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Item 8. Financial Statements and Supplementary Data

2025-03-24 compared with 2024-03-29 · 335 added, 357 removed, 712 unchanged (49% of the section changed)

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Report of Independent Registered Public Accounting Firm (PCAOB ID Number 185 )

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 42 )

Consolidated Balance Sheets as of December 31, 2023 (Successor) and December 31, 2022 (Predecessor)

Consolidated Statements of Operations and Comprehensive (Loss) Income for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor) and for the year ended December 31, 2022 (Predecessor )

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor) and for the year ended December 31, 2022 (Predecessor)

Consolidated Statements of Cash Flows for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor) and for the year ended December 31, 2022 (Predecessor)

Consolidated Balance Sheets as of December 31, 2024 (Successor) and December 31, 2023 (Successor)

Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor )

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the year ended December 31, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor)

Consolidated Statements of Cash Flows for the year ended December 31, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor)

Notes to Consolidated Financial Statements

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of AEON Biopharma, Inc.

and subsidiary (the Company) as of December 31, 2023 (Successor), the related consolidated statements of operations and comprehensive (loss) income, convertible preferred stock and stockholders’ deficit, and cash flows for the periods from January 1, 2023 through July 21, 2023 (Predecessor), and July 22, 2023 through December 31, 2023 (Successor), and the related notes (collectively, 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 (Successor), and the results of its operations and its cash flows for the periods from January 1, 2023 through July 21, 2023 (Predecessor), and July 22, 2023 through December 31, 2023 (Successor), in conformity with U.S.

We have audited the accompanying consolidated balance sheets of AEON Biopharma, Inc.

and subsidiary (the Company) as of December 31, 2024 and 2023 (Successor), the related consolidated statements of operations and comprehensive income (loss), convertible preferred stock and stockholders’ deficit, and cash flows for the year ended December 31, 2024 (Successor) and for the periods from January 1, 2023 through July 21, 2023 (Predecessor), and July 22, 2023 through December 31, 2023 (Successor), and the related notes (collectively, 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, 2024 and 2023 (Successor), and the results of its operations and its cash flows for the year ended December 31, 2024 (Successor) and for the periods from January 1, 2023 through July 21, 2023 (Predecessor), and July 22, 2023 through December 31, 2023 (Successor), in conformity with U.S.

generally accepted accounting principles.

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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 the outcome of this uncertainty.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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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.

We conducted our audits 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 controls 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 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.

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 audits, 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 audits 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.

Our audits 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 audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2023.

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March 24, 2025

Report of Independent Registered Public Accounting Firm

The Stockholders and Board of Directors of AEON Biopharma, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of AEON Biopharma, Inc.

(Old AEON) (the Company) as of December 31, 2022, the related consolidated statements of operations and comprehensive income (loss), 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 at December 31, 2022, and the results of its operations and its cash flows for the years then ended in conformity with U.S.

generally accepted accounting principles.

The Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has experienced recurring losses from operations, has a net capital deficiency, negative cash flows from operations since inception, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management's evaluation of the events and conditions and management’s plans regarding 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 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 and in accordance with auditing standards generally accepted in the United States of America.

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.

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/ Ernst & Young LLP

We served as the Company’s auditor from 2019 to 2023.

Irvine, California

March 9, 2023

AEON BIOPHARMA, INC.

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Current assets:

Cash and cash equivalents

Prepaid expenses and other current assets

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Operating lease right-of-use asset

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

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Other accrued expenses

Current portion of convertible notes at fair value, including related party amount of $ 0 and $ 38,834 at December 31, 2023 and December 31, 2022, respectively

Total current liabilities

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Commitments and contingencies

Convertible preferred stock issuable in series, $ 0.0001 par value;

44,666,035 shares authorized as of December 31, 2022;

21,257,708 shares issued and outstanding at December 31, 2022;

liquidation preference of $ 141,920 at December 31, 2022

Stockholders’ Deficit:

AEON Biopharma, Inc.

stockholders’ deficit:

Class A common stock, $ 0.0001 par value;

500,000,000 and 207,450,050 shares authorized, 37,159,600 and 138,848,177 shares issued and 37,159,600 and 138,825,356 shares outstanding at December 31, 2023 and December 31, 2022, respectively

500,000,000 shares authorized at December 31, 2024 and December 31, 2023, and 555,511 and 516,404 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

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Accumulated deficit

Treasury stock, at cost, 0 and 22,821 shares at December 31, 2023 and December 31, 2022, respectively

Total AEON Biopharma, Inc.

stockholders’ deficit

Non-controlling interest

Total stockholders' deficit

Total liabilities, convertible preferred stock and stockholders' deficit

Total liabilities and stockholders' deficit

See accompanying notes to the consolidated financial statements

AEON BIOPHARMA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share data)

July 22 to December 31

January 1 to December 31

Operating expenses:

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Research and development

Acquired in-process research and development

Change in fair value of contingent consideration

Total operating costs and expenses

(Loss) income from operations

Other (loss) income:

Income (loss) from operations

Other income (loss):

Change in fair value of convertible notes

Change in fair value of warrants

Change in fair value of embedded forward purchase agreements and derivative liabilities

Loss on embedded forward purchase agreements and derivative liabilities, net

Other income, net

Total other (loss) income, net

(Loss) income before taxes

(Loss) income and comprehensive (loss) income

Basic and diluted net (loss) income per share

Weighted average shares of common stock outstanding used to compute basic and diluted net (loss) income per share

Total other loss, net

Income (loss) before taxes

Net income (loss)

Basic net income (loss) per share

Diluted net income (loss) per share

Weighted average shares of common stock outstanding used to compute basic net income (loss) per share

Weighted average shares of common stock outstanding used to compute diluted net income (loss) per share

See accompanying notes to the consolidated financial statements

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Stockholders'

Balance as of January 1, 2023 (Predecessor)

Balance as of January 1, 2024 (Successor)

Termination of Forward Purchase Agreements

Issuance of shares and reclassification of liability related to cashless warrant exercises

Issuance of shares related to at-the-market offering, net

Issuance of common stock

Stock-based compensation expense

Debt extinguishment due to warrant modification

Balance as of July 21, 2023 (Predecessor)

Balance as of December 31, 2024 (Successor)

Balance as of July 22, 2023 (Successor)

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Stock-based compensation expense

Balance as of December 31, 2022 (Predecessor)

Debt extinguishment due to warrant modification

Balance as of July 21, 2023 (Predecessor)

See accompanying notes to the consolidated financial statements

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(in thousands, except per share data)

July 22 to December 31

January 1 to December 31

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net loss to net cash used in operating activities:

Write-off of deferred offering costs

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Stock-based compensation expense

Non-cash issuance of common stock

Write-off of acquired in-process research and development

Change in fair value of convertible notes

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Net cash used in operating activities

Cash flows from investing activities:

Purchases of property and equipment

Net cash used in investing activities

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Proceeds from issuance of convertible notes

Repayment of convertible notes

Proceeds from issuance of at-the-market shares

Net cash provided by financing activities

Net (decrease) increase in cash

Cash at beginning of period

Cash at end of period

Net decrease in cash

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

See accompanying notes to the consolidated financial statements

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See Note 3 Forward Merger for additional details.

The outstanding public warrants were fully redeemed in April 2024, and as such, there are no public warrants outstanding as of December 31, 2024.

Refer to Note 6 for additional information.

Liquidity and Going Concern

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The Company has experienced recurring losses from operations and has a net capital deficiency and negative cash flows from operations since its inception.

As of December 31, 2023, the Successor reported cash of $ 5.2 million and an accumulated deficit of $ 473.6 million.

As of December 31, 2024, the Company reported cash of $ 13 thousand and an accumulated deficit of $ 431.6 million.

The Company expects to incur losses and use cash in its operations for the foreseeable future.

Any further development of ABP-450 for any indication, including the completion of the Phase 2 open-label extension study in migraine, any Phase 3 trials for migraine, and any additional studies in cervical dystonia, will require additional funding, which may not be available to us on reasonable terms, or at all.

As a result of these conditions, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern and to meet its obligations as they become due within one year after the date that these consolidated financial statements are issued.

The Company expects to seek additional funding in the form of equity financings or debt, however, there can be no assurance that such efforts will be successful or that, in the event that they are successful, the terms and conditions of such financing will be commercially acceptable.

On May 3, 2024, the Company announced preliminary top-line results from its planned interim analysis of the Phase 2 trial with ABP-450 in the preventative treatment of chronic migraine, which did not meet the primary or secondary endpoints.

The Company originally intended to pursue submission of an Original BLA seeking one or more potential therapeutic indications for ABP-450.

However, in May 2024, the Company announced the discontinuation of its Phase 2 clinical trials for episodic and chronic migraine in order to implement certain cash preservation measures.

On July 9, 2024, the Company announced a strategic reprioritization to pursue a Section 351(k) biosimilar regulatory pathway for ABP-450, using AbbVie Inc.’s product Botox as a proposed reference product.

The Company held an initial meeting with the FDA in the third quarter of 2024 during which it aligned with the FDA on next steps to develop a Botox biosimilar.

The Company commenced analytical studies in the fourth quarter of 2024 to prepare for a potential Biosimilar Biological Product Development (“BPD”) Type 2a meeting with the FDA to review the results from the studies in the second half of 2025.

Securities and Exchange Commission (the “SEC”) declared effective on August 21, 2024, having aggregate gross proceeds of up to $ 50.0 million through Leerink Partners as sales agent.

As of December 31, 2024, the Company issued 2,241 shares under the ATM for net proceeds of $0.2 million and approximately $ 49.8 million of common stock remained available to be sold under the ATM.

See Note 8 Common Stock for additional information.

The commencement of studies, preparation for the potential BPD meeting and any further development of ABP-450 would require additional funding in the form of equity financings or debt.

There can be no assurance that such efforts will be successful or that, in the event that they are successful, the terms and conditions of such financing will be commercially acceptable.

Furthermore, the use of equity as a source of financing would dilute existing shareholders.

The Company is actively attempting to secure additional capital to fund its operations.

However, there can be no assurance that the Company will be able to raise additional capital on commercially reasonable terms or at all.

The preparation of these consolidated financial statements does not include any adjustments that may result from the outcome of this uncertainty.

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GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes.

The Company’s most significant estimates relate to the research and development accruals, valuation of common stock and related stock-based compensation, and the fair values of the contingent consideration, forward purchase agreements, in-process research and development, warrant liabilities, convertible notes, among others.

The Company’s most significant estimates relate to the research and development accruals, valuation of common stock and related stock-

based compensation, and the fair values of contingent consideration, forward purchase agreements, in-process research and development, warrant liabilities, convertible notes, among others.

Although the Company bases estimates on historical experience, knowledge of current events and actions it may undertake in the future, and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments over the carrying values of assets and liabilities, this process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.

The Company provides segment financial information and results for its segments based on the segregation of revenues and expenses that its chief operating decision makers review for purposes of allocating resources and evaluating its financial performance.

As of December 31, 2023 and December 31, 2022, the Company operates and manages its business as one operating and reportable segment.

The Company determined that it operates and manages its business as one operating segment, focused on the research and development of ABP-450.

The Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer, who reviews its consolidated operating results for the purpose of assessing liquidity needs, allocating resources and evaluating financial performance.

Asset information, including monitoring of its cash and cash equivalents, provided to the CODM is consistent with those reported on the consolidated balance sheets.

The key measure of the Company’s single segment profit and loss that the CODM uses to allocate resources and assess performance is the Company’s operating income (loss) as reported on the consolidated statement of operations and comprehensive income (loss).

The table below shows a reconciliation of the Company’s net income (loss), including the significant expense categories regularly provided to and reviewed by the CODM, as computed under US GAAP to the Company’s total consolidated net income (loss) as reported in the consolidated statement of operations:

Segment operating expenses:

Compensation and benefits

Professional and legal fees

Office and travel

Research and development

Total selling, general and administrative, and research and development

Acquired in-process research and development

Change in fair value of contingent consideration

Total operating costs and expenses

Income (loss) from operations

Other segment items:

Change in fair value of convertible notes

Change in fair value of warrants

Loss on embedded forward purchase agreements and derivative liabilities, net

Other income, net

Total other segment items, net

Income (loss) before taxes

Segment net income (loss)

Risk and Uncertainties

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Total other accrued expenses

Convertible Notes (Predecessor)

The Company elected to account for its Predecessor convertible promissory notes at fair value at inception and at each subsequent reporting date.

Subsequent changes in fair value were recorded as a component of non-operating loss in the Predecessor’s consolidated statements of operations and comprehensive (loss) income or as a component of other comprehensive (loss) income for changes related to instrument-specific credit risk.

Convertible Notes

The Company elected to account for its convertible promissory notes at fair value at inception and at each subsequent reporting date.

Subsequent changes in fair value are recorded as a component of non-operating income (loss) in the consolidated statements of operations or as a component of other comprehensive income (loss) for changes related to instrument-specific credit risk.

As a result of electing the fair value option, direct costs and fees related to the convertible promissory notes are expensed as incurred.

The convertible promissory notes were converted into shares of the Company’s common stock at the Closing.

The Predecessor convertible promissory notes were converted into shares of the Company’s common stock at the Closing.

Contingent Consideration (Successor)

in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

Based on the appropriate guidance, the Company determined that the Contingent Consideration Shares would be classified as a liability on the Successor’s consolidated balance sheets and remeasured at each reporting period with changes to fair value recorded to the Successor’s consolidated statements of operations and comprehensive (loss) income.

The Company accounts for its contingent consideration as either equity-classified or liability-classified instruments based on an assessment of the Contingent Consideration specific terms (as further defined in Note 6) and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

Based on the appropriate guidance, the Company determined that the Contingent Consideration would be classified as a liability on the Successor’s

consolidated balance sheets and remeasured at each reporting period with changes to fair value recorded to the Successor’s consolidated statements of operations and comprehensive income (loss).

Forward Purchase Agreements (Successor)

Based on the applicable guidance in ASC 480, ASC 815, ASC 505, Equity (“ASC 505”) and Staff Accounting Bulletin Topic 4.E, Receivables from Sale of Stock (“SAB 4E”), the Company has determined that each of its forward purchase agreements entered in connection with the Merger is a freestanding hybrid financial instrument comprising a subscription receivable and embedded features, which have been bifurcated and accounted for separately as derivative instruments.

The Company has recorded the derivatives as liabilities and measured them at fair value with the initial value of the derivative recorded as a loss “on the line” in the Successor’s opening accumulated deficit.

On the line describes those transactions triggered by the consummation of the Merger that are not recognized in the consolidated financial statements of the Predecessor or the Successor as they are not directly attributable to either period but instead were contingent on the Merger.

Based on the applicable guidance in ASC 480, ASC 815, Equity (“ASC 505”) and Staff Accounting Bulletin Topic 4.E, Receivables from Sale of Stock (“SAB 4E”), the Company had determined that each of its forward purchase agreements entered in connection with the Merger was a freestanding hybrid financial instrument comprising a subscription receivable and embedded features, which were bifurcated and accounted for separately as derivative instruments.

The Company recorded the derivatives as liabilities and measured them at fair value each reporting period.

For more information, see Note 3 Forward Merger .

Subsequent changes in the bifurcated derivatives are recorded in the Successor’s consolidated statements of operations and comprehensive (loss) income.

Subsequent changes in the bifurcated derivatives were recorded in the Successor’s consolidated statements of operations and comprehensive income (loss).

The forward purchase agreements were terminated in March 2024, and the loss related to the termination was recorded to the consolidated statement of operations and comprehensive income (loss).

Warrants (Successor)

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For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter until settlement.

Changes in the estimated fair value of the warrants are recognized in the Successor’s consolidated statements of operations and comprehensive (loss) income.

Changes in the estimated fair value of the warrants are recognized in the Successor’s consolidated statements of operations and comprehensive income (loss).

Convertible Preferred Stock (Predecessor)

The Company recorded its Predecessor convertible preferred stock at their respective issuance price, less issuance costs on the dates of issuance.

The convertible preferred stock is classified outside of permanent equity as temporary equity in the accompanying Predecessor’s consolidated balance sheets.

Although the convertible preferred stock is not redeemable at the holder’s option, upon certain change in control events that are outside of the Company’s control, including liquidation, sale or transfer of control of the Company, holders of the convertible preferred stock may have the right to receive their liquidation preference to any distribution of the proceeds under the terms of the Company’s amended and restated certificate of incorporation.

The Company has not adjusted the carrying values of the convertible preferred stock to the liquidation preferences of such shares since it is uncertain whether or when a redemption event will occur.

Subsequent adjustments to increase the carrying values to the redemption values will be made only when it becomes probable that such redemption will occur.

As part of the Merger, each share of Old AEON common stock issued with respect to the Old AEON convertible preferred stock was converted into approximately 0.0323 shares of common stock and the right to receive a pro-rata portion of the contingent consideration.

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Costs incurred in obtaining technology licenses are charged to acquired in-process research and development (“IPR&D”) if the technology licensed has not reached technological feasibility and has no alternative future use.

The acquired IPR&D recorded at the Closing was recorded “on the line” in the Successor’s opening accumulated deficit.

The acquired IPR&D at the Closing was written off to the Successor’s consolidated income statement for the period ended December 31, 2023.

The Company accrues the expenses for its clinical trial activities performed by third parties, including clinical research organizations and other service providers, based upon estimates of the work completed over the life of the individual study in accordance with associated agreements.

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Payments made to outside service providers in advance of the performance of the related services are recorded as prepaid expenses and other current assets until the services are rendered.

There have been no material adjustments to the Company’s estimates for clinical trial expenses through December 31, 2022 (Predecessor) and December 31, 2023 (Successor).

There have been no material adjustments to the Company’s estimates for clinical trial expenses through December 31, 2024 (Successor) and December 31, 2023 (Successor).

Stock-Based Compensation

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The fair value of equity awards that are expected to vest is amortized on a straight-line basis over the requisite service period.

Stock-based compensation expense is recognized net of actual forfeitures when they occur, as an increase to additional paid-in capital or noncontrolling interest in the consolidated balance sheets and in selling, general and administrative or research and development

expenses in the consolidated statements of operations and comprehensive (loss) income.

All stock-based compensation costs are recorded in the consolidated statements of operations and comprehensive (loss) income based upon the underlying employee’s role within the Company.

Noncontrolling Interest (Predecessor)

ABP Sub Inc., the Predecessor’s wholly owned subsidiary, granted stock options to certain employees and nonemployee consultants of ABP Sub Inc.

The Company accounts for stock-based compensation expense recognized by ABP Sub Inc.

as an increase in noncontrolling interest in the accompanying consolidated financial statements.

At the Closing, all such shares were either canceled or converted into AEON shares.

See Note 11 Share-based Compensation for more information.

Stock-based compensation expense is recognized net of actual forfeitures when they occur, as an increase to additional paid-in capital in the consolidated balance sheets and in selling, general and administrative or research and development expenses in the consolidated statements of operations and comprehensive income (loss).

All stock-based compensation costs are recorded in the consolidated statements of operations and comprehensive income (loss) based upon the underlying employee’s role within the Company.

The Company accounts for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax basis of the Company’s assets and liabilities and their financial statement reported amounts.

In addition, deferred tax assets are recorded for the future benefit of utilizing net operating losses and research and development credit carryforwards and are measured using the enacted tax rates and laws that will be in effect when such items are expected to reverse.

items are expected to reverse.

A valuation allowance is provided against deferred tax assets unless it is more likely than not that they will be realized.

The Company records uncertain tax positions on the basis of a two-step process whereby (i) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, it recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying consolidated statements of operations and comprehensive (loss) income.

Any accrued interest and penalties related to uncertain tax positions will be reflected as a liability in the consolidated balance sheets.

Net Loss Per Share Attributable to Common Stockholders

Net Income (Loss) Per Share Attributable to Common Stockholders

Prior to the Merger, the Predecessor calculated basic and diluted net loss per share to common stockholders in conformity with the two-class method required for companies with participating securities.

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Subsequent to the Merger, the Company only has one class of shares.

Basic 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 outstanding during the period, without consideration for potentially dilutive shares of common stock in Predecessor periods.

For Predecessor periods, diluted net loss per share was 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 using the “treasury stock,” “if converted” or “two-class” method unless their inclusion would have been anti-dilutive.

Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive shares of common stock.

Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average shares of common stock and potentially dilutive securities outstanding during the period using the treasury stock and if-converted methods, unless their inclusion would have been anti-dilutive.

For purposes of the diluted net loss per share calculation, convertible preferred stock, warrants, convertible notes and common stock options were considered as potentially dilutive securities.

Since the Company was in a loss position for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and for the twelve months ended December 31, 2022, basic net loss per share is the same as diluted net loss per share as the inclusion of all potentially dilutive common shares was anti-dilutive.

For the periods from July 22, 2023 to December 31, 2023 (Successor), the impact of the

options and non-vested RSU’s were anti-dilutive, and as such, there was no difference between the weighted-average number of shares used to calculate basic and diluted earnings per share for the periods presented.

Basic and diluted net loss per share for the year ended December 31, 2022 was calculated as follows (in thousands, except share and per share amounts):

Year ended December 31, 2022 (Predecessor)

Net loss available to common stockholders

Weighted average common shares outstanding, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

For the year ended December 31, 2024 (Successor), dilutive stock options of 24,245 and restricted stock units of 11,339 were included in the calculation of diluted net income per share.

Since the Company was in a loss position for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), basic net loss per share is the same as diluted net loss per share as the inclusion of all potentially dilutive shares of common stock was anti-dilutive.

Basic and diluted net income per share for the year ended December 31, 2024 was calculated as follows (in thousands, except share and per share amounts):

Year ended December 31, 2024 (Successor)

Weighted average shares of common stock outstanding, basic

Net income per share, basic

Weighted average shares of common stock outstanding, diluted

Net income per share, diluted

Basic and diluted net loss per share for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor) were calculated as follows (in thousands, except share and per share amounts):

Period from January 1, 2023 to July 21, 2023 (Predecessor)

Net loss available to common stockholders

Weighted average common shares outstanding, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

Weighted average shares of common stock outstanding, basic and diluted

Net loss per share, basic and diluted

Period from July 22, 2023 to December 31, 2023 (Successor)

Net income available to common stockholders

Weighted average common shares outstanding, basic and diluted

Net income per share attributable to common stockholders, basic and diluted

Weighted average shares of common stock outstanding, basic and diluted

Net loss per share, basic and diluted

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an anti-dilutive impact:

Contingent consideration

Contingent founder shares

Convertible preferred stock outstanding

Convertible preferred stock warrants outstanding

January 1 to July 21

Common stock options and restricted stock units

Convertible notes

Contingencies

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In the cases where the Company believes that a reasonably possible loss exists, the Company discloses the facts and circumstances of the litigation, including an estimable range, if possible.

Recently Adopted Accounting Standards

In June 2016, the FASB issued an accounting standards update (ASU 2016-13) that amended the guidance on the measurement of credit losses on financial instruments.

The guidance amended the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain financial instruments.

In November 2019, the FASB issued an update to the guidance to defer the effective date for all entities except SEC filers that are not smaller reporting companies to fiscal years beginning after December 15, 2022, including interim periods within those years.

The Predecessor adopted this standard in the

first quarter of 2023.

The adoption of this standard did not have an impact on the Company’s consolidated financial statements or related disclosures.

In August 2020, the FASB issued an accounting standards update that simplified the accounting for certain financial instruments with characteristics of liabilities and equity by reducing the number of accounting models for convertible debt and convertible preferred stock instruments.

It also amended the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, the new guidance modified how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation.

The guidance will be effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2020 but only if the adoption is as of the beginning of a fiscal year.

The Predecessor adopted this standard on January 1, 2023.

The adoption of this standard did not have an impact on the Company’s consolidated financial statements or related disclosures.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures .

This update requires public entities to disclose information about their reportable segments’ significant expenses that are regularly provided to the CODM and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280, on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 31, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted this standard during its fiscal year ended December 31, 2024.

For the purpose of the adoption of ASU 2023-07, the Company performed an evaluation of financial information regularly reviewed by the Company’s CODM for purposes of assessing liquidity needs, allocating resources and evaluating performance.

See Note 2 Summary of Significant Accounting Policies - Segment Reporting for more information.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures .

This update requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income

ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which is intended to improve financial reporting by requiring disaggregated disclosure of certain costs and expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied on either a prospective or retrospective basis.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

Other recent accounting pronouncements issued by the FASB, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (the “SEC”) did not, or are not believed by management to, have a material impact on the Company’s financial position, results of operations or cash flows.

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On December 12, 2022, Old AEON and Priveterra entered into a Business Combination Agreement.

On July 3, 2023, Priveterra held the special meeting of stockholders, at which the Priveterra stockholders considered and adopted, among other matters, a proposal to approve the transactions contemplated by the Business Combination Agreement, including the Merger.

On July 21, 2023, the parties consummated the Merger.

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Costs incurred in obtaining technology licenses are charged to research and development expense as IPR&D if the technology licensed has not reached technological feasibility and has no alternative future use.

The IPR&D recorded at the Closing of $ 348.0 million is reflected “on the line” in the Successor’s opening accumulated deficit.

The IPR&D recorded at the Closing of $ 348.0 million was written off in the Successor’s consolidated statement of operations and comprehensive income (loss).

To estimate the value of the acquired IPR&D, the Company used a Multi-Period Excess Earnings Method under the Income Approach.

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The allocation of the purchase price was as follows (in thousands).

Net working capital (excluding cash)

Cash and cash equivalents

Net working capital (excluding cash and cash equivalents)

Other assets and liabilities

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The number of shares of common stock issued and amounts recorded on the line within stockholders’ deficit are reflected below to arrive at the opening consolidated balance sheet of the Successor.

Common shares

Shares of common stock

Common stock amount

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Contingent Founder Shares

Acquired IPR&D and Loss on Consolidation of VIE

Loss on Consolidation of VIE

Other Miscellaneous

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2019 Debt Financings

In June 2019, the Predecessor entered into a senior unsecured note purchase agreement (the “Original 2019 Note Purchase Agreement”), with Dental Innovations, pursuant to which the Predecessor issued Dental Innovations a promissory note (the “Original

2019 Note”) with a principal amount of $ 5.0 million.

Pursuant to the terms of the Original 2019 Note, the Predecessor was required to repay a total of $ 8.75 million, representing all principal and interest owed, upon the earliest to occur of (i) June 19, 2022, (ii) Dental Innovations’ demand for repayment following the Predecessor’s completion of an initial public offering and (iii) the Predecessor’s election to repay the Original 2019 Note in full.

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Due to certain embedded features within the 2019 Convertible Notes, the Predecessor elected to account for the 2019 Convertible Notes and all their embedded features at fair value at inception.

Subsequent changes in fair value were recorded as a component of other (loss) income in the Predecessor’s consolidated statements of operations and comprehensive (loss) income or as a component of other comprehensive income (loss) for changes to instrument-specific credit risk.

Subsequent changes in fair value were recorded as a component of other income (loss) in the Predecessor’s consolidated statements of operations and comprehensive income (loss) or as a component of other comprehensive income (loss) for changes to instrument-specific credit risk.

As a result of electing the fair value option, direct costs and fees related to the 2019 Convertible Notes were expensed as incurred.

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As such, due to the warrant modification, the Predecessor recognized a $ 17.0 million reduction to the underlying fair value of the convertible notes and a corresponding increase of $ 17.0 million to additional paid in capital during the period from January 1, 2023 to July 21, 2023 (Predecessor), of which $ 5.2 million was attributable to 2019 Debt Financing contingent warrants.

During the periods from January 1, 2023 to July 21, 2023 (Predecessor) and the twelve months ended December 31, 2022, the Predecessor recognized $ 1.6 million and $ 1.7 million, respectively, of expense related to the increase in the fair value of the 2019 Convertible Notes.

During the period from January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor recognized $ 1.6 million of expense related to the increase in the fair value of the 2019 Convertible Notes.

As of December 31, 2022 (Predecessor), the principal amount outstanding under the 2019 Convertible Notes was $ 6.0 million, with an estimated fair value of $ 16.2 million.

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Due to certain embedded features within the SCH Convertible Note, the Predecessor elected to account for the SCH Convertible Note and the embedded features at fair value at inception.

As a result of electing the fair value option, any direct costs and fees related to the SCH Convertible Note were expensed as incurred.

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The interest rate was increased from 0.0 % to 15.79 % on the total of $ 30.6 million from the original maturity date to the new maturity date.

During the periods from January 1, 2023 to July 21, 2023 (Predecessor) and the twelve months ended December 31, 2022, the Predecessor recognized $ 4.2 million and $ 2.1 million, respectively, of expense related to the increase in the fair value of the SCH Convertible Note.

During the period from January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor recognized $ 4.2 million of expense related to the increase in the fair value of the SCH Convertible Note.

As of December 31, 2022, the principal amount outstanding under the SCH Convertible Note was $ 17.5 million, with an estimated fair value of $ 25.1 million.

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Due to certain embedded features within the 2021 A1 Convertible Notes, the Predecessor elected to account for the 2021 A1 Convertible Notes and the embedded features at fair value at inception.

Subsequent changes in fair value were recorded as a component of other (loss) income in the accompanying Predecessor’s consolidated statements of operations and comprehensive (loss) income or as a component of other comprehensive income (loss) for changes to instrument-specific credit risk.

During the periods from January 1, 2023 to July 21, 2023 (Predecessor) and the year ended December 31, 2022, the Predecessor recognized $( 3.0 ) million and $ 0.6 million, respectively, of (expense) income related to the (increase) decrease in the fair value of the 2021 A1 Convertible Notes.

Subsequent changes in fair value were recorded as a component of other income (loss) in the accompanying Predecessor’s consolidated statements of operations and comprehensive income (loss) or as a component of other comprehensive income (loss) for changes to instrument-specific credit risk.

During the period from January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor recognized $ 3.0 million of expense related to the increase in the fair value of the 2021 A1 Convertible Notes.

As of December 31, 2022, the principal amount outstanding under the 2021 A1 Convertible Notes was $ 10 million, with an estimated fair value of $ 8.7 million.

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During the year ended December 31, 2022, the Predecessor issued five additional tranches of subordinated convertible promissory notes to A1 on February 18, 2022, March 9, 2022, April 14, 2022, June 3, 2022 and July 1, 2022 (collectively, the “2022 A1 Convertible Notes”), the first four with a principal amount of $ 3.0 million each and the fifth issued July 1, 2022, for a principal amount of $ 2.5 million and totaling $ 14.5 million.

The terms of the 2022 A1 Convertible Notes were similar to those of the 2021 A1

Convertible Notes.

During the periods from January 1, 2023 to July 21, 2023 (Predecessor) and the year ended December 31, 2022, the Predecessor recognized $ 4.2 million and $ 1.0 million, respectively, of expense related to the increase in the fair value of the 2022 A1 Convertible Notes.

The terms of the 2022 A1 Convertible Notes were similar to those of the 2021 A1 Convertible Notes.

During the period from January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor recognized $ 4.2 million of expense related to the increase in the fair value of the 2022 A1 Convertible Notes.

As of December 31, 2022, the principal balance was $ 14.5 million, with an estimated fair value of $ 12.2 million.

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The March 2023 A1 Convertible Notes were converted into shares of the Successor’s common stock at the Closing and was recorded “on the line” as part of the shares issued as consideration in the Merger (see Note 3 Forward Merger ).

Daewoong Convertible Notes

Daewoong Convertible Notes (Predecessor)

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provided, however, that in no event was Daewoong’s ownership to exceed 15 % of the pre-IPO shares of the Predecessor after taking into account conversion of the 2020 Daewoong Convertible Notes.

either in cash or by the issuance of additional shares of common stock at the price per share in the IPO, which payment method would have been be at the Predecessor’s sole election.

In the event, and only in the event, that shares of the Predecessor were sold in the IPO whereby the pre-money valuation of the Predecessor was $ 200.0 million or greater, within five business days of the conversion of the 2020 Daewoong Convertible Notes, the Predecessor would have been required pay to Daewoong the PIK Principal plus all accrued and unpaid interest either in cash or by the issuance of additional shares of common stock at the price per share in the IPO, which payment method would have been be at the Predecessor’s sole election.

In May 2021, the Daewoong Purchase Agreement was amended to provide for the issuance of an additional subordinated convertible promissory note by the Predecessor to Daewoong at an initial principal amount of $ 5.0 million.

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Due to certain embedded features within the Daewoong Convertible Notes, the Predecessor elected to account for the Daewoong Convertible Notes, including the paid-in-kind principal and interest, and the embedded features at fair value at inception.

As a result of electing the fair value option, any direct costs and fees related to the Daewoong Convertible Notes were expensed as incurred.

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Such note could have been prepaid, in whole, without premium or penalty at any time prior to the maturity date.

During the periods from January 1, 2023 to July 21, 2023 (Predecessor) and the year ended December 31, 2022, the Predecessor recognized $ 3.7 million and $( 2.2 ) million, respectively, of income (expense) related to the decrease (increase) in the fair value of the Daewoong Convertible Notes.

During the period from January 1, 2023 to July 21, 2023, the Predecessor recognized $ 3.7 million of income related to the decrease in the fair value of the Daewoong Convertible Notes.

As of December 31, 2022, the principal amount outstanding (excluding the PIK Principal) under the Daewoong Convertible Notes was $ 60 million, with an estimated fair value of $ 53.5 million.

The Daewoong Convertible Notes were converted into shares of the Successor’s common stock at the Closing.

Daewoong Convertible Notes (Successor)

On March 19, 2024, the Company entered into a subscription agreement with Daewoong (the “Subscription Agreement”) relating to the sale and issuance by the Company of senior secured convertible notes (each, a “2024 Convertible Note” and together, the “2024 Convertible Notes”) in the principal amount of up to $ 15.0 million, which are convertible into shares of the Company’s common stock, subject to certain conditions and limitations set forth in each Convertible Note.

Each Convertible Note contains customary events of default, accrues interest at an annual rate of 15.79 % and has a maturity date that is three years from the funding date, unless earlier repurchased, converted or redeemed in accordance with its terms prior to such date.

The Company will use the net proceeds from each Convertible Note to support the late-stage clinical development of its lead product candidate ABP-450 and for general working capital purposes.

Pursuant to the terms of the Subscription Agreement, on March 24, 2024, the Company issued and sold to Daewoong one Convertible Note in the principal amount of $ 5.0 million, and on April 12, 2024, the Company issued and sold to Daewoong one Convertible Note in the principal amount of $ 10.0 million.

On March 19, 2024, the Company entered into a Fourth Amendment to the License Agreement (the “License Agreement Amendment”) with Daewoong, which amends that certain License and Supply Agreement, by and between the Company and Daewoong, dated December 20, 2019, as previously amended on July 29, 2022, January 8, 2023 and April 24, 2023 (the “License Agreement”).

Pursuant to the terms of the License Agreement Amendment, the License Agreement will terminate if, over any six month period, (a) the Company ceases to commercialize ABP-450 in certain territories specified in the License Agreement and (b) the Company ceases to advance any clinical studies of ABP-450 in such territories.

The License Agreement Amendment also provides that, in the event that the License Agreement is terminated for the foregoing reasons, Daewoong will have the right to purchase all Know-How (as defined in the License Agreement) related to ABP-450 for a price of $ 1.00 (the “Termination Purchase Right”).

The Termination Purchase Right will terminate and expire upon Daewoong’s sale of 50 % of its common stock, including common stock held by its affiliates and common stock that would be issued upon an Automatic Conversion or Optional Conversion (as defined in the Convertible Notes).

During the year ended December 31, 2024 (Successor), the Company recognized $ 3.3 million of income related to the decrease in the fair value of the 2024 Daewoong Convertible Note.

As of December 31, 2024, the principal amount outstanding under the 2024 Daewoong Convertible Note was $ 15.0 million, with an estimated fair value of $ 11.7 million.

Fair Value Measurements

The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The carrying value of cash, accounts payable, accrued liabilities and convertible notes approximate fair value because of the short-term nature of those instruments.

There were no convertible notes outstanding at December 31, 2023.

The carrying value of cash, accounts payable and accrued liabilities approximate fair value because of the short-term nature of those instruments.

The following are other financial assets and liabilities that are measured at fair value on a recurring basis.

Convertible Notes at Fair Value (Predecessor)

Due to certain embedded features within the convertible notes, the Predecessor elected the fair value option to account for its convertible notes, including any paid-in-kind principal and interest, and the embedded features.

During the periods from January 1, 2023 to July 21, 2023 (Predecessor) and the year ended December 31, 2022, the Predecessor recognized $ 19.4 million and $ 4.4 million, respectively, of expense related to the increase in the fair value of the convertible notes.

Convertible Notes at Fair Value

Due to certain embedded features within the convertible notes, the Company elected the fair value option to account for its convertible notes, including any paid-in-kind principal and interest, and the embedded features.

During the year ended December 31, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), the Company recognized $ 3.3 million, $( 19.4 ) million and $ 0 of income (expense) related to the decrease (increase) in fair value of the convertible notes.

As of December 31, 2024, the principal amount outstanding under the convertible notes was $ 15.0 million, with an estimated fair value of $ 11.7 million.

The convertible notes were converted into shares of the Successor’s common stock at the Closing.

See Note 4 Related Party Transactions (Predecessor) and Note 5 Daewoong Convertible Notes (Predecessor) for more information on the convertible notes.

The fair value of the convertible notes was determined based on Level 3 inputs using a scenario-based analysis that estimated the fair value of the convertible notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various initial public offering, settlement, equity financing, corporate transaction and dissolution scenarios.

The significant unobservable input assumptions that can significantly change the fair value included (i) the weighted average cost of capital, (ii) the timing of payments, (iii) the discount for lack of marketability, (iv) the probability of certain corporate scenarios, and (v) the long-term pretax operating margin.

During the period from January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor utilized discount rates ranging from 15 % to 40 % and 15 % to 45 %, respectively, reflecting changes in the Predecessor’s risk profile, time-to-maturity probability, and key terms when modified to the convertible notes.

As of the Closing, the fair value of the convertible notes immediately prior to their conversion was based on the fair value of the Company's shares to be received by the holders using the market price of the shares at Closing.

Preferred Stock Warrant Liability (Predecessor)

In 2016, in connection with an earlier debt issuance that has been subsequently settled, the Predecessor issued to one of its investors, Longitude Venture Partners II, L.P.

(“Longitude”), warrants to purchase 342,011 shares of the Predecessor’s Series B convertible preferred stock at an exercise price of $ 7.3097 per share.

The Predecessor accounted for the warrants as a liability, which were initially recorded at their fair value of $ 0.8 million on the date of issuance and are subject to remeasurement at each subsequent balance sheet date.

Any change in fair value of the warrants as a result of the remeasurement was recognized as a component of other (loss) income, net in the accompanying Predecessor’s consolidated statements of operations and comprehensive (loss) income.

The fair value of the warrant liability is determined based on Level 3 inputs using the Black-Scholes option-pricing model, which includes expected volatility, risk-free interest rate, expected life and expected dividend yield.

The warrant liability was not material as of December 31, 2022 (Predecessor) and there were no material changes in fair value for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and the year ended December 31, 2022 (Predecessor).

The preferred stock warrants expired prior to the Closing.

The Predecessor convertible notes were converted into shares of the Successor’s common stock at the Closing.

See Note 4 Related Party Transactions (Predecessor) and Note 5 Daewoong Convertible Notes for more information on those convertible notes.

The fair value of the convertible notes was determined based on Level 3 inputs using a scenario-based analysis that estimated the fair value of the convertible notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various qualified financings, corporate transaction and dissolution scenarios.

The significant unobservable input assumptions that can significantly change the fair value included (i) the discount rates, (ii) the timing of payments, and (iii) the probability of certain settlement scenarios.

During the year ended December 31, 2024 (Successor) and the period from January 1, 2023 to July 21, 2023 (Predecessor), the Company utilized discount rates ranging from 15 % to 60 %, reflecting changes in the Successor’s and Predecessor’s risk profile, time-to-maturity probability, and key terms to the convertible notes.

As of the Closing, the fair value of the Predecessor convertible notes immediately prior to their conversion was based on the fair value of the Company's shares to be received by the holders using the market price of the shares at Closing.

Forward Purchase Agreements (Successor)

On June 29, 2023, Priveterra and Old AEON entered into the Forward Purchase Agreements with each of (i) ACM ARRT J LLC (“ACM”) and (ii) Polar Multi-Strategy Fund (“Polar”) (each of ACM and Polar, individually, a “Seller”, and together, the “Sellers”) for OTC Equity Prepaid Forward Transactions.

For purposes of each Forward Purchase Agreement, Priveterra is referred to as the “Company” prior to the consummation of the Merger, while AEON is referred to as the “Company” after the consummation of the Merger.

As described below in Note 12 Subsequent Events , the Forward Purchase Agreements were terminated on March 18, 2024.

As described below, the Forward Purchase Agreements were terminated on March 18, 2024.

Pursuant to the terms of the Forward Purchase Agreements, the Sellers intended, but were not obligated, to purchase up to 104,167 shares of Priveterra Class A Common Stock in the aggregate concurrently with the Closing pursuant to each Seller’s respective FPA Funding Amount PIPE Subscription Agreement.

No Seller would be required to purchase an amount of shares of Priveterra Class A Common Stock that would result in that Seller owning more than 9.9 % of the total shares of Priveterra Class A Common Stock outstanding immediately after giving effect to such purchase, unless such Seller, at its sole discretion, waived such 9.9 % ownership limitation.

The Number of Shares subject to a Forward Purchase Agreement was subject to reduction following a termination of the Forward Purchase Agreements with respect to such shares as described under “Optional Early Termination” (“OET”) in the respective Forward Purchase Agreements.

Each Forward Purchase Agreement provided that a Seller would be paid directly the Prepayment Amount which was equal to an aggregate of $ 66.7 million based on the product of (i) 87,154 shares of Priveterra Class A Common Stock (the “Additional Shares”) and (ii) the redemption price per share of $ 765.36 .

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Therefore, the aggregate Prepayment Amount of $ 66.7 million was netted against the proceeds paid from the purchase of the Additional Shares in the aggregate by the Sellers pursuant to the FPA Funding Amount PIPE Subscription Agreements.

We did not have access to the Prepayment Amount immediately following the Closing and, pursuant to the termination of the Forward Purchase Agreements as described below in Note 12 Subsequent Events , the Sellers will retain the Prepayment Amount in full, which may adversely affect our liquidity and capital needs.

The Prepayment Amount of $ 66.7 million was recorded at its present value of $ 60.7 million as Subscription Receivables, which reduced stockholders’ deficit on the Successor’s consolidated balance sheets.

The $ 6.0 million difference between the subscription receivables and the present value of the subscription receivables at Closing was reflected as a loss “on the line” in the Successor’s opening accumulated deficit (see Note 3 Forward Merger ).

Prior to the termination of the Forward Purchase Agreements as described below in Note 12 Subsequent Events , the redemption price per share in the Forward Purchase Agreements was subject to a reset price (the "Reset Price").

The Company did not have access

to the Prepayment Amount immediately following the Closing and, pursuant to the termination of the Forward Purchase Agreements as described below related to the FPA termination, the Sellers will retain the Prepayment Amount in full, which may adversely affect our liquidity and capital needs.

The $ 6 million difference between the subscription receivables and the present value of the subscription receivables at Closing was recorded as a loss “on the line” in the Successor’s opening accumulated deficit (see Note 3 Forward Merger ).

For the period from July 22, 2023 to December 31, 2023 (Successor), the Company recorded expense of $ 8.4 million related to the increase in fair value of the derivatives to the Successor’s consolidated statement of operations and comprehensive income (loss).

The Company utilized the Monte-Carlo valuation model using expected volatility of 52.0 % and risk-free rate of 4.48 % and expected life of 1.56 years.

As of December 31, 2023 (Successor), the fair value of the FPA was $ 40.3 million, which was included within embedded forward purchase agreements and derivative liabilities on the consolidated balance sheet.

As further discussed below, the FPA was terminated in March 2024.

Prior to the termination of the Forward Purchase Agreements, the redemption price per share in the Forward Purchase Agreements was subject to a reset price (the "Reset Price").

The Reset Price was initially the redemption price per share of $ 765.36 per share.

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The maximum number of shares would have been reset to equal 104,167 divided by a number equal to the offering price in the Dilutive Offering divided by $ 720.00 .

The Company did not have access to the Prepayment Amount immediately following the Closing and, depending on the manner of settlement for the transactions covered by the Forward Purchase Agreements, may have had limited or no access to the Prepayment Amount during the terms of the Forward Purchase Agreements, particularly if the Company’s Common Stock continues to trade below the prevailing Reset Price.

Further, prior to the termination of the Forward Purchase Agreements in March 2024, the Company would have been required to make cash payments to the counterparties in respect of settlement amounts under the Forward Purchase Agreements, such as in the case of a failure to maintain the listing of the Company’s Common Stock on a national securities exchange.

From time to time and on any date following the Merger (any such date, an “OET Date”), any Seller had the option, in its absolute discretion, to terminate its Forward Purchase Agreement in whole or in part by providing written notice to the Company (the “OET Notice”), no later than the next Payment Date following the OET Date (which would have specified the quantity by which the Number of Shares was to be reduced (such quantity, the “Terminated Shares”)).

The effect of an OET Notice would have been to reduce the Number of Shares by the number of Terminated Shares specified in such OET Notice with effect as of the related OET Date.

As of each OET Date, the Company would have been entitled to an amount from the Seller, and the Seller would have been obligated to pay to the Company an amount, equal to the product of (x) the number of Terminated Shares and (y) the Reset Price in respect of such OET Date.

Pursuant to the terms of the Forward Purchase Agreements, the “Valuation Date” would have been the earlier to occur of (a) the date that is two years after the Closing Date pursuant to the Business Combination Agreement;

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The Company recorded the derivatives as liabilities and measured them at fair value with the initial value of the derivative of $ 32.3 million and the loss on issuance of $ 6.0 million recorded as a loss “on the line” in the Successor’s opening accumulated deficit (see Note 3 Forward Merger ).

Subsequent changes in the bifurcated derivatives are recorded in the Successor’s consolidated statements of operations and comprehensive (loss) income.

For the period from July 22, 2023 to December 31, 2023 (Successor), the Company recorded a loss related to the change in fair value of derivatives of $ 8.4 million.

Subsequent changes in the bifurcated derivatives are recorded in the Successor’s consolidated statements of operations and comprehensive income (loss).

For the period from July 22, 2023 to December 31, 2023 (Successor), the Company

recorded a loss related to the change in fair value of derivatives of $ 8.4 million.

The Company utilized the Monte-Carlo valuation model to value the forward purchase agreements at Closing date and as of December 31, 2023.

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Expected dividend yield

New Money PIPE Subscription Agreements and Letter Agreements

Termination of Forward Purchase Agreements

On March 18, 2024, the Company and ACM ARRT J LLC (“ACM”) entered into a termination agreement (the “ACM Termination Agreement”) terminating that certain Forward Purchase Agreement, dated June 29, 2023, by and among the Company and ACM (the “ACM FPA”).

The ACM Termination Agreement provides that ACM will retain 43,056 previously issued shares of common stock held by ACM pursuant to the ACM FPA and its respective subscription agreement (the “ACM Retained Shares”).

ACM did not pay any cash to the Company for the ACM Retained Shares and retained all portions of the Prepayment Amount associated with the ACM Retained Shares.

On March 18, 2024, the Company and Polar entered into a termination agreement (the “Polar Termination Agreement”) terminating that certain Forward Purchase Agreement, dated June 29, 2023, by and among the Company and Polar (the “Polar FPA”).

The Polar Termination Agreement provides that Polar will retain 44,098 previously issued shares of common stock held by Polar pursuant to the Polar FPA and its respective subscription agreement (the “Polar Retained Shares”).

Polar did not pay any cash to the Company for the Polar Retained Shares and retained all portions of the Prepayment Amount associated with the Polar Retained Shares.

As a result of the ACM Termination Agreement and Polar Termination Agreement, the Company recorded a charge to the consolidated statement of operations of $ 20.3 million during the year ended December 31, 2024 to reverse the related subscription receivable and derivative liability on the accompanying consolidated balance sheet.

In connection with the negotiation of the Forward Purchase Agreements (and FPA Termination Agreements) and related subscription agreements, J.V.B.

Financial Group, LLC, acting through its Cohen & Company Capital Markets division (“CCM”), provided certain consulting services, initially to Priveterra and subsequently to AEON, pursuant to an engagement letter, by and between the Company and CCM, dated July 27, 2023 and amended July 1, 2024 (the “CCM Engagement Letter”).

On July 5, 2024, pursuant to the CCM Engagement Letter, the Company issued 5,556 shares of the Company’s common stock to CCM.

New Money PIPE Subscription Agreements

On June 29, 2023, Priveterra entered into separate subscription agreements (the “New Money PIPE Subscription Agreements”) with each of ACM ASOF VIII Secondary-C LP (“ACM Investor”), the Polar Affiliate and certain other investors (collectively, the “New Money PIPE Investors”).

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The Company recorded a loss of $ 6.4 million on the line in the Successor’s opening accumulated deficit related to issuance of common shares underlying the New Money PIPE Subscription Agreement equal to the market price of the stock on the Closing Date less the purchase price of $ 504.00 per share.

On June 29, 2023, the Sponsor entered into separate letter agreements (each, “Letter Agreement” and collectively, the “Letter Agreements”) with each of ACM Investor and Polar.

Pursuant to the Letter Agreements, in the event that the average price per share at which shares of common stock purchased pursuant to the New Money PIPE Subscription Agreements that are transferred during the period ending on the earliest of (A) June 21, 2025, (B) the date on which the applicable Forward Purchase Agreement terminates and (C) the date on which all such shares are sold (such price, the “Transfer VWAP”, and such period, the “Measurement Period”) is less than $ 7.00 per share, then (i) ACM Investor and Polar shall be entitled to receive from Sponsor a number of additional shares of common stock that have been registered for resale by us under an effective resale registration statement pursuant to the Securities Act, under which ACM Investor and Polar may sell or transfer such shares of common stock in an amount that is equal to the lesser of (A) a number of shares of common stock equal to the Make-Whole Amount divided by the VWAP (measured as of the date the additional

shares are transferred to ACM Investor or Polar, as applicable) and (B) an aggregate of 400,000 shares of common stock (the “Additional Founder Shares”) and (ii) Sponsor shall promptly (but in any event within fifteen (15) business days) after the Measurement Date, transfer the Additional Founder Shares to ACM Investor or Polar, as applicable.

“Make-Whole Amount” means an amount equal to the product of (A) $ 7.00 minus the Transfer VWAP multiplied by (B) the number of Transferred PIPE Shares.

“VWAP” means the per share volume weighted average price of the common stock in respect of the five consecutive trading days ending on the trading day immediately prior to the Measurement Date.

“Measurement Date” means the last day of the Measurement Period.

Based on the terms of the Letter Agreements, and applicable guidance in ASC 815 and SAB 5.T, “Accounting for Expenses or Liabilities Paid by Principal Stockholder(s)”, the Company has determined that the make-whole provision in the Letter Agreements is a freestanding financial instrument and a derivative instrument.

The Company has recorded the derivative liability and measured it at fair value with the initial value of the derivative of $ 0.4 million recorded as a loss “on the line” in the Successor’s opening accumulated deficit (see Note 3 Forward Merger ).

Subsequent changes in fair value of the make-whole provision are recorded in the Successor’s consolidated statements of operations and comprehensive (loss) income.

As of December 31, 2023 (Successor), the make-whole provision derivative liability was $ 0.7 million, included in the embedded forward purchase agreements and derivative liabilities on the Successor’s consolidated balance sheets.

For the period from July 22, 2023 to December 31, 2023 (Successor), the Company recorded a loss related to the change in fair value of the make-whole provision derivative liability of $ 0.3 million.

Committed Financing

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● In the event that the Company licenses any of its products (except in connection with migraine or cervical dystonia indications) to a third-party licensor for distribution in the U.S.

market (a “Qualifying License”) prior to the satisfaction of (x) the conditions for the issuance of the Episodic Migraine Contingent Consideration Shares and (y)

the conditions for the issuance of the Chronic Migraine Contingent Consideration Shares, then upon the entry of AEON into such Qualifying License, 2,000,000 shares of common stock shall become due and payable to Participating Stockholders and the number of Episodic Migraine Contingent Consideration Shares and (A) the number of Episodic Migraine Contingent Consideration Shares shall be reduced by 1,000,000 or by 2,000,000 and (B) the number of Chronic Migraine Contingent Consideration Shares shall be reduced by 1,000,000 , but not below zero .

The Company accounts for the Contingent Consideration Shares as either equity-classified or liability-classified instruments based on an assessment of the Contingent Consideration Shares specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

As of December 31, 2023 (Successor), the contingent consideration liability was $ 104.4 million.

market (a “Qualifying License”) prior

to the satisfaction of (x) the conditions for the issuance of the Episodic Migraine Contingent Consideration Shares and (y) the conditions for the issuance of the Chronic Migraine Contingent Consideration Shares, then upon the entry of AEON into such Qualifying License, 27,992 shares of common stock shall become due and payable to Participating Stockholders and the number of Episodic Migraine Contingent Consideration Shares and (A) the number of Episodic Migraine Contingent Consideration Shares shall be reduced by 13,996 or by 27,992 and (B) the number of Chronic Migraine Contingent Consideration Shares shall be reduced by 13,996 , but not below zero .

The Company classifies the Contingent Consideration as a liability on the Successor’s consolidated balance sheets and remeasures at each reporting period with changes to fair value recorded to the Successor’s consolidated statements of operations and comprehensive income (loss).

The Company utilized the Probability-Weighted Expected Return Method (PWERM) model to value the contingent consideration based on earnout milestones, probability of forfeiture and success scenarios.

For the successor period July 22, 2023 to December 31, 2023, the Company recognized $ 52.8 million in income related to the change in fair value of contingent consideration on the Successor’s consolidated statements of operations and comprehensive (loss) income.

For the year ended December 31, 2024 and the successor period July 22, 2023 to December 31, 2023, the Company recognized $100.8 million and $52.8 million, respectively, of income related to the change in fair value of contingent consideration on the Successor’s consolidated statements of operations and comprehensive income (loss), and relates to the change in probabilities of achieving certain scenarios following the clinical results released in the second quarter of 2024 and changes in the Company’s stock price during the period.

As of December 31, 2024 (Successor), the contingent consideration liability was $ 3.5 million.

Warrants (Successor)

Upon the Closing, 14,479,999 warrants initially issued by Priveterra in February 2021, consisting of 9,200,000 public warrants sold in the IPO and 5,279,999 warrants issued in a concurrent private placement, were outstanding.

Upon the Closing, 201,112 warrants that were initially issued by Priveterra in February 2021, consisting of 127,788 public warrants sold in the IPO and 73,334 warrants issued in a concurrent private placement, were outstanding.

The terms of the warrants are governed by a Warrant Agreement dated February 8, 2021 between the Company (then known as Priveterra Acquisition Corp.) and Continental Stock Transfer & Trust Company (the “Warrant Agreement”).

The warrants are accounted for as a liability at the Closing with changes in the fair value through December 31, 2023 recorded to the Successor’s consolidated statement of operations.

The Company utilized the publicly reported market price of the public warrants to value the warrant liability at $ 1.4 million as of December 31, 2023 (Successor).

For the Successor period from July 22, 2023 to December 31, 2023, the income from the change in fair value of warrants was $ 2.3 million.

The warrants are accounted for as a liability at the Closing with changes in the fair value through recorded to the Successor’s consolidated statement of operations.

The Company utilized the Black-Scholes model (Level 3) to value the warrants at $ 1.2 million as of December 31, 2024.

The Company utilized the publicly reported market price of the public warrants (Level 1) to value the warrant liability at $ 1.4 million as of December 31, 2023 (Successor).

For the year ended December 31, 2024 and the Successor period from July 22, 2023 to December 31, 2023, the (expense) income from the change in fair value of warrants was $( 14.7 ) million and $ 2.3 million, respectively.

The following table summarizes the significant inputs as of the valuation dates:

Expected volatility

Risk-free interest rate

Expected life (in years)

Expected dividend yield

Public warrants

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Each private placement warrant was identical to the public warrants initially sold by Priveterra in the IPO, except that the private placement warrants, so long as they are held by the Sponsor or its permitted transferees, (i) will not be redeemable by the Company and (ii) may be exercised by the holders on a cashless basis.

Warrant exercises

On March 29, 2024, the Company delivered notice of redemptions to warrant holders with a redemption date of April 29, 2024 for a cashless redemption of the Company’s outstanding public warrants.

The number of shares of common stock that each exercising warrant holder received by virtue of the cashless exercise (instead of paying the $ 828.00 per Public Warrant cash exercise price) was calculated in accordance with the terms of the Warrant Agreement.

Any remaining unexercised public warrants on the redemption date were cancelled and the public warrant holders received the redemption price of $ 7.20 for each public warrant.

During the year ended December 31, 2024, an aggregate of 142,829 warrants were exercised on a cashless basis for 27,310 shares of common stock, with an impact to additional paid in capital of $ 15.0 million.

Additionally, the Company paid $ 21 thousand in April 2024 related to the cancellation of the remaining 2,881 public warrants on the redemption date.

A summary of activity of the Company’s issued and outstanding public warrants for the year ended December 31, 2024 (Successor) is as follows:

Issued and Outstanding, January 1, 2024

Number of warrants exercised

Number of warrants cancelled

Issued and Outstanding, December 31, 2024

Medytox Top-off Right

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Summary of Recurring Fair Value Measurements

The following details the Company’s recurring measurements for assets and liabilities at fair value (in thousands):

The following details the Company’s recurring measurements for assets and liabilities at fair value on the consolidated balance sheets as of December 31, 2024 (in thousands):

Convertible Notes

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Embedded Forward Purchase Agreement and Make Whole Derivative

Balance, January 1, 2024

Issuance of convertible notes

Change in fair value

Warrant cashless exercise

Termination of forward purchase agreements

Balance, December 31, 2024

The following details the Company’s recurring measurements for assets and liabilities at fair value on the consolidated balance sheets as of December 31, 2023 (in thousands):

Convertible Notes

Warrant Liabilities

Contingent Consideration

Embedded Forward Purchase Agreement and Make Whole Derivative

Balance, December 31, 2022

Issuance of convertible notes

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In December 2021, the Predecessor entered into a three-year non-cancellable lease for office space.

The lease was extended for an additional five years in March 2024 by the Successor.

The lease does not include variable or contingent lease payments.

An operating lease asset and liability are recognized based on the present value of the remaining lease payments discounted using the Predecessor’s incremental borrowing rate.

An operating lease asset and liability are recognized based on the present value of the remaining lease payments discounted using the Successor’s incremental borrowing rate.

Lease expense is recognized on a straight-line basis over the lease term.

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Discount rate

The following table summarizes supplemental disclosures of operating cost and cash flow information related to operating leases for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), and the year ended December 31, 2022 (Predecessor) (in thousands).

January 1, 2023 to July 21, 2023

July 22, 2023 to December 31, 2023

The following table summarizes supplemental disclosures of operating cost and cash flow information related to operating leases for the periods indicated (in thousands):

Cost of operating leases

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The Daewoong Agreement will terminate upon written notice by either the Company or Daewoong upon a continuing default that remains uncured within 90 days (or 30 days for a payment default) by the other party, or without notice upon the bankruptcy or insolvency of the Company.

The Company has accrued $ 0.2 million and a de minimus amount for ABP-450 supplies as of December 31, 2022 (Predecessor) and December 31, 2023 (Successor), respectively.

The Company has recorded $ 0.2 million as a liability in accounts payable on the consolidated balance sheets as of December 31, 2024 (Successor) and accrued a de minimus amount for ABP-450 supplies in accrued expenses on the consolidated balance sheets as of December 31, 2023 (Successor).

Legal Proceedings

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Odeon seeks monetary damages for the full amount of its claimed underwriting fee, punitive damages, attorneys’ fees and other amounts.

On November 16, 2023, the Company filed a motion to dismiss certain claims included in Odeon’s complaint.

In November 2023, the Company filed a motion to dismiss certain claims included in Odeon’s complaint.

In April 2024, the Company successfully obtained a dismissal of Odeon’s non-breach of contract claims, including the tort claims, breach of covenant claim and associated punitive damages claim.

Odeon’s breach of contract claim is proceeding, with each party filing a summary judgment motion in March 2025, which the court is expected to decide upon in the coming months.

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications.

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See Note 2 Summary of Significant Accounting Policies for additional information.

The Company’s loss before income taxes was entirely generated from its U.S.

As a result of its continuing losses, the Company had no provision for income taxes in the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), and the twelve months ended December 31, 2022 (Predecessor).

The Company’s income (loss) before income taxes for the periods presented in the statement of operations was entirely generated from its U.S.

As a result of its continuing taxable losses, the Company had no provision for income taxes for the year ended December 31, 2024 and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor).

As of December 31, 2024 and 2023, the Company had federal net operating loss (“NOL”) carryforwards of $ 112.1 million and $ 87.3 million, respectively, which will begin to expire in 2036.

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Deferred tax liabilities:

Convertible notes

Total deferred tax liabilities

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The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid.

Convertible Preferred Stock (Predecessor)

As of December 31, 2022 (Predecessor), the Predecessor’s certificate of incorporation, as amended and restated, authorized the Predecessor to issue up to 44,666,035 shares of preferred stock at a par value of $ 0.0001 per share.

The Predecessor’s convertible

preferred stock was converted and exchanged into shares of the Company’s common stock at the Closing.

The Predecessor had the following convertible preferred stock issued and outstanding at December 31, 2022:

Carrying Value,

Net of Issuance

Shares Issued

and Outstanding

(in thousands)

The holders of the convertible preferred stock had various rights and preferences as follows:

Voting Rights

The holders of each share of convertible preferred stock, prior to the conversion of the preferred stock in connection with the Closing, previously had the right to one vote for each share of common stock into which such preferred stock could be converted, and with respect to such vote, such holder had full voting rights and powers equal to the voting rights and powers of the holders of common stock.

Prior to the conversion of the preferred stock in connection with the Closing, each holder of the convertible preferred stock was entitled to vote, together with holders of common stock, with respect to any question upon which holders of common stock had the right to vote.

Election of Directors

The holders of Series A and Series A-2 convertible preferred stock, voting together as a single class were entitled to elect one director of the Company.

The holders of Series B and Series B-2 convertible preferred stock, voting together as a single class, were entitled to together elect one director of the Company.

The holders of the convertible preferred stock and common stock (voting together as a single class and not as separate series, and with the preferred stock voting on an as-converted basis using then-effective conversion prices) were entitled to elect any remaining directors of the Company.

The holders of shares of Series B, Series B-1 and Series B-2 convertible preferred stock were entitled to non-cumulative dividends, out of any assets legally available therefore, on a pari passu basis and prior and in preference to any declaration or payment of any dividend on the Series A, Series A-1 and Series A-2 convertible preferred stock, or common stock of the Company, at the rate of $ 0.5847768 per calendar year for each share of Series B, Series B -1 and Series B -2 convertible preferred stock, payable when, as and if declared by the board of directors.

The holders of shares of Series A, Series A-1 and Series A-2 convertible preferred stock were entitled to non-cumulative dividends, out of any assets legally available therefore, on a pari passu basis and prior and in preference to any declaration or payment of any dividend on the common stock of the Company, at the rate of $ 0.4382 per calendar year for each share of Series A, Series A -1 and Series A -2 preferred stock, payable when, as and if declared by the board of directors.

Declared but unpaid dividends with respect to a share of preferred stock shall, upon conversion of such share to common stock, be paid to the extent assets are legally available therefore in cash.

There were no cash dividend declared through the Closing.

In the event of any liquidation event, the holders of Series B-2 convertible preferred stock would be entitled to receive, on a pari passu basis and prior and in preference to any distribution of the proceeds of such liquidation event (“Proceeds”) to the holders of

Series A-2 convertible preferred stock, Series B convertible preferred stock, Series B-1 convertible preferred stock, Series A convertible preferred stock, Series A-1 convertible preferred stock and common stock, an amount per share equal to the Series B original issue price of $ 7.3097 per share, plus declared but unpaid dividends on each such share (the “Series B-2 Liquidation Preference”).

Subject to the payments set forth above, in the event of any liquidation event, the holders of Series A-2 convertible preferred stock would be entitled to receive, on a pari passu basis and prior and in preference to any distribution of the Proceeds of such liquidation event to the holders of Series B convertible preferred stock, Series B-1 convertible preferred stock, Series A convertible preferred stock, Series A-1 convertible preferred stock and common stock, an amount per share equal to the Series A original issue price of $ 5.4779 per share, plus declared but unpaid dividends on each such share (the “Series A-2 Liquidation Preference”).

Subject to the payments set forth above, in the event of any liquidation event, the holders of Series B convertible preferred stock and Series B-1 convertible preferred stock would be entitled to receive, on a pari passu basis and prior and in preference to any distribution of the Proceeds of such liquidation event to the holders of Series A convertible preferred stock, Series A-1 convertible preferred stock and common stock, an amount per share equal to the Series B original issue price of $ 7.3097 per share, plus declared but unpaid dividends on each such share (the “Series B Liquidation Preference”).

Subject to the payments set forth above, the holders of Series A convertible preferred stock and Series A-1 convertible preferred stock would be entitled to receive, on a pari passu basis and prior and in preference to any distribution of the Proceeds of such Liquidation Event to the holders of common stock, an amount per share equal to the Series A issue price of $ 5.4779 , plus declared but unpaid dividends on each such share (the “Series A Liquidation Preference”).

Upon the completion of the distributions above, the remaining Proceeds available for distribution to stockholders, if any, would be distributed ratably among the holders of convertible preferred stock and common stock in proportion to the number of shares of common stock that would be held by each such holder if all shares of convertible preferred stock were converted into common stock at the then effective conversion price.

Each share of convertible preferred stock can be converted, at the option of the holder thereof, at any time after the date of issuance of such share into such number of fully paid and non-assessable shares of common stock.

The conversion rate is 1 :1 initially.

Each share of convertible preferred stock would automatically convert into shares of common stock based on the applicable conversion rate at the time in effect upon the earlier of (A) immediately prior to the closing, and conditioned upon such closing, of the sale of the Company’s common stock in an underwritten public offering at a public offering price per share of not less than (w) $ 7.3097 minus the sum of (x) the fair market value of the per unit membership interest of A1, as determined by the board of directors of the Company in good faith (the “A-1 Per Unit Price”) plus (y) the fair market value of the per unit membership interest of AC HoldCo, as determined by the board of directors of the Company in good faith (the “AC Per Unit Price”) plus (z) the fair market value of the per unit membership interest of Z HoldCo, as determined by the board of directors of the Company in good faith (together with the A-1 Per Unit Price and the AC Per Unit Price, the “Aggregate Spin-Out Value”), and yielding net proceeds (after discounts and commissions) to the Company of at least $ 50 million, or (B) on the date specified by affirmative vote at a meeting or by written consent from the holders of at least two-thirds of the convertible preferred stock then outstanding, voting as a single class on an as-converted-to-common stock basis (the “Preferred Supermajority”).

In the event that the Preferred Supermajority enacts a conversion of the Series A Preferred Stock in conjunction with the consummation of an initial public offering of the common stock in which the public offering price per share of the common stock (the “IPO Per Share Price”) is less than 71.4286 % of the then effective per share Series A-2 Liquidation Preference (the “Adjusted Series A-2 Preference Amount”), then the number of shares of common stock issuable with respect to each share of Series A convertible preferred stock, each share of Series A-1 convertible Preferred Stock and each share of Series A-2 convertible preferred stock will be equal to the greater of (A) the quotient obtained by dividing (x) the Adjusted Series A-2 Preference Amount by (y) the IPO Per Share Price, or (B) the quotient obtained by dividing the Series A original issue price of $ 5.4779 per share by the applicable conversion price for such series of the Series A Preferred Stock, each as in effect on the date of effective conversion.

In the event of an automatic conversion in conjunction with the consummation of an initial public offering of the common stock in which the IPO Per Share Price is less than the Series B original issue price of $ 7.3097 per share, then the applicable conversion

price for the Series B convertible preferred stock, the Series B-1 convertible preferred stock and the Series B-2 convertible preferred stock for purposes of the approved conversion will be the IPO Per Share Price, rounded to the nearest whole cent with one-half cent rounded up.

The convertible preferred stock was not mandatorily redeemable.

The Company classified the convertible preferred stock as temporary equity on the accompanying Predecessor’s consolidated balance sheets as these shares could be redeemed upon the occurrence of certain change in control events that are outside of the Company’s control.

Convertible Preferred Stock Warrants

Pursuant to the terms of the Company’s Bridge Note, in 2016 the Company issued Longitude warrants to purchase 342,011 shares of the Company’s Series B convertible preferred stock at an exercise price of $ 7.3097 per share.

The warrants are exercisable, in whole or in part, from the date of issuance and expired on May 31, 2023.

As of December 31, 2022 (Predecessor), the Predecessor’s certificate of incorporation, as amended and restated, authorized the Predecessor to issue up to 207,450,050 shares of common stock at a par value of $ 0.0001 per share.

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The number of authorized shares of common stock could be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of shares of preferred stock and common stock, voting together as a single class.

At the effective time of the Merger (the “Effective Time”), (i) each outstanding share of Old AEON common stock (on an as-converted basis after taking into effect the conversion of the outstanding warrants of Old AEON exercisable for shares of Old AEON preferred stock, the conversion of the shares of Old AEON preferred stock into Old AEON common stock in accordance with the governing documents of Old AEON as of the Effective Time, the conversion of the outstanding convertible notes of Old AEON into Old AEON common stock in accordance with the terms of such convertible notes and after giving effect to the issuance of Old AEON common stock in connection with the merger of ABP Sub, Inc.

with and into Old AEON) issued and outstanding immediately prior to the Effective Time converted into the right to receive approximately 2.328 shares of the Company’s common stock.

In addition, each share of Priveterra Class B common stock (“Founder Shares”), par value $ 0.0001 per share, issued and outstanding immediately prior to the Effective Time converted into one share of common stock (of which 3,450,000 Founder Shares are subject to certain vesting and forfeiture conditions).

As of December 31, 2023 (Successor), the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 500,000,000 shares of common stock at a par value of $ 0.0001 per share.

As of December 31, 2023 (Successor), 37,159,600 shares were issued and outstanding .

The holders of common stock are entitled to receive dividends whenever funds are legally available, when and if declared by the Company’s Board.

The Successor’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 500,000,000 shares of common stock at a par value of $ 0.0001 per share.

The holders of common stock are entitled to receive dividends whenever funds are legally available, when and if declared by the Company’s Board of Directors.

As of December 31, 2024 (Successor), no cash dividend has been declared to date.

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Common Stock Reserved

The table below summarizes the Company’s reserved common stock for further issuance as of December 31, 2023 (Successor) and December 31, 2022 (Predecessor):

Conversion of convertible preferred stock

The table below summarizes the Company’s reserved common stock for further issuance as of December 31, 2024 (Successor) and December 31, 2023 (Successor):

Stock options issued and outstanding

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Contingent consideration

Convertible preferred stock warrants outstanding

Convertible notes

Total common stock reserved

ATM Offering of Common Stock

On August 14, 2024, the Company entered into an “at-the-market” sales agreement with Leerink Partners LLC (“Leerink Partners”) relating to an at-the-market offering program (the “ATM”), pursuant to which the Company may offer and sell, from time to time at its sole discretion, shares of common stock, registered pursuant to a shelf registration statement on Form S-3 that the Securities and Exchange Commission (the “SEC”) declared effective on August 21, 2024, having aggregate gross proceeds of up to $ 50.0 million through Leerink Partners as sales agent.

Under the ATM, Leerink Partners is entitled to commission at a rate equal to 3.0 % of the gross proceeds from sales of shares of common stock under the ATM.

As of December 31, 2024, the Company issued 2,241 shares under the ATM for net proceeds of $ 147 thousand and approximately $ 49.8 million of common stock remained available to be sold under the ATM.

The Company may cancel its at-the-market program at any time upon prior notice, pursuant to its terms.

2023 Employee Stock Purchase Plan (“ESPP”)

The 2023 Employee Stock Purchase Plan assists eligible employees in acquiring a stock ownership interest of the Company’s common stock in consideration of the participating employees’ continued services.

Eligible employers will be entitled to purchase, by means of payroll deductions, limited amounts of the Company’s common stock at a discount during periodic offering periods.

There were 6,780 shares initially reserved for issuance under the 2023 ESPP, which shall automatically increase on January 1 of each calendar year beginning and including January 1, 2024 and ending on and including January 1, 2033, by an amount equal to the lesser of (i) 1.0 % of the total number of shares of common stock issued and outstanding on January 1 of the year in which such increase is to occur, or (ii) such smaller number of shares of common stock as may be established by the Board of Directors.

As of December 31, 2024, there were 12,619 shares available for issuance.

There have been no shares issued under the 2023 ESPP.

Share-based Compensation Stock Incentive Plans

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Restricted stock awards granted generally become fully vested between one to three years .

As of December 31, 2022 (Predecessor), the aggregate number of shares available for future grant under the 2013 Stock Incentive Plan was 27,884,000 shares.

Upon the Closing, the 2013 Stock Incentive Plan was terminated and the stock options were cancelled.

The following table summarizes stock option activity under the Predecessor’s 2013 Stock Incentive Plan:

Outstanding, January 1, 2022

Options granted

Options forfeited

Outstanding, December 31, 2022

Exercisable, December 31, 2022

The following table summarizes stock option activity under the Predecessor’s 2013 Stock Incentive Plan prior to the Closing:

Outstanding, January 1, 2023

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Exercisable, July 21, 2023

As of December 31, 2022 (Predecessor), the weighted average remaining contractual life of options outstanding and options exercisable were 2.5 years.

The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2022 (Predecessor) was $ 0.3 million.

The aggregate intrinsic value was calculated as the difference between the exercise price of the underlying options and the estimated fair value of the Predecessor’s common stock at December 31, 2022 (Predecessor).

All awards were vested prior to 2022.

As such during the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), and the year ended December 31, 2022, the Company did not recognize share-based compensation expense related to stock options granted under the 2013 Stock Incentive Plan.

As of December 31, 2022 and December 31, 2023, there was no unrecognized compensation expense related to non-vested stock options.

All awards were fully vested prior to 2022.

As such during the periods from January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor did not recognize share-based compensation expense related to stock options granted under the 2013 Stock Incentive Plan.

As of December 31, 2023, there was no unrecognized compensation expense related to non-vested stock options.

2019 Incentive Award Plan

In June 2019, ABP Sub Inc., the Predecessor’s wholly owned subsidiary, established its 2019 Incentive Award Plan (the “2019 Incentive Award Plan”), as amended from time to time, that provides for the granting of incentive and nonqualified stock options, restricted stock units, restricted stock and stock appreciation rights to its employees, members of the board of directors and non-employee consultants.

The 2019 Incentive Award Plan has similar grant terms as the Company’s 2013 Stock Incentive Plan.

In June 2019, ABP Sub Inc., the Predecessor’s wholly-owned subsidiary, established its 2019 Incentive Award Plan (the “2019 Incentive Award Plan”), as amended from time to time, that provides for the granting of incentive and nonqualified stock options, restricted stock units (“RSU”), restricted stock and stock appreciation rights to its employees, members of the Board of Directors and non-employee consultants.

The 2019 Incentive Award Plan provides for stock options to be granted with exercise prices not less than the estimated fair value of the Predecessor’s common stock, and incentive options to be granted to individuals owning more than 10 % of the total combined voting power of all classes of stock of the Predecessor with exercise prices not less than 110 % of the estimated fair value of the Predecessor’s common stock on the date of grant.

Stock options granted generally expire ten years after their original date of grant and generally vest between three years to four years with 25 % vesting on the first anniversary of the date of grant and then monthly vesting after that.

Stock options granted to a 10 % stockholder are exercisable up to five years from the date of grant.

Restricted stock awards granted generally become fully vested between one to three years .

In connection with the Merger, the Successor assumed the 2019 Incentive Award Plan and all options and RSU awards that were outstanding immediately prior to the Merger were converted into substantially similar awards covering shares of the Successor’s common stock based on a conversion ratio of approximately 1.078 to 1 share.

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Additionally, of such RSU awards, 6,481 RSU’s contained performance-based vesting criteria based on the achievement of the same milestones as the contingent consideration (see Note 6 Fair Value Measurements for additional information).

As of December 31, 2023, the milestones 1 and 2 were determined to be probable, and the Company expenses the proportionate RSU’s over the vesting term, calculated as the period from the date the milestone was determined to be probable and the expected achievement date of the milestone.

For the period from July 22, 2023 to December 31, 2023 (Successor), the Company has recognized $ 0.4 million in selling, general and administrative expenses and a de minimus amount in research and development expenses associated with such performance based RSU’s in the Successor’s consolidated statement of operations.

The following table summarizes stock option activity under 2019 Incentive Award Plan:

Outstanding, January 1, 2022

Options granted

Options forfeited

Outstanding, December 31, 2022

Exercisable, December 31, 2022

Upon designation of a probable milestone, the Company expenses the proportionate RSU’s over the vesting term, calculated as the period from the date the milestone was determined to be probable and the expected achievement date of the milestone.

For the year ended December 31, 2024 and the period from July 22, 2023 to December 31, 2023 (Successor), the Company has recognized $ 0.3 million and $ 0.4 million, respectively, in selling, general and administrative expenses and a de minimus amount in research and development expenses associated with such performance based RSU’s in the Successor’s consolidated statement of operations.

The following table summarizes stock option activity in 2024 under 2019 Incentive Award Plan:

Outstanding, January 1, 2024

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Options forfeited

Outstanding, July 21, 2023

Exercisable, July 21, 2023

Outstanding, July 22, 2023 (converted)

Options granted

Options forfeited

Outstanding, December 31, 2024

Exercisable, December 31, 2024

There were no options granted in the 2019 Incentive Plan during 2023.

The weighted average fair value of options granted during the year ended December 31, 2022 was $ 488.02 .

There were no options granted in 2023.

There were no options granted in the 2019 Incentive Plan during 2023, and no options will be granted from this plan after the Closing.

As of December 31, 2024 and December 31, 2023, the weighted average remaining contractual life of options outstanding and options exercisable was 6.0 years and 7.1 years.

During the year ended December 31, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), the Company recognized $ 2.9 million, $ 2.7 million and $ 2.4 million, respectively, of share-based compensation expense related to stock options granted.

As of December 31, 2024 and December 31, 2023, total unrecognized compensation expense related to nonvested stock options was $ 1.8 million and $ 4.9 million, respectively, which is expected to be recognized over the weighted-average remaining requisite service period of 4 months and 10 months , respectively.

The following table summarizes restricted stock units activity under the 2019 Incentive Award Plan:

Outstanding, July 22, 2023

The following table summarizes restricted stock units activity in 2024 under the 2019 Incentive Award Plan:

Outstanding, January 1, 2024

Outstanding, December 31, 2024

During the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), the Company recognized $ 0.5 million and $ 0.8 million, respectively, of share-based compensation expense related to restricted stock units granted.

As of December 31, 2023, total unrecognized compensation expense related to nonvested restricted stock units was $ 9.6 million, which is expected to be recognized over the weighted-average remaining requisite service period of 31 months .

During the year ended December 31, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), the Company recognized $ 1.3 million, $ 0.5 million and $ 0.8 million, respectively, of share-based compensation expense related to restricted stock units granted.

As of December 31, 2024 and December 31, 2023, total unrecognized compensation expense related to nonvested restricted stock units was $ 7.3 million and $ 9.6 million, respectively, which is expected to be recognized over the weighted-average remaining requisite service period of 21 months and 31 months , respectively.

The unrecognized compensation expense with the earnout criteria will be recognized when the milestones are determined to be probable over the RSUs vesting term, calculated as the period from the date the milestone was determined to be probable and the expected achievement date of the milestone.

AEON Biopharma Inc 2023 Incentive Award Plan

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In addition, the number of shares of common stock available for issuance under the 2023 Plan will be annually increased on January 1 of each calendar year beginning in 2024 and ending in 2033 by an amount equal to the lesser of (i) 4 % of the number of fully-diluted number of shares outstanding on the final day of the immediately preceding calendar year or (ii) such other number of shares as is determined by the Board.

Any shares issued pursuant to the 2023 Plan may consist, in whole or in part, of authorized and unissued common stock, treasury common stock or common stock purchased on the open market.

Outstanding, July 22, 2023

Any shares issued pursuant to the 2023 Plan may consist, in whole or in part, of authorized and unissued common stock, treasury common stock or common stock

purchased on the open market.

As of December 31, 2024, there were 13,199 shares of common stock available for issuance under the 2023 Plan.

The following table summarizes stock options activity in 2024 under the 2023 Incentive Award Plan:

Outstanding, January 1, 2024

Options granted

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Exercisable, December 31, 2024

The weighted average fair value of options granted in 2023 was $ 3.18 .

The weighted average remaining contractual life of options outstanding and options exercisable was 9.6 years.

During the periods from July 22, 2023 to December 31, 2023 (Successor), the Company recognized $ 0.1 million of share-based compensation expense related to stock options granted.

As of December 31, 2023, total unrecognized compensation expense related to nonvested stock options was $ 0.9 million, which is expected to be recognized over the weighted-average remaining requisite service period of 35 months .

The weighted average per share fair value of options granted in 2024 and 2023 was $ 135.50 and $ 229.29 , respectively.

The weighted average remaining contractual life of options outstanding and options exercisable as of December 31, 2024 and December 31, 2023 was 9.5 years and 9.6 years, respectively.

During the year ended December 31, 2024 (Successor) and the period from July 22, 2023 to December 31, 2023 (Successor), the Company recognized $ 1.6 million and $ 0.1 million, respectively, of share-based compensation expense related to stock options granted.

As of December 31, 2024 and December 31, 2023, total unrecognized compensation expense related to nonvested stock options was $ 5.3 million and $ 0.9 million, respectively, which is expected to be recognized over the weighted-average remaining requisite service period of 19 months and 35 months , respectively.

The following table summarizes restricted stock units activity in 2024 under the 2023 Incentive Award Plan:

Outstanding, January 1, 2024

Outstanding, December 31, 2024

During the year ended December 31, 2024 (Successor), the Company recognized $ 0.1 million of share-based compensation expense related to restricted stock units granted.

As of December 31, 2024 (Successor), total unrecognized compensation expense related to nonvested restricted stock units was $ 0.7 million, which is expected to be recognized over the weighted-average remaining requisite service period of 20 months .

Share-based Compensation Expense and Valuation Information

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The Company records share-based compensation expense net of actual forfeitures.

During the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), and the twelve months ended December 31, 2022 (Predecessor), the Company recognized $ 2.8 million, $ 3.1 million and $ 5.9 million, respectively, of share-based compensation expense in selling, general and administrative expenses, respectively, and $ 0.4 million, $ 0.8 million and $ 1.3 million, respectively, in research and development expenses in the accompanying consolidated statements of operations and comprehensive (loss) income.

The fair value of stock options under the 2019 Stock Incentive Award Plan was estimated using the following assumptions:

During the year ended December 31, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to December 31, 2023 (Successor), the Company recognized $ 4.7 million, $ 2.8 million and $ 3.1 million, respectively, of share-based compensation expense in selling, general and administrative expenses, respectively, and $ 1.5 million, $ 0.4 million and

$ 0.8 million, respectively, in research and development expenses in the accompanying consolidated statements of operations and comprehensive income (loss).

The fair value of stock options under the 2019 Plan and 2023 Plan was estimated using the following assumptions:

Expected volatility

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Fair Value of the Underlying Common Stock.

For Predecessor periods, since the Predecessor’s common stock was not traded in a public stock market exchange, the Board considered numerous factors including new business and economic developments affecting the Predecessor and independent appraisals, when appropriate, to determine the fair value of the Predecessor’s common stock.

For the Predecessor period, since the Predecessor’s common stock was not traded in a public stock market exchange, the Board considered numerous factors including new business and economic developments affecting the Predecessor and independent appraisals, when appropriate, to determine the fair value of the Predecessor’s common stock.

Independent appraisal reports were prepared using valuation techniques, such as discounted cash flow analyses, from which a discount factor for lack of marketability was applied.

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Expected Volatility .

The expected volatility is estimated based on a study of selected publicly traded peer companies as the Company does not have any trading history for its common stock.

The expected volatility is estimated based on a study of selected publicly traded peer companies as the Company does not have sufficient trading history for its common stock.

The Company selected the peer group based on similarities in industry, stage of development, size and financial leverage with the Company’s principal business operations.

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Subsequent Events

The Company has further evaluated subsequent events for recognition and remeasurement purposes as of and for the twelve months ended December 31, 2023.

The Company has evaluated subsequent events for recognition and remeasurement purposes as of and for the twelve months ended December 31, 2024.

After review and evaluation, management has concluded that there were no material subsequent events as of the date that the financial statements were available to be issued, except as discussed below.

Termination of Forward Purchase Agreements

The ACM Termination Agreement provides that (i) ACM will retain 3,100,000 previously issued shares of Common Stock held by ACM pursuant to the ACM FPA and its respective subscription agreement (the “ACM Retained Shares”) and (ii) the Company will be subject to up to $ 1,500,000 in liquidated damages if it fails to meet certain registration requirements for the ACM Retained Shares, subject to certain conditions set forth in the ACM Termination Agreement.

ACM did not pay any cash to the Company for the ACM Retained Shares and retained all portions of the Prepayment Amount associated with the ACM Retained Shares.

The Polar Termination Agreement provides that (i) Polar will retain 3,175,000 previously issued shares of Common Stock held by Polar pursuant to the Polar FPA and its respective subscription agreement (the “Polar Retained Shares”) and (ii) the Company will be subject to up to $ 1,500,000 in liquidated damages if it fails to meet certain registration requirements for the Polar Retained Shares,

subject to certain conditions set forth in the Polar Termination Agreement.

Polar did not pay any cash to the Company for the Polar Retained Shares and retained all portions of the Prepayment Amount associated with the Polar Retained Shares.

As a result of the ACM Termination Agreement and Polar Termination Agreement, the Company expects to record a charge to the consolidated statement of operations of approximately $ 20.3 million during the quarter ended March 31, 2024 to reverse the related subscription receivable and derivative liability on the accompanying consolidated balance sheet.

Convertible Note Subscription and License Agreement Amendment

On March 19, 2024, the Company entered into a subscription agreement with Daewoong (the “Subscription Agreement”) relating to the sale and issuance by the Company of senior secured convertible notes (each, a “Convertible Note” and together, the “Convertible Notes”) in the principal amount of up to $ 15.0 million, which are convertible into shares of the Company’s common stock, subject to certain conditions and limitations set forth in each Convertible Note.

Each Convertible Note will contain customary events of default, will accrue interest at an annual rate of 15.79 % and will have a maturity date that is three years from the funding date, unless earlier repurchased, converted or redeemed in accordance with its terms prior to such date.

The Company will use the net proceeds from each Convertible Note to support the late-stage clinical development of its lead product candidate ABP-450 and for general working capital purposes.

Pursuant to the terms of the Subscription Agreement, on March 24, 2024, the Company issued and sold to Daewoong one Convertible Note in the principal amount of $ 5.0 million.

The Subscription Agreement further provides that the Company will issue and sell to Daewoong a second Convertible Note in the principal amount of $ 10.0 million no later than thirty (30) days following the Company’s compliance with certain conditions set forth in the Subscription Agreement, including the Company’s execution of an amendment to that certain License and Supply Agreement, by and between the Company and Daewoong, dated December 20, 2019, as amended on July 29, 2022, January 8, 2023 and April 24, 2023 (the “License Agreement”).

On March 19, 2024, the Company entered into a Fourth Amendment to the License Agreement (the “License Agreement Amendment”) with Daewoong, which amends the License Agreement.

Public Offering

On January 6, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp.

(“Aegis” or the “Underwriter”) pursuant to which the Company agreed to sell and issue, in an underwritten public offering (the “Offering”) 555,571 Common Units, each consisting of (i) one (1) share of Common Stock, (ii) one (1) Series A Registered Common Warrant to purchase one (1) share of Common Stock per warrant at an exercise price of $ 45.00 (the “Series A Warrants”) and (iii) one (1) Series B Registered Common Warrant to purchase one (1) share of Common Stock per warrant at an exercise price of $ 45.00 (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”).

Additionally, the Company granted Aegis a 45-day option to purchase additional shares of Common Stock and/or Warrants of (i) up to 15.0 % of the number of shares of Common Stock sold in the offering, (ii) up to 15.0 % of the number of Series A Warrants sold in the offering and (iii) up to 15.0 % of the number of Series B Warrants sold in the offering.

The purchase price per additional share of Common Stock is equal to the public offering price of one Common Unit (less $0.01 allocated to each full Warrant), less the underwriting discount.

The purchase price per additional

Warrant is $ 0.01 .

On January 7, 2025, Aegis exercised its over-allotment option with respect to 83,334 Series A Warrants and 83,334 Series B Warrants.

The closing of the Offering occurred on January 7, 2025.

The Company received net proceeds of approximately $ 18.3 million from the Offering, after deducting the offering expenses payable by the Company, including the Underwriter’s fees and expenses.

Special Meeting of Shareholders

On February 24, 2025, the following proposals were approved at a special meeting of shareholders:

An amendment to the Company’s certificate of incorporation to increase the number of authorized shares of our common stock, par value $ 0.0001 (the “Common Stock”) from 500,000,000 to 1,040,000,000 ;

Discretionary authority granted to the Company’s board of directors to (i) amend the Company’s certificate of incorporation to combine outstanding shares of the Company’s common stock into a lesser number of outstanding shares at a specific ratio within a range of one -for-five (1-for-5) to a maximum of a one -for-one hundred fifty (1-for-150), with the exact ratio to be determined by our board of directors in its sole discretion;

and (ii) effect the reverse stock split, if at all, within one year of the date the proposal is approved by stockholders;

Authorized shares of common stock underlying the warrants and certain provisions of the warrants issued in connection with a public offering that was consummated on January 7, 2025.

Reverse Stock Split

On February 24, 2025, following the Special Meeting of Shareholders, the Board approved the filing of a Certificate of Amendment to the Certificate of Incorporation (the “Charter Amendment”) to effect a reverse stock split at a split ratio of 1 -for-72 (the “Reverse Stock Split”).

As a result of the Reverse Stock Split, each 72 pre-split shares of Common Stock outstanding will automatically combine into one new share of Common Stock without any action on the part of the holders.

The Reverse Stock Split will affect all of the Company’s stockholders uniformly and will not affect any stockholder’s percentage ownership interests in the Company.

No fractional shares will be issued in connection with the Reverse Stock Split.

In lieu of fractional shares, any person who would otherwise be entitled to a fractional share of Common Stock as a result of the reclassification and combination following the effective time of the Reverse Stock Split (after taking into account all fractional shares of Common Stock otherwise issuable to such holder) shall instead receive a number of shares rounded up to the nearest whole share.

Proportional adjustments will be made to the number of shares of Common Stock issuable upon exercise or conversion of the Company’s outstanding equity awards and warrants, as well as the applicable exercise price, except in cases where the applicable agreement provides otherwise.

On February 26, 2025, the effective date of the Reverse Stock Split, the number of outstanding shares of Common Stock was reduced from approximately 79.9 million shares to approximately 1.1 million shares (subject to rounding of fractional shares, which will be rounded up to the nearest whole share).

The capital stock accounts, all share data and earnings (loss) per share, restricted stock units and stock options and corresponding exercise price give effect to the reverse stock split, applied retrospectively, to all periods presented for Successor and on-the-line periods.

However, share amounts and per share data for the Predecessor have not been adjusted to reflect our 1-for-72 reverse stock split because the capital structure of Predecessor is not comparable to the Successor.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data