What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-28 compared with 2024-04-16 · 422 added, 359 removed, 123 unchanged (86% of the section changed)

1 unchanged sentence

following discussion and analysis of our financial condition and results of operations should be read together with the other sections

of this Annual Report on Form 10-K, including our audited financial statements for the year ended

December 31, 2023, together with related notes thereto, included elsewhere in this Annual Report.

The following discussion contains forward-looking

statements based upon current expectations that involve risks, uncertainties, and assumptions.

Our actual results may differ materially

from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section

titled “Risk Factors” or in other parts of this Annual Report and our other filings with the SEC.

Our historical results

are not necessarily indicative of the results that may be expected for any period in the future.

Conduit Pharmaceuticals Limited entered

into an Agreement and Plan of Merger (the “Merger Agreement”) with Murphy Canyon Acquisition Corp.

November 8, 2022.

The transaction contemplated by the terms of the Merger Agreement was completed on September 22, 2023, in conjunction

with which MURF changed its name to Conduit Pharmaceuticals Inc.

(hereafter referred to, collectively with is subsidiaries as “Conduit”,

the “Company”, “we”, “us” or “our”, unless the context otherwise requires.

amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.

has developed a unique business model that allows it to act as a “conduit” to bring clinical assets from pharmaceutical

companies and develop new treatments for patients.

Our novel approach addresses unmet medical need and lengthens the intellectual

property for our existing assets through cutting-edge solid-form technology and then commercialize these products with life science

are led by highly experienced pharma executives, Dr.

Freda Lewis-Hall, former Chief Medical Officer of Pfizer Inc., the Chair of our

Board of Directors, and Dr.

David Tapolczay, former Chief Executive Officer of the United Kingdom-based medical research charity LifeArc,

our Chief Executive Officer.

simultaneously leveraging the capabilities of our Cambridge laboratory facility and highly experienced team of solid-form experts to

extend or develop proprietary solid-form intellectual property for our existing and future clinical assets.

Our own intellectual property

portfolio comprises a 20-year patent pending solid-form compound, the AZD1656 Cocrystal (a HK-4 Glucokinase Activator), targeting a wide

range of autoimmune diseases.

Our pipeline research includes a number of compounds that serve as promising alternatives to existing clinical

assets currently marketed and sold by large pharmaceutical companies, which we have identified as having an opportunity to develop further intellectual property positions through solid-form technology.

connection with the funding and development of clinical assets, we evaluate and select the specific molecules to be developed and collaborate

with external CROs and KOLs to run clinical trials that are managed, funded, and overseen by us.

of this Annual Report on Form 10-K, including our audited financial statements for the year ended December 31, 2024, together with related

notes thereto, included elsewhere in this Annual Report.

The following discussion contains forward-looking statements based upon current

expectations that involve risks, uncertainties, and assumptions.

Our actual results may differ materially from those anticipated in these

forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors”

or in other parts of this Annual Report and our other filings with the SEC.

Our historical results are not necessarily indicative of

the results that may be expected for any period in the future.

Conduit Pharmaceuticals Limited entered into an Agreement and Plan of

Merger (the “Merger Agreement”) with Murphy Canyon Acquisition Corp.

(“MURF”) on November 8, 2022.

The transaction

contemplated by the terms of the Merger Agreement was completed on September 22, 2023, in conjunction with which MURF changed its name

to Conduit Pharmaceuticals Inc.

(hereafter referred to, collectively with is subsidiaries as “Conduit”, the “Company”,

“we”, “us” or “our”, unless the context otherwise requires.

All dollar amounts are expressed in thousands

of United States dollars (“$”), unless otherwise indicated.

September 22, 2023, a merger transaction (the “Business Combination”) between Conduit Pharmaceuticals Limited (“Old

Conduit”), Murphy Canyon Acquisition Corp (“MURF”) and Conduit Merger Sub, Inc., a Cayman Islands exempted company

and a wholly owned subsidiary of MURF (“Merger Sub”), was completed pursuant to the Agreement and Plan of Merger, dated November

8, 2022, as amended, (the “Merger Agreement”).

Pursuant to the terms of the Merger Agreement, at the closing, (i) Merger

Sub merged with and into Old Conduit, with Old Conduit surviving the Business Combination as a wholly-owned subsidiary of MURF, and (ii)

MURF changed its name from Murphy Canyon Acquisition Corp.

to Conduit Pharmaceuticals Inc.

has developed a unique business model that allows it to act as a conduit to bring clinical assets from pharmaceutical companies and develop

new treatments for patients.

Our novel approach addresses unmet medical needs and lengthens the intellectual property for our existing

assets through cutting-edge solid-form technology and then commercializing these products with life science companies.

We continue to

evaluate novel artificial intelligence and cybernetics approaches to drug re-purposing, intellectual property and asset selection to

give Conduit a competitive advantage.

are led by highly experienced pharmaceutical executives:

Freda Lewis-Hall, former Chief Medical Officer of Pfizer Inc., the Chair

of our Board of Directors, and Dr.

David Tapolczay, former Chief Executive Officer of the United Kingdom-based medical research charity

LifeArc, our Chief Executive Officer.

Our management team includes active senior scientists who have an extensive understanding of the

pharmaceuticals market, which supports our strategy of developing clinical assets in a cost-efficient manner while focusing on therapeutic

efficacy and patient safety.

Simultaneously,

Conduit leverages the capabilities of our Cambridge laboratory facility and highly experienced team of solid-form experts to extend or

develop proprietary solid-form intellectual property for our existing and future clinical assets.

Our own intellectual property portfolio

comprises pending patent applications in several international jurisdictions describing a solid-form compound, including the AZD1656

Cocrystal (a HK-4 Glucokinase Activator), targeting a wide range of autoimmune disorders.

Our pipeline research includes a number of

compounds that serve as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical companies,

which we have identified as having an opportunity to develop further intellectual property positions through solid-form technology.

connection with the funding and development of clinical assets, we expect to evaluate and select the specific molecules to be

developed and collaborate with external CROs and Key Opinion Leaders

(“KOLs”) to run clinical trials that are managed, funded, and overseen by us.

We intend to leverage our comprehensive

clinical and scientific expertise in order to facilitate development of clinical assets through Phase II trials in an efficient manner

by using CROs and third-party service providers.

We will also collaborate closely with disease specific KOLs to collectively assess and

determine the most appropriate indications for all our current and forthcoming assets.

clinical and scientific expertise in order to facilitate development of clinical assets through Phase II trials in an efficient

manner by using CROs and third-party service providers.

We will also collaborate closely with disease specific KOLs to collectively

assess and determine the most appropriate indications for all our current and forthcoming assets.

believe that successful Phase II trials of the clinical assets in our pipeline will increase the value of our assets.

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portfolio in combination with other potential sources of financing, including debt or equity financing.

of our proprietary owned patented clinical assets, we have an exclusive relationship and partnership with St George Street, a biomedical

charity based in the United Kingdom.

We have the option to fund 100% of the development of clinical assets that were initially licensed

to St George Street by AstraZeneca.

AstraZeneca has conducted initial pre-clinical and, in some instances, clinical trials on these assets,

but has decided to license them for further development.

addition to our patent pending solid-form compound targeting a wide range of autoimmune diseases, two assets which were licensed from

AstraZeneca to St George Street that is expected to be developed by us include AZD5904 (a Myeloperoxidase Inhibitor) targeting idiopathic

male infertility and AZD1656 (a Glucokinase Activator) targeting autoimmune diseases or immunodeficient conditions including uveitis,

premature labor, renal transplant rejection, and Hashimoto’s thyroiditis.

the clinical assets have undergone initial pre-clinical and clinical testing conducted by AstraZeneca, we are able to use the safety

data generated in these clinical trials to assess which clinical assets to further develop and for which indications.

this relationship, there is considerable APIs that was manufactured by AstraZeneca in conducting its clinical trials available.

result, Conduit may not have to develop the API, which is often a time consuming and expensive process, and the API already produced

was subject to rigorous quality control measures.

Conduit is well positioned, and intends, to pursue additional relationships and/or partnerships with third parties for the licensing

of further assets which are currently deprioritized.

We plan to focus our efforts on developing clinical assets to address diseases that

impact a large population where there is no present treatment or the present treatment, carries significant unwanted side effects.

of COVID-19, the Russia and Ukraine Conflict, and Global Economic Conditions

a result of the spread of the COVID-19 pandemic, economic uncertainties have arisen which may negatively affect our financial position,

results of operations and cash flows.

We have assessed that the COVID-19 pandemic has not so far had a material or direct impact on our

operations or financial position.

Nevertheless, in light of the ongoing COVID-19 pandemic, we have implemented measures to protect employees

and take social responsibilities while at the same time attempting to limit any negative effects on our business.

outbreak of an illness, a communicable disease, or any other public health crisis, and any resulting impacts, such as an extended period

of global supply chain and/or economic disruption, labor shortages, or government-mandated actions in response to such public health

crisis could materially affect our business, results of operations, access to sources of liquidity, and financial condition.

continues to actively monitor our financial condition, liquidity, operations, suppliers, industry and workforce.

conflicts between Russia and Ukraine and between Israel and Hamas have caused major macroeconomic disruptions that have impacted the

global trade and economies.

As such increasing inflation around the globe has forced national banks to increase their interest rates,

consequently impacting interest yields around the globe.

We have assessed the impact of these measures and concluded that as of today,

no material impact has been identified on our business or our ability to continue as a going concern.

of our proprietary owned patented clinical assets, AstraZeneca agreed to grant a license to the Company under certain intellectual property

rights controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor

AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility.

The Company will be responsible for the development

and commercialization of the Licensed Products under the related License Agreement.

Company is required to use commercially reasonable efforts to develop and commercialize the Licensed Products.

has conducted initial pre-clinical and, in some instances, clinical trials on these assets, but has decided to license them for further

As the clinical assets have undergone initial pre-clinical and clinical testing conducted by AstraZeneca, we are able to

use the safety data generated in these clinical trials to assess which clinical assets to further develop and for which indications.

this relationship, there are considerable APIs that were manufactured by AstraZeneca

(prior to conducting its clinical trials) available to Conduit.

As a result, Conduit may not have to develop the APIs, which is often

a time consuming and expensive process, and the APIs already produced were subject to rigorous quality control measures.

collaboration with SARBORG Limited (“Sarborg”), a related party, Conduit intends to leverage an advanced AI and cybernetics platform to evaluate key deliverables across multiple areas of the Company’s operations,

including drug repurposing, drug discovery, solid-form identification, and clinical trial monitoring.

Sarborg Agreement is designed to address longstanding challenges in the pharmaceutical sector, in particular by reducing human error

in critical decision-making processes in both clinical development and asset identification.

By integrating Sarborg’s

algorithmic AI/cybernetics technology, Conduit aims to enhance efficiency, lower costs, and accelerate timelines by minimizing human

intervention, ultimately optimizing the drug development cycle and giving Conduit a competitive advantage in the sector.

this relationship, Conduit will gain access to cutting-edge predictive models and dashboards, enabling the Company to evaluate drug candidates,

streamline clinical trials, and optimize asset management with real-time data.

These tools will drive faster, more accurate decisions,

improving efficiency and reducing costs.

By leveraging these insights, Conduit can differentiate itself in a competitive sector and gain

unique data-driven insights that position the Company for success across both its current and future asset portfolio.

addition, Conduit will retain a perpetual, non-exclusive, royalty-free, and assignable right to use any platform or technology developed

by Sarborg in association with the deliverables.

Ongoing support from Sarborg will ensure these systems evolve with Conduit’s needs,

driving long-term innovation in areas like IP creation, regulatory strategy, and clinical trial monitoring.

This partnership reinforces

Conduit’s commitment to leveraging AI-driven solutions to accelerate growth, deliver value to shareholders, and maintain a competitive

edge in the pharmaceutical sector.

strategic move reaffirms Conduit’s commitment to adopting forward-thinking solutions to stay at the forefront of innovation in

the pharmaceutical industry.

By reducing reliance on traditional, labor-intensive methods and harnessing the power of AI-driven technology,

Conduit is well-positioned to lead in areas such as drug repurposing, clinical trial monitoring, and IP creation, ensuring the Company’s

long-term growth and market leadership.

Conduit is well positioned to pursue, and intends to pursue, additional relationships and/or partnerships with third parties for the

licensing of further assets which are currently deprioritized.

We plan to focus our efforts on developing clinical assets to address

disorders that impact a large population where there is no present treatment or the present treatment, carries significant unwanted side

January 22, 2025, we filed a certificate of amendment to the Company’s Second Amended and Restated Certificate of Incorporation

(the “Amendment”) with the Secretary of State of the State of Delaware to effectuate a 1-for-100 reverse stock split (the

“Reverse Stock Split”) of the outstanding shares of our common stock.

Our stockholders previously approved the Reverse Stock

Split and granted the board of directors the authority to determine the exact split ratio and when to proceed with the Reverse Stock

Split at our annual meeting of stockholders held on December 18, 2024.

The Reverse Stock Split became effective on January 24, 2025,

and the common stock begin trading on The Nasdaq Global Market on a Reverse Stock Split-adjusted basis on January 27, 2025.

The par value

and other terms of the common stock were not affected by the Reverse Stock Split.

a result of the reverse stock split, every 100 shares of our common stock issued or outstanding were automatically reclassified into

and became one new share of common stock, and the number of our issued and outstanding shares of common stock was reduced to 1,384,801

and 738,295 as of December 31, 2024 and December 31, 2023, respectively.

All references to numbers of shares of common stock and per-share

information in this Annual Report on Form 10-K have been adjusted retroactively, as appropriate, to reflect the reverse stock split.

Nasdaq Stock Market Correspondence and Subsequent

Nasdaq Capital Market Listing

We are compliant with the MVPHS

continued listing standard of Nasdaq Capital Market being greater than $1.0 million.

The current MVPHS is $5,166,785 based on

the closing price of the common stock on March 27, 2025.

On a pro-forma basis at March 31, 2025, we expect to satisfy compliance

with the Nasdaq Capital Market Equity Standard of Stockholder’s Equity greater than $2.5 million, after anticipating all Q1

2025 expected losses.

Through the date of the consolidated financial statements, Stockholder’s Equity has increased significantly,

through (i) fundraising of an additional $8.332 million from the Sales Agreement with AGP, (ii) conversion of $1.785 million from the

Nirland Notes into 924,200 shares of common stock, and (iii) capitalization of certain invoices and fees.

We expect to maintain

continued compliance with the Equity Standard through additional issuance under its Sales Agreement, additional conversions of outstanding

debt and capitalization of fees and a tight control of expenditure, although no such assurance can be given.

Component of Result of Operations

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The prepaid amounts are expensed as the benefits are

incurred approximately $37,000 on research and development activities during the year ended December 31, 2022, and $90,000 during the

year ended December 31, 2023.

Our research and development activities have been wholly focused on developing co-crystals of AZD1656 to

increase patent life.

Some of this work was completed by third-party CROs but all intellectual property is retained by us.

have one pending international patent application and two pending national patent applications.

The successful completion of clinical

trials increases the value of clinical assets and may lead to the commercialization and/or licensing of such assets to other pharmaceutical

There is no assurance that any clinical trials on the assets owned or licensed by us will be successful.

and Development Funding expenses

Funding expenses

consist primarily of costs incurred in connection with the Company providing funding to SGSC to carry out its research and development

SGSC holds all licenses to conduct clinical research through third party pharmaceutical companies.

We and St George

Street entered into an Exclusive Funding Agreement on March 26, 2021 (the “Global Funding Agreement”), pursuant to which

St George Street granted us the exclusive first right to provide to St George Street, or procure the provision of, all funding for the

performance of a drug discovery and/or development project in consideration for a share of the net revenue in respect of such project.

We have provided approximately GBP £220,000 in aggregate project funding pursuant to the Global Funding Agreement and the project

funding agreements and we have received aggregate revenues totaling GBP £0 pursuant to the Global Funding Agreement and the project

funding agreements.

date, we do not track our research and development expenses on a program-by-program basis as we only worked on one program related to

COVID-19 treatment.

Moving forward, we do not expect further research and development expense for clinical research into COVID-19 as

we explore broader applications of our research to date.

Our direct external research and development expenses consist primarily of external

costs, such as fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our preclinical development,

process development, manufacturing and clinical development activities.

We do not allocate employee costs, costs associated with our

discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific programs because

these costs are deployed across multiple programs and, as such, are not separately classified.

We use internal resources primarily to

conduct its research and discovery as well as for managing its preclinical development, process development, manufacturing and clinical

development activities.

These employees work across multiple programs and, therefore, we do not track their costs by program.

and development activities have historically been central to our business model.

We anticipate that our research and development expenses

will increase for the foreseeable future in connection with our planned clinical development activities, upon raising anticipated additional

this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that would be necessary to complete the

preclinical and clinical development of any of our clinical assets or when, if ever, material net cash inflows may commence from any

of our clinical assets.

The successful development and commercialization of any of our clinical assets is highly uncertain.

This uncertainty

is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of

the following:

scope, progress, timing, outcome and costs of any continued preclinical development activities, clinical trials and other related

development activities;

suspensions, or other setbacks or interruptions encountered;

patient enrollment in and the initiation and completion of any clinical trials;

timing, receipt and terms of any marketing approvals from applicable regulatory authorities including the U.S.

Food and Drug Administration

(“FDA”) and non-U.S.

regulatory authorities;

extent of any required post-marketing approval commitments to applicable regulatory authorities;

clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that

us or our third-party manufacturers are able to make and scale our products successfully;

and timely delivery of clinical-grade and commercial-grade drug formulations that can be used in Conduit’s clinical trials

and for commercial launch;

maintaining, defending and enforcing patent claims and other intellectual property rights;

and changing government regulation;

commercial sales of Conduit’s clinical assets, if and when approved, whether alone or in collaboration with others;

a continued acceptable safety profile of Conduit’s clinical assets following approval, if any, of Conduit’s clinical

change in any of these variables with respect to any of Conduit’s programs would significantly change the costs, timing and viability

associated with that program.

Our research and development

activities have been wholly focused on developing co-crystals of AZD1656 to increase patent life.

Some of this work was completed by

third-party CROs but all intellectual property is retained by us.

We currently have one pending international patent application and

two pending national patent applications.

The successful completion of clinical trials increases the value of clinical assets and may

lead to the commercialization and/or licensing of such assets to other pharmaceutical companies.

There is no assurance that any clinical

trials on the assets owned or licensed by us will be successful.

and Administrative Expenses

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SEC and the Nasdaq listing rules, additional insurance expenses, investor relations activities and other administrative and professional

In addition, if regulatory approval is obtained for clinical assets, we expect to incur expenses associated with building a

sales and marketing team.

Income (Expenses)

income (expenses), net

income (expense), net consists of realized and unrealized losses or gains from the sale of equity securities, unrealized foreign

currency transaction loss, loss on the change in fair value of convertible notes, warrants and option liabilities, and write-off of

long-term debt- related party, and derecognition of deferred revenue.

income (expense), net consists of change in the fair value of options, change in fair value of convertible notes, and expense incurred

upon the issuance of warrants during the year.

expense, net consists primarily of interest expense on convertible loan notes and promissory notes and interest expense on deferred commissions

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following table set forth our results of operations for the periods indicated:

amounts in thousands)

and development expenses

and development expenses increased by approximately $53,000, or 143%, to approximately $90,000 for the year ended December 31, 2023,

as compared to approximately $37,000 for the year ended December 31, 2022.

The increase was primarily due to the development of certain

co-crystals of AZD1656 (AZD1656 Co-Crystal PCT/IB2022/00075 - Patent Expires 02/09/2042) during the year ended December 31, 2023.

will seek to develop the AZD1656 Co-Crystal in psoriasis, Crohn’s disease, lupus, sarcoidosis, diabetic wound healing, idiopathic

pulmonary fibrosis, and nonalcoholic steatohepatitis (NASH).

and administrative expenses

amounts in thousands)

(Dollar amounts in thousands)

Research and development expenses

and development expenses increased by approximately $3.3 million, or 3,653%, to approximately $3.4 million for the year ended December

31, 2024, as compared to approximately $90 thousand for the year ended December 31, 2023.

The increase was primarily driven by a $3.1

million upfront payment to AstraZeneca in connection with the license agreement, comprised of $1.5 million cash and $1.6 million of our

common shares issued to AstraZeneca with no comparable activity in 2023.

and administrative expenses

(Dollar amounts in thousands)

General and administrative expenses

and administrative expenses increased by $6.9 million, or 133%, to approximately $12.0 million for the year ended December 31, 2024,

as compared to approximately $5.2 million for the year ended December 31, 2023.

The increase was primarily driven by a $1.2 million

increase in professional fees including:

legal fees, accounting

and tax expense, listing fees and consulting fees.

General and administrative expenses were also impacted by a $0.4 million increase

in salaries, payroll expense and stock compensation, a $0.2 million increase in travel expense, $0.5 million increase in

employee insurance (including directors and officers insurance expense), offset by a $0.2 million decrease in Other G&A expenses.

amounts in thousands)

expenses decreased by $0.1 million, or 100%, to zero for the year ended December 31, 2023, as compared to $0.1 million for the year ended

December 31, 2022.

The decrease was primarily due to a decrease of $0.1 million in funding requirements from St George Street for research

and development expenses incurred and which we agreed to fund.

No funding was provided in 2023, as Conduit continues to explore preferred

indications, its preferred collaboration partners, and preferred avenues of additional research.

income (expense), net

amounts in thousands)

The increase was primarily driven by a $3.4 million increase

in salaries, stock-based compensation and payroll, a $1.3 million increase in other G&A expenses, a $1.1 million increase in D&O

insurance, a $0.5 million increase in professional fees including:

legal fees, accounting and tax expense, listing fees and consulting

fees and a $0.5 million increase in travel expenses.

income (expense), net

income (expense), net changed by $6.7 million, or 385%, to other income of $4.9 million for the year ended December 31, 2023, as

compared to other expense, net of $1.7 million for the year ended December 31, 2022.

The change was primarily driven by a $1.5

million gain on the derecognition of the Cizzle option in 2023, a $1.3 million gain on the change in fair value of the Cizzle

option, a $2.8 million gain on the derecognition of the deferred revenue for the Vela option prior to the exercise of the Vela

option , and a $1.0 million gain on the change in fair value of the Vela option.

This was offset by a $1.0 million loss on issuance

related to the Vela option, $0.4 million change in the fair value of convertible notes payable and $0.3 million realized foreign

currency transaction loss.

During the year ended December 31, 2022, we recorded a loss on the fair market value adjustment for the

Cizzle option of $1.3 million and a loss on the adjustment to convertible notes of $0.3 million.

further details refer to Note 16 – Other income (expense), net in the financial statements as of December 31, 2023 and 2022

included elsewhere in this Report.

amounts in thousands)

changes denoted with an “nm” represent percent changes that are not meaningful.

expense, net changed by $0.2 million from nil for the year ended December 31, 2023 to an expense of $0.2 million for the year ended

December 31, 2022.

The change was driven by $0.2 million increase in interest expense on interest-bearing convertible promissory

notes for the year ended December 31, 2023 that was not issued until the first quarter of 2023.

(Dollar amounts in thousands)

Other income (expense), net

income (expense), net changed by $5.8 million, or 118%, to other expense of approximately $0.9 million for the year ended December

31, 2024, as compared to other income of $4.9 million for the year ended December 31, 2023.

In 2024, other expense was driven by a

$2.7 million loss on the issuance of warrants, and a $0.7 million expense related to a net loss on extinguishments, offset by a $2.0

million gain on the change in fair value of convertible notes payable, a $0.3 million increase from an income tax refund and a $0.2

million increase in the gain on change in fair value of warrants.

In 2023, other income was driven by a $1.5 million gain on the

derecognition of the Cizzle option in 2023, a $1.3 million gain on the change in fair value of the Cizzle option, a $2.8 million

gain on the derecognition of the deferred revenue for the Vela option prior to the exercise of the Vela option, and a $1.0 million

gain on the change in fair value of the Vela option.

This was offset by a $1.0 million loss on issuance related to the Vela option,

$0.4 million change in the fair value of convertible notes payable and $0.3 million realized foreign currency transaction

further details refer to Note 17 in the consolidated financial statements as of December 31, 2024 and 2023 included elsewhere in this

Annual Report.

(Dollar amounts in thousands)

Interest expense, net

expense, net changed by $1.3 million or 614%, to $1.5 million for the year ended December 31, 2024, from $0.2 million for the year

ended December 31, 2023.

The change was driven by a $0.9 million increase in the amortization of debt issuance costs and debt

discounts and a $0.4 million increase in interest expense incurred on interest-bearing convertible promissory notes.

and Capital Resources

4 unchanged sentences

To date, our primary sources of capital have

been through private placements of equity securities and convertible debt as well as PIPE financing as a result of the Merger.

the year ended December 31, 2023 and 2022, we had net losses of $0.5 million and $4.9 million, respectively.

The Company has also received

a $5 million commitment for working capital, subject to agreement and definitive documentation, from Corvus Capital, a major shareholder,

and expects to use that commitment to cover its operating costs for the coming year.

We expect to incur additional losses and higher

operating expenses for the foreseeable future as we continue to invest in research and development programs.

been through private placements of equity securities and convertible debt and the Sales Agreement with A.G.P.

During the years ended December

31, 2024 and 2023, we incurred operating losses of $15.4 million and $5.3 million, respectively.

primary uses of cash are to fund our operations as we continue to grow our business.

We will require a significant amount of cash for

expenditures as we invest in ongoing research and development and business operations.

Until such time as we can generate significant

revenue from commercialization of our product, we expect to finance our cash needs for ongoing research and development and business

operations through public or private equity or debt financings or other capital sources, including strategic partnerships.

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

To the extent

that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders

will be, or could be, diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the

rights of our common stockholders.

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

or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, or substantially

reduce research and development efforts all of which could have a material adverse effect on the Company and its financial results.

We will require a significant amount of cash

for expenditures as we invest in ongoing research and development and business operations.

Until such time we can generate

significant revenue from the successful approval and commercialization of a product candidate, we expect to finance our cash needs for

ongoing research and development and business operations through public or private equity or debt financings or other capital

sources, including strategic partnerships.

However, we may be unable to raise additional funds or enter into such other

arrangements, when needed, on favorable terms or at all.

To the extent that we raise additional capital through the sale of equity

or convertible debt securities, the ownership interest of our stockholders will be, or could be, diluted, and the terms of these

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

Debt financing

and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take

specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we are unable to raise

additional funds through equity or debt financings when needed, we may be required to delay, limit, or substantially reduce research

and development efforts all of which could have a material adverse effect on the Company and its financial results.

the Company believes in the viability of its ability to raise additional funds, there can be no assurances to that effect.

16 unchanged sentences

material cash requirements include the following contractual and other obligations.

May 2022, we entered into two loan agreements (the “Loans”), with an aggregate principal amount of $0.2 million, with

The Loans were to mature and become payable in full two years from the date of the loan agreement and they bear no

On October 9, 2024, the Company executed agreements to extend the loan maturity date for each loan to December 19, 2024.

As of December 31, 2024, the Loans are still outstanding and considered to be in default.

The Company repaid the lenders in full during February 2025.

Refer to Note 8 to our financial statements included elsewhere in this

Annual Report.

Convertible Note

March 2023, we issued an aggregate principal amount of $0.8 million convertible promissory note payable to an investor.

promissory convertible note matures and is payable in full 18 months from the date of the note.

The note carries 20% interest and is

payable every six months from the date of the note until the maturity date.

The note is subject to conversion into our common stock prior

to the maturity date.

May 2022, we entered into two loan agreements, with an aggregate principal amount of $0.2 million, with two lenders.

loans are payable and mature in May 2024 and bear no interest.

additional information regarding our convertible promissory note, see Note 7 of the notes to the financial statements.

currently anticipate that cash required for working capital for the next 12 months is approximately $6.8 million, which includes accrued

expenses and other current liabilities of $1.1 million, and convertible promissory note, if not converted prior to maturity, of $0.8 million.

We do anticipate being able to fund required working capital for the next 12 months with cash and cash equivalents on hand and current

Management believes that we will be able to fund cash required for the next 12 months through borrowings.

March 2023, we issued an aggregate principal amount of $0.8 million convertible promissory note (the “March 2023 Convertible Note”)

payable to an investor.

March 2023 Convertible Note originally was to mature and become payable in full, 18 months from the date of the March 2023 Convertible

The March 2023 Convertible Note carries 20% interest per annum and interest is payable every six months from the date of the March

2023 Convertible Note until the maturity date.

The March 2023 Convertible Note became convertible into Common Stock following the consummation

of the Merger.

October 9, 2024, the Company and the loan holder signed an extension for the March 2023 Convertible Note to extend the maturity date

from September 20, 2024 to October 20, 2024 with the option for the Company to further extend the maturity date two times, each by

an additional 30-day period.

The Company exercised both options to extend the maturity date to December 19, 2024.

As of December 31,

2024, the March 2023 Convertible Note is still outstanding and considered to be in default.

On March 6, 2025, the Company reached an agreement with the loan holder

to pay $0.7 million in order to settle the March 2023 Convertible Note in full.

The Company repaid the loan holder the settlement amount

$0.7 million on March 13, 2025.

Refer to Note 7 to our financial statements included elsewhere in this

Annual Report.

Convertible Note

November 25, 2024, the Company issued to A.G.P.

a convertible promissory note (the “A.G.P.

Convertible Note”) in the principal

amount of $5.7 million to evidence the A.G.P.’s currently owed deferred commission payable.

Unless earlier converted as specified

in the Convertible Note, the principal amount plus all accrued but unpaid interest is due on November 25, 2025 (the “Maturity Date”).

Convertible Note accrues interest at 5.5% per annum.

any time prior to the full payment of the A.G.P.

Convertible Note, provided that the A.G.P.

has given at least three business days

written notice to the Company, A.G.P., in its sole discretion, may elect to have all or any portion of the outstanding principal amount

and all interest accrued converted into shares of the Company’s common stock, at the lower of the Reverse Split price and the market

price per share at the time of the conversion date, but in no event less than $1.00, subject to adjustment as provided therein and to

take into account any future share splits or reverse splits.

However, the conversion of the A.G.P.

Convertible Note may not occur

prior to the Company having sufficiently authorized shares of common stock to permit the entire conversion of the convertible promissory

Refer to Note 8 to our financial statements included elsewhere in this Annual Report.

Per the terms outlined in the agreement, we are required to undertake capital raises to paydown the A.G.P.

2024 Nirland Note

August 6, 2024, the Company entered into a Senior Secured Promissory Note (the “August 2024 Nirland Note”) with Nirland,

a related party of the Company, pursuant to which the Company issued and sold to Nirland the August 2024 Note in the original principal

amount of $2,650,000, inclusive of a $500,000 original issuance discount.

Refer to Note 8 to our financial statements included elsewhere

in this Annual Report.

October 31, 2024, the Company and Nirland amended the August 2024 Nirland Note, whereby the August 2024 Nirland Note was amended to (i)

provide for the conversion of the August 2024 Nirland Note into shares of Common Stock, at Nirland’s discretion, in a multiple

of any unpaid amounts, if not otherwise previously paid, pursuant to the conversion rate contained therein, (ii) remove Nirland’s

Mandatory Prepayment Right, and (iii) remove Nirland’s right of first refusal to participate in any future equity or debt offerings

of the Company.

The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to shall be determined

by dividing (x) such conversion amount by (y) the conversion price.

Conversion amount means two and one quarter times the sum of (x)

portion of the principal to be converted, redeemed or otherwise with respect to which this determination is being made and (y) all accrued

and unpaid interest with respect to such portion of the principal amount, if any.

Conversion price means, as of any conversion date or

other date of determination, $10, subject to adjustment as provided within the amended agreement.

Note 7 to our financial statements

included elsewhere in this Annual Report.

November 22, 2024, the Company and Nirland entered into a Second Amendment to the August 2024 Nirland Note (the “Second

Pursuant to the Second Amendment, the Nirland Note may not be converted (other than partial conversions that may

be permitted pursuant to the rules and regulations of NASDAQ (or any successor entity)) prior to receipt of stockholder approval to

provide for such conversion of the Nirland Note, and subsequent issuance of the Company’s Common Stock, pursuant to the

stockholder approval rules under the rules and regulations of The Nasdaq Stock Market.

If the Company has not held a special meeting

of the stockholders to approve the full conversion of the August 2024 Nirland Note on or before January 9, 2025, then the Company

shall be obligated to pay Nirland a penalty of $100,000 per day until the special meeting is held.

The special meeting was held on

January 9, 2025, in which stockholder approval was obtained.

In addition, the existing conversion rate was amended to be two and one

half times the sum of (x) the portion of the principal to be converted, redeemed or otherwise with respect to which this

determination is being made and (y) all accrued and unpaid interest (including default interest) with respect to such portion of the

principal amount, if any divided by $0.10, pre-split in January 2025 (or following any reverse splits that may occur in a ratio greater than 10 to 1, the lower

of such reverse split price and the market price per share at the time of the conversion date, but in no event less than $1.00),

subject to adjustment as provided therein and to take into account any future share splits or reverse splits.

On January 24, 2025, the Reverse Stock Split became effective, resulting in every 100 shares of our common stock

issued or outstanding becoming one new share of our common stock, resulting in the conversion price increasing to $6.86 as of December

On December 9, 2024, Nirland

exercised their conversion option and converted $0.1 million of principal for 23,000 shares of common stock pursuant to the rules and

regulations of the NASDAQ.

As of December 31, 2024, $2.6 million of principal and accrued interest remains outstanding.

2024 Nirland Note

October 28, 2024, the Company issued a promissory note (the “October 2024 Nirland Note”) to Nirland in the original

principal amount of $0.6 million in exchange for funds in such amount.

The October 2024 Nirland Note bears interest at a rate of 12%

per annum, is due and payable semi-annually in arrears, and matures on October 31, 2025.

If an event of default under and as defined

in the Nirland Note occurs, the interest rate will be increased to 18% per annum or to the maximum rate permitted by law.

connection with the Nirland Note, the Company has agreed to pay Nirland a 1% arrangement fee, which will be included with the

principal and interest owed under the Nirland Note.

The Company paid down $0.2 million of the October 2024 Nirland Note on December

11, 2024 and as of the date of filing this Annual Report, such note has been repaid in full.

Refer to Note 8 and Note 20 to our

financial statements included elsewhere in this Annual Report.

currently anticipate that cash required for working capital for the next 12 months is approximately $22.9 million, which includes forecasted

research and development costs of $6.0 million, forecasted operating expenses of $6.2 million, accrued expenses and other current liabilities

of $3.4 million, a convertible promissory note payable, if not converted prior to maturity of $6.0 million, a convertible promissory

note, if not converted prior to maturity, of $0.8 million and loans payable due within the next 12 months of $0.5 million.

We do anticipate

being able to fund required working capital for the next 12 months with cash and cash equivalents on hand and current borrowings.

believes that we will be able to fund cash required for the next 12 months through borrowings and equity raises.

We have historically

been able to access funds through the issuance of debt and believe we can continue to obtain funding through such debt financing agreements

as needed to meet cash requirements for the next 12 months.

been able to access funds through the issuance of debt, and more recently the at the market offering program agreement, and believe we

can continue to obtain funding through such debt financing agreements and Sales agreement as needed to meet cash requirements

for the next 12 months.

of December 31, 2024, we have raised $3.3 million (net of fees) out of the $23.9 million available to us

through the Sales agreement and expect to raise the additional $20.4 million over the next 12 months.

Through the date of the issuance of the consolidated financial statements,

we have raised an additional $8.1 million, net of fees due to A.G.P., through the Sales Agreement.

After considering the issuances subsequent

to December 31, 2024, we have $12.0 million available to us through the Sales Agreement.

following table set forth our cash flows for the period indicated (in thousands):

cash (used in) provided by:

of exchange rate changes on cash and cash equivalents

(decrease) increase in cash and cash equivalents

Net cash (used in) provided by:

Operating Activities

Investing Activities

Financing Activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Flows Used in Operating Activities

cash used in operating activities for the year ended December 31, 2024 was $9.7 million, resulting primarily from a net loss of $17.8

million, adjusted for non-cash items including a $4.3 million reduction of deferred income upon exercise of the Cizzle and Vela

option, a $2.5 million change in operating assets and liabilities, a $2.3 million gain on the change in fair value of the Vela and

Cizzle options, a $0.2 million change in the reserve for uncollectible loans and a $0.1 million gain on warrant remeasurement,

partially offset by a $1.0 million loss upon the issuance of the Vela option, a $0.5 million change in amortization on directors

& officers insurance, a $0.4 million loss on change in fair value of convertible notes and a $0.2 million increase in stock

based compensation expense.

The $2.5 million cash outflow from operating assets and liabilities is primarily due to a $1.0 million

cash outflow from prepaid expenses and a $1.7 million cash outflow from accrued expenses and other current liabilities partially

offset by a $0.2 million cash inflow from accounts payable $1.8 million in decrease from accounts payable, accrued expense and other

current liabilities due to differences in the timing of disbursements.

cash used in operating activities during the year ended December 31, 2022 was $2.3 million, resulting primarily from a net loss of $4.9

million, adjusted for non-cash charges of $2.0 million and working capital adjustments of $0.6 million.

million, a gain on the change in fair value of convertible notes payable of $2.0 million, a gain on change in fair value of warrant liabilities

of $0.2 million and a $0.1 million cash outflow from operating assets and liabilities.

This was partially offset by a $2.7 million loss

on the issuance of warrants, $1.7 million of amortization of directors and officers insurance, a $1.6 million outflow attributable to

the purchase of licensing rights, $1.6 million of stock-based compensation, $0.9 million of debt discount amortization, a $0.7 million

loss on debt extinguishment, $0.5 million of non-cash interest expense, $0.4 million of amortization expense, a $0.2 million share issuance

for services and a $0.1 million of non-cash lease expense.

The $0.1 million cash outflow from operating assets and liabilities is primarily

due to a $2.3 million cash outflow from prepaid expenses and other current assets and a $0.1 million cash outflow from lease liabilities,

partially offset by a cash inflow of $1.2 million from accounts payable and a cash inflow of $1.2 million from accrued expenses and other

current liabilities.

cash used in operating activities for the year ended December 31, 2023 was $7.7 million, resulting primarily from a net loss of $0.5

million, adjusted for non-cash items including a $4.3 million reduction of deferred income upon exercise of the Cizzle and Vela option,

a $2.5 million change in operating assets and liabilities, a $2.3 million gain on the change in fair value of the Vela and Cizzle options,

a $0.2 million change in the reserve for uncollectible loans and a $0.1 million gain on warrant remeasurement, partially offset by a

$1.0 million loss upon the issuance of the Vela option, a $0.5 million change in amortization on directors & officers insurance,

a $0.4 million loss on change in fair value of convertible notes and a $0.2 million increase in stock based compensation expense.

$2.5 million cash outflow from operating assets and liabilities is primarily due to a $1.0 million cash outflow from prepaid expenses

and a $1.7 million cash outflow from accrued expenses and other current liabilities partially offset by a $0.2 million cash inflow from

accounts payable.

Flows (Used) Provided by Investing Activities

cash provided by or used in investing activities for the year ended December 31, 2023.

was $0.7 million, resulting from $0.5 million

in proceeds from an option fee received from Vela of $0.5 million and $0.6 million proceeds from the repayment of a loan from a

related party, partially offset by an issuance of a loan to a related party of $0.4 million.

cash used in investing activities for the year ended December 31, 2022 was $0.2 million resulting from the issuance of a loan to a related

party of $0.3 million, partially offset by an option fee received from Cizzle of $0.1 million .

cash used in investing activities for the year ended December 31, 2024 was $43 thousand, resulting from purchases

of short-term investments of $0.5 million and purchases of property, plant and equipment of $0.1 million, partially offset by sales of

short-term investments of $0.5 million.

cash provided by investing activities for the year ended December 31, 2023 was $0.7 million, resulting from $0.5 million in proceeds from

an option fee received from Vela and $0.6 million proceeds from the repayment of a loan from a related party, partially

offset by an issuance of a loan to a related party of $0.4 million.

Flows Provided by Financing Activities

cash provided by financing activities for the year ended December 31, 2023 was $11.0 million, resulting from the proceeds from the

Merger and related PIPE financing, net of transaction costs of $8.5 million, $2.3 million from issuance of convertible notes

payable, and $0.1 million capital contribution from a related party.

cash provided by financing activities for the year ended December 31, 2024 was $6.1 million, resulting from proceeds from the Sales Agreement

of $3.3 million, proceeds from the issuance of notes payable of $3.2 million, proceeds from the exercise of warrants of $0.2 million

and proceeds from the exercise of warrants of $0.1 million, partially offset by repayments of notes payable of $0.8 million.

cash provided by financing activities during the year ended December 31, 2023 was $11.0 million.

resulting from the proceeds from the

sale of shares received for the sale of future revenue of $1.3 million, proceeds from notes payable of $0.2 million and the issuance

of our convertible debt of $0.9 million.

Merger and related PIPE financing, net of transaction costs of $8.5 million, $2.3 million from issuance of convertible notes payable,

and $0.2 million capital contribution from a related party.

Obligations and Other Commitments

of December 31, 2023, we had no non-cancellable commitments for the purchase of clinical materials, contract manufacturing, maintenance

and committed funding which we expect to pay within one year.

Laboratory Lease

of December 31, 2024, we are the lessee under one laboratory space lease for a term of two years.

The annual rent payments

are $0.1 million for the years ending December 31, 2025 and December 31, 2026.

The laboratory space lease has a remaining lease term

of approximately 1.2 years.

Accounting Estimates

10 unchanged sentences

financial results include the following:

accompanying Consolidated Financial Statements have been prepared on a going concern basis of accounting, which contemplates continuity

of operations, realization of assets and liabilities and commitments in the normal course of business.

The accompanying Consolidated

Financial Statements do not reflect any adjustments that might result if we are unable to continue as a going concern.

In connection

with the preparation of the Consolidated Financial Statements for the years ended December 31, 2023 and 2022, we conducted an evaluation

as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to our ability to continue

as a going concern within one year after the date of the issuance of such financial statements, and concluded that substantial doubt

existed as to our ability to continue as a going concern as further discussed in Note 1 in the notes to the Consolidated Financial Statements

of this Annual Report.

ASC 205-40, the receipt of potential funding from future partnerships, equity or debt issuances, potential achievement of milestones

from customer agreements and reductions in workforce cannot be considered probable at this time because these plans are not entirely

within our control and/or have not been approved by our board of directors as of the date of issuance of the Consolidated Financial Statements.

expectation to generate operating losses and negative operating cash flows in the future and the need for additional funding to support

our planned operations, raise substantial doubt regarding our ability to continue as a going concern.

Our plans to alleviate the conditions

that raise substantial doubt include reduced spending, and the pursuit of additional capital.

We have concluded the likelihood that our

plan to successfully obtain sufficient funding from one or more of these sources, or adequately reduce expenditures, while possible,

is less than probable.

We believe that the accounting estimates described below involve a significant degree of judgment and complexity.

Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results

of operations.

Value Measurements

Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures , defines fair value, establishes

a framework for measuring fair value, and expands disclosures about fair value measurements.

Fair value is to be determined based on

the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous

market for the asset or liability in an orderly transaction between market participants.

In determining fair value, the Company used

various valuation approaches.

A fair value hierarchy has been established for inputs used in measuring fair value that maximizes the

use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources

independent of the Company.

inputs reflect the Company’s assumption about the inputs that market participants would use in pricing the asset or liability developed

based on the best information available in the circumstances.

The fair value hierarchy is categorized into three levels, based on the

inputs, as follows:

1—Valuations based on quoted prices for identical instruments in active markets.

Since valuations are based on quoted prices

that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree

2— Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for either similar

instruments in active markets, identical or similar instruments in markets that are not active, or model-derived valuations whose

inputs or significant value drivers are observable or can be corroborated by observable market data.

3—Valuations based on inputs that are unobservable.

These valuations require significant judgment.

Company’s Level 1 assets consist of cash and cash equivalents in the accompanying balance sheets and the value of accrued expenses

and other current liabilities approximate fair value due to the short-term nature of these assets and liabilities.

of December 31, 2023, the Company has a warrant liability for which the fair value is determined based on Level

2 inputs as such inputs are based on observable inputs other than quoted prices.

See Note 4 and Note 6 for further information on the

Company’s financial liabilities carried at fair value.

Option Agreement

account for the Vela option at fair value in order to measure the liability at an amount that more accurately reflects the current economic

environment in which we operate.

We recorded the option at fair value with changes in fair value recorded in earnings at each

reporting period through settlement.

The significant assumptions used to estimate the fair value of the option liability involved inherent

uncertainties and the application of significant judgment and included the time to maturity and the underlying asset price based on the

probability of AZD 1656 successfully moving from Phase I to Phase II.

The sensitivity of these inputs to the fair value of the option is assessed on a periodic basis.

fair value of the option liability was estimated using the Monte Carlo Simulation Model, where the value of the Vela option was estimated

based on an analysis of five inputs.

Valuation models require the input of highly subjective assumptions, including the expected volatility

of the underlying asset as well as the expected share price of the Company at the reporting date.

If any of the assumptions used in the

Monte Carlo Simulation Model changes significantly, the option liability may differ materially from that recorded in the current period.

Option Agreement

account for the Cizzle option at fair value in order to measure the liability at an amount that more accurately reflects the current

economic environment in which we operate.

We recorded the option at fair value with changes in fair value recorded in earnings

at each reporting period through settlement.

The significant assumptions used to estimate the fair value of the option liability involved

inherent uncertainties and the application of significant judgment and included the time to maturity and the underlying asset price based

on the probability of the AZD 1656 successfully moving from Phase I to Phase II.

The sensitivity of these inputs to the fair value of

the option is assessed on a periodic basis.

fair value of the option liability was estimated using the Black-Scholes-Merton Model, where the value of the Cizzle option was estimated

based on an analysis of six inputs.

Valuation models require the input of highly subjective assumptions, including the expected volatility

of the underlying asset.

If any of the assumptions used in the Black-Scholes-Merton Model changes significantly, the option liability

may differ materially from that recorded in the current period.

Value Option for Convertible Notes

elected to account for certain of our convertible notes at fair value in order to measure those liabilities at amounts that more

accurately reflect the current economic environment in which we operate.

We recorded the convertible notes at fair value with

changes in fair value recorded in earnings at each reporting period through settlement.

The fair value of the convertible notes was

determined using a probability-weighted income approach as the convertible notes contained various settlement outcomes.

significant assumptions used to estimate the fair value of the convertible notes involved inherent uncertainties and the application

of significant judgment and included the time to maturity and the probability of the various settlement outcomes.

The sensitivity

of these inputs to the fair value of the convertible notes is assessed on a periodic basis.

values of the derivative liabilities related to the convertible notes were estimated using a probability-weighted expected return method,

where the values of various instruments were estimated based on an analysis of future values of our business, assuming various future

The resulting instruments’ values were based upon the probability - weighted present value of expected future

investment returns, considering each of the possible future outcomes available to us, as well as the economic benefits attributable to

each class of instruments.

The expected future investment returns were estimated using a variety of methodologies, including both the

market approach and the income approach, where an observable quoted market does not exist, and were generally classified as Level 3.

Such methodologies included reviewing values ascribed to our most recent financing, comparing the subject instrument with similar instruments

of publicly traded companies in similar lines of business, and reviewing our underlying financial performance and subject instrument,

including estimating discounted cash flows.

If any of the assumptions used in the probability-weighted expected return method changes

significantly, the convertible notes may differ materially from that recorded in the current period.

Value of Convertible Notes

Company has elected the fair value measurement option for convertible debt with embedded derivatives that would otherwise require bifurcation,

and has recorded the entire hybrid financial instrument at fair value under the guidance in ASC 825, Financial Instruments.

To value the convertible debt, the Company utilizes Binomial Lattice Pricing Models.

The Binomial Lattice Pricing Models involve the

construction of various intermediate lattices:

stock price tree, conversion value tree, conversion probability tree, and discount rate

In doing so, we assume the holders act rationally to maximize return and minimize cost at each decision point.

We computed the

notes payoff at maturity and at intermediate decision nodes based upon the better of (i) conversion or (ii) repayment of principal and

significant inputs and assumptions used to estimate the fair value include:

(i) the Company’s stock price, (ii) the term of the

convertible debt, (iii) the sum of the notes’ principal and unpaid accrued interest, (iv) expected volatility, (v) risk-free interest

rate, (vi) the corporate bond yield, (vii) the credit spread, (viii) probability of default, and (ix) the estimated recovery upon default.

Any change to the unobservable inputs to estimate fair value could produce significantly higher or lower fair value measurements and

result in a material change within the financial statements.

convertible debt will subsequently be remeasured at fair value each reporting date until settled or converted.

Value of Warrants

Company has issued warrants to investors in our debt and equity offerings.

The Company has also issued warrants to service providers

in relation to our financing offerings.

We evaluate all warrants issued to determine the appropriate classification under ASC 480 and ASC

warrants that are determined to be equity-classified, we estimate the fair value at issuance and record the amounts to additional paid

For warrants that are determined to be liability-classified, we estimate the fair value at issuance and each subsequent reporting date.

the Company’s liability classified warrants, we estimate fair value using the Black-Scholes model.

The significant inputs and assumptions

used to estimate the fair value include:

(i) the Company’s stock price, (ii) the risk-free rate, (iii) the expected volatility,

and (iv) the dividend yield.

The use of these valuation models requires the input of highly subjective assumptions.

Any change to these

inputs could produce significantly higher or lower fair value measurements and result in a material change within the financial statements.

Contingencies

the ordinary course of business, we are involved in various legal proceedings that are complex in nature and have outcomes that are difficult

We describe our legal proceedings and other matters that are significant or that we believe could become significant in Note

15 to the consolidated financial statements.

We record accruals for loss contingencies to the extent that we conclude it is probable

that a liability has been incurred and the amount of the related loss can be reasonably estimated.

We evaluate, on a quarterly basis,

developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that has

been accrued previously or modifications to contingency disclosures that are considered material.

record stock compensation expense related to our 2023 Plan in accordance with ASC 718, Compensation - Stock Compensation

which requires our stock-based awards, including restricted stock units (“RSUs”) and stock options to be measured at

fair value of stock options is estimated on the grant date using the Black-Scholes option-valuation model.

The calculation of stock-based

compensation expense requires that we make assumptions and judgments about the variables used in the Black- Scholes option-valuation

model, including the fair value of our common stock, expected term, expected volatility of the underlying common stock, and risk-free

interest rate.

assumption inputs subject to significant estimation include:

The expected term represents the period that the Company’s stock options are expected to be outstanding.

limitations on the sale or transfer of the Company’s common stock under the lock-up agreements and market standoff components of

the stock option agreements, the Company does not believe its historical exercise pattern is indicative of the pattern it will experience

after restricted periods expire.

The Company uses the simplified method to calculate the expected term, which is the average of the contractual

term and vesting period.

determine the price volatility based on the historical volatilities of industry peers as we have limited trading history for our common

We intend to continue to consistently apply this process using the same or a similar peer group of public companies, until

a sufficient amount of historical information regarding the volatility of our own common stock price becomes available, or unless circumstances

change such that the identified peer companies are no longer similar, in which case other suitable peer companies whose common stock

prices are publicly available would be utilized in the calculation.

Accounting Pronouncements

discussion of recent accounting pronouncements is included in Note 1 - Nature of the Business and Basis of Presentation and Summary

of Significant Accounting Policies to our financial statements included elsewhere in this Report.

of Significant Accounting Policies to our financial statements included elsewhere in this Annual Report.

Growth Company Status and Smaller Reporting Company Status

27 unchanged sentences

Financial Statements and Supplementary Data

information appears following Item 15 of this Report and is included herein by reference.

information appears following Item 15 of this Annual Report and is included herein by reference.

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 7. Management’s Discussion and Analysis