UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38022

MATINAS BIOPHARMA HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		No. 46-3011414
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1545 Route 206 South, Suite 302

Bedminster, New Jersey 07921

(Address of principal executive offices) (Zip Code)

908-484-8805

(Registrant’s telephone number, including area code)

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading ~~Symbol~~Symbol(s)		Name of Each Exchange on Which Registered
Common Stock		MTNB		NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated Filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 4, 2021,~~May 9, 2022, there were ~~216,247,528~~216,864,526 shares of the registrant’s common stock, $0.0001 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

MATINAS BIOPHARMA HOLDINGS, INC.

Form 10-Q

Quarter Ended ~~September 30, 2021~~March 31, 2022

Table of Contents

		Page

PART - I FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS	1

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1514

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2321

Item 4.	CONTROLS AND PROCEDURES	2321

PART - II OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	2421

Item 1A.	RISK FACTORS	2422

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2422

Item 3.	DEFAULTS UNDER SENIOR SECURITIES	2422

Item 4.	MINE SAFETY DISCLOSURES	2422

Item 5.	OTHER INFORMATION	2422

Item 6.	EXHIBITS	2622

Matinas BioPharma Holdings, Inc.

Condensed Consolidated Balance Sheets

	September 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
	(Unaudited)			(Audited)				(Unaudited)			(Audited)
ASSETS:
Current assets:
Cash and cash equivalents	$	24,922,760		$	12,432,481		$	19,328,135		$	21,029,806
Marketable securities		28,907,045			46,246,573			24,541,834			28,592,049
Restricted cash – security deposits		50,000			136,000
Restricted cash – security deposit								50,000			50,000
Prepaid expenses and other current assets		2,601,126			2,739,791			1,199,111			1,321,466
Total current assets		56,480,931			61,554,845			45,119,080			50,993,321

Non-current assets:
Leasehold improvements and equipment - net		1,568,717			1,523,950			2,013,322			1,537,728
Operating lease right-of-use assets - net		4,352,588			3,276,639			4,082,763			4,218,890
Finance lease right-of-use assets - net		28,707			58,007			15,835			22,270
In-process research and development		3,017,377			3,017,377			3,017,377			3,017,377
Goodwill		1,336,488			1,336,488			1,336,488			1,336,488
Restricted cash - security deposit		200,000			200,000			200,000			200,000
Total non-current assets		10,503,877			9,412,461			10,665,785			10,332,753
Total assets	$	66,984,808		$	70,967,306		$	55,784,865		$	61,326,074

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Current liabilities:
Accounts payable	$	661,998		$	349,941		$	1,351,905		$	938,270
Accrued expenses		2,893,903			2,795,329			1,840,748			2,850,888
Operating lease liabilities - current		518,786			391,498			558,702			538,546
Financing lease liabilities - current		24,309			30,853			17,134			21,039
Total current liabilities		4,098,996			3,567,621			3,768,489			4,348,743

Non-current liabilities:
Deferred tax liability		341,265			341,265			341,265			341,265
Operating lease liabilities - net of current portion		4,284,552			3,304,063			3,993,396			4,140,387
Financing lease liabilities - net of current portion		5,745			23,660			-			2,621
Total non-current liabilities		4,631,562			3,668,988			4,334,661			4,484,273
Total liabilities		8,730,558			7,236,609			8,103,150			8,833,016

Stockholders’ equity:
Series B Convertible preferred stock, stated value $1,000 per share, 8,000 shares authorized as of September 30, 2021 and December 31, 2020; 0 and 4,361 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		-			3,797,705

Common stock par value $0.0001 per share, 500,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 216,247,528 and 200,113,431 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		21,625			20,010
Common stock par value $0.0001 per share, 500,000,000 shares authorized at March 31, 2022 and December 31, 2021; 216,864,526 and 216,269,450 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively								21,685			21,627
Additional paid-in capital		183,168,987			167,192,003			185,901,685			184,251,138
Accumulated deficit		(124,934,768	)		(107,507,193	)		(137,612,481	)		(131,634,208	)
Accumulated other comprehensive (loss)/income		(1,594	)		228,172
Accumulated other comprehensive loss								(629,174	)		(145,499	)
Total stockholders’ equity		58,254,250			63,730,697			47,681,715			52,493,058
Total liabilities and stockholders’ equity	$	66,984,808		$	70,967,306		$	55,784,865		$	61,326,074

The accompanying notes are an integral part of these condensed consolidated financial statements

Matinas BioPharma Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

Unaudited

	2021			2020			2021			2020			2022			2021
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Revenue:
Research and development	$	-		$	95,833		$	33,333		$	95,833		$	-		$	33,333
Costs and expenses:
Costs and Expenses:
Research and development		4,621,255			3,336,225			10,343,451			10,833,345			4,978,105			3,241,432
General and administrative		2,256,689			2,364,214			7,710,625			6,980,155			2,744,195			3,145,010

Total costs and expenses		6,877,944			5,700,439			18,054,076			17,813,500			7,722,300			6,386,442

Loss from operations		(6,877,944	)		(5,604,606	)		(18,020,743	)		(17,717,667	)		(7,722,300	)		(6,353,109	)
Sale of New Jersey net operating loss & tax credits		-			-			1,328,470			1,073,289			1,734,133			1,328,470
Other income, net		41,394			155,093			108,298			538,420			9,894			68,319

Net loss	$	(6,836,550	)	$	(5,449,513	)	$	(16,583,975	)	$	(16,105,958	)	$	(5,978,273	)	$	(4,956,320	)

Preferred stock series B accumulated dividends		-			(227,600	)		(395,799	)		(575,392	)		-			(210,900	)

Net loss attributable to common shareholders	$	(6,836,550	)	$	(5,677,113	)	$	(16,979,774	)	$	(16,681,350	)	$	(5,978,273	)	$	(5,167,220	)

Net loss available for common shareholders per share - basic and diluted	$	(0.03	)	$	(0.03	)	$	(0.08	)	$	(0.09	)
Weighted average common shares outstanding – basic and diluted		215,179,949			198,909,016			208,130,431			196,070,952
Other comprehensive (loss)/income, net of tax
Net unrealized (loss)/gain on securities available-for-sale		(52,837	)		(114,159	)		(229,766	)		367,144
Reclassifications to net loss		-			-			-			(2,719	)
Other comprehensive (loss)/income, net of tax		(52,837	)		(114,159	)		(229,766	)		364,425
Net loss attributable to common shareholders per share - basic and diluted													$	(0.03	)	$	(0.03	)
Weighted average common shares outstanding:
Basic and diluted														216,644,783			203,871,820
Other comprehensive loss, net of tax
Unrealized loss on securities available-for-sale														(483,675	)		(91,766	)
Other comprehensive loss, net of tax														(483,675	)		(91,766	)
Comprehensive loss attributable to shareholders	$	(6,889,387	)	$	(5,563,672	)	$	(16,813,741	)	$	(15,741,533	)	$	(6,461,948	)	$	(5,048,086	)

The accompanying notes are an integral part of these condensed consolidated financial statements

Matinas BioPharma Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

Unaudited

Shares Amount Shares Amount Capital Deficit Income (loss) Equity

Redeemable Convertible
Preferred Stock B
Common Stock

Additional
Paid - in
Accumulated
Accumulated Other
Comprehensive

Total
Stockholders’

Shares Amount Shares Amount Capital Deficit Income (loss) Equity
Balance, December 31, 2020 4,361 $ 3,797,705 200,113,431 $ 20,010 $ 167,192,003 $ (107,507,193 ) $ 228,172 $ 63,730,697
Stock-based compensation - - - - 3,132,351 - - 3,132,351
Issuance of common stock as compensation for services - - 23,910 3 23,811 - - 23,814
Issuance of common stock in exchange for preferred stock (4,361 ) (3,797,705 ) 8,722,000 873 3,796,832 - - -
Issuance of common stock in public offering, net of stock issuance costs ($172,592) - - 3,023,147 302 5,580,169 - - 5,580,471
Issuance of common stock from the exercise of Common Stock Options - - 1,062,883 106 1,400,552 - - 1,400,658
Issuance of common stock from the exercise of Warrants - - 114,957 12 (12 ) - - -
Issuance of common stock pursuant to the Aquarius Merger Agreement - - 1,500,000 150 1,199,850 - - 1,200,000
Stock dividend - - 1,687,200 169 843,431 (843,600 ) - -
Other comprehensive loss - - - - - - (229,766 ) (229,766 )
Net loss - - - - - (16,583,975 ) - (16,583,975 )
Balance, September 30, 2021 - $ - 216,247,528 $ 21,625 $ 183,168,987 $ (124,934,768 ) $ (1,594 ) $ 58,254,250
Shares Amount Capital Deficit Loss Equity
Common Stock

Additional
Paid - in
Accumulated
Accumulated Other
Comprehensive

Total
Stockholders’

Shares Amount Capital Deficit Loss Equity
Balance, December 31, 2021 - 216,269,450 $ 21,627 $ 184,251,138 $ (131,634,208 ) $ (145,499 ) $ 52,493,058
Stock-based compensation - - 1,259,964 - - 1,259,964
Issuance of common stock in exchange for Options 195,076 18 99,423 - - 99,441
Issuance of common stock pursuant to license agreement amendment - 400,000 40 291,160 - - 291,200
Other comprehensive loss - - - - (483,675 ) (483,675 )
Net loss - - - (5,978,273 ) - (5,978,273 )
Balance, March 31, 2022 - 216,864,526 $ 21,685 $ 185,901,685 $ (137,612,481 ) $ (629,174 ) $ 47,681,715

Redeemable Convertible
Preferred Stock B
Common Stock

Additional
Paid - in
Accumulated
Accumulated Other
Comprehensive

Total
Stockholders’

Shares Amount Shares Amount Capital Deficit Income (loss) Equity
Balance, June 30, 2021 - $ - 214,627,522 $ 21,462 $ 180,929,263 $ (118,098,218 ) $ 51,243 $ 62,903,750
Stock-based compensation - - - - 1,031,949 - - 1,031,949
Issuance of common stock as compensation for services - - 6,106 1 7,937 - - 7,938
Issuance of common stock from the exercise of Warrants - - 113,900 12 (12 ) - - -
Issuance of common stock pursuant to the Aquarius Merger Agreement - - 1,500,000 150 1,199,850 - - 1,200,000
Other comprehensive loss - - - - - - (52,837 ) (52,837 )
Net loss - - - - - (6,836,550 ) - (6,836,550 )
Balance, September 30, 2021 - $ - 216,247,528 $ 21,625 $ 183,168,987 $ (124,934,768 ) $ (1,594 ) $ 58,254,250

Redeemable Convertible
Preferred Stock B
Common Stock

Additional
Paid - in
Accumulated
Accumulated Other
Comprehensive

Total
Stockholders’

Shares Amount Shares Amount Capital Deficit (Loss) Income Equity
Balance, December 31, 2019 4,577 $ 3,985,805 163,156,984 $ 16,315 $ 113,427,897 $ (84,377,555 ) $ (880 ) $ 33,051,582
Stock-based compensation - - - - 3,082,048 - - 3,082,048
Issuance of common stock as compensation for services - - 267,712 27 203,977 - - 204,004
Issuance of common stock in exchange for preferred stock (25 ) (21,771 ) 50,000 5 21,766 - - -
Issuance of common stock in public offering, net of stock issuance costs ($3,298,790) - - 32,260,000 3,226 46,700,984 - - 46,704,210
Issuance of common stock from the exercise of Common Stock Options - - 132,073 14 107,313 - - 107,327
Issuance of common stock from the exercise of Warrants - - 1,737,389 172 797,409 - - 797,581
Stock dividend - - 1,365,600 137 682,663 (682,800 ) - -
Other comprehensive income - - - - - - 364,425 364,425
Net loss - - - - - (16,105,958 ) - (16,105,958 )
Balance, September 30, 2020 4,552 $ 3,964,034 198,969,758 $ 19,896 $ 165,024,057 $ (101,166,313 ) $ 363,545 $ 68,205,219

Redeemable Convertible
Preferred Stock B
Common Stock

Additional
Paid - in
Accumulated
Accumulated Other
Comprehensive

Total
Stockholders’
Shares Amount Shares Amount Capital Deficit Income/(Loss) Equity
Shares Amount Shares Amount Capital Deficit Income (loss) Equity
Redeemable Convertible
Preferred Stock B
Common Stock

Additional
Paid - in
Accumulated
Accumulated Other
Comprehensive

Total
Stockholders’

Balance, June 30, 2020 4,552 $ 3,964,034 198,873,477 $ 19,886 $ 164,079,847 $ (95,716,800 ) $ 477,704 $ 72,824,671
Shares Amount Shares Amount Capital Deficit Income/(Loss) Equity
Balance, December 31, 2020 4,361 $ 3,797,705 200,113,431 $ 20,010 $ 167,192,003 $ (107,507,193 ) $ 228,172 ) $ 63,730,697
Stock-based compensation - - - - 863,518 - - 863,518 - - - - 1,073,057 - - 1,073,057
Issuance of common stock as compensation for services - - 20,725 2 15,873 - - 15,874 - - 7,560 1 7,937 - - 7,938
Issuance of common stock in public offering, net of stock issuance costs
Issuance of common stock from the exercise of Common Stock Options - - 75,556 8 64,819 - - 64,827
Issuance of common stock in exchange for preferred stock (143 ) (124,529 ) 286,000 29 124,500 - - -
Issuance of common stock in public offering, net of stock issuance costs ($172,592) - - 3,023,147 302 5,580,169 - - 5,580,471
Issuance of common stock in exchange for Options - - 852,777 85 1,211,942 - - 1,212,027
Issuance of common stock from the exercise of Warrants - - 1,057 - - - -
Other comprehensive loss - - - - - - (114,159 ) (114,159 ) - - - - - - (91,766 ) (91,766 )
Net loss - - - - - (5,449,513 ) - (5,449,513 ) - - - - - (4,986,320 ) - (4,956,320 )
Balance, September 30, 2020 4,552 $ 3,964,034 198,969,758 $ 19,896 $ 165,024,057 $ (101,166,313 ) $ 363,545 $ 68,205,219
Balance, March 31, 2021 4,218 $ 3,673,176 204,283,972 $ 20,427 $ 175,789,608 $ (112,463,513 ) $ 136,406 $ 66,556,104

The accompanying notes are an integral part of these condensed consolidated financial statements
3

Matinas BioPharma Holdings, Inc.
Condensed Consolidated Statements of Cash Flow
Unaudited

2021 2020 2022 2021
Nine Months Ended September 30, Three Months Ended March 31,
2021 2020 2022 2021
Cash flows from operating activities:
Net loss $ (16,583,975 ) $ (16,105,958 ) $ (5,978,273 ) $ (4,956,320 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 179,421 173,246 68,965 58,647
Stock based compensation expense 3,217,497 3,344,577 1,259,964 1,101,214
Amortization of operating lease right-of-use assets 367,661 360,071 136,127 126,896
Amortization of finance lease right-of-use assets 29,300 50,319 6,435 12,014
Amortization of bond discount 172,227 - 60,892 54,251
Stock issued pursuant to the Aquarius Merger Agreement charged to Research and Development 1,200,000 -
Stock issued pursuant to license agreement amendment 291,200 -
Changes in operating assets and liabilities:
Operating lease liabilities (335,833 ) (309,860 ) (126,835 ) (116,281 )
Prepaid expenses and other current assets 77,333 (406,869 ) 122,355 386,346
Accounts payable 312,057 (306,244 ) 413,635 71,704
Accrued expenses and other liabilities 98,574 140,592 (1,010,140 ) (1,389,584 )
Net cash used in operating activities (11,265,738 ) (13,060,126 ) (4,755,675 ) (4,651,113 )

Cash flows from investing activities:
Purchase of marketable securities (17,787,465 ) (74,200,602 ) (2,494,352 ) (4,083,141 )
Proceeds from sales of marketable securities 34,725,000 24,450,000 6,000,000 12,900,000
Purchases of leasehold improvements and equipment (224,188 ) (5,749 ) (544,559 ) -
Net cash provided by/(used in) investing activities 16,713,347 (49,756,351 )
Net cash provided by investing activities 2,961,089 8,816,859

Cash flows from financing activities:
Net proceeds from public offering of common stock 5,580,471 46,639,210 - 5,580,472
Proceeds from exercise of warrants - 797,581
Proceeds from exercise of options 1,400,658 107,327 99,441 1,212,027
Payments of capital lease liability - principal (24,459 ) (46,854 ) (6,526 ) (7,983 )
Net cash provided by financing activities 6,956,670 47,497,264 92,915 6,784,516

Net increase/(decrease) in cash, cash equivalents and restricted cash 12,404,279 (15,319,213 )
Net (decrease)/increase in cash, cash equivalents and restricted cash (1,701,671 ) 10,950,262
Cash, cash equivalents and restricted cash at beginning of period 12,768,481 22,756,438 21,279,806 12,768,481

Cash, cash equivalents and restricted cash at end of period $ 25,172,760 $ 7,437,225 $ 19,578,135 $ 23,718,743

Supplemental non-cash financing and investing activities:
Unrealized (loss)/gains on securities for sale $ (229,766 ) $ 364,425
Unrealized loss on securities for sale $ (483,675 ) $ (91,766 )
Preferred stock conversion into common stock - Series B $ 3,797,705 $ 21,771 $ - $ 124,529
Unearned restricted stock grants $ 7,189 $ - $ - $ 48,301
Cashless exercise of warrants $ 12 $ 441,189
Stock dividends issued $ 843,600 $ 682,800
Right of use asset in exchange from liabilities from operation lease $ 1,443,610 $ -

The accompanying notes are an integral part of these condensed consolidated financial statements

4

MATINAS BIOPHARMA HOLDINGS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(Tabular dollars and shares in thousands, except per share data)

Note 1 – Description of Business

Matinas BioPharma Holdings Inc. (“Holdings”) is a Delaware corporation formed in 2013. Holdings is the parent company of Matinas BioPharma, Inc. (“BioPharma”), and Matinas BioPharma Nanotechnologies, Inc. (“Nanotechnologies,” formerly known as Aquarius Biotechnologies, Inc.), its operating subsidiaries (“Nanotechnologies”, and together with “Holdings” and “BioPharma”, “the Company” ~~or “we” or “our” or “us”~~). The Company is a clinical-stage biopharmaceutical company with a focus on identifying and developing novel pharmaceutical products.

Note 2 – Liquidity and Plan of Operations

The Company has experienced net losses and negative cash flows from operations each period since its inception. Through ~~September 30, 2021,~~March 31, 2022, the Company had an accumulated deficit of approximately $~~124.9~~137.6 million. The Company’s net loss was approximately $~~16.6~~6.0 million and $~~16.1~~5.0 million for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

The Company has been engaged in developing LYPDISO (formerly MAT9001) as well as its lipid nanocrystal (“LNC”) platform delivery technology and a pipeline of associated product candidates, including MAT2203 and MAT2501, since 2011. To date, the Company has not obtained regulatory approval for any of its product candidates nor generated any revenue from product sales, and the Company expects to incur significant expenses to complete development of its product candidates. The Company may never be able to obtain regulatory approval for the marketing of any of its product candidates in any indication in the United States or internationally and there can be no assurance that the Company will generate revenues or ever achieve profitability.

~~Assuming~~If the Company obtains Food and Drug Administration (“FDA”) approval for one or more of its product candidates, the Company expects that its expenses will continue to increase once the Company reaches commercial launch. The Company also expects that its research and development expenses will continue to increase as it moves forward with additional clinical studies for its current product candidates and development of additional product candidates. As a result, the Company expects to continue to incur substantial losses for the foreseeable future, and that these losses will be increasing.

~~To continue to fund operations, during January 2021, the Company sold~~ ~~3,023,147~~ ~~shares of common stock under its At-The-Market Sales Agreement with BTIG, LLC, generating net proceeds of approximately $5.6~~ ~~million (See Note 11 – Stockholders’ Equity).~~
As of ~~September 30, 2021,~~March 31, 2022, the Company had cash and cash equivalents of approximately $~~24.9~~19.3 million, marketable securities of approximately $~~28.9~~24.5 million and restricted cash of approximately $0.3 million. The Company believes the cash and cash equivalents and marketable securities on hand are sufficient to fund planned operations ~~into 2024.~~through 2023.

Note 3 – Summary of Significant Accounting Policies

Basis of presentation and principles of consolidation

The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of Holdings and its wholly owned subsidiaries, BioPharma, and Nanotechnologies. The ~~Company has prepared its condensed consolidated financial statements following the requirements of the SEC for interim reporting. The~~ accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ~~of America~~ (“U.S. GAAP”) and reflect the operations of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

5
The Company’s significant accounting policies are described in Note 3 within the Company’s Notes to Consolidated Financial Statements included in the Company’s ~~2020~~2021 Form 10-K.
The Company’s management has considered all recent accounting pronouncements issued and believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

COVID-19

~~In March 2020, the World Health Organization declared~~Since its emergence in 2019, COVID-19 ~~a global pandemic. This contagious disease outbreak, which~~ has continued to spread and ~~any related adverse public health developments,~~ has adversely affected workforces, economies, and financial markets globally, and has and may continue to cause economic downturns.

5
~~The Company has been actively monitoring the impact of COVID-19.~~
The financial results for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 were not significantly impacted by COVID-19. However, the Company cannot predict the impact of the progression of COVID-19 on future results or the Company’s ability to raise capital due to a variety of factors, including but not limited to the continued good health of Company employees, the ability of suppliers to continue to operate and deliver, the ability of the Company to maintain operations, and any further government and/or public actions taken in response to ~~the pandemic and ultimately the length of the pandemic.~~COVID-19.

Note 4 – Cash, Cash Equivalents, Restricted Cash and Marketable Securities

The Company considers all highly liquid financial instruments with original maturities of three months or less when purchased to be cash and cash equivalents and all investments with maturities of greater than three months from date of purchase are classified as marketable securities. Cash and cash equivalents consisted of cash in bank checking and savings accounts, money market funds and short-term U.S. treasury bonds that mature within three months of settlement date.

Cash, Cash Equivalents and Restricted Cash

The Company presents restricted cash with cash and cash equivalents in the Condensed Consolidated Statements of Cash Flows. Restricted cash at both March 31, 2022 and December 31, 2021 of approximately $250 thousand represents funds the Company is required to set aside ~~to cover building~~as collateral primarily for the Company’s lab operating ~~leases~~lease and other purposes.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets to the total of the amounts in the Condensed Consolidated Statements of Cash Flows as of ~~September 30, 2021,~~March 31, 2022, December 31, ~~2020, September 30, 2020~~2021, March 31, 2021 and December 31, ~~2019:~~2020:
Schedule of Cash, Cash Equivalents and Restricted Cash

September 30,
2021

December 31,
2020

September 30,
2020

December 31,
2019
March 31,
2022 December 31,
2021 March 31,
2021 December 31,
2020
Cash and cash equivalents $ 24,923 $ 12,432 $ 7,051 $ 22,170 $ 19,328 $ 21,030 $ 23,383 $ 12,432
Restricted cash included in current/long term assets 250 336 386 586 250 250 336 336
Cash, cash equivalents and restricted cash in the statement of cash flows $ 25,173 $ 12,768 $ 7,437 $ 22,756 $ 19,578 $ 21,280 $ 23,719 $ 12,768

Marketable Securities

The Company has classified its investments in marketable securities as available-for-sale and as a current asset. The Company’s investments in marketable securities are carried at fair value, with unrealized gains and losses included as a separate component of stockholders’ equity. Unrealized losses and gains are classified as other comprehensive (loss)/income and costs are determined on a specific identification basis. Realized gains and losses from our marketable securities are recorded in other income, net. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, the Company recorded unrealized losses of approximately $53484 thousand and $~~230~~ ~~thousand, respectively. For the three and nine months ended September 30, 2020, the Company recorded unrealized loss of approximately $114~~ ~~thousand and unrealized gains of approximately $367~~92 thousand, respectively. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had net accumulated unrealized ~~(loss)/gains~~losses of approximately ($$2629) thousand and $~~228~~145 thousand, respectively.
6

The following tables summarizes the Company’s marketable securities as of ~~September 30, 2021:~~March 31, 2022:
Summary of Marketable Securities
Amortized Cost Unrealized Gain Unrealized (Loss) Fair Value
Amortized Unrealized Unrealized Amortized Unrealized Unrealized
Cost Gain (Loss) Fair Value Cost Gain (Loss) Fair Value
U.S. Treasury Bonds $ 3,500 $ 5 $ - $ 3,505 $ 988 $ — $ (13 ) $ 975
U.S. Government Notes 16,010 16 (16 ) 16,010 18,378 — (519 ) 17,859
Corporate Debt Securities 9,149 - (7 ) 9,142 5,555 — (97 ) 5,458
State and Municipal Bonds 250 - - 250 250 — — 250
Total marketable securities $ 28,909 $ 21 $ (23 ) $ 28,907 $ 25,171 $ — $ (629 ) $ 24,542
6

Maturities of debt securities classified as available-for-sale were as follows at ~~September 30, 2021:~~March 31, 2022:
Schedule of Maturities of Debt Securities Available-for-sale
Accrued Net Carrying Net Carrying
Fair Value Interest Amount Fair Value Amount
Due within one year $ 13,805 $ 56 $ 13,861 $ 5,253 $ 5,260
Due after one year through five years 15,102 45 15,147 19,289 19,349
$ 28,907 $ 101 $ 29,008 $ 24,542 $ 24,609

The following tables summarizes the Company’s marketable securities for the year ended December 31, ~~2020~~2021 consisted of the following:

Amortized
Cost

Unrealized
Gain

Unrealized
(Loss)
Fair Value Amortized Cost Unrealized Gain Unrealized (Loss) Fair Value
U.S. Treasury Bonds $ 18,293 $ 136 $ - $ 18,429
Amortized Cost Unrealized Gain Unrealized (Loss) Fair Value
U.S. Government Notes 22,148 82 - 22,230 $ 19,395 $ 2 $ (120 ) $ 19,277
Corporate Debt Securities 4,303 3 - 4,306 9,092 — (27 ) 9,065
State and Municipal Bonds 1,275 7 - 1,282 250 — — 250
Total marketable securities $ 46,019 $ 228 $ - $ 46,247 $ 28,737 $ 2 $ (147 ) $ 28,592

Maturities of debt securities classified as available-for-sale were as follows at December 31, ~~2020:~~2021:

Accrued Net Carrying
Fair Value Interest Amount Fair Value Net Carrying Amount
Due within one year $ 31,438 $ 164 $ 31,602 $ 8,257 $ 8,310
Due after one year through five years 14,809 36 14,845 20,335 20,402
$ 46,247 $ 200 $ 46,447 $ 28,592 $ 28,712
Note 5 - Fair Value Measurements

The Company uses the fair value hierarchy to measure the value of its financial instruments. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:

● Level 1 – Quoted prices for identical assets or liabilities in active markets.

● Level 2 – Quoted prices for identical or similar assets and liabilities in markets that are not active; or other model-derived valuations whose inputs are directly or indirectly observable or whose significant value drivers are observable.

● Level 3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable and for which assumptions are used based on management estimates.

7
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

The carrying amounts of ~~certain cash and~~ cash equivalents, current portion of restricted cash, marketable securities, prepaid expenses and other current assets, accounts payable, current portion of lease ~~liability~~liabilities and accrued expenses approximate fair value due to the short-term nature of these instruments.
7

A summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows:
Schedule of Fair Value Measurement of Assets and Liabilities
March 31, 2022 Total (Level 1) (Level 2) (Level 3)
Fair Value Hierarchy Fair Value Hierarchy
September 30, 2021 Total (Level 1) (Level 2) (Level 3)
March 31, 2022 Total (Level 1) (Level 2) (Level 3)
Assets
Marketable Securities:
U.S. Treasury Bonds $ 3,505 $ 3,505 $ - $ - $ 975 $ 975 $ — $ —
U.S. Government Notes 16,010 - 16,010 - 17,859 — 17,859 —
Corporate Debt Securities 9,142 - 9,142 - 5,458 — 5,458 —
State and Municipal Bonds 250 - 250 - 250 — 250 —
Total $ 28,907 $ 3,505 $ 25,402 $ - $ 24,542 $ 975 $ 23,567 $ —

March 31, 2022 Total (Level 1) (Level 2) (Level 3)
Fair Value Hierarchy Fair Value Hierarchy
December 31, 2020 Total (Level 1) (Level 2) (Level 3)
December 31, 2021 Total (Level 1) (Level 2) (Level 3)
Assets
Marketable Securities:
U.S. Treasury Bonds $ 18,429 $ 18,429 $ - $ -
U.S. Government Notes 22,230 - 22,230 - $ 19,277 $ — $ 19,277 $ —
Corporate Debt Securities 4,306 - 4,306 - 9,065 — 9,065 —
State and Municipal Bonds 1,282 - 1,282 - 250 — 250 —
Total $ 46,247 $ 18,429 $ 27,818 $ - $ 28,592 $ — $ 28,592 $ —
Marketable Securities $ 28,592 $ — $ 28,592 $ —

U.S. treasury bonds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical assets in active markets. Marketable securities consisting of U.S. government notes, corporate debt securities and state and municipal bonds are classified as Level 2 and are valued using quoted market prices in markets that are not active.

Note 6 – Leasehold Improvements and Equipment

Leasehold improvements and equipment, summarized by major category, consist of the following as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:
Schedule of Leasehold Improvements and Equipment
September 30, 2021 December 31, 2020 March 31, 2022 December 31, 2021
Equipment $ 1,610 $ 1,443 $ 1,964 $ 1,640
Leasehold improvements 935 878 1,155 935
Total 2,545 2,321 3,119 2,575
Less: accumulated depreciation and amortization 976 797 1,106 1,037
Leasehold improvements and equipment, net $ 1,569 $ 1,524 $ 2,013 $ 1,538

Depreciation and amortization expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 was approximately $6269 thousand and $~~179~~ ~~thousand, respectively, and for the three and nine months ended September 30, 2020 was approximately $~~58 ~~thousand and $173~~59 thousand, respectively. During the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 the Company purchased ~~equipment and~~ leasehold improvements of approximately $~~224~~220 ~~thousand. During the three~~thousand, and ~~nine months ended September 30, 2020 the Company purchased~~ equipment of approximately $0324 thousand. The Company did not purchase any leasehold improvements and $6 ~~thousand, respectively.~~equipment during the three months ended March 31, 2021.

8

Note 7 – Accrued Expenses and Other Liabilities

Accrued Expenses, summarized by major category, as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consist of the following:
Schedule of Accrued Expenses
September 30, 2021 December 31, 2020 March 31, 2022 December 31, 2021
Payroll and incentives $ 944 $ 1,094 $ 482 $ 1,343
General and administrative expenses 217 280 302 195
Research and development expenses 501 778 355 381
Deferred revenue and other deferred liabilities * 1,232 643 702 932
Total $ 2,894 $ 2,795 $ 1,841 $ 2,851

* At ~~September 30, 2021, there was~~March 31, 2022, approximately $~~1,199~~669 thousand is the remaining balance of the CFF Agreement’s deferred liability ~~under the Cystic Fibrosis Foundation (“CFF”) agreement~~ and approximately $33 thousand inis deferred revenue related to the Genentech Agreement. ~~The Company expects to recognize the deferred revenue and deferred liabilities within the next 12 months.~~ At December 31, ~~2020, there was an~~2021, the balance included approximately $~~577~~899 thousand ~~deferred liability under~~related to the CFF ~~Agreement~~Agreement’s deferred liability and approximately $6733 thousand inis deferred revenue related to the Genentech ~~Agreement. (See Note 9 – Collaboration Agreements, Licenses and Other Research and Development Agreements).~~feasibility study agreement.

Note 8 – Leases

The Company has various lease agreements ~~with terms up to~~ ~~10 years~~, including leases of office space, a laboratory and manufacturing facility, and various equipment. Some leases include purchase, termination or extension options for one or more years. These options are included in the lease term when it is reasonably certain that the option will be ~~exercised.~~exercised
~~Operating lease obligations~~
~~On November 1, 2013, the Company entered into a~~ 7~~-year lease for office space in Bedminster, New Jersey which commenced in June 2014 at a monthly rent of approximately $13,000, increasing to approximately $14,000~~ ~~per month toward the end of the term.~~
~~On September 23, 2020, the Company entered into an amendment to the Bedminster lease. Pursuant to the amendment, the Company leased an additional~~ ~~3,034~~ ~~rentable square feet (“Expansion Premises”)~~. ~~The amendment became effective upon delivery to the Company of the Expansion Premises, which occurred on August 1, 2021, and extends the term of the lease for~~ ~~seven years~~ from such date. There is no renewal option, no security deposit, no residual value or significant restrictions or covenants other than those customary in such arrangements. Except as expressly provided, all other terms, covenants, conditions and agreements as set forth in the lease will remain unchanged and in full force and effect.

The assets and liabilities from operating and finance leases are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term using the Company’s incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.
The Company’s operating leases ~~did~~do not provide an implicit ~~rate that can readily be determined. Therefore,~~rates, therefore the Company ~~uses~~utilized a discount rate based on its incremental borrowing ~~rate.~~rate to record the lease obligations. The Company’s finance leases provide readily determinable implicit rates.
Operating lease obligations

The Company incurred lease expense for its operating leases of approximately $~~219~~226 thousand and $~~626~~203 thousand for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and approximately $203~~ ~~thousand and $610~~ ~~thousand for the three and nine months ended September 30, 2020.~~respectively. The Company incurred amortization expense on its operating lease right-of-use assets of approximately $~~125~~136 thousand and $~~368~~127 thousand for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and approximately $122~~ ~~thousand and $360~~ ~~thousand for the three and nine months ended September 30, 2020,~~ respectively.

9
Finance Leases

The Company incurred interest expense on its finance leases of approximately $1 ~~thousand and $~~3 thousand for the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 and ~~approximately $~~1 ~~thousand and $~~5 ~~thousand for the three and nine months ended September 30, 2020, respectively.~~2021. The Company incurred amortization expense on its finance lease right-of-use assets of approximately $96 thousand and $2912 thousand for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and approximately $~~9 ~~thousand and $~~50 ~~thousand for the three and nine months ended September 30, 2020,~~ respectively.

The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases and finance leases as of ~~September 30, 2021:~~March 31, 2022:
Schedule of Maturity of Operating and Finance Leases Liabilities
Maturity of Lease Liabilities
Operating Lease
Liabilities
Finance Lease Liabilities
Operating Lease
Liabilities
Finance Lease Liabilities
Remainder of 2021 $ 218 $ 9
2022 883 19
Remainder of 2022 $ 666 $ 15
2023 922 2 922 2
2024 962 - 962 -
2025 1,004 - 1,004 -
2026 1,046 -
2026 1,046 -
Thereafter 2,157 - 1,112 -
Total undiscounted operating lease payments $ 6,146 $ 30 $ 5,712 $ 17
Less: Imputed interest 1,343 - 1,160 -
Present value of operating lease liabilities $ 4,803 $ 30 $ 4,552 $ 17

Weighted average remaining lease term in years 6.3 1.1 5.8 1.1
Weighted average discount rate 7.7 % 7.8 % 7.8 % 7.6 %
9

The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases ~~excluding the Expansion Premises which the Company had not taken control of as of December 31, 2020,~~ and finance leases as of December 31, ~~2020:~~2021:

Maturity of Lease Liabilities
Operating Lease
Liabilities
Finance Lease Liabilities Operating Lease Liabilities Finance Lease Liabilities
2021 $ 685 $ 34
2022 645 19 $ 883 $ 22
2023 677 2 922 2
2024 710 - 962 -
2025 745 - 1,004 -
2026 1,046 -
Thereafter 1,458 - 1,112 -
Total undiscounted operating lease payments $ 4,920 $ 55 $ 5,929 $ 24
Less: Imputed interest 1,224 - 1,250 -
Present value of operating lease liabilities $ 3,696 $ 55 $ 4,679 $ 24

Weighted average remaining lease term in years 6.7 1.7 6.1 0.9
Weighted average discount rate 8.4 % 8.1 % 7.8 % 7.8 %

Note 9 - Collaboration Agreements, Licenses and Other Research and Development Agreements

Cystic Fibrosis Foundation Therapeutics Development Award

On November 19, 2020, the Company entered into an award agreement (the “CFF Agreement”) with the ~~CFF,~~Cystic Fibrosis Foundation (“CFF”), pursuant to which it received a Therapeutics Development Award of up to $4.2 million (the “Award”) (of which $~~484,249~~484 ~~was received during 2020)~~thousand had been previously received) to support the preclinical development (the “Development Program”) of the Company’s MAT2501 product ~~candidate, a lipid nanocrystal oral formulation~~candidate. On November 19, 2021, the Company and CFF entered into an Amendment to the CFF Agreement which added an additional milestone payment in the amount of $321 thousand, which was received in the ~~broad-spectrum aminoglycoside amikacin, for the treatment~~fourth quarter of ~~pulmonary non-tubercular mycobacteria infections and other pulmonary diseases.~~2021.

10
~~During the three and nine months ended September 30, 2021,~~As of March 31, 2022, the Company ~~recognized approximately~~has received $~~588~~3.6 ~~thousand and~~million of the $~~1,558~~4.5 ~~thousand, respectively, as credits to research and development expenses related to~~million commitment, including the ~~Award. At September 30, 2021, a receivable of approximately $980~~ ~~thousand related to the Award was included in prepaid expenses and other current assets and the remaining deferred liability balance is approximately $1,199~~ ~~thousand and is included in accrued expenses and other current liabilities (See Note 7 – Accrued Expenses and Other Liabilities). At December 31, 2020, a receivable of $650~~ ~~thousand related to the Award was included in prepaid expenses and other current assets~~Amendment’s additional milestone payment, and a related deferred liability balance of $~~577~~669 thousand ~~was~~and $899 thousand is included in accrued expense and other current ~~liabilities.~~liabilities at March 31, 2022 and December 31, 2021, respectively. The remainder of the Award will be paid to the Company ~~incrementally in installments~~ upon the achievement of certain milestones related to progress of the ~~development program~~Development Program, as set forth in the CFF Agreement.

Genentech Feasibility Study Agreement

On December 12, 2019, the Company entered into a feasibility study agreement (the “Genentech Agreement”) with Genentech, Inc. (“Genentech”). ~~This feasibility study agreement~~The Genentech Agreement involves the development of oral formulations using the Company’s LNC platform delivery ~~technology, which enables the development of a wide range of difficult-to-deliver molecules.~~ technology. Under the terms of the Genentech Agreement, Genentech ~~shall pay~~paid the Company a total of ~~$100~~$100 thousand for ~~developing oral formulations~~the development of three molecules, or approximately ~~$33~~$33 thousand per molecule, which ~~will be~~is being recognized upon the Company fulfilling its obligations for each molecule under the Genentech Agreement. ~~On December 13, 2019, per Genentech’s request, the~~The Company ~~billed Genentech for the total $100~~ ~~thousand and~~ recorded the upfront consideration as deferred revenue, which is ~~recorded~~included in accrued expenses on the consolidated balance ~~sheets, and will recognize it over the term~~sheets. As of ~~the contract performance obligation period. During the year ended~~ December 31, ~~2020, the Company fulfilled its obligations for the first of three molecules. During the nine months ended September 30,~~ 2021, the Company ~~fulfilled~~completed its obligations ~~for~~related to the first and second of the three ~~molecules and recognized approximately $~~33 ~~thousand of Genentech revenue.~~molecules. During the three months ended ~~September 30, 2021,~~March 31, 2022, the Company did not ~~fulfill any of~~complete its obligations ~~and did not recognize any Genentech revenue.~~related to the remaining molecule.

Note 10 – Income Taxes

Sale of net operating losses (NOLs) & tax credits

The Company recognized approximately $~~1.3~~1.7 million and approximately $~~1.1~~1.3 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ in connection with the sale of certain State of New Jersey Net Operating Losses (“NOL”) and Research and Development (“R&D”) tax credits to a third ~~parties~~party under the New Jersey Technology Business Tax Certificate Transfer Program. ~~During the three months ended September 30, 2021 and 2020, the Company did not sell any NOL and R&D tax credits.~~
10
Note 11 – Stockholders’ Equity

Common Stock

On ~~September 3, 2021,~~February 8, 2022, the Company issued ~~1,500,000~~ 400,000unregistered shares of its common stock to Rutgers, The State University of New Jersey (“Rutgers”), as partial consideration pursuant to the Second Amended and Restated Exclusive License Agreement ~~and Plan of Merger by and among~~between the Company ~~Saffron Merger Sub, Inc., Aquarius Biotechnologies Inc. (“Aquarius”),~~ and ~~J Carl Craft, as holder representative, dated January 19, 2015, as subsequently amended~~Rutgers. The agreement provides for (1) royalties on ~~September 3, 2021 (the “Aquarius Merger Agreement”),~~a tiered basis between low single digits and the mid-single digits of net sales of products using such licensed technology, (2) a one-time sales milestone fee of $100,000 when and if sales of products using the licensed technology reach the specified sales threshold and (3) an annual license fee of $50,000 over the term of the license agreement. There was also a reduction in the consideration paid to Rutgers in the event of a sublicense to a third party of the exclusive patent rights granted pursuant to the ~~holders of Aquarius Biotechnologies Inc., as defined in the Aquarius Merger~~ Agreement. ~~The shares were issued in place of certain milestone payments previously included under the Aquarius Merger Agreement upon the achievement of specified development milestones.~~ The Company recorded a $~~1.2~~ 291~~million~~ thousand research and development expense related to the issuance of the ~~1,500,000~~ 400,000shares based on the closing price of the Company’s common stock of $~~0.80~~0.728 on the date of issuance.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2021, the Company sold 3,023,147 shares of its common stock under its At-The-Market Sales Agreement with BTIG, LLC, at an average price of $1.90, generating gross proceeds of approximately $5.8 million and net proceeds of approximately $5.6 million.
~~On January 14, 2020, the Company closed an underwritten public offering of~~ ~~32.3~~ ~~million shares of its common stock at a purchase price of $1.55~~ ~~per share. The Company generated gross proceeds of approximately $50.0~~ ~~million and net proceeds of approximately $46.6~~ ~~million, after deducting underwriting discounts and commissions and other estimated offering expenses.~~
11
~~Preferred Stock~~
In connection with a public offering of Series B Preferred Stock, on June 19, 2018, the Company filed the Series B Certificate of Designation with the Secretary of the State of Delaware to designate the preferences, rights and limitations of the Series B Preferred Stock. Pursuant to the Series B Certificate of Designation, the Company designated ~~8,000~~ ~~shares of the Company’s previously undesignated preferred shares as Series B Preferred Stock. On June 19, 2021, each share of Series B Preferred Stock was automatically converted into~~ ~~2,000~~ ~~shares~~ No sales of the Company’s common stock ~~resulting in~~occurred during the ~~issuance of~~ ~~8,436,000~~ ~~shares of common stock. As of September 30, 2021 and December~~three months ended March 31, ~~2020 there were~~ 0 ~~and~~ ~~4,361~~ ~~shares of Series B Preferred stock outstanding, respectively.~~
~~Dividends~~~~. Subject to certain ownership limitations, holders of the Series B Preferred Stock received dividends paid in the Company’s common stock as follows:~~ (i) a number of shares of common stock equal to 10% of the shares of common stock underlying the Series B Preferred Stock then held by such holder on June 19, 2019, (ii) a number of shares of common stock equal to 15% of the shares of common stock underlying the Series B Preferred Stock then held by such holder on June 19, 2020 and (iii) a number of shares of common stock equal to 20% of the shares of common stock underlying the Series B Preferred Stock then held by such holder on June 19, 2021. ~~Based on an accounting of the holders of record of Series B Preferred Stock on June 19, 2021 and 2020, the Company made dividend payments totaling~~ ~~1,687,200~~ ~~and~~ ~~1,365,600~~ ~~shares of common stock, respectively.~~2022.

Warrants

~~The Company has issued two types of warrants: (i) investor warrants and (ii) placement agent warrants.~~ All warrants issued by the Company are exercisable immediately upon issuance and have a five-year term. The warrants may be exercised at any time in whole or in part upon payment of the applicable exercise price until expiration. No fractional shares will be issued upon the exercise of the warrants. The exercise price and the number of shares purchasable upon the exercise of the ~~investor~~ warrants are subject to adjustment upon the occurrence of certain events, which include stock dividends, stock splits, combinations and reclassifications of the Company’s capital stock or other similar changes to the equity structure of the Company. The warrants do not have a redemption feature. They may be exercised on a cashless basis at the holder’s option. The warrants are classified as equity instruments.

As of ~~September 30, 2021,~~March 31, 2022, the Company had outstanding warrants to purchase an aggregate of 988,000 shares of common stock at exercise prices ranging from $0.50 to $0.75 per ~~share.~~share, and with expiration dates between December 31, 2022 and June 21, 2023. A summary of warrants outstanding as of ~~September 30, 2021~~March 31, 2022 and December ~~31, 2020~~2021 is presented below, all of which are fully vested:
Summary of Shareholders Equity Warrants Outstanding
Shares
Outstanding at December 31, ~~2019~~2020 ~~5,397~~1,328
Issued -
Exercised (~~2,576~~320 )
Tendered -
Expired (~~1,493~~20 )
Outstanding at December 31, ~~2020~~2021 ~~1,328~~988 ^*
Issued -
Exercised ~~(320~~ )**
~~Tendered~~ -
~~Expired~~Tendered ~~(20~~- )
Expired -
Outstanding at ~~September 30, 2021~~March 31, 2022 988 ^***

* ~~Weighted average exercise price for outstanding warrants is $0.55~~.
** ~~Converted into approximately~~ ~~115~~ ~~thousand shares of commons stock.~~
*** Weighted average exercise price for outstanding warrants is $0.56.

1211

Basic and diluted net loss per common share

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ diluted earnings per common share is the same as basic earnings per common share because, as the Company incurred a net loss during each period presented, the potentially dilutive securities from the assumed exercise of all outstanding stock options, warrants and conversion of preferred stock, would have an anti-dilutive effect. The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common shareholders because including them would have been anti-dilutive ~~for the three~~as of March 31, 2022 and ~~nine months ended September 30, 2021 and 2020:~~2021:
Schedule of ~~Anti-Diluted~~Anti - Diluted Securities Excluded ~~From~~from Computation of Earning Per Share

As of September 30, As of March 31,
2021 2020 2022 2021
Stock options 22,242 22,260 27,748 22,890
Preferred Stock and accrued dividend upon conversion - 9,104
Warrants 988 1,328 988 1,326
Preferred Stock and accrued dividend as converted - 10,123
Total 23,230 32,692 28,736 34,339
Anti dilutive securities 28,736 34,339

Note 12 – Accumulated Other Comprehensive (Loss)/Income

The following table summarizes the changes in accumulated other comprehensive ~~(loss)/~~income by components during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:
Schedule of Components of Accumulated Other Comprehensive (Loss)/Income
Net Unrealized (Losses)/Gains on Available-for-Sale Securities
Accumulated
Other Comprehensive
(Loss)/Income

Balance, December 31, 2020 $ 228 $ 228
Net unrealized loss on securities available-for-sale (230 ) (230 )
Net Unrealized Gains (Losses) on Available-for-Sale Securities, Reclassifications to net loss - -
Accumulated Other Comprehensive (Loss)/Gain, Reclassifications to net loss - -
Net current period other comprehensive loss (230 ) (230 )
Balance, September 30, 2021 $ (2 ) $ (2 )

Balance, December 31, 2019 $ (1 ) $ (1 )
Net unrealized gain on securities available-for-sale 368 368
Reclassifications to net loss (3 ) (3 )
Net current period other comprehensive income 365 365
Balance, September 30, 2020 $ 364 $ 364
Net Unrealized (Losses)/Gains on Available-for-Sale Securities Accumulated Other Comprehensive
(Loss)/Income
Balance, December 31, 2021 $ (145 ) $ (145 )
Net unrealized loss on securities available-for-sale (484 ) (484 )
Net current period other comprehensive loss (484 ) (484 )
Balance, March 31, 2022 $ (629 ) $ (629 )

Balance, December 31, 2020 $ 228 $ 228
Net unrealized loss on securities available-for-sale (92 ) (92 )
Net current period other comprehensive income (92 ) (92 )
Balance, March 31, 2021 $ 136 $ 136

All components of accumulated other comprehensive ~~(loss)/~~income are net of tax.

Note 13 – Stock-based Compensation

The Company’s Amended and Restated 2013 Equity Compensation Plan (the “Plan”) provides for the granting of incentive stock options, nonqualified stock options, restricted stock units, performance units, and stock purchase rights. There were no significant modifications to the Plan during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.
With the approval of the Board of Directors and a majority of shareholders, effective May 8, 2014, the Plan was amended and restated to provide for an automatic increase in the number of shares of common stock available for issuance under the Plan each January, commencing January 1, 2015, in an amount up to four percent (4%~~) of the total number of shares of common stock outstanding on the preceding December 31st.~~
13

The following table contains information about the Company’s stock plan at ~~September 30, 2021:~~March 31, 2022:
Schedule of Equity Compensation Plan by Arrangements

Awards
Reserved for
Issuance

Awards
Issued &
Exercised

Awards
Available
for Grant

2013 Equity Compensation Plan 36,952 ^* 26,705 ^** 10,247
Awards
Reserved for
Issuance Awards
Issued &
Exercised Awards
Available
for Grant
2013 Equity Compensation Plan 45,603 * 32,429 ** 13,174

* Increased by ~~8,005~~8,651 thousand on January 1, ~~2021~~2022 representing 4%4% of the total number of shares of common stock outstanding on December 31, ~~2020.~~2021.
** Includes both restricted stock grants and option grants
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The Company recognized stock-based compensation expense (options and restricted share grants) in its condensed consolidated statements of operations as follows:
Schedule of Recognized Stock-Based Compensation

Three Months Ended
September 30,

Nine Months Ended
September 30,
Three Months Ended March 31,
2021 2020 2021 2020 2022 2021
Research and Development $ 467 $ 358 $ 1,411 $ 1,538 $ 550 $ 485
General and Administrative 594 595 1,806 1,807 710 616
Total $ 1,061 $ 953 $ 3,217 $ 3,345 $ 1,260 $ 1,101

As of ~~September 30, 2021,~~March 31, 2022, total compensation costs related to unvested awards not yet recognized was approximately $~~8.4~~10.5 million and the weighted-average periods over which the awards are expected to be recognized was ~~2.6~~2.7 years.

Stock Options

The following table summarizes the activity for Company’ stock options for the three months ended ~~September 30, 2021:~~March 31, 2022:
Schedule of Stock Option Activity
Stock Options
Outstanding at ~~January 1,~~December 31, 2021 ~~22,551~~ 28,184
Granted ~~4,796~~ 225
Exercised ~~(1,063~~ )(195)
Forfeited ~~(2,701~~ )(100)
Cancelled -
Expired ~~(1,341~~ )(366)
Outstanding at ~~September 30, 2021~~March 31, 2022 ~~22,242~~ 27,748

Restricted Stock Awards

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company granted restricted stock awards for 240 ~~thousand~~ and ~~268~~8 thousand shares of common stock, respectively. These awards are typically granted to members of the Board of Directors as payment in lieu of cash fees or as payment to a vendor pursuant to a consulting agreement. The Company values restricted stock awards at the fair market value on the date of grant. The Company recorded the value of these restricted awards as general and administrative expense of approximately $290 ~~thousand~~ and $8520 thousand in the condensed consolidated statement of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and approximately $~~90 ~~thousand and $263~~ ~~thousand for the three and nine months ended September 30, 2020, respectively, in the Condensed Consolidated Statement of Operations.~~respectively. As of ~~September 30, 2021,~~March 31, 2022, there was ~~approximately $~~7 ~~thousand of total~~no unrecognized compensation costs related to ~~100,000~~ ~~non-vested~~ restricted stock ~~grants which~~grants.
Note 14 – Commitments and Contingencies
On March 7, 2022, the Company entered into an agreement with Thermo Fisher Scientific to provide scale-up and commercial manufacturing capabilities for MAT2203. The estimated fees under the agreement, including capital equipment requirements, are approximately $7.7 million. The fees are expected to be ~~recognized~~incurred over a ~~weighted-average~~two-year period beginning in March 2022 through the first quarter of 2024~~0.1~~. ~~years.~~
Note 15 – Subsequent Event
On April 8, 2022, the Company entered into an exclusive research collaboration with BioNTech SE to evaluate the combination of mRNA formats utilizing the Company’s proprietary LNC platform technology. Under the terms of the agreement, the Company will receive an exclusivity fee in the amount of $2.75 million, and BioNTech SE will fund certain of the Company’s research expenses related to the collaboration. The parties have also commenced discussions on a potential license agreement for the Company’s LNC platform technology.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and in other reports we file with the Securities and Exchange Commission, particularly those under “Risk Factors.” Dollars in tabular format are presented in thousands, except per share data, or otherwise indicated.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, ~~together with any statements~~including risks and uncertainties related ~~in any way~~ to the ~~COVID-19 pandemic including its~~ impact ~~on the Company,~~of COVID-19, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. In addition, the extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future.

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

● our ability to raise additional capital to fund our operations and to develop our product candidates;

● our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals;

● our history of operating losses in each year since inception and the expectation that we will continue to incur operating losses for the foreseeable future;

● our dependence on product candidates ~~including LYPDISO ™ (formerly MAT9001), MAT2203 and MAT2501,~~ which are still in an early development stage;
● ~~our ability to successfully partner for the development of LYPDISO;~~

● our reliance on our proprietary lipid nanocrystal (LNC) platform delivery technology, which is licensed to us by Rutgers University;

● our ability to manufacture GMP batches of our product candidates ~~including LYPDISO, MAT2203 and MAT2501,~~ which are required for preclinical and clinical trials and, subsequently, if regulatory approval is obtained for any of our products, our ability to manufacture commercial quantities;

● our ability to complete required clinical trials for our lead product candidate and other product candidates and obtain approval from the FDA or other regulatory agents in different jurisdictions;

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● our dependence on third parties, including third parties to manufacture our intermediates and final product formulations and third-party contract research organizations to conduct our clinical trials;

● our ability to maintain or protect the validity of our patents and other intellectual property;

● our ability to retain and recruit key personnel;

● our ability to internally develop new inventions and intellectual property;

● interpretations of current laws and the passages of future laws;

● our lack of a sales and marketing organization and our ability to commercialize products, if we obtain regulatory approval, whether alone or through potential future collaborators;

● our ability to successfully commercialize, and our expectations regarding future therapeutic and commercial potential with respect to, our product candidates;

● the accuracy of our estimates regarding expenses, ongoing losses, future revenue, capital requirements and our needs for or ability to obtain additional financing; ~~and~~

● developments and projections relating to our competitors or our industry;

● our operations, business and financial results ~~have been and could continue to~~may be adversely impacted by ~~the current public health pandemic related to COVID-19,~~COVID-19; and

● the factors listed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, elsewhere in this report and other reports that we file with the Securities and Exchange Commission.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward- looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

Overview

We are a clinical-stage biopharmaceutical company focused on ~~creating value through improving~~redefining the intracellular delivery of ~~critical therapeutics~~nucleic acids and small molecules through our ~~paradigm-changing~~ lipid nanocrystal (LNC) ~~drug~~ delivery platform ~~and its application to overcome~~technology. Our current ~~challenges in safely and effectively delivering~~pipeline consists of two potent anti-infective small molecules, ~~nucleic acids, gene therapies, proteins/peptides,~~MAT2203 (oral amphotericin B) and ~~vaccines.~~MAT2501 (oral amikacin). We are also ~~focused~~expanding the application of our LNC platform through collaborations with well-respected pharmaceutical companies whose molecules and compounds benefit from the unique capabilities of our delivery technology, which can provide oral bioavailability and facilitate non-toxic and efficient intracellular delivery. We are intent on ~~creating value~~further expansion of our LNC platform, both internally and through ~~finding~~external partnerships, into the field of nucleic acids where delivery into cells remains a ~~partner to continue the development~~critical element of LYPDISO, our proprietary, next-generation prescription omega-3 drug, which we believe is differentiated from all other prescription omega-3 products and positioned to potentially demonstrate superior cardioprotective effects.therapeutic effect.
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Key elements of our strategy include:

● Advancing our clinical stage assets based on our LNC platform delivery technology and continuing to expand utilization of this promising technology into areas of innovative ~~medicine.~~medicine beyond small molecules, including nucleic acids (e.g. mRNA, DNA, ASOs) and proteins, both internally and through additional external collaborations and partnerships, including our feasibility study agreement with Genentech and exclusive research collaboration with BioNTech SE.
● ~~Delivering efficacy data for~~Advancing MAT2203 intoward NDA filing through the ongoing EnACT study for the treatment of cryptococcal meningitis, which ~~would highlight~~highlights the safety and efficacy of this promising drug candidate, while ~~highlighting~~also demonstrating the ability of our LNC platform technology to deliver potent medicines across the blood-brain barrier ~~following~~with oral administration.
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● Progressing the development of MAT2501 through extensive preclinical toxicology and efficacy studies in NTM infections and completing a single ascending dose (SAD) pharmacokinetic study in healthy volunteers later in ~~2021,~~2022, all with the financial support of the ~~Cystic Fibrosis Foundation.~~
● ~~Expanding the application of our LNC platform delivery technology through collaborations with sophisticated and well-resourced biotech and pharmaceutical companies in areas of innovative medicine.~~CFF.

We have incurred losses for each period from our inception. For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ our net loss was approximately ~~$16.6~~$6.0 million and ~~$16.1~~$5.0 million, respectively. We expect to incur significant expenses and operating losses over the next several years. Accordingly, we will need additional financing to support our continuing operations. We will seek to fund our operations through public or private equity offerings, debt financings, government or other third-party funding, collaborations and licensing arrangements. 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 impact our going concern and would have a negative impact on our financial condition and our ability to pursue our business strategy and continue as a going concern. We will need to generate significant revenues to achieve profitability, and we may never do so.

Financial Operations Overview

Revenue

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022, we did not generate any revenue and during the three months ended March 31, 2021, we generated contract research revenue of approximately $33 thousand resulting from the feasibility study agreement with Genentech Inc. ~~and approximately $96 thousand resulting from a grant with the Cystic Fibrosis Foundation and the feasibility study agreement with Genentech Inc. during the nine months ended September 30, 2020.~~ Our ability to generate product revenue, which we do not expect to occur ~~until 2023 at the earliest,~~for many years, if ever, will depend heavily on the successful development and eventual commercialization of our early-stage product candidates.

Research and Development Expenses

Research and development expenses consist of costs incurred for the development of product candidates MAT2203 and MAT2501, ~~LYPDISO~~ and advancement of our LNC delivery technology platform, which include:

● the cost of conducting pre-clinical work;

● the cost of acquiring, developing and manufacturing pre-clinical and human clinical trial materials;

● costs for consultants and contractors associated with Chemistry and Manufacturing Controls (CMC), pre-clinical and clinical activities and regulatory operations;

● expenses incurred under agreements with contract research organizations, or CROs, including the ~~National Institutes of Health (NIH),~~NIH, that conduct our pre-clinical or clinical trials; ~~and~~

● employee-related expenses, including salaries and stock-based compensation expense for those employees involved in the research and development ~~process.~~process; and
● the reimbursement of certain expenses related to the CFF award agreement.
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The table below summarizes our direct research and development expenses for our product candidates and development platform for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. Our direct research and development expenses consist principally of external costs, such as fees paid to contractors, consultants, analytical laboratories and CROs and/or the NIH, in connection with our development work. We typically use our employee and infrastructure resources for manufacturing clinical trial materials, conducting product analysis, study protocol development and overseeing outside vendors. Included in “Internal ~~Staffing, Overhead~~staffing, overhead and ~~Other”~~other” below is the cost of laboratory space, supplies, research and development (R&D) employee costs (including stock-based compensation), travel and medical education.

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Three months ended
September 30,

Nine months ended
September 30,

Three months ended
March 31,

2021 2020 2021 2020 2022 2021
Direct research and development expenses:
Manufacturing process development $ 844 $ 318 $ 1,572 $ 928 $ 884 $ 489
Preclinical trials 99 119 101 598 566 9
Clinical development 586 1,295 1,652 3,994 583 771
Regulatory 44 39 129 73 169 42
Internal staffing, overhead and other 3,048 1,565 6,889 5,240 2,776 1,930
Total research and development $ 4,621 $ 3,336 $ 10,343 $ 10,833 $ 4,978 $ 3,241

Research and development activities are central to our business model. We expect our research and development expenses to increase because product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage human trials. Our research and development expenses reflect the reimbursement of certain MAT2501 program expenses related to the CFF award agreement. In addition, we will look to strategically expand the use of our drug platform technology through additional development work. During ~~2021,~~2022, we will be focused on advancing our lead product candidate, MAT2203, to efficacy data in the treatment of cryptococcal meningitis (CM), accelerating the ~~preclinical~~ development of MAT2501 and also expanding application of our LNC platform delivery technology through both internal efforts and collaborations with third parties. We have also initiated a global process to identify a suitable partner to continue the development of ~~LYPDISO following the announcement of topline date from the ENHANCE-IT study in February 2021.~~LYPDISO.

General and Administrative Expenses

General and administrative expenses consist principally of salaries and related costs for personnel in executive and finance functions. Other general and administrative expenses include facility costs, insurance, investor relations expenses, professional fees for legal, patent review, consulting and accounting/audit services.
We anticipate that our general and administrative expenses during ~~2021~~2022 will remain relatively consistent with ~~the prior year.~~expenses incurred during 2021.

Sale of Net Operating Losses (NOLs) & Tax Credits

Income obtained from selling unused net operating losses (NOLs) and unused research tax credits under the New Jersey Technology Business Tax Certificate Program was approximately ~~$1.3~~$1.7 million and ~~$1.1~~$1.3 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Other Income, net

Other income, net is largely comprised of interest income/(expense), dividends and franchise taxes.

Application of Critical Accounting Policies and Accounting Estimates

A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operation and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

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For a description of our significant accounting policies, refer to “Note 3 – Summary of Significant Accounting Policies” in our ~~2020~~2021 Form 10-K. Of these policies, the following are considered critical to an understanding of our Unaudited Condensed Consolidated Financial Statements as they require the application of the most difficult, subjective and complex judgments; (i) Stock-based compensation, (ii) Fair value measurements, (iii) Research and development costs, (iv) Goodwill and other intangible assets, and (v) Basic and diluted net loss per common share.

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Recent Accounting Pronouncements
Refer to “Note 3 – Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements and their expected impact on our financial positions and results of operations.

Current Operating Trends

Our current R&D efforts are focused on advancing our lead LNC product candidates, MAT2203, through clinical development toward an initial indication for the treatment of CM, accelerating preclinical development of MAT2501 with the assistance of the CFF, and expanding application of our LNC platform delivery technology through collaborations with third parties. Our R&D expenses consist of manufacturing work and the cost of active pharmaceutical ingredients and excipients used in such work, fees paid to consultants for work related to clinical trial design and regulatory activities, fees paid to providers for conducting various clinical studies as well as for the analysis of the results of such studies, and for other medical research addressing the potential efficacy and safety of our drugs. We believe that significant investment in product development is a competitive necessity, and we plan to continue these investments in order to be in a position to realize the potential of our product candidates and proprietary technologies.

We expect that all of our R&D expenses in the near-term future will be incurred in support of our current and future preclinical and clinical development programs rather than technology development. These expenditures are subject to numerous uncertainties relating to timing and cost to completion. We test compounds in numerous preclinical studies for safety, toxicology and efficacy. At the appropriate time, subject to the approval of regulatory authorities, we expect to conduct early-stage clinical trials for each drug candidate. We anticipate funding these trials ourselves, and possibly with the assistance of federal grants, contracts or other agreements. As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain products in order to focus our resources on more promising products. Completion of clinical trials may take several years, and the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product candidate.

The commencement and completion of clinical trials for our products may be delayed by many factors, including lack of efficacy during clinical trials, unforeseen safety issues, slower than expected participant recruitment, lack of funding or government delays. In addition, we may encounter regulatory delays or rejections as a result of many factors, including results that do not support the intended safety or efficacy of our product candidates, perceived defects in the design of clinical trials and changes in regulatory policy during the period of product development. As a result of these risks and uncertainties, we are unable to accurately estimate the specific timing and costs of our clinical development programs or the timing of material cash inflows, if any, from our product candidates. Our business, financial condition and results of operations may be materially adversely affected by any delays in, or termination of, our clinical trials or a determination by the FDA that the results of our trials are inadequate to justify regulatory approval, insofar as cash in-flows from the relevant drug or program would be delayed or would not occur.

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Results of Operations
~~Comparison of the three months ended September 30, 2021 to the three months ended September 30, 2020~~

The following tables summarizes our revenues and operating expenses for the ~~comparative~~ periods presented:

Three Months Ended September 30, Three Months Ended March 31,
2021 2020 2022 2021
Revenues $ - $ 96 $ - $ 33

Expenses:
Research and development $ 4,621 $ 3,336 $ 4,978 $ 3,241
General and administrative 2,257 2,364 2,744 3,145
Operating Expenses $ 6,878 $ 5,700 $ 7,722 $ 6,386

Sale of net operating losses (NOLs) $ 1,734 $ 1,328

Revenues. During the three months ended ~~September 30, 2021 and 2020,~~March 31, 2022 we generated no revenue ~~of $0~~ and approximately ~~$96~~$33 thousand ~~respectively.~~during the same period in 2021. The amount earned ~~in 2020~~ consists of contract research revenue resulting from ~~a grant with~~ the ~~Cystic Fibroses Foundation and a~~ feasibility study agreement with Genentech Inc.

Research and Development expenses. Research and Development (R&D) expense for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was approximately ~~$4.6~~$5.0 million and ~~$3.3~~$3.2 million, respectively. The increase ~~of approximately $1.3 million~~ in R&D expenses was primarily due to the ~~$1.2 million expense~~increased clinical trials related to the ~~issuance~~advancement of ~~common stock pursuant to the Aquarius Merger Agreement~~our product candidates and ~~an increase of~~higher compensation expense ~~primarily related to headcount increases partially offset by decreased clinical trials expenses.~~in 2022.
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General and Administrative expenses. General and administrative expense for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was approximately ~~$2.3~~$2.7 million and ~~$2.4~~$3.1 million, respectively. The decrease in general and administrative expense was primarily due to ~~lower compensation expenses, professional fees and consulting expenses.~~
~~Comparison of the nine months ended September 30, 2021 to the nine months ended September 30, 2020~~
~~The following tables summarizes our revenues and operating expenses for the comparative periods presented:~~
Nine Months Ended September 30,
2021 2020
Revenues $ 33 $ 96

Expenses:
Research and development $ 10,343 $ 10,834
General and administrative 7,711 6,980
Operating Expenses $ 18,054 $ 17,814

Sale of net operating losses (NOLs) $ 1,328 $ 1,073
~~Revenues.~~ During the nine months ended September 30, 2021 and 2020 we generated revenue of approximately $33 thousand and $96 thousand, respectively. The amount earned during the nine months ended September 30, 2020 consists of contract research revenue resulting from the feasibility study agreement with Genentech Inc. and the amount earned during the nine months ended September 30, 2020 consists of contract research revenue resulting from a grant with the Cystic Fibroses Foundation and the feasibility study agreement with Genentech Inc.
~~Research and Development expenses.~~ Research and Development (R&D) expense for the nine months ended September 30, 2021 and 2020 was approximately $10.3 million and $10.8 million, respectively. The decrease in R&D expenses was primarily due to completion of the LYPDISO clinical trial in January 2021 and expense reimbursement of approximately $1.6 million for certain MAT2501 clinical trial costs related to the CFF Agreement, partially offset by the $1.2 million expense related to the Aquarius Merger Agreement and an increase of compensation expense related to department headcount increases and the exercise of stock options.
~~General and Administrative expenses.~~ General and administrative expense for the nine months ended September 30, 2021 and 2020 was approximately $7.7 million and $7.0 million, respectively. The increase in general and administrative expense was primarily due to highernon-recurring compensation expense related to the exercise of stock options ~~and increased insurance expense slightly offset by lower professional fees & consulting expense.~~
~~Sale of net operating losses (NOLs).~~ ~~The Company recognized approximately $1.3 million and $1.1 million for~~during the ~~nine~~three months ended September 30, 2021 and 2020, respectively, in connection with the sale of state net operating losses and state research and development credits to third parties under the New Jersey Technology Business Tax Certificate Program.March 31, 2021.

Liquidity and capital resources

Sources of Liquidity

We have funded our operations since inception through private placements and public offerings of our equity securities. As of ~~September 30, 2021,~~March 31, 2022, we have raised a total of approximately $156.7 million in gross proceeds and $143.9 million, net, from sales of our equity securities.

As of ~~September 30, 2021,~~March 31, 2022, we had ~~unrestricted~~ cash, cash equivalents and marketable securities totaling approximately ~~$53.8~~$43.9 million.
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~~2020 At-The-Market Sales Agreement~~
On July 2, 2020, we entered into an At-The-Market Sales Agreement (the “Sales Agreement”) with BTIG, LLC (“BTIG”), pursuant to which we may offer and sell, from time to time, through BTIG, as sales agent and/or principal, shares of our common stock having an aggregate offering price of up to $50,000,000, subject to certain limitations on the amount of common stock that may be offered and sold by us set forth in the Sales Agreement. BTIG will be paid a 3% commission on the gross proceeds from each sale. We may terminate the Sales Agreement at any time; BTIG may terminate the Sales Agreement in certain limited circumstances. As of December 31, 2020, we did not sell any shares of our common stock under the ATM Sales Agreement. For the nine months ended September 30, 2021, the Company sold 3,023,147 shares of its common stock under its ATM Sales Agreement with BTIG, LLC, at an average price of $1.90, generating gross proceeds of approximately $5.8 million and net proceeds of approximately $5.6 million.
~~2020 Common Stock Offering~~
On January 14, 2020, we closed an underwritten public offering of our common stock. The offering resulted in the sale of approximately 32.3 million shares to the public at a price of $1.55 per share. We generated net proceeds of approximately $46.7 million. We granted the underwriters a 30-day option (the “option”) to purchase approximately 4.8 million additional shares of common stock subject to the same terms and conditions. No additional shares of our common stock were sold pursuant to this option.

Cash Flows

The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for each of the periods set forth below:

Nine Months Ended September 30,
2021 2020
Cash used in operating activities $ (11,266 ) $ (13,060 )
Cash provided by/(used in) investing activities 16,713 (49,756 )
Cash provided by financing activities` 6,957 47,497
Net increase/(decrease) in cash and cash equivalents and restricted cash $ 12,404 $ (15,319 )
Three Months Ended March 31,
2022 2021
Cash used in operating activities $ (4,756 ) $ (4,651 )
Cash provided by investing activities 2,961 8,817
Cash provided by financing activities 93 6,785
Net (decrease)/increase in cash and cash equivalents and restricted cash $ (1,702 ) $ 10,951

Operating Activities

Net cash used in operating activities was approximately ~~$11.3~~$4.8 million and ~~$13.1~~$4.7 million for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. ~~The decrease~~Net losses of approximately ~~$1.8~~$6.0 million ~~was primarily due to a decrease of approximately $1.0~~and $5.0 million offor the three-month periods ended March 31, 2022 and 2021, respectively, were partially offset by working capital adjustments due to the timing of receipts and payments in the ordinary course of ~~business and approximately $0.8 million of lower expenses.~~business. We expect that there will be an increase in cash used in operations during the remainder of ~~2021 will be similar~~2022 due to ~~that used during the quarter just ended~~higher research and development expenses as we continue to move our product candidates and ~~the~~ delivery platform forward in their development cycles.

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Investing Activities

Approximately ~~$16.7~~$3.0 million and $8.8 million of net cash was provided by ~~and approximately $49.8 million of cash was used in~~ investing activities for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The ~~increase~~decrease of approximately ~~$66.5~~$5.8 million was primarily due to the approximately ~~$10.3~~$6.9 million ~~increase~~decrease in proceeds received from maturities of our marketable securities and the purchase of $0.5 million of leasehold improvements and equipment offset by the decrease of approximately ~~$56.4~~$1.7 million in purchases of marketable securities as compared to ~~September 30, 2020 partially offset by $0.2 million in purchases of equipment and leasehold improvements.~~March 31, 2021.
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Financing Activities

Net cash provided by financing activities was approximately ~~$7.0~~$0.1 million and approximately ~~$47.5~~$6.8 million for the ~~nine-months~~three-months periods ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The decrease of approximately ~~$40.5~~$6.7 million ~~in cash provided by financing activities was~~is primarily due to the ~~Company raising~~ATM sales during January 2021 of approximately $5.6 million, ~~of net proceeds from~~for which the ~~January 2021 ATM sales of our common stock compared to~~Company did not have similar equity raises during the ~~approximately $46.6 million of net proceeds that was raised from the January 2020 public offering of common stock. Other financing activities included~~three months ended March 31, 2022, and a decrease in receipt of proceeds of approximately ~~$0.8 million from the exercising of warrants and an increase of approximately $1.3~~$1.1 million from the exercising of stock options.

Funding Requirements and Other Liquidity Matters

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:

● conduct further preclinical and clinical studies of MAT2203, our lead product ~~candidates, MAT2203 and~~candidate, even if such studies are primarily financed with non-dilutive funding from NIH;
● support the conduct of further clinical studies of MAT2501, even if such studies are ~~supported~~primarily financed with non-dilutive funding from ~~third parties;~~the CFF;

● seek to discover and develop additional product candidates;

● seek regulatory approvals for any product candidates that successfully complete clinical trials;

● require the manufacture of larger quantities of product candidates for clinical development and potentially commercialization;

● maintain, expand and protect our intellectual property portfolio;

● hire additional clinical, quality control and scientific personnel; and

● add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts and personnel and infrastructure necessary to help us comply with our obligations as a public company.

We expect that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditures requirements ~~into 2024.~~through 2023.

Until such time, if ever, that we can generate product revenues sufficient to achieve profitability, we expect to finance our cash needs through a combination of ~~private~~public and ~~public~~private equity offerings, debt financings, government or other third-party funding, collaborations and licensing arrangements. We do not have any committed external source of funds other than limited grant funding from the ~~CFF.~~CFF and NIH. To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interest of our stockholders may be materially diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights of our common stockholders. Debt financing and preferred equity financing, if available, would result in increased fixed payment obligations and 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, that could adversely impact our ability to conduct our business. Securing additional financing could require a substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development of our product candidates.

20
If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses 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 product candidates that we would otherwise prefer to develop and market ourselves.

22
Contractual Obligations and Commitments

On ~~August 1, 2021,~~March 7, 2022, the ~~amendment~~Company entered into an agreement with a contract manufacturing organization to provide commercial manufacturing capabilities for MAT2203. The estimated fees under the ~~Company’s Bedminster lease became effective upon delivery~~agreement, including capital equipment requirements, are approximately $7.7 million. The fees are expected to be incurred over a two-year period beginning in March 2022 through the first quarter of the Expansion Premises and extends the term of the lease for seven years from such date. The total lease commitment over the seven-year extension period is approximately $1.8 million. (See Note 8 – Leases)
Besides the amendment to the Bedminster lease, there have been no other material changes from the disclosures relating to our contractual obligations reported in our Annual Report on Form 10-K for the year ended December 31, 2020.2024.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk is limited to our cash, cash equivalents and marketable securities. As of September 30, 2021, we had $53.8 million in unrestricted cash, cash equivalents and marketable securities. Such interest-earning instruments carry a degree of interest rate risk. The primary objectives of our investment activities are to preserve principal, provide liquidity and maximize income without significantly increasing risk. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our financial condition and/or results of operation. We do not have any foreign currency or other derivative financial instruments.Not applicable.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

Disclosure Controls and Procedures:

As of ~~September 30,~~March 31, 2021, under the supervision and with the participation of our principal executive officer and principal financial officer we have evaluated, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~September 30, 2021.~~March 31, 2022.

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that we filed or submitted under the Exchange Act is recorded, processed, summarized and reported within time periods specified by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the ~~third~~first quarter of ~~2021~~2022 that have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

23
PART - II OTHER INFORMATION

Item 1. LEGAL ~~PROCEEDINGS~~PROCEEDSINGS

None.
21
Item 1A. RISK FACTORS

There were no material changes from the risk factors set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. You should carefully consider the risk factors contained in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 in addition to the other information set forth in this report which could materially affect our business, financial condition or future results. The risks and uncertainties described in this report and in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, as well as other reports and statements that we file with the SEC, are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, results of operations or cash flows.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On September 3, 2021, the Company issued 1,500,000 unregistered shares of its common stock pursuant to the Agreement and Plan of Merger by and among the Company, Saffron Merger Sub, Inc., Aquarius Biotechnologies Inc., and J Carl Craft, as holder representative, dated January 19, 2015, as subsequently amended on September 3, 2021 (the “Aquarius Merger Agreement”), to the holders of Aquarius Biotechnologies Inc., as defined in the Aquarius Merger Agreement. The shares were issued in place of certain milestone payments due under the Aquarius Merger Agreement upon the achievement of specified development milestones. The issuance of these shares was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving any public offering and/or the private offering safe harbor provision of Rule 506 of Regulation D promulgated under the Securities Act. The shares may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.None.

Item 3. DEFAULTS UNDER SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Not applicable.

Item 6. EXHIBITS

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

2422

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MATINAS BIOPHARMA HOLDINGS, INC.

BY:

/s/ Jerome D. Jabbour
Dated: ~~November 8, 2021~~May 12, 2022 Jerome D. Jabbour
Chief Executive Officer (Principal Executive Officer)

/s/ Keith A. Kucinski
Dated: ~~November 8, 2021~~May 12, 2022 Keith A. Kucinski
Chief Financial Officer
(Principal Financial and Accounting Officer)

2523

EXHIBIT INDEX

3.1 Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).
3.2 Bylaws (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).
3.3 Certificate of Amendment, dated October 29, 2015 to Certificate of Incorporation. (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 5, 2015).
4.6 Description of Securities* (incorporated herein by reference to the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2022)
*31.1 Certification of Chief Executive Officer
*31.2 Certification of Chief Financial Officer
**32.1 Section 1350 Certifications
*101.1 Inline XBRL Instance Document.
*101.2 Inline XBRL Taxonomy Extension Schema Document.
*101.3 Inline XBRL Taxonomy Extension Calculation Linkbase Document.
*101.4 Inline XBRL Taxonomy Extension Definition Linkbase Document.
*101.5 Inline XBRL Taxonomy Extension Label Linkbase Document.
*101.6 Inline XBRL Taxonomy Extension Presentation Linkbase Document.
*104 ~~Filed herewith.~~ Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed herewith.
2624

		Shares			Amount			Shares		Amount		Capital			Deficit			Income (loss)			Equity
	Redeemable Convertible Preferred Stock B						Common Stock				Additional Paid - in			Accumulated			Accumulated Other Comprehensive			Total Stockholders’
	Shares			Amount			Shares		Amount		Capital			Deficit			Income (loss)			Equity
Balance, December 31, 2020		4,361		$	3,797,705			200,113,431	$	20,010	$	167,192,003		$	(107,507,193	)	$	228,172		$	63,730,697
Stock-based compensation		-			-			-		-		3,132,351			-			-			3,132,351
Issuance of common stock as compensation for services		-			-			23,910		3		23,811			-			-			23,814
Issuance of common stock in exchange for preferred stock		(4,361	)		(3,797,705	)		8,722,000		873		3,796,832			-			-			-
Issuance of common stock in public offering, net of stock issuance costs ($172,592)		-			-			3,023,147		302		5,580,169			-			-			5,580,471
Issuance of common stock from the exercise of Common Stock Options		-			-			1,062,883		106		1,400,552			-			-			1,400,658
Issuance of common stock from the exercise of Warrants		-			-			114,957		12		(12	)		-			-			-
Issuance of common stock pursuant to the Aquarius Merger Agreement		-			-			1,500,000		150		1,199,850			-			-			1,200,000
Stock dividend		-			-			1,687,200		169		843,431			(843,600	)		-			-
Other comprehensive loss		-			-			-		-		-			-			(229,766	)		(229,766	)
Net loss		-			-			-		-		-			(16,583,975	)		-			(16,583,975	)
Balance, September 30, 2021		-		$	-			216,247,528	$	21,625	$	183,168,987		$	(124,934,768	)	$	(1,594	)	$	58,254,250

	September 30, 2021		December 31, 2020		September 30, 2020		December 31, 2019		March 31, 2022		December 31, 2021		March 31, 2021		December 31, 2020
Cash and cash equivalents	$	24,923	$	12,432	$	7,051	$	22,170	$	19,328	$	21,030	$	23,383	$	12,432
Restricted cash included in current/long term assets		250		336		386		586		250		250		336		336
Cash, cash equivalents and restricted cash in the statement of cash flows	$	25,173	$	12,768	$	7,437	$	22,756	$	19,578	$	21,280	$	23,719	$	12,768

										Amortized Cost		Unrealized Gain		Unrealized (Loss)			Fair Value
	Amortized		Unrealized		Unrealized					Amortized		Unrealized		Unrealized
	Cost		Gain		(Loss)			Fair Value		Cost		Gain		(Loss)			Fair Value
U.S. Treasury Bonds	$	3,500	$	5	$	-		$	3,505	$	988	$	—	$	(13	)	$	975
U.S. Government Notes		16,010		16		(16	)		16,010		18,378		—		(519	)		17,859
Corporate Debt Securities		9,149		-		(7	)		9,142		5,555		—		(97	)		5,458
State and Municipal Bonds		250		-		-			250		250		—		—			250
Total marketable securities	$	28,909	$	21	$	(23	)	$	28,907	$	25,171	$	—	$	(629	)	$	24,542

			Accrued		Net Carrying				Net Carrying
	Fair Value		Interest		Amount		Fair Value		Amount
Due within one year	$	13,805	$	56	$	13,861	$	5,253	$	5,260
Due after one year through five years		15,102		45		15,147		19,289		19,349
	$	28,907	$	101	$	29,008	$	24,542	$	24,609

	Amortized Cost		Unrealized Gain		Unrealized (Loss)		Fair Value		Amortized Cost		Unrealized Gain		Unrealized (Loss)			Fair Value
U.S. Treasury Bonds	$	18,293	$	136	$	-	$	18,429
									Amortized Cost		Unrealized Gain		Unrealized (Loss)			Fair Value
U.S. Government Notes		22,148		82		-		22,230	$	19,395	$	2	$	(120	)	$	19,277
Corporate Debt Securities		4,303		3		-		4,306		9,092		—		(27	)		9,065
State and Municipal Bonds		1,275		7		-		1,282		250		—		—			250
Total marketable securities	$	46,019	$	228	$	-	$	46,247	$	28,737	$	2	$	(147	)	$	28,592

●	Level 1 – Quoted prices for identical assets or liabilities in active markets.

●	Level 2 – Quoted prices for identical or similar assets and liabilities in markets that are not active; or other model-derived valuations whose inputs are directly or indirectly observable or whose significant value drivers are observable.

●	Level 3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable and for which assumptions are used based on management estimates.

March 31, 2022									Total		(Level 1)		(Level 2)		(Level 3)
			Fair Value Hierarchy								Fair Value Hierarchy
September 30, 2021	Total		(Level 1)		(Level 2)		(Level 3)
March 31, 2022									Total		(Level 1)		(Level 2)		(Level 3)
Assets
Marketable Securities:
U.S. Treasury Bonds	$	3,505	$	3,505	$	-	$	-	$	975	$	975	$	—	$	—
U.S. Government Notes		16,010		-		16,010		-		17,859		—		17,859		—
Corporate Debt Securities		9,142		-		9,142		-		5,458		—		5,458		—
State and Municipal Bonds		250		-		250		-		250		—		250		—
Total	$	28,907	$	3,505	$	25,402	$	-	$	24,542	$	975	$	23,567	$	—

	September 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
Equipment	$	1,610	$	1,443	$	1,964	$	1,640
Leasehold improvements		935		878		1,155		935
Total		2,545		2,321		3,119		2,575
Less: accumulated depreciation and amortization		976		797		1,106		1,037
Leasehold improvements and equipment, net	$	1,569	$	1,524	$	2,013	$	1,538

Maturity of Lease Liabilities	Operating Lease Liabilities			Finance Lease Liabilities			Operating Lease Liabilities			Finance Lease Liabilities
Remainder of 2021	$	218		$	9
2022		883			19
Remainder of 2022							$	666		$	15
2023		922			2			922			2
2024		962			-			962			-
2025		1,004			-			1,004			-
2026								1,046			-
2026								1,046			-
Thereafter		2,157			-			1,112			-
Total undiscounted operating lease payments	$	6,146		$	30		$	5,712		$	17
Less: Imputed interest		1,343			-			1,160			-
Present value of operating lease liabilities	$	4,803		$	30		$	4,552		$	17

Weighted average remaining lease term in years		6.3			1.1			5.8			1.1
Weighted average discount rate		7.7	%		7.8	%		7.8	%		7.6	%

	Shares
Outstanding at December 31, ~~2019~~2020		~~5,397~~1,328
Issued		-
Exercised		(~~2,576~~320	)
Tendered		-
Expired		(~~1,493~~20	)
Outstanding at December 31, ~~2020~~2021		~~1,328~~988	^*

Issued		-
Exercised		~~(320~~	)**
~~Tendered~~		-
~~Expired~~Tendered		~~(20~~-	)
Expired		-
Outstanding at ~~September 30, 2021~~March 31, 2022		988	^***

*	~~Weighted average exercise price for outstanding warrants is $0.55~~.
**	~~Converted into approximately~~ ~~115~~ ~~thousand shares of commons stock.~~
***	Weighted average exercise price for outstanding warrants is $0.56.


	As of September 30,				As of March 31,
	2021		2020		2022		2021
Stock options		22,242		22,260		27,748		22,890
Preferred Stock and accrued dividend upon conversion		-		9,104
Warrants		988		1,328		988		1,326
Preferred Stock and accrued dividend as converted						-		10,123
Total		23,230		32,692		28,736		34,339
Anti dilutive securities						28,736		34,339

	Net Unrealized (Losses)/Gains on Available-for-Sale Securities			Accumulated Other Comprehensive (Loss)/Income
Balance, December 31, 2020	$	228		$	228
Net unrealized loss on securities available-for-sale		(230	)		(230	)
Net Unrealized Gains (Losses) on Available-for-Sale Securities, Reclassifications to net loss		-			-
Accumulated Other Comprehensive (Loss)/Gain, Reclassifications to net loss		-			-
Net current period other comprehensive loss		(230	)		(230	)
Balance, September 30, 2021	$	(2	)	$	(2	)

Balance, December 31, 2019	$	(1	)	$	(1	)
Net unrealized gain on securities available-for-sale		368			368
Reclassifications to net loss		(3	)		(3	)
Net current period other comprehensive income		365			365
Balance, September 30, 2020	$	364		$	364

	Net Unrealized (Losses)/Gains on Available-for-Sale Securities			Accumulated Other Comprehensive (Loss)/Income
Balance, December 31, 2021	$	(145	)	$	(145	)
Net unrealized loss on securities available-for-sale		(484	)		(484	)
Net current period other comprehensive loss		(484	)		(484	)
Balance, March 31, 2022	$	(629	)	$	(629	)

Balance, December 31, 2020	$	228		$	228
Net unrealized loss on securities available-for-sale		(92	)		(92	)
Net current period other comprehensive income		(92	)		(92	)
Balance, March 31, 2021	$	136		$	136

*	Increased by ~~8,005~~8,651 thousand on January 1, ~~2021~~2022 representing 4%4% of the total number of shares of common stock outstanding on December 31, ~~2020.~~2021.
**	Includes both restricted stock grants and option grants

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2021		2020		2022		2021
Research and Development	$	467	$	358	$	1,411	$	1,538	$	550	$	485
General and Administrative		594		595		1,806		1,807		710		616
Total	$	1,061	$	953	$	3,217	$	3,345	$	1,260	$	1,101

	Stock Options
Outstanding at ~~January 1,~~December 31, 2021	~~22,551~~	28,184
Granted	~~4,796~~	225
Exercised	~~(1,063~~	)(195)
Forfeited	~~(2,701~~	)(100)
Cancelled	-
Expired	~~(1,341~~	)(366)
Outstanding at ~~September 30, 2021~~March 31, 2022	~~22,242~~	27,748

●	our ability to raise additional capital to fund our operations and to develop our product candidates;

●	our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals;

●	our history of operating losses in each year since inception and the expectation that we will continue to incur operating losses for the foreseeable future;

●	our dependence on product candidates ~~including LYPDISO ™ (formerly MAT9001), MAT2203 and MAT2501,~~ which are still in an early development stage;

●	~~our ability to successfully partner for the development of LYPDISO;~~

●	our reliance on our proprietary lipid nanocrystal (LNC) platform delivery technology, which is licensed to us by Rutgers University;

●	our ability to manufacture GMP batches of our product candidates ~~including LYPDISO, MAT2203 and MAT2501,~~ which are required for preclinical and clinical trials and, subsequently, if regulatory approval is obtained for any of our products, our ability to manufacture commercial quantities;

●	our ability to complete required clinical trials for our lead product candidate and other product candidates and obtain approval from the FDA or other regulatory agents in different jurisdictions;

●	our dependence on third parties, including third parties to manufacture our intermediates and final product formulations and third-party contract research organizations to conduct our clinical trials;

●	our ability to maintain or protect the validity of our patents and other intellectual property;

●	our ability to retain and recruit key personnel;

●	our ability to internally develop new inventions and intellectual property;

●	interpretations of current laws and the passages of future laws;

●	our lack of a sales and marketing organization and our ability to commercialize products, if we obtain regulatory approval, whether alone or through potential future collaborators;

●	our ability to successfully commercialize, and our expectations regarding future therapeutic and commercial potential with respect to, our product candidates;

●	the accuracy of our estimates regarding expenses, ongoing losses, future revenue, capital requirements and our needs for or ability to obtain additional financing; ~~and~~

●	developments and projections relating to our competitors or our industry;

●	our operations, business and financial results ~~have been and could continue to~~may be adversely impacted by ~~the current public health pandemic related to COVID-19,~~COVID-19; and

●	Progressing the development of MAT2501 through extensive preclinical toxicology and efficacy studies in NTM infections and completing a single ascending dose (SAD) pharmacokinetic study in healthy volunteers later in ~~2021,~~2022, all with the financial support of the ~~Cystic Fibrosis Foundation.~~

●	~~Expanding the application of our LNC platform delivery technology through collaborations with sophisticated and well-resourced biotech and pharmaceutical companies in areas of innovative medicine.~~CFF.

●	the cost of conducting pre-clinical work;

●	the cost of acquiring, developing and manufacturing pre-clinical and human clinical trial materials;

●	costs for consultants and contractors associated with Chemistry and Manufacturing Controls (CMC), pre-clinical and clinical activities and regulatory operations;

●	expenses incurred under agreements with contract research organizations, or CROs, including the ~~National Institutes of Health (NIH),~~NIH, that conduct our pre-clinical or clinical trials; ~~and~~

●	employee-related expenses, including salaries and stock-based compensation expense for those employees involved in the research and development ~~process.~~process; and

●	the reimbursement of certain expenses related to the CFF award agreement.

	Three Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2022		2021
Revenues	$	-	$	96	$	-	$	33

Expenses:
Research and development	$	4,621	$	3,336	$	4,978	$	3,241
General and administrative		2,257		2,364		2,744		3,145
Operating Expenses	$	6,878	$	5,700	$	7,722	$	6,386

Sale of net operating losses (NOLs)					$	1,734	$	1,328

	Nine Months Ended September 30,
	2021		2020
Revenues	$	33	$	96

Expenses:
Research and development	$	10,343	$	10,834
General and administrative		7,711		6,980
Operating Expenses	$	18,054	$	17,814

Sale of net operating losses (NOLs)	$	1,328	$	1,073

●	conduct further preclinical and clinical studies of MAT2203, our lead product ~~candidates, MAT2203 and~~candidate, even if such studies are primarily financed with non-dilutive funding from NIH;

●	support the conduct of further clinical studies of MAT2501, even if such studies are ~~supported~~primarily financed with non-dilutive funding from ~~third parties;~~the CFF;

●	seek to discover and develop additional product candidates;

●	seek regulatory approvals for any product candidates that successfully complete clinical trials;

●	require the manufacture of larger quantities of product candidates for clinical development and potentially commercialization;

●	maintain, expand and protect our intellectual property portfolio;

●	hire additional clinical, quality control and scientific personnel; and

●	add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts and personnel and infrastructure necessary to help us comply with our obligations as a public company.

	MATINAS BIOPHARMA HOLDINGS, INC.

	BY:

	/s/ Jerome D. Jabbour
Dated: ~~November 8, 2021~~May 12, 2022	Jerome D. Jabbour
	Chief Executive Officer (Principal Executive Officer)

	/s/ Keith A. Kucinski
Dated: ~~November 8, 2021~~May 12, 2022	Keith A. Kucinski
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

3.1		Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).
3.2		Bylaws (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed with the SEC on February 7, 2014).
3.3		Certificate of Amendment, dated October 29, 2015 to Certificate of Incorporation. (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 5, 2015).
4.6		Description of Securities* (incorporated herein by reference to the Company’s Annual Report on Form 10-K filed with the SEC on March 8, 2022)
*31.1		Certification of Chief Executive Officer
*31.2		Certification of Chief Financial Officer
**32.1		Section 1350 Certifications
*101.1		Inline XBRL Instance Document.
*101.2		Inline XBRL Taxonomy Extension Schema Document.
*101.3		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
*101.4		Inline XBRL Taxonomy Extension Definition Linkbase Document.
*101.5		Inline XBRL Taxonomy Extension Label Linkbase Document.
*101.6		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
*104	~~Filed herewith.~~	Cover Page Interactive Data File (embedded within the Inline XBRL document)