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 June 30, 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)

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 August 14, 2024, the registrant had 9,659,496 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 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	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION	33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	34
Signatures		35

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 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.

●	We are not in compliance with Nasdaq’s minimum bid price requirement and if we fail to regain compliance our ordinary shares would be delisted, which could adversely affect the liquidity of our ordinary shares and our ability 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)

	June 30, 2024			December 31, 2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	4,092		$	11,825
Prepaid expenses and other current assets		2,892			3,645
Total current assets		6,984			15,470

Property and equipment, net		346			316
Finance lease right-of-use assets, net		297			337
Operating lease right-of-use assets		1,467			1,694
Investment in SAFE		-			1,500
Investment in Series Seed Preferred Stock		1,500			-
Deferred financing costs		306			-
Other assets		104			224
Total assets	$	11,004		$	19,541

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	1,140		$	1,755
Accrued expenses and other current liabilities		809			418
Accounts payable and accrued expenses - related party		22			42
Finance lease liabilities, current		79			78
Operating lease liabilities, current		467			445
Total current liabilities		2,517			2,738

Finance lease liabilities, net of current amount		224			263
Operating lease liabilities, net of current amount		1,025			1,263
Warrant liability		52			163
Total liabilities		3,818			4,427

Commitments and contingencies		-			-

Shareholders’ equity
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		97,514			96,524
Accumulated deficit		(91,293	)		(82,308	)
Accumulated other comprehensive income		116			110
Total shareholders’ equity		7,186			15,114
Total liabilities and shareholders’ equity	$	11,004		$	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						For the Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023

Services revenue	$	2		$	-		$	3		$	-
Cost of services		-			-			-			-
Gross profit		2			-			3			-

Operating expenses
Research and development		2,354			1,054			3,904			2,650
General and administrative		3,028			1,932			5,317			5,855
Total operating expenses		5,382			2,986			9,221			8,505

Loss from operations		(5,380	)		(2,986	)		(9,218	)		(8,505	)

Other income (expense), net
Change in fair value of SAFEs		-			(858	)		-			(2,723	)
Change in fair value of warrant liability		100			408			111			1,504
Other income		61			1			122			17
Total Other income (expense)		161			(449	)		233			(1,202	)

Net loss		(5,219	)		(3,435	)		(8,985	)		(9,707	)

Other comprehensive income (expense)
Change in foreign currency translation adjustment		(59	)		-			6			-

Comprehensive loss	$	(5,278	)	$	(3,435	)	$	(8,979	)	$	(9,707	)

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				Capital			Deficit			Income			Equity
		Ordinary							Additional						Accumulated Other			Total
		Shares							Paid-In			Accumulated			Comprehensive			Shareholders’
		Shares			Amount				Capital			Deficit			Income			Equity
Balance December 31, 2023	-		9,018,261		$	788		-	$	96,524		$	(82,308	)	$	110		$	15,114
Share-based compensation expense			-			-				132			-			-			132
Net (loss) income	-		-			-		-		-			(3,766	)		65			(3,701	)
Balance March 31, 2024	-		9,018,261			788		-		96,656			(86,074	)		175			11,545
Issuance of restricted share awards			656,235			62				719			-			-			781
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		Shares		Amount		Capital		Deficit			Income		Deficit
	Redeemable Convertible				Common				Additional					Accumulated Other		Total
	Preferred Stock				Stock				Paid-In		Accumulated			Comprehensive		Shareholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Income		Deficit
Balance December 31, 2022		464,321	$	35,352		970,192	$	15	$	34,061	$	(71,044	)	$	-	$	(36,968	)
Share-based compensation expense		-		-		-		-		116		-			-		116
Net loss		-		-		-		-		-		(6,272	)		-		(6,272	)
Balance March 31, 2023		464,321		35,352		970,192		15		34,177		(77,316	)		-		(43,124	)
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 Six Months Ended June 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(8,985	)	$	(9,707	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		127			130
Share-based compensation		1,051			318
Non-cash operating leases		227			371
Change in fair value of SAFEs		-			2,723
Change in fair value of warrant liability		(111	)		(1,504	)
Change in operating assets and liabilities
Prepaid expenses		855			619
Other assets		18			-
Accounts payable		(607	)		1,365
Accrued expenses and other current liabilities		390			227
Accounts payable - related parties		(20	)		-
Operating lease liabilities		(216	)		(375	)
Net cash used in operating activities		(7,271	)		(5,833	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(14	)		(30	)
Trademark costs		(1	)		-
Net cash used in investing activities		(15	)		(30	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from employee options		-			5
Repayment of finance lease liabilities		(38	)		(25	)
Deferred financing costs		(306	)		-
Proceeds from issuance of the SAFE agreements		-			6,198
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	$	4,092		$	1,896

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 Medicines Platform (“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 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 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 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 June 30, 2024 and December 31, 2023, the Company had an accumulated deficit of approximately $91.3 million and $82.3 million, respectively. As of June 30, 2024, the Company had cash of $4.1 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.

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 a 1-for-35 reverse stock split immediately following the effective time of the Merger. No fractional shares were issued in connection with the Reverse Share Split. Each shareholder who did not have a number of shares evenly divisible pursuant to the Reverse 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 as of June 30, 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 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 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. 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 June 30, 2024 or December 31, 2023. The Company has not recorded any contract assets as of June 30, 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.

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 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 June 30, 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 June 30, 2024, there are no recently issued accounting standards not yet adopted which the Company expects would have a material 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 June 30, 2024
	Level 1		Level 2		Level 3		Total Fair Value
Liabilities
Warrant liability	$	—	$	—	$	52	$	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 six months ended June 30, 2024 and the year ended December 31, 2023. Additionally, there were no cash equivalents or marketable securities held as of June 30, 2024 and 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 June 30, 2024. The following assumptions were used in determining the fair value of the warrants:


Risk Free interest rate	4.3	%
Expected life (years)	7.96
Expected volatility	168.1	%
Annual dividend yield	0	%
Warrants measurement input	0	%

The 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

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 June 30, 2024 and December 31, 2023 (in thousands):

	June 30, 2024		December 31, 2023
Accounts receivable	$	184	$	186
Employee retention credit		316		572
Prepaid expenses		2,352		2,857
Prepaid benefits		34		24
Prepaid clinical expenses		6		6
Total prepaid expenses and other current assets	$	2,892	$	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 June 30, 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 during the six months ended June 30, 2023 and believes there is reasonable assurance the remaining balance will be collected.

Property and Equipment, Net

The following table presents the components of property and equipment, net, as of June 30, 2024 and December 31, 2023 (in thousands):

SCHEDULE OF PROPERTY AND EQUIPMENT

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

Depreciation expense was approximately $0.0 million and $0.1 million for both the three and six months ended June 30, 2024 and 2023, respectively.

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 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 would 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 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 as of December 31, 2023. The investment in the Oncoheroes SAFE was treated as an investment in an equity security that the Company elected to record at its cost less any impairment as of December 31, 2023.

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 June 30, 2024 and December 31, 2023 (in thousands):

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

NOTE 6 – TRADEMARKS

Costs associated with the registration of trademarks have 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 trademark is filed, the costs will be amortized over the estimated useful 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):

		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 $65,691 and $128,250 for the three and six months ended June 30, 2024 and $61,623 and $105,401 for the three and six months ended June 30, 2023.

NOTE 8 – 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.

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 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

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 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 June 30, 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 agreement.

NOTE 9 – INCOME TAXES

As of January 1, 2024, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during the six months ended June 30, 2024 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the six months ended June 30, 2024, and there was no accrual for uncertain tax positions as of June 30, 2024. Tax years from 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 June 30, 2024 and 2023, since management has determined that 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 10 - LEASES

The following table summarizes total lease expense during the three and six months ended June 30, 2024 and 2023 (in thousands):

SCHEDULE OF LEASES EXPENSES


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

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes amounts due under lease liabilities and the reconciliation of lease liabilities as of June 30, 2024 (in thousands):

	Lease Obligation
	Finance Lease			Facilities Lease
2024	$	44		$	272
2025		87			552
2026		87			569
2027		87			239
2028 and thereafter		15			-
Total future undiscounted lease payments		320			1,632
Less: imputed interest		(17	)		(140	)
Total lease liabilities	$	303		$	1,492

NOTE 11 – EQUITY INCENTIVE PLANS AND STOCK BASED COMPENSATION EXPENSE

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 Notable’s public offering. Under the 2014 Plan, Notable reserved up to 26,514 Ordinary Shares. The Ordinary Shares to be issued 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 June 30, 2024, there were 66,975 Ordinary Shares reserved for future issuance pursuant to 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 of ISO, NSO, restricted shares and restricted units to employees, directors, and consultants. The 2024 Plan authorized a total of 4 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 2014 Plan, such Ordinary Shares shall be added to the 2024 Plan. As of June 30, 2024, there were 4 million Ordinary Shares reserved for future issuance pursuant to the 2024 Plan.

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		865,299		$	1.20		-		-
Cancelled		(154,368	)	$	67.26		-		-
Outstanding as of June 30, 2024		995,368		$	4.80		9.4	$	-
Exercisable as of June 30, 2024		136,101		$	25.67		7.4	$	-
Vested and expected to vest as of June 30, 2024		995,368		$	4.80		9.4	$	-

No options were exercised during the three and six months ended June 30, 2024 and 5,000 shares were exercised during the three and six months ended June 30, 2023.

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-average grant date fair value of the options granted during the 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:

	●	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.

NOTABLE LABS, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The fair value of stock options granted during the six months ended June 30, 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 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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	46	$	25	$	145	$	51
General and administrative		109		177		143		267
Total	$	155	$	202	$	288	$	318

As of June 30, 2024, the total share-based compensation expense related to stock awards not yet recognized was $1.3 million and will be recognized over a weighted-average remaining period of approximately 2.8 years.

Restricted 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):


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Numerator:
Net loss	$	(5,219	)	$	(3,435	)	$	(8,985	)	$	(9,707	)
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
Net loss per share, basic and diluted:	$	(0.55	)	$	(3.54	)	$	(0.97	)	$	(10.00	)

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 13 – SUBSEQUENT EVENTS

On July 17, 2024, the Company received a written notification (the “Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”), indicating that the Company 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 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.

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 periods ended June 30, 2024, or the 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 June 30, 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 medicines for patients with cancer. Through its proprietary Predictive Medicines Platform or 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, an average 97% of PMP predicted responders achieved a clinical response to their actual treatment. To pursue improved medical outcomes compared to traditional precision medicines, PMP does not depend on genetic or other biomarkers. Instead, 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.

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 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 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 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 medicines using its PMP. PMP has already guided Notable in the selection of its first two candidate predictive medicines, two clinical-stage candidates for development in platform-predicted responders with acute myeloid leukemia (“AML”). Notable’s lead asset derived from PMP is Volasertib, a polo like kinase 1 (“PLK1”) inhibitor proven to induce cell cycle arrest and apoptosis in various cancer cells.

Notable in-licensed Volasertib after extensive analysis on our PMP and has been actively preparing to initiate our Phase 2 study in relapsed/refractory AML (r/r AML). We anticipate initial Phase 2 safety data to begin reading out in the fourth quarter of 2024 with the first patient cohort completion in the first quarter of 2025. We expect initial efficacy data in the first half of 2025.

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 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 six months ended June 30, 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 June 30, 2024 and December 31, 2023. Notable has not recorded any contract assets as of June 30, 2024 and December 31, 2023, and as of June 30, 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;

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