Nuo Therapeutics Inc

NUO THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note1 – Description of Business

Description of Business

Nuo Therapeutics, Inc. (“Nuo Therapeutics,” the “Company,” “we,” “us,” or “our”) is a Delaware corporation organized in1998 under the name Informatix Holdings, Inc. In1999, Autologous Wound Therapy, Inc., an Arkansas Corporation, merged with and into Informatix Holdings, Inc. and the name of the surviving corporation was changed to Autologous Wound Therapy, Inc. In2000, Autologous Wound Therapy, Inc. changed its name to Cytomedix, Inc. (“Cytomedix”). In2001, Cytomedix, filed for bankruptcy from which it emerged in2002 under a Plan of Reorganization. In* September 2007,Cytomedix received510*(k) clearance for the Aurix System (“Aurix”), formerly known as the AutoloGel™ System, from the U. S. Food and Drug Administration (“FDA”). In* April 2010,Cytomedix acquired the Angel Whole Blood Separation System (“Angel”) and the Angel Business, from Sorin Group USA, Inc. In February 2012,Cytomedix, acquired Aldagen, Inc. (“Aldagen”), a privately held developmental cell-therapy company located in Durham, NC. In2014,* Cytomedix changed its name to Nuo Therapeutics, Inc. In2016, Nuo filed for and emerged from bankruptcy under Chapter11. Effective* May 1, 2019,we furloughed our remaining employees and ceased standard operational activities as we awaited developments concerning our reconsideration request with the Centers for Medicare & Medicaid Services (“CMS”) regarding Medicare coverage for Aurix. Based on a favorable National Coverage Determination (“NCD”) issued in April 2021,we initiated restart activities for the business beginning in October 2021.*Aldagen is a non-operational, wholly owned subsidiary of Nuo.

**Note2 **–Liquidity and Summary of Significant Accounting Principles

Liquidity

Since our inception, we have financed our operations by raising debt, issuing equity and equity-linked instruments, and executing licensing arrangements, and to a lesser extent by generating royalties and product revenues. In mid-2019, we ceased ongoing operational activities as we worked to reach a favorable outcome to Medicare reimbursement coverage for the Aurix System. In* April 2021CMS issued an NCD establishing national reimbursement coverage for Aurix when used in chronic non-healing wounds where a diabetes clinical diagnosis exists for the patient. During the year ended December 31, 2023,the Company raised proceeds of $1,997,500 from the sale of common stock to certain accredited investors intwo* private placement which closed in* Augustand December 2023.During the year ended December 31, 2022,the Company raised proceeds of $4,457,757 from the sale of common stock, participation right, and contingent warrant to certain accredited investors inthree* separate equity private placements which closed in* April,** May,and September 2022.*

We have incurred, and continue to incur, recurring losses and negative cash flows. As of* December 31, 2023,*we have an accumulated deficit of approximately $29.9 million and cash and cash equivalents on hand of approximately $0.9 million.

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due.

We believe based on the operating cash requirements and capital expenditures expected for the nexttwelve months that our current resources and projected revenue from sales of Aurix products are insufficient to support our operations for the next12 months. As such, we believe that substantial doubt about our ability to continue as a going concern exists. The financial statements donot include any adjustments that might result from the outcome of this uncertainty.

Even assuming we succeed in raising sufficient additional funds in the near future to avoid a cessation of business operations, we require additional capital and will seek to continue financing our operations with external capital for the foreseeable future. Any equity financings* maycause further substantial dilution to our stockholders and could involve the issuance of securities with rights senior to the common stock. Any debt financings mayrequire us to comply with additional onerous financial covenants and restrict our business operations. Our ability to complete additional financings is dependent on, among other things, market reception of the Company and perceived likelihood of success of our business model, the state of the capital markets at the time of any proposed equity or debt offering, state of the credit markets at the time of any proposed loan financing, and on the relevant transaction terms, among other things. We maynot* be able to obtain additional capital as required to finance our efforts, through equity or debt financing, other transactions, or any combination thereof, on satisfactory terms or at all. Additionally, any such financing, if at all obtained,* maynot* be adequate to meet our capital needs and to support our operations.

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Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned, controlled, and inactive subsidiary Aldagen, Inc. (“Aldagen”). All significant inter-company accounts and transactions are eliminated in consolidation. The Company operates its business inone operating segment consisting ofone reporting unit.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, butnot limited to stock-based compensation, the fair value of common stock and equity-linked and derivative financial instruments, recoverability and depreciable lives of long-lived assets, deferred taxes and associated valuation allowance, the valuation and classification of debt instruments, and allowances for inventory obsolescence and doubtful accounts. Actual results could differ from those estimates.

Credit Concentration

We generate accounts receivable from the sale of our products. Specific customer receivable balances in excess of10% of total receivables at* December 31, 2023and December 31, 2022*are listed below.

• less than10%

Revenue from significant customers exceeding10% of total revenues for the years ended* December 31, 2023and December 31, 2022*is listed below. All our revenue in both years was generated within the U.S.

• less than10%

Historically, we used single suppliers for several components of the Aurix product line. We outsource the manufacturing of various product components to contract manufacturers. While we believe these manufacturers demonstrate competency, reliability and stability, there isno assurance thatone or more of them willnot experience an interruption or inability to provide us with the products needed to satisfy customer demand. Additionally, while most of the components of Aurix are generally readily available on the open market, a reagent, bovine thrombin, is available exclusively through Pfizer, with whom we have an established vendor relationship.

Cash, Cash Equivalents, and Restricted Cash

We consider all highly liquid instruments purchased with an original maturity ofthree months or less to be cash equivalents. Cash and cash equivalents potentially subject us to a concentration of credit risk, as approximately $0.9 million held in financial institutions was in excess of the FDIC insurance limit of*$250,000* at* December 31, 2023.We maintain our cash in the form of money market deposit accounts with financial institutions that we believe are credit worthy. We maintainedno* cash equivalents as of* December 31, 2023or2022.* As of* December 31, 2022,*$55,000 of cash was considered as restricted as it collateralized a corporate credit card.

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Accounts Receivables, net

We generate accounts receivables from the sale of the Aurix products and accounts receivable as of* December 31, 2023reflects customer receivables from commercial sales activities since the re-initiation of such activities beginning in thethree* months ended* September 30, 2022.*

We provide for an allowance against receivables for estimated losses that* mayresult from a customer’s inability or unwillingness to pay. The Company estimates credit losses expected over the life of its trade receivables and contract assets based on historical information combined with current conditions that mayaffect a customer’s ability to pay and reasonable and supportable forecasts. While the Company uses various credit quality metrics, it primarily monitors collectability by reviewing the duration of collection pursuits on its delinquent trade receivables and historical write-off trends. Based on the Company’s experience, the customer's delinquency status, which is analyzed periodically, is the strongest indicator of the credit quality of the underlying trade receivables. Accounts are written off against the allowance for credit losses when we determine that amounts arenot* collectable. Recoveries of previously written-off accounts are recorded when collected. During the year ended* December 31, 2023,we established a provision for credit losses of $160,000. As of December 31, 2023,the allowance for credit losses was approximately $32,400. At December 31, 2022,we didnot maintain an allowance for credit losses as it wasnot* considered necessary based on the recent initiation of commercial sales.

Inventory, net

Our inventory is produced bythird-party manufacturers and consists of raw materials and finished goods. Inventory cost is determined on afirst-in,first-out basis and is stated at the lower of cost or net realizable value. We maintain an inventory of kits, reagents, and other disposables having shelf-lives that generally range from12 months totwo years.

As of* December 31, 2023,our inventory consisted of approximately $150,000 of finished goods inventory and approximately $60,000 of raw materials acquired to facilitate the manufacturing of finished goods at our contract manufacturer and our warehouse/distribution facility. As of December 31, 2022,*our inventory consisted of approximately $157,000 of finished goods inventory and approximately $83,000 of raw materials.

We provide for an allowance against inventory for estimated losses that* mayresult in excess and obsolete inventory (i.e., from the expiration of products). Our allowance for expired inventory is estimated based upon the inventory’s remaining shelf-life and our anticipated ability to sell such inventory, which is estimated using past experience and future forecasts, within its remaining shelf life. Expired products are segregated and used for demonstration purposes only; we will record the associated expense for this reserve to cost of sales in the consolidated statements of operations. As of December 31, 2023,we established an allowance for expired inventory of approximately $16,000. As of December 31, 2022,we didnot maintain an allowance for inventory obsolescence as it wasnot* considered necessary based on the recent initiation of commercial sales and the relatively recent vintage of product inventory.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization. Assets are depreciated, using the straight-line method, over their estimated useful life ranging fromone tosix years. Maintenance and repairs are charged to operations as incurred.

Leases

At the inception of a contract, the Company determines if the arrangement is, or contains, a lease. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term.

The Company has made certain accounting policy elections whereby the Company (i) doesnot recognize ROU assets or lease liabilities for short-term leases (those with original terms of12-months or less) and (ii) combines lease and non-lease elements of its operating leases.

Revenue Recognition

The Company analyzes its revenue arrangements to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. The Company recognizes revenues upon the satisfaction of its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.

We provide for the sale of our products, including disposable processing sets and supplies to customers. Revenue from the sale of products is recognized upon shipment of products to the customers. We donot maintain a reserve for returned products, as in the past those returns havenot been material and arenot expected to be material in the future. Direct costs associated with product sales are recorded at the time that revenue is recognized.

We recognized initial revenues from commercial sales activities beginning in thethree months ended* September 30, 2022.*

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Stock-Based Compensation

The fair value of employee stock options is measured at the date of grant. Expected volatilities for the2016 Omnibus Plan options are based on the equally weighted average historical volatility fromfive comparable public companies with an expected term consistent with ours. Expected years until exercise represents the period of time that options are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company estimated that the dividend rate on its common stock will be zero. The assumptions are summarized in the following table:

The Company recognizes forfeitures of stock-based awards as they occur.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. Tax rate changes are reflected in income during the period such changes are enacted. We measure our deferred tax assets and liabilities using the enacted tax rates that we believe will apply in the years in which the temporary differences are expected to be recovered or paid. The Company expects that recent tax law changes contained in the Inflation Reduction Act and CHIPS Act willnot have a material impact on its provision for income taxes.

A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely thannot that some portion or all of the deferred tax assets willnot be realized. All of our tax years remain subject to examination by the tax authorities.

The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income before taxes. There wereno material penalties and interest incurred in2023 and2022.

Basic and Diluted Loss per Share

In periods of net loss, basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. In periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potential dilutive common shares is anti-dilutive.

For periods of net income, diluted earnings per share is computed using the more dilutive of the “treasury method” or “two class method.” Dilutive earnings per share under the “treasury method” is calculated by dividing net income available to common stockholders by the weighted- average number of shares outstanding plus the dilutive impact of all potential dilutive common shares, consisting primarily of common shares underlying common stock options and stock purchase warrants using the treasury stock method, and convertible notes using the if-converted method. Becausenone of the Company’s equity-linked financial instruments contain non-forfeitable rights to dividends, the “two class” method results in the same diluted earnings per share as the “treasury method.”

The following table provides a reconciliation of the numerator and denominators used in the calculation of basic and diluted loss per share for the years ended* December 31, 2023and2022:*

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The following table sets forth the potential dilutive securities excluded from the calculation of diluted loss per share for the years ended* December 31, 2023and2022:*

Reclassifications

Certain amounts as of* December 31, 2022in Note4 - Accrued Liabilities* have been reclassified to conform to the current year presentation.

Recent Accounting Developments

In* December 2023,the FASB issued final guidance in ASUNo.* 2023-09, Income Taxes (ASC740): Improvements to Income Tax Disclosures requiring entities to provide additional information in the rate reconciliation and disclosures about income taxes paid. For public business entities, the guidance is effective for annual periods beginning after* December 15, 2024.The Company doesnot* expect this ASU to have a material impact on the consolidated financial statements.

We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards willnot have a material impact on our results of operations, financial position, or cash flows.

Note3 –** Property and Equipment**

Property and equipment, net consisted of the following:

Depreciation expense was $15,327 and $6,827, respectively, for the years ended* December 31, 2023and December 31, 2022.None of the Company's long-lived assets were deemed to be impaired during the years ended December 31, 2023and2022.*

Note4 —Accrued Liabilities

Accrued liabilities consisted of the following:

Note 5 –** Stock Purchase Warrants**

The following schedule reflects outstanding stock purchase warrants as of* December 31, 2023and2022:*

During the year ended* December 31, 2022,the Company issuedtwo* warrants to purchase (i)250,000 shares of common stock at an exercise price of $1.00 per share and expiring* December 31, 2027and (ii)200,000 shares of common stock at an exercise price of $1.50 per share and expiring December 31, 2028to a distribution partner under an agreement whereby the warrants are exercisable subject to the distributor attaining certain performance goals set forth in the warrants based upon exceeding sales quota revenues for calendar years2023* through potentially2025. The aggregate intrinsic value for2022 sales incentive warrants as of* December 31, 2023waszero. Additionally, the Company agreed to issue certain additional warrants to acquire up to 500,000 shares of common stock to the same distribution partner where the issuance of the warrant is contingent upon future financing events and arenot* reflected in the above table. SeeNote6* – Equity and Stock-Based Compensation* for further information.

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Note6 – Equity and Stock-Based Compensation

Under the Company’s Second Amended and Restated Certificate of Incorporation, it has the authority to issue a total of 101,000,000 shares of capital stock, consisting of: (i)100,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share, which will have such rights, powers and preferences as the Board of Directors of the Company shall determine.

2022 Private Placement Equity Issuances

The Company sold 3,957,757 shares of common stock to certain accredited investors pursuant to Securities Purchase Agreements intwo private placements which closed in* Apriland May 2022for proceeds of $3,957,757. Certain related parties including a principal shareholder, members of the Board of Directors, and members of senior management invested an aggregate of $940,400 in the April 2022*private placement transaction.

Pacific Medical Common Stock and Warrant Purchase Agreement

In* August 2022,*the Company entered into a Common Stock and Warrant Purchase Agreement (the “Agreement”) with Pacific Medical, Inc. (“Pacific Med”) for the sale and issuance of shares of common stock and warrants to purchase shares of common stock. Pacific Med is the exclusive distributor for the Aurix System product within a territory that covers the states of Washington, Oregon, Idaho, Montana, Wyoming, most of California, the northern half of Nevada, plus Alaska.

Pursuant to the Agreement, Pacific Med purchased 500,000 shares of the Company’s common stock for $500,000. As part of the purchase of common stock, the Company agreed to grant to Pacific Med the right to participate in any future financing by the Company through* December 31, 2023 (the “Participation Rights”) in connection with a listing of our common stock on a national securities exchange. The Participation Rights entitle Pacific Med to purchase up to 500,000 shares of common stock upon substantially the same terms, conditions, and price provided for in such financing. In the event such a financing didnot* occur by* December 31, 2023,the Company agreed to issue Pacific Med a warrant with a January 1, 2024issuance date and exercisable until June 30, 2024,to purchase up to 500,000 shares of Common Stock at a price equal to the lower of $2.00 per share or the20*-day volume weighted average closing price per share ending* December 31, 2023 (the “Contingent Warrant”). The Contingent Warrant was issued on January 1, 2024*with an exercise price of $0.56 per share. The common stock, Participation Rights, and Contingent Warrant are equity classified.

As part of the Agreement and as additional incentive compensation with respect to Pacific Med’s performance under its existing sales and distribution arrangement, the Company also provided to Pacific Medtwo compensatory performance-based stock purchase warrants and certain contingently issuable performance shares. Thefirst warrant entitles Pacific Med to purchase up to 250,000 shares of common stock at a price of $1.00 per share (the “First Warrant”) upon Pacific Med attaining certain performance goals set forth in the First Warrant based upon exceeding sales quota revenue, as agreed between the Company and Pacific Med, for calendar years2023 and/or2024. Thesecond warrant entitles Pacific Med to purchase up to 200,000 shares of Common Stock at a price of $1.50 per share (the “Second Warrant”) upon Pacific Med attaining certain performance goals set forth in the Second Warrant based upon exceeding sales quota revenue, as agreed between the Company and Pacific Med, for calendar years2024 and/or2025. The First Warrant will expire* December 31, 2027and the Second Warrant will expire December 31, 2028.The fair value of the First Warrant and Second Warrant at the date of issuance was approximately $434,000 and $345,000, respectively, based on a Black-Scholes option pricing model. As the exercisability of thetwo* warrants wasnot considered probable as of* December 31, 2023or2022,* there wasno recognition of stock-based compensation expense for the years then ended. When exercisability is determined to be probable, the issuance date fair value of the warrant earned through such date will be recognized with the balance of the fair value recognized ratably over the remaining period of performance. The Company also agreed to issue up to 300,000 shares of common stock to Pacific Med subject to and upon the achievement of certain milestones set forth in the Agreement based upon sales of our products over defined12-month periods of between $4.5 million by* June 30, 2024through at least $12.5 million in calendar year2025* (the Performance Shares”). The fair value of the Performance Shares at the date of issuance was approximately $615,000 based on the closing stock price on the closing of the Agreement. As the issuance of the shares isnot considered probable as of* December 31, 2023,there wasno expense recognition for the year ended December 31, 2023.*When issuance is determined to be probable, the issuance date fair value of the shares through such date will be recognized with the balance of the fair value recognized ratably over the remaining period of performance.

2023 Private Placement Equity Issuances

The Company sold 2,442,500 shares of common stock to certain accredited investors pursuant to Securities Purchase Agreements intwo private placements which closed in* Augustand December 2023for proceeds of $1,997,500. Certain related parties including a principal shareholder, a member of the Board of Directors, and a member of senior management invested an aggregate of $760,000 in thetwo* 2023 private placement transactions.

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Stock-Based Compensation

In* July 2016,the Board of Directors approved the Company’s2016* Omnibus Incentive Plan (the*“2016* Omnibus Plan”), and in* August 2016,the Board amended such plan to include an evergreen provision, intended to increase the maximum number of shares issuable under the Omnibus Plan on thefirst* day of each fiscal year (starting on* January 1, 2017)by an amount equal tosix* percent (6%) of the shares reserved as of the last day of the preceding fiscal year, provided that the aggregate number of all such increases* may**not* exceed 1,000,000 shares. In* November 2016,holders of a majority of our capital stock approved the2016* Omnibus Plan, as amended and restated, which provides for the Company to grant equity and cash incentive awards to officers, directors and employees of, and consultants to, the Company and its subsidiaries. Further, in* March 2022,the Board approved an amendment to the2016* Omnibus Plan to increase the shares available under to Plan to 4,250,000 and remove the annual evergreen provision, which was approved by the holders of a majority of our common stock outstanding, and which became effective in* June 2022.*

A summary of stock option activity under the2016 Omnibus Plan during thetwo years ended* December 31, 2023*is presented below:

There were 2,021,666 stock options granted under the2016 Omnibus Plan during the year ended* December 31, 2022of which (i)206,666 options were granted to settle prior accrued compensation liabilities with senior management and Board of Directors, (ii)450,000 of immediately vested options were granted to management, the Board of Directors, and athird*-party service provider, (iii)1,355,000 incentive stock options vesting over 3 years were granted to employees, and (iv)10,000 incentive stock options vesting over 1 year were granted to athird party consultant. The fair value of the stock options granted in settlement of accrued liabilities was approximately $3,000. As the options issued were to related parties, the $103,333 of settled liabilities was credited to additional paid-in-capital. The fair value of 450,000 of immediately vested options was $6,430 and was recognized as stock-based compensation expense for the year ended* December 31, 2022.*

During the year ended* December 31, 2023,there were 100,000 incentive stock options granted to an employee under the2016* Omnibus Plan. The fair value of the options vesting over three years was approximately $53,500.

The aggregate intrinsic value for outstanding and exercisable options as of* December 31, 2023*was approximately $178,000.

For the years ended* December 31, 2023and2022,* the Company recorded total stock-based compensation expense of $21,746 and $9,145, respectively. As of* December 31, 2023,there was approximately $74,000 of unrecognized compensation cost related to non-vested stock options which is expected to be recognized prior to year end2026.*

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Note7 —Income Taxes

Income tax expense (benefit) for the years ended* December 31, 2023and2022* consisted of the following:

Significant components of the Company's deferred tax assets and liabilities consisted of the following at* December 31, 2023and2022:*

The following table presents a reconciliation between the U.S. federal statutory income tax rate and the Company's effective tax rate:

The Company has Federal net operating loss carry-forwards of approximately $158.1 million as of* December 31, 2023.The Federal net operating loss carry-forwards are subject to annual limitation under Section382* of the Internal Revenue Code as a result of the Company’s emergence from bankruptcy in2016 as well as due to other changes in ownership subsequent to such emergence; any such limitation reduces the Company's ability to use its net operating loss carryforwards to offset future taxable income on an annual basis and* maypermanently reduce the Company’s ability to use such net operating loss carryforwards. Federal net operating loss carryforwards generated before2018* have a20-year life and expire through2028, while net operating loss carryforwards generated after2017 have an indefinite life. The Company hasnot filed its required state income tax returns since2017 and intends to file all required state returns within the next12-18 months. The Company has provided a full valuation allowance against its net deferred tax assets as it is more likely thannot that those net assets willnot be realized. The Company doesnot believe that it has any uncertain income tax positions.

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Note8 –** Commitments and Contingencies**

In* January 2022,the Company entered into a commercial operating lease agreement for its office space in Florida, expiring on December 31, 2024.The lease requires the Company to pay for its insurance, taxes, and its share of common operating expenses. The lease resulted in recognition of right of use assets and lease liabilities of $89,312, using a discount rate of 10%. The lease was cancellable by the landlord at any time prior to December 31, 2022based on certain capital raising contingencies which the Company met in April 2022.*

In* February 2022,the Company entered into an additional commercial operating lease for its primary office and warehouse/distribution space in Texas. The lease requires the Company to pay for its insurance, taxes, and its share of common operating expenses. This lease expires in March 2027.The space remained under buildout and Landlord control during thethree* months ended* March 31, 2022with the Company acquiring control of the lease space effective April 1, 2022;as a result, a right of use asset and lease liability was recognized of $337,226 as of April 1, 2022*using a discount rate of 10%.

Total operating lease costs were approximately $158,000 and $128,000 for the years ended* December 31, 2023and December 31, 2022,respectively, consisting solely of base rental and common area maintenance costs. The Company hasno* financing leases. The weighted average remaining lease term is 3.0 years at* December 31, 2023.*

Future undiscounted cash flows under these leases are:

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Note9 –** Subsequent Events**

The Company has evaluated subsequent events through the date the consolidated financial statements were available to be issued.No material events requiring disclosure were identified.