Forward-Looking Statements



The following section of this Annual Report on Form 10-K entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contains statements that are not statements of historical fact and are
forward-looking statements within the meaning of federal securities laws. These
statements involve known and unknown risks, uncertainties, and other factors
that may cause our actual results, performance, or achievements to be materially
different from any future results, performance, or achievements expressed or
implied by the forward-looking statements. These statements reflect our current
views with respect to future events and are based on assumptions and subject to
risks and uncertainties. Factors that may cause our actual results to differ
materially from those in the forward-looking statements include those factors
described in "Item 1A. Risk Factors" beginning on page   23   of this Annual
Report on Form 10-K. You should carefully review all of these factor

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s, as well as the comprehensive discussion of forward-looking statements on page

2 of this Annual Report on Form 10-K.

Business Overview



We are a clinical-stage specialty pharmaceutical company developing and
commercializing products for the treatment of ophthalmic diseases. We were
formed as a Delaware corporation on December 26, 2004, under the name of EyeGate
Pharmaceuticals, Inc., and changed our name to Kiora Pharmaceuticals, Inc.
effective November 8, 2021. We were originally incorporated in 1998 under the
name of Optis France S.A. in Paris, France. At that time, the name of the French
corporation was changed to EyeGate Pharma S.A.S. and became a subsidiary of
EyeGate Pharmaceuticals, Inc. EyeGate Pharma S.A.S. was dissolved effective
December 30, 2020. We have four wholly-owned subsidiaries: Jade Therapeutics,
Inc., Kiora Pharmaceuticals, GmbH (formerly known as Panoptes Pharma GmbH),
Bayon Therapeutics, Inc., and Kiora Pharmaceuticals Pty Ltd (formerly known as
Bayon Therapeutics Pty Ltd).

Our lead product is KIO-301 with an initial focus on patients with later stages
of vision loss due to retinitis pigmentosa (RP, any and all sub-forms). KIO-301
is a potential vision-restoring small molecule that acts as a "photoswitch"
specifically designed to restore vision in patients with inherited and
age-related degenerative retinal diseases. The molecule is designed to restore
the eyes' ability to perceive and interpret light in visually impaired patients
through selectively entering viable downstream retinal ganglion cells (no longer
receiving electrical input due to degenerated rods and cones) and is intended to
turn them into light sensing cells, capable of signaling the brain as to the
presence or absence of light. We initiated a Phase 1b clinical trial in third
quarter of 2022 and dosed the first patient in November 2022. On March 17, 2022,
we were granted orphan drug designation by the FDA for the API in KIO-301.
KIO-301 (formerly known as B-203) was acquired through the Bayon transaction
which closed October 21, 2021.

KIO-101 focuses on patients with OPRA+. KIO-101 is a next-generation,
non-steroidal, immuno-modulatory and small-molecule inhibitor of DHODH. We
believe KIO-101 to be best-in-class with picomolar potency and a validated
immune modulating mechanism designed to overcome the off-target side effects and
safety issues associated with commercially available DHODH inhibitors. In a
14-day good laboratory practice intravenous repeated dose toxicity study in
rats, no adverse or test item related effects were observed in any of the tested
parameters (mortality, clinical observations, ophthalmoscopy, body weight and
food consumption, hematology and coagulation, clinical biochemistry, organ
weight, pathology, and histopathology) at the highest doses tested (1.0 mg/kg).
In the fourth quarter of 2021, we reported top-line safety and tolerability data
from a Phase 1b proof-of-concept study evaluating KIO-101 in patients with
ocular surface inflammation. As a further sign of safety, there were zero
clinically significant laboratory (including liver enzymes) findings observed in
both healthy patients and those with ocular surface inflammation. We expect to
initiate a Phase 2 clinical trial in the first quarter of 2023. KIO-101
(formerly known as PP-001) was acquired through the acquisition of Panoptes
Pharma GmbH in the fourth quarter of 2020.

We are developing KIO-201, for patients with persistent corneal epithelial
defects. PCED is an orphan disease and as such, we are currently seeking orphan
drug designation. KIO-201 is also being evaluated for patients recovering from
surgical wounds, such as those undergoing the laser vision correction procedure,
PRK. KIO-201 is a modified form of the natural polymer hyaluronic acid, designed
to protect the ocular surface to permit re-epithelialization of the cornea and
improve and maintain ocular surface integrity. KIO-201 has unique properties
that help hydrate and protect the ocular surface. We are currently evaluating
KIO-201 in a Phase 2 clinical trial in patients with PCEDs and released top-line
data in Q1 2023. We expect to release full data in Q2 2023. We are in planning
stages of a Phase 3b trial for patients recovering from PRK and plan to initiate
the study before the end of 2023.

In May 2020, we were granted a loan (the "Loan") from Silicon Valley Bank in the
amount of $0.3 million pursuant to the Paycheck Protection Program (the "PPP")
under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security
Act (CARES Act), which was enacted in March 2020. The Loan could have been
prepaid by us at any time prior to maturity with no prepayment penalties. Funds
from the Loan were only permitted to be used for payroll costs, costs used to
continue group health care benefits, mortgage payments, rent, utilities, and
interest on other debt obligations incurred before February 15, 2020
("Qualifying Expenses").

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We used the entire Loan amount for Qualifying Expenses. Under the terms of the
PPP, certain amounts of the Loan could be forgiven if they are used for
Qualifying Expenses as described in the CARES Act. In April 2021, we were
notified by the Small Business Administration (SBA) that this Loan was forgiven
in full.

Throughout our history, we have not generated significant revenue. We have never
been profitable, and from inception through December 31, 2022, our losses from
operations have aggregated $134.5 million. Our Net Loss was approximately $13.6
million and $13.8 million for the twelve months ended December 31, 2022, and
2021, respectively. We expect to incur significant expenses and increasing
operating losses for the foreseeable future as we continue the development and
clinical trials of and seek regulatory approval for our KIO-101, KIO-201, and
KIO-301 product candidates, and any other product candidates we advance to
clinical development. If we obtain regulatory approval for KIO-101, KIO-201, and
KIO-301, we expect to incur significant expenses to create an infrastructure to
support the commercialization of KIO-101, KIO-201, and KIO-301 including sales,
marketing, and distribution functions.

The continued spread of the COVID-19 pandemic could adversely impact our
clinical studies. See "Item 1A. Risk Factors" above. The extent to which
COVID-19 may impact our business will depend on future developments, which are
highly uncertain and cannot be predicted with confidence, such as the duration
of the outbreak, the emergence of new variants, and the effectiveness of actions
to contain and treat COVID-19. We cannot presently predict the scope and
severity of any potential disruptions to our business, including to our ongoing
and planned clinical studies. Any such shutdowns or other business interruptions
could result in material and negative effects to our ability to conduct our
business in the manner and on the timelines presently planned, which could have
a material adverse impact on our business, results of operation, and financial
condition. As of the date of this report, there have been no material adverse
effects to our ongoing business operations from COVID-19.

We will need additional financing to support our continuing operations. We will
seek to fund our operations through public or private equity, debt financings,
license and development agreements, or other sources, which may include
collaborations with third parties. Adequate additional financing may not be
available to us on acceptable terms, or at all. Our failure to raise capital as
and when needed would have a negative impact on our financial condition and our
ability to pursue our business strategy. These conditions raise substantial
doubt about our ability to continue as a going concern. We will need to generate
significant revenue to achieve profitability, and we may never do so.

Financial Overview

Revenues



To date, we have recognized collaboration revenue from U.S. and foreign
government grants made to Jade and Panoptes, as well as from license agreements
as performance obligations toward milestones that were met. We expect to
continue to incur significant operating losses as we fund research and clinical
trial activities relating to our therapeutic assets, consisting of our
photoswitch, DHODH, and modified HA-based products, or any other product
candidate that we may develop. There can be no guarantee that the losses
incurred to fund these activities will succeed in generating revenue.

Research and Development Expenses

We expense all research and development expenses as they are incurred. Research and development expenses primarily include:

•non-clinical development, pre-clinical research, and clinical trial and regulatory-related costs;

•expenses incurred under agreements with sites and consultants that conduct our clinical trials;

•expenses related to generating, filing, and maintaining intellectual property; and

•employee-related expenses, including salaries, bonuses, benefits, travel, and stock-based compensation expense.


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We expect our research and development expenses to increase for the near future
as we advance KIO-101, KIO-201, KIO-301, and any other product candidate through
clinical development, including the conduct of our planned clinical trials. The
process of conducting clinical trials necessary to obtain regulatory approval is
costly and time consuming. We are unable to estimate with any certainty the
costs we will incur in the continued development of our KIO-101, KIO-201,
KIO-301, and any other product candidate that we may develop. Clinical
development timelines, the probability of success and development costs can
differ materially from expectations.

We may never succeed in achieving marketing approval for our product candidates.

The costs of clinical trials may vary significantly over the life of a project owing to, but not limited to, the following:

•per patient trial costs;

•the number of sites included in the trials;

•the countries in which the trials are conducted;

•the length of time required to enroll eligible patients;

•the number of patients that participate in the trials;

•the number of doses that patients receive;

•the cost of comparative agents used in trials;

•the drop-out or discontinuation rates of patients;

•potential additional safety monitoring or other studies requested by regulatory agencies;

•the duration of patient follow-up; and

•the efficacy and safety profile of the product candidate.

We do not expect our product candidates to be commercially available, if at all, for the next several years.

General and Administrative Expenses



General and administrative expenses consist primarily of salaries and related
benefits, including stock-based compensation. Our general and administrative
expenses consisted primarily of payroll expenses for our full-time employees.
Other general and administrative expenses include professional fees for
auditing, tax, patent costs, and legal services.

We expect that general and administrative expenses will remain consistent for
the near future until commercialization of our photoswitch, DHODH, and modified
HA-based products, which could lead to an increase in these expenses.

Other Income, Net

Other income, net consists primarily of warrant liability fair value changes, interest income we earn on interest-bearing accounts, and interest expense incurred on our outstanding financing arrangements.

Critical Accounting Policies and Significant Judgments and Estimates



Our management's discussion and analysis of our financial condition and results
of operations is based on our consolidated financial statements, which we have
prepared in accordance with accounting principles generally accepted in the
United States, or U.S. GAAP. The preparation of these consolidated financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements, as
well as the

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expenses during the reporting periods. We evaluate these estimates and judgments
on an ongoing basis. We base our estimates on historical experience and on
various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other
sources. Our actual results may differ materially from these estimates under
different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2 to
our consolidated financial statements appearing elsewhere in this Annual Report
on Form 10-K, we believe that the following accounting policies are the most
critical for fully understanding and evaluating our financial condition and
results of operations.

Business Combinations



We applied the provisions of Accounting Standards Codification (ASC) Topic 805,
"Business Combinations," in the accounting for our acquisitions of Bayon and
Panoptes. It required us to recognize the assets acquired and the liabilities
assumed at their acquisition date fair values, which were determined using
market, income, and cost approaches, or a combination. Goodwill as of the
respective acquisition date was measured as the excess of consideration
transferred over the net of the acquisition date fair value of the assets
acquired and the liabilities assumed. Goodwill is generally the result of
expected synergies of the combined company or an assembled workforce.
Indefinite-lived intangible assets acquired were in-process research and
development. The fair value for these intangible assets was determined using the
income approach. Under the income approach, fair value reflects the present
value of the projected cash flows that are expected to be generated by the
products incorporating the in-process research and development, if successful.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair
value of the identifiable assets acquired and liabilities assumed in a business
combination. The Company evaluates goodwill for impairment annually or when a
triggering event occurs that could indicate a potential impairment. The
evaluation for impairment includes assessing qualitative factors or performing a
quantitative analysis to determine whether it is more-likely-than-not that the
fair value of net assets is below the carrying amount. The goodwill was related
to the 2021 acquisition of Bayon and 2020 acquisition of Panoptes, which
represents the excess of the purchase price over the estimated fair value of the
net assets acquired. For the year ended December 31, 2021, we incurred a $4.0
million impairment loss related to goodwill. As of December 31, 2022 and 2021,
goodwill was $0.

Intangible assets acquired in a business combination are recognized separately
from goodwill and are initially recognized at fair value at the acquisition
date. The Company tests intangible assets for impairment as of December 31 of
each year or more frequently if indicators of impairment are present. The
authoritative accounting guidance provides an optional qualitative assessment
for any indicators that indefinite-lived intangible assets are impaired. If it
is determined that it is more likely than not that the indefinite-lived
intangible assets are impaired, the fair value of the indefinite-lived
intangible assets is compared with the carrying amount and impairment is
recorded for any excess of the carrying amount over the fair value of the
indefinite-lived intangible assets.

The Company performed an annual evaluation of it's indefinite-lived intangible
assets for impairment as of August 31, 2022 with a quantitative analysis. As of
December 31, 2022 the Company also performed a qualitative update analysis for
impairment and based on this analysis, the fair value of these products was
greater than their carrying value. The Company considered the development
timelines for its program and noted no qualitative factors that would indicate
potential impairment of its indefinite-lived intangible assets.

Accrued Research and Development Expenses

As part of the process of preparing the consolidated financial statements, we are required to estimate and accrue research and development expenses. This process involves the following:


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•communicating with our applicable personnel to identify services that have been
performed on our behalf and estimating the level of service performed and the
associated cost incurred for the service when we have not yet been invoiced or
otherwise notified of actual cost;

•estimating and accruing expenses in our consolidated financial statements as of each balance sheet date based on facts and circumstances known to us at the time; and

•periodically confirming the accuracy of our estimates with selected service providers and making adjustments, if necessary.

Examples of estimated research and development expenses that we accrue include:

•fees paid to contract research organizations and investigative sites in connection with clinical studies;

•fees paid to contract manufacturing organizations in connection with non-clinical development, pre-clinical research, and the production of clinical study materials; and

•professional service fees for consulting and related services.



We base our expense accruals related to non-clinical development, pre-clinical
studies, and clinical trials on our estimates of the services received and
efforts expended pursuant to contracts with organizations/consultants that
conduct and manage clinical studies on our behalf. The financial terms of these
agreements vary from contract to contract and may result in uneven payment
flows. Payments under some of these contracts may depend on many factors, such
as the successful enrollment of patients, site initiation, and the completion of
clinical study milestones. Our service providers invoice us as milestones are
achieved and monthly in arrears for services performed. In accruing service
fees, we estimate the time period over which services will be performed and the
level of effort to be expended in each period. If we do not identify costs that
we have begun to incur or if we underestimate or overestimate the level of
services performed or the costs of these services, our actual expenses could
differ from our estimates. To date, we have not experienced significant changes
in our estimates of accrued research and development expenses after a reporting
period.

However, due to the nature of estimates, we cannot assure you that we will not
make changes to our estimates in the future as we become aware of additional
information about the status or conduct of our clinical studies and other
research activities.

Refunds for Research and Development



We, through our Kiora Pharmaceuticals, GmbH and Kiora Pharmaceuticals Pty Ltd.
subsidiaries, are eligible to receive certain refundable tax incentives
associated with our research and development expenses in Austria and Australia.
These refunds are realized in the form of a cash payment when received,
following the incurred research & development expenses. We record the refundable
payment as a tax receivable and a reduction in expense in the period in which
the research and development expenses are incurred.

Contingent Consideration



We initially value contingent consideration related to business combinations
using a probability-weighted calculation of potential payment scenarios
discounted at rates reflective of the risks associated with the expected future
cash flows. Key assumptions used to estimate the fair value of contingent
consideration include the probability of success, discount rate, and updated
timing of payment. After the initial valuation, we will use our best estimate to
measure contingent consideration at each subsequent reporting period. Gains and
losses are recorded in operating expenses within the consolidated statements of
operations and comprehensive loss.

Stock-Based Compensation



We have issued options to purchase our common stock and restricted stock.
Stock-based compensation cost is measured at the grant date based on the fair
value of the award and is recognized as expense over the requisite
service/vesting period. Determining the appropriate fair value model and
calculating the fair value of stock-based payment awards require the use of
highly subjective assumptions, including the expected life of the stock-based
payment awards and stock price volatility.

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We estimate the grant date fair value of stock options and the related
compensation expense, using the Black-Scholes option valuation model. This
option valuation model requires the input of subjective assumptions including:
(1) expected life (estimated period of time outstanding) of the options granted,
(2) volatility, (3) risk-free rate, and (4) dividends. In general, the
assumptions used in calculating the fair value of stock-based payment awards
represent management's best estimates, but the estimates involve inherent
uncertainties and the application of management judgment. As a result, if
factors change and we use different assumptions, our stock-based compensation
expense could be materially different in the future.

Recent Accounting Pronouncements



Refer to Note 1. Business, Presentation and Recent Accounting Pronouncements, in
the Notes to the audited consolidated financial statements of Part IV, Item 15.
Exhibits, Financial Statement Schedules of this Form 10-K for detailed
information regarding the status of recently issued accounting pronouncements.

Other Information

Net Operating Loss Carryforwards



As of December 31, 2022, the Company has federal and state net operating loss
carryforwards of approximately $80.5 million and $52.6 million, respectively, to
offset future federal and state taxable income. Federal NOL carryforwards as of
December 31, 2017 totaling $46.1 million, and state NOL carryforwards as of
December 31, 2022 totaling $52.6 million will expire at various dates through
2042. Federal NOL carryforwards generated during the years ended December 31,
2018 and forward totaling $34.4 million will carry forward indefinitely, but
their utilization will be limited to 80% of taxable income. The Company has
foreign net operating loss carryforwards of $10.7 million as of December 31,
2022, which can be carried forward indefinitely. As of December 31, 2022, the
Company also has federal and state research and development tax credit
carryforwards of approximately $2.5 million and $0.5 million, respectively, to
offset future income taxes, which expire at various times through 2042.

Utilization of these net operating loss and tax credit carryforwards may be
subject to a substantial limitation under Sections 382 and 383 of the Internal
Revenue Code of 1986, as amended, or the Code, and comparable provisions of
state, local, and foreign tax laws due to changes in ownership of our company
that have occurred previously or that could occur in the future. Under Section
382 of the Code and comparable provisions of state, local, and foreign tax laws,
if a corporation undergoes an "ownership change," generally defined as a greater
than 50% change by value in its equity ownership over a three-year period, the
corporation's ability to use its pre-change net operating loss carryforwards and
other pre-change tax attributes, such as research and development tax credits,
to reduce its post-change income may be limited. We have not completed a study
to determine whether our initial public offering, our registered direct
offering, our follow-on public offerings, and other transactions that have
occurred over the past three years may have triggered an ownership change
limitation. We may also experience ownership changes in the future as a result
of subsequent shifts in our stock ownership. As a result, if we generate taxable
income, our ability to use our pre-change net operating loss and tax credits
carryforwards to reduce U.S. federal and state taxable income may be subject to
limitations, which could result in increased future tax liability to us. In
addition, the TCJA enacted on December 22, 2017, limits the amount of NOLs that
we are permitted to deduct in any taxable year to 80% of our taxable income in
such year. The TCJA also eliminates the ability to carry back NOLs to prior
years but allows NOLs generated after 2017 to be carried forward indefinitely.
As such, there is a risk that due to such items, our existing NOLs could expire
or be unavailable to offset future income.

Results of Operations

Comparison of Years Ended December 31, 2022 and 2021

The following table summarizes the results of our operations for the years ended December 31, 2022 and 2021:



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                                                                      Year Ended December 31,
                                                         2022                   2021                 Change
Operating Expenses:
Research and Development                               3,448,925              5,350,264            (1,901,339)
General and Administrative                             8,277,993              5,323,649             2,954,344
Goodwill Impairment                                            -              4,037,811            (4,037,811)
Change in Fair Value of Contingent Consideration         582,605               (475,956)            1,058,561
Total Operating Expenses                              12,309,523             14,235,768            (1,926,245)
Operating Loss Before Other Income                   (12,309,523)           (14,235,768)            1,926,245
Other (Expense) Income, Net                           (1,387,097)               272,480            (1,659,577)
Loss Before Income Tax Benefit (Expense)             (13,696,620)           (13,963,288)              266,668
Income Tax Benefit (Expense)                             113,010                192,603               (79,593)
Net Loss                                           $ (13,583,610)         $ (13,770,685)         $    187,075

Research and Development Expenses



Research and development expenses decreased by $1.9 million due to reduced
development costs for KIO-101 and KIO-201 of approximately $1.1 million,
decreased personnel costs of approximately $1.0 million and an increase in the
research refundable credit of $1.0 million. These net decreases were partially
offset by an increase in development costs related to KIO-301 of $1.3 million.

The following table summarizes our research and development expense by program:

                                                                   Year Ended December 31,
                                                       2022                 2021                Change
External research and development expense by
program
KIO-101                                             1,622,602            2,160,530              (537,928)
KIO-201                                               102,754              652,107              (549,353)
KIO-301                                             1,349,382               16,096             1,333,286
Unallocated research and development expense
Personnel                                           1,868,131            2,883,229            (1,015,098)
R&D Credit                                         (1,541,609)            (517,625)           (1,023,984)
Other Research                                         47,665              155,927              (108,262)
Total research and development expense            $ 3,448,925          $

5,350,264 $ (1,901,339)

General and Administrative Expenses

General and administrative expenses increased by $3.0 million due to increases in professional fees of $1.5 million, executive severance of $1.0 million, corporate costs of $0.3 million and travel related costs of $0.3 million.

Goodwill Impairment Loss

Goodwill impairment loss decreased by $4.0 million due to the write-off of goodwill in 2021.

Change in Fair Value of Contingent Consideration



The change in fair value of contingent consideration increased $1.1 million. The
change in fair value of contingent consideration is primarily due to a change in
the probability of success related to a new indication that was added for
KIO-201 (PCED) which increased the probability of success for the Jade milestone
payment. Additionally, in March 2022 KIO-301 was granted orphan drug designation
which increased the probability of success rate for the Bayon milestone payment.

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Other (Expense) Income, Net



Other (expense) income increased by $1.7 million due to a change in fair value
of warrant liability. The change in fair value of the warrant liability between
issuance and reclassification to equity was approximately $1.4 million in
expense and was primarily due to a change in our stock price..

Income Tax Benefit (Expense)

Income tax benefit (expense) decreased by $0.1 million.

Liquidity and Capital Resources



Since becoming a public company in 2015, we have financed our operations from
several registered offerings and private placements of our securities, payments
from license agreements, and U.S. and foreign government grants. From inception
through December 31, 2022, we have raised a total of approximately $127.2
million from such sales of our equity and debt securities, both as a public
company and prior to our IPO, as well as approximately $14.9 million in payments
received under our license agreements and government grants and $0.3 million
received pursuant to the Loan under the PPP, which was fully forgiven in April
of 2021.

On January 6, 2021, we completed a private placement of 38,278 shares of common
stock and warrants to purchase up to 38,278 shares of common stock to an
affiliate of Armistice Capital, LLC, with a combined purchase price per share
and warrant of $209.00. The total net proceeds from the private placement were
approximately $8.0 million. The warrants have an exercise price of $209.00 per
share, subject to adjustments as provided under the terms of the warrants, and
will be exercisable on the six-month anniversary of their issuance date. The
warrants are exercisable for five years from the issuance date.

On August 11, 2021, we completed a registered direct offering for 116,721 shares
of common stock with a purchase price of $92.10 per share. We also completed a
concurrent private placement of unregistered warrants to purchase up to an
aggregate of 58,361 shares of common stock at an exercise price of $89.60 per
share that are exercisable immediately upon issuance and will expire five and
one-half years following the date of issuance. In addition, the Company issued
to the placement agent warrants to purchase up to 5,836 shares of Common Stock
at an exercise price of $115.124 per share, which expire five years following
the date of issuance. The total net proceeds to us from the offering were
approximately $9.8 million.

On June 18, 2022, in connection with our acquisition of Panoptes Pharma
Ges.m.b.H in December 2020 ("Panoptes Acquisition"), we issued an aggregate of
10,087 shares of common stock to former shareholders of Panoptes, which had been
held back for a period of eighteen months following the closing of the Panoptes
acquisition to satisfy post-closing adjustment and indemnification obligations
pursuant to the terms of the Share Purchase Agreement between us and the former
shareholders of Panoptes.

On July 22, 2022, we entered into an underwriting agreement to issue and sell
stock and warrants in a public offering. On July 25, 2022, the underwriter fully
exercised the option granted by us to purchase stock and warrants. On July 26,
2022, the Public Offering closed, and we issued and sold (i) 592,392 shares of
common stock, (ii) 1,280 shares of Series E Convertible Preferred Stock
convertible into up to 160,000 shares of common stock, (iii) 30,095,697 Class A
Warrants, and (iv) 30,095,697 Class B Warrants. Upon exercise, the warrants will
convert on a 40 for 1 basis into a total of 1,504,785 common shares. The public
offering price of $8.00 per share of common stock, Class A Warrant and Class B
Warrant or $1,000 per preferred share, 5,000 Class A Warrants and 5,000 Class B
Warrants resulted in net proceeds to us of approximately $5.3 million net of
underwriting discount and commissions of $0.4 million and expense of $0.3
million.

On November 17, 2022, we entered into warrant exercise inducement offer letters
with some of the Class A warrant holders who agreed to exercise for cash, at a
discounted exercise price of $4.77 per share, all of their Class A Warrants to
purchase 654,609 shares of our common stock originally issued in the Public
Offering in exchange for our agreement to issue new warrants (the "Inducement
Warrants") on substantially the same terms as the Class A Warrants to purchase
up to 654,609 shares of common stock. Each Inducement Warrant is exercisable six
months following its date of issuance at a price per share of common stock of
$5.97 and will expire on the 18 month anniversary of their initial exercise
date. We received aggregate gross proceeds of

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approximately $3.1 million from the exercise of the Class A Warrants by the selling stockholders and the sale of the Inducement Warrants.

At December 31, 2022, we had unrestricted cash and cash equivalents totaling approximately $6.0 million.

Comparison of Years Ended December 31, 2022 and 2021

The following table sets forth the primary sources and uses of cash for the years ended December 31, 2022 and 2021:

Year Ended December 31,


                                                                    2022                     2021
Net Cash Used in Operating Activities                         $  (10,428,133)              (10,675,390)
Net Cash Provided by (Used in) Investing Activities                    6,375                  (157,020)
Net Cash Provided by Financing Activities                          8,620,921                17,582,926


Operating Activities

During the year ended December 31, 2022, we recorded a net loss of $13.6 million
and adjusted primarily for non-cash expense for stock-based compensation in the
amount of $0.5 million, an increase in the change in fair value of contingent
consideration of $0.6 million, an increase in the change in fair value of
warrant liability of $1.4 million and a decrease in accounts payable of $0.8
million and accrued expenses of $0.6 million, which was partially offset by an
increase in tax credits receivable of $0.9 million. During the year ended
December 31, 2021, we recorded a net loss of $13.8 million and adjusted
primarily for goodwill impairment loss of $4.0 million, non-cash expense for
stock-based compensation in the amount of $0.8 million, which was partially
offset by an increase in tax credits receivable of $0.4 million, a decrease in
the change in fair value of contingent consideration of $0.5 million, and a
decrease in accounts payable of $0.3 million.

Investing Activities



During the year ended December 31, 2022, net cash provided by investing
activities related to proceeds from the sale of equipment. During the year ended
December 31, 2021, net cash used related to the acquisition of Bayon, as well as
the purchase of office furniture and fixtures.

Financing Activities



During the year ended December 31, 2022, we received net proceeds of $5.4
million from the completion of a public offering, as well as net proceeds of
$2.7 million from the completion of a warrant inducement transaction. During the
year ended December 31, 2021, we received net proceeds of $9.8 million from the
completion of a registered direct offering, as well as net proceeds of $8.0
million from the completion of a private placement.

Funding Requirements and Other Liquidity Matters



Our KIO-101, KIO-201, and KIO-301 product pipeline is still in various stages of
clinical development. We expect to continue to incur significant expenses and
increasing operating losses for the foreseeable future. We anticipate that our
expenses will increase substantially if and as we:

•seek marketing approval for our KIO-101, KIO-201 or KIO-301 products, or any other products that we successfully develop;

•establish a sales and marketing infrastructure to commercialize our KIO-101, KIO-201, or KIO-301 products in the U.S., if approved; and

•add operational, financial, and management information systems and personnel, including personnel to support our product development and future commercialization efforts.



Until such time, if ever, as we can generate substantial product revenue, we
expect to finance our cash needs through a combination of equity offerings, debt
financings, collaborations, strategic alliances, and licensing

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arrangements. We do not have any committed external source of funds. To the
extent that we raise additional capital through the sale of equity or
convertible debt securities, the ownership interest of our stockholders will be
diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect the rights of a common stockholder. Debt
financing, if available, may involve agreements that include covenants limiting
or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures, or declaring dividends. If we
raise additional funds through collaborations, strategic alliances, or licensing
arrangements with pharmaceutical partners, we may have to relinquish valuable
rights to our technologies, future revenue streams, research programs, or
product candidates, including our KIO-301, KIO-101, and KIO-201 products, on
terms that may not be favorable to us. If we are unable to raise additional
funds through equity or debt financings when needed, we may be required to
delay, limit, reduce, or terminate our product development or future
commercialization efforts or grant rights to develop and market KIO-101,
KIO-201, and KIO-301 products, or any other products that we would otherwise
prefer to develop and market ourselves.

Based on our cash on hand at December 31, 2022, we believe we will have
sufficient cash to fund planned operations into July 2023. However, the
acceleration or reduction of cash outflows by management can significantly
impact the timing needed for raising additional capital to complete development
of its products. To continue development, we will need to raise additional
capital through debt and/or equity financing, or access additional funding
through grants. Although we successfully completed our IPO and several
subsequent registered offerings and private placements of our securities,
additional capital may not be available on terms favorable to us, if at all. We
do not know if our future offerings will succeed. Accordingly, no assurances can
be given that management will be successful in these endeavors. Our recurring
losses from operations have caused management to determine there is substantial
doubt about our ability to continue as a going concern. Our consolidated
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities or any other adjustments that might be
necessary should we be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements at December 31, 2022.

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