GAXOSAI INC

Previous wording

Recently, we launched a new initiative, Gaxos Health, which is dedicated to revolutionizing personal health and wellness by developing a suite of innovative AI-powered health optimization solutions. Gaxos Health will integrate AI-driven insights with individual biometric data and health goals to create web and application based personalized wellness strategies to users. We believe that this cutting-edge approach will redefine preventative medicine, offering unparalleled personalization in health and wellness. Gaxos Health solutions will analyze a wide range of health data to provide tailored wellness plans and address the growing demand for personalized health solutions. We believe that this technology is not just a step but a leap forward in empowering individuals to take control of their health and longevity with AI’s precision and intelligence.

Current wording

Recently, we began to develop a new initiative, Gaxos Health, which is dedicated to revolutionizing personal health and wellness by developing a suite of innovative AI-powered health optimization solutions. Gaxos Health will integrate AI-driven insights with individual biometric data and health goals to create web and application based personalized wellness strategies for users. We believe that this cutting-edge approach will redefine preventative medicine, offering unparalleled personalization in health and wellness. Gaxos Health solutions will analyze a wide range of health data to provide tailored wellness plans and address the growing demand for personalized health solutions. We believe that this technology is not just a step but a leap forward in empowering individuals to take control of their health and longevity with AI’s precision and intelligence.

Previous wording

Comparison of Our Results of Operations for the Three Months Ended March 31, 2024 and 2023.**

Current wording

Comparison of Our Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023.**

Previous wording

During the three months ended March 31, 2024, we generated revenue of $19. During the three months ended March 31, 2023, we did not generate any revenues from operations. Once we achieve a critical mass of users, we plan to offer new features and to charge fees in order to generate revenues from these added features.

Current wording

During the three months ended June 30, 2024 and 2023, we did not generate any revenues from operations. Once we achieve a critical mass of users, we plan to offer new features and to charge fees in order to generate revenues from these added features. During the six months ended June 30, 2024 and 2023, we generated revenue of $19 and $0, respectively. Once we achieve a critical mass of users, we plan to offer new features and to charge fees in order to generate revenues from these added features.

Previous wording

During the three months ended March 31, 2024 and 2023, we incurred operating expenses of $1,043,858 and $1,542,332, respectively, a decrease of $498,493, or 32.3%. Operating expenses consisted of the following:

Current wording

During the three months ended June 30, 2024 and 2023, we incurred operating expenses of $854,503 and $768,601, respectively, an increase of $85,902, or 11.2%. During the six months ended June 30, 2024 and 2023, we incurred operating expenses of $1,898,361 and $2,310,933, respectively, a decrease of $412,572. For the three and six months ended June 30, 2024 and 2023, operating expenses consisted of the following:

Previous wording

We capitalize all development and production service payments to third-party developers as internal-use software development costs and licenses once we reach the application development stage. Prior to this stage, we expense all research and development fees. During the three months ended March 31, 2024 and 2023, we reported research and development expense of $182,329 and $104,551, respectively, an increase of $77,778, or 74.4%, primarily due to an increase in outside development costs incurred in connection with the development of Gaxos Games and Gaxos Health platforms. We expect research and development expenses to increase in the future as development of Gaxos games and Gaxos Health accelerates.

Current wording

We capitalize all development and production service payments to third-party developers as internal-use software development costs and licenses once we reach the application development stage. Prior to this stage, we expense all research and development fees. During the three months ended June 30, 2024 and 2023, we reported research and development expense of $249,341 and $267,618, respectively, a decrease of $18,277, or 6.8%. The decrease is primarily due to a decrease in outside development costs incurred in connection with the development of Gaxos Games offset by an increase in development of the Gaxos Health platforms. During the six months ended June 30, 2024 and 2023, we reported research and development expense of $431,670 and $372,169, respectively, an increase of $59,501, or 16.0%. The increase is primarily due to an increase in outside development costs incurred in connection with the development of Gaxos Health platforms offset by a decrease in outside development costs incurred in connection with the development of Gaxos Games. We expect research and development expenses to increase in the future as development of Gaxos Games and Gaxos Health accelerates.

Previous wording

During the three months ended March 31, 2024 and 2023, compensation and related benefits amounted to $363,484 and $786,236, respectively, a decrease of $422,752, or 53.8%. The decrease during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily attributable to a decrease in accretion of stock-based compensation related to issuance of stock options to executive officers, directors and employees of $640,491, offset by an increase in executive officer and employee compensation of $217,739.

Current wording

During the six months ended June 30, 2024 and 2023, compensation and related benefits amounted to $517,062 and $993,833, respectively, a decrease of $476,771, or 48.0%. The decrease during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily attributable to a decrease in accretion of stock-based compensation related to issuance of stock options to executive officers, directors and employees of $640,514, offset by an increase in executive officer and employee compensation of $163,743.

Previous wording

During the three months ended March 31, 2024 and 2023, we incurred professional fees of $274,688 and $588,862, respectively, a decrease of $314,174, or 53.3%, attributable to a decrease in stock-based consulting fees due to the accretion of stock options expense to consultants of $214,275, and a decrease in investor relations fees of $172,000, offset by an increase in advisory fees of $29,695, and an increase in other professional fees of $42,406.

Current wording

During the six months ended June 30, 2024 and 2023, we incurred professional fees of $560,361 and $697,878, respectively, a decrease of $137,517, or 19.7%, attributable to a decrease in stock-based consulting fees due to the accretion of stock options expense to consultants of $202,744, and a decrease in investor relations fees of $176,550, offset by an increase in advisory fees of $177,195, and an increase in other professional fees of $64,582.

Previous wording

General and administrative expenses consist of advertising and marketing expenses, office expenses, insurance, listing fees, computer and interest expenses, travel expenses, amortization expense, and other general business expenses. During the three months ended March 31, 2024 and 2023, we incurred general and administrative expenses of $223,357 and $62,683, respectively, an increase of $160,674, or 256.3%. Generally, the increase in other general and administrative expenses during the three months ended March 31, 2024 as compared to the three months ended March 311, 2023 was attributable to a ramp up of operations which began in February 2023 following the Company’s IPO.

Current wording

General and administrative expenses consist of advertising and marketing expenses, office expenses, insurance, listing fees, computer and interest expenses, travel expenses, amortization expense, and other general business expenses. During the three months ended June 30, 2024 and 2023, we incurred general and administrative expenses of $165,911 and $132,007, respectively, an increase of $33,904, or 25.7%. During the six months ended June 30, 2024 and 2023, we incurred general and administrative expenses of $389,258 and $194,690, respectively, an increase of $194,568, or 100.0%. Generally, the increase in other general and administrative expenses during the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023 was attributable to an increase in advertising and marketing expenses and a ramp up of operations which began in February 2023 following the Company’s IPO.

Previous wording

During the three months ended March 31, 2024 and 2023, we reported a loss from operations of $1,043,839 and $1,542,332, respectively, a decrease of $498,493, or 32.3%. The decrease in loss from operations was due to the decrease in general and administrative expenses, offset by an increase in research and development as discussed above.

Current wording

During the three months ended June 30, 2024 and 2023, we reported a loss from operations of $854,503 and $768,601, respectively, an increase of $85,902, or 11.2%. During the six months ended June 30, 2024 and 2023, we reported a loss from operations of $1,898,342 and $2,310,933, respectively, a decrease of $412,591, or 17.8%. The change in loss from operations was due to changes in general and administrative expenses, research and impairment loss as discussed above.

Previous wording

During the three months ended March 31, 2024 and 2023, we reported other income of $131,694 and $6,301, respectively, an increase of $125,393. This increase is attributable to an increase in interest income of $5,678. Additionally, we recorded a realized gain on short-term investments during the three months ended March 31, 2024 and 2023 of $119,715 and $0, respectively.

Current wording

During the three months ended June 30, 2024 and 2023, we reported other income of $45,265 and $14,557, respectively, an increase of $30,708, or 210.9%. This increase is attributable to an increase in interest income. During the six months ended June 30, 2024 and 2023, we reported other income of $176,959 and $20,858, respectively, an increase of $156,101, or 748.4%. This increase is attributable to an increase in interest income of $36,386. Additionally, we recorded a realized gain on short-term investments during the six months ended June 30, 2024 and 2023 of $119,715 and $0, respectively.

Previous wording

During the three months ended March 31, 2024 and 2023, our net loss amounted to $912,145, or a net loss per common share of $0.91 (basic and diluted) and $1,536,031, or a net loss per common share of $1.64 (basic and diluted), respectively, a decrease of $623,886, or 40.6%. During the three months ended March 31, 2024 and 2023, our total comprehensive loss amounted to $1,011,560 and $1,517,875, respectively, a decrease of $506,315, or 33.4%.

Current wording

During the six months ended June 30, 2024 and 2023, our net loss amounted to $1,721,383, or a net loss per common share of $1.60 (basic and diluted) and $2,290,075, or a net loss per common share of $2.35 (basic and diluted), respectively, a decrease of $568,692, or 24.8%. During the six months ended June 30, 2024 and 2023, our total comprehensive loss amounted to $1,813,753 and $2,252,270, respectively, a decrease of $438,517, or 19.5%.

Previous wording

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. On March 31, 2024, we had a cash balance of $3,312,277, had short-term investments of $2,092,078, and had working capital of $5,251,505.

Current wording

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. On June 30, 2024, we had a cash balance of $2,371,933, had short-term investments of $2,099,122, and had working capital of $4,495,777.

Previous wording

For the three months ended March 31, 2024, net cash used in operations was $1,099,417, which primarily resulted from our net loss of $912,145, adjusted for the add back of amortization expense of $8,683, stock-based compensation to employees of $15,806, and a realized gain on short-term investments of $119,715, and changes in operating asset and liabilities such as an increase in prepaid expenses and other current assets of $335,781, an increase in accounts payable of $177,268, and an increase in accrued expenses of $66,469.

Current wording

For the six months ended June 30, 2024, net cash used in operations was $1,837,867, which primarily resulted from our net loss of $1,721,383, adjusted for the add back of amortization expense of $22,846, stock-based compensation to employees of $49,241, and a realized gain on short-term investments of $119,715, and changes in operating asset and liabilities such as an increase in prepaid expenses and other current assets of $191,699, an increase in accounts payable of $81,779, and an increase in accrued expenses of $40,292.

Previous wording

For the three months ended March 31, 2023, net cash used in operations was $933,858, which primarily resulted from our net loss of $1,536,031, adjusted for the add back of amortization expense of $3,142 and stock-based compensation to employees and consultants of $870,572, and changes in operating asset and liabilities such as an increase in prepaid expenses and other current assets of $165,123, a decrease in accounts payable of $119,399, and an increase in accrued expenses of $12,981.

Current wording

For the six months ended June 30, 2023, net cash used in operations was $1,433,858, which primarily resulted from our net loss of $2,290,075, adjusted for the add back of amortization expense of $6,284, stock-based compensation to employees and consultants of $892,499, and impairment loss of $52,363, and changes in operating asset and liabilities such as an increase in prepaid expenses and other current assets of $116,212, a decrease in accounts payable of $62,583, and an increase in accrued expenses of $83,866.

Previous wording

For the three months ended March 31, 2024, net cash provided by investing activities was $349,602, which resulted from proceeds received from the sale of short-term investments of $2,616,619, offset by cash used for the purchase of short-term investments of $2,095,707, an increase in capitalized internal-use software development costs of $21,310, and the purchase of an intangible asset of $150,000.

Current wording

For the six months ended June 30, 2024, net cash provided by investing activities was $147,604, which resulted from proceeds received from the sale of short-term investments of $2,617,205, offset by cash used for the purchase of short-term investments of $2,096,293, the purchase of equity securities of $199,998, an increase in capitalized internal-use software development costs of $23,310, and the purchase of an intangible asset of $150,000.

Previous wording

For the three months ended March 31, 2023, net cash used in investing activities was $3,491,242, which resulted from the purchase of short-term investments of $3,491,242.

Current wording

For the six months ended June 30, 2023, net cash used in investing activities was $3,491,242, which resulted from the purchase of short-term investments of $3,491,242.

Previous wording

For the three months ended March 31, 2024, net cash provided by financing activities was $3,037,382. On March 13, 2024, we entered into a securities purchase agreement with an institutional investor for the issuance and sale in a private placement of (i) 108,000 shares of the Company’s common stock (the “Common Stock”), (ii) pre-funded warrants to purchase 520,367 shares of Common Stock, (iii) series A warrants to purchase up to 628,367 shares of Common Stock, and (iv) series B warrants to purchase up to 628,367 shares Common Stock. The purchase price of each share of Common Stock and associated warrants was $5.57 and the purchase price of each pre-funded warrant and associated warrants was $5.569. The private placement closed on March 15, 2024 and the aggregate net proceeds of $3,056,984, after deducting placement agent fees and expenses and offering expenses payable by the Company. Additionally, during the three months ended March 31, 2024, we purchased and cancelled 6,846 treasury shares for $19,602, or at an average price of $2.86 per share.

Current wording

For the six months ended June 30, 2024, net cash provided by financing activities was $3,037,486. On March 13, 2024, we entered into a securities purchase agreement with an institutional investor for the issuance and sale in a private placement of (i) 108,000 shares of the Company’s common stock (the “Common Stock”), (ii) pre-funded warrants to purchase 520,367 shares of Common Stock, (iii) series A warrants to purchase up to 628,367 shares of Common Stock, and (iv) series B warrants to purchase up to 628,367 shares Common Stock. The purchase price of each share of Common Stock and associated warrants was $5.57 and the purchase price of each pre-funded warrant and associated warrants was $5.569. The private placement closed on March 15, 2024 and the aggregate net proceeds of $3,056,984, after deducting placement agent fees and expenses and offering expenses payable by the Company. Additionally, during the six months ended June 30, 2024, we purchased and cancelled 6,846 treasury shares for $19,602, or at an average price of $2.86 per share.

Previous wording

For the three months ended March 31, 2023, net cash provided by financing activities was $5,958,470. On February 17, 2023, we closed an IPO pursuant to which we issued 1,686,747 of our common stock for gross proceeds of approximately $7 million and net proceeds of $5,958,470, after deducting underwriting discounts and commissions, and offering expenses.

Current wording

For the six months ended June 30, 2023, net cash provided by financing activities was $5,934,229. On February 17, 2023, we closed an IPO pursuant to which we issued 1,686,755 of our common stock for gross proceeds of approximately $7 million and net proceeds of $5,958,470, after deducting underwriting discounts and commissions, and offering expenses. Additionally, during the six months ended June 30, 2023, we purchased and cancelled treasury shares for $24,241 and pre-funded warrants were exercised for proceeds of $104..