. Further, the unaudited pro forma financial information also may not be useful in predicting the future financial condition of HbO2. The actual financial position may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of this filing and is subject to change as additional information becomes available and analyses are performed. However, Management believes that the assumptions provide a reasonable basis for presenting the significant effects of the Pro Forma Transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma balance sheet and pro forma statement of operations. These pro forma statements do not reflect the use of proceeds from this offering.

Notes to the Unaudited Pro Forma Financial Statements

Note 1—Basis of Presentation

We currently operate as a Delaware limited liability company under the name Hemoglobin Oxygen Therapeutics LLC. Prior to the closing of this offering, Hemoglobin Oxygen Therapeutics LLC (“HbO2”) will convert into a Delaware corporation pursuant to a statutory conversion, and will change its name to Hemoglobin Oxygen Therapeutics Inc. In order to consummate the corporate conversion, a certificate of conversion will be filed with the Secretary of State of the State of Delaware. In this prospectus, we refer to all transactions related to our conversion to a corporation as the Corporate Conversion.

As part of the Corporate Conversion, all the Company’s outstanding membership interests will be converted into shares of common stock. Hemoglobin Oxygen Therapeutics Inc. will continue to hold all property and assets of Hemoglobin Oxygen Therapeutics LLC and will assume all of the debts and obligations of Hemoglobin Oxygen Therapeutics LLC. Hemoglobin Oxygen Therapeutics Inc. will be governed by a certificate of incorporation filed with the Secretary of State of the State of Delaware and bylaws, the material portions of which are described under the heading “Description of Capital Stock.” On the effective date of the Corporate Conversion, the members of the board of managers of Hemoglobin Oxygen Therapeutics LLC will become the initial members of Hemoglobin Oxygen Therapeutics Inc.’s board of directors, and as such are referred to throughout this prospectus as “Directors” rather than “Managers” and the officers of Hemoglobin Oxygen Therapeutics LLC will become the officers of Hemoglobin Oxygen Therapeutics Inc.

In connection with the closing of the Offering, the Company will convert all outstanding convertible notes, amounts due to the landlord and amounts payable to an engineering firm into shares of common stock of Hemoglobin Oxygen Therapeutics Inc.

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented. The unaudited pro forma financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the merger.

The pro forma balance sheet and statement of operations do not reflect the proceeds from the offering.

The unaudited pro forma balance sheet as of December 31, 2021 assumes that the Corporate Conversion and Debt Conversion occurred on December 31, 2021. The unaudited pro forma statement of operations for the year ended December 31, 2021 assumes that the Corporate Conversion, Debt Conversion, including the amounts payable to the landlord and engineering firm, occurred on January 1, 2021.

The unaudited pro forma balance sheet and statement of operations as of and for the year ended December 31, 2021 has been prepared using, and should be read in conjunction with, Hemoglobin Oxygen Therapeutics LLC’s audited consolidated financial statements as of and for the year ended December 31, 2021, and the related notes, included elsewhere in this prospectus.

Note 2 —Transaction Accounting Adjustments

The following describes the transaction accounting adjustments included in the unaudited pro forma financial statements presented herein, as of and for the year ended December 31, 2021.

Adjustments to Unaudited Pro Forma Balance Sheet as of December 31, 2021

The transaction accounting adjustments included in the unaudited pro forma balance sheet as of December 31, 2021 are as follows:

Adjustments to Unaudited Pro Forma Statement of Operations for the Year Ended December 31, 2021

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This management’s discussion and analysis (“MD&A”) of the financial condition and results of operations of Hemoglobin Oxygen Therapeutics LLC and its subsidiaries (“HbO2 Therapeutics”, the “Company”, “us”, “our” or “we”) is supplemental to, and should be read in conjunction with, the “Summary Historical Financial Information of HbO2 Therapeutics” section of this filing and HbO2 Therapeutics information, the discussion in this section contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. Actual future results could differ materially from those discussed below for many reasons, including those set forth under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” section and elsewhere in this prospectus.

HbO2 Therapeutics’ financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Objective

The objective of the Management Discussion and Analysis is to detail material information, events, uncertainties and factors impacting the Company and provide investors an understanding from “Management’s perspective”.

Company Overview

We are a biotechnology company focused on the development, manufacture, and commercialization of a proprietary technology platform for oxygen-carrying solutions that address critical unmet medical needs in both human and veterinary medicine. Using our patent, proprietary technology and know-how, we develop and sell products that, under certain conditions, are a possible alternative to blood transfusions to deliver oxygen to organs and tissues. Through numerous clinical studies, our products have been shown to address many of the current limitations that exist for blood transfusion. These include the limited shelf life of blood, logistical challenges of typing/cross-matching, delays in testing for pathogens, and blood shortages during times of high need and/or insufficient donations. We have significant experience gained through extensive pre-clinical and clinical testing of these products, which have a well-understood and extensively documented safety and efficacy profile.

Hemopure and Oxyglobin are sterile medicinal products administered via intravenous or arterial infusion that deliver oxygen to organs and tissues, that could provide a potential alternative to blood transfusion. Our sterile veterinary and human products have been widely investigated in pre-clinical models, clinical trials and real-world clinical experience for more than 20 years and described in at least 250 peer-reviewed publications in the scientific literature and reference texts.

Hemopure, our human product, can address some of the logistical limitations of blood transfusions. The potential benefits are a reduction in both mortality and morbidity while offering several strategic advantages, such as universal compatibility, room temperature storage, off-the-shelf availability, readiness for use (supplied in sterile IV infusion bags) and a three-year shelf life. Clinical data suggests that when blood transfusion is not an option, Hemopure could provide a life-saving option for patients. In markets where Hemopure is not yet authorized / or approved, approval(s) for Hemopure would be pursued for an indication when suitable blood transfusion is indicated, but not readily available, or an option.

Oxyglobin is the only oxygen-carrying solution approved by the FDA, the European Medicines Agency (“EMA”) and the British Veterinary Medicines Directorate (“VMD”) to treat all-cause canine anemia.

We are also pursuing a medical device indication for Hemopure under the name ZK1. ZK1 is intended to act as an additive oxygen carrier solution during ex vivo sub-sub normothermic and normothermic machine perfusion of organs to recondition and assess organ viability prior to transplantation.

We have reached an agreement with all convertible debt holders to convert their loans into equity at the time of the offering, including the outstanding convertible debt principal amount is $6,930,000 as of December 31, 2021. We also reached an agreement on January 3, 2022 with the landlord of our facility to convert $2,000,000 of the outstanding debt into equity at the time of the offering at a 35% discount to the offering price. He will also receive an option to convert an additional $1,000,000 of the outstanding debt into equity during the 18 months following the offering. The total outstanding debt to the landlord as of December 31, 2021 is approximately $3,200,000.

On January 7, 2022, we reached an agreement with the engineering firm building out our production facility to convert $486,000 of the outstanding debt into equity at the time of the offering at a 25% discount to the offering price, which is our total debt to the engineering firm as of December 31, 2021.

Key Factors Affecting Our Performance

Retrofit of our Manufacturing Facility

Our ability to start manufacturing our products and generating revenues is dependent upon the successful completion of the construction and re-fitting of our Souderton facility. While we plan on using the proceeds of this offering towards the construction and re-fitting of the facility, the proceeds of this offering will not be sufficient to complete this process. As such, the proceeds of the Offering will be insufficient to fully complete the relaunch of our products into the market. We will require approximately $15 million of additional monies to complete this process. We will need to seek such additional funds through public or private equity or debt financings or other sources, such as strategic collaborations or license and development agreements. If we do not successfully raise such monies, the facility cannot be completed and we will be unable to produce and commercially distribute any product.

Regulation

The production and marketing of some of our products and ongoing research and development activities will be subject to extensive regulation by numerous governmental authorities governing the production of approved products and product candidates in the United States. Prior to marketing in the United States, any product candidate developed by us must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive regulatory approval process implemented by the FDA under the Federal Food, Drug, and Cosmetic Act. There can be no assurance that we will not encounter problems in producing these products or in clinical trials that will cause us or the FDA to delay or suspend the clinical trials.

Intellectual Property Protection

Our success will depend in part on our ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by us will not be challenged, rendered unenforceable, invalidated, or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to us.

Impact of COVID-19

On March 27, 2020, the World Health Organization declared the global outbreak of COVID-19 to be a pandemic. The COVID-19 global pandemic has been unprecedented and unpredictable and is likely to continue to result in significant national and global economic disruption, which may adversely affect the Company’s business. The COVID-19 pandemic has delayed a trial for Hemopure the Company had planned in South Africa in 2020, which is now currently planned to take place in 2022. Certain labs/plants had to close their doors in response to COVID-19 regulations in 2020, which resulted in overall lower salary costs and some delays in research and development. Further, as a result of COVID-19 shutdowns during 2020, the Company’s spending on outside services, projects or operations was reduced. Based on the Company’s current assessment, it does not expect any material impact on its long-term strategic plans, its operations, or its liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, suppliers, and industry.

On March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law to provide certain aid and stimulus to the U.S. Economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act also allocated funds for the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) loans that are forgivable in certain situations to promote continued employment.

We qualified as a small business under the CARES Act and submitted a loan application with a qualified lender for funding under the PPP. Our PPP Loan was approved on May 5, 2020 for $206,200. The PPP Loan was eligible to be forgiven provided that we satisfied certain conditions and upon the approval by the lender and the SBA and was fully forgiven in the first quarter of 2021 by the SBA and the lender. As a result, the Company recognized a gain on paycheck protection program loan forgiveness of $206,200 within other income (expense) in the consolidated statement of operations for the year ended December 31, 2021.

Public Company Costs

Our common shares will be registered with the SEC and listed on The Nasdaq Capital Market, which will require us to hire additional personnel and implement public company procedures and processes. We expect to incur additional annual expenses as a public company for internal controls compliance and public company reporting obligations, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.

Components of Results of Operations

The following describes the components of revenue and expenses that are reflected in our consolidated statements of operations:

Revenue

Our revenue through contracts with customers relate to the selling of hemoglobin-based oxygen carriers (“HBOCs”), which represent single performance obligations that are satisfied when control of the product passes to the customer. We consider the timing of right to payment, transfer of risk and rewards, transfer of title, transfer of physical possession and customer acceptance when determining when control transfers to the customer. As a result, revenue is recognized at a point in time upon product shipment. Shipping and handling activities are accounted for as activities to fulfill a promise to transfer a product to a customer and as such, costs incurred are recorded when the related revenue is recognized. Payment for products is due within a limited time period after shipment or delivery, typically within 30 calendar days of the respective invoice dates.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. Amounts billed and due from our customers are classified as accounts receivable, less allowance for doubtful accounts on the balance sheet. We record a contract asset when it has a right to payment from a customer that is conditioned on events that have occurred other than the passage of time. We also record a contract liability when customers prepay but we have not yet satisfied our performance obligation. The Company had deferred revenue of $378,637 as of December 31, 2021 and 2020 As of December 31, 2020, deferred revenue is classified as a current liability as all remaining performance obligations are expected to be fulfilled in 2022.

Research and Development Costs

We record research and development activities conducted by third-party service providers, which include the conduct of preclinical studies and clinical trials, and contract manufacturing activities, to research and development expense as incurred.

General and Administrative

General and administrative expenses are recorded in the period which they are incurred and include salaries, benefits, finance, other administrative services, information technology expenses, outside services, legal and accounting services, and other costs required to support our operations.

Interest Expense

Our interest expense is related to convertible promissory notes totaling $2,500,000 that will be converted as of the closing of this Offering. There was an increase in the average outstanding balance of these notes in 2021 over 2020, and therefore, interest expense was higher. We recorded a Convertible Note debt discount to account for the beneficial conversion features on convertible notes issued in the year ended December 31, 2020, as well as the 1st and 2nd Warrant issued in conjunction with the $2,400,000 Convertible Note. The Convertible Note debt discounts are being accreted to non-cash interest expense over the life of each associated Convertible Note or will be accreted in full upon conversion of the corresponding Convertible Note into Member Units. If the holder chooses to convert, they forego the related accrued interest; the conversion is for principal only. If the note is not converted, the principal plus accrued interest is due on the maturity date.

On January 5, 2021 the Company entered into amendments to three convertible notes totaling $2,500,000 with the same lender. Under the amendments, the conversion price of the loans was decreased from $548.81 to $274.40. The Company accounted for the amendments as debt extinguishments under ASC 470-50 resulting in a loss on extinguishment of debt of $2,235,770 which included the fair value of the embedded conversion option. As the new debt was issued at a substantial premium, the fair value of the full premium of $2,235,770 was recorded as additional paid-in capital.

Contractual interest expense on the Convertible Notes Payable for the years ended December 31, 2021 and 2020 was $302,003 and $261,002 respectively. Non-cash interest expense related to the amortization of debt discount for the years ended December 31, 2021 and 2020 was $276,862 and $76,689 respectively. The remaining unamortized debt discount as of December 31, 2021 of $2,164,929 million will be amortized over 3.7 years. Accrued interest expense on the Convertible Notes as of December 31, 2021 and 2020 was $876,391 and $574,388 respectively. The effective interest rate on the Convertible Notes for the years ended December 31, 2021 and 2020, was 10.10% and 6.96%, respectively.

Results of Operations for the Years Ended December 31, 2021 and 2020

The following table summarizes our results of operations for the years ended December 31, 2021 and 2020:

Revenue

There were two sales of product from expired shelf-life inventory during the year that ended December 31 2020. Revenues decreased by 100% or $35,470 during the year ending December 2021 as our production facility remained non-operational.

Research and Development

Our research and development expenses increased 34.4% between the years ended December 31, 2021 and 2020 as a result of additional spending as certain plants/labs that had to close their doors in response to COVID-19 regulations during 2020, which resulted in overall lower R&D costs. In 2021, we were able to resume our work on new and existing product development and incurred higher costs, which were consistent with our pre-COVID annual spending.

General and Administrative

General and administrative expenses remained steady with a decrease of 0.2% between the years ended December 31, 2021 and 2020 as a result of a relatively fixed cost corporate structure, as well as continued cost containment measures where applicable. The Company also incurred expenses related to their proposed initial public offering which were capitalized during the year ended December 31, 2021.

Interest Expense

Interest expense increased 79.4% between the years ended December 31, 2021 and 2020 as a result of a higher average outstanding debt balance during 2021 including additional debt discounts that are accreted to interest expense.

Gain on Paycheck Protection Program Loan Forgiveness

In May 2020, the Company obtained a loan (“PPP Loan”) in the amount of $206,200. In January 2021, the PPP loan was fully forgiven by SBA and lender. As a result, the Company recognized a gain on paycheck protection program loan forgiveness of $206,200 within other income (expense) in 2021.

Loss on Extinguishment of Debt

On January 5, 2021 the Company entered into amendments to three convertible notes totaling $2,500,000 with the same lender. Under the amendments, the conversion price of the loans was decreased from $548.81 to $274.40. The Company accounted for the amendments as debt extinguishments resulting in a loss on extinguishment of debt of $2,235,770, which included the fair value of the embedded conversion option.

Change in Fair Value of Warrant Liability

The Company accounts for warrants issued in conjunction with financial instruments as liability-classified instruments. Changes in the estimated fair value of the warrants are recognized as non-cash gains or losses on the consolidated statements of operations.

Critical Accounting Policies and Estimates

We believe the following accounting policies are most critical in understanding and evaluating this management discussion and analysis:

Revenue Recognition

Revenue is recognized when control of the goods and services provided is transferred to the Company’s customers and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those good and services using the following steps: 1) identification of the contract, or contracts with a customer, 2) identification of performance obligations in the contract, 3) determination of the transaction price, 4) allocation of the transaction price to the performance obligations in the contract and 5) recognition of revenue when or as the Company satisfies the performance obligation(s).

The Company’s contracts with customers are comprised primarily of contractual agreement paperwork (i.e., purchase orders) and verbal orders. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable. These contracts with customers relate to the selling of hemoglobin-based oxygen carriers (“HBOCs”), which represent single performance obligations that are satisfied when control of the product passes to the customer. The Company considers the timing of right to payment, transfer of risk and rewards, transfer of title, transfer of physical possession and customer acceptance when determining when control transfers to the customer. As a result, revenue is recognized at a point in time upon product shipment. Shipping and handling activities are accounted for as activities to fulfill a promise to transfer a product to a customer and, as such, applicable costs incurred are recorded when the related revenue is recognized. Payment for products is due within a limited time period after shipment or delivery, typically within 30 calendar days of the respective invoice date. The Company does not generally offer extended payment terms.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Amounts billed and due from the Company’s customers are classified as accounts receivable, less allowance for doubtful accounts on the consolidated balance sheet. During 2021, the Company had no revenue. The Company’s 2020 revenue consisted solely of sales of Hemopure in South Africa.

The Company records a contract asset when it has a right to payment from a customer that is conditioned on events that have occurred other than the passage of time. The Company records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The Company had $378,637 of deferred revenue as of December 31, 2021 and 2020, which is classified as a current liability as of December 31, 2021 as all remaining performance obligations are expected to be fulfilled in 2022. The Company did not have any material contract assets as of December 31, 2021 and 2020.

Convertible Debt

We have entered into several convertible notes payable with interest rates varying from 5-10%. A discount is recorded to the convertible notes for the intrinsic value of the conversion options embedded in debt instruments based upon the differences between the fair value of the underlying member unit at the commitment date of the note and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized to noncash interest expense using the effective interest method over the term of the related debt to their date of maturity. If the note becomes convertible only upon the occurrence of a future event outside our control, or, is convertible from inception, but contains conversion terms that change upon the occurrence of a future event, then any contingent beneficial conversion feature is measured and recognized when the triggering event occurs, and contingency has been resolved. All of our convertible debt will be converted into equity at the closing of the Offering upon terms which vary depending on the holder of the debt. See “Capitalization”.

Warrants

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

For issued or modified warrants that do not meet all of the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as non-cash gain or loss on the statement of operations. The fair value of the warrants at issuance and at December 31, 2021 and 2020 was estimated using a Black Scholes option pricing model.

Liquidity and Capital Resources

Sources of Liquidity

To date, we have financed our operations primarily through issuance of convertible debt. In the near term, we expect to continue to increase investing activities as we build out our operational facility. Ultimate cash inflow to the Company from the common stock offering will depend on the per share offering price and number of shares sold.

Funding Our Operations

The ability to raise funds through equity or debt is subject to many risks and uncertainties and, even if we were successful, future equity issuances would result in dilution to our existing stockholders and any future debt or debt securities may contain covenants that may limit our operations or ability to enter into certain transactions.

We estimate that we will need approximately $35 million to complete the construction, re-fitting, automation process update, validation and certification of our Souderton facility. As the proceeds of the Offering will be insufficient to fully complete this process, we will require approximately $15 million of additional monies. Our ability to generate sales to fund operations is subject to a number of uncertainties, including regulatory, financial and business risks, many of which are beyond our control. If we are unable to generate sufficient revenue from our sales, or when needed, to secure additional sources of funding; it may be necessary to significantly reduce our current rate of spending or explore other strategic alternatives.

Cash and Cash Flows

Our principal uses of cash since the Company’s inception in 2014 have been funding our operations and investing in capital expenditures. The following table presents cash and cash provided by (used in) operating, investing and financing activities during the years ended December 31, 2021 and 2020:

The following is a summary of our cash flows from operating, investing and financing activities for the years ended December 31, 2021 and 2020:

Operating Activities

During the year ended December 31, 2021, our cash used in operations of $1,913,759 consisted primarily of the Company’s net loss of $6,126,238, offset by non-cash expenses of $2,985,198 mainly associated with the loss on extinguishment of debt and right of use asset amortization and $1,227,281 in positive changes in operating assets and liabilities.

During the year ended December 31, 2020, our cash used in operations of $931,252 consisted of the Company’s net loss of $3,586,014, offset by non-cash expenses of $663,832 mainly associated with right of use asset amortization and non-cash interest expense and positive changes in operating assets and liabilities of $1,990,930.

Investing Activities

During the year ended December 31, 2020, our investing activities involved the purchase of $50,040 in property and equipment. There were no investing activities during the year ended December 31, 2021.

Financing Activities

During the years ended December 31, 2021 and 2020, our cash flows provided by financing activities entailed proceeds from the issuance of convertible notes payable of $1,700,000 and $1,056,438, respectively, proceeds of $300,485 from the issuance of notes payable in 2021, and proceeds from the Paycheck Protection Program loan of $206,200 in 2020.

Operating and Capital Expenditure Requirements

Our ability to start manufacturing our products and generating revenues is dependent upon the successful completion of the construction and re-fitting of our Souderton facility. Until it is complete, and the relevant cGMP certification is received, we will not be able to release and commercially distribute any product. The proceeds of the Offering will be insufficient to fully complete the relaunch of our products into the market. We will require approximately $15 million of additional monies to complete this process. We are seeking such additional funds through public or private equity or debt financings or other sources, such as strategic collaborations or license and development agreements. We believe our existing cash, cash equivalents, together with cash provided by operations and funding from this equity issuance, will be sufficient to meet our needs, other than those required to complete the construction and re-fitting of our facility, for at least the next 12 months. Our future capital requirements will depend on many factors including our revenue growth rate, the timing and extent of spending to support further sales and marketing and research and development efforts, the timing and extent of additional capital expenditures to invest in the expansion of our existing facilities. We may enter into arrangements in the future to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition would be materially and adversely affected.

Going Concern and Liquidity

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. We have experienced net losses and negative cash flows from operating activities since inception and expect to continue to incur net losses into the foreseeable future. We have an members’ deficit of approximately $9,249,000 at December 31, 2021, incurred a net loss of approximately $6,126,000 for the year ended December 31, 2021 and used approximately $1,914,000 of net cash for operating activities during the year ended December 31, 2021. To date, these operating losses have been funded primarily from outside sources of invested capital through the issuance of convertible promissory notes, notes payable and sale of member units. At December 31, 2021, we had cash on hand of approximately $444,000. We expect operating losses and negative cash flows to continue for the foreseeable future as we continue to incur costs related to research and development and commercialization efforts. Management has prepared cash flow forecasts which indicate that based on our expected operating losses and negative cash flows, there is substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date these consolidated financial statements are available for issuance.

Our ability to continue as a going concern is dependent upon its ability to raise additional funding. Management plans to raise additional capital to fulfill our operating and capital requirements for the next twelve months. In 2021, we raised an additional approximately $1,700,000 through the issuance of convertible notes. In 2021, we raised an additional approximately $300,000 through note payable issuances. In 2022, we plan to fund our operating losses and capital funding needs primarily through an initial public offering, and/or through additional debt and equity financings. These financing and capital raising options may not be able to be successfully achieved and may not be available on a timely basis or on terms acceptable to us. If we are not able to secure adequate additional funding in a timely manner or on favorable terms, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could have a material adverse effect on our business, results of operations and future prospects.

The accompanying consolidated financial statements do not reflect any adjustments that might result if we are unable to continue as a going concern. Since inception, we have been engaged in organizational activities, including raising capital and research and development activities. We have not generated any substantial revenues and has not yet achieved profitable operations, nor have we ever generated positive cash flows from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. Further, our future operations are dependent on the success of our efforts to complete and re-fit our manufacturing facility and to raise additional capital and the market acceptance of our products. There can be no assurance that these efforts will be successful.

Emerging Growth Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act. We would cease to be an emerging growth company upon the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues are $1.07 billion or more; (ii) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year; or (iii) the date on which we have, during the previous three-year period, issued more than $1.07 billion in non-convertible debt securities. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. We have elected to take advantage of these reduced disclosure obligations and may elect to take advantage of other reduced reporting obligations in the future.

For so long as HbO2 Therapeutics is an emerging growth company, we will not be required to: