What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-26 compared with 2025-03-13 · 307 added, 560 removed, 198 unchanged (81% of the section changed)

Management’s Discussion and Analysis of Financial Condition

and Results of Operations.

The following discussion and

analysis of the financial condition and results of our operations should be read together with the consolidated financial statements and

related notes of Actuate Therapeutics, Inc.

included in Part II Item 8 of this Annual Report on Form 10-K (“Report”).

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.

The following discussion

and analysis of the financial condition and results of our operations should be read together with the consolidated financial statements

and related notes of Actuate Therapeutics, Inc.

included in Part II Item 8 of this Annual Report on Form 10-K (“Annual Report”

or “Report”).

This discussion and analysis

contains forward-looking statements reflecting our management’s current expectations that involve risks, uncertainties and assumptions.

contain forward-looking statements reflecting our management’s current expectations that involve risks, uncertainties and assumptions.

See the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Our actual results and the timing of events

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synthase kinase-3 (GSK-3).

We are developing elraglusib (formerly 9-ING-41), an ATP-competitive small molecule that is designed

to enter cancer cells and block the function of the enzyme glycogen synthase kinase-3 beta (“GSK-3β”), a master regulator

of complex biological signaling cascades, including those mediated by oncogenes, that lead to tumor cell survival, growth, migration,

and invasion.

We believe that the blockade of GSK-3β signaling ultimately results in the death of the cancer cells and the regulation

of anti-tumor immunity.

We have exclusively licensed a

portfolio of GSK-3 inhibitors developed in a collaboration between The Board of Trustees of the University of Illinois-Chicago (“UIC”)

and Northwestern University (“NU”).

Elraglusib is the lead investigational product in our portfolio and is being evaluated

in a Phase 2 trial in patients with metastatic pancreatic ductal adenocarcinoma (“mPDAC”), our most advanced clinical indication

We are also advancing a Phase 1/2 clinical trial in refractory pediatric malignancies, including Ewing sarcoma (“EWS”).

Elraglusib represents a broad

opportunity for us to potentially initiate and advance multiple drug development programs around our lead asset based on data emerging

from completed or ongoing Phase 1/2 trials and non-clinical biological, cellular, and animal data.

Animal tumor model data, Phase 1/2

clinical data and AI-based computational approaches have identified a number of areas of unmet clinical need in cancer where elraglusib

may play an interventional role, including pancreatic, metastatic melanoma, lung, colon, breast, renal, and ovarian cancer, leukemias

and lymphomas, as well as some pediatric cancers including Ewing sarcoma, neuroblastoma and pediatric leukemias.

Our lead clinical program, referred

to as Actuate-1801, is an intravenous (“IV”) injection solution of elraglusib (“Elraglusib Injection”) that we

are evaluating for the treatment of first-line mPDAC.

In addition, Elraglusib Injection is also being evaluated in a Phase 1/2 clinical

trial in refractory pediatric malignancies and the data from this study (Actuate-1902) identified Ewing sarcoma as a potential second

indication for further development of Elraglusib Injection.

We have developed several oral

dosage forms of elraglusib, which we believe will allow us to expand the number of cancer indications that we are able to target and allow

us to further explore more convenient dose delivery options for patients.

A clinical candidate tablet, the Elraglusib Oral Tablet, has

been selected for further development and we are planning a Phase 1 study (Actuate-2401) to identify the maximum tolerated dose (“MTD”)

and recommended Phase 2 dose (“RP2D”) for Elraglusib Oral Tablet in patients with advanced, refractory adult cancers subject

to future funding.

Subject to additional funding, several Phase 2 studies have been identified for further clinical development of Elraglusib

Oral Tablet based on data from the Actuate-1801 study in indications, including but not limited to, refractory, metastatic melanoma and

refractory, metastatic colorectal cancer.

Since our inception in 2015, we

have focused substantially all of our resources on organizing and staffing our Company, business planning, raising capital, establishing

We are developing elraglusib, an ATP-competitive small molecule that is designed to enter cancer cells and

block the function of the enzyme glycogen synthase kinase-3 beta (“GSK-3β”), a master regulator of complex biological

signaling cascades, including those mediated by oncogenes, that lead to tumor cell survival, growth, migration, and invasion.

that the blockade of GSK-3β signaling ultimately results in the death of the cancer cells and the regulation of anti-tumor immunity.

There are no approved high-affinity inhibitors of GSK-3β, and we believe elraglusib is one of the most advanced GSK-3β inhibitors

in clinical development.

Elraglusib was originally known as 9-ING-41 but was granted the elraglusib International Nonproprietary Names

(“INN”) and United States Adopted Names (“USAN”) generic name in 2021.

We have exclusively licensed

elraglusib, a proprietary and patent protected GSK-3 inhibitor developed in a collaboration between The Board of Trustees of the University

of Illinois-Chicago (“UIC”) and Northwestern University (“NU”).

We believe elraglusib represents

a “pipeline in a molecule” with a broad opportunity for us to potentially initiate and advance multiple drug development programs

around our lead asset based on its multimodal mechanisms of action, data emerging from completed or ongoing clinical trials and non-clinical

biological, cellular, and animal data.

Animal tumor model data, clinical trial data and AI-based computational approaches have identified

a number of areas of unmet clinical need in cancer treatment where elraglusib may play an interventional role, including pancreatic, metastatic

melanoma, lung, colon, breast, renal, and ovarian cancer, leukemias and lymphomas, as well as some pediatric cancers including Ewing sarcoma,

neuroblastoma and pediatric leukemias.

To date, we have treated over

500 patients with elraglusib as an IV injection (“Elraglusib Injection”) in Phase 1 and Phase 2 studies.

Our most advanced

clinical indication is first-line metastatic pancreatic ductal adenocarcinoma (“mPDAC”).

Our Phase 2 study in mPDAC, known

as Actuate-1801 Part 3B study, is a randomized, controlled Phase 2 trial that enrolled 286 patients with no prior systemic treatment for

metastatic disease.

The primary endpoint for this study was mOS, with OS summarized throughout the study by estimates of 1-year survival.

Updated data results presented at the American Society of Clinical Oncology (“ASCO”) Genitourinary Cancers Symposium (“ASCO

GI”) in January 2026 utilizing a data cutoff as of November 22, 2025 showed that the trial met its primary endpoint, demonstrating

a statistically significant improvement in mOS with elraglusib plus gemcitabine/nab-paclitaxel (“GnP”) versus GnP alone.

presented at ASCO GI included:

· Statistically significant benefit in mOS in the

elraglusib/GnP arm vs GnP control arm (mOS 10.1 months vs.

7.2 months, p=0.02, HR=0.62);

· Near doubling of the 12-month survival rate,

from 22.3% in the GnP arm to 44.4% in the elraglusib/GnP arm;

· Almost fivefold increase in 24-month survival

rate, from 2.6% in the GnP control arm to 12.9% in the elraglusib/GnP arm, emphasizing the potential for long-term clinical benefit.

In addition to treating mPDAC,

Elraglusib Injection is also being evaluated in pediatric cancer patients with recurrent/refractory solid cancers.

This study, Actuate-1902,

is a Phase 1/2 study that evaluated escalating doses of elraglusib as a single agent as well as in combination with irinotecan or cyclophosphamide/topotecan

in the Phase 1 portion of the trial.

Patients in this Actuate-1902 study also experienced a number of objective responses in the combination

chemotherapy arms, and based on this data, we identified Ewing sarcoma and neuroblastoma as new indications for further development of

Elraglusib Injection, further expanding the potential of elraglusib.

We have developed several

oral dosage forms of elraglusib, which we believe will allow us to expand the number of cancer indications that we are able to target

and allow us to further explore more convenient dose delivery options for patients.

A clinical candidate tablet, the Elraglusib Oral Tablet,

has been selected for further development and, subject to future funding, we are planning a Phase 1 study to identify the maximum tolerated

dose and RP2D for Elraglusib Oral Tablet in adult patients with advanced, refractory cancers.

Once we have determined a RP2D, several

Phase 2 studies have been identified for further clinical development of Elraglusib Oral Tablet, subject to additional funding, based

on data from previous studies, including but not limited to, refractory, metastatic melanoma and refractory, metastatic colorectal cancer,

and non-small cell lung cancer.

Components of Our Results of Operations

Since our inception in 2015,

we have focused substantially all of our resources on organizing and staffing our Company, business planning, raising capital, establishing

and maintaining our intellectual property portfolio, conducting research, preclinical studies, and clinical trials, establishing arrangements

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have any products approved for sale and have not generated any revenue from product sales since inception.

We have incurred significant operating

losses and negative cash flows from operations since our inception.

Our net losses were $27,285,328 and $24,744,620 for the years ended

December 31, 2024 and 2023, respectively.

As of December 31, 2024, we had an accumulated deficit of $132,379,849.

Substantially all of

our net losses have resulted from costs incurred in connection with our research and development programs and, to a lesser extent, from

general and administrative costs associated with our operations.

We expect to continue to incur significant expenses and operating losses

in the foreseeable future, and we anticipate these losses will increase substantially as we continue our development of, seek regulatory

approval for, and potentially commercialize elraglusib, and potentially seek to discover and develop additional product candidates, utilize

third parties to manufacture elraglusib, hire additional personnel, expand and protect our intellectual property, and incur additional

costs associated with being a public company.

If we obtain regulatory approval for elraglusib, we expect to incur significant expenses

related to developing our commercialization capability to support product sales, marketing and distribution.

Because of the numerous risks

and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased

expenses or when, or if, we will be able to achieve or maintain profitability.

Even if we are able to generate product sales, we may not

become profitable.

If we do not become profitable or are unable to sustain profitability on a continuing basis, then we may be unable

to continue our operations at planned levels and may be forced to reduce or terminate our operations.

As of December 31, 2024, we had

cash and cash equivalents of $8,641,622.

Based on our current operating plan, we estimate that our existing cash and cash equivalents

as of the date of this Report will not satisfy the Company’s operational and capital requirements through twelve months from the

issuance date of the consolidated financial statements included in this Report.

Also, we will not generate revenue

from product sales unless and until we successfully complete clinical development and obtain regulatory approval for elraglusib or any

future product candidates, which we expect will take a number of years and may never occur.

As a result, we will need substantial additional

funding to support our continuing operations and pursue our business strategy.

Until such time we can generate significant revenue from

product sales, if ever, we expect to finance our operations through equity offerings, debt financings, or other capital sources, including

potential future collaborations, licenses, and other similar arrangements.

As we seek additional financing in the near term, we may be

unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all.

fail to raise capital or enter into such agreements or arrangements as, and when needed, we may delay, limit, reduce or terminate our

product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise

prefer to develop and market ourselves, or even cease operations.

Recent Developments

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.

Company’s common shares began trading on the Nasdaq Global Market on August 13, 2024, under the symbol "ACTU".

received net proceeds of approximately $22 million, after deducting discounts and commissions and other offering expenses of approximately

$3.7 million 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 IPO and

Overallotment Option, we issued the underwriters warrants (“Underwriter 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, 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.

In addition, the Company’s

Redeemable Convertible Preferred Stock, Related Party Convertible Notes Payable and in-the-money warrants to purchase the Company’s

Redeemable Convertible Preferred Stock converted into or were automatically exercised for, as applicable, common stock immediately prior

to the closing of the IPO.

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.

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.

Components of Our Results of Operations

Our operating expenses consist

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As a result, we expect our research and development expenses

will increase substantially in connection with our ongoing and planned clinical and preclinical development activities in the near term

to increase substantially in connection with our ongoing and planned clinical and preclinical development activities in the near term

and in the future, provided we are able to raise additional capital.

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license, or other arrangements.

A change in the outcome of any

of these variables with respect to the development of elraglusib or any future product candidates could significantly change the costs

A change in the outcome of

any of these variables with respect to the development of elraglusib or any future product candidates could significantly change the costs

and timing associated with the development of that product candidate.

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General and Administrative Expenses

General and administrative expenses

consist primarily of personnel-related expenses such as employee compensation, benefits, and stock-based compensation, for our personnel

in executive and other administrative functions.

General and administrative expenses also include legal fees relating to patent and corporate

matters and professional fees paid for accounting, auditing, consulting and tax services, as well as other costs such as insurance costs,

investor and public relations, and travel expenses.

We anticipate our general and

administrative expenses will increase substantially in the future as we expand our operations, including increasing our headcount to support

our continued research and development activities and preparing for later-stage clinical trials and potential commercialization of elraglusib.

General and administrative

expenses consist primarily of personnel-related expenses such as employee compensation, benefits, and stock-based compensation, for our

personnel in executive and other administrative functions.

General and administrative expenses also include legal fees relating to patent

and corporate matters and professional fees paid for accounting, auditing, consulting and tax services, as well as other costs such as

insurance costs, board of director fees, investor and public relations, and travel expenses.

We anticipate our general

and administrative expenses will increase in the future as we expand our operations, including increasing our headcount to support our

continued research and development activities and preparing for later-stage clinical trials and potential commercialization of elraglusib.

We also anticipate we will continue to incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance,

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Change in Fair Value of Warrant Liability

On June 30, 2023, in connection

with the issuance of the Series C Redeemable Convertible Preferred Stock, we issued the placement agent warrants to purchase up to 18,223

shares of Series C Redeemable Convertible Preferred Stock (after giving effect to the conversion of such shares into common stock) at

an exercise price equivalent to $9.42 per share of common stock.

The initial estimated fair value of these 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.

In 2018, in connection with convertible

promissory note payable agreements, we issued the noteholders warrants to purchase shares of Series B-1 Redeemable Convertible Preferred

Stock, of which, warrants to purchase up to 76,376 shares of Series B Redeemable Convertible Preferred Stock (after giving effect to the

conversion of such shares into common stock) were issued at an exercise price equivalent to $5.27 per share of common stock and warrants

to purchase up to 76,376 shares of Series B Redeemable Convertible Preferred Stock (after giving effect to the conversion of such shares

into common stock) were issued at an exercise price equivalent to $10.55 per share of common stock.

The Redeemable Convertible Preferred

Stock Warrants required liability classification as the underlying Redeemable Convertible Preferred Stock was considered contingently

redeemable and could have obligated us to transfer assets to the holders at a future date upon occurrence of a deemed liquidation event.

The warrants were recorded at fair value upon issuance and were subject to remeasurement to fair value at each balance sheet date, with

any changes in fair value recognized in other income (expense), net.

We adjusted the warrant liability for changes in 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.

Accordingly, the Redeemable Convertible Preferred Stock Warrants were remeasured upon the closing

of the IPO and marked to market to its fair value before being reclassified to equity.

Loss on Issuance of Related Party Convertible Notes

We previously had outstanding

warrants that required liability classification.

The warrants were recorded at fair value upon issuance and were subject to remeasurement

to fair value at each balance sheet date, with any changes in fair value recognized in other income (expense), net.

The warrant liabilities

were remeasured upon the closing of our IPO and marked to market to its fair value before being reclassified to equity.

Loss on Issuance of Related Party Convertible

Notes Payable;

Change in Estimated Fair Value of Related Party Convertible Notes Payable

On February 20, 2024, March 27,

2024, and May 8, 2024, the Company issued related party convertible notes in the amount of $3,000,000, $1,500,000, and $1,000,000 (collectively,

“Related Party Convertible Notes Payable”), respectively.

The Related Party Convertible Notes Payable were measured at fair

value on their issuance date 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).

Upon issuance of the Related Party Convertible Notes Payable, we elected to apply the fair value

option to the Related Party Convertible Notes Payable in accordance with Accounting Standards Codification (“ASC”) 825, Financial

Upon issuance of certain notes

payable, we elected to apply the fair value option in accordance with Accounting Standards Codification (“ASC”) 825, Financial

Instruments .

In certain circumstances, the estimated fair value at issuance may be greater than the principal amount at issuance.

The loss on issuance of the Related Party Convertible Notes Payable represented the difference between the estimated fair value of the

Related Party Convertible Notes Payable on the issuance date and the gross proceeds received on the issuance date based on the valuation

assumptions, including but not limited to, the proximity in time to the IPO, the discount on conversion of the Related Party Convertible

Notes Payable upon a financing or IPO, and the increased probability weighted IPO scenario on the issuance date.

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 included

but were 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 fair value of these notes payable was estimated at each reporting period while outstanding.

These notes payable were converted into

common stock upon the closing of the IPO in August 2024.

Interest Expense

Interest expense represents interest

owed to UIC under our license agreement with UIC, whereby UIC agreed to defer amounts owed to UIC under a former sublicense agreement

Interest expense represents

interest owed to UIC under our license agreement with UIC, whereby UIC agreed to defer amounts owed to UIC under a former sublicense agreement

in the amount of $404,991.

Interest Income

Interest income represents interest

earned on our cash and cash equivalents at the then prevailing market rates.

Interest income represents

interest earned on our cash and cash equivalents at the then prevailing market rates.

Results of Operations

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Gain on settlement of warrants (non-cash)

Loss on issuance of related party convertible notes payable at fair value

Loss on issuance of related party convertible notes payable at fair value (non-cash)

Change in estimated fair value of related party convertible notes payable (non-cash)

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$ (27,285,328 )

$ (2,540,708 )

Research and Development Expenses

The following table summarizes our research and development

expenses for the year ended December 31, 2024 and 2023:

The following table summarizes

our research and development expenses for the year ended December 31, 2025 and 2024:

Year Ended December 31,

External clinical trial expenses

Personnel and consulting expenses

CMC related costs

$ (8,336,486 )

Chemistry, Manufacturing & Control (“CMC”) related costs

Preclinical and biomarker research

Personnel and consulting expenses

Total research and development expenses

$ (8,383,656 )

The decrease in research and development

expenses of $3,032,056 for the year ended December 31, 2024 compared to the prior year was primarily due to (i) a decrease in preclinical

and biomarker studies in the current period of $1,402,916 due to few contracted studies in the current year, (ii) a decrease in external

clinical trial expenses of $573,612 mostly related to lower contract research organizations (“CRO”) costs in the current year

related to the randomized Phase 2 mPDAC trial (Actuate-1801 Part 3B) associated with fewer patients on study, (iii) a decrease of $539,148

in Chemistry Manufacturing & Control (“CMC”) related costs due to a decrease in manufacturing costs of elraglusib in the

current period due to the timing of drug substance manufacturing to support the randomized Phase 2 mPDAC trial (Actuate-1801 Part 3B),

and (iv) a decrease in personnel and consulting expenses of $516,380 primarily due to a decrease in consulting fees in the current period

as certain consultants transitioned to full-time employment at an overall lower cost to the Company.

The decrease in research and

development expenses of $8,383,656 for the year ended December 31, 2025 compared to the prior year was primarily due to (i) a decrease

in external clinical trial expenses of $8,336,486 mostly related to lower patient fees and CRO costs associated with fewer patients on

study related to the randomized Phase 2 mPDAC trial (Actuate-1801 Part 3B) as the trial winds down and (ii) a decrease in CMC related

costs of $953,419 primarily due to the timing of drug product manufacturing and stability studies.

These decreases were partially offset

by (i) an increase in preclinical and biomarker studies of $575,238, driven by new studies completed during 2025, and (ii) an increase

in personnel and consulting expenses of $331,011, primarily due to higher non-cash stock-based compensation expense of $314,933.

General and Administrative Expenses

The following

table summarizes our general and administrative expenses for the year ended December 31, 2024 and 2023:

following table summarizes our general and administrative expenses for the year ended December 31, 2025 and 2024:

Year Ended December 31,

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Total general and administrative expenses

The increase in general and administrative

expenses of $3,218,961 for the year ended December 31, 2024 compared to the prior year was primarily due to (i) an increase in personnel-related

expenses of $1,943,643 primarily due to an increase in non-cash stock-based compensation expense of approximately $1.6 million related

to awards granted to the president and chief executive officer, the chief financial officer, members of the board of directors in connection

with the IPO, and other administrative award grants combined with an increase in payroll and bonus expense of approximately $0.3 million

mostly related to the hiring of the Company’s chief financial officer in connection with the IPO (ii) an increase in professional

and consulting fees of $774,006 primarily related to an increase in search firm related fees to identify and add three new board members

to the Company’s Board of Directors to comply with Nasdaq listing requirements, an increase in valuation services to support the

estimated fair market value of the Company’s common stock and other financial instruments, including the fair value of the Related

Party Convertible Notes Payable, an increase in legal fees related to additional corporate matters and intellectual property costs, and

an increase in audit and audit related fees associated with the annual and quarterly review of the Company’s financial statements,

and (iii) an increase in other expenses of $501,312 primarily due to an increase in the cost of directors and officer insurance during

the current period, combined with an increase in board fees, investor relations fees, and other public company expenses.

The increase in general and

administrative expenses of $5,718,234 for the year ended December 31, 2025 compared to the prior year was primarily due to (i) an increase

in personnel-related expenses of $3,834,300 mostly due to an increase in non-cash stock-based compensation expense of $3,735,935 related

to awards granted to employees, non-employee members of the board of directors, and consultants of the Company combined with an increase

in payroll and related expenses primarily related to the hiring of the Company’s chief financial officer in June 2024, an increase

in base salaries for certain administrative employees, offset by a decrease in bonus expense, (ii) an increase in professional and consulting

fees of $1,148,376 primarily due to an increase in (a) investor and public relation fees, (b) consulting fees associated with increased

administrative support, and (c) legal fees related to routine corporate activities, which amounts were offset by a decrease in board member

search fees and valuation services and (iii) an increase in other expenses of $735,558 primarily due to an increase in the cost of directors

and officers insurance, board fees, listing fees, and other public company expenses.

Other Income (Expense)

Other income (expense), net, for

the year ended December 31, 2024 and 2023 is comprised of the following:

Other income (expense), net,

for the year ended December 31, 2025 and 2024 is comprised of the following:

· Change in fair value of warrant liability

—During the year ended December 31, 2024 and 2023, we recognized an increase in fair value of the warrant liability of $78,903 and

$79,822, respectively, based on the estimated fair value of warrant liability using the Black-Scholes valuation model at August 14, 2024

(closing date of the IPO) and December 31, 2023, respectively, which amounts are included in other income (expense) in the accompanying

consolidated financial statements.

—During the year ended December 31, 2024, we recognized an increase in fair value of the warrant liability of $78,903 based on the

estimated fair value of warrant liability using the Black-Scholes valuation model at August 14, 2024 (closing date of the Company’s

As of December 31, 2024, there were no Redeemable Convertible Preferred Stock Warrants outstanding and no related warrant liability.

· Gain on settlement of warrants —

Upon the closing of the IPO on August 14, 2024, the Company’s Series B Redeemable Convertible Preferred Stock 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.

Upon the settlement of the in-the-money warrants, the Company recorded a gain on settlement

of $343,240, which amounts is included in other income (expense) in the accompanying consolidated financial statements.

During the year ended December 31, 2024, we recognized a gain on settlement of warrants of $343,240 on the closing date of the Company’s

IPO, representing the difference between the estimated fair value at December 31, 2023 and the estimated fair value upon conversion of

the warrants into shares of common stock on August 14, 2024.

· Loss on issuance of related party convertible

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December 31, 2024 represents the difference between the estimated fair value of the Related Party Convertible Notes Payable on the issuance

date and the principal amount on the issuance date based on the valuation assumptions.

date and the principal amount of the note on the issuance date based on the valuation assumptions.

· Change in estimated fair value of Related

1 unchanged sentence

for the year ended December 31, 2024 represents the difference between the estimated fair value at issuance and the estimated fair value

upon conversion into common stock upon the closing of the IPO on August 14, 2024, which amount is included in other income (expense) in

the accompanying consolidated financial statements.

upon conversion into common stock on August 14, 2024.

· Interest expense — Interest expense

4 unchanged sentences

for the year ended December 31, 2025 and 2024 represents interest earned on cash and cash equivalents based on the prevailing market rates.

The decrease in interest income for the year ended December 31, 2024 compared to the prior year is primarily due to a lower average cash

The increase in interest income for the year ended December 31, 2025 compared to the prior year is primarily due to a higher average cash

balance on hand in 2025 compared to 2024.

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Sources of Liquidity

Since our inception, we have not

generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations.

to incur significant expenses and operating losses in the foreseeable future as we advance the clinical development of elraglusib and

any future product candidates.

As of December 31, 2024, we had cash and cash equivalents of $8,641,622.

Future Funding Requirements

We expect our expenses to increase

substantially in connection with our ongoing activities, particularly as we continue our development of, seek regulatory approval for,

and potentially commercialize elraglusib and potentially seek to discover and develop and/or license or acquire additional product candidates,

conduct our ongoing and planned clinical trials and preclinical studies, continue our research and development activities, utilize third

parties to manufacture elraglusib, hire additional personnel, expand and protect our intellectual property, and incur additional costs

associated with being a public company.

Cash used to fund our operating

expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding prepaid expenses, accounts

payable, and other accrued expenses.

The timing and amount of our funding requirements will depend on many factors, including:

· the costs and timing of, including invoicing

for, clinical trials and preclinical studies of elraglusib and any future product candidates we may choose to pursue, including the costs

of modification to clinical development plans based on feedback that we may receive from regulatory authorities and any third-party products

used as combination agents in our clinical trials;

· the costs, timing

and outcome of regulatory meetings and reviews of elraglusib or any future product candidates, including requirements of regulatory authorities

in any additional jurisdictions in which we may seek approval for elraglusib and any future product candidates;

· the costs of obtaining, maintaining, enforcing

and protecting our patents and other intellectual property and proprietary rights;

· our efforts to enhance operational systems and

hire additional personnel to satisfy our obligations as a public company, including enhanced internal control over financial reporting;

· the costs associated with hiring additional personnel

and consultants as our business grows, including additional executive officers and clinical development, regulatory, CMC, quality and

commercial personnel;

· the timing and payment of milestone, royalty

or other payments we must make pursuant to our existing and potential future license or collaboration agreements with third parties;

· the costs and timing of establishing or securing

sales and marketing capabilities if elraglusib or any future product candidate is approved;

· our ability to achieve sufficient market acceptance,

coverage, and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;

· our ability and strategic decision to develop

future product candidates other than elraglusib, and the timing of such development, if any;

· the terms and timing of establishing and maintaining

collaborations, licenses and other similar arrangements;

· costs associated with any products or technologies

that we may in-license or acquire.

Based on our current operating

plan, we estimate that our existing cash and cash equivalents as of the date of this Report will not satisfy the Company’s operational

and capital requirements through twelve months from the issuance date of the consolidated financial statements included in this Report.

We have no other committed sources

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through equity

offerings, debt financings, or other capital sources, including current or potential future collaborations, licenses, and other similar

arrangements.

As we seek additional financing in the near future, we may be unable to raise additional funds or enter into such other

arrangements when needed on favorable terms or at all.

To the extent we raise additional capital through the sale of equity or convertible

debt securities, stockholders’ ownership interest in our common stock will be diluted, and the terms of these securities may include

liquidation or other preferences that adversely affect the rights of our common stockholders.

Debt financing and preferred equity financing,

if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring

additional debt, making acquisitions, engaging in acquisition, merger or collaboration transactions, selling or licensing our assets,

making capital expenditures, redeeming our stock, making certain investments or declaring dividends.

If we raise additional funds through

collaborations or license agreements with third parties, we may have to relinquish valuable rights to our technologies, future revenue

streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us.

If we are unable to raise

additional funds through equity, debt, or other financings when needed, we may be required to delay, limit, reduce or terminate our product

development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer

to develop and market ourselves, or even cease operations.

Since our inception, we have

not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from operations.

expect to incur significant expenses and operating losses in the foreseeable future as we advance the clinical development of elraglusib

and any future product candidates.

On March 27, 2025, we entered

into a common stock purchase agreement (the “Committed Equity Facility”) with B.

Riley Principal Capital II (“B.

giving the Company the right, but not the obligation, to sell to B.

Riley over a 36-month period up to the lesser of (i) $50 million of

newly issued shares of our common stock and (ii) 3,904,374 shares of the Company’s common stock.

During the year ended December

31, 2025, we received net proceeds of $3,800,465 in exchange for 539,967 shares of common stock sold under the Committed Equity Facility.

As of December 31, 2025, we had 3,364,407 shares of common stock in remaining capacity under our Committed Equity Facility.

On June 25, 2025, we entered

into a securities purchase agreement for a private placement of common stock and warrants with certain institutional and accredited investors,

which closed on June 27, 2025 (the “June 2025 Private Placement”).

Under the June 2025 Private Placement, the Company received

aggregate net proceeds of $4,592,462 in exchange for the issuance of 666,497 shares of common stock and warrants to purchase up to 666,497

shares of common stock.

On September 10, 2025, we

entered into an underwriting agreement (the “Underwriter Agreement”) with Lucid Capital Markets, LLC (“Underwriter”)

relating to an underwritten public offering of 2,142,858 shares of common stock plus an over-allotment option to purchase up to an additional

321,428 shares of common stock at the public offering price of $7.00 per share, less underwriting discounts and commissions and other

offering expenses (“September 2025 Public Offering”).

The offering closed on September 11, 2025, and the Company issued 2,464,286

shares of common stock to the Underwriter, including shares issued under the over-allotment option, in exchange for net proceeds of $15,573,966.

On November 28, 2025, we entered

into an At Market Issuance Sales Agreement (the “ATM Agreement”) with B.

Riley Securities, Inc.

and Craig-Hallum Capital Group

LLC (each a “Sales Agent” and collectively the “Sales Agents”) with respect to an “at the market”

offering program (the “ATM Facility”), under which we may, from time to time, at our sole discretion, issue and sell through

the Sales Agents, up to $100 million of shares of common stock.

Pursuant to the ATM Agreement, we may sell the shares through the Sales

Agents by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act.

The Sales Agents will use commercially reasonable efforts consistent with their normal trading and sales practices to sell the shares

from time to time, based upon instructions from us, including any price or size limits or other customary parameters or conditions we

We will pay the Sales Agents a commission of up to 3.0% of the gross sales proceeds of any common stock sold through the Sales

Agents under the ATM Agreement, and we also have provided the Sales Agents with customary indemnification rights.

During the year ended

December 31, 2025, the Company did not sell any shares of common stock under the ATM Facility.

As of December, we had $100 million in

remaining capacity under our ATM Facility.

As of December 31,

2025, we had cash and cash equivalents of $13,159,423 and working capital of $7,936,503.

We expect our expenses to increase substantially

in connection with our ongoing activities, particularly as we continue our development of, seek regulatory approval for, and potentially

commercialize elraglusib and potentially seek to discover and develop and/or license or acquire additional product candidates, conduct

our ongoing and planned clinical trials and preclinical studies, continue our research and development activities, utilize third parties

to manufacture elraglusib, hire additional personnel, expand and protect our intellectual property, and incur additional costs associated

with being a public company.

Based on our current operating plan, we estimate that our existing cash and cash equivalents as of the date

of this Annual Report will not satisfy the Company’s operational and capital requirements beyond July 2026 without raising additional

There can be no assurance that the Company will be able to raise sufficient proceeds in the future under the ATM Facility or

Committed Equity Facility or any additional financing will be available to the Company on acceptable terms, if at all.

Until such time, if ever,

as we can generate substantial product revenue, we expect to finance our operations through equity offerings, debt financings, or other

capital sources, including current or potential future collaborations, licenses, and other similar arrangements.

As we seek additional

financing in the near future, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable

terms or at all.

Our ability to raise additional funds may be adversely impacted by business conditions, global economic conditions, disruptions

to, and volatility in, the credit and financial markets in the United States and worldwide, and diminished liquidity and credit availability.

To the extent we raise additional capital through the sale of equity or convertible debt securities, stockholders’ ownership interest

in our common stock will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect

the rights of our common stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include

covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions, engaging

in acquisition, merger or collaboration transactions, selling or licensing our assets, making capital expenditures, redeeming our stock,

making certain investments or declaring dividends.

If we raise additional funds through collaborations or license agreements with third

parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates,

or grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity, debt, or other

financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts

or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, or even cease

Based on the above matters,

we have concluded that there is substantial doubt regarding the Company’s ability to continue as a going concern.

Material Cash Requirements for Known Contractual and Other Obligations

Research and Development Costs

We are continuing to invest in

our elraglusib clinical trials and have entered into contractual obligations with each clinical trial site.

We are continuing to invest

in our elraglusib clinical trials and have entered into contractual obligations with each clinical trial site.

Each contract shall continue

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Other Capital Requirements and Additional Royalty Obligations.

We enter into agreements in the

normal course of business with various vendors, which are generally cancellable upon notice.

We enter into agreements in

the normal course of business with various vendors, which are generally cancellable upon notice.

Payments due upon cancellation typically

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Net change in cash and cash equivalents

$ (17,490,651 )

Cash Flows From Operating Activities

Year Ended December 31, 2024 — Net

cash used in operating activities for the year ended December 31, 2024 consisted of our net loss of $27,285,328 combined with the non-cash

gain on settlement of the warrant liability of $343,240, which amounts were offset by (i) non-cash stock-based compensation expense of

$1,995,793, (ii) a non-cash increase in the fair value of our warrant liability of $78,903, (iii) a loss on issuance of Related Party

Convertible Notes Payable at fair value of $400,000, (iv) the change in estimated fair value of Related Party Convertible Notes Payable

of $2,192,507, (v) an increase in accrued interest on license payable of $18,641, and (vi) cash provided by a net change in operating

assets and liabilities of $1,100,076.

Year Ended December 31,

2023 — Net cash used in operating activities for the year ended December 31, 2023 consisted of our net loss

of $24,744,620, which amount was offset by (i) non-cash stock-based compensation expense of $423,539, (ii) a non-cash increase

in the fair value of our warrant liability of $79,822, (iii) an increase in accrued interest on license payable of $43,641, and (iv) cash

provided by a net change in operating assets and liabilities of $2,572,451.

2025 — Net cash used in operating activities for the year ended December 31, 2025 consisted of our net loss of

$22,227,852 combined with cash used by a net change in operating assets and liabilities of $3,045,312, which amounts were offset by non-cash

stock-based compensation expense of $6,046,661 and an increase in accrued interest on license payable of $20,250

Year Ended December 31,

2024 — Net cash used in operating activities for the year ended December 31, 2024 consisted of our net loss of

$27,285,328 combined with the non-cash gain on settlement of the warrant liability of $343,240, which amounts were offset by (i) non-cash

stock-based compensation expense of $1,995,793, (ii) a non-cash increase in the fair value of our warrant liability of $78,903, (iii)

a loss on issuance of Related Party Convertible Notes Payable at fair value of $400,000, (iv) the change in estimated fair value of Related

Party Convertible Notes Payable of $2,192,507, (v) an increase in accrued interest on license payable of $18,641, and (vi) cash provided

by a net change in operating assets and liabilities of $1,100,076.

Cash Flows From Financing Activities

Year Ended December 31, 2024 — During

the year ended December 31, 2024, net cash provided by financing activities primarily consisted of net proceeds received from the closing

of the IPO and Overallotment Option of $22,025,611 (net of underwriting discounts and commissions and after payment of offering costs

of $1,931,189), proceeds of $5,500,000 from the issuance of the Related Party Convertible Notes Payable, which amount was offset .

Year Ended December 31, 2023 — During

the year ended December 31, 2023, net cash provided by financing activities consisted of net proceeds of $4,134,516 related to the issuance

of Series C Redeemable Convertible Preferred Stock.

Year Ended December 31,

2025 —During the year ended December 31, 2025, net cash provided by financing activities consisted of net proceeds received

of (i) $15,573,966 under the September 2025 Public Offering, (ii) $4,592,462 under the June 2025 Private Placement, (iii) $3,826,336 from

the sale of common stock to B.

Riley under the Committed Equity Facility, and (iv) $34,115 from the exercise of stock options, which amounts

were offset by the payment of deferred offering costs of $302,825.

Year Ended December 31,

2024 — During the year ended December 31, 2024, net cash provided by financing activities primarily consisted

of net proceeds received from the closing of the IPO and Overallotment Option of $22,025,611 (net of underwriting discounts and commissions

and after payment of offering costs of $1,931,189), proceeds of $5,500,000 from the issuance of the Related Party Convertible Notes Payable,

and proceeds of $200,000 from the issuance of a related party short-term loan, which amount was offset by the payment of the related party

short-term loan of $200,000.

Critical Accounting Policies and Significant Judgments and Estimates

Our financial statements are prepared

in accordance with accounting principles generally accepted in the United States of America (“U.S.

Our financial statements are

prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The preparation

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third parties to conduct and support our clinical trials and preclinical studies.

As part of the process of preparing

our consolidated financial statements, we are required to estimate our research and development 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 research and development expenses

as of each balance sheet date based on facts and circumstances known to us at that time.

The significant estimates in our research and

development 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 research and development activities on our estimates of the services received and efforts

expended pursuant to quotes and contracts with contractors and vendors that conduct research and development 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.

payments for goods and services that will be used in future research and development 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.

there have been no material differences between our estimates of such expenses and the amounts actually incurred.

As part of the process of

preparing our consolidated financial statements, we are required to estimate our research and development expenses as of each balance

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 research and development

expenses as of each balance sheet date based on facts and circumstances known to us at that time.

The significant estimates in our research

and development 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 research and development activities on our estimates of the services received and

efforts expended pursuant to quotes and contracts with contractors and vendors that conduct research and development on our behalf.

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 research and development 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

To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.

Stock-Based Compensation

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Stock Incentive Plan (“2024 Plan”), respectively.

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, consultants and non-employees and records stock-based compensation expenses for awards of stock-based

Under the 2015 Plan and 2024 Plan, 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, consultants 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 and RSAs are 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

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.

Post IPO, the fair value of our common stock is determined based on the closing price of our common

stock as reported on the date of grant on the primary stock exchange on which our common stock is traded.

The estimated fair value of

service-based RSAs and RSUs are 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.

Since the Company’s IPO, the fair value of our common stock was determined

based on the closing price of our common stock as reported on the date of grant on the primary stock exchange on which our common stock

The Company classifies stock-based

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related to stock-based compensation awards as they occur.

Determination of Fair Value of Our Common Stock

Prior to the closing of the Company’s

IPO, there was no public market for our common stock.

Therefore, the estimated fair value of our common stock prior to the date of the

Company’s IPO was determined by our board of directors as of the date of grant of each award, with input from management, considering

our most recently available third-party valuations of common stock and our board of directors’ assessment of additional objective

and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the

date of the grant.

These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified

Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Our common stock valuations were prepared using either an option pricing method (OPM) or a hybrid method, both of which used market approaches

to estimate our enterprise value.

The OPM treats common stock and preferred stock as call options on the total equity value of a company,

with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes.

Under this method, the common stock has value only if the funds available for distribution to stockholders exceed the value of the preferred

stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger.

The hybrid method is a probability-weighted

expected return method (PWERM) where the equity value in one or more of the scenarios is calculated using an OPM.

The PWERM is a scenario-based

methodology that estimates the fair value of common stock based upon an analysis of future values for us, assuming various outcomes.

addition to considering the results of these third-party valuations, our board of directors considered various objective and subjective

factors to determine the fair value of our common stock as of each grant date, including:

· the prices at which we sold shares of preferred

stock and the superior rights and preferences of the preferred stock relative to our common stock at the time of each grant;

· the progress of our research and development

programs, including the status of preclinical studies and clinical trials for our product candidates;

· our stage of development and business strategy;

· external market conditions affecting the biotechnology

industry and trends within the biotechnology industry;

· our financial position, including cash on hand,

and our historical and forecasted performance and operating results;

· the lack of an active public market for our common

stock and our preferred stock;

· the likelihood of achieving a liquidity event,

such as an initial public offering, or IPO, or sale of our company in light of prevailing market conditions;

· the analysis of IPOs and subsequent market performance

of similar companies in the biotechnology industry.

The assumptions underlying these

valuations represented management’s best estimate, which involved inherent uncertainties and the application of management’s

As a result, if we had used significantly different assumptions or estimates, the fair value of our common stock and our stock-based

compensation expense could have been materially different.

There were significant judgments

and estimates inherent in the determination of the fair value of our common stock.

Historically, these judgments and estimates included

assumptions regarding our future operating performance, the time to complete an IPO or other liquidity event, and the determination of

the appropriate valuation methods.

Based on our early stage of development,

the difficulty in predicting the range of specific outcomes (and their likelihood), and other relevant factors, the market approach was

considered most appropriate for valuations prior to the closing of the IPO.

The recent transactions method was utilized to determine the

value of the equity and the OPM allocated the equity value to the respective share classes.

In determining the estimated fair value of

our common stock, our board of directors also considered the fact that our stockholders could not freely trade our common stock in the

public markets prior to the closing of the Company’s IPO.

Accordingly, we applied discounts to reflect the lack of marketability

of our common stock based on the weighted-average expected time to liquidity.

Once a public trading market for

our common stock became established in connection with the completion of the Company’s IPO, it is no longer necessary for our board

of directors to estimate the fair value of our common stock in connection with our accounting for granted equity-based awards or for any

other such awards we may grant, as the fair value of our common stock is determined based on the closing price of our common stock as

reported on the date of grant on the primary stock exchange on which our common stock is traded.

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.

Party Convertible Notes Payable and the Redeemable Convertible Preferred Stock Warrant Liability 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;

· 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.

Redeemable Convertible Preferred Stock Warrants

The Company’s Redeemable

Convertible Preferred Stock Warrants 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.

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 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

The Redeemable Convertible Preferred

Stock Warrant Liability was valued using the Black-Scholes valuation model, which requires the use of highly subjective assumptions to

determine the appropriate fair value of each warrant, including:

· Fair Value of Common Stock — See

the subsection titled “— Determination of Fair Value of Our Common Stock” above.

· Expected Volatility — Prior to the closing

of the Company’s IPO, there was no public market or trading history for our common stock.

Therefore, the expected volatility was

estimated based on the historical volatilities of common stock of comparable publicly traded companies, for a look-back period commensurate

with the expected term of the warrant.

The comparable companies were chosen based on their size, stage of their life cycle or area of

· Risk-Free Interest Rate — The risk-free

interest rate used was based on the published U.S.

Department of Treasury interest rates in effect at each measurement date for zero coupon

Treasury notes with maturities approximating the expected remaining term of each warrant.

· Expected Dividend Yield — The expected

dividend yield was zero as we have not paid dividends and do not anticipate paying a cash dividend in the foreseeable future.

· Expected Term — The expected term of each

warrant represents the remaining contractual term of the underlying warrant.

Fair Value Option of Accounting for Related Party Convertible Notes

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

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.

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 were determined using valuation models that incorporated assumptions and estimates.

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

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.

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 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.

Off-Balance Sheet Arrangements

We did not have, during the periods

presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

We did not have, during the

periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Recent Accounting Pronouncements

A description of recently issued

accounting standards that may potentially impact our financial position, results of operations, and cash flows is included in Note 2 to

our consolidated financial statements in this Report.

Emerging Growth Company Status and Smaller Reporting

Company Status

We are an emerging growth company,

as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

The JOBS Act permits an emerging growth company

such as ours to take advantage of an extended transition period to comply with new or revised accounting standards.

We have elected to

avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application

dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised

standard and may do so until such time that we either (i) irrevocably elect to opt out of such extended transition period or (ii) no longer

qualify as an emerging growth company.

We may choose to early adopt any new or revised accounting standards whenever such early adoption

is permitted for private companies.

A description of recently

issued accounting standards that may potentially impact our financial position, results of operations, and cash flows is included in Note

2 to our consolidated financial statements in this Report.

Emerging Growth Company Status and Smaller

Reporting Company Status

We are an emerging growth

company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

The JOBS Act permits an emerging

growth company such as ours to take advantage of an extended transition period to comply with new or revised accounting standards.

have elected to avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different

application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new

or revised standard and may do so until such time that we either (i) irrevocably elect to opt out of such extended transition period or

(ii) no longer qualify as an emerging growth company.

We may choose to early adopt any new or revised accounting standards whenever such

early adoption is permitted for private companies.

We will continue to remain an emerging growth company until the earliest of the following:

last day of the fiscal year following the fifth anniversary of the date of the completion of the IPO;

(2) the last day of the fiscal year

in which our total annual gross revenue is equal to or more than $1.235 billion;

(3) the date on which we have issued more than $1.0 billion

in nonconvertible debt during the previous three years;

or (4) the date on which we are deemed to be a large accelerated filer under the

rules of the SEC.

(1) the last day of the fiscal year following the fifth anniversary of the date of the completion of the IPO;

(2) the last day of the

fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion;

(3) the date on which we have issued more

than $1.0 billion in nonconvertible debt during the previous three years;

or (4) the date on which we are deemed to be a large accelerated

filer under the rules of the SEC.

We are also a smaller reporting

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by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting

company” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this item.

Quantitative and Qualitative Disclosures About Market

As a “smaller reporting company” as defined in Rule 12b-2

of the Exchange Act, we are not required to provide the information called for by this item.

Financial Statements and Supplementary Data.

Our consolidated financial statements,

together with the report of our independent registered public accounting firm, are included in this Annual Report on Form 10-K beginning

Our consolidated financial

statements, together with the report of our independent registered public accounting firm, are included in this Annual Report on Form

10-K beginning on page F-1.

Changes in and Disagreements with Accountants on Accounting

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis