UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~March~~June 3130, 2024

☐	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: 001-36581

Notable Labs, Ltd.

(Exact name of registrant as specified in its charter)

Israel		Not Applicable
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
320 Hatch Drive
Foster City, California		94404
(Address of principal executive offices)		(Zip Code)

Israel		Not Applicable
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

320 Hatch Drive
Foster City, California		94404
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (415) 851-2410

(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(s)		Name of each exchange on which registered
Ordinary Shares, par value NIS 0.35 per share		NTBL		The Nasdaq Capital Market

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 every Interactive Data File required to be submitted 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 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 ~~May~~August 614, 2024, the registrant had 9,~~018~~659,~~261~~496 ordinary shares, par value NIS 0.35 par value per share, outstanding.

NOTABLE LABS, LTD.

Table of Contents

		Page
	CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS	3
PART I.	FINANCIAL INFORMATION	5
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	6
	Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Shareholders’ Equity (Deficit) (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows (Unaudited)	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1820
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2632
Item 4.	Controls and Procedures	2632
PART II.	OTHER INFORMATION	2733
Item 1.	Legal Proceedings	2733
Item 1A.	Risk Factors	2733
Item 2.	Unregistered Sales of Equity Securities, ~~Use of Proceeds,~~ and ~~Issuer~~Use ~~Purchases~~ of ~~Equity Securities~~Proceeds	2734
Item 3.	Defaults Upon Senior Securities	2734
Item 4.	Mine Safety Disclosures	2734
Item 5.	Other Information	2734
Item 6.	Exhibits	2734
Signatures		2835

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that relate to future events or our future financial performance, which express the current beliefs and expectations of our management. Such statements involve a number of known and unknown risks, uncertainties and other factors that could cause our actual future results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include all statements that are not historical facts and can be identified by words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “will,” “would,” “could,” and similar expressions or phrases. We have based these forward-looking statements largely on our management’s current expectations and future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Forward-looking statements include, but are not limited to, express or implied statements about:

● our cash runway; ● the initiation, timing, progress and results of our preclinical and clinical activities, including a Phase 2a trial for Volasertib and our research and development program; ● our expectations about the availability and timing of data from any clinical trial; ● our ability to advance product candidates into, and successfully complete, clinical trials; ● our plans for future clinical trials; ● our ability to manufacture our product candidates in sufficient quantities for clinical trials and, if appropriate, commercialization; ● the timing or likelihood of regulatory filings and approvals, including data required to file for regulatory approval; ● the commercialization of our product candidates, if approved; ● potential advantages of our product candidates; ● the pricing and reimbursement of our product candidates, if approved; ● our ability to develop and commercialize additional product candidates; ● our business strategy; ● the implementation of our business model, strategic plans for our business, product candidates and technology; ● the scope and duration of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology; ● estimates of our expenses, future revenues, capital requirements and our needs for additional financing; ● our ability to maintain the listing of our ordinary shares on the NASDAQ Capital Market; ● our ability to establish and maintain collaborations and the benefits of such collaborations; ● our ability to maintain our level of grant funding or obtain additional grant or other non-dilutive sources of funding and commitments associated with such grants; and ● developments relating to our competitors and our industry.

All forward-looking statements involve risks, assumptions and uncertainties. You should not rely upon forward-looking statements as predictors of future events. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission, or SEC, on April 11, 2024, and other subsequent filings with the SEC, including, among other things, the following:

● We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future. ● We have never generated any revenue from product sales and may never be profitable. ● We will ~~likely~~ need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations. ● We are highly dependent on our technology in general, and we cannot be certain that our product candidates will receive regulatory approval or be commercialized or that we will be able to realize any value from these product candidates. Any failure to successfully develop, obtain regulatory approval for and commercialize any current or future product candidates, independently or in cooperation with a third-party collaborator, or the experience of significant delays in doing so, would compromise our ability to generate revenue and become profitable. ● Our product candidates are based on novel technology and are in early stages of development, which makes it difficult to predict the time and cost of development and potential regulatory approval. ● We may find it difficult to enroll patients in future clinical trials, and patients could discontinue their participation in our clinical trials, which could delay or prevent clinical trials of our product candidate. ● We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities. ● The results from our future clinical trials may not be sufficiently robust to support the submission for marketing approval for our product candidates. Before we submit our product candidates for marketing approval, the U.S. Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, may require us to conduct additional clinical trials, or evaluate subjects for an additional follow-up period. ● Legislative and regulatory activity may exert downward pressure on potential pricing and reimbursement for our product candidates, if approved, that could materially affect the opportunity to commercialize. ● We expect to rely on third parties to conduct certain aspects of our product manufacturing, protocol development, research and preclinical and clinical testing, and these third parties may not perform satisfactorily. ● We intend to rely on third-party manufacturers to produce commercial quantities of any of our product candidates that receive regulatory approval, but we have not entered into binding agreements with any such manufacturers to support commercialization. Additionally, these manufacturers may not have experience producing our product candidates at commercial levels and may not pass regulatory inspections or achieve the necessary regulatory approvals or produce our product candidate at the quality, quantities, locations and timing needed to support commercialization. ● Our future success depends on our ability to retain key employees, consultants, and advisors and to attract, retain and motivate qualified personnel. ● ~~Pandemics~~We orare ~~other~~not ~~global~~in ~~emergencies~~compliance with Nasdaq’s minimum bid price requirement and if we fail to regain compliance our ordinary shares would be delisted, which could ~~have~~adversely anaffect ~~adverse~~the ~~impact~~liquidity onof our ~~developmental~~ordinary ~~programs~~shares and our ~~financial~~ability ~~condition~~to raise additional capital. ● The market price of our ordinary shares may be highly volatile, and you may not be able to resell your shares at the purchase price.

These risks, assumptions and uncertainties are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results.

All of the forward-looking statements we have included in this Quarterly Report are based on information available to us on the date of this Quarterly Report. We undertake no obligation, and specifically decline any obligation, to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report might not occur.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

NOTABLE LABS, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except share and per share amounts)

	March 31, 2024			December 31, 2023
	June 30, 2024			December 31, 2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	84,~~171~~092		$	11,825
Prepaid expenses and other current assets		32,~~544~~892			3,645
Total current assets		116,~~715~~984			15,470
Property and equipment, net		~~279~~346			316
Finance lease right-of-use assets, net		~~317~~297			337
Operating lease right-of-use assets		1,~~581~~467			1,694
Investment in SAFE		~~1,500~~-			1,500
Other assets		206			224
Investment in Series Seed Preferred Stock		1,500			-
Total assets	$	15,598		$	19,541
Deferred financing costs		306			-
Other assets		104			224
Total assets	$	11,004		$	19,541
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	1,~~522~~140		$	1,755
Accrued expenses and other current liabilities		~~434~~809			418
Accounts payable and accrued expenses - related parties		22			42
Accounts payable and accrued expenses - related party		22			42
Finance lease liabilities, current		79			78
Operating lease liabilities, current		~~456~~467			445
Total current liabilities		2,~~513~~517			2,738
Finance lease liabilities, net of current amount		~~243~~224			263
Operating lease liabilities, net of current amount		1,~~145~~025			1,263
Warrant liability		~~152~~52			163
Total liabilities		43,~~053~~818			4,427
Commitments and contingencies		-			-
Shareholders’ equity
Ordinary shares, NIS 0.35 par value, 34,285,714 shares authorized as of March 31, 2024 and December 31, 2023 and 9,018,261 issued and outstanding as of March 31, 2024 and December 31, 2023		788			788
Ordinary shares, NIS 0.35 par value, 34,285,714 shares authorized as of June 30, 2024 and December 31, 2023 and 9,659,496 issued and outstanding as of June 30, 2024 and 9,018,261 issued and outstanding as of December 31, 2023		849			788
Additional paid-in capital		9697,~~656~~514			96,524
Accumulated deficit		(8691,~~074~~293	)		(82,308	)
Accumulated other comprehensive income		~~175~~116			110
Total shareholders’ equity		117,~~545~~186			15,114
Total liabilities and shareholders’ equity	$	1511,~~598~~004		$	19,541

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

NOTABLE LABS, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(U.S. dollars in thousands, except share and per share amounts)

(Unaudited)

	2024			2023			2024			2023
	For the Three Months Ended March 31,
	For the Three Months Ended						For the Six Months Ended
	2024			2023
	June 30,						June 30,
Services revenue	$	1		$	-
	2024			2023			2024			2023
Cost of services		-			-
Services revenue	$	2		$	-		$	3		$	-
Gross profit		1			-
Cost of services		-			-			-			-
Operating expenses
Gross profit		2			-			3			-
Research and development		1,550			1,596
Operating expenses
General and administrative		2,289			3,923
Research and development		2,354			1,054			3,904			2,650
Total operating expenses		3,839			5,519
General and administrative		3,028			1,932			5,317			5,855
Loss from operations		(3,838	)		(5,519	)
Total operating expenses		5,382			2,986			9,221			8,505
Other income (expense), net
Loss from operations		(5,380	)		(2,986	)		(9,218	)		(8,505	)
Change in fair value of SAFEs		-			(1,865	)
Other income (expense), net
Change in fair value of warrant liability		11			1,096
Change in fair value of SAFEs		-			(858	)		-			(2,723	)
Other income		61			16
Change in fair value of warrant liability		100			408			111			1,504
Total Other income (expense)		72			(753	)
Other income		61			1			122			17
Net loss		(3,766	)		(6,272	)
Total Other income (expense)		161			(449	)		233			(1,202	)
Other comprehensive income
Net loss		(5,219	)		(3,435	)		(8,985	)		(9,707	)
Change in foreign currency translation adjustment		65		$	-
Other comprehensive income (expense)
Comprehensive loss	$	(3,701	)	$	(6,272	)
Change in foreign currency translation adjustment		(59	)		-			6			-
Net loss per share, basic and diluted	$	(0.42	)	$	(6.46	)
Comprehensive loss	$	(5,278	)	$	(3,435	)	$	(8,979	)	$	(9,707	)
Weighted-average common shares outstanding, basic and diluted		9,018,261			970,192
Net loss per share, basic and diluted	$	(0.55	)	$	(3.54	)	$	(0.97	)	$	(10.00	)
Weighted-average common shares outstanding, basic and diluted		9,455,751			970,402			9,235,006			970,297

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

NOTABLE LABS, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT)

(U.S. dollars in thousands, except share amounts)

(Unaudited)

		Shares			Amount				~~Shares~~Capital			~~Amount~~Deficit			~~Capital~~Income			~~Deficit~~Equity			~~Income~~		~~Deficit~~
		Redeemable Convertible							Common						Additional						Other		Total
		Ordinary							Additional						Accumulated Other			Total
		Preferred Stock							Stock						Paid-In			Accumulated			Comprehensive		Shareholders’
		Shares							Paid-In			Accumulated			Comprehensive			Shareholders’
		Shares			Amount				~~Shares~~Capital			~~Amount~~Deficit			~~Capital~~Income			~~Deficit~~Equity			~~Income~~		~~Deficit~~
Balance December 31, 2022			464,321		$	35,352		-		970,192		$	15		$	34,061		$	(71,044	)	$	-	$	(36,968	)
Balance December 31, 2023	-		9,018,261		$	788		-	$	96,524		$	(82,308	)	$	110		$	15,114
Balance December 31, 2022			464,321		$	35,352		-		970,192		$	15		$	34,061		$	(71,044	)	$	-	$	(36,968	)
Share-based compensation expense			-			-				132			-			-			132
Share-based compensation expense			-			-				-			-			116			-			-		116
Net (loss) income	-		-			-		-		-			(3,766	)		65			(3,701	)
Net loss			-			-		-		-			-			-			(6,272	)		-		(6,272	)
Balance March 31, 2024	-		9,018,261			788		-		96,656			(86,074	)		175			11,545
Balance March 31, 2023			464,321		$	35,352		-		970,192		$	15		$	34,177		$	(77,316	)	$	-	$	(43,124	)
Issuance of restricted share awards			656,235			62				719			-			-			781
Balance March 31, 2023			464,321		$	35,352		-		970,192		$	15		$	34,177		$	(77,316	)	$	-	$	(43,124	)
Cancellation of restricted share awards			(15,000	)		(1	)			(17	)		-			-			(18	)
Share-based compensation expense			-			-				156			-			-			156
Net loss	-		-			-		-		-			(5,219	)		(59	)		(5,278	)
Balance June 30, 2024	-		9,659,496		$	849		-	$	97,514		$	(91,293	)	$	116		$	7,186

	Shares		Amount		~~Capital~~Shares		~~Deficit~~Amount			~~Income~~Capital		(Deficit)			Income		Deficit
	Ordinary Shares				Additional Paid-In		Accumulated			Other Comprehensive		Total Shareholders’ Equity
	Redeemable Convertible				Common					Additional					Accumulated Other		Total
	Shares		Amount		Capital		Deficit			Income		(Deficit)
	Preferred Stock				Stock					Paid-In		Accumulated			Comprehensive		Shareholders’
Balance December 31, 2023		9,018,261	$	788	$	96,524	$	(82,308	)	$	110	$	15,114
	Shares		Amount		Shares		Amount			Capital		Deficit			Income		Deficit
Balance		9,018,261	$	788	$	96,524	$	(82,308	)	$	110	$	15,114
Balance December 31, 2022		464,321	$	35,352		970,192	$	15		$	34,061	$	(71,044	)	$	-	$	(36,968	)
Share-based compensation expense		-		-		~~132~~-		-			-116		~~132~~-			-		116
Net loss		-		-		-		~~(3,766~~-	)		65-		(36,~~701~~272	)		-		(6,272	)
Balance March 31, 2024		9,018,261	$	788	$	96,656	$	(86,074	)	$	175	$	11,545
Balance March 31, 2023		464,321		35,352		970,192		15			34,177		(77,316	)		-		(43,124	)
Balance March 31, 2024		9,018,261	$	788	$	96,656	$	(86,074	)	$	175	$	11,545
Balance		464,321		35,352		970,192		15			34,177		(77,316	)		-		(43,124	)
Exercise of ordinary share options		-		-		315		-			5		-			-		5
Share-based compensation		-		-		-		-			202		-			-		202
Share-based compensation expense		-		-		-		-			202		-			-		202
Net loss		-		-		-		-			-		(3,435	)		-		(3,435	)
Balance June 30, 2023		464,321	$	35,352		970,507	$	15		$	34,384	$	(80,751	)	$	-	$	(46,352	)
Balance		464,321	$	35,352		970,507	$	15		$	34,384	$	(80,751	)	$	-	$	(46,352	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

NOTABLE LABS, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

(Unaudited)

	2024			2023
	For the Three Months Ended March 31,
	For the Six Months Ended June 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(38,~~766~~985	)	$	(69,~~272~~707	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		63127			68130
Share-based compensation		~~132~~1,051			~~116~~318
Non-cash operating leases		~~113~~227			~~184~~371
Change in fair value of SAFEs		-			12,~~865~~723
Change in fair value of warrant liability		(11111	)		(1,~~096~~504	)
Change in operating assets and liabilities
Prepaid expenses		~~237~~855			~~577~~619
Other assets		18			-
Accounts payable		(~~230~~607	)		1,~~735~~365
Accrued expenses and other current liabilities		10390			87227
Accounts payable - related parties		(20	)		-
Operating lease liabilities		(~~107~~216	)		(~~187~~375	)
Net cash used in operating activities		(37,~~561~~271	)		(25,~~923~~833	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(614	)		(430	)
Net cash used in investing activities		(6	)		(4	)
Trademark costs		(1	)		-
Net cash used in investing activities		(15	)		(30	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of finance lease liabilities		(19	)		(7	)
Proceeds from employee options		-			5
Proceeds from issuance of SAFE agreements		-			4,351
Repayment of finance lease liabilities		(38	)		(25	)
Net cash (used in) provided by financing activities		(19	)		4,344
Deferred financing costs		(306	)		-
Net increase (decrease) in cash and cash equivalents		(3,586	)		1,417
Proceeds from issuance of the SAFE agreements		-			6,198
Effect of exchange rate changes on cash		(68	)		-
Net cash (used in) provided by financing activities		(344	)		6,178
Net increase (decrease) in cash and cash equivalents		(7,630	)		315
Effect of exchange rate changes on cash		(103	)		-
Cash and cash equivalents at the beginning of the period		11,825			1,581
Cash and cash equivalents at the end of the period	$	84,~~171~~092		$	21,~~998~~896
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Issuance of finance lease liability for finance lease right-of-use asset	$	-		$	405
Issuance of operating lease liability for operating lease right-of-use asset	$	-		$	1,950

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Notable Labs, Ltd., previously known as Vascular Biogenics, Ltd., is an Israeli corporation (“Notable”). These consolidated financial statements include three wholly owned subsidiaries, Notable Labs, Inc. (“Notable US”), VBL, Inc. (“VBL”) and Notable Therapeutics, Inc. (“Therapeutics”) (together with Notable, the “Company”). All material intercompany transactions have been eliminated in consolidation.

Notable US was incorporated as a Delaware corporation in 2014. Initially, Notable US developed its Predictive ~~Precision~~ Medicines Platform (“~~PPMP~~PMP”) as a diagnostic tool for physicians for identifying which cancer treatment would be the most effective for an individual patient. Notable US then broadened its mission and applied its ~~PPMP~~PMP to streamline and accelerate the identification and validation of investigational compounds, working with multiple biotechnology and pharmaceutical companies under service-based agreements. In 2021, by entering into the Oncoheroes Agreement and the CicloMed Agreement, Notable US advanced from a purely diagnostic company to an integrated – diagnostic and therapeutic – platform therapeutics company designing and developing or co-developing predictive ~~precision~~ medicines.

On October 16, 2023, pursuant to the Agreement and Plan of Merger, dated February 22, 2023 (the “Merger Agreement”), by and among Notable Labs, Ltd., Merger Sub, and Notable US, Merger Sub was merged with and into Notable US, with Notable US continuing after the merger as the surviving entity and a wholly owned subsidiary of Notable Labs, Ltd. (the “Merger”). At the effective time of the Merger, without any action on the part of any stockholder, each issued and outstanding share of pre-Merger Notable US common stock, par value $0.001 per share (the “Notable US Common Stock”), including shares underlying pre-Merger Notable US outstanding equity awards, was converted into the right to receive 0.0629 shares (the “Exchange Ratio”) of Notable Labs, Ltd. ordinary shares, NIS 0.35 par value per share (the “Company Ordinary Shares” or “Notable Ordinary Shares”). Immediately following the effective time of the Merger, Notable effected a 1-for-35 reverse stock split of the issued and outstanding Notable Ordinary Shares (the “Reverse Share Split”).

In connection with the closing of the Merger, Notable changed its name to Notable Labs, Ltd. and Notable’s Ordinary Shares listed on The Nasdaq Capital Market, previously trading through the close of business on October 16, 2023 under the trading symbol “VBLT”, commenced trading on The Nasdaq Capital Market, on a post-Reverse ~~Stock~~Share Split adjusted basis, under the trading symbol “NTBL” on October 17, 2023.

Liquidity and Going Concern Assessment

The Company has incurred losses and negative cash flows from operations since its inception. As of ~~March~~June 3130, 2024 and December 31, 2023, ~~the~~ the Company had an accumulated deficit of approximately $8691.1 3 million and $82.3 million, respectively. As of ~~March~~June 3130, 2024, the ~~Company~~ Company had cash of $84.2 1 million and has forecasted cash needs in excess of current liquidity. These conditions raise substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

The Company’s ability to fund its operations will require additional capital, and the Company intends to raise such capital through the issuance of additional debt or equity, including through licensing or collaboration agreements.

These plans are intended to mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern; however, as the plans are not entirely within the Company’s control, management has determined it is not probable they will be effectively implemented.

These financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event the Company can no longer continue as a going concern.

The Company is continuing to develop its predictive medicine platform and treatments, which is the primary use of funds for the Company. Management expects to continue to incur additional substantial losses and negative cash flows from operations in the foreseeable future as a result of expanded research and development activities until regulatory approval is granted. Regulatory approval is not guaranteed and may never be obtained.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish these plans and secure sources of financing and ultimately attain profitable operations. However, if such financing is not approved, does not occur, or alternative financing is not available at adequate levels or on acceptable terms, or profitable operations are not attained, the Company could be required to significantly reduce operating expenses and delay, reduce the scope of or eliminate some of its development programs, enter into a collaboration or other similar arrangement with respect to commercialization rights to any of its product candidates, out license intellectual property rights to its product candidates and sell unsecured assets, or a combination of the above. Any of these actions could have a material adverse effect on the Company’s business, results of operations, financial condition and/or its ability to fund its scheduled obligations on a timely basis or at all. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements of Notable have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. These unaudited interim condensed consolidated financial statements should therefore be read in conjunction with the audited consolidated financial statements and notes included in Form 10-K, filed with the Securities and Exchange Commission on April 11, 2024. In the opinion of management, all adjustments (of a normal recurring nature) considered necessary for the fair statement of the results for the interim periods presented have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year.

Notable ~~affected~~ affected a 1-for-35 reverse stock split immediately following the effective time of the Merger. No fractional shares were issued in ~~connection~~ connection with the Reverse ~~Stock~~Share Split. Each shareholder who did not have a number of shares evenly divisible pursuant to the Reverse ~~Stock~~Share Split ratio and who would otherwise be entitled to receive a fractional ordinary share was entitled to receive an additional Notable Ordinary Share. The number of shares on equity related disclosures included in the condensed consolidated financial statements and accompanying notes, were retroactively adjusted to reflect the effects of the Reverse Share Split and the Exchange Ratio.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and calculation methods applied in the preparation of the unaudited condensed consolidated interim financial ~~statements~~ statements as of ~~March~~June 3130, 2024 are consistent with those applied in the preparation of the annual financial statements as of December 31, 2023 and for the year then ended.

Revenue Recognition

The Company performed certain diagnostics services on a limited basis as an outsourced provider during the three and six months ended ~~March 31~~June 30, 2024 and 2023, but such activities do not represent its major and ongoing central operations.

The Company recognizes revenue from diagnostic services in the amount that reflects the consideration that it expects to be entitled as the Company performs its obligation under a contract with a customer by processing diagnostic tests on laboratory samples and making the test results available to its customers. Revenue is recorded considering a five-step revenue recognition model that includes ~~identifying~~ identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, ~~allocating~~ allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. The Company generally has a contract or a purchase order from a customer with the specified required terms, including the number of diagnostic samples to be performed. The Company has not received any advance payments for which there are any remaining performance obligations. Accordingly, no deferred revenue is recorded as of ~~March~~June 3130, 2024 or December 31, 2023. The Company has not recorded any contract assets as of ~~March~~June 3130, 2024 and December 31, 2023 as the Company has not completed any performance obligations for which it has not been able to bill its customers.

An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable, and current economic conditions. The determination of the collectability of amounts due requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer account, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. At March 31, 2024 and December 31, 2023, an allowance for doubtful accounts was not considered necessary as all accounts receivable were deemed collectible.

Cost of Services

Cost of services represents costs directly related to the services performed. Cost of services is primarily comprised of cost of samples and labor.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP generally requires management to make certain estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets and liabilities, and disclosures of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Areas where management uses subjective judgments include, but are not limited to, measurement of lease liabilities and right-of-use assets, impairment of long-lived assets, stock-based compensation, accrued research and development costs, SAFE notes and redeemable convertible preferred stock warrant liability in the accompanying condensed consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

An allowance for expected credit losses is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for expected credit losses to accounts receivable, and current economic conditions. The determination of the collectability of amounts due requires the Company to make judgments regarding future events and trends. Allowances for expected credit losses are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer account, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. At June 30, 2024 and December 31, 2023, an allowance for expected credit losses was not considered necessary as all accounts receivable were deemed collectible.

Cost of Services

Cost of services represents costs directly related to the services performed. Cost of services is primarily comprised of cost of samples and labor.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP generally requires management to make certain estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets and liabilities, and disclosures of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Areas where management uses subjective judgments include, but are not limited to, measurement of lease liabilities and right-of-use assets, impairment of long-lived assets, stock-based compensation, accrued research and development costs, SAFEs and warrant liability in the accompanying condensed consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Segments

The Company operates and manages its business as one reportable operating segment, which is the business of developing predictive ~~precision~~ medicines that treat various forms of cancer. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating resources and evaluating financial performance. All of the Company’s long-lived assets are maintained in, and all revenues and losses are attributable to, the United States of America.

Recently Adopted Accounting Pronouncements

As of ~~March~~June 3130, 2024, there are no recently adopted accounting standards which the Company expects would have a material effect on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of ~~March~~June 3130, 2024, there are no recently issued accounting standards not yet adopted which the Company expects would have a material ~~effect~~ effect on the Company’s condensed consolidated financial statements.

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – FAIR VALUE MEASUREMENTS

The following table sets forth the Company’s financial liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Level 1

Level 2

Level 3

Total Fair Value

As of March 31, 2024

As of June 30, 2024

Level 1

Level 2

Level 3

Total Fair Value

Liabilities

Warrant liability

—

~~152~~52

	Level 1		Level 2		Level 3		Total Fair Value
	As of December 31, 2023
	Level 1		Level 2		Level 3		Total Fair Value
Liabilities
Warrant liability	$	—	$	—	$	163	$	163

There were no transfers between Levels 1, 2, or 3 during the ~~three~~six months ended ~~March~~June 3130, 2024 and the year ended December 31, 2023. Additionally, there were no cash equivalents or marketable securities held as of ~~March~~June 3130, 2024 orand December 31, 2023.

The value of the warrants was based on the estimated value of the warrant using the Black-Scholes-Merton model as of ~~March~~June 3130, 2024. The following assumptions were used in determining the fair value of the warrants:

SCHEDULE OF FAIR VALUE ASSUMPTIONS OF WARRANT

Risk Free interest rate	4.23	%
Expected life (years)	87.2196
Expected volatility	~~164~~168.71	%
Annual dividend yield	0	%
Warrants measurement input	0	%

11The following is a summary of the Company’s warrant liability activity for the six months ended June 30, 2024 and 2023 (in thousands):

	June 30, 2024
Balance as of December 31, 2023	$	163
Change in fair value		(111	)
Balance as of June 30, 2024	$	52

	June 30, 2023
Balance as of December 31, 2022	$	5,113
Beginning balance	$	5,113
Change in fair value		(1,504	)
Balance as of June 30, 2023	$	3,609
Ending balance	$	3,609

The change in the fair value of the warrant liability resulted from a reduction in the value per warrant based on the fair market valuation of the warrants as of June 30, 2024. The reduction for the six months ended June 30, 2024 related to the decrease in the price of the underlying shares and the reduction for the six months ended June 30, 2023 related to the decrease in the value of the underlying shares.

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of the Company’s warrant liability activity for the three months ended March 31, 2024 (in thousands):

SCHEDULE OF SAFE WARRANT LIABILITY

	Warrant liability
Balance as of December 31, 2023	$	163
Fair value of warrants at issuance
Change in fair value		(11	)
Balance as of March 31, 2024	$	152

	Warrant liability
Balance as of December 31, 2022	$	5,113
Change in fair value		(1,096	)
Balance as of March 31, 2023	$	4,017

The change in the fair value of the warrant liability resulted from a reduction in the value per warrant based on the fair market valuation of the warrants as of March 31, 2024. The reduction primarily for the three months ended March 31, 2024 related to the decrease in the price of the underlying shares and the increase for the three months ended March 31, 2023 related to the increase in the value of the underlying shares.

NOTE 5 – BALANCE SHEET COMPONENTS

Prepaid Expenses and Other Current Assets

The following table presents the components of prepaid expenses and other current assets as of ~~March~~June 3130, 2024 and December 31, 2023 (in thousands):

	March 31, 2024		December 31, 2023
	June 30, 2024		December 31, 2023
Accounts receivable	$	~~183~~184	$	186
Employee retention credit		~~572~~316		572
Prepaid expenses		2,~~754~~352		2,857
Prepaid benefits		2934		24
Prepaid clinical expenses		6		6
Total prepaid expenses and other current assets	$	32,~~544~~892	$	3,645

During fiscal years 2020 and 2021, the Company took advantage of the relief provisions provided by the U.S. government in response to COVID-19 under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The CARES Act provides an employee retention credit (“Employee Retention Credit”), which is a refundable tax credit against certain employment taxes dependent on certain qualified wages paid to employees through fiscal year 2021. The Company qualifies for the tax credit under the CARES Act and continued to receive additional tax credits under the additional relief provisions for qualified wages through the end of 2021. The Company accounts for these labor related tax credits as a reduction to the expense that they are intended to compensate in the period in which the corresponding expense is incurred and there is reasonable assurance the Company will both receive the tax credits and comply with all conditions attached to the tax credits. As of ~~March~~June 3130, 2024 and December 31, 2023, $0.3 million and $0.6 million was recorded as a receivable in prepaid expenses and other current assets. The Company received $0.3 million during the six months ended June 30, 2024 and recorded a bad debt for $0.01 million, received $0.7 million of the receivable induring the ~~quarter~~six months ended ~~March~~June 3130, 2023 and believes there is reasonable ~~assurance~~ assurance the remaining balance will be collected ~~(See Note 12)~~.

Property and Equipment, Net

The following table presents the components of property and equipment, net, as of ~~March~~June 3130, 2024 and December 31, 2023 (in thousands):

SCHEDULE OF PROPERTY AND EQUIPMENT

	March 31, 2024			December 31, 2023
	June 30, 2024			December 31, 2023
Computer equipment	$	~~194~~202		$	192
Laboratory equipment		12,~~999~~102			1,999
Furniture and office equipment		29			29
Leasehold improvements		76			73
Property plant and equipment, gross		2,298			2,293
Total property and equipment, gross		2,409			2,293
Less: accumulated depreciation		(2,~~019~~063	)		(1,977	)
Total property and equipment, net	$	~~279~~346		$	316

Depreciation expense was approximately $0.0 million and $0.1 million for both the three and six months ended ~~March~~June 3130, 2024 and 2023, respectively.

1213

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Investment in SAFE and Series Seed Preferred Stock

In October 2021, the Company entered into a simple agreement for future equity (“Oncoheroes SAFE”) agreement for $1.5 ~~million~~ million in exchange for a right to participate in a future equity financing of preferred stock to be issued by Oncoheroes Biosciences Inc. (“Oncoheroes”). Alternatively, upon a dissolution or liquidity event such as a change in control or an initial public offering, the Company iswould be entitled to receive a portion of $1.5 million. The number of shares of preferred stock would be determined by dividing the Oncoheroes SAFE purchase amount by ~~price~~the price per share of the preferred stock issued in the respective equity financing. The Company recorded the investment of $1.5 million as an investment in the Oncoheroes SAFE on the condensed consolidated balance sheet ~~(unaudited)~~ as of ~~March~~December 31, ~~2024 and December 31,~~ 2023. The investment in the Oncoheroes SAFE iswas treated as an investment in an equity security that the Company ~~has~~ elected to record at its cost less any impairment. Noas ~~impairment~~of ~~losses~~December ~~have been recognized related to the investment for the three months ended March~~ 31, ~~2024 and~~ 2023 ~~(See Note 7)~~.

Effective April 15, 2024, the Oncoheroes SAFE converted into Series Seed Preferred Stock of Oncoheroes (“Series Seed Preferred Stock”) with an aggregate liquidation preference of $1.5 million. The Company recorded the investment of $1.5 million as an investment in Series Seed Preferred Stock on the condensed consolidated balance sheet(unaudited) as of June 30, 2024. The investment in the Oncoheroes Series Seed Preferred Stock is treated as an investment in an equity security that the Company has elected to record at its cost less any impairment as of June 30, 2024.

No impairment losses have been recognized related to the investment for the three and six months ended June 30, 2024 and 2023 (See Note 8).

Accrued Expenses and Other Current Liabilities

The following table presents the components of accrued expenses and other current liabilities as of ~~March~~June 3130, 2024 and December 31, 2023 (in thousands):

	March 31, 2024		December 31, 2023
	June 30, 2024		December 31, 2023
Accrued expenses	$	~~102~~370		107
Accrued employee expenses		8		78
Accrued bonuses		~~324~~431		233
Total accrued expenses and other current liabilities	$	~~434~~809	$	418

NOTE 6 – ~~ACCOUNTS PAYABLE - RELATED PARTIES~~TRADEMARKS

AsCosts associated with the registration of ~~March~~trademarks 31have been capitalized in the amount of $1,300 and have been included in other assets. As of June 30, 2024 and December 31, 2023, no trademark has been filed, however, when the ~~Company~~trademark ~~owed~~is ~~related~~filed, ~~parties~~the costs will be amortized over the ~~following~~estimated ~~(in~~useful ~~thousands):~~life of 20 years.

NOTE 7 – ACCOUNTS PAYABLE - RELATED PARTIES

As of June 30, 2024 and December 31, 2023, the Company owed related parties the following (in thousands):

	March 31, 2024		December 31, 2023
	June 30, 2024		December 31, 2023
Board Member	$	22	$	42

For consulting services with the Board Member, the Company recorded general and administrative expenses of $6065,~~450~~691 and $43128,~~403~~250 for the three and six months ended ~~March~~June 3130, 2024 and $61,623 and $105,401 for the three and six months ended June 30, 2023.

NOTE 78 – CO-DEVELOPMENT AND LICENSE AGREEMENTS

Oncoheroes Agreement

In September 2021, the Company entered into an Exclusive License Agreement with Oncoheroes (the “Oncoheroes Agreement”) whereby the Company obtained worldwide exclusive development and commercialization rights in the small molecule volasertib for uses relating to certain types of cancer in adults. Under the terms of the Oncoheroes Agreement, Oncoheroes retains the right to develop and commercialize volasertib for cancers not licensed to the Company.

13Under the terms of the agreement, the Company is obligated to make additional clinical and regulatory milestone payments up to a total of $8.0 million, plus tiered royalties from the mid-single digits up to mid-teens on net sales. When a licensed product is submitted to NDA, the Company is required to pay $1 million, upon US NDA approval, the Company is required to pay $4 million and upon EU MAA Approval, the Company is required to pay $3 million. In the event the Company grants a sublicense of rights, the Company will need to pay Oncoheroes a high single digit percentage of any upfront payment obtained from such sublicenses. No milestones have been met during the six months ended June 30, 2024 and 2023, and the Company did not make any royalty payments as the related product has not been approved for commercialization.

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Under the terms of the agreement, the Company is obligated to make additional clinical and regulatory milestone payments up to a total of $8.0 million, plus tiered royalties from the mid-single digits up to mid-teens on net sales. When a licensed product is submitted to NDA, the Company is required to pay $1 million, upon US NDA approval, the Company is required to pay $4 million and upon EU MAA Approval, the Company is required to pay $3 million. In the event the Company grants a sublicense of rights, the Company will need to pay Oncoheroes a high single digit percentage of any upfront payment obtained from such sublicenses. No milestones have been met during the three months ended March 31, 2024 and 2023, and the Company did not make any royalty payments as the related product has not been approved for commercialization.

The Company also entered a SAFE agreement with Oncoheroes in October 2021 for $1.5 million recorded in the investment in SAFE on the condensed consolidated balance sheets, as discussed in Note 5.

CicloMed Agreement

In July 2021, the Company entered into a Co-Development and Profit-Sharing Agreement with CicloMed LLC (“CicloMed”) (the “CicloMed Agreement”) regarding use of the Company’s precision oncology diagnostic test in the research and development of CicloMed’s CicloProx product for the treatment of acute myeloid leukemia. Under the terms of the co-development agreement, CicloMed holds the primary responsibility for executing clinical trial operations while the Company is primarily focused on optimizing the Company’s predictive ~~precision medicine~~medicines platform. Both parties will equally share the costs associated with the on-going clinical trial incurred after the effective date. In the event a CicloProx product is commercially developed and sold, the parties will share in the net proceeds. The Company recorded $0.0 million and $0.1 million for the three and six months ended ~~March~~June 3130, 2024 and $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively, as research and development expense related to ~~this~~ this agreement.

NOTE 89 – INCOME TAXES

As of January 1, ~~2023~~2024, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during the ~~three~~six months ended ~~March~~June 3130, 2024 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the ~~three~~six months ended ~~March~~June 3130, 2024, and there was no accrual for uncertain tax positions as of ~~March~~June 3130, 2024. Tax years from ~~2020~~ 2020 through 2023 remain subject to examination by major tax jurisdictions.

There is no income tax benefit for the losses for the three and six months ended ~~March~~June 3130, 2024 and 2023, since management has determined that ~~the~~ the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits.

NOTE 910 - LEASES

The following table summarizes total lease expense during the three and six months ended ~~March~~June 3130, 2024 and 2023 (in thousands):

SCHEDULE OF LEASES EXPENSES

	March 31, 2024		March 31, 2023
	For the Three Months Ended				For the Six Months Ended
Amortization of ROU assets - finance lease	$	20	$	7
	June 30,				June 30,
Interest on lease liabilities - finance lease	$	3	$	1
	2024		2023		2024		2023
Cash paid for financing lease liabilities	$	22	$	-
Amortization of ROU assets - finance lease	$	20	$	20	$	40	$	27
Cash paid for operating lease liabilities	$	132	$	187
Interest on lease liabilities - finance lease	$	2	$	3	$	5	$	4
Operating lease expense	$	120	$	185
Cash paid for financing lease liabilities	$	17	$	-	$	38	$	-
Variable lease expense	$	4	$	22
Cash paid for operating lease liabilities	$	84	$	188	$	216	$	375
Short-term lease expense	$	1	$	-
Operating lease expense	$	137	$	186	$	257	$	371
Variable lease expense	$	-	$	20	$	4	$	42
Short-term lease expense	$	1	$	1	$	1	$	1

1415

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes ~~maturities~~amounts ofdue under lease liabilities and the reconciliation of lease liabilities as of ~~March~~June 3130, 2024 (in thousands):

	Lease Obligation
	Finance Lease			Facilities Lease
2024	$	6644		$	~~404~~272
2025		87			552
2026		87			569
2027		87			239
2028 and thereafter		15			-
Total future undiscounted lease payments		~~342~~320			1,~~764~~632
Less: imputed interest		(2017	)		(~~163~~140	)
Total lease liabilities	$	~~322~~303		$	1,~~601~~492

NOTE 1011 – EQUITY INCENTIVE PLANS AND STOCK BASED COMPENSATION EXPENSE

2000 Plan

In February 2000, Notable’s Board of Directors approved an option plan (the “2000 Plan”) as amended through 2008. Under the 2000 Plan, the Company reserved up to 40,674 Ordinary Shares of NIS 0.01 par value of the Company for allocation to employees and non-employees. Each option provides the holder the right to exercise such option and acquire one Ordinary Share per option. Any option granted under the Plan that is not exercised within ten years from the date upon which it becomes exercisable, will expire.

2011 Plan

In April 2011, Notable’s board of directors approved a new option plan (the “2011 Plan”). Under the 2011 Plan, the Company reserved up to 21,913 Ordinary Shares (of which 4,556 Ordinary Shares shall be taken from the unallocated pool reserved under the 2000 Plan) for allocation to employees and non-employees. Any option which was granted under the 2011 Plan and was not exercised within twenty years from the date when it becomes exercisable, will expire.

2014 Equity Incentive Plan

In September 2014, Notable’s shareholders approved the adoption of the Employee Share Ownership and Option Plan (2014) (“2014 Plan”) effective as of the closing of ~~the~~Notable’s public offering. Under the 2014 Plan, Notable reserved up to 26,514 ~~Ordinary Shares (of~~ ~~which 800~~ Ordinary Shares ~~shall be taken from the unallocated pool reserved under the 2011 Plan)~~. The Ordinary Shares to be issued ~~upon~~ upon exercise of the options confer the same rights as the other Ordinary Shares, immediately upon allotment. Any option which was granted under the 2014 Plan and was not exercised within twenty years from the date when it becomes exercisable, will expire.

2015 Equity Incentive Plan

Notable adopted the 2015 Equity Incentive Plan (the “2015 Plan”) in August 2015, which provides for the granting of ISO, NSO, and restricted shares to employees, directors, and consultants. The 2015 Plan authorized a total of 37,199 shares reserved for future issuance. Under amendments to the 2015 Plan, an additional 160,253 shares in 2017, 141,094 shares in 2019, and 31,450 shares in 2022 were authorized to be reserved for future issuance. As of ~~March~~June 3130, 2024, there were 66,975 Ordinary Shares reserved for future issuance pursuant to ~~the~~ the 2015 Plan.

Options under the 2015 Plan may be granted for periods of up to 10 years and at prices no less than 100% of the estimated fair value of the underlying shares of common stock on the date of grant as determined by the Board provided that the exercise price of an ISO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. The 2015 Plan requires that options be exercised no later than 10 years after the grant. Options granted to employees generally vest ratably on a monthly basis over four years, subject to cliff vesting restrictions and continuing service.

2024 Employee Share Ownership and Option Plan

Notable adopted the 2024 Employee Share Ownership and Option Plan (the “2024 Plan”) in March 2024, which provides for the ~~granting~~ granting of ISO, NSO, restricted shares and restricted units to employees, directors, and consultants. The 2024 Plan authorized a total of 4 ~~million~~ million shares reserved for future issuance. The shares may be increased automatically (i) on an annual basis on January 1 of each year (unless resolved otherwise by the Board of Directors), such that the number of shares issuable under the Plan shall equal 35% of the Company’s issued and outstanding share capital on a fully diluted basis; and (ii) in the event that any Ordinary Shares would have otherwise returned to the Company’s ~~employee~~2014 ~~share ownership and option plans of 2000~~Plan, ~~2011 and 2014,~~ such Ordinary Shares shall be added to ~~this~~ the 2024 Plan. As of ~~March~~June 3130, 2024, there were 4 million Ordinary Shares reserved for future issuance pursuant to the 2024 Plan.

1516

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Options under the 2024 Plan may be granted for periods of up to 10 years and at prices no less than 100% of the estimated fair value of the underlying shares of common stock on the date of grant as determined by the Board provided that the exercise price of an ISO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. The 2024 Plan requires that options be exercised no later than 10 years after the grant. Options granted to employees generally vest ratably on a monthly basis over four years, subject to cliff vesting restrictions and continuing service.

Share Option Awards

The following summarizes stock option activity under all of the Plans:

SCHEDULE OF STOCK OPTIONS

	Options Outstanding
	Total Options Outstanding			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 31, 2023		284,437		$	49.67		4.0	$	-
Granted		55865,299		$	1.2820		-		-
Cancelled		(~~141~~154,~~289~~368	)	$	7567.4526		-		-
Outstanding as of March 31, 2024		198,447		$	17.83		7.9	$	27
Outstanding as of June 30, 2024		995,368		$	4.80		9.4	$	-
Exercisable as of March 31, 2024		135,375		$	24.28		7.0	$	-
Exercisable as of June 30, 2024		136,101		$	25.67		7.4	$	-
Vested and expected to vest as of March 31, 2024		198,447		$	17.83		7.9	$	27
Vested and expected to vest as of June 30, 2024		995,368		$	4.80		9.4	$	-

No options were exercised during the three and ~~there~~six ~~was~~months noended ~~restricted~~June ~~stock~~30, ~~activity~~2024 ~~(RSA)~~and ~~under~~5,000 ~~the~~shares ~~Plans~~were exercised during the three ~~months~~and six months ended ~~March~~June 3130, ~~2024 and~~ 2023.

~~Stock~~During the three and six months ended June 30, 2024, the Company issued in aggregate 810,000 and 865,299 options to purchase the Company’s ordinary shares to board members, employees and consultants under the 2014 Plan and the 2024 Plan. The weighted-~~Based~~average grant date fair value of the options granted during ~~Compensation~~the ~~Expense~~three and six months ended June 30, 2024, was $1.19 and $1.20 per share. During the three and six months ended June 30, 2023, the Company did not issue any options. Notable estimated the fair value of stock options using the Black-Scholes-Merton option pricing model which requires the use of highly subjective assumptions to determine the fair value of stock-based awards. The fair value of employee and non-employee stock options is recognized as expense on the straight-line basis over the requisite service period of the awards. These assumptions include:

During the three months ended March 31, 2024 and 2023, the Company issued in aggregate 55,299 and 0 options to purchase the Company’s ordinary shares to six board members under the 2014 Equity Incentive Plan. The weighted-average grant date fair value of the options granted during the three months ended March 31, 2024, was $1.28 per share. Notable estimated the fair value of stock options using the Black-Scholes-Merton option pricing model which requires the use of highly subjective assumptions to determine the fair value of stock-based awards. The fair value of employee and non-employee stock options is recognized as expense on the straight-line basis over the requisite service period of the awards. These assumptions include:

	●	Risk-free interest rate — The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

	●	Expected volatility —The Company uses the volatility of the ordinary shares traded in the public market.

	●	Expected term — The expected term represents the period that stock-based awards are expected to be outstanding. The expected term for option grants is determined using the simplified method. The simplified method deems the term to be the midpoint of the time-to-vesting and the contractual term of the stock-based awards. The Company utilizes this method due to lack of historical exercise data.

	●	Expected dividend rate — The Company has never paid dividends on its ordinary shares and has no plans to pay dividends on its ordinary shares. Therefore, the Company used an expected dividend yield of zero.

1617

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The fair value of stock options granted during the ~~three~~six months ended ~~March~~June 3130, 2024 was estimated using the following weighted-average assumptions:

	2024
Expected term (in years)		10
Risk-free interest rate		4.2% - 4.5	%
Expected dividend rate		-	%
Expected volatility		168.% - 170.7	%

The following table summarizes the components of ~~stock~~share-based compensation expense relating to options recognized in the Company’s condensed consolidated statement of operations and comprehensive loss (in thousands):

SCHEDULE OF SHARE BASED COMPENSATION

	Three months ended March 31,
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	9946	$	2625	$	145	$	51
General and administrative		33109		90177		143		267
Total	$	~~132~~155	$	~~116~~202	$	288	$	318

As of ~~March~~June 3130, 2024, the total ~~stock~~share-based compensation expense related to stock awards not yet recognized was $01.53 million and will be recognized over a weighted-average remaining period of approximately 02.78 years.

~~NOTE~~Restricted 11Share ~~– NET LOSS PER SHARE~~Awards

The following summarizes restricted stock awards (“RSA”) activity under all of the Plans:

SCHEDULE OF RESTRICTED STOCK AWARDS

	Total RSAs Outstanding

Outstanding as of December 31, 2023		-
Granted		656,235
Cancelled		(15,000	)
Outstanding as of June 30, 2024		641,235
Exercisable as of June 30, 2024		-
Vested and expected to vest as of June 30, 2024		641,235

During the three and six months ended June 30, 2024, the Company issued RSAs to purchase 656,235 of the Company’s ordinary shares to Board members and one consultant, with a fair market value of $780,920. None of the RSA’s have vested. Of the restricted share awards to purchase 30,000 of the Company’s ordinary shares issued to the consultant, restricted share awards to purchase 15,000 of the Company’s ordinary shares expired pursuant to their terms.

The vesting terms of 226,235 RSAs are two equal annual installments beginning with the first anniversary of the RSAs, 400,000 of the RSAs are four equal annual installments beginning with the first anniversary of the RSAs and the vesting terms of the remaining 15,000 are contingent on funding of the Company.

The following table summarizes the components of share-based compensation expense relating to RSAs recognized in the Company’s condensed consolidated statement of operations and comprehensive loss (in thousands):

SCHEDULE OF SHARE BASED COMPENSATION

	2024		2023		2024		2023
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	-	$	-	$	-	$	-
General and administrative		763		-		763		-
Total	$	763	$	-	$	763	$	-

As of June 30, 2024, the total share-based compensation expense related to stock awards not yet recognized was $0.0 million.

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – NET LOSS PER SHARE

The following table sets forth the computation of the basic and diluted net loss per share (in thousands except share and per share data):

	2024			2023
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	For the Three Months Ended March 31,
	2024			2023			2024			2023
	2024			2023
Numerator:
Numerator:
Net loss	$	(5,219	)	$	(3,435	)	$	(8,985	)	$	(9,707	)
Net loss	$	(3,766	)	$	(6,272	)
Denominator:
Denominator:
Weighted-average ordinary shares outstanding used to compute net loss per share, basic and diluted		9,455,751			970,402			9,235,006			970,297
Weighted-average ordinary shares outstanding used to compute net loss per share, basic and diluted		9,018,261			970,192
Net loss per share, basic and diluted:	$	(0.55	)	$	(3.54	)	$	(0.97	)	$	(10.00	)
Net loss per share, basic and diluted:	$	(0.42	)	$	(6.46	)

The Company’s potentially dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be antidilutive. Therefore, the weighted-average number of ordinary shares outstanding used to calculate both basic and diluted net loss per share is the same.

NOTE 1213 – SUBSEQUENT EVENTS

~~The~~On July 17, 2024, the Company received ~~Employee~~a ~~Retention~~written ~~Credit~~notification ~~refund~~(the ~~checks~~“Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”), indicating that ~~were~~the ~~deposited~~Company was not in ~~April~~compliance ~~2024,~~with the minimum closing bid price requirement set forth in Nasdaq Rules for continued listing on the ~~total~~Nasdaq ~~amount~~Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $~~251~~1.00 per share,~~220~~ and Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the closing bid price of the Company’s ordinary shares for the 30 consecutive business days from June 3, 2024, to July 16, 2024, the Company no longer meets the minimum bid price requirement.

On May 8, 2024, the Company issued options to purchase 390,000 of the Company’s ordinary shares to employees, options to purchase 70,000 of the Company’s ordinary shares to consultants, options to purchase 350,000 of the Company’s ordinary shares to officers of the Company, 30,000 restricted ordinary shares of the Company to a consultant and 400,000 restricted ordinary shares of the Company to the Chief Executive Officer of the Company.19

In addition, the Company issued 40,247 restricted ordinary shares of the Company to each of four board members and 65,247 restricted ordinary shares of the Company to the Chairman of the Board.

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 in conjunction with the unaudited condensed consolidated interim financial statements and related notes included in this Form 10-Q. Our audited financial statements as of and for the year ended December 31, 2023 have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP, and our unaudited condensed consolidated interim financial statements for the ~~three~~periods ~~months~~ ended ~~March~~June 3130, 2024, or the ~~period~~periods, have been prepared in accordance with U.S. GAAP, “Interim Reporting,” or ASC 270 and Article 10 of Regulation S-X. Unless stated otherwise, comparisons included herein are made to the three or six month period ended on ~~March~~June 3130, ~~2023~~2024, or the parallel period. Unless the context requires otherwise, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to the “Company”, “Notable,” “we,” “us,” and “our” refer to Notable Labs, Ltd. and its consolidated subsidiaries. You should read the “Risk Factors” section included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and other subsequent SEC filings, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

Notable is a clinical-stage platform therapeutics company developing predictive ~~precision~~ medicines for patients with cancer. Through its proprietary Predictive ~~Precision~~ Medicines Platform or ~~PPMP~~PMP, Notable bio-simulates a patient’s cancer treatment ex vivo (outside of the body) and seeks to precisely predict whether or not an individual patient will clinically respond to their actual treatment. In four independent clinical validation trials with recognized medical centers, ~~PPMP~~an average 97% of PMP predicted responders ~~with~~achieved ~~83-100%~~a ~~precision~~clinical response to their actual treatment. To pursue improved medical outcomes compared to traditional precision medicines, ~~PPMP~~PMP does not depend on genetic or other biomarkers. Instead, ~~PPMP~~PMP generates multi-dimensional measures of biological response of cells to drugs and then integrates and translates these data by computational algorithms into a patient response predictor.

~~PPMP~~PMP is designed to enable Notable to identify and select patients expected to be clinically responsive prior to the initiation of their treatment and potentially enable fast-track therapeutic development in this patient population. Notable utilizes its ~~PPMP~~PMP to evaluate investigational compounds for in-licensing and development or co-development that have shown clinical activity, with the goal of improving patient response and the success, speed and value of developing these compounds, compared with traditional drug development.

Using ~~PPMP~~PMP, Notable targets in-licensing assets that have already demonstrated compelling clinical activity but have been abandoned because the activity was limited to a subset of 10% to 30% of treated patients, a likely hurdle to successful development, regulatory approval, and commercialization. Notable has screened and evaluated hundreds of assets on its ~~PPMP~~PMP platform, and for many of these assets, believes it can predict with relatively high precision which patients will clinically respond. This provides Notable with the opportunity to selectively enroll predicted responders into clinical trials, and thus to fast-track development of these assets selectively in clinical responders delivering higher response rates.

Notable is seeking to create a growing portfolio of predictive ~~precision~~ medicines using its ~~PPMP~~PMP. ~~PPMP~~PMP has already guided Notable in the selection of its first two candidate predictive ~~precision~~ medicines, two clinical-stage candidates for development in platform-predicted responders with acute myeloid leukemia (“AML”). Notable’s lead asset derived from ~~PPMP~~PMP is Volasertib, a polo like kinase 1 (“PLK1”) ~~inhibitor~~ inhibitor proven to induce cell cycle arrest and apoptosis in various cancer cells. Notable expects to initiate a Phase 2 trial evaluating Volasertib in adult AML in the second quarter of 2024, which includes a dose optimization prelude targeting 6 patients. The results of these first 6 patients are expected in the fourth quarter of 2024, and the enrollment of the first PPMP-predicted responder is expected in the same quarter. In addition, Notable is co-developing, with CicloMed LLC (“CicloMed”), Fosciclopirox for patients with AML. This co-development partnership resulted from a successful pre-clinical application of PPMP for Fosciclopirox. Notable is also using PPMP to identify additional compelling assets for in-licensing and fast-tracking additional assets as it builds out its development pipeline.

ByNotable ~~continually~~in-licensed ~~advancing~~Volasertib ~~and~~after ~~expanding~~extensive ~~the~~analysis ~~reach~~on ofour ~~the~~PMP ~~PPMP~~and ~~across~~has ~~patient~~been ~~segments,~~actively ~~diseases~~preparing ~~and~~to ~~predicted~~initiate ~~medical~~our ~~outcomes,~~Phase ~~Notable~~2 ~~aims~~study in torelapsed/refractory beAML ~~the~~(r/r ~~leader~~AML). inWe ~~predictive~~anticipate ~~precision~~initial ~~medicine~~Phase ~~and~~2 ~~revolutionize~~safety ~~the~~data ~~way~~to inbegin ~~which~~reading ~~patients~~out ~~seek~~in ~~and~~the ~~receive~~fourth ~~treatments~~quarter ~~that~~of ~~are~~2024 ~~most~~with ~~likely~~the tofirst ~~work~~patient ~~best~~cohort ~~for~~completion ~~them~~in –the ~~with~~first ~~major~~quarter ~~impact~~of ~~for~~2025. ~~patients~~We ~~and~~expect initial efficacy data in the ~~healthcare~~first ~~community~~half of 2025.

18In addition, Notable is co-developing, with CicloMed LLC (“CicloMed”), Fosciclopirox for patients with AML. This co-development partnership resulted from a successful pre-clinical application of PMP for Fosciclopirox. Notable is also using PMP to identify additional compelling assets for in-licensing and fast-tracking additional assets as it builds out its development pipeline.

By continually advancing and expanding the reach of the PMP across patient segments, diseases and predicted medical outcomes, Notable aims to be the leader in predictive precision medicine and revolutionize the way in which patients seek and receive treatments that are most likely to work best for them – with major impact for patients and the healthcare community.

Merger Transaction

On October 16, 2023, pursuant to the Merger Agreement, by and among the Company, Merger Sub and Notable Labs, Inc., Merger Sub was merged with and into Notable Labs, Inc., with Notable Labs, Inc. continuing after the merger as the surviving entity and a wholly owned subsidiary of the Company. At the effective time of the Merger, without any action on the part of any stockholder, each issued and outstanding share of pre-Merger Notable Labs, Inc.’s common stock, par value $0.001 per share (the “Notable Labs, Inc. Common Stock”), including shares underlying pre-Merger Notable Labs, Inc.’s outstanding equity awards, was converted into the right to receive 0.0629 shares (the “Exchange Ratio”) of the Company’s common stock, 0.35 NIS par value per share (the “Company Ordinary Shares”), Immediately following the effective time of the Merger, the Company effected a 1-for-35 reverse stock split of the issued and outstanding Company Ordinary Shares (the “Reverse Stock Split”). Upon completion of the Merger and the transactions contemplated in the Merger Agreement, (i) the former Notable Labs, Inc. equity holders owned approximately 71.9% of the outstanding equity of the Company on a fully diluted basis, assuming the exercise in full of warrants to purchase 94,988 Company Ordinary Shares and including 160,635 Company Ordinary Shares underlying options to purchase shares of Notable Labs, Inc.’s Common Stock assumed by the company at closing and after adjustments based on the Company’s net cash at closing; and (ii) former Vascular Biogenics, Ltd. shareholders owned approximately 28.1% of the outstanding equity of the Company.

The Merger was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes. Notable Labs, Inc. was being treated as the accounting acquirer, as its stockholders control the Company after the Merger, even though Vascular Biogenics, Ltd. was the legal acquirer. As a result, the assets and liabilities and the historical operations that are reflected in our consolidated financial statements are those of Notable Labs, Inc. as if Notable Labs, Inc. had always been the reporting company. All references to ordinary shares, warrants and options have been presented on a post-merger, post-reverse split basis.

Nasdaq Listing Deficiency Notice

On July 17, 2024, Notable received a written notification (the “Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”), indicating that it was not in compliance with the minimum closing bid price requirement set forth in Nasdaq Rules for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the closing bid price of Notable’s ordinary shares for the 30 consecutive business days from June 3, 2024, to July 16, 2024, Notable no longer met the minimum bid price requirement.

The Notice has no immediate effect on the listing of Notable’s ordinary shares on the Nasdaq Capital Market. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), Notable has been granted a 180-calendar-day compliance period, or until January 13, 2025, to regain compliance with the minimum bid price requirement. During the compliance period, Notable’s ordinary shares will continue to be listed and traded on the Nasdaq Capital Market. To regain compliance, the closing bid of our ordinary shares must meet or exceed $1.00 per share for a minimum of ten (10) consecutive business days during the 180-calendar-day grace period. In the event Notable is not in compliance by January 13, 2025, it may be afforded a second 180-calendar-day grace period. To qualify, Notable would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement. If Notable does not regain compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that Notable’s ordinary shares will be subject to delisting. Under such circumstances, Notable would have the right to appeal a determination to delist the ordinary shares, and Notable’s ordinary shares would remain listed on the Nasdaq Capital Market until the completion of the appeal process.

Notable intends to monitor the closing bid price for its ordinary shares between now and January 13, 2025, and will consider any such available options to resolve its non-compliance with the minimum bid price requirement as may be necessary. No determination regarding Notable’s response has been made at this time. There can be no assurance that Notable will be able to regain compliance with the minimum bid price requirement or will otherwise be in compliance with other Nasdaq listing criteria. If Notable fails to satisfy any other continued listing requirements of Nasdaq, such as the corporate governance requirements, Nasdaq may also take steps to delist the ordinary shares. Such a delisting would likely have a negative effect on the price of Notable’s ordinary shares and would impair an investor’s ability to sell or purchase the ordinary shares when they wish to do so. In the event of a delisting, Notable can provide no assurance that any action taken by it to restore compliance with listing requirements would allow Notable’s ordinary shares to become listed again, stabilize the market price or improve the liquidity of its ordinary shares, prevent the ordinary shares from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.

Financial Overview

Revenues and Cost of Revenues

Notable does not expect to generate any material revenue from the sale of any products unless or until Notable obtains regulatory approval of and commercializes any of its therapeutic products.

Notable continued to perform certain diagnostics services on a limited basis as an outsourced provider through the ~~three~~six months ended ~~March~~June 3130, 2024, but such activities do not represent its major and ongoing central operations and Notable does not expect to derive any material revenue as a result.

Notable recognizes revenue from diagnostic services in the amount that reflects the consideration that it expects to be entitled as Notable performs its obligation under a contract with a customer by processing diagnostic tests on laboratory samples and making the test results available to its customers. Revenue is recorded considering a five-step revenue recognition model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. Notable generally has a contract or a purchase order from a customer with the specified required terms, including the number of diagnostic samples to be performed. Notable has not received any advance payments for which there are any remaining performance obligations. Accordingly, no deferred revenue is recorded as of ~~March~~June 3130, 2024 and December 31, 2023. Notable has not recorded any contract assets as of ~~March~~June 3130, 2024 and ~~December~~ December 31, 2023, and as of ~~March~~June 3130, 2024 Notable had not completed any performance obligations for which it has not been able to bill its customers. Material costs of services revenue are recorded as costs of sales and immaterial costs of services and are recorded in operating expenses.

Research and Development Expenses

Research and development expenses are charged to expense as incurred. Research and development expenses include payroll and personnel costs related to research and development activities, materials costs, external clinical drug product manufacturing costs, outside services costs, repair, maintenance and depreciation costs for research and development equipment, as well as facility costs used for research and development activities. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are capitalized and expensed as the goods are delivered or the related services are performed. Notable continues to evaluate whether it expects the goods to be delivered or services to be rendered and charges to expense any portion of the advance payment that has been capitalized when the entity no longer expects the goods to be delivered or services to be rendered.

Notable expects to significantly increase its research and development efforts by conducting the remaining studies necessary for the development and approval of Volasertib and Fosciclopirox. Future research and development expenses may include:

● employee-related expenses, such as salaries, bonuses and benefits, consultant-related expenses, share-based compensation, overhead related expenses and travel related expenses for Notable’s research and development personnel; ● expenses incurred under agreements with CROs, as well as consultants that support the implementation of the clinical studies described above; ● manufacturing and packaging costs in connection with conducting clinical trials and for stability and other studies required to support the NDA filing as well as manufacturing drug product for commercial launch; ● formulation, research and development expenses related to the PPMP, Volasertib and Fosciclopirox and other products Notable may choose to develop; and

1922

●	expenses incurred under agreements with CROs, as well as consultants that support the implementation of the clinical studies described above;

●	manufacturing and packaging costs in connection with conducting clinical trials and for stability and other studies required to support the NDA filing as well as manufacturing drug product for commercial launch;

●	formulation, research and development expenses related to the PMP, Volasertib and Fosciclopirox and other products Notable may choose to develop; and

●	costs for sponsored research.

Research and development activities will continue to be central to Notable’s business plan. Products 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 clinical trials. Notable expects its research and development expenses to be significant over the next several years as personnel and compensation costs increase and Notable conducts late-stage clinical studies and prepares to seek regulatory approval for Volasertib and Fosciclopirox and any other future product.

The duration, costs and timing of clinical trials of Volasertib and Fosciclopirox and any other future product will depend on a variety of factors that include, but are not limited to:

	●	the number of trials required for approval;

	●	the per patient trial costs;

	●	the number of patients that participate in the trials;

	●	the number of sites included in the trials;

	●	the countries in which the trial is conducted;

	●	the length of time required to enroll eligible patients;

	●	the number of doses that patients receive;

	●	the drop-out or discontinuation rates of patients;

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

	●	the duration of patient follow-up;

	●	the timing and receipt of regulatory approvals; and

	●	the efficacy and safety profile of Notable’s product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of employee-related expenses, including salaries, benefits and stock-based compensation, for personnel in executive, finance, business development, facility and administrative functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters and fees for accounting, tax and consulting services.

Notable anticipates that general and administrative expenses will increase in the future to support its continued research and development activities. These increases will likely include increased costs related to the hiring of personnel, including compensation and employee-related expenses, and fees to outside consultants, lawyers and accountants. Additionally, Notable anticipates increased costs associated with being a public company, including compliance with Nasdaq Capital Market and SEC requirements, insurance and investor relations costs.

Income Taxes

For the ~~three~~six months ended ~~March~~June 3130, 2024 and 2023, no income tax expense or benefit was recognized. Notable’s deferred tax assets ~~are~~ are comprised primarily of net operating loss carryforwards. At ~~March~~June 3130, 2024, Notable had federal and state net operating loss carryforwards of approximately $~~128~~130.38 million and foreign net operating loss carryforwards of $~~263~~264.72 million. Notable maintains a full valuation allowance on its deferred tax assets since Notable has not yet achieved sustained profitable operations and does not expect taxable income in the near future. As a result, Notable has not recorded any income tax benefit since its inception.

Results of Operations

Comparison of the Three Months Ended ~~March~~June 3130, 2024 and ~~March~~June 3130, 2023

The following table sets forth Notable’s results of operations for the three months ended ~~March~~June 3130, 2024 compared to the three months ended ~~March~~June 3130, 2023 (in thousands):

							2024
	Three Months ended March 31,						Increase
	Three Months ended June 30,						Increase
	2024			2023			(Decrease)
Services revenue	$	12		$	-		$	12
Cost of services		-			-			-
Operating expenses:
Research and development		12,~~550~~354			1,~~596~~054			~~(46~~1,300	)
General and administrative		23,~~289~~028			31,~~923~~932			(1,~~634~~096	)
Loss from operations		(35,~~838~~380	)		(52,~~519~~986	)		1(2,~~681~~394	)
Other income (expense), net
Change in fair value of SAFEs		-			(~~1,865~~858	)		~~1,865~~858
Change in fair value warrant liability		11			1,096			(1,085	)
Change in fair value of warrant liability		100			408			(308	)
Other income		61			161			4560
Net loss	$	(35,~~766~~219	)	$	(63,~~272~~435	)	$	2(1,~~506~~784	)

Services Revenue

Services revenue increased from $0 to $12 thousand for the three months ended ~~March~~June 3130, 2024 compared to the three months ended ~~March~~June 3130, 2023. ~~This~~ This increase of $12 thousand was the result of Notable’s performing diagnostic services for others.

Research and Development Expenses

Research and development expenses ~~remained~~increased ~~consistent at~~ $1.63 million for the three months ended ~~March~~June 3130, 2024 compared to the three months ended ~~March~~ ~~31,~~June 30, 2023. The change was primarily due to the increases and decreases in the following programs (in thousands):

					2024
	Three Months ended March 31,				Increase
	Three Months ended June 30,				Increase
	2024		2023		(Decrease)
Engineering	$	216	$	238	$	(22	)
Predictive Medicines Platform (“PMP”)	$	244	$	195	$	49
Medical Affairs		16		-		16
Medical affairs		20		-		20
Operational		23		23		-
Scientific projects		747		859		(112	)
Scientific projects		621		629		(8	)
Volasertib		1,343		-		1,343
Volasertib		489		463		26
Total	$	2,354	$	1,054	$	1,300
Subtotal		1,365		1,353		12
Other		185		243		(58	)
Total	$	1,550	$	1,596	$	(46	)

~~Engineering~~Reclassification—Certain ~~expenses~~prior ~~are~~year ~~costs~~amounts ~~necessary~~have tobeen ~~support~~reclassified ~~the~~to ~~PPMP~~conform ~~platform. Engineering expenses remained consistent for the three months ended March 31, 2024 compared~~ to the three months ended ~~March~~June 3130, ~~2023~~2024 presentation.

~~Medical~~PMP ~~affairs~~ expenses ~~include~~are costs ofnecessary ~~clinical~~to ~~planning.~~support ~~Medical~~the ~~affairs~~PMP platform. PMP expenses remained materially consistent for the three months ended ~~March 31,~~June 30, 2024 compared to the three months ended ~~March~~June 3130, 2023. The immaterial increase ~~related~~is primarily related to ~~establishing~~payroll ~~relationships for the Volasterib project~~costs.

21Medical affairs expenses include costs of clinical planning. Medical affairs expenses remained materially consistent for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The immaterial increase related primarily to establishing relationships for the Volasterib project.

~~Operational~~Scientific ~~expenses~~projects are ~~costs~~exploratory toresearch ~~operate~~and ~~the~~development ~~laboratory~~projects. ~~Operational~~The ~~expenses~~decrease ~~remained~~in ~~consistent~~scientific project expenses for the three months ended ~~March 31~~June 30, 2024 compared to the three months ended ~~March~~June 3130, 2023, were a result of costs associated with the Fosciclopirox program during the three months ended June 30, 2023 that were not incurred during the three months ended June 30, 2024.

~~Scientific~~Volasertib ~~projects~~is ~~are~~a ~~exploratory~~small ~~research~~molecule ~~and~~with ~~development~~certain ~~projects~~uses related to cancer. ~~Scientific~~The ~~project~~increase ~~expenses~~in ~~remained~~the ~~consistent~~Volasertib expenses for the three months ended ~~March~~ ~~31,~~June 30, 2024 compared to the three months ended ~~March~~June 3130, 2023 related to preparation for the start of the clinical trial.

Volasertib is a small molecule with certain uses related to cancer. Volasertib expenses remained consistent for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

General and Administrative Expenses

General and administrative expenses ~~decreased~~increased to $2.3.0 million from $31.9 million for the three months ended ~~March~~June 3130, 2024 compared to the ~~three~~ three months ended ~~March~~June 3130, 2023. The ~~decrease~~increase of $1.61 million, or 4156.07%, was due primarily to aincreases $2in payroll related expenses of 0.1 million, or 5.2%; consulting fees of $0.3 million, ~~decrease~~or 14.6%; business development expenses of $0.1, or 5.3%; directors and officers insurance of $0.3 million, or 16.7% and share-based compensation of $0.7 million or 38.4%; partially offset by decreases in legal and professional fees primarily related to the merger for the three months ended ~~March~~June 3130, 2023 that were non-recurring during the three months ended ~~March 31~~June 30, 2024, ~~offset~~of ~~by a~~ $0.14 million, or ~~decrease~~21.5%; inand facilities expenses, aof $0.31 million, ~~increase~~or in5.3% ~~insurance~~resulting ~~expense~~from ~~predominantly~~repurposing ~~related to~~of ~~directors~~space ~~and~~for ~~officers~~research ~~insurance~~ and ~~a $0~~development activities.~~2 million increase in board fees.~~

Other Income (Expense), Net

Other income (expense), net, increased to $0.12 million of other income, net, from $0.74 million of other expense, net for the three months ended June ~~March 31~~30, 2024 compared to the three months ended ~~March~~June 3130, 2023. The increase of $0.86 million, or ~~109~~135.68%, was primarily due to the increase in the unrealized loss of convertible debt of $10.9 million during the three months ended ~~March~~June 3130, 2023 not recurring during the three months ended ~~March~~June 3130, 2024, ~~and~~ the ~~increase~~decrease in the derivative fair value of the Series C SAFE ~~and redeemable convertible preferred stock~~ warrant liability of $10.14 million during the three months ended ~~March~~ 31June 30, 2023 not recurring during the three months ended ~~March~~June 3130, 2024 and the increase in interest income during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Net Loss

Net loss ~~decreased~~increased to $35.82 million from $6.3.4 million for the three months ended ~~March~~June 3130, 2024 compared to the three ~~monhts~~months ended ~~March~~June 3130, 2023. The ~~decrease~~increase of $21.58 million, or 4051.09%, was due to the factors described above.

Comparison of the Six Months Ended June 30, 2024 and June 30, 2023

The following table sets forth Notable’s results of operations for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 (in thousands):

							2024
	Six Months ended June 30,						Increase
	2024			2023			(Decrease)
Services revenue	$	3		$	-		$	3
Cost of services		-			-			-
Operating expenses:
Research and development		3,904			2,650			1,254
General and administrative		5,317			5,855			(538	)
Loss from operations		(9,218	)		(8,505	)		(713	)
Other income (expense), net
Change in fair value of SAFEs		-			(2,723	)		2,723
Change in fair value of warrant liability		111			1,504			(1,393	)
Other income		122			17			105
Net loss	$	(8,985	)	$	(9,707	)	$	(722	)

Services Revenue

Services revenue increased from $0 to $3 thousand for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase of $3 thousand was the result of Notable’s performing diagnostic services for others.

Research and Development Expenses

Research and development expenses increased $1.3 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The change was primarily due to the increases and decreases in the following programs (in thousands):

					2024
	Six Months ended June 30,				Increase
	2024		2023		(Decrease)
Predictive Medicines Platform (“PMP”)	$	460	$	434	$	26
Medical affairs		21		-		21
Scientific projects		1,564		1,753		(189	)
Volasertib		1,859		463		1,396
Total	$	3,904	$	2,650	$	1,254

Reclassification—Certain prior year amounts have been reclassified to conform to the six months ended June 30, 2024 presentation.

PMP expenses are costs necessary to support the PMP platform. PMP expenses remained materially consistent for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The immaterial increase is primarily related to payroll costs.

Medical affairs expenses include costs of clinical planning. Medical affairs expenses remained materially consistent for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The immaterial increase related primarily to establishing relationships for the Volasterib project.

Scientific projects are exploratory research and development projects. The decrease in scientific project expenses for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, were primarily a result of costs associated with the Fosciclopirox program during the six months ended June 30, 2023 that were not incurred during the six months ended June 30, 2024.

Volasertib is a small molecule with certain uses related to cancer. The increase in the Volasertib expenses for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 related to preparation for the start of the clinical trial.

General and Administrative Expenses

General and administrative expenses decreased to $5.3 million from $5.9 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease of $0.5 million, or 9.2%, was due primarily to decreases in consulting fees of $0.1 million, or 2.3%; legal and professional fees primarily related to the merger for the six months ended June 30, 2023 that were non-recurring during the six months ended June 30, 2024 of $2.2 million, or 37.9%; facilities expenses of $0.2 million, or 2.9% resulting from repurposing of space for research and development activities; partially offset by increases in payroll related expenses of 0.1 million, or 2.1%; business development expenses of $0.2, or 2.9%; directors and officers insurance of $0.7 million, or 11.9%; board of director fees of $0.2 million or 4.2% and stock based compensation of $0.7 million or 11.7%.

Other Income (Expense), Net

Other income (expense), net, increased to $0.2 million of other income, net, from $1.2 million of other expense, net for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase of $1.4 million, or 119.5%, was primarily due to the increase in the unrealized loss of convertible debt of $2.7 million during the six months ended June 30, 2023 not recurring during the six months ended June 30, 2024, the decrease in the derivative fair value of the Series C SAFE warrant liability of $1.4 million during the six months ended June 30, 2023 not recurring during the six months ended June 30, 2024 and the increase in interest income during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Net Loss

Net loss decreased to $9.0 million from $9.7 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease of $0.7 million, or 7.4%, was due to the factors described above.

Liquidity, Capital Resources, and Financial Requirements

Overview

For the period from inception through ~~March~~June 3130, 2024, Notable has incurred losses and negative cash flows from operations mainly attributable to its development efforts and has an accumulated deficit of $8691.1 3 million. Notable has financed its operations primarily through the issuance of equity securities and through the cash inflow as a result of the Merger completed on October 16, 2023. Notable does not expect to have positive cash flow for the foreseeable future and does not believe the existing cash resources will be sufficient to sustain operations during the next twelve months. We currently need to generate sufficient revenues to support our cost structure to enable us to pay ongoing costs and expenses as they are incurred, finance the development of our products, and execute the business plan. If we cannot generate sufficient revenue to fund our business plan, we intend to seek to raise such financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If we are unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to us, we will be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on our business, financial condition and results of operations. Even if we are successful in generating sufficient revenue or in raising sufficient capital in order commercialize our products, our ability to continue in business as a viable going concern can only be achieved when our revenues reach a level that sustains our business operations.

As of May 9, 2024, Notable has cash and cash equivalents of $6.8 million. Based on the current cash position and the Company’s planned expense run rate, management believes Notable will be able to finance its operations through September 2024. Notable has based this estimate on assumptions that may prove to be wrong and may deplete its capital resources sooner than it expects.27

22As of August 9, 2024, Notable has cash and cash equivalents of $3.2 million. Based on the current cash position and the Company’s planned expense run rate, management believes Notable will be able to finance its operations through September 2024. Notable has based this estimate on assumptions that may prove to be wrong and may deplete its capital resources sooner than it expects.

Notable expects to continue to incur significant and increasing operating losses at least for the foreseeable future. Notable does not expect to generate product revenue unless and until it successfully completes development of and obtains regulatory approval for Volasertib, Fosciclopirox, or any other future products. Notable’s net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of planned clinical trials and Notable’s expenditures on other research and development activities. Notable anticipates that its expenses will increase substantially in 2024 as Notable advances the clinical development of Volasertib and Fosciclopirox, and operates as a publicly traded company. Notable does not expect positive cash flows from operations in the foreseeable future. Notable management expects to continue to incur additional substantial losses in the foreseeable future as a result of expanded research and development activities until regulatory approval is granted. Regulatory approval is not guaranteed and may never be obtained. As a result, these conditions raise substantial doubt about Notable’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

The foregoing forward-looking information was prepared by us in good faith based upon assumptions that we believe to be reasonable. No assurance can be given, however, regarding the attainability of the projections or the reliability of the assumptions on which they are based. The projections are subject to the uncertainties inherent in any attempt to predict the results of our operations, especially where new products and services are involved. Certain of the assumptions used will inevitably not materialize and unanticipated events will occur. Actual results of operations are, therefore, likely to vary from the projections and such variations may be material and adverse to us. Accordingly, no assurance can be given that such results will be achieved. Moreover, due to changes in technology, new product announcements and competitive pressures, we may be required to change the current plans.

Future Funding Requirements

Notable expects that it will need to obtain further funding through other public or private offerings of Notable’s capital stock, debt financing, collaboration and licensing arrangements or other sources, the requirements for which will depend on many factors, including:

● the scope, timing, rate of progress and costs of Notable’s drug development efforts, preclinical development activities, laboratory testing and clinical trials for Notable’s product candidates; ● the number and scope of clinical programs Notable decides to pursue; ● the cost, timing and outcome of preparing for and undergoing regulatory review of Notable’s product candidates; ● the scope and costs of development and commercial manufacturing activities; ● the cost and timing associated with commercializing Notable’s product candidates, if they receive marketing approval; ● the extent to which Notable acquires or in-licenses other product candidates and technologies; ● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing Notable’s intellectual property rights and defending intellectual property-related claims; ● Notable’s ability to establish and maintain collaborations on favorable terms, if at all; ● Notable’s efforts to enhance operational systems and Notable’s ability to attract, hire and retain qualified personnel, including personnel to support the development of Notable’s product candidates and, ultimately, the sale of Notable’s products, following FDA approval; ● Notable’s implementation of operational, financial and management systems; and ● the costs associated with being a public company.

●	Notable’s efforts to enhance operational systems and Notable’s ability to attract, hire and retain qualified personnel, including personnel to support the development of Notable’s product candidates and, ultimately, the sale of Notable’s products, following FDA approval;

●	Notable’s implementation of operational, financial and management systems; and

●	the costs associated with being a public company.

A change in the outcome of any of these or other variables with respect to the development of any of Notable’s product candidates could significantly change the costs and timing associated with the development of such product candidate. Furthermore, Notable’s operating plans may change in the future, and Notable will continue to require additional capital to meet operational needs and capital requirements associated with such operating plans.

Adequate additional funding may not be available to Notable on acceptable terms, or at all. If Notable is unable to raise capital in sufficient amounts or on terms acceptable to it, Notable may have to significantly delay, scale back or discontinue the development or commercialization of Volasertib and Fosciclopirox, or any future product, or potentially discontinue operations.

To the extent that Notable raises additional capital through the sale of equity or convertible debt securities, the ownership interest of Notable shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of Notable Ordinary Shareholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting Notable’s ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If Notable raises additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, Notable may be required to relinquish valuable rights to Notable’s technologies, future revenue streams, research programs or proposed products, or to grant licenses on terms that may not be favorable to Notable. If Notable is unable to raise additional funds through equity or debt financings when needed, Notable may be required to delay, limit, reduce or terminate Notable’s drug development or future commercialization efforts or grant rights to develop and market any future product, that Notable would otherwise prefer to develop and market ~~ourselves~~itself.

Because Notable is currently engaged in research at a relatively early stage, it will take a significant amount of time and resources to develop any product or intellectual property capable of generating sustainable revenues. Accordingly, Notable’s business is unlikely to generate any sustainable operating revenues in the next several years, and may never do so. In addition, to the extent that Notable is able to generate operating revenues, there can be no assurances that Notable will be able to achieve positive earnings and operating cash flows.

Cash Flows

Comparison of the ~~Three~~Six Months Ended ~~March~~June 3130, 2024 and ~~March~~June 3130, 2023

The following table sets forth the primary sources and uses of cash for each of the periods set forth below (in thousands):

	Three Months ended March 31,
	Six Months ended June 30,
	2024			2023			Change
Cash used in operating activities	$	(37,~~561~~271	)	$	(25,~~923~~833	)	$	(~~638~~1,438	)
Cash used in investing activities		(615	)		(430	)		(215	)
Cash provided by (used in) financing activities		(19344	)		46,~~344~~178			(46,~~363~~522	)
Net increase (decrease) in cash and cash equivalents	$	(37,~~586~~630	)	$	~~1,417~~315		$	(57,~~003~~945	)

Cash Flows used in Operating Activities

Net cash used in operating activities was $37.63 million and $25.98 million for the ~~three~~six months ended ~~March~~June 3130, 2024 and 2023, respectively, representing an increase of $01.74 million or approximately 2124.86%. The increase was primarily due to aincreased ~~decrease~~expenses in ~~the~~planning ~~redeemable~~for ~~convertible~~the ~~preferred~~start ~~stock warrant liability~~ of ~~$1.1 million offset by a~~ ~~decrease in~~ the ~~fair~~clinical ~~value of SAFE notes of $1~~trial.~~9 million and other working capital increases.~~

Cash Flows used in Investing Activities

Net cash ~~from~~used in investing activities was $0 million for the ~~three~~six months ended ~~March~~June 3130, 2024 and 2023.

Cash Flows from Financing Activities

Net cash used in financing activities was $0.3 million for the ~~three~~six months ended ~~March~~June 3130, 2024 and net cash provided ~~from~~by financing ~~activities~~ activities was $46.32 million for the ~~three~~six months ended ~~March~~June 3130, 2023, representing a decrease of $46.35 million. For the ~~three~~six months ended ~~March~~June 3130, 2023, the ~~amounts~~increase primarily ~~represent~~represents net proceeds from issuance of SAFE Agreements, which were not recurring during the ~~three~~six months ended June ~~March 31~~30, 2024.

Critical Accounting Policies and Use of Estimates

Notable’s discussion and analysis of its financial condition and results of operations are based on Notable’s financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires Notable to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in Notable’s financial statements. On an ongoing basis, Notable evaluates its estimates and judgments, including those related to accrued expenses, valuation allowance on deferred tax assets and valuation of intangible assets. Notable bases its estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.

Stock-Based Compensation Expense

We have adopted the fair value recognition provisions contained in Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 718. In addition, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 “Share-Based Payment” (“SAB 107”), which provides supplemental FASB ASC 718 application guidance based on the views of the SEC. Under FASB ASC 718, compensation cost recognized includes compensation cost for all share-based payments granted, based on the grant date fair value estimated in accordance with the provisions of FASB ASC 718.

We have used the Black-Scholes-Merton option-pricing model to estimate the option fair values. The option-pricing model requires a number of assumptions, of which the most significant are, expected stock price volatility, the expected pre-vesting forfeiture rate and the expected option term (the amount of time from the grant date until the options are exercised or expire).

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by Notable are accounted for based on the fair value of the equity instruments issued. Non-employee equity-based payments that do not vest immediately upon grant are recorded as an expense over the vesting period.

Fair Value Measurement

Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Financial instruments such as cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities.

Assets and liabilities recorded at fair value on a recurring basis in the balance sheet are categorized based on the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Warrants issued pursuant to equity offerings that are potentially exercisable in cash or on a cashless basis resulting in a variable number of shares being issued are considered derivative liabilities and therefore measured at fair value.

Accrued Research and Development Costs

Notable accrues for expenses resulting from obligations under contracts with clinical research organizations (CROs). The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided. Notable’s objective is to reflect the appropriate trial expense in the financial statements by matching the appropriate expenses with the period in which services and efforts are expended.

Warrant Liabilities

Notable classifies warrants to purchase ordinary shares as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The warrants to purchase ordinary shares are subject to re-measurement at each balance sheet date until exercised or expired, and any change in fair value is recognized as a component of other income, net in the consolidated statements of operations and comprehensive loss. We use the Black-Scholes-Merton option-pricing model to estimate the fair value of the warrants. Offering costs associated with the issuance of warrant liabilities are allocated on a relative basis and expensed as incurred. These warrants are now convertible into Ordinary Shares.

Revenue Recognition

During the ~~three~~six months ended ~~March~~June 3130, 2024, Notable’s central revenue generating activities and performance obligations consisted of ~~performing~~ performing diagnostic services using its proprietary platform that was utilized by entities primarily engaged in their own research and ~~development~~ development efforts to identify therapeutic combinations in a more targeted and efficient method of drug discovery. These activities do not represent its major and ongoing central operations.

Notable recognizes revenue from diagnostic services in the amount that reflects the consideration that it expects to be entitled as Notable performs its obligation under a contract with a customer by processing diagnostic tests on laboratory samples and making the test results available to its customers. Revenue is recorded considering a five-step revenue recognition model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. Notable generally has a contract or a purchase order from a customer with the specified required terms, including the number of diagnostic samples to be performed. Notable has not received any advance payments for which there are any remaining performance obligations. Accordingly, no deferred revenue is recorded as of ~~March~~June 3130, 2024 and December 31, 2023. Notable has not recorded any contract assets as of ~~March~~June 3130, 2024 and ~~December~~ December 31, 2023 as Notable has not completed any performance obligations for which it has not been able to bill its customers. Material ~~costs~~ costs of services revenue are recorded as costs of sales and immaterial costs of services are recorded in operating expenses.

In accordance with FASB ASC 606, Revenue from Contracts with Customers, Notable recognizes revenue when it satisfies performance obligations, by transferring promised goods or services to customers, in an amount that reflects the consideration to which Notable expects to be entitled in exchange for fulfilling those performance obligations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 4. Controls and Procedures.

Management’s Evaluation of our Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness 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, or the Exchange Act, as of ~~March~~June 3130, 2024. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~March~~ 31June 30, 2024, our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the quarter ended ~~March~~June 3130, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2632

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

As of the date of this Quarterly Report on Form 10-Q, we are not involved in any material legal proceedings. However, from time to time, we could be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

Please refer to the Risk Factors in Part I, Item 1A of the Company’s Form 10-K for the year ended December 31, 2023. There have been no material changes to such matters during the quarter ended ~~March~~June 3130, 2024., except as follows:

~~Item~~We 2.are ~~Unregistered~~not ~~Sales~~in ofcompliance ~~Equity~~with ~~Securities,~~Nasdaq’s ~~Use~~minimum ofbid ~~Proceeds~~price requirement and ~~Issuer~~if ~~Purchases~~we fail to regain compliance our ordinary shares would be delisted, which could adversely affect the liquidity of ~~Equity~~our ~~Securities~~ordinary shares and our ability to raise additional capital.

On July 17, 2024, we received a written notification (the “Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”), indicating that we were not in compliance with the minimum closing bid price requirement set forth in Nasdaq Rules for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the closing bid price of our ordinary shares for the 30 consecutive business days from June 3, 2024, to July 16, 2024, we no longer meet the minimum bid price requirement.

The Notice has no immediate effect on the listing of our ordinary shares on the Nasdaq Capital Market. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we have been granted a 180-calendar-day compliance period, or until January 13, 2025, to regain compliance with the minimum bid price requirement. During the compliance period, our ordinary shares will continue to be listed and traded on the Nasdaq Capital Market. To regain compliance, the closing bid of our ordinary shares must meet or exceed $1.00 per share for a minimum of ten (10) consecutive business days during the 180-calendar-day grace period.

In the event we are not in compliance by January 13, 2025, we may be afforded a second 180-calendar-day grace period. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement.

If we do not regain compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that our ordinary shares will be subject to delisting. Under such circumstances, we would have the right to appeal a determination to delist our ordinary shares, and our ordinary shares would remain listed on the Nasdaq Capital Market until the completion of the appeal process.

We intend to monitor our closing bid price for our ordinary shares between now and January 13, 2025, and will consider any such available options to resolve our non-compliance with the minimum bid price requirement as may be necessary. No determination regarding our response has been made at this time. There can be no assurance that we will be able to regain compliance with the minimum bid price requirement or will otherwise be in compliance with other Nasdaq listing criteria.

If we fail to satisfy any other continued listing requirements of Nasdaq, such as the corporate governance requirements, Nasdaq may also take steps to delist our ordinary shares. Such a delisting would likely have a negative effect on the price of our ordinary shares and would impair your ability to sell or purchase our ordinary shares when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our ordinary shares to become listed again, stabilize the market price or improve the liquidity of our ordinary shares, prevent our ordinary shares from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~None~~On August 9, 2024, Notable Labs, Inc. a wholly-owned subsidiary of Notable Labs, Ltd. (“Notable”) entered into a Second Amended and Restated Employment Agreement with Thomas A. Bock, Notable’s Chief Executive Officer (the “2024 CEO Agreement”). The 2024 CEO Agreement is in accordance with the economic terms previously approved pursuant to Israeli law by Notable’s shareholders at the special meeting of shareholders on March 22, 2024 and superseded and replaced Dr. Bock’s prior employment agreement dated April 30, 2021.

The 2024 CEO Agreement has no fixed term, has an effective date of April 1, 2024, and includes the following terms and conditions: (i) Dr. Bock’s salary was increased to $525,000 and may be adjusted from time to time thereafter at the discretion of Notable’s Board of Directors (the “Board”), (ii) Dr. Bock shall be entitled to receive a target annual bonus equivalent to sixty-five percent (65%) of his annual base salary (as in effect from time to time), which annual bonus shall be awarded, if at all, at the discretion of the Board based upon metrics to be mutually agreed upon by Dr. Bock and the Board, (iii) Dr. Bock will be eligible for short-term and long-term incentive compensation, including equity compensation, which will be determined by the Board and Notable’s shareholders, and (iv) reimbursement for travel expenses from Dr. Bock’s residence in San Diego, California to Notable’s business location in Foster City, CA, subject to a maximum of one thousand five hundred dollars ($1,500) per week and reimbursement of all other ordinary and reasonable out-of-pocket business expenses.

Notwithstanding the foregoing, with respect to calendar year 2024, Dr. Bock’s annual cash bonus earned, if any, shall be prorated by multiplying it by a fraction, the numerator of which equals the number of days that he was employed by Notable Labs, Inc. from April 1, 2024 through the end of the 2024 calendar year and the denominator of which equals 365.

In the event that Dr. Bock’s employment is terminated by Notable Labs, Inc. other than for Cause (as defined in the 2024 CEO Agreement), or by Dr. Bock for Good Reason (as defined in the 2024 CEO Agreement), then, in addition to any accrued but unpaid amounts and the annual bonus (if deemed earned), Dr. Bock shall receive: (i) a lump sum payment equal to his then-current annual base salary, less all customary and required taxes and employment-related deductions, commencing on the first payroll date following the date on which he provides a customary release and such release becomes effective and non-revocable but not more than seventy (70) days after the effective date of termination, (ii) continued medical insurance coverage with the premium for such benefits paid by Notable Labs, Inc. until the earlier to occur of (A) twelve (12) months following Dr. Bock’s termination date, or (B) the date he becomes eligible for medical benefits with another employer.

In the event that a Change of Control of Notable (as defined in the 2024 CEO Agreement) occurs and within a period of one (1) year following the Change of Control, or ninety (90) days preceding the earlier to occur of a Change of Control or the execution of a definitive agreement the consummation of which would result in a Change of Control, Dr. Bock’s employment is terminated other than for Cause, or Dr. Bock terminates his employment for Good Reason, then, in addition to any accrued but unpaid amounts and the annual bonus (if deemed earned), Dr. Bock shall receive: (i) a lump sum payment equal to his then-current annual base salary, less all customary and required taxes and employment-related deductions, commencing on the first payroll date following the date on which he provides a customary release and such release becomes effective and non-revocable but not more than seventy (70) days after the effective date of termination, (ii) on the date of termination of his employment, Dr. Bock shall become fully vested in any and all outstanding equity awards with a time-based vesting schedule outstanding as of the date of his termination and his time to exercise any time-based equity interests shall be extended for twelve (12) months following the termination date, and (iii) continued medical insurance coverage with the premium for such benefits paid by Notable Labs, Inc. until the earlier to occur of (A) twelve (12) months following Dr. Bock’s termination date, or (B) the date he becomes eligible for medical benefits with another employer.

The 2024 CEO Agreement also obligates Dr. Bock to continue to abide by the terms of his proprietary inventions and assignment agreement, which remains in effect.

Item 6. Exhibits.

Exhibit Number		Description
10.1*		Second Amended and Restated Employment Agreement with Thomas Bock dated August 9, 2024.
31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)
*		Management compensation plan, agreement or arrangement.

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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.

	NOTABLE LABS, LTD.
Date: May 15, 2024	By:	/s/ Thomas A. Bock
Date: August 14, 2024	By:	/s/ Thomas A. Bock
		Thomas A. Bock
		Chief Executive Officer (Principal Executive Officer)
Date: May 15, 2024	By:	/s/ Scott A. McPherson
Date: August 14, 2024	By:	/s/ Scott A. McPherson
		Scott A. McPherson
		Chief Financial Officer (Principal Financial and Accounting Officer)

2835

Filing Compare · Notable Labs, Ltd.