ACTUATE THERAPEUTICS, INC. 10-K

Item 9A. Controls and Procedures. Attestation Report of the Independent Registered Public Accounting Firm This Annual Report does not include an attestation report of our independent registered public accounting firm due to an exemption provided by the JOBS Act for “emerging growth companies.” Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15(b) under the Exchange Act, as of December 31, 2024, the end of the period to which this annual report relates, we have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including the President and Chief Executive Officer and the Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. 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 December 31, 2024, our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level. Material Weakness in Internal Control over Financial Reporting While management was not required to conduct an assessment regarding internal control over financial reporting, we previously identified a material weakness as of December 31, 2023 as a result of an inadequate review and accrual of clinical trial related expenses that resulted in improper accrual of expenses. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected on a timely basis. Changes in Internal Control over Financial Reporting The Company has implemented remediation procedures to address the material weakness in our internal control over financial reporting identified above, including the implementation of additional processes and controls to properly review and monitor the accrual of clinical trial expenses at the end of each period during the year ended December 31, 2024. The material weakness was remediated as of December 31, 2024. 118 Item 9B. Other Information. Executive Compensation On March 10, 2025, the Compensation Committee of the Board recommended and the Board approved updates to executive officer compensation for 2025. The Compensation Committee and the Board considered, among other factors, the compensation practices, trends and data from comparable companies and input from its independent compensation consultant, with the adjustment resulting in compensation levels at approximately the 25th percentile of the comparable company peer group. Effective January 1, 2025, the following updates to cash compensation amounts were approved, subject to the Company receiving at least $25 million in additional funding from one or more financings and will only payable after receipt of at least $25 million in aggregate funding: (1) an increase in Mr. Schmitt’s annual base salary to $570,000; and (2) an increase in Mr. Lytle’s annual base salary to $435,363. In addition, the executive officers will receive, with a grant date of April 1, 2025 and at an exercise price equal to the closing price of the Company’s common stock as of such date, stock option grants consisting of (1) one-time grants to reflect a catch-up of salary that would have been paid if such salary increases had taken effect on August 14, 2024, representing the IPO closing date, in the following amounts: Mr. Schmitt, 4,285 stock options; and Mr. Lytle, 1,900 stock options (the “Base Pay True Up Grants”); (2) one-time grants to reflect a catch-up grant, since no annual grants were made in 2024, in the following amounts: Mr. Schmitt, 200,000 stock options; Mr. Lytle, 39,999 stock options; and Dr. Mazar, 110,346 stock options (the “Equity True Up Grants,” and together with the Base Pay True Up Grants, the “Special Option Grants”); and (3) annual grants in the following amounts: Mr. Schmitt, 66,503 stock options; Mr. Lytle, 49,394 stock options; and Dr. Mazar, 51,046 stock options (the “Annual Option Grants”). The Special Option Grants will vest as to 25% on August 14, 2025 with the remaining 75% vesting in equal monthly installments during the 36 months thereafter and the Annual Grants will vest as to 25% on the first anniversary of the grant date with the remaining 75% vesting in equal monthly installments during the 36 months following the first anniversary of the grant date. The Board also approved (1) an amendment to the employment agreement with Dr. Mazar to provide that the deadline by which the Company would need to complete a Sale Transaction (as defined in the agreement) for him to receive an additional equity award be extended from March 31, 2024 to December 31, 2026 (to align with a similar provision in Mr. Schmitt’s agreement), and (2) an amendment to the employment agreement with Mr. Lytle to provide for the issuance of an equity award in the event of a Sale Transaction (as defined in the agreement) completed on or before December 31, 2026 (to align with similar provisions in each of Mr. Schmitt’s and Dr. Mazar’s agreements). See “Item 11. Executive Compensation – Employment Agreements” for additional information. Rule 10b5-1 Trading Plans During the quarter ended December 31, 2024, no director or officer of the Company adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 119 PART III Item 10. Directors, Executive Officers and Corporate Governance. Executive Officers and Directors The table below lists the name, age and position of each of our executive officers and director as February 28, 2025. Name Age Position Executive Officers: Daniel M. Schmitt 63 President, Chief Executive Officer and Director Andrew P. Mazar, Ph.D. 63 Chief Operating Officer Paul Lytle 57 Chief Financial Officer Non-Employee Directors: Aaron G.L. Fletcher, Ph.D. 44 Chairperson and Director (1) Jason Keyes 53 Director (3) Amy Ronneberg 51 Director (2)(3) Roger Sawhney 55 Director (2)(3) Todd Thomson 64 Director (1) Dan Zabrowski, Ph.D. 65 Director (1)(2) (1) Member of the nominating and corporate governance committee. (2) Member of the compensation committee. (3) Member of the audit committee. Background of Executive Officers and Directors Daniel M. Schmitt. Mr. Schmitt has served as our Chief Executive Officer and President since March 2015 and our director since April 2015. He previously served as Chief Operating Officer of Genus Oncology LLC, a clinical stage company, from 2009 to 2014. Prior to that, he served as Senior Vice President, Licensing and Commercial Development of Immtech Pharmaceuticals, Inc., a pharmaceutical company, from 2004 to 2009; General Manager, Academic and Government Institution Markets of First Genetic Trust, a genomic technology company, from 2001 to 2004; and previously held positions with G.D. Searle Inc., a pharmaceutical company, ILEX Oncology, Inc., a pharmaceutical company, Fujisawa USA, Inc., a pharmaceutical company, and Burroughs Wellcome Co., a pharmaceutical company. Mr. Schmitt has also held research positions affiliated with the National Foundation for Cancer Research in 1984 and the University of North Carolina School of Medicine from 1987 to 1988. He also served as an Entrepreneur-In-Residence at Northwestern University in 2014 and as an external expert consultant for both the University of Chicago and the University of Illinois — Chicago from 2011 to 2014. Mr. Schmitt is also a founding member of Chicago Innovation Mentors. He earned his MBA and a BS in Chemistry with a concentration in Theoretical Mathematics from West Virginia University. Mr. Schmitt is well qualified to serve as a director due to his pharmaceutical and biotechnology experience, including his experience in operations management, new product development and business development. Andrew P. Mazar, Ph.D. Dr. Mazar has served as our Chief Operating Officer since June 2022, and prior to joining the Company, he served as an independent consultant from January 2022 to June 2022. Previously, Dr. Mazar was the Co-Founder, Chief Scientific Officer and a director of Monopar Therapeutics, Inc., a public clinical-stage biopharmaceutical company, from September 2016 to April 2022. Dr. Mazar is also a founder and managing member of Tactic Pharma, LLC, where he developed WTX-101/ALXN1840, a drug he co-invented for the treatment of Wilson’s disease. WTX-101/ALXN1840 was acquired by Alexion Pharmaceuticals for more than $800 million in 2018. Prior to Monopar, Dr. Mazar was a Professor of Pharmacology at the Feinberg School of Medicine at Northwestern University, where he also served as the Director of the Center for Developmental Therapeutics and Entrepreneur-in-Residence from September 2009 to September 2016. During his tenure at Northwestern University, Dr, Mazar served as the Co-chair of the Animal Model Working Group for the NCI Nanotechnology Alliance; was a charter member of the Developmental Therapeutics (DT) study section at the NIH Center for Scientific review; and was a member of the editorial board of Clinical Cancer Research where he continues to serve. Prior to that, Dr. Mazar served as the Chief Scientific Officer at Attenuon, LLC, a private clinical-stage biopharmaceutical company, from February 2000 to July 2009. Dr. Mazar earned his BS in Chemistry from the University of Wisconsin, Parkside and his Ph.D. in Biochemistry from the University of Illinois College of Medicine, Chicago, Illinois. 120 Paul Lytle . Mr. Lytle has served as our Interim Chief Financial Officer since February 2024, and has served as our Chief Financial Officer since June 2024. Mr. Lytle is the Co-Founder of Thendor Therapeutics, LLC, a private biopharmaceutical company, and he has served as its Chief Financial Officer since September 2023. Mr. Lytle is also the Co-Founder of Mosaic ImmunoEngineering, Inc., a public development-stage biotechnology company, and he has served on its board of directors and as its Executive Vice President, Chief Financial Officer since August 2020. Previously, Mr. Lytle served as Executive Vice President, Chief Financial Officer of Breathe Technologies, Inc., a private medical device company acquired by Hillrom Holdings, Inc. in August 2019, from September 2018 to December 2019. Prior to that, Mr. Lytle served as Chief Financial Officer of Avid Bioservices, Inc., a biologics development company initially focused on developing immunotherapies for the treatment of cancer while building a biologics contract development and manufacturing organization, from March 1997 to May 2018. Mr. Lytle received his B.S. in Business with an emphasis in Accounting from California State University at Long Beach and is a Certified Public Accountant (inactive). Aaron G.L. Fletcher, Ph.D. Dr. Fletcher has served as our director since April 2015. Dr. Fletcher is the Founder and has served as the President of Bios Research, a financial services firm, since 2012. Dr. Fletcher has also served as an independent consultant in the biotechnology and healthcare equity industry for over 10 years, and a visiting professor at Dallas Baptist University since 2008, where he teaches Biochemistry, Bioethics and Cell Biology. Dr. Fletcher has served on the board of directors and as a member of the compensation committee of Cognition Therapeutics, Inc., a public neuroscience company, since July 2015, and on the board of directors of ONL Therapeutics, Inc., a private clinical-stage biopharmaceutical company, since September 2024. Previously, he served on the board of directors and as a member of the compensation committee and nominating and governance committee of TFF Pharmaceuticals, Inc., a public biopharmaceutical company, from March 2018 to November 2023, the board of directors and as a member of the compensation committee and pricing committee of Cue Biopharma, a public biopharmaceutical company, from October 2019 to October 2023, the board of directors and compensation committee of Lung Therapeutics, Inc., a biopharmaceutical company, from August 2014 to October 2023, the board of directors and as a member of the compensation committee of Rein Therapeutics (fka Aileron Therapeutics, Inc.), a public biopharmaceutical company, from August 2014 to October 2023, the board of directors and as a member of the compensation committee of AbiliTech Medical, Inc., a medical equipment manufacturer, from November 2016 to January 2023, and the board of directors and as a member of the audit committee of SWK Holdings Corporation, a public finance company focused on global healthcare, from August 2019 to December 2021. Dr. Fletcher earned his PhD in Biochemistry from Colorado State University. Dr. Fletcher is well qualified to serve as a director due to his extensive experience in the healthcare industry, particularly in the biotech and med-tech sub-sectors. Jason Keyes. Mr. Keyes has served as our director since August 2024. Mr. Keyes currently serves as the Chief Financial Officer of Equillium, Inc., a public clinical-stage biotechnology company, since March 2018, and as a director of its Australian subsidiary since January 2019. Prior to this, he served in various roles at Orexigen Therapeutics, Inc., a public pharmaceutical company which filed a voluntary petition for Chapter 11 bankruptcy in March 2018 that concluded with the bankruptcy court confirming a plan of liquidation in May 2019 following a sale of substantially all of its assets in June 2018, including as Executive Vice President and Chief Financial Officer, from January 2013 to February 2018. Previously, Mr. Keyes served in various roles at Amylin Pharmaceuticals, Inc., a public biopharmaceutical company, including as Senior Director of Finance, from August 2007 to January 2013. Mr. Keyes also held leadership positions in finance and corporate strategy at Amgen, Inc., a public biopharmaceutical company, and Baxter Healthcare Corporation, a public healthcare company. Mr. Keyes formerly served on the board of directors, including as chair of the audit committee and as a member of the compensation committee, of Sesen Bio, Inc., a public biopharmaceutical company, from 2020 to 2023. Mr. Keyes received his B.S. and M.S. degrees in Civil Engineering from Stanford University and an M.B.A. from the Anderson School at the University of California, Los Angeles. Mr. Keyes is well qualified to serve as a director due to his extensive experience in finance and in the biotechnology and biopharmaceutical industries. Amy Ronneberg. Ms. Ronneberg has served as our director since August 2024. Ms. Ronneberg currently serves as the Chief Executive Officer of NMDP (f/k/a Be The Match), a nonprofit organization that facilitates bone marrow transplantation, since March 2020, and served as its Chief Financial Officer from July 2013 to March 2020. Ms. Ronneberg also served as the President at NMDP BioTherapies, LLC, a start-up company within NMDP, and as its Chief of Staff from February 2018 to February 2020. Prior to that, Ms. Ronneberg served in various roles at Capella Education Company, a public online postsecondary education services company, including as Chief Accounting Officer and Vice President of Operations, from 2000 to 2012. She also served as an Audit Manager of Ernst & Young, a professional services partnership, from 1995 to 2000. Ms. Ronneberg has served as a director and member of the finance committee (Vice Chair) for Allina Health, a nonprofit healthcare company, since November 2020, and previously served as a director of Magenta Therapeutics, Inc., a clinical stage biotechnology company, from June 2018 to August 2023, a director and executive committee member of Medical Alley Association, a healthcare industry network, from December 2020 to present, an executive committee member of the World Marrow Donor Association, an international healthcare organization, from January 2017 to January 2020, and chairman of the board of directors of Twin Cities in Motion, Minneapolis, a nonprofit running event organization, from January 2012 to January 2014. Ms. Ronneberg earned a Master’s in Business Administration from Capella University, Minneapolis, Minnesota, a Corporate Directorship Certificate from Harvard Business School, and a B.B.A. in Accounting from University of Wisconsin-Eau Claire. Ms. Ronneberg is well qualified to serve as a director due to her extensive financial expertise and leadership in the biotechnology and biopharmaceutical industries. 121 Roger Sawhney. Dr. Sawhney has served as our director since August 2024. Dr. Sawhney currently serves as the Chief Financial Officer of LB Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, since June 2024. Dr. Sawhney previously served as the Chief Financial Officer of Garuda Therapeutics, Inc., a biotechnology company, from September 2022 to December 2023. Prior to this, Dr. Sawhney served as the Chief Business Officer of Omega Therapeutics, Inc., a clinical-stage biotechnology company, from May 2022 to September 2022, and its Chief Financial Officer from May 2020 to May 2022. He served at KKR & Co., a global investment firm, as Director of its healthcare investment platform, from September 2018 to February 2020. Dr. Sawhney also served as Senior Vice President and Head of Global Corporate Strategy for Novartis AG, a public pharmaceutical company, from August 2009 to August 2012, Senior Vice President of Corporate Strategy and Business Development for Outcome Health, a healthcare technology company, from February 2017 to February 2018, a Partner with Bain & Company, a management consulting firm, from August 2012 to February 2017, and Partner and Managing Director with the Boston Consulting Group, a management consulting firm, from September 1996 to July 2009. He has served as a director of Adlai Nortye Ltd., a public clinical-stage biopharmaceutical company, since August 2024, a director of SIRPant Immunotherapeutics, Inc., a clinical-stage immuno-oncology company, since January 2024 and previously served as a director of Alimera Sciences, Inc., a pharmaceutical company, from February 2023 to March 2023. Dr. Sawhney earned an M.D. from Harvard Medical School and a BA in Economics from Stanford University. Dr. Sawhney is well qualified to serve as a director due to his extensive financial and strategic expertise in the biotechnology and biopharmaceutical industries. Todd Thomson. Mr. Thomson has served as our director since September 2022. Mr. Thomson has served as the Chief Operating and Financial Officer of Kairos Ventures, a venture capital firm, since August 2019. Previously, he co-founded and served as Chairman of Dynasty Financial Partners, an investment and technology platform, from November 2010 to August 2019, and currently serves on the board of directors. Prior to that, Mr. Thomson served as CEO of the Wealth Management Division of Citigroup and previously Chief Financial Officer of Citigroup Inc., an investment bank and financial services corporation, from 1998 to 2007. Mr. Thomson has served on the board of directors and as a member of the audit committee of Sivers Semiconductors, a public technology company, since January 2022, the board of directors of Dragonfly Energy Holdings Corp., a public battery manufacturer, from August 2021 to October 2022, the board of directors of Cyren Ltd., a public cybersecurity company, from November 2011 to July 2021, the board of directors of Cordia Bancorp Inc., a bank holding company, from 2010 to May 2016, and the board of directors and as a member of the Investment Committee for the Davidson College and World Resources Institute Endowments. He earned his MBA with Distinction in Finance and Strategy from the Wharton School of Business and his BA in Economics from Davidson College. Mr. Thomson is well qualified to serve as a director due to his extensive investing experience and years of executive leadership, financial leadership, and experience in mergers and acquisitions and business strategy. Dan Zabrowski, Ph.D. Dr. Zabrowski has served as our director since March 2021. Dr. Zabrowski has served as a Venture Partner of Decheng Capital, a private investment firm, since July 2016. Prior to that, Dr. Zabrowski served in a number of roles for Roche, a healthcare company, from 1994 to 2016, including Global Head of Regulatory Affairs, Global Head of Development Operations, Global Head of Roche Pharma Partnering, President of Ventana Medical Systems and President of the Roche Sequencing Unit. Dr. Zabrowski also previously held positions with Syntex, Fujisawa (now Astellas), a pharmaceutical company, and G.D. Searle, LLC, a pharmaceutical company, and served as Adjunct Assistant Professor at the School of Pharmacy, University of Illinois — Chicago. He also served on the board of directors of Apexigen, Inc., a public biopharmaceutical company, from February 2021 to August 2023, including serving as Chairman of its compensation committee and member of its audit committee, BeyondSpring Inc., a public biopharmaceutical company, from January 2020 to June 2022, including serving as a member of its compensation committee, Nimble Therapeutics, Inc., a private biotechnology company, since 2019, Ariagen, Inc., a private biotechnology company, since 2018, Endogena Therapeutics, Inc., a private biotechnology company, since 2018, and AccuraGen, Inc., a private biotechnology company, since 2013, and also as a board observer for Encodia, Inc., a private biotechnology company, since 2018. Dr. Zabrowski earned his PhD in Organic Chemistry from Indiana University, Bloomington and his BA degree in Chemistry from Saint Louis University. Dr. Zabrowski is well qualified to serve as a director due to his extensive experience on a variety of public and private boards in the biotechnology and biopharmaceutical industries. Family Relationships There are no familial relationships among our directors and executive officers. 122 Board Composition Our business and affairs are organized under the direction of the Board. The Board currently consists of seven members. The primary responsibilities of the Board are to provide oversight, strategic guidance, counseling, and direction to our management. The Board meets on a regular basis and additionally as required. Audit Committee The audit committee consists of Mr. Keyes (chairperson), Dr. Sawhney and Ms. Ronneberg. The Board has determined that each of Mr. Keyes, Dr. Sawhney and Ms. Ronneberg is an independent director as defined by Nasdaq rules applicable to members of an audit committee, including that each such member meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act. In addition, as required by Nasdaq rules, each member of the audit committee is able to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and statement of cash flows. Financial Experts on Audit Committee The Board determined that Mr. Keyes qualifies as an audit committee financial expert within the meaning of the rules and regulations of the SEC. In making this determination, the Board considered Mr. Keyes’ formal education and previous experience in financial roles. In addition, as required by Nasdaq rules, we have at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The Board determined Mr. Keyes qualifies as financially sophisticated under the Nasdaq rules. Guidelines for Selecting Director Nominees The nominating and corporate governance committee does not have a written policy or formal procedural requirements for stockholders to submit recommendations for director nominations. However, the nominating and corporate governance committee will consider properly submitted recommendations for candidates to the Board from stockholders in accordance with our amended and restated bylaws. Stockholders should communicate nominee suggestions directly to the nominating and corporate governance committee and accompany the recommendation with biographical details and a statement of support for the nominee. The suggested nominee must also provide a statement of consent to being considered for nomination. There have been no material changes to the procedures by which stockholders may recommend nominees to the Board. Code of Ethics We have adopted a code of business conduct and ethics that applies to our officers, directors, and employees. The full text of our code of business conduct and ethics can be found on our website (http://www.actuatetherapeutics.com) under the "Corporate Governance" heading on the “Investors” page. We may satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of our code of business conduct and ethics that applies to our principal executive officer, principal financial officer, or persons performing similar functions, by posting such information on our website where it is accessible through the same link noted above. Insider Trading Policy We adopted an insider trading policy that governs the purchase, sale and/or disposition of our securities by our directors, officers, employees and consultants. We believe the insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards. A copy of the insider trading policy is filed as Exhibit 19.1 to this Annual Report. 123 Item 11. Executive Compensation. This section discusses the material components of the executive compensation program for our executive officers who are named in the “Summary Compensation Table” below. In 2024, our “named executive officers,” which consist of our principal executive officer and our two next most highly compensated executive officers during 2024, and their positions were as follows: · Daniel M. Schmitt, our President and Chief Executive Officer; · Andrew P. Mazar, Ph.D., our Chief Operating Officer; and · Paul Lytle, our Chief Financial Officer (appointed in February 2024). Summary Compensation Table The following table sets forth information concerning the compensation of the named executive officers for the years ended December 31, 2024 and 2023. Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($)(1) All Other Compensation ($) Total Compensation ($) Daniel M. Schmitt (2) 2024 400,000 200,000 (5) 4,978,616 – – 5,578,616 President and Chief Executive Officer 2023 400,000 120,000 – – – 520,000 Andrew P. Mazar, Ph. D. (3) 2024 450,000 225,000 (5) – – – 675,000 Chief Operating Officer 2023 450,000 157,500 – 58,612 – 666,112 Paul Lytle (4) 2024 210,000 84,000 (5) – 1,503,579 98,517 1,896,096 Chief Financial Officer (1) The dollar amounts listed reflect the value of the award as of the grant date calculated in accordance with ASC Topic 718 based upon the fair-market value of our common stock on the date of the grant and, therefore, do not necessarily reflect the actual value received by the individuals. The assumptions made in computing the estimated fair value of such awards are disclosed in Note 10 to our consolidated financial statements included in this Report for the fiscal year ended December 31, 2024. (2) The terms of Mr. Schmitt’s compensation are set forth in his employment agreement or as otherwise increased by the Board. See “Employment Agreements — Chief Executive Officer.” Upon the closing of the IPO, Mr. Schmitt was granted 544,111 RSUs pursuant to his employment agreement, which award vests 50% on the first anniversary date of the closing of the IPO and 50% of which vests on the second anniversary date of the closing of the IPO. (3) The terms of Dr. Mazar’s compensation are set forth in his employment agreement or as otherwise increased by the Board. See “Employment Agreements — Chief Operating Officer.” Dr. Mazar was granted 37,374 stock options based on performance on October 23, 2023, of which, 25% vested on the grant date and the remaining 75% vest in equal installments on a monthly basis during the 36 months following the grant date. (4) Mr. Lytle was hired on June 1, 2024 as a full-time employee. The terms of Mr. Lytle’s compensation are set forth in his employment agreement or as otherwise increased by the Board. See “Employment Agreements — Chief Financial Officer.” Prior to June 1, 2024, Mr. Lytle provided consulting services to the Company and received consulting fees of $98,517 prior to June 1, 2024. In addition, pursuant to his employment agreement, Mr. Lytle was granted 234,971 stock options upon the closing of the IPO, of which, 25% vests on June 1, 2025 and the remaining 75% vests in equal monthly installments during the 36 months following June 1, 2025. (5) Bonus amounts for 2024 have not been paid as of the date of this Report. 124 Narrative to Summary Compensation Table For the years ended December 31, 2024 and 2023, the compensation program for our named executive officers consisted of base salary and incentive compensation delivered in the form of cash bonuses and equity awards. Base salary was set at a level that was commensurate with the executive’s duties and authorities, contributions, prior experience and sustained performance. Cash bonuses and equity awards were also set at a level that was commensurate with the executive’s duties and authorities, contributions, prior experience and sustained performance, in accordance with the employment or similar agreement with the executive. Following our IPO, we grant all equity awards under the terms of our 2024 Plan. Equity awards, including stock options, are not granted in anticipation of the release of material non-public information, and the release of material non-public information is not timed on the basis of stock option or equity grant dates. All stock options are granted with an exercise price per share that is no less than the fair market value of our common stock on the date of grant of such award. We also provide benefits to our named executive officers on the same basis as we provide benefits to all of our employees, including health, dental and vision insurance. Employment Agreements Chief Executive Officer On April 15, 2015, we entered into an employment agreement with Mr. Schmitt, which was amended on each of February 5, 2016, September 28, 2017, September 23, 2018, January 29, 2019, September 3, 2019, August 1, 2022, January 27, 2023, December 12, 2023, May 9, 2024 and March 11, 2025 (the “CEO Employment Agreement”), that provides a base salary equal to $400,000 per year, and the ability to earn an annual bonus of up to 50% of his base salary, 70% of which shall be payable upon achievement of certain milestones mutually agreed to between the Company and Mr. Schmitt and 30% of which shall be payable at the discretion of the Board. On March 10, 2025, the Board approved an increase to Mr. Schmitt’s annual base salary to $570,000 and bonus up to 55% of his base salary, contingent upon the Company raising at least $25 million in additional equity financing. In addition, Mr. Schmitt will receive, with a grant date of April 1, 2025 and at an exercise price equal to the closing price of our common stock as of such date, stock option grants consisting of (1) a one-time grant of 4,285 stock options to reflect a catch-up of salary that would have been paid if his salary increase had taken effect on August 14, 2024, representing the IPO closing date (a “Base Pay True Up Grant”); (2) a one-time grant of 200,000 stock options to reflect a catch-up grant since no annual grants were made in 2024 (an “Equity True Up Grant,” and together with the Base Pay True Up Grant, the “Special Option Grant”); and (3) an annual grant of 66,503 stock options (an “Annual Option Grant”). The Special Option Grant will vest as to 25% on August 14, 2025 with the remaining 75% vesting in equal monthly installments during the 36 months thereafter and the Annual Grant will vest as to 25% on the first anniversary of the grant date with the remaining 75% vesting in equal monthly installments during the 36 months following the first anniversary of the grant date. In the event the Company is sold on or before December 31, 2026 for cash in a transaction valued at or above $29.56 per share, immediately prior to the consummation of such transaction, Mr. Schmitt will also be (i) granted shares of common stock under the stock incentive plan of the Company that is then in effect equal to that number of shares that would bring his total ownership (including the shares he owned prior to calculation of the shares to be granted in the sale transaction) to 8.0% of the issued and outstanding shares of common stock immediately prior to the closing of such transaction on a fully diluted basis, and (ii) entitled to receive a cash bonus equal to 100% of his base salary. Further, in the event on or before December 31, 2026 the Company receives between $10,000,000 – $100,000,000 or more in gross revenue pursuant to certain licensing arrangements between the Company and any third party or another non- dilutive capital transaction, Mr. Schmitt will be (i) granted shares of common stock under the stock incentive plan of the Company that is then in effect equal to that number of shares that would bring his total ownership (including the shares he owned prior to calculation of the shares to be granted in the transaction) to 5.0 – 6.0% (depending on the geographic location from which such gross revenue is derived) of the issued and outstanding shares of common stock on a fully diluted basis, and (ii) entitled to receive a cash bonus equal to 25 – 50% of his base salary (depending on the geographic location from which such gross revenue is derived). These potential stock awards are subject to limits under the stock plan on the number of shares available for grant. 125 The CEO Employment Agreement also provided that if the Company closed a transaction or series of related transactions occurring on or before December 31, 2026 pursuant to which the Company issues and sells shares of its common or preferred equity securities in exchange for aggregate gross proceeds of more than $10,000,000, excluding any gross proceeds attributable to sales to Bios Partners L.P. or its affiliates, (a Qualified Financing), Mr. Schmitt would be granted restricted stock units entitling him, upon vesting, to shares of common stock equal to that number of shares that would bring his total ownership (including the shares he owned prior to calculation of the shares to be granted in the transaction) to 4.25 – 5.0% of the issued and outstanding shares of common stock on a fully diluted basis at the time of the transaction, depending on the per share price of the shares sold in such Qualified Financing. Upon the closing of our IPO on August 14, 2024, which was considered a Qualified Financing, Mr. Schmitt was granted an award of 544,111 restricted stock units, which vest as follows: (i) 50% will vest on the first anniversary of the IPO closing, and (ii) 50% will vest on the second anniversary of the IPO closing. In addition, such shares will vest immediately upon: (i) a change in control, (ii) termination of Mr. Schmitt’s employment by us without “cause,” (iii) termination of employment by Mr. Schmitt for “good reason,” or (iv) death or disability. The severance amount payable to Mr. Schmitt upon his termination by the Company for any reason (other than Mr. Schmitt’s death, disability or for “cause”), or termination by Mr. Schmitt for “good reason,” is equal to one times his then current base salary (the CEO Standard Severance Benefits). Upon termination upon a change in control, and if Mr. Schmitt’s employment is terminated by the Company for any reason other than Mr. Schmitt’s death, disability or for “cause,” or termination by Mr. Schmitt for “good reason,” in any such case within the six months immediately preceding or the twelve months immediately following such change in control, Mr. Schmitt is entitled to a payment equal to one and one-half times his then current base salary reduced by the CEO Standard Severance Benefits to which he would be entitled. Chief Operating Officer Dr. Mazar assumed the role of Chief Operating Officer on April 1, 2022 pursuant to a consulting agreement, dated March 25, 2022 (the “COO Consulting Agreement”), which entitled him to compensation equal to $35,000 per month for serving in that role. On June 1, 2022, the COO Consulting Agreement was superseded by an employment agreement, which was amended on March 11, 2025 (the “COO Employment Agreement”) that provides for a base salary equal to $450,000 per year, the ability to earn an annual bonus of up to 50% of his base salary upon achievement of certain milestones mutually agreed to between the Company and Dr. Mazar, and a signing bonus equal to $200,000. Upon execution of the COO Employment Agreement, the Company granted to Dr. Mazar 40,395 shares of restricted common stock, 25% of which vested on the first anniversary of the grant date and the remaining 75% of which vest in equal monthly installments during the 36 months following the first anniversary of the grant date. In addition, Dr. Mazar will receive, with a grant date of April 1, 2025 and at an exercise price equal to the closing price of our common stock as of such date, stock option grants consisting of (1) a one-time grant of 110,346 stock options as an Equity True Up Grant; and (2) an Annual Option Grant of 51,046 stock options. The Equity True Up Grant will vest as to 25% on August 14, 2025 with the remaining 75% vesting in equal monthly installments during the 36 months thereafter and the Annual Grant will vest as to 25% on the first anniversary of the grant date with the remaining 75% vesting in equal monthly installments during the 36 months following the first anniversary of the grant date. In the event the Company is sold on or before December 31, 2026 for cash in a transaction valued at or above $29.56 per share, immediately prior to the consummation of such transaction, Dr. Mazar will also be granted shares of common stock under the stock incentive plan of the Company that is then in effect equal to that number of shares that would bring his total ownership (including the shares he owned prior to calculation of the shares to be granted in the sale transaction) to 2.0% of the issued and outstanding shares of common stock on the day immediately prior to the closing of such transaction on a fully diluted basis (subject to limits under the stock plan on the number of shares available for grant). The shares issued to Dr. Mazar in such transaction will be fully vested as of the date of grant. The severance amount payable to Dr. Mazar upon termination by the Company for any reason (other than Dr. Mazar’s death, disability or for “cause”), or termination by Dr. Mazar for “good reason,” is equal to 100% of his then current base salary plus reimbursement of the cost associated with his premiums for elected COBRA coverage up to $25,000 (the “COO Standard Severance Benefits”). Upon termination upon a change in control, and if Dr. Mazar’s employment is terminated by the Company for any reason (other than Dr. Mazar’s death, disability or for “cause”), or termination by Dr. Mazar for “good reason,” in any such case within the six months immediately preceding or the twelve months immediately following such change in control, Dr. Mazar is entitled to a payment equal to one times his then current base salary reduced by the COO Standard Severance Benefits to which he would be entitled. 126 Chief Financial Officer On February 17, 2024, we entered into a consulting agreement with Mr. Lytle (the Interim CFO Agreement), that provided for a consulting fee equal to $20,000 per month for services of at least 20 hours per week. The Interim CFO Agreement was superseded by an employment agreement effective June 1, 2024, as amended on March 11, 2025 (the “CFO Employment Agreement”) that provides for a base salary equal to $360,000 per year, and the ability for Mr. Lytle to earn an annual bonus of up to 40% of his base salary upon achievement of certain milestones mutually agreed to between the Company and Mr. Lytle. On March 10, 2025, the Board approved an increase to Mr. Lytle’s annual base salary to $435,363, contingent upon the Company raising at least $25 million in additional equity financing. In addition, Mr. Lytle will receive, with a grant date of April 1, 2025 and at an exercise price equal to the closing price of our common stock as of such date, stock option grants consisting of (1) a one-time grant of 1,900 stock options as a Base Pay True Up Grant; (2) a one-time grant of 39,999 stock options as an Equity True Up Grant; and (3) an Annual Option Grant of 49,394 stock options. The Special Option Grant will vest as to 25% on August 14, 2025 with the remaining 75% vesting in equal monthly installments during the 36 months thereafter and the Annual Grant will vest as to 25% on the first anniversary of the grant date with the remaining 75% vesting in equal monthly installments during the 36 months following the first anniversary of the grant date. In the event the Company is sold on or before December 31, 2026 for cash in a transaction valued at or above $29.56 per share, immediately prior to the consummation of such transaction, Mr. Lytle will also be granted shares of common stock under the stock incentive plan of the Company that is then in effect equal to that number of shares that would bring his total ownership (including the shares he owned prior to calculation of the shares to be granted in the sale transaction) to 2.0% of the issued and outstanding shares of common stock on the day immediately prior to the closing of such transaction on a fully diluted basis (subject to limits under the stock plan on the number of shares available for grant). The shares issued to Mr. Lytle in such transaction will be fully vested as of the date of grant. Upon the closing of our initial public offering, the Company granted Mr. Lytle options to purchase that number of shares of common stock equal to 1.0% of the Company’s issued and outstanding capital stock on a fully diluted basis as of such date, or 234,971 shares, 25% of which vest on June 1, 2025 and the remaining 75% of which vest in equal monthly installments during the 36 months following June 1, 2025. The CFO Employment Agreement may be terminated by the Company or Mr. Lytle at any time, upon 30 days’ prior written notice thereof to the other party. The severance amount payable to Mr. Lytle upon termination by the Company for any reason (other than Mr. Lytle’s death, disability or for “cause”), or termination by Mr. Lytle for “good reason,” is equal to 50% of his then current base salary (the “CFO Standard Severance Benefits”). Upon termination upon a change in control, and if Mr. Lytle’s employment is terminated by the Company for any reason (other than Mr. Lytle’s death, disability or for “cause”), or termination by Mr. Lytle for “good reason,” in any such case within the six months immediately preceding or the twelve months immediately following such change in control, Mr. Lytle is entitled to a payment equal to 50% of his then current base salary reduced by the CFO Standard Severance Benefits to which he would be entitled. 127 Outstanding Equity Awards at Year End The following table presents information regarding the outstanding stock options and restricted common stock awards held by the Company’s named executive officers at December 31, 2024. Option Awards Stock Awards Name Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable(1) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of unearned shares, units or other rights that have not vested Equity Incentive Plan Awards: Market or payout value of unearned shares, units or other rights that have not vested($)(1) Daniel M. Schmitt(2) 2/5/16(3) – – – – – – 11,726 93,339 2/22/21(4) – – – – – – 15,389 122,496 8/14/24(5) – – – – – – 544,111 4,331,124 Andrew P. Mazar, Ph.D.(2) 2/22/21(6) – – – – – – 1,158 9,218 7/7/22(7) – – – – – – 15,990 127,280 10/23/23(8) 10,900 26,474 2.14 10/23/33 – – – – Paul Lytle 8/12/24(9) – 234,971 8.00 8/12/34 – – – – ______________ (1) The market value of the restricted stock as of December 31, 2024 is calculated by multiplying the number of unvested shares outstanding under the award by $7.96 per share, which is the fair value we used for financial reporting purposes as of such date. (2) Each of Mr. Schmitt and Dr. Mazar are also entitled to receive shares of common stock following the consummation of certain transactions. See “Employment Agreements — Chief Executive Officer” and “— Chief Operating Officer” above. (3) 46,905 restricted common stock awards were granted on February 5, 2016, of which, (i) 11,727 shares vested on the grant date, (ii) 11,726 shares vested on September 18, 2017 upon the hiring of the Company’s Chief Medical Officer, (iii) 11,726 shares vested on January 11, 2018 upon the filing of the Company’s “Investigation of New Drug” application with the FDA, and (iv) 11,726 shares will vest upon the achievement of strategic partnership or licensing transaction with anticipated gross proceeds of at least $25 million. (4) 369,318 restricted common stock awards were granted on February 22, 2021, of which, 25% vested on the first anniversary of the grant date and the remaining 75% vests in equal monthly installments during the 36 months following the first anniversary of the grant date. (5) 544,111 RSUs were granted upon the closing of the IPO on August 14, 2024, of which, 50% vest on each of the first and second anniversary dates of the closing of the IPO. (6) 27,778 restricted common stock awards were granted on February 22, 2021, of which, 25% vested on the first anniversary of the grant date and the remaining 75% vests in equal monthly installments during the 36 months following the first anniversary of the grant date. (7) 40,395 restricted common stock awards were granted on July 7, 2022, of which, 25% vested on the first anniversary of the grant date and the remaining 75% vests in equal monthly installments during the 36 months following the first anniversary of the grant date. (8) 37,374 non-qualified stock option awards were granted on October 23, 2023, of which, 25% of the option vests on the first anniversary of the grant date and the remaining 75% vests in equal monthly installments during the 36 months following the first anniversary of the grant date. (9) 234,971 non-qualified stock option awards were granted upon the closing of the IPO, of which, 25% vest on June 1, 2025 and the remaining 75% of which vest in equal monthly installments during the 36 months following June 1, 2025. 128 Potential Payments upon Termination or Change in Control Our named executive officers each have employment agreements with us, pursuant to which they are entitled to receive certain benefits upon qualifying termination. See the section “Employment Agreements” above for additional information regarding these benefits. Clawback Policy We have adopted a compensation recovery policy that is compliant with the Nasdaq Listing Rules, as required by the Dodd-Frank Act. Director Compensation The following table sets forth compensation earned during the year ended December 31, 2024 by each director who is not a named executive officer and served during the year ended December 31, 2024. Name Fees Earned or Paid in Cash ($) Option Awards ($) (1) All Other Compensation ($) Total ($) Aaron G.L. Fletcher, Ph.D.(2) 29,971 94,335 – 124,306 Jason Keyes(4)(5) 22,671 192,090 – 214,761 Les Kreis, Jr.(3) – – – – Amy Ronneberg(4)(5) 21,022 192,090 – 213,112 Roger Sawhney, Ph.D.(4)(5) 21,022 192,090 – 213,112 Todd Thomson(2) 16,907 94,335 – 111,242 Dan Zabrowski, Ph.D.(2) 21,518 94,335 – 115,853 (1) The dollar amounts listed reflect the value of the underlying shares as of the grant date calculated in accordance with ASC Topic 718 based upon the fair-market value of our common stock on the date of the grant and, therefore, do not necessarily reflect the actual value received by the individuals. The assumptions made in computing the estimated fair value of such awards are disclosed in Note 10 to our consolidated financial statements included in this Report. (2) Represents an annual grant for continued service on the Board on August 12, 2024 of an option to purchase up to 15,000 shares of common stock with an exercise price of $8.00 per share, the public offering price of shares in the IPO. (3) Mr. Kreis resigned from the Board effective immediately prior to the closing of the initial public offering. (4) Mr. Keyes was appointed to serve as a member of our Board effective upon the effectiveness of the registration statement for the initial public offering on August 12, 2024. Each of Dr. Sawhney and Ms. Ronneberg was appointed to serve as members of our Board effective upon the closing of the IPO on August 14, 2024. Each received an initial option grant in connection with such appointment on August 12, 2024 to purchase up to 30,000 shares of common stock at an exercise price of $8.00 per share, the public offering price of shares in the IPO. 129 Director Compensation Program In connection with our initial public offering, the Board established, based upon the recommendation of the compensation committee, a compensation program for the non-employee members of the Board. The compensation program is designed to align the directors’ compensation with our business objectives and the creation of stockholder value. The compensation committee and the Board expect to review non-employee director compensation periodically to ensure that such compensation remains competitive and enables us to recruit and retain qualified directors. Under the non-employee directors’ compensation program, beginning upon the effectiveness of the registration statement for this offering, each non-employee director will receive an annual cash retainer and will receive cash fees for serving as chair or as a member of the audit, compensation or nominating and corporate governance committees, as follows: Annual Amount ($) Director Compensation Cash Retainer 40,000 Chair of the Board (in lieu of Director Compensation Cash Retainer) 70,000 Additional Annual Compensation for Committee Chairs ​ Audit Committee 19,000 Compensation Committee 12,000 Nominating and Corporate Governance Committee 8,000 Additional Annual Compensation for Committee Members (Non-Chairs) ​ Audit Committee 9,000 Compensation Committee 6,500 Nominating and Corporate Governance Committee 4,000 In addition, each non-employee director, upon their initial appointment or election, and on an annual basis thereafter, will receive a grant of stock options under our 2024 Plan exercisable for 30,000 and 15,000 shares, respectively, with the initial grant vesting in three equal installments on the first, second, and third anniversary of the grant date, and with the annual grants vesting in full on the first anniversary of the grant date. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth information regarding the actual beneficial ownership of our common stock as of February 28, 2025 by: • each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock; • each of our named executive officers and directors; and • all of our executive officers and directors as a group. Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. Applicable percentage ownership is based on 19,531,636 shares of common stock outstanding on February 28, 2025. 130 Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all our common stock beneficially owned by them. Name and Address of Beneficial Owner (8) Number of Shares Beneficially Owned Percentage of Shares Beneficially Owned Directors and Named Executive Officers Daniel M. Schmitt(1) 619,014 3.17% Andrew Mazar(2) 128,641 * Paul Lytle – – Aaron G.L. Fletcher(3)(4) 10,125,488 51.66% Todd Thomson(5) 2,678,752 13.68% Daniel Zabrowski(6) 92,290 * Jason Keyes – – Amy Ronneberg – – Roger Sawhney – – All directors and executive officers (9 individuals)(7) 13,644,185 69.34% 5% Beneficial Holders Bios Equity Affiliated Funds(4) 10,048,403 51.26% Kairos Venture Affiliated Funds(5) 2,678,752 13.68% * Less than 1%. (1) Includes (i) 22,223 shares of common stock held by The Andrew Schmitt Irrevocable Trust, dated December 31, 2019, of which Mr. Schmitt is trustee, (ii) 22,223 shares of common stock held by The Anna Schmitt Irrevocable Trust, dated December 31, 2019, of which Mr. Schmitt is trustee, (iii) 22,223 shares of common stock held by The Edward Schmitt Irrevocable Trust, dated December 31, 2019, of which Mr. Schmitt is trustee, and (iv) 552,345 shares of common stock held by The Schmitt Family Irrevocable Trust, dated December 31, 2019, of which Mr. Schmitt is trustee. (2) Includes 112,943 shares of common stock, 1,683 shares of restricted common stock that vest within 60 days, and 14,015 shares of common stock underlying options that are exercisable within 60 days. (3) Includes (i) 60,973 shares of common stock held by Dr. Fletcher directly, (ii) 8,056 shares of common stock held by the KF Legacy Trust U/A/D December 7, 2016, which has an independent trustee, and (iii) 8,056 shares of common stock held by the MF Legacy Trust U/A/D December 7, 2016, which has an independent trustee. Dr. Fletcher disclaims beneficial ownership of the shares held by each of the KF Legacy Trust U/A/D December 7, 2016 and the MF Legacy Trust U/A/D December 7, 2016, which are trusts for the benefit of his children, other than to the extent he may have a pecuniary interest therein. 131 (4) Includes (i) 300,749 shares of common stock held by Bios Actuate Co-Invest I, LP, (ii) 2,094,650 shares of common stock held by Bios Actuate Co-Invest II, LP, (iii) 573,394 shares of common stock held by Bios Actuate Co-Invest III, LP, (iv) 307,538 shares of common stock held by Bios Fund I QP, LP, (v) 525,797 shares of common stock held by Bios Fund I, LP, (vi) 131,248 shares of common stock and 3,528 shares of common stock issuable upon the exercise of warrants held by Bios Fund II NT, LP, (vii) 980,433 shares of common stock and 26,355 shares of common stock issuable upon the exercise of warrants held by Bios Fund II QP, LP, (viii) 300,143 shares of common stock and 8,068 shares of common stock issuable upon the exercise of warrants held by Bios Fund II, LP, (ix) 404,814 shares of common stock held by Bios Fund III NT, LP, (x) 2,506,667 shares of common stock held by Bios Fund III QP, LP, (xi) 383,791 shares of common stock held by Bios Fund III, LP, (xii) 84,917 shares of common stock and 31,884 shares of common stock underlying options that are or will be exercisable within 60 days held by BP Directors, LP, (xiii) 1,259,427 shares of common stock held by Bios Clinical Opportunity Fund, LP, and (xiv) 125,000 shares of common stock held by Bios 2024 Co-Invest, LP. Bios Equity Partners, LP is the general partner of Bios Actuate Co-Invest I, LP; Bios Equity Partners III, LP is the general partner of Bios Actuate Co-Invest II, LP, Bios Actuate Co-Invest III, LP, Bios Fund III NT, LP, Bios Fund III QP, LP, Bios Fund III, LP; Bios Equity Partners, LP is the general partner of Bios Fund I QP, LP and Bios Fund I, LP; Bios Equity Partners II, LP is the general partner of Bios Fund II NT, LP, Bios Fund II QP, LP and Bios Fund II, LP; Dr.. Fletcher and Mr. Kreis, Jr. are the general partners of BP Directors, LP; and Bios Equity COF, LP is the general partner of Bios Clinical Opportunity Fund, LP (collectively, the Bios Equity Affiliated Funds). Cavu Management, LP, an entity managed and controlled by Mr. Kreis, Jr., and Bios Capital Management, LP, an entity managed and controlled by Dr. Fletcher (Bios Capital Management, LP), are the general partners of Bios Equity Partners, LP, Bios Equity Partners II, LP and Bios Equity Partners III, LP. Bios Capital Management, LP is the general partner of Bios Equity COF, LP. Cavu Advisors LLC, an entity that is managed and controlled by Mr. Kreis, Jr., is the general partner of Cavu Management LP. Bios Advisors GP, LLC, an entity that is managed and controlled by Dr. Fletcher, is the general partner of Bios Capital Management, LP. The shares owned by Bios Equity Affiliated Funds are aggregated for purposes of reporting share ownership information. Mr. Kreis, Jr. and Dr. Fletcher share voting and investment control with respect to shares held by the Bios Equity Affiliated Funds. The address for Bios Equity Affiliated Funds is 1751 River Run, Suite 400, Fort Worth, Texas 76107. (5) Includes (i) 321,781 shares of common stock held by Kairos SPV Fund LLC, (ii) 873,033 shares held by Kairos Venture Opportunities I, L.P., (iii) 1,184,797 shares of common stock, 28,464 shares of common stock issuable upon the exercise of warrants, and 15,942 shares of common stock underlying options that are or will be exercisable within 60 days held by Kairos Venture Partners II, L.P., and (iv) 254,735 shares of common stock held by Kairos-Actuate SPV L.P. Kairos Venture Investments, LLC is the manager of Kairos SPV Fund LLC; Kairos Venture Opportunities GP I, LLC is the general partner of Kairos Venture Opportunities I, L.P.; and Kairos Venture Partners GP II, LLC is the general partner of Kairos-Actuate SPV L.P. and Kairos Venture Partners II, L.P. (collectively, the “Kairos Venture Affiliated Funds”). The shares owned by Kairos Venture Affiliated Funds are aggregated for purposes of reporting share ownership information. Mr. Thomson shares voting and investment control with James Demetriades, CEO of Kairos Ventures, with respect to shares held by the Kairos Venture Affiliated Funds. The address for Kairos Venture Affiliated Funds is 9440 S. Santa Monica Blvd., Ste. 710, Beverly Hills, CA 90210. (6) Includes 76,348 shares of common stock and 15,942 shares of common stock underlying options that are exercisable within 60 days held by the Catharine A. Zabrowski Irrevocable Trust, of which Catherine A. Zabrowski, the wife of Dr. Zabrowski, is the trustee and has sole voting and investment power over such shares and options. Dr. Zabrowski may be deemed to have or share such investment and/or voting power due to the trustee’s status as his spouse. Dr. Zabrowski disclaims beneficial ownership of such shares other than to the extent he may have a pecuniary interest therein. (7) Includes 77,783 shares of common stock underlying options that are or will be exercisable within 60 days and 1,683 shares of restricted common stock that will be vested within 60 days. (8) Unless otherwise noted, the address of the beneficial owner is 1751 River Run, Suite 400, Fort Worth, Texas 76107. 132 Equity Compensation Plan Information The following table provides information as of December 31, 2024 with respect to shares of common stock that may be issued under our equity compensation plans. Plan Category (a) Number of Securities to be Issued Upon the Exercise of Outstanding Options, Warrants and Rights (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($/share) (c) Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) Equity compensation plans approved by stockholders 1,371,113 (1) $ 5.52 (2) 2,385,140 (3) Equity compensation plans not approved by stockholders – – – Total 1,371,113 – 2,385,140 (1) Consists of (a) (i) options to purchase a total of 780,539 shares of common stock under the 2015 and 2024 Plans, (ii) 46,463 shares of our common stock that are subject to unvested RSAs under the 2015 Plan, and (iii) 544,111 shares of our common stock that are subject to outstanding RSUs under the 2024 Plan. (2) The weighted average exercise price is calculated based solely on outstanding stock options. It does not take into account the shares of our common stock subject to outstanding restricted stock awards or restricted stock units, which have no exercise price. (3) Consists of 2,385,140 shares of our common stock reserved for issuance under the 2024 Plan. The 2024 Plan provides for an annual increase on the first day of each calendar year beginning January 1, 2025 and ending on and including January 1, 2034, equal to the lesser of (A) 5% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares as is determined by the administrator. These increases are not reflected in the table above. The 2015 Plan terminated prior to the IPO, and no additional awards will be granted under the 2015 Plan. Any shares under outstanding awards under the 2015 that are subsequently cancelled, forfeited or expire will become available for grant under the 2024 Plan. Item 13. Certain Relationships and Related Transactions, and Director Independence. The following includes a summary of transactions since January 1, 2023 and any currently proposed transactions, to which we were or are to be a participant, in which (i) the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years; and (ii) any of our directors, executive officers or holders of more than 5% of our capital stock, or any affiliate or member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation and other arrangements that are described under Item 11 of Part III of this Annual Report. We also describe below certain other transactions with our directors, executive officers and stockholders. 133 Convertible Promissory Note, Preferred Stock and Warrant Financings From 2015 through 2024, we entered into various financing transactions in which the Bios Equity Affiliated Funds and the Kairos Venture Affiliated Funds, each of which beneficially own more than 5% of our capital stock, participated. Dr. Fletcher, who has served as our director and chairperson of the board since April 2015, is a Co-Founder and has served as the President of Bios Research since 2012. Mr. Kreis, who served as our director from March 2015 to August 2024, is also a Co-Founder and has served as the Managing Partner of Bios Partners since 2013. Dr. Fletcher and Mr. Kreis are each deemed to beneficially own the shares and warrants held by the Bios Equity Affiliated Funds. Mr. Thomson, our director since September 2022, has served as the Chief Operating and Financial Officer of Kairos Ventures since August 2019. Mr. Thompson is deemed to beneficially own the shares and warrants held by the Kairos Venture Affiliated Funds. From September 2015 to June 2017, we issued shares of Series A redeemable convertible preferred stock to Bios Equity Affiliated Funds for a purchase price of $2.00 per share. From April 2019 to December 2020, we entered into a Series B preferred stock purchase agreement with various investors, including Bios Equity Affiliated Funds and the Kairos Venture Affiliated Funds, pursuant to which we issued and sold Series B-1, B-2, B-3 and B-4 redeemable convertible preferred stock. The Series B-1 per share purchase price was $3.66, the Series B-2 per share purchase price was $3.83, the Series B-3 per share purchase price was $4.00 and the Series B-4 per share purchase price was $4.18. Investors in the Series B-1 redeemable convertible preferred stock also received (i) warrants to purchase Series B-1 redeemable convertible preferred stock at an exercise price equivalent to $5.27 per share of common stock and (ii) warrants to purchase Series B-1 redeemable convertible preferred stock at an exercise price equivalent to $10.55 per share of common stock (collectively, referred to as the “Series B Warrants”). In May 2024, we agreed to amend the terms of the Series B Warrants to provide that they will remain exercisable for common stock for a period of two years after the closing of the IPO if they were not in the money based on the initial offering price in the IPO. From August 2022 to June 2023, we entered into a Series C preferred stock purchase agreement with various investors, including Bios Equity Affiliated Funds and the Kairos Venture Affiliated Funds, pursuant to which, in seven separate tranches, we issued and sold Series C redeemable convertible preferred stock at a price per share of $4.36. In February, March and May 2024, we issued to Bios Clinical Opportunity Fund, LP, a Bios Equity Affiliated Fund, convertible promissory notes in the aggregate principal amount of $5,500,000 (the “Bridge Notes”). The Bridge Notes accrued interest at a rate of 7% per annum and were due and payable on August 16, 2024, as amended, subject to their earlier conversion according to the terms of the Bridge Notes. Upon the closing of our IPO on August 14, 2024, (i) the Series A, B-1, B-2, B-3 and B-4 and C redeemable convertible preferred stock converted into common stock, (ii) the Series B Warrants issued at an exercise price of $5.27 per share (in-the-money warrants) were automatically exercised and settled on a cashless basis for shares of our Series B redeemable convertible preferred stock, which were subsequently converted into 26,070 shares of our common stock, (iii) the remaining out-of-the money Series B Warrants became exercisable for the same number of shares of common stock with an exercise price of $10.55 through August 13, 2026, and (iv) Bios Clinical Opportunity Fund, LP received 884,427 shares of common stock upon the conversion of the Bridge Notes, including accrued interest thereon, at a conversion price of $6.40 per share, representing 80% of the IPO price of $8.00 per share. The table below sets forth the number of shares of our Series A, B-1, B-2, B-3, B-4 and C redeemable convertible preferred stock, number of Series B Warrants and amount of the Bridge Notes acquired by the Bios Equity Affiliated Funds and Kairos Venture Affiliated Funds, as adjusted for the 1-for-1.8 reverse stock split, in each case, without giving effect to the conversion into common stock. As of February 28, 2025, we have outstanding an aggregate of approximately 19,531,636 shares of common stock and the Bios Equity Affiliated Funds beneficially hold approximately 51.26% of our outstanding shares and the Kairos Venture Affiliated Funds beneficially own approximately 13.68% of our outstanding shares. Name of Greater than 5% stockholders(1)(2) Series A Redeemable Convertible Preferred Stock (#)(3) Series B-1 Redeemable Convertible Preferred Stock (#)(3) Series B-2 Redeemable Convertible Preferred Stock (#)(3) Series B-3 Redeemable Convertible Preferred Stock (#)(3) Series B-4 Redeemable Convertible Preferred Stock (#)(2) Series B Warrants (#)(3)(4) Series C Redeemable Convertible Preferred Stock (#)(3) Principal Amount of Bridge Notes ($) Bios Equity Affiliated Funds 833,335 819,089 401,206 479,326 4,752,815 75,902 1,210,501 5,500,000 Kairos Venture Affiliated Funds – 1,058,318 726,163 355,204 363,505 56,928 74,122 – (1) Additional details regarding these stockholders and their equity holdings are provided in the section titled “Principal Stockholders.” (2) Excludes 84,917 shares of common stock held by the Bios Equity Affiliated Funds and 47,320 shares of common stock held by the Kairos Venture Affiliated Funds, each prior to the closing of the IPO on August 14, 2024. (3) Represents shares adjusted for the 1-for-1.8 reverse stock split. (4) Represents Series B Warrants outstanding prior to the closing of the IPO on August 14, 2024. In connection with the closing of the IPO, 12,952 shares of common stock were issued to the Bios Equity Affiliated Funds and 9,714 shares of common stock were issued to the Kairos Venture Affiliated Funds, each upon the automatic exercise and settlement on a cashless basis of the Series B Warrants issued at an exercise price of $5.27. As of February 28, 2025, the Bios Equity Affiliated Funds held 37,951 Series B Warrants and the Kairos Venture Affiliated Funds held 28,464 Series B Warrants, each with an exercise price of $10.55 exercisable through August 13, 2026. 134 Promissory Note Financing In August 2024, we issued to Bios Clinical Opportunity Fund, LP, a Bios Equity Affiliated Fund, a promissory note in the principal amount of $200,000 (the “August Note”). The August Note accrued interest at a rate of 7% per annum and was due and payable on the earlier of (i) the closing of the IPO or (ii) August 16, 2024. The August Note was paid in full on August 14, 2024, including accrued interest thereon. Investors’ Rights, Voting and Right of First Refusal and Co-Sale Agreements The Bios Equity Affiliated Funds and Kairos Ventures Affiliated Funds are parties to the following agreements entered into in connection with the investments described above. Investor Rights Agreement We entered into a fourth amended and restated investor rights agreement in November 2022 (the Investor Rights Agreement) with the holders of our redeemable convertible preferred stock, or the preferred stockholders. The Investor Rights Agreement provides for certain customary demand and “piggy-back” registration rights for a period of three years following our IPO, with respect to the shares of common stock underlying the redeemable convertible preferred stock owned by the preferred stockholders. All expenses incurred in connection with registrations, filings or qualifications, including (without limitation) all registration, filing and qualification fees, printer’s fees, accounting fees and fees and disbursements of our counsel and the reasonable fees and disbursements of one counsel for the selling holders not to exceed $30,000 per registration, but excluding underwriting discounts and commissions relating to registrable securities, will be borne by us. Except for the registration rights (including the related provisions pursuant to which we have agreed to indemnify the parties to the Investors’ Rights Agreement), all rights under this agreement terminated upon closing of the IPO. The registration rights have continued following our IPO and will terminate on August 14, 2027 or earlier for certain holders. Voting Agreement We entered into a fourth amended and restated voting agreement in November 2022 (the Voting Agreement) with the preferred stockholders. Through the date of the IPO, our Board consisted of five members. The holders of the Series A Preferred Stock, voting as a separate class, were entitled to elect one member of the Board, with the initial director being Dr. Fletcher, the holders of the Series B Preferred Stock, voting as a separate class, were entitled to elect two members of the Board, with the initial directors being Messrs. Kreis, Jr. and Thomson, and the holders of the Series C Preferred Stock, voting as a separate class, were entitled to elect one member of the Board. No director was elected by the holders of the Series C Preferred Stock. The holders of common stock, voting as a separate class, were entitled to elect one member of the Board, with the initial director being Mr. Schmitt. The holders of the Preferred Stock and the common stock voting together as a single class on an as-converted basis were also entitled to elect one additional “independent” director, as such term is defined in the Exchange Act, with the initial director being Dr. Zabrowski. The Voting Agreement terminated upon the closing of the IPO, and members previously elected to the Board pursuant to the Voting Agreement will continue to serve as directors until they resign, are removed or their successors are duly elected by holders of our common stock. The composition of our board of directors is described in more detail in Item 10 of Part III of this Annual Report. 135 Right of First Refusal and Co-Sale Agreement We entered into a fourth amended and restated right of first refusal and co-sale agreement in November 2022 (the ROFR and Co-Sale Agreement) with Mr. Schmitt, Dr. Mazar and Dr. Francis Giles, each referred to in the ROFR and Co-Sale Agreement as a key holder, and certain holders of our preferred stock that individually or together with their respective affiliates, hold at least 379,513 shares of common stock (on an as-converted basis), which holders are referred to in the ROFR and Co-Sale Agreement as major investors. Pursuant to the ROFR and Co-Sale Agreement, the major investors had a right of first refusal on certain transfers of our shares by the key holders, and if any shares proposed to be transferred by a key holder is not purchased pursuant to the major investors’ right of first refusal and is to be sold to a prospective transferee, the major investors have a right of co-sale in respect of such transfers. The ROFR and Co-Sale Agreement terminated upon the closing of our IPO. Participation in our Initial Public Offering In August 2024, the Bios Equity Affiliated Funds purchased 500,000 shares of our common stock in the IPO at the initial public offering price of $8.00 per share. Indemnification Agreements We have entered into indemnification agreements with each of our current directors and executive officers. Our amended and restated certificate of incorporation and our amended and restated bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by applicable law. Policies and Procedures for Related Party Transactions We have adopted a written related-person transactions policy, which became effective upon the closing of our IPO, that sets forth our policies and procedures regarding the identification, review, consideration and oversight of “related-person transactions.” For purposes of our policy only, a “related-person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any “related person” are participants involving an amount that exceeds $120,000. Transactions involving compensation for services provided to us as an employee, consultant or director are not considered related-person transactions under this policy. A related person is any executive officer, director, nominee to become a director or a holder of more than five percent of our common stock, including any of their immediate family members and affiliates, including entities owned or controlled by such persons. Under the policy, where a transaction has been identified as a related-person transaction, management must present information regarding the proposed related-person transaction to our audit committee (or, where review by our audit committee would be inappropriate, to another independent body of our board of directors) for review. The presentation must include a description of, among other things, all of the parties thereto, the direct and indirect interests of the related persons, the purpose of the transaction, the material facts, the benefits of the transaction to us and whether any alternative transactions are available, an assessment of whether the terms are comparable to the terms available from unrelated third parties and management’s recommendation. To identify related-person transactions in advance, we rely on information supplied by our executive officers, directors and certain significant stockholders. In considering related-person transactions, our audit committee or another independent body of our board of directors takes into account the relevant available facts and circumstances including, but not limited to: • the risks, costs and benefits to us; • the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated; • the terms of the transaction; • the availability of other sources for comparable services or products; and • the terms available to or from, as the case may be, unrelated third parties. In the event a director has an interest in the proposed transaction, the director must recuse himself or herself from the deliberations and approval. 136 Director Independence We utilize the Nasdaq listing rules in determining whether a director is independent. The Nasdaq rules generally define an “independent director” as a person, other than an executive officer of a company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Mr. Schmitt is not considered to be independent due to his role as an executive officer of the Company. The Board has determined that each of Dr. Fletcher, Mr. Thomson, Dr. Zabrowski, Mr. Keyes, Dr. Sawhney and Ms. Ronneberg qualifies as an independent director, and that the Board currently consists of a majority of independent directors, as such term is defined under the Nasdaq rules. In making this determination, our Board considered the current and prior relationships, as applicable, that each of Dr. Fletcher, Mr. Thomson, Dr. Zabrowski, Mr. Keyes, Dr. Sawhney and Ms. Ronneberg has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including their beneficial ownership of our capital stock. In addition, we are subject to the rules of the SEC and Nasdaq relating to the membership, qualifications, and operations of the audit committee, the compensation committee, and the nominating and corporate governance committee, as discussed below. Item 14. Principal Accountant Fees and Services. The following table is a summary and description of fees for services provided by of each of KMJ Corbin & Company LLP (“KMJ”) and Crowe LLP (“Crowe”), our independent registered public accounting firms, for each of the last two fiscal years for audit services and billed to us in each of the last two fiscal years for other services. On May 20, 2024, the partners and professional staff of KMJ joined Crowe. The Company continued to receive services from KMJ until it resigned as the Company’s independent registered public accounting firm on August 19, 2024. In connection with the resignation of KMJ, the Company’s Audit Committee appointed Crowe to serve as the Company’s independent registered public accounting firm effective August 19, 2024 for the fiscal year ended December 31, 2024. Fees paid to KMJ Corbin & Company LLP were as follows: Year Ended December 31, 2024 2023 Audit fees (1) $ 147,258 $ 51,939 Audit-related fees (2) – – Tax fees (3) – – All other fees – – Total fees $ 147,258 $ 51,939 137 Fees paid to Crowe LLP were as follows: Year Ended December 31, 2024 Audit fees (1) $ 178,500 Audit-related fees (2) – Tax fees (3) – All other fees – Total fees $ 178,500 (1) Audit fees pertain to the aggregate fees by our principal accountants for professional services rendered for the audit of our annual consolidated financial statements on Form 10-K, and reviews of quarterly consolidated financial statements included in our reports on Form 10-Q, and audit services provided in connection with other statutory or regulatory filings, such as registration statements. (2) This category of services would include, among others: employee benefit plan audits, due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services related to financial reporting that are not required by statute or regulation and consultation concerning financial accounting and reporting standards. (3) This category consists of fees for professional services rendered for tax compliance and tax advice. All fees described above were pre-approved by the Audit Committee since the closing of the IPO and adoption of the Audit Committee Charter. Audit Committee Pre-Approval of Audit and Non-Audit Services The Audit Committee must pre-approve the audit and non-audit services rendered by our independent registered public accounting firm. 138 PART IV Item 15. Exhibits and Financial Statement Schedules. (1) Financial Statements. The consolidated financial statements of Actuate Therapeutics, Inc. filed as part of this Report are listed on the Index to Financial Statements on page F-1. (2) Finance Statement Schedules. All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (3) Exhibits. The exhibits filed or furnished as part of this Report are set forth below. Exhibit Number Description of Document 3.1 Sixth Amended and Restated Certificate of Incorporation (incorporated by reference from our Current Report on Form 8-K as filed on August 14, 2024) 3.2 Amended and Restated Bylaws of Actuate Therapeutics, Inc. (incorporated by reference from our Current Report on Form 8-K as filed on August 14, 2024) 4.1 Form of Common Stock Certificate of the registrant (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on June 11, 2024) 4.2 Fourth Amended and Restated Investors’ Rights Agreement, by and between the Registrant and certain of its stockholders, dated November 30, 2022 (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on May 24, 2024) 4.3 Form of Representative Warrant issued to underwriter under IPO (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on June 11, 2024) 4.4 Form of Second Amended and Restated Warrant issued to holders of Convertible Redeemable Preferred Stock (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on June 11, 2024) 4.5* Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 10.1± Exclusive License Agreement with Equity, dated April 6, 2015, as amended, between The Board of Trustees of the University of Illinois and the Registrant (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on July 16, 2024) 10.2± License Agreement, dated March 31, 2015, as amended, between Northwestern University and the Registrant (incorporated by reference to the Registrant’s Registration Statement on Form S-1, filed with the SEC on May 24, 2024) 10.3+ Actuate Therapeutics, Inc. 2015 Equity Incentive Plan, as amended, and form of grant agreements thereunder (incorporated by reference to the Registrant’s Registration Statement on Form S-1, filed with the SEC on May 24, 2024) 10.4+ Actuate Therapeutics, Inc. 2024 Equity Incentive Plan (incorporated by reference to the Registrant’s Registration Statement on Form S-1, filed with the SEC on May 24, 2024) 10.5+ Form of Stock Option Agreement under the Actuate Therapeutics, Inc. 2024 Stock Incentive Plan (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on June 11, 2024) 10.6+ Form of Restricted Stock Unit Agreement under the Actuate Therapeutics, Inc. 2024 Stock Incentive Plan (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on June 11, 2024) 10.7+ Non-Employee Director Compensation Policy (incorporated by reference to the Registrant’s Registration Statement on Form S-1/A, filed with the SEC on June 21, 2024) 139 Exhibit Number Description of Document 10.8+ Employment Agreement, effective April 15, 2015 and as amended on each of February 5, 2016, September 28, 2017, September 23, 2018, January 29, 2019, August 1, 2022, January 27, 2023 December 12, 2023 and May 9, 2024, between Daniel Schmitt, and the Registrant (incorporated by reference to the Registrant’s Registration Statement on Form S-1, filed with the SEC on May 24, 2024) 10.9+ Employment Agreement, effective June 1, 2022, between Andrew P. Mazar, Ph.D., and the Registrant (incorporated by reference to the Registrant’s Registration Statement on Form S-1, filed with the SEC on May 24, 2024) 10.10+ Employment Agreement, effective June 1, 2024, between Paul Lytle, and the Registrant (incorporated by reference to the Registrant’s Registration Statement on Form S-1, filed with the SEC on May 24, 2024) 10.11 Form of Indemnification Agreement for Directors and Officers (incorporated by reference to the Registrant’s Registration Statement on Form S-1, filed with the SEC on May 24, 2024) 19.1* Insider Trading Policy 21.1* Subsidiaries of the Registrant 23.1* Consent of Crowe LLP, Independent Registered Public Accounting Firm 23.2* Consent of KMJ Corbin & Company LLP, Independent Registered Public Accounting Firm 24.1* Power of Attorney (included on the signature page of this Annual Report on Form 10-K). 31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended 31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended 32* 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 97.1* Clawback Policy of Actuate Therapeutics, Inc. 101.INS* XBRL Instance Document 101.SCH* XBRL Schema Document 101.CAL* XBRL Calculation Linkbase Document 101.DEF* XBRL Definition Linkbase Document 101.LAB* XBRL Label Linkbase Document 101.PRE* XBRL Presentation Linkbase Document _____________________ * Filed herewith + Indicates management contract or compensatory plan. ± Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K on the basis that they are not material and would likely cause competitive harm to the registrant if disclosed. Item 16. Form 10-K Summary. None. 140 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. Dated: March 13, 2025 ACTUATE THERAPEUTICS, INC. /s/ Daniel M. Schmitt Daniel M. Schmitt. President and Chief Executive Officer, Director (Principal Executive Officer) SIGNATURES AND POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Daniel M. Schmitt and Paul Lytle, and each of them, his or her true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Name Position Date /s/ Daniel M. Schmitt President, Chief Executive Officer and Director (principal executive officer) March 13, 2025 Daniel M. Schmitt /s/ Paul Lytle Chief Financial Officer (principal financial and accounting officer) March 13, 2025 Paul Lytle /s/ Aaron G. L. Fletcher Director and Chairperson March 13, 2025 Aaron G.L. Fletcher, Ph.D. /s/ Jason Keyes Director March 13, 2025 Jason Keyes /s/ Amy Ronneberg Director March 13, 2025 Amy Ronneberg /s/ Roger Sawhney Director March 13, 2025 Roger Sawhney /s/ Todd Thomson Director March 13, 2025 Todd Thomson /s/ Daniel Zabrowski Director March 13, 2025 Daniel Zabrowski, Ph.D. 141 ACTUATE THERAPEUTICS, INC. INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 173 ) F-2 Report of Independent Registered Public Accounting Firm (PCAOB ID 170 ) F-3 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-4 Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 F-5 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2024 and 2023 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-7 Notes to the Consolidated Financial Statements F-8 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Stockholders and the Board of Directors of Actuate Therapeutics, Inc. Fort Worth, Texas Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Actuate Therapeutics Inc. (the “Company”) as of December 31, 2024, the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring operating losses, has had negative operating cash flows and has not recognized any revenues since its inception. In addition, the Company has an accumulated deficit of $132,379,849 as of December 31, 2024 and is dependent on its ability to raise capital. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. Management has concluded there is substantial doubt regarding the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Crowe LLP We have served as the Company’s auditor since 2024. Costa Mesa, California March 13 , 2025 F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Actuate Therapeutics, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Actuate Therapeutics, Inc. and subsidiary (the “Company”) as of December 31, 2023, the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ deficit and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring operating losses, has had negative operating cash flows and has not recognized any revenues since its inception. In addition, the Company has an accumulated deficit of $105,094,521 as of December 31, 2023 and is dependent on its ability to raise capital. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ KMJ Corbin & Company LLP We served as the Company’s auditor from 2021 to 2024. Glendora, California February 29, 2024 (except for the retroactive effect of the 1-for-1.8 reverse stock split as described in the “Reverse Stock Split” section of Note 1, as to which the date is June 7, 2024, and except for Note 14, as to which the date is March 13, 2025) F- 3 Actuate Therapeutics, Inc. Consolidated Balance Sheets December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 8,641,622 $ 2,958,659 Prepaid assets and other current assets 566,278 36,907 Total current assets 9,207,900 2,995,566 Other assets 110,548 – Total assets $ 9,318,448 $ 2,995,566 LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 1,921,189 $ 3,421,840 Other accrued expenses 5,921,908 3,221,254 Accrued compensation 888,449 277,500 Accrued interest, current 70,957 – Total current liabilities 8,802,503 6,920,594 Long term liabilities: Warrant liability – 988,049 Accrued interest, less current portion 6,768 130,041 License payable 404,991 404,991 Total long-term liabilities 411,759 1,523,081 Total liabilities 9,214,262 8,443,675 Commitments and contingencies (Note 6) – Redeemable convertible preferred stock, $ 0.000001 par value; no shares authorized, issued or outstanding at December 31, 2024; 33,463,018 shares authorized and 24,678,355 shares issued and outstanding at December 31, 2023; aggregate liquidation value of $ 0 and $ 121,033,336 as of December 31, 2024 and 2023, respectively – 94,178,404 Stockholders’ equity (deficit): Preferred stock, $ 0.000001 par value; 10,000,000 shares authorized, no shares issued or outstanding at December 31, 2024; no shares authorized, issued or outstanding at December 31, 2023 – – Common stock: $ 0.000001 par value, 200,000,000 shares authorized, 19,531,636 shares issued and outstanding at December 31, 2024; 38,108,584 shares authorized and 1,690,760 shares issued and outstanding at December 31, 2023 20 2 Additional paid-in capital 132,484,015 5,468,006 Accumulated deficit ( 132,379,849 ) ( 105,094,521 ) Total stockholders’ equity (deficit) 104,186 ( 99,626,513 ) Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) $ 9,318,448 $ 2,995,566 See accompanying notes to consolidated financial statements. F- 4 Actuate Therapeutics, Inc. Consolidated Statements of Operations Year Ended December 31, 2024 2023 Operating expenses: Research and development $ 18,676,276 $ 21,708,332 General and administrative 6,484,458 3,265,497 Total operating expenses 25,160,734 24,973,829 Loss from operations ( 25,160,734 ) ( 24,973,829 ) Other income (expense): Change in estimated fair value of warrant liability ( 78,903 ) ( 79,822 ) Gain on settlement of warrants 343,240 – Loss on issuance of related party convertible notes payable at fair value ( 400,000 ) – Change in estimated fair value of related party convertible notes payable ( 2,192,507 ) – Interest expense ( 18,717 ) ( 43,641 ) Interest income 222,293 352,672 Total other income (expense), net ( 2,124,594 ) 229,209 Net loss $ ( 27,285,328 ) $ ( 24,744,620 ) Weighted-average shares of common stock outstanding, basic and diluted 8,372,741 1,434,964 Net loss per share attributable to common stockholders, basic and diluted $ ( 3.26 ) $ ( 17.24 ) See accompanying notes consolidated financial statements. F- 5 Actuate Therapeutics, Inc. Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) Redeemable Convertible Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholders’ Equity Shares Amount Shares Amount Capital Deficit (Deficit) Balances, December 31, 2022 23,656,337 $ 90,137,751 1,690,760 $ 2 $ 5,044,467 $ ( 80,349,901 ) $ ( 75,305,432 ) Proceeds from issuances of redeemable convertible preferred stock, net of issuance costs of $ 321,500 1,022,018 4,134,516 – – – – – Fair market value of warrants issued to placement agent in conjunction with issuance of redeemable convertible preferred stock – ( 93,863 ) – – – – – Stock-based compensation expense – – – – 423,539 – 423,539 Net loss – – – – – ( 24,744,620 ) ( 24,744,620 ) Balances, December 31, 2023 24,678,355 94,178,404 1,690,760 2 5,468,006 ( 105,094,521 ) ( 99,626,513 ) Issuance of common stock in initial public offering, net of underwriting discounts, commissions and offering costs of $ 3,734,389 – – 3,220,000 3 22,025,608 – 22,025,611 Conversion of redeemable convertible preferred stock into common stock upon closing of initial public offering ( 24,678,355 ) ( 94,178,404 ) 13,710,379 14 94,178,390 – 94,178,404 Conversion of related party convertible notes payable into common stock upon closing of initial public offering – – 884,427 1 8,092,506 – 8,092,507 Reclassification of warrant liability to equity upon exchange of warrants to purchase redeemable convertible preferred stock for warrants to purchase common stock upon closing of initial public offering – – – – 485,172 – 485,172 Exercise of in-the-money warrants to purchase redeemable convertible preferred stock and conversion into common stock upon closing of initial public offering – – 26,070 – 238,540 – 238,540 Stock-based compensation expense – – – – 1,995,793 – 1,995,793 Net loss – – – – – ( 27,285,328 ) ( 27,285,328 ) Balances, December 31, 2024 – $ – 19,531,636 $ 20 $ 132,484,015 $ ( 132,379,849 ) $ 104,186 See accompanying notes to consolidated financial statements. F- 6 Actuate Therapeutics, Inc. Consolidated Statements of Cash Flows Year Ended December 31, 2024 2023 Operating Activities: Net loss $ ( 27,285,328 ) $ ( 24,744,620 ) Adjustment to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 1,995,793 423,539 Change in estimated fair value of warrant liability 78,903 79,822 Gain on settlement of warrant liability ( 343,240 ) – Loss on issuance of related party convertible notes payable at fair value 400,000 – Change in estimated fair value of related party convertible notes payable 2,192,507 – Interest accrued on license payable 18,641 43,641 Changes in operating assets and liabilities: Prepaid assets and other current assets ( 529,371 ) ( 3,161 ) Other assets ( 110,548 ) – Accounts payable ( 1,500,651 ) 1,290,993 Accrued compensation 610,949 145,467 Accrued interest ( 70,957 ) – Other accrued expenses 2,700,654 1,139,152 Net cash used in operating activities ( 21,842,648 ) ( 21,625,167 ) Financing Activities: Proceeds from initial public offering, net of underwriting discounts and commissions 23,956,800 – Payment of offering costs related to initial public offering ( 1,931,189 ) – Proceeds from issuance of related party short-term loan 200,000 – Payment of related party short-term loan ( 200,000 ) – Proceeds from issuances of related party convertible notes payable 5,500,000 – Proceeds from issuances of redeemable convertible preferred stock, net – 4,134,516 Net cash provided by financing activities 27,525,611 4,134,516 Net change in cash and cash equivalents 5,682,963 ( 17,490,651 ) Cash and cash equivalents, beginning of period 2,958,659 20,449,310 Cash and cash equivalents, end of period $ 8,641,622 $ 2,958,659 Supplemental disclosure of cash flow information: Cash paid for interest $ 71,033 $ – Cash paid for income taxes $ 800 $ – Supplemental Schedule of Noncash Financing Activities: Conversion of redeemable convertible preferred stock into common stock upon initial public offering $ 94,178,404 $ – Reclassification of warrant liability to equity upon exchange of not in-the-money Series B and Series C Redeemable Convertible Preferred Stock Warrants for warrants to purchase common stock $ 485,172 $ – Exercise of in-the-money warrants to purchase redeemable convertible preferred stock and conversion into common stock upon initial public offering $ 238,540 $ – Conversion of related party convertible notes payable into common stock upon initial public offering $ 8,092,507 $ – Estimated fair market value of warrants issued to placement agent in connection with issuance of redeemable convertible preferred stock $ – $ 93,863 See accompanying notes consolidated financial statements. F- 7 Actuate Therapeutics, Inc. Notes to the Consolidated Financial Statements For The Years Ended December 31, 2024 and 2023 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Actuate Therapeutics, Inc. (the “Company”) was incorporated in the State of Delaware on January 16, 2015 and is headquartered in Fort Worth, Texas. The Company is a clinical-stage biopharmaceutical company focused on developing novel therapies for the treatment of cancers through the inhibition of glycogen synthase kinase-3 (“GSK-3”). The Company’s lead investigational product, elraglusib (formerly 9-ING-41), is a small molecule that is designed to enter cancer cells and block the function of the enzyme GSK-3β, thereby causing the death of the cancer cells and the regulation of anti-tumor immunity. The Company has a 100 %-owned Irish subsidiary, Actuate Therapeutics Limited, that is currently dormant. Reverse Stock Split On May 31, 2024, the Company’s board of directors approved a 1-for-1.8 reverse stock split of its issued and outstanding shares of common stock and stock option awards, which was effected on June 7, 2024. All issued and outstanding shares of common stock (including outstanding restricted stock awards), stock option awards and per share data have been adjusted in these audited consolidated financial statements, on a retrospective basis, to reflect the reverse stock split for all periods presented. The par value of the common stock and preferred stock was not adjusted as a result of the reverse stock split. The shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities. In addition, the conversion ratios for each series of the Company’s Redeemable Convertible Preferred Stock (see Note 8), which automatically converted into shares of common stock upon the closing of the Company’s initial public offering (“IPO”), were proportionally adjusted. Stockholders entitled to fractional shares as a result of the reverse stock split were rounded up to the nearest whole share. Initial Public Offering On August 14, 2024, the Company completed the closing of its IPO of 2,800,000 shares of common stock at an initial offering price to the public of $8.00 per share, before the underwriters discount of $0.56 per share. Additionally, the underwriters exercised their option (“Overallotment Option”) to purchase an additional 420,000 shares at the same price of $8.00 per share less the underwriters discount on September 12, 2024. The Company’s common shares began trading on the Nasdaq Global Market on August 13, 2024, under the symbol “ACTU”. The Company received net proceeds of approximately $ 22 million, after deducting discounts and commissions of approximately $1.8 million and other offering expenses of approximately $1.9 million (or approximately $ 3.7 million in aggregate) for the issuance of 3,220,000 shares of common stock of the Company, including shares issued under the Overallotment Option. Upon the closing of the Company’s IPO and Overallotment Option, the Company issued the underwriters warrants to purchase up to 161,000 shares of common stock, representing 5% of the shares of common stock issued under the IPO and Overallotment Option, at an exercise price of $ 10.00 per share (see Note 9). In addition, the Company’s Redeemable Convertible Preferred Stock (see Note 8), Related Party Convertible Notes Payable (see Note 5) and in-the-money warrants to purchase the Company’s Redeemable Convertible Preferred Stock (see Note 9) converted into or were automatically exercised for, as applicable, common stock immediately prior to the closing of the IPO. F- 8 Authorized Capital Effective upon the closing of the Company’s IPO, the Company’s authorized capital consists of 200,000,000 shares of common stock, $ 0.000001 par value per share, and 10,000,000 shares of preferred stock, $ 0.000001 par value per share. Basis of Presentation The Company’s consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the financial position, results of operations and cash flows for all periods presented. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Going Concern and Management’s Plans The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2024, the Company had cash and cash equivalents of $ 8,641,622 and working capital of $ 405,397 . The Company has not generated any revenue and has incurred recurring operating losses since inception. The Company expects to continue to incur losses for the foreseeable future and therefore, the Company’s ability to continue its operations is highly dependent on its ability to raise additional capital to fund its future operations. During the year ended December 31, 2024, the Company issued convertible promissory notes of $ 5,500,000 in aggregate to a related party (the “Related Party Convertible Notes Payable”) in exchange for proceeds of $ 5,500,000 , which automatically converted into 884,427 shares of common stock upon the closing of the IPO (see Note 5). On August 14, 2024 and September 12, 2024, the Company received net proceeds of approximately $ 18.9 million and $ 3.1 million upon the closing of the IPO and Overallotment Option, respectively, after deducting discounts and commissions and other estimated offering expenses of approximately $ 3.5 million and $ 0.2 million, respectively. Management anticipates, based on currently proposed plans and assumptions, that our cash and cash equivalents on hand will not satisfy the Company’s operational and capital requirements beyond the second quarter of fiscal year 2025. As the Company continues to pursue its business plan, it expects to finance its operations through equity offerings, debt financings, or other capital sources. However, there can be no assurance that any additional financing will be available to the Company on acceptable terms, if at all. If events or circumstances occur such that the Company does not obtain additional funding, it may be necessary to significantly reduce its scope of operations to reduce the current rate of spending through actions such as the need to delay, limit, reduce or terminate its product development, which could have a material adverse effect on the Company’s business, results of operations or financial condition. Based on the above matters, we have concluded that there is substantial doubt regarding the Company’s ability to continue as a going concern for a year from the date the financial statements were issued. F- 9 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Actuate Therapeutics, Inc. and its wholly owned subsidiary, Actuate Therapeutics Limited. All material intercompany accounts and transactions have been eliminated in the consolidated financial statements. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and judgements that affect the reported amounts of assets, liabilities, expenses, and related disclosures in the accompanying notes. The Company bases its estimates, assumptions and judgements on historical experience when available and on various factors that it believes to be reasonable under the circumstances as of the date of the accompanying consolidated financial statements including the fair value of its common stock, fair value of the warrant liability, fair value of Related Party Convertible Notes Payable, stock-based compensation expense, accrued expenses (including accrued expenses related to research and development (“R&D”) as described below), and the recoverability of the Company’s net deferred tax assets and related valuation allowance. In addition, other factors may affect estimates, including the expected business and operational changes, the sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Actual results could differ materially from the estimates and assumptions used in the preparation of the accompanying consolidated financial statements under different assumptions or conditions. Accrued Expenses Related to R&D Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate our R&D expenses as of each balance sheet date. This process involves reviewing open contracts, including clinical site contracts, and communicating with our personnel to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. We make estimates of our R&D expenses as of each balance sheet date based on facts and circumstances known to us at that time. The significant estimates in our R&D expenses include the costs incurred for services performed by our vendors in connection with services for which we have not yet been invoiced. We base our expenses related to R&D activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with contractors and vendors that conduct R&D on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows. Advance payments for goods and services that will be used in future R&D activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred. Segment Reporting and Geographic Concentrations The Company manages its operations as a single operating segment in the U.S. (see Note 14). Cash and Cash Equivalents The Company considers all highly liquid investments acquired with a maturity of three months or less from the purchase date that can be liquidated without prior notice or penalty to be cash equivalents. Cash and cash equivalents includes bank demand deposits, U.S. treasury bills and money market funds that invest primarily in U.S. government treasuries. F- 10 Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company deposits cash and cash equivalents with high credit quality financial institutions in the U.S. Deposits held in checking and money market accounts may, from time to time, exceed the federally insured amounts. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant risk in its cash and cash equivalents. The primary objectives of the Company’s investment portfolio are the preservation of capital and maintenance of liquidity. The Company is subject to risks common to companies in the biopharmaceutical industry, including, but not limited to, risks related to the successful development and commercialization of product candidates, fluctuations in operating results and financial risks, the ability to successfully raise additional funds when needed, protection of proprietary rights and patent risks, patent litigation, compliance with government regulations, dependence on key personnel and collaboration partners, and competition from competing products in the marketplace. Deferred Offering Costs The Company capitalized as deferred offering costs all direct and incremental legal, professional, accounting and other third-party fees incurred in connection with the Company’s IPO. Deferred offering costs were offset against IPO proceeds upon the closing of the IPO. Upon closing of the Company’s IPO in August 2024, deferred offering costs of $ 1,931,189 were transferred to additional paid-in capital to offset the IPO proceeds. Fair Value of Financial Instruments Authoritative guidance requires disclosure of the fair value of financial instruments. The Company applies fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The carrying amount of certain of the Company’s financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, approximate their estimated fair values primarily due to the short-term nature of the instruments or based on information obtained from market sources and management estimates. The Related Party Convertible Notes Payable (see Note 5) and the Redeemable Convertible Preferred Stock Warrant Liability (see Note 9) were carried at fair value until the closing of the IPO based on unobservable market inputs. The Company measures the fair value of certain of its financial liabilities on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value which is not equivalent to cost will be classified and disclosed in one of the following three categories: · Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities; · Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and · Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation. The Company reviews the fair value hierarchy classification at each reporting date. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value measurement hierarchy during the years presented. F- 11 Comprehensive Loss There were no differences between net loss and comprehensive loss presented in the consolidated statements of operations for the years ended December 31, 2024 and 2023. R&D Expenses In accordance with authoritative guidance, the Company charges research and development costs to operations as incurred. Research and development expenses consist primarily of personnel and related costs, external costs of outside vendors engaged clinical trials, contract manufacturers, consultants and other third parties to conduct and support our clinical trials and preclinical studies. Patent Costs Patent fees and patent related costs in connection with filing and prosecuting patent applications are expensed as incurred and are classified as general and administrative expenses in the accompanying consolidated statements of operations. Fair Value Option of Accounting for Related Party Convertible Notes Payable When financial instruments contain various embedded derivatives which may require bifurcation and separate accounting of those derivatives apart from the entire host instrument, if eligible, ASC 825, Financial Instruments (“ASC 825”) allows issuers to elect the fair value option (“FVO”) of accounting for those instruments. The FVO may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. The FVO allows the issuer to account for the entire financial instrument at fair value with subsequent remeasurements of that fair value recorded through the statements of operations at each reporting period until the conversion or payment of the Related Party Convertible Notes Payable balance. A financial instrument is generally eligible for the FVO if, amongst other factors, no part of the convertible, or contingently convertible, instrument is classified in stockholders’ equity. Based on the eligibility assessment discussed above, the Company concluded that its Related Party Convertible Notes Payable were eligible for the FVO and accordingly elected to apply the FVO to its Related Party Convertible Notes Payable in accordance with ASC 825. Accordingly, the Related Party Convertible Notes Payable were measured at fair value on their issuance dates and remeasured at estimated fair value at the end of each reporting period with changes in fair value recognized as a component of other income (expense) in the consolidated statements of operations. The primary reason for electing the fair value option was to address simplification and cost-benefit considerations that result from accounting for hybrid financial instruments at fair value in their entirety versus bifurcation of the embedded derivatives from the debt hosts. The estimated fair values of the Related Party Convertible Notes Payable are determined using valuation models that incorporated assumptions and estimates. The Company assessed these assumptions and estimates at each financial reporting period as additional information impacting the assumptions was obtained. Assumptions in the models included but were not limited to equity value, volatility, time to a conversion event, risk-free rate and scenario weightings. The fair value measurements of the Related Party Convertible Notes Payable were based on significant inputs that were not observable in the market and represented a Level 3 measurement (see Note 5). The change in fair value related to accrued interest was also included within the single line of change in fair value of Related Party Convertible Notes Payable in the consolidated statements of operations. In addition, in certain circumstances, the estimated fair value at issuance may be greater than the face value at issuance. The loss on issuance of the Related Party Convertible Notes Payable of $ 400,000 recorded during year ended December 31, 2024 represented the difference between the estimated fair value of the Related Party Convertible Notes Payable and the gross proceeds received on the issuance date based on the assumptions, including the proximity in time to the anticipated IPO, the discount on conversion of the Related Party Convertible Notes Payable, and the increased probability-weighted IPO scenario. In connection with the closing of the Company’s IPO on August 14, 2024, the Related Party Convertible Notes Payable were converted into common stock and no amounts are outstanding as of December 31, 2024 (see Note 5). F- 12 Redeemable Convertible Preferred Stock The Company recorded all shares of Redeemable Convertible Preferred Stock at their respective fair values on the dates of issuance, net of issuance costs. Redeemable Convertible Preferred Stock was recorded outside of permanent equity because while it was not mandatorily redeemable, in certain events considered not solely within the Company’s control, such as a merger, acquisition, or sale of all or substantially all of the Company’s assets, each referred to as a “deemed liquidation event,” the Redeemable Convertible Preferred Stock could become redeemable at the option of the holders of at least a majority of the then outstanding preferred shares. The Company did not adjust the carrying value of the Redeemable Convertible Preferred Stock to its liquidation preference because a deemed liquidation event obligating the Company to pay the liquidation preference to holders of shares of Redeemable Convertible Preferred Stock did not occur prior to conversion and was subsequently not triggered upon the closing of the Company’s IPO when all shares of Redeemable Convertible Preferred Stock converted into shares of common stock (see Note 8). Redeemable Convertible Preferred Stock Warrants The Company’s Redeemable Convertible Preferred Stock Warrants (see Note 9) required liability classification and accounting as the underlying Redeemable Convertible Preferred Stock was considered contingently redeemable and could have obligated the Company to transfer assets to the holders at a future date upon occurrence of a deemed liquidation event. The warrants were recorded at their estimated fair value upon issuance and were subject to remeasurement to estimated fair value at each balance sheet date, with changes in the estimated fair value recognized as a component of other income (expense) in the accompanying consolidated statements of operations. The Company adjusted the warrant liability for changes in estimated fair value until the earlier of the exercise, conversion, or expiration of the Redeemable Convertible Preferred Stock Warrants. In July 2024, the Redeemable Convertible Preferred Stock Warrants were amended to provide that if underlying Redeemable Convertible Preferred Stock Warrants were out-of-the-money based on the initial public offering price in the IPO, the out-of-the-money Redeemable Convertible Preferred Stock Warrants would convert into warrants to purchase common stock with an exercise price per share that reflected the Conversion Ratio (see Note 8) then in effect for the underlying Redeemable Convertible Preferred Stock. Accordingly, the Redeemable Convertible Preferred Stock Warrants were remeasured upon the closing of the IPO and marked to market to their fair value before being reclassified to equity. Stock-Based Compensation In April 2015 and August 2024, the Company’s Board of Directors (“Board”) adopted the 2015 Stock Incentive Plan (“2015 Plan”) and the 2024 Stock Incentive Plan (“2024 Plan”), respectively, which are more fully described in Note 10. The Company periodically grants equity-based payment awards in the form of restricted common stock awards (“RSAs”), restricted stock units (“RSUs”), and stock options to employees, directors and non-employees and records stock-based compensation expenses for awards of stock-based payments based on their estimated fair value at the grant date. The estimated fair value of service-based RSAs is measured at the grant date based on the estimated fair market value of the Company’s common stock on the date of grant and is recognized as expense over the requisite service period, which is generally the awards’ vesting period. The estimated fair value of performance-based RSAs is measured at the grant date based on the estimated fair value of shares expected to be earned at the end of the performance period, and is recognized as expense ratably over the performance period based upon the probable number of shares expected to vest. The Company accounts for the grant of stock options based on the estimated fair value of the underlying option using the Black-Scholes valuation model on the date of grant and are recognized as expense in the consolidated statement of operations on a straight-line basis over the requisite service period, which is the vesting period. The Black-Scholes valuation model requires the input of subjective assumptions, including expected volatility, expected dividend yield, expected term, risk-free rate of return and the estimated fair value of the underlying common stock on the date of grant. Prior to the IPO, the Company regularly engaged a third-party valuation specialist to assist with estimates related to the valuation of the Company’s common stock. F- 13 The Company classifies stock-based compensation expense in the consolidated statements of operations in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified. The Company recognizes forfeitures related to stock-based compensation awards as they occur. Net Loss Per Share Attributable to Common Stockholders Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, Redeemable Convertible Preferred Stock, convertible notes payable, warrants to purchase Redeemable Convertible Preferred Stock, unvested RSAs, and outstanding stock options and RSUs are considered to be potentially dilutive securities (see Note 11). Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as the Redeemable Convertible Preferred Stock and common stock subject to repurchase are considered participating securities. The Redeemable Convertible Preferred Stock did not have a contractual obligation to share in the Company’s losses, and unvested RSAs subject to repurchase is considered an unvested stock-based compensation award for accounting purposes. As such, the net loss is attributed entirely to common stockholders. Because the Company has reported a net loss for the reporting periods presented, the diluted net loss per common share is the same as basic net loss per common share for those periods. Income Taxes The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). In accordance with authoritative guidance, deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and tax bases of assets and liabilities using the current enacted tax rate expected to be in effect when the differences are expected to reverse. A valuation allowance is recorded on deferred tax assets unless realization is considered more likely than not. The Company evaluates its tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are not recorded as a tax benefit or expense in the current year. The Company recognizes interest and penalties, if any, related to uncertain tax positions in interest expense. No interest and penalties related to uncertain tax positions were accrued at either December 31, 2024 or 2023. The Company follows authoritative guidance which requires the evaluation of existing tax positions. The Company files in the federal and various state jurisdictions. Management has analyzed all open tax years, as defined by the statute of limitations, for all major jurisdictions. Open tax years are those that are open for examination by taxing authorities. Tax years covering the years from 2020 to 2024 are the only open years for the Company as of the issuance date of these consolidated financial statements. The Company also has elected to utilize research credits against the employer portion of payroll tax as it is considered a qualified small business under the Internal Revenue code. Due to the uncertainty of utilizing the research credits, the Company accounts for the credits against research and development expenses in the accompanying consolidated financial statements when the related expense is incurred. F- 14 Recently Adopted Accounting Standards In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The guidance includes the requirements that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, the title and position of the chief operating decision maker, and an explanation of how the chief operating decision maker uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The guidance also requires that a public entity that has a single reportable segment provide all the disclosures required by the guidance and all existing segment disclosures in ASC 280, Segment Reporting . The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in the guidance retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company adopted the guidance as of December 31, 2024 with no material impact on the Company’s consolidated financial statements upon adoption, as further described in Note 14. In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) . The guidance simplifies the accounting for certain financial instruments, eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments, and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. It also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity and amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The guidance is effective for public business entities that meet the definition of a Securities and Exchange Commission filer, excluding entities eligible to be smaller reporting companies as defined by the Securities and Exchange Commission, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted the guidance as of January 1, 2024 with no material impact on the Company’s consolidated financial statements upon adoption. Recently Issued Accounting Standards Not Yet Adopted Accounting standards not listed below were assessed and determined not to be applicable or are expected to have minimal impact on the Company’s consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The guidance includes the requirement that public business entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). It also requires that all entities disclose, on an annual basis, the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received) and requires that all entities disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. Lastly, the guidance eliminates the requirement for all entities to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or make a statement that an estimate of the range cannot be made. For public business entities, the guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The guidance should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact that this guidance may have on its consolidated financial statements. F- 15 3. FAIR VALUE MEASUREMENTS As of December 31, 2024, there were no financial assets or liabilities carried at fair value which were not equivalent to cost. The following table summarizes the Company’s liabilities measured at fair value as of December 31, 2023: Schedule of liabilities measured at fair value Fair Value Measurements at December 31, 2023 Using Fair Value at December 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities: Redeemable Convertible Preferred Stock Warrant liability $ 988,049 $ – $ – $ 988,049 Total liabilities $ 988,049 $ – $ – $ 988,049 Information pertaining to the changes in the estimated fair value of the Redeemable Convertible Preferred Stock Warrant Liability in connection with the Company’s outstanding warrants to purchase Series B Redeemable Convertible Preferred Stock and Series C Redeemable Convertible Preferred Stock for the year ended December 31, 2024 is described in Note 9. 4. OTHER ACCRUED EXPENSES Other accrued expenses as of December 31, 2024 and 2023 consisted of the following: Schedule of other accrued expenses December 31, 2024 December 31, 2023 Accrued clinical trial costs $ 5,483,846 $ 3,207,785 Other accrued expenses 438,062 13,469 Total other accrued expenses $ 5,921,908 $ 3,221,254 5. RELATED PARTY CONVERTIBLE NOTES PAYABLE On February 20, 2024, March 27, 2024, and May 8, 2024, the Company issued convertible promissory notes in the amount of $ 3,000,000 , $ 1,500,000 , and $ 1,000,000 , respectively, to Bios Clinical Opportunity Fund, LP, a fund affiliated with a current member and a former member of the board of directors of the Company and a majority shareholder, which notes accrued interest at a rate of 7 % per annum and would mature on August 16, 2024 , as amended (“Maturity Date”). Principal and accrued interest were due and payable on the Maturity Date, subject to an automatic conversion upon a Qualified Financing (as defined below) or the Company’s first firm commitment underwritten initial public offering of its common stock or at the option of the holder, convertible into shares of Series C Redeemable Convertible Preferred Stock. In the event the Company either completed a financing of at least $5,000,000 in gross proceeds (“Qualified Financing”) or closed the Company’s first firm commitment underwritten initial public offering of its common stock before the Maturity Date, the Related Party Convertible Notes Payable were to automatically convert into (i) in the case of a Qualified Financing, that number of shares of capital stock issued in such Qualified Financing (the “Qualified Financing Securities”) equal to the quotient obtained by dividing the outstanding principal amount of the Related Party Convertible Notes Payable plus all accrued and unpaid interest thereon by eighty percent (80%) of the per share price at which shares are to be sold in such Qualified Financing or (ii) in the case of an initial public offering, such number of shares of common stock equal to the outstanding principal amount of the Related Party Convertible Notes Payable plus all accrued and unpaid interest thereon, divided by eighty percent (80%) of the initial public offering price. F- 16 In the event a Qualified Financing or an initial public offering did not occur prior to the Maturity Date, then on or after the Maturity Date, the holder could elect to either (i) convert the Related Party Convertible Notes Payable into such number of shares of Series C Redeemable Convertible Preferred Stock equal to the principal amount plus the accrued but unpaid interest thereon divided by $7.848 or (ii) elect that the Related Party Convertible Notes Payable become fully due and payable in cash. Transaction fees of the related party in the amount of $ 50,000 that were withheld by the related party were expensed as incurred in accordance with ASC 825. Prior to the closing of the Company’s IPO, the fair value of the Related Party Convertible Notes Payable was estimated at each reporting period using a scenario-weighted binomial lattice model to calculate equity values at different points in time leading up to a conversion event. Assumptions in the model include but are not limited to the following: equity value, conversion price, accrued interest, volatility, risk-free interest rate, dividend yield, time to a conversion event, and scenario weightings. Accrued interest on the Related Party Convertible Notes Payable was included in the determination of the estimated fair value. In connection with the closing of the Company’s IPO on August 14, 2024, the Company issued Bios Clinical Opportunity Fund, LP 884,427 shares of its common stock upon the conversion of the Related Party Convertible Notes Payable, including accrued interest thereon, at a conversion price of $ 6.40 per share, representing 80% of the IPO price of $8.00 per share. The Related Party Convertible Notes Payable was marked to market to its fair value on the conversion date before being reclassified to equity. The aggregate fair value at the time of conversion was calculated by multiplying the number of shares of common stock issued upon conversion by the fair value per share on the conversion date, which was the closing price of the Company’s common stock on the Nasdaq Global Market on the closing date of the IPO. The following table sets forth the changes in the estimated fair value of the Company’s Related Party Convertible Notes Payable for the year ended December 31, 2024: Schedule of estimated fair value of related party convertible notes payable Balance as of December 31, 2023 $ – Principal amount of Related Party Convertible Notes Payable issued 5,500,000 Loss recorded at issuance (see Note 2) 400,000 Change in fair value 2,192,507 Conversion into common stock ( 8,092,507 ) Balance as of December 31, 2024 $ – 6. COMMITMENTS AND CONTINGENCIES Operating Lease On December 1, 2024, the Company rented office space on a month-to-month basis with no long-term commitment, representing a short-term lease. As a result, the Company has elected to apply the short-term lease exemption to its office lease and therefore has not recorded a right of use (“ROU”) asset and related lease liability in accordance with ASC 842, “Leases” (“ASC 842”). Rent expense recorded during the years ended December 31, 2024 and 2023 was $ 4,200 and $ 0 , respectively, which amount is included in general and administrative expenses in the accompanying consolidated statements of operations. Legal The Company may be involved, from time to time, in legal proceedings and claims arising in the ordinary course of its business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. While management believes that such matters are currently insignificant, matters arising in the ordinary course of business for which the Company is or could become involved in litigation may have a material adverse effect on its business and financial condition. To the Company’s knowledge, the Company is not subject to any pending legal proceedings. F- 17 Indemnities and Guarantees We have made certain indemnities and guarantees, under which we may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions. We indemnify our officers and directors to the maximum extent permitted under the laws of the State of Delaware. The duration of these indemnities and guarantees varies and, in certain cases, is indefinite. These indemnities and guarantees do not provide for any limitation of the maximum potential future payments we could be obligated to make. Historically, we have not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheets. 7. LICENSES AND AGREEMENTS Northwestern License Agreement On March 31, 2015, the Company entered into an Exclusive License Agreement with Equity (the “Northwestern License Agreement”) with Northwestern University (“Northwestern”). Pursuant to the Northwestern License Agreement, Northwestern granted the Company (a) a nonexclusive license to certain technical information developed in the laboratory of Andrew Mazar (who now serves as the Company’s Chief Operating Officer), and (b) an exclusive license to all results obtained by Andrew Mazar and his collaborators at Northwestern on the use of glycogen synthase kinase-3 beta (“GSK-3β”) (formerly 9-ING-41) and related compounds used for the treatment of cancer, including combination therapies. In consideration of the license granted pursuant to the Northwestern License Agreement, the Company granted Northwestern 27,778 shares of the Company’s common stock, representing 5% of the Company’s capital stock on a fully diluted basis on the date of grant. In addition, the Company granted Northwestern the right to participate in future offerings of the Company’s capital securities on the same terms as offered to those participating in the offering. In 2019, Northwestern’s right to participate in future offerings expired. UIC License Agreement On April 6, 2015, the Company entered into an Exclusive License Agreement with Equity (the “UIC License Agreement”) with The Board of Trustees of the University of Illinois (“UIC”), whereby, UIC granted the Company (a) an exclusive, nontransferable license, with the right to sublicense under UIC’s rights in the Patent Rights (as defined in the UIC License Agreement), and (b) a non-exclusive, non-transferable license, with the right to sublicense, to use UIC’s rights in the Technical Information (as defined in the UIC License Agreement) within the Territory and the Field as each such term is defined in the UIC License Agreement. In consideration of the license granted under the UIC License Agreement, the Company issued 46,528 shares of the Company’s common stock to UIC, which represented 5% of the Company’s capital stock on a fully diluted basis at the time of issuance, as defined in the UIC License Agreement, and agreed to pay UIC (i) development milestones of up to $1.25 million, of which, up to $0.25 million is due upon the progress of clinical trials and $1.0 million is due upon the initiation of commercial sales (ii) annual minimum royalty payments of $5,000 beginning on the third anniversary year of the UIC License Agreement and increasing to $15,000 in year four, $35,000 in year five, and $50,000 in year six and each year thereafter, (iii) royalty on net sales for product covered under the Patent Rights in the low single digits with a 50% reduction in royalties for products solely utilizing Technical Information, (iv) a declining percentage of sublicensing revenue based on the escalating stage of development upon a sublicensing event, and (v) the reimbursement of all patent and related expenses incurred by UIC covering the Patent Rights. For the years ended December 31, 2024 and 2023, the Company incurred minimum royalties and other reimbursable expenses to UIC in the aggregate amount of $ 75,000 and $ 64,711 , respectively, which amounts were included in general and administrative expenses in the accompanying consolidated statements of operations. F- 18 In addition, the Company entered into a sublicense and collaboration agreement dated August 28, 2017 with an unrelated entity that was covered under the UIC License Agreement, which sublicense agreement was later terminated on January 31, 2018. Under the UIC License Agreement, the Company owed UIC a certain percentage of amounts received under the sublicense agreement in the amount of $ 449,990 . The Company paid UIC 10% of the sublicense fees in the amount of $ 44,999 and the remaining unpaid balance of $ 404,991 (“Deferred Amount”) was originally due and payable to UIC in two installments: 50% due and payable on the one-year anniversary from the first commercial sale and 50% due on the second-year anniversary from the first commercial sale. The Deferred Amount is treated as debt and continues to accrue interest at a rate of five percent (5%) per annum, representing the prime rate as of the date of the agreement plus 1%. On July 16, 2024, the Company and UIC entered an amendment to the UIC License Agreement (“UIC Amendment”). Pursuant to the UIC Amendment, accrued interest is due and payable in two installments: (i) 50% was due within 30 days following the closing of the Company’s IPO; and (ii) 50% is due within 30 days following the first anniversary of the closing of the IPO. Thereafter, interest will be paid annually within 30 days following the second anniversary of the closing of the IPO and annually thereafter. In addition, the UIC Amendment provides for payment of the Deferred Amount and any accrued interest thereon upon the sooner of (i) termination of the UIC License Agreement by the Company, (ii) the Company ceases development of the licensed UIC technology, (iii) the Company consummates a Change in Control (as defined in the UIC License Agreement), (iv) the Company sublicenses the licensed technology or the developed product, (v) the one-year anniversary following approval of a NDA of a licensed product, or (vii) the Company executes a partnership agreement with any entity resulting in the payment to us above a specified milestone amount or the Company secures cumulative financing equal to or exceeding $200 million. In addition, the UIC Amendment provides that to the extent the Company secures equity financing equal to or exceeding $85 million through its IPO or otherwise, 50% of the Deferred Amount is due and payable within 30 days. The remaining 50% of the Deferred Amount shall be due and payable upon the first to occur of any of the events noted above in clauses (i) through (vii). Finally, the UIC Amendment provides that for as long as the Company or a sublicensee is selling the licensed product, the Company will pay all consideration provided for in the original UIC License Agreement and described above until the last to expire market exclusivity date, the period of which for all products in a jurisdiction will not exceed a total of seven (7) years beginning with the date regulatory approval is granted for the first licensed product in the jurisdiction, and such obligation will survive termination of the UIC License Agreement. Interest payable to UIC was $ 77,725 as of December 31, 2024, of which, $ 70,957 is classified as current and $ 6,768 is classified as non-current, and are included in the accompanying consolidated balance sheet. At December 31, 2023, accrued interest to UIC was $ 130,041 , which is included in the accompanying consolidated balance sheet. 8. STOCKHOLDERS’ EQUITY (DEFICIT) Authorized and Issued Capital Effective upon the closing of the Company’s IPO, the Company’s authorized capital consists of 200,000,000 shares of common stock, $ 0.000001 par value per share, and 10,000,000 shares of preferred stock, $ 0.000001 par value per share. As of December 31, 2024 and 2023, there were 19,531,636 and 1,690,760 shares of common stock issued and outstanding, respectively. Prior to the closing of the Company’s IPO, the Company’s authorized capital consisted of 38,108,584 shares of common stock, $ 0.000001 par value per share, and 33,463,018 shares of preferred stock, $ 0.000001 par value per share, of which, the Company had designated multiple series of redeemable convertible preferred stock (“Redeemable Convertible Preferred Stock”) that were converted into common stock upon the closing of the IPO. Reverse Stock Split On May 31, 2024, the Company’s board of directors approved a 1-for-1.8 reverse stock split of its issued and outstanding shares of common stock and stock option awards, which was effected on June 7, 2024. All issued and outstanding shares of common stock (including outstanding RSAs), stock option awards and per share data have been adjusted in these consolidated financial statements, on a retrospective basis, to reflect the reverse stock split for all periods presented. The par value of the common stock and preferred stock was not adjusted as a result of the reverse stock split. The shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities. In addition, the conversion price for each series of the Company’s Redeemable Convertible Preferred Stock, which automatically converted into shares of common stock upon the closing of the IPO, were proportionally adjusted. Fractional shares resulting from the reverse stock split were rounded up to the nearest whole share. F- 19 Redeemable Convertible Preferred Stock On August 14, 2024, the closing date of the Company’s IPO, all shares of Redeemable Convertible Preferred Stock were automatically converted into 13,710,379 shares of common stock. Immediately prior to the closing of the Company’s IPO, Redeemable Convertible Preferred Stock was comprised of the following: Schedule of redeemable convertible preferred stock Number of Shares Authorized Number of Shares Issued and Outstanding Face Amount Original Issue Price Common Stock Issuable Upon Conversion Series A 1,983,663 1,983,663 $ 3,967,333 $ 2.00000 1,102,039 Series B-1 4,133,477 3,858,547 14,121,012 $ 3.65967 2,143,652 Series B-2 2,307,017 2,307,017 8,824,986 $ 3.82528 1,281,680 Series B-3 1,625,000 1,625,000 6,500,000 $ 4.00000 902,786 Series B-4 11,961,721 9,333,928 39,015,819 $ 4.18000 5,185,526 Series C 11,452,140 5,570,200 24,286,072 $ 4.36000 3,094,696 33,463,018 24,678,355 $ 96,715,222 13,710,379 As of December 31, 2023, the Redeemable Convertible Preferred Stock was comprised of the following: Number of Shares Authorized Number of Shares Issued and Outstanding Face Amount Liquidation Value Original Issue Price Common Stock Issuable Upon Conversion Series A 1,983,663 1,983,663 $ 3,967,333 $ 6,123,812 $ 2.00000 1,102,039 Series B-1 4,133,477 3,858,547 14,121,012 19,401,105 $ 3.65967 2,143,652 Series B-2 2,307,017 2,307,017 8,824,986 12,046,258 $ 3.82528 1,281,680 Series B-3 1,625,000 1,625,000 6,500,000 8,694,252 $ 4.00000 902,786 Series B-4 11,961,721 9,333,928 39,015,819 48,356,709 $ 4.18000 5,185,526 Series C 11,452,140 5,570,200 24,286,072 26,411,200 $ 4.36000 3,094,696 33,463,018 24,678,355 $ 96,715,222 $ 121,033,336 13,710,379 The rights, preferences, privileges and restrictions granted to or imposed on the Company’s Redeemable Convertible Preferred Stock or the holders thereof was as follows: Dividends The holders of Redeemable Convertible Preferred Stock were entitled to receive dividends, out of any assets legally available therefore, prior and in preference to any declaration or payment of any dividend to the common stockholders, at the rate of 8.0 % per annum on each of the Series A, Series B-1, Series B-2, Series B-3, Series B-4, and Series C original issue prices, payable when, and if declared by the Board. Such dividends shall be cumulative and if less than the full amount of dividends payable on the Redeemable Convertible Preferred Stock if declared and paid, any such payments shall be made ratably among the holders of the Redeemable Convertible Preferred Stock in proportion to the total amount each holder would be entitled to receive if the full amount of dividends payable on the Redeemable Convertible Preferred Stock had been declared. During the years ended December 31, 2024 and 2023, no dividends had been declared or paid. F- 20 Conversion Effective upon the closing of the IPO, each share of Redeemable Convertible Preferred Stock converted into that number of shares of common stock based on the conversion ratio of approximately 0.555555 shares of common stock per share of Redeemable Convertible Preferred Stock (“Conversion Ratio”). The Conversion Ratio was determined by dividing the applicable initial purchase price (the “Initial Purchase Price”) of such share by the applicable Conversion Price. The Conversion Price for each series of Redeemable Convertible Preferred Stock as of August 14, 2024 (the closing date of the IPO) and December 31, 2023 were as follows: Series A - $ 3.6000 ; Series B-1 - $ 6.5874 ; Series B-2 - $ 6.8855 ; Series B-3 - $ 7.2000 ; Series B-4 - $ 7.5240 ; and Series C - $ 7.8480 , which reflects the 1-for-1.8 reverse stock split discussed above. Voting Rights Prior to conversion, the holders of Redeemable Convertible Preferred Stock had the right to one vote for each whole share of common stock into which such Redeemable Convertible Preferred Stock could then be converted. With respect to such vote, the holder had full voting rights and powers equal to the voting rights and powers of the holders of common stock, was entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Company, and was entitled to vote, together with holders of common stock, with respect to any matter upon which holders of common stock had the right to vote. Redemption and Balance Sheet Classification Prior to conversion, the Redeemable Convertible Preferred Stock was recorded outside permanent equity because, while it was not mandatorily redeemable, it would become redeemable at the option of the holders upon the occurrence of certain deemed liquidation events that were considered not solely within the Company’s control. Reserved Shares As of December 31, 2024, the Company reserved the following shares of common stock for issuance upon the (i) exercise of outstanding warrants, (ii) exercise of issued and outstanding stock option awards and restricted stock unit awards, and (iii) to reserve the remaining shares available for grant under the 2024 Stock Incentive Plan (“2024 Plan”): Schedule of reserved shares of common stock for issuance December 31, 2024 Warrants issued and outstanding to purchase common stock 255,599 Stock option awards issued and outstanding 780,539 Restricted stock unit awards issued and outstanding 544,111 Shares reserved for issuance under the 2024 Plan 2,385,140 Total 3,965,389 F- 21 9. WARRANTS As of December 31, 2024, the following warrants to purchase up to 255,599 shares of common stock were outstanding: Schedule of warrant outstanding Warrants Outstanding Exercise Price per Share Expiry Date Underwriter warrants issued under IPO 161,000 $ 10.00 August 12, 2027 Warrants originally issued in conjunction with Series B Redeemable Convertible Preferred Stock 76,376 $ 10.55 August 13, 2026 Warrants originally issued in conjunction with Series C Redeemable Convertible Preferred Stock 18,223 $ 9.42 August 13, 2026 Total 255,599 Warrants Issued Under IPO Upon the closing of the Company’s IPO and Overallotment Option, we issued the underwriters warrants to purchase up to 161,000 shares of common stock, representing 5% of the shares of common stock issued under the IPO and Overallotment Option, at an exercise price of $ 10.00 per share (“Underwriter Warrants”), representing 125% of the initial offering price. The Underwriter Warrants are not exercisable prior to February 8, 2025 (or 180-days from the effective date of the registration statement), and expire on August 12, 2027 . The Underwriter Warrants can only be exercised on a cash basis through November 11, 2025 and only on a cashless basis on November 12, 2025 and thereafter. The Underwriter Warrants met the criteria for equity classification and were recorded as a component of additional paid-in capital at the time of issuance. Redeemable Convertible Preferred Stock Warrants and Warrant Liability On June 30, 2023, in connection with issuance of the Series C Redeemable Convertible Preferred Stock, the Company issued the placement agent warrants to purchase 18,223 shares of Series C Redeemable Convertible Preferred Stock at an exercise price of $ 9.42 per share (“Series C Redeemable Convertible Preferred Stock Warrants” or “Series C Warrants”). The warrants were to terminate at the earlier of (i) five (5) years from the issuance date, (ii) the consummation of a change of control, or (iii) upon the first closing of an initial public offering of the Company’s common stock. The warrants had a net exercise provision under which the holders could, in lieu of payment of the exercise price in cash, surrender the warrant and receive a net amount of shares based on the fair market value of the Company’s stock at the time of exercise of the warrants after deduction of the aggregate exercise price. The warrants contained provisions for adjustment of the exercise price and number of shares issuable upon the exercise of warrants in the event of certain stock dividends, stock splits, reorganizations, reclassifications, and consolidations. The initial estimated fair value of the warrants of $ 93,863 was calculated using the Black-Scholes valuation model and recorded as a reduction to Redeemable Convertible Preferred Stock and a corresponding increase in the warrant liability. On September 7, 2018, in connection with convertible promissory note payable agreements, the Company agreed to issue the noteholders warrants to purchase shares of Series B-1 Redeemable Convertible Preferred Stock (“Series B Redeemable Convertible Preferred Stock Warrants” or “Series B Warrants”). Warrants to purchase 76,376 shares of Series B-1 Redeemable Convertible Preferred Stock were issued at an exercise price of $ 5.27 per share and warrants to purchase 76,376 shares of Series B-1 Redeemable Convertible Preferred Stock were issued at an exercise price of $ 10.55 per share. The warrants were to terminate at the earlier of (i) ten (10) years from the issuance date, (ii) the consummation of a change of control, or (iii) upon the first closing of an initial public offering of the Company’s common stock. The warrants had a net exercise provision under which the holders could, in lieu of payment of the exercise price in cash, surrender the warrant and receive a net amount of shares based on the fair market value of the Company’s stock at the time of exercise of the warrants after deduction of the aggregate exercise price. The warrants contained provisions for adjustment of the exercise price and number of shares issuable upon the exercise of warrants in the event of certain stock dividends, stock splits, reorganizations, reclassifications, and consolidations. The initial estimated fair value of the warrants of $ 805,292 was recorded on the closing date of a private placement in April 2019, representing the initial date the warrants could be measured. F- 22 The Company remeasured the fair value of the Series B Warrants and Series C Warrants at the end of each reporting period, with any adjustments being recorded as a component of other income (expense) in the accompanying consolidated statements of operations. Upon the closing of the IPO on August 14, 2024, the Series B Warrants issued at an exercise price of $ 5.27 per share (in-the-money warrants) were automatically exercised and settled on a cashless basis for shares of our Series B Redeemable Convertible Preferred Stock, and such shares of Series B Redeemable Convertible Preferred Stock were subsequently converted into 26,070 shares of our common stock. The fair value at the time of settlement of $ 238,540 was calculated by multiplying the number of shares of common stock issued upon settlement by the fair value per share on the settlement date, which was the closing price of the Company’s common stock on the Nasdaq Global Market on the closing date of the IPO. Upon the settlement of the in-the-money warrants, the Company recorded a gain on settlement of $ 343,240 on August 14, 2024. In addition, upon the closing of the IPO, the remaining out-of-the money Series B Warrants and Series C Warrants were amended in July 2024 to become exercisable for the same number of shares of common stock with an exercise price of $ 10.55 and $ 9.42 per share, respectively, and exercisable for a period of two years after the closing date of the IPO or through August 13, 2026. The estimated fair value of the warrant liability for the Series B Warrants and Series C Warrants was $ 0 and $ 988,049 as of December 31, 2024 and 2023, respectively (see Note 3). The following table sets forth the changes in the estimated fair value of the warrant liability in connection with the Company’s Series B Warrants and Series C Warrants for the two years ended December 31, 2024: Schedule of estimated fair value of the warrant liability Estimated fair value as of December 31, 2022 $ 814,364 Estimated fair market value of Series C Warrants issued to placement agent in connection with issuance of redeemable convertible preferred stock 93,863 Change in fair value 79,822 Estimated fair value as of December 31, 2023 988,049 Change in fair value 78,903 Exercise of in-the-money warrants to purchase redeemable convertible preferred stock and conversion into common stock upon closing of IPO ( 238,540 ) Gain on settlement of in-the-money warrants upon conversion into common stock upon closing of IPO ( 343,240 ) Reclassification of warrant liability to equity upon exchange of warrants to purchase redeemable convertible preferred stock for warrants to purchase common stock upon closing of IPO ( 485,172 ) Balance as of December 31, 2024 $ – During the years ended December 31, 2024 and 2023, the aggregate increase in the fair value of the Series B Warrants and Series C Warrants was $ 78,903 and $ 79,822 , respectively. During the year ended December 31, 2024, the increase in fair value of the in-the-money Series B Warrants was $ 96,050 . Prior to settlement and as of December 31, 2023, the fair value of the in-the-money Series B Warrants was determined using the Black-Scholes valuation model with the following assumptions: Schedule of assumptions In-the-Money Series B Warrants Prior to Settlement December 31, 2023 Expected term (in years) 4.04 4.7 Expected volatility 127.26 % 80.68 % Weighted average risk-free interest rate 5.25 % 4.48 % Expected dividend yield 0.00 % 0.00 % Fair value of convertible preferred stock $ 8.82 $ 8.60 F- 23 The out-of-the money Series B Warrants and Series C Warrants were remeasured upon the closing of the IPO and marked to market to its aggregate fair value of $ 485,172 before being reclassified to equity. During the year ended December 31, 2024, the decrease in fair value of the out-of-the-money Series B Warrants and Series C Warrants was $ 17,147 . The fair value of the out-of-the money Series B Warrants and Series C Warrants as of the closing date of the IPO and December 31, 2023 was determined using the Black-Scholes valuation model with the following assumptions: Schedule of assumptions Out-of-the Money Series B Warrants Out-of-the Money Series C Warrants August 14, 2024 December 31, 2023 August 14, 2024 December 31, 2023 Expected term (in years) 2.0 4.7 2.0 4.5 Expected volatility 111.47 % 80.68 % 111.47 % 80.68 % Weighted average risk-free interest rate 3.97 % 4.48 % 3.97 % 4.48 % Expected dividend yield 0.00 % 0.00 % 0.00 % 0.00 % Fair value of convertible preferred stock – $ 8.60 – $ 8.50 Fair value of common stock per share $ 9.15 – $ 9.15 – 10. EQUITY COMPENSATION PLANS Stock Incentive Plans In connection with the Company’s IPO, our board of directors adopted and our stockholders approved our 2024 Plan, which became effective on August 12, 2024, the effective date of the registration statement for the Company’s IPO. The purpose of the 2024 Plan is to enhance the Company’s ability to attract, retain and motivate individuals by providing these individuals with equity ownership and incentive opportunities. All of the Company’s employees, as well as all of the Company’s non-employee directors and other consultants, advisors and other persons who provide services to the Company are eligible to receive incentive awards under the 2024 Plan, including stock options grants, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and other awards. Up to 3,316,444 shares of common stock were reserved for future issuance under the 2024 Plan, which number included 496,801 shares of common stock reserved for issuance under the 2015 Plan as of the closing of the IPO. In addition, the number of shares of common stock available for issuance under the 2024 Plan is subject to an annual increase on the first day of each calendar year beginning on January 1, 2025 and ending on and including January 1, 2034 equal to the lesser of (i) 5% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as determined by the Board. As of December 31, 2024, there were 2,385,140 shares available for grant under the 2024 Plan. In addition, the Company had previously adopted the 2015 Stock Incentive Plan (the “2015 Plan”). As of December 31, 2024, there were 365,568 stock options outstanding and 46,463 unvested RSAs outstanding under the 2015 Plan. Upon the effective date of the 2024 Plan on August 12, 2024, there were no remaining shares available for grant under the 2015 Plan. Restricted Stock Awards There were no RSAs granted during the two years ended December 31, 2024. At December 31, 2024, the total estimated unrecognized compensation cost related to unvested service-based RSAs and unvested performance based RSAs was approximately $ 66,000 and $ 42,000 , respectively. The unrecognized cost related for service-based RSAs is expected to be recognized over the remaining weighted average vesting period of 0.44 years. The unrecognized cost related to performance-based RSAs will be recognized ratably over the performance period based upon the probable number of shares expected to vest. During the years ended December 31, 2024 and 2023, there was no expense recorded for the outstanding performance-based RSAs. F- 24 The following summarizes our RSAs transaction activity for two years ended December 31, 2024: Schedule of RSAs transaction activity Restricted Common Stock Award Shares Weighted Average Grant Date Fair Value Unvested balance at December 31, 2022 364,526 $ 2.23 Granted – $ – Vested ( 195,496 ) $ 2.24 Forfeited – $ – Unvested balance at December 31, 2023 169,030 $ 2.21 Granted – $ – Vested ( 122,567 ) $ 2.11 Forfeited – $ – Unvested balance at December 31, 2024 46,463 $ 2.48 Restricted Stock Units Upon the closing of the IPO, we granted 544,111 RSUs to our president and chief executive officer pursuant to his employment agreement. At December 31, 2024, the total estimated unrecognized compensation cost related to unvested RSUs was approximately $ 4,026,000 . This cost is expected to be recognized over the remaining weighted average vesting period of 1.24 years. There were no RSUs granted or outstanding for the year ended December 31, 2023. The following summarizes our RSUs transaction activity for the year ended December 31, 2024: Schedule of RSUs transaction activity Restricted Common Stock Unit Shares Weighted Average Grant Date Fair Value Unvested balance at December 31, 2023 – $ – Granted 544,111 $ 9.15 Vested – $ – Forfeited – $ – Unvested balance at December 31, 2024 544,111 $ 9.15 F- 25 Stock Options The following summarizes our stock option transaction activity for the two years ended December 31, 2024: Schedule of stock option transaction activity Number of Shares Weighted- Average Exercise Price (per share) Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding at December 31, 2022 – $ – Options granted 265,566 2.14 Options exercised – – Options canceled and forfeited – – Outstanding at December 31, 2023 265,566 $ 2.14 Options granted 542,751 7.13 Options exercised – – Options canceled and forfeited ( 27,778 ) 4.68 Outstanding at December 31, 2024 780,539 $ 5.52 9.07 $ 1,919,951 Vested and expected to vest as of December 31, 2024 780,539 $ 5.52 9.07 $ 1,919,951 Exercisable as of December 31, 2024 189,703 $ 2.90 8.15 $ 960,376 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2024 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last trading day of 2024. This amount changes based on the fair market value of the Company’s common stock. As of December 31, 2024, total unrecognized stock-based compensation cost related to stock options was approximately $ 2,424,000 . This cost is expected to be recognized over the weighted average remaining period of 1.61 years. The following table provides the assumptions used in determining the estimated fair value of stock option awards granted during the years ended December 31, 2024 and 2023: Schedule of stock option assumptions Year Ended December 31, 2024 2023 Weighted average expected volatility 92.54 % 84.09 % Weighted average risk-free interest rate 3.75 % 4.31 % Expected dividend yield 0.00 % 0.00 % Weighted average expected term (in years) 5.72 5.47 F- 26 The following table summarizes the stock-based compensation expense recorded in the accompanying consolidated statements of operations during the years ended December 31, 2024 and 2023: Schedule of stock-based compensation expense Year Ended December 31, 2024 2023 Research and development $ 147,533 $ 129,642 General and administrative 1,848,260 293,897 Total $ 1,995,793 $ 423,539 The Company has not recognized and does not expect to recognize in the near future, any tax benefit related to employee stock-based compensation expense as a result of the full valuation allowance related to its net deferred tax assets. 11. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders: Schedule of computation of basic and diluted net loss per share attributable to common stockholders Year Ended December 31, 2024 2023 Numerator: Net loss $ ( 27,285,328 ) $ ( 24,744,620 ) Denominator: Weighted-average shares of common stock outstanding, basic and diluted 8,372,741 1,434,964 Net loss per share attributable to common stockholders, basic and diluted $ ( 3.26 ) $ ( 17.24 ) The potential dilutive effect of Redeemable Convertible Preferred Stock and Related Party Convertible Notes outstanding during the periods were calculated using the if-converted method assuming the conversion of underlying instruments as of the earliest period reported or at the date of issuance, if later, but are excluded if their effect is anti-dilutive. The potential dilutive effect of outstanding stock options, unvested RSAs, unvested RSUs, and outstanding warrants during the period are calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. The number of whole shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect were as follows: Schedule of anti-dilutive shares As of December 31, 2024 2023 Redeemable Convertible Preferred Stock – 13,710,379 Options issued and outstanding 780,539 265,566 Unvested RSAs 46,463 169,027 Unvested RSUs 544,111 – Warrants issued and outstanding 255,599 170,975 Total 1,626,712 14,315,947 F- 27 12. INCOME TAXES The Company had no income tax expense due to operating losses incurred for the years ended December 31, 2024 and 2023. The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”), which requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a full valuation allowance. The provision (benefit) for income taxes for the years ended December 31, 2024 and 2023 is as follows: Schedule of provision (benefit) for income taxes December 31, 2024 2023 Current Federal $ – $ – State 800 – Foreign – – Total current 800 – Deferred Federal ( 5,918,525 ) ( 7,198,732 ) State ( 35,752 ) ( 92,676 ) Foreign – – Change in valuation allowance 5,954,277 7,291,408 Total deferred – – Income tax provision $ 800 $ – The income tax provision is included in general and administrative expenses in the accompanying consolidated statements of operations. Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of our deferred tax assets as of December 31, 2024 and 2023 are as follows: Schedule of components of deferred tax assets December 31, 2024 2023 Deferred tax assets (liabilities): Capitalized R&D, net of amortization $ 8,914,944 $ 6,800,091 Other 590,030 33,579 Net operating loss carryforwards 14,295,945 12,500,774 Research and development tax credits 13,908,401 12,420,431 Total deferred tax assets 37,709,320 31,754,875 Valuation allowance ( 37,709,320 ) ( 31,754,875 ) Net deferred tax assets $ – $ – F- 28 The reconciliation of the effective income tax rate to the Federal statutory rate for the years ended December 31, 2024 and 2023 is as follows: Schedule of effective income tax rate December 31, 2024 2023 Statutory federal income tax rate 21.00 % 21.00 % Research and development tax credits 6.23 % 9.45 % Other ( 2.00 % ) ( 1.32 % ) Change in valuation allowance ( 25.23 % ) ( 29.13 % ) Effective income tax rate 0.00 % 0.00 % As of December 31, 2024 and 2023, the Company had gross federal income tax net operating loss (“NOL”) carryforwards of $ 67,858,056 and $ 59,443,749 , respectively, and federal research tax credits of $ 13,908,401 and $ 12,420,431 , respectively. Of the federal NOL carryforwards, $ 3,010,902 will expire beginning in 2035 and $ 64,847,154 has an indefinite life while the federal research tax credits will expire by 2044. In addition, the Company has state NOL carryovers of $ 319,752 that will carry forward indefinitely. Utilization of U.S. net operating losses and tax credit carryforwards may be limited by “ownership change” rules, as defined in Sections 382 and 383 of the Code. Similar rules may apply under state tax laws. The Company has not conducted a study to date to assess whether a limitation would apply under Sections 382 and 383 of the Code as and when it starts utilizing its net operating losses and tax credits. The Company will continue to monitor activities in the future. In the event the Company previously experienced an ownership change, or should experience an ownership change in the future, the amount of net operating losses and research and development credit carryovers available in any taxable year could be limited and may expire unutilized. Federal net operating losses incurred in tax years beginning before December 31, 2017, are subject to a 20 year carry forward period and net operating losses incurred after December 31, 2017, can be carried forward indefinitely but will be subjected to the 80% taxable income limitation. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion, or all, of the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during periods in which those temporary differences become deductible. Due to the uncertainty surrounding the realization of the benefits of its deferred assets, including NOL carryforwards, the Company has provided a 100% valuation allowance on its deferred tax assets at December 31, 2024 and 2023. 13. RELATED PARTY TRANSACTIONS On August 12, 2024, we issued to Bios Clinical Opportunity Fund, LP, a fund affiliated with a current member and a former member of the board of directors of the Company and a majority shareholder, a promissory note in the principal amount of $ 200,000 (“August Note”) in exchange for net proceeds of $ 200,000 . The August Note accrued interest at a rate of 7 % per annum and was due and payable on the earlier of (i) the closing of the IPO or (ii) August 16, 2024, as amended. The August Note was paid in full on August 14, 2024, including accrued interest thereon. On February 20, 2024, March 27, 2024, and May 8, 2024, the Company issued convertible promissory notes in the amount of $ 3,000,000 , $ 1,500,000 , and $ 1,000,000 , respectively, to Bios Clinical Opportunity Fund, LP (see Note 5). During 2018, the Company entered into a master service agreement with Pacific BioPharma Logistics, Inc. (“PBL”) to provide clinical support related to the packaging, labeling, kitting, storage, distribution and inventory of the Company’s investigational products. Mr. Richard Kenley, Vice President of Manufacturing for the Company (but not an “executive officer” of the Company, as defined under Rule 3b-7 of the Securities Exchange Act of 1934, as amended), is an unpaid advisor for PBL and his spouse is a shareholder in PBL. During the years ended December 31, 2024 and 2023, we incurred $ 886,905 and $ 853,574 , respectively, in services provided by PBL, which amounts are included in research and development expense in the accompanying consolidated statements of operations. As of December 31, 2024 and 2023, we had an outstanding balance owed to PBL of $ 51,540 and $ 52,206 , respectively, which amounts are included in accounts payable in the accompanying consolidated balance sheets. F- 29 14. SEGMENT REPORTING The Company manages its operations as a single operating segment. which includes all activities related to the development and potential commercialization of novel therapies for the treatment of cancer, for the purposes of assessing performance and making operating decisions. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODM is its President and Chief Executive Officer, who reviews and evaluates consolidated net income (loss) for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. In addition to the significant expense categories included within consolidated net income (loss) presented on the Company’s Consolidated Statements of Operations, see below for disaggregated amounts that comprise research and development expenses for the years ended December 31, 2024 and 2023: Schedule of research and development expenses Year Ended December 31, 2024 2023 External clinical trial expenses $ 13,412,743 $ 13,986,355 Personnel and consulting expenses 3,158,993 3,675,373 CMC related costs 1,707,132 2,246,280 Preclinical and biomarker research 397,408 1,800,324 Total research and development expenses $ 18,676,276 $ 21,708,332 In addition, the Company has a wholly-owned subsidiary, Actuate Therapeutics Limited, which is a dormant entity with no assets, liabilities or operations in any foreign countries. 15. SUBSEQUENT EVENTS The Company has evaluated all subsequent events and transactions through the date these consolidated financial statements were issued, to ensure these financial statements include appropriate disclosure of events both recognized in the financial statements and events which occurred but were not recognized in the financial statements. The Company has concluded that no subsequent event has occurred that requires disclosure, except as described herein. Executive Compensation On March 10, 2025, the Compensation Committee of the Board recommended and the Board approved an increase in annual base compensation for Mr. Daniel Schmitt, our President and CEO, and Mr. Paul Lytle, our Chief Financial Officer, to $570,000 and $435,363, respectively, provided the Company receives at least $25 million in additional funding from one or more financings no later than December 31, 2025. In addition, the executive officers will receive, with a grant date of April 1, 2025 and at an exercise price equal to the closing price of the Company’s common stock as of such date, stock option grants consisting of (1) one-time grants to reflect a catch-up of salary that would have been paid if such salary increases had taken effect on August 14, 2024, representing the IPO closing date, in the following amounts: Mr. Schmitt, 4,285 stock options; and Mr. Lytle, 1,900 stock options (the “Base Pay True Up Grants”); (2) one-time grants to reflect a catch-up grant, since no annual grants were made in 2024, in the following amounts: Mr. Schmitt, 200,000 stock options; Mr. Lytle, 39,999 stock options; and Dr. Mazar (our Chief Operating Officer), 110,346 stock options (the “Equity True Up Grants,” and together with the Base Pay True Up Grants, the “Special Option Grants”); and (3) annual grants in the following amounts: Mr. Schmitt, 66,503 stock options; Mr. Lytle, 49,394 stock options; and Dr. Mazar, 51,046 stock options (the “Annual Option Grants”). The Special Option Grants will vest as to 25% on August 14, 2025 with the remaining 75% vesting in equal monthly installments during the 36 months thereafter and the Annual Option Grants will vest as to 25% on the first anniversary of the grant date with the remaining 75% vesting in equal monthly installments during the 36 months following the first anniversary of the grant date. Also, the Board approved to amend Mr. Lytle’s employment agreement (to align with similar provisions in each of Mr. Schmitt’s and Dr. Mazar’s agreements) to provide that in the event the Company is sold on or before December 31, 2026 for cash in a transaction valued at or above $29.56 per share (“Sale Transaction”), immediately prior to the consummation of such Sale Transaction, Mr. Lytle will also be granted shares of common stock under the stock incentive plan of the Company that is then in effect equal to that number of shares that would bring his total ownership (including the shares he owned prior to calculation of the shares to be granted in the sale transaction) to 2.0% of the issued and outstanding shares of common stock on the day immediately prior to the closing of such transaction on a fully diluted basis (subject to limits under the stock plan on the number of shares available for grant). The shares issued to Mr. Lytle in such transaction will be fully vested as of the date of grant. In addition, the Board also approved (1) an amendment to the employment agreement with Dr. Mazar to provide that the deadline by which the Company would need to complete a Sale Transaction for him to receive an additional equity award be extended from March 31, 2024 to December 31, 2026. F- 30