Celcuity Inc. 10-K

ITEM 8. Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Celcuity Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Celcuity Inc. (the Company) as of December 31, 2024 and 2023, and the related statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. 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 audits. We are a public accounting firm registered with the 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 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 financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our 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 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 audits 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 audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters. /s/ Boulay LLP We have served as the Company’s auditor since 2017. Minneapolis, Minnesota March 31, 2025 PCAOB ID: 542 48 Celcuity Inc. Balance Sheets December 31, 2024 December 31, 2023 Assets Current Assets: Cash and cash equivalents $ 22,514,823 $ 30,662,774 Investments 212,588,960 149,919,974 Other current assets 9,467,247 10,007,849 Total current assets 244,571,030 190,590,597 Property and equipment, net 336,515 228,782 Operating lease right-of-use assets 215,502 400,019 Total Assets $ 245,123,047 $ 191,219,398 Liabilities and Stockholders’ Equity: Current Liabilities: Accounts payable $ 9,366,007 $ 5,076,699 Operating lease liabilities 171,952 184,950 Accrued expenses 22,184,948 8,927,094 Total current liabilities 31,722,907 14,188,743 Operating lease liabilities 53,969 225,922 Note payable, non-current 97,727,136 37,035,411 Total Liabilities 129,504,012 51,450,076 Commitments and Contingencies (Note 9) - - Stockholders’ Equity: Preferred stock, $ 0.001 par value: 2,500,000 shares authorized; 317,577 and 854,134 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively 318 854 Common stock, $ 0.001 par value: 95,000,000 and 65,000,000 shares authorized as of December 31, 2024 and December 31, 2023, respectively; 37,143,242 and 25,506,012 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively 37,143 25,506 Additional paid-in capital 387,436,682 299,818,965 Accumulated deficit ( 271,855,108 ) ( 160,076,003 ) Total Stockholders’ Equity 115,619,035 139,769,322 Total Liabilities and Stockholders’ Equity $ 245,123,047 $ 191,219,398 See accompanying notes to the financial statements 49 Celcuity Inc. Statements of Operations 2024 2023 Twelve Months Ended December 31, 2024 2023 Operating expenses: Research and development $ 104,203,230 $ 60,594,005 General and administrative 9,063,721 5,636,326 Total operating expenses 113,266,951 66,230,331 Loss from operations ( 113,266,951 ) ( 66,230,331 ) Other (expense) income Interest expense ( 10,280,445 ) ( 5,326,387 ) Interest income 11,768,291 7,777,602 Other income, net 1,487,846 2,451,215 Net loss before income taxes ( 111,779,105 ) ( 63,779,116 ) Income tax benefits - - Net loss $ ( 111,779,105 ) $ ( 63,779,116 ) Net loss per share, basic and diluted $ ( 2.83 ) $ ( 2.69 ) Weighted average common shares outstanding, basic and diluted 39,449,393 23,679,472 See accompanying notes to the financial statements 50 Celcuity Inc. Statements of Changes in Stockholders’ Equity Shares Amount Shares Amount Capital Deficit Total Common Stock Preferred Stock Additional Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance at December 31, 2022 21,667,250 $ 21,667 1,120,873 $ 1,121 $ 230,045,566 $ ( 96,296,887 ) $ 133,771,467 Stock-based compensation 1,958 2 - - 4,901,432 - 4,901,434 Conversion of preferred to common stock 2,667,390 2,668 ( 266,739 ) ( 267 ) ( 2,401 ) - - Employee stock purchases 33,850 33 - - 202,812 - 202,845 Exercise of common stock options, net of shares withheld for exercise price 98,695 99 - - 388,423 - 388,522 Exercise of common stock warrants 2,369 2 - - 22,503 - 22,505 Issuance costs associated with private placement offering - - - - ( 7,486 ) - ( 7,486 ) Issuance of common stock in an ATM offering 1,034,500 1,035 - - 14,999,216 - 15,000,251 Issuance costs associated with an ATM offering - - - - ( 614,205 ) - ( 614,205 ) Issuance of pre-funded warrants - - - - 50,000,000 - 50,000,000 Issuance costs associated with pre-funded warrants - - - - ( 116,895 ) - ( 116,895 ) Net loss - - - - ( 63,779,116 ) ( 63,779,116 ) Balance at December 31, 2023 25,506,012 $ 25,506 854,134 $ 854 $ 299,818,965 $ ( 160,076,003 ) $ 139,769,322 Balance 25,506,012 $ 25,506 854,134 $ 854 $ 299,818,965 $ ( 160,076,003 ) $ 139,769,322 Stock-based compensation 1,429 1 - - 6,988,340 - 6,988,341 Conversion of preferred to common stock 5,365,570 5,367 ( 536,557 ) ( 536 ) ( 4,831 ) - - Employee stock purchases 33,215 33 - - 275,568 - 275,601 Exercise of common stock options, net of shares withheld for exercise price 103,245 104 - - 769,463 - 769,567 Exercise of common stock warrants, net of shares withheld for exercise price 1,827,357 1,826 - - 14,733,991 - 14,735,817 Issuance of common stock in an ATM offering 435,414 435 - - 7,641,765 - 7,642,200 Issuance costs associated with an ATM offering - - - - ( 263,727 ) - ( 263,727 ) Issuance of common stock upon closing of follow-on offering, net of underwriting discounts and offering costs 3,871,000 3,871 - - 56,248,237 - 56,252,108 Issuance of common stock warrants, note payable - - - - 1,228,911 - 1,228,911 Net loss - - - - - ( 111,779,105 ) ( 111,779,105 ) Balance at December 31, 2024 37,143,242 $ 37,143 317,577 $ 318 $ 387,436,682 $ ( 271,855,108 ) $ 115,619,035 Balance 37,143,242 $ 37,143 317,577 $ 318 $ 387,436,682 $ ( 271,855,108 ) $ 115,619,035 See accompanying notes to the financial statements 51 Celcuity Inc. Statements of Cash Flows 2024 2023 Twelve Months Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 111,779,105 ) $ ( 63,779,116 ) Adjustments to reconcile net loss to net cash used for operations: Depreciation 129,947 142,772 Stock-based compensation 6,988,341 4,901,434 Amortization of debt issuance costs and discount 1,330,652 241,752 Payment-in-Kind interest 1,363,708 1,810,584 Non-cash operating lease, net ( 434 ) 4,368 Change in accrued interest income 150,421 ( 993,457 ) Changes in operating assets and liabilities: Other current assets 775,981 ( 3,438,018 ) Accounts payable 4,315,892 2,430,614 Accrued expenses 13,257,854 4,866,814 Net cash used for operating activities ( 83,466,743 ) ( 53,812,253 ) Cash flows from investing activities: Proceeds from maturities of investments 642,345,545 309,614,521 Purchases of investments ( 705,164,950 ) ( 314,525,084 ) Purchases of property and equipment ( 249,878 ) ( 97,644 ) Net cash used for investing activities ( 63,069,283 ) ( 5,008,207 ) Cash flows from financing activities: Proceeds from exercise of common stock warrants 14,735,817 22,505 Proceeds from exercise of employee stock options 769,571 388,522 Proceeds from employee stock purchases 275,601 202,845 Proceeds from follow-on offering, net of underwriting discounts and offering costs 56,252,108 - Proceeds from note payable, net of debt issuance costs and discount of $ 2,437,644 59,226,276 - Proceeds from an ATM offering, net of issuance costs 7,356,107 14,431,186 Proceeds from pre-funded warrants, net of offering costs - 49,917,589 Payments for secondary registration statement costs ( 227,405 ) ( 45,805 ) Payments for debt issuance costs - ( 2,716 ) Payments for finance leases - ( 2,449 ) Net cash provided by financing activities 138,388,075 64,911,677 Net change in cash and cash equivalents ( 8,147,951 ) 6,091,217 Cash and cash equivalents: Beginning of period 30,662,774 24,571,557 End of period $ 22,514,823 $ 30,662,774 Supplemental disclosure of cash flow information: Interest paid $ 7,586,084 $ 3,274,051 Supplemental disclosures of non-cash investing and financing activities: Deferred financing costs and offering and registration statement costs included in accounts payable $ 42,028 $ 56,414 Property and equipment included in accounts payable $ 1,417 $ 13,615 Common stock warrants issued with the note payable transaction $ 1,228,911 $ - See accompanying notes to the financial statements 52 CELCUITY INC. NOTES TO FINANCIAL STATEMENTS 1. Organization Nature of Business Celcuity Inc., a Delaware corporation (the “Company”) is a clinical-stage biotechnology company focused on the development of targeted therapies for the treatment of multiple solid tumor indications. The Company’s lead therapeutic candidate is gedatolisib, a potent, well-tolerated, small molecule reversible inhibitor, administered intravenously, that selectively targets all Class I isoforms of phosphatidylinositol-3-kinase (“PI3K”) and the two mechanistic targets of rapamycin (“mTOR”) sub-complexes, mTORC1 and mTORC2. Gedatolisib’s mechanism of action and pharmacokinetic properties are differentiated from other currently approved and investigational therapies that target PI3K or mTOR alone or together. A Phase 3 clinical trial, VIKTORIA-1, evaluating gedatolisib in combination with fulvestrant with or without palbociclib in patients with HR+/HER2- advanced breast cancer is currently enrolling patients. Site selection and activation activities for a Phase 3 clinical trial, VIKTORIA-2, evaluating gedatolisib in combination with a CDK4/6 inhibitor and fulvestrant as first-line treatment for patients with HR+/HER2- advanced breast cancer has commenced. The first patient is expected to be dosed in the second quarter of 2025. A Phase 1b/2 clinical trial, CELC-G-201, evaluating gedatolisib in combination with darolutamide in patients with metastatic castration resistant prostate cancer, is currently underway. The Company was co-founded in 2012 by Brian F. Sullivan and Dr. Lance G. Laing and is based in Minnesota. The Company has not generated any revenues to date. 2. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Operating results for the year ended December 31, 2024 are not necessarily indicative of results to be expected for any future year. Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates and the difference could be material. Significant items subject to such estimates and assumptions include the valuation of stock-based compensation and prepaid or accrued clinical trial costs. Cash and Cash Equivalents The Company maintains its accounts at two financial institutions. At times throughout the year, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. At December 31, 2024 and December 31, 2023, the Company had $ 22,514,823 and $ 30,662,774 , respectively, in business checking accounts and money market funds that are considered cash equivalents and not insured by the Federal Deposit Insurance Corporation. Investments The Company maintains its investments in U.S. governmental agency securities and U.S. treasury bills and has classified them as held-to-maturity at the time of purchase. Held-to-maturity purchases are those securities in which the Company has the ability and intent to hold until maturity. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums and discounts. Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security using a straight-line method. The difference between the carrying value, which is based on cost, and the aggregate fair value of the held-to-maturity securities, was immaterial as of December 31, 2024. At December 31, 2024 and December 31, 2023, the Company had $ 212,588,960 and $ 149,919,974 , respectively, of short-term investments. 53 Property and Equipment Property and equipment are stated at cost. Depreciation is provided over estimated useful lives using the straight-line method. Maintenance and repairs are expensed as incurred; major improvements and betterments are capitalized. Estimated useful lives of property and equipment are as follows for the major classes of assets: Schedule of Estimated Useful Lives of Property and Equipment Estimated Asset Description Lives Furniture and Equipment 4 - 5 Leasehold Improvements 2 - 3 Long-Lived Assets Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. Deferred Transaction Costs Deferred transaction costs primarily consist of legal fees that are capitalized as incurred and will be offset against the proceeds from future equity financing arrangements. The deferred transaction costs will be reviewed periodically to assess the probability that future securities will be offered. In the event that no future offering will occur, any deferred transaction costs will be expensed. Total costs incurred, but not accounted for as a reduction in equity, were $ 235,379 and $ 0 as of December 31, 2024 and 2023, respectively. Debt Issuance Costs The Company recognizes debt issuance costs as deferred costs, which are capitalized and amortized over the term of the related debt using the effective interest method. These costs primarily consist of fees, commissions, legal, and other costs directly attributable to securing debt financing. Debt issuance costs are reported as a direct reduction of the carrying amount of the related debt on the balance sheets. Amortization of these costs is recorded as interest expense in the statements of operations over the life of the debt instrument. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. For all periods presented, there was no difference between net loss and comprehensive loss. Risks and Uncertainties The Company is subject to risks common to companies in the development stage including, but not limited to, dependency on the clinical and commercial success of its initial drug product, gedatolisib, the ability to obtain regulatory approval for gedatolisib, the need for substantial additional financing to achieve its goals, uncertainty of broad adoption of its approved products, if any, by physicians and consumers, and significant competition. Fair Value of Financial Instruments The Company’s accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or nonrecurring basis adheres to the Financial Accounting Standards Board (“FASB”) fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: ● Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement date. ● Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. ● Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. 54 The level in the fair value hierarchy within which a fair value measurement in its entirety falls, is based on the lowest level input that is significant to the fair value measurement in its entirety. The carrying values of cash equivalents, accounts payable, accrued expenses and other financial working capital items approximate fair value at December 31, 2024 and December 31, 2023, due to the short maturity nature of these items. Income Taxes The Company accounts for income taxes using the asset and liability method, as required by the accounting standard for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and tax credit carryforwards. Deferred taxes are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in results of operations in the period that includes the enactment date. The effects of any future changes in tax laws or rates have not been considered. The Company regularly reviews deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if the Company does not consider it to be more likely than not that the deferred tax assets will be realized. The Company recognizes the impact of an uncertain tax position in its financial statements if, in management’s judgment, the position is more-likely-than-not sustainable upon audit based on the position’s technical merits. This involves the identification of potential uncertain tax positions, the evaluation of applicable tax laws and an assessment of whether a liability for an uncertain tax position is necessary. Stock-Based Compensation The Company’s stock-based compensation consists of stock options and restricted stock issued to certain employees and non-employees of the Company and the Company’s 2017 Employee Stock Purchase Plan. The Company recognizes compensation expense based on an estimated grant date fair value using the Black-Scholes option-pricing method for equity-based awards and the Monte Carlo simulation model for performance-based awards. If the factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. The Company recognizes stock-based compensation expense for these options on a straight-line basis over the requisite service period. The Company has elected to account for forfeitures as they occur. Research and Development Research and development costs are expensed as incurred. Research and development costs amounted to $ 104,203,230 for the year ended December 31, 2024 and $ 60,594,005 for the year ended December 31, 2023. Clinical Trial Costs The Company relies on third parties to conduct certain aspects of clinical studies and to formulate and manufacture our drug product. While there are alternative vendors that can perform these functions, any disruption or delay by the Company’s current third parties in carrying out their contractual duties could delay the clinical trials. The Company records prepaid assets or accrued expenses for prepaid or estimated clinical trial costs conducted by third-party service providers, which includes the conduct of preclinical studies and clinical trials. These costs can be a significant component of the Company’s research and development expenses. The Company primarily relies on a compilation of progress reports from third-party service providers, including the respective invoicing, to record actual expenses, along with determining changes to prepaid assets and accrued liabilities. To date, the Company believes utilization of third-party reports most accurately reflects expenses incurred. With the ongoing VIKTORIA-1 Phase 3 trial and the CELC-G-201 Phase 1b/2 trial, and the commencement of the VIKTORIA-2 Phase 3 clinical trial site activation and patient enrollment anticipated in Q2 2025 , the Company’s estimated expenses in future periods and actual services performed may vary from these estimates, and these estimates may become more significant. Changes in these estimates that result in material changes to the Company’s prepaid assets or accrued expenses could materially affect the Company’s results of operations and financial position. Segment Data In November 2023, the FASB issued ASU 2023-07: Improvements to Reportable Segment Disclosures. This ASU, which amends Topic 280: Segment Reporting, improves disclosure requirements for reportable segments and enhances disclosures for companies with single reportable segments. The Company has a single reportable segment based on the nature of its operations. The nature of business and the accounting policies of the segment are the same as described throughout Notes 1 and 2. The Company’s Chief Operating Decision Maker (“CODM”) is its executive team. The CODM assesses the reportable segment’s performance and allocates resources for the reportable segment based on net income and total assets, which are the same amounts in all material respects as those reported on the statements of operations and balance sheets. The Company adopted the standard on January 1, 2024. The adoption did not have a material impact on the Company’s financial statements. 55 3. Liquidity Based on the Company’s cash and cash equivalents and short-term investments on hand at December 31, 2024 of $ 22,514,823 and $ 212,588,960 , respectively, the Company believes that its cash and short-term investments will be sufficient to fund the Company’s current operating plan through at least the next 12 months from the issuance date of this Annual Report. 4. Net Loss Per Common Share Basic and diluted net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding during the period. For all periods presented, the common shares underlying the preferred stock, options, warrants, and restricted stock have been excluded from the calculation because their effect would be anti-dilutive. Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per common share are the same. The following table summarizes the potentially-dilutive shares excluded from the diluted weighted-average shares outstanding: Schedule of Potentially-Dilutive Shares Excluded from the Diluted Weighted-Average Shares Outstanding 2024 2023 December 31, 2024 2023 Potentially-dilutive shares excluded from diluted weighted-average shares outstanding: Preferred stock on an as-if-converted to common stock 3,175,770 8,541,340 Options to purchase common stock 4,306,977 2,815,392 Warrants to purchase common stock 5,521,152 7,263,733 Restricted common stock 1,079 1,958 Total 13,004,978 18,622,423 Anti-dilutive securities excluded from diluted weighted- average shares outstanding 13,004,978 18,622,423 Pre-funded warrant shares of 5,747,787 are included in the computation of basic and diluted net loss per share for the years ended December 31, 2024 and 2023, as the pre-funded warrants are issuable for nominal consideration. 5. Investments The following table summarizes the Company’s held-to-maturity investment securities at amortized cost as of December 31, 2024 and 2023: Schedule of Investment Amortized Cost, as Adjusted Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value December 31, 2024 Amortized Cost, as Adjusted Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value U.S. Treasury Bills $ 212,588,960 $ 82,251 $ - $ 212,671,211 Total $ 212,588,960 $ 82,251 $ - $ 212,671,211 Amortized Cost, as Adjusted Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value December 31, 2023 Amortized Cost, as Adjusted Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value U.S. Treasury Bills $ 149,919,974 $ 30,995 $ - $ 149,950,969 Total $ 149,919,974 $ 30,995 $ - $ 149,950,969 The fair value of the Company’s held-to-maturity debt securities is determined based upon inputs, other than the quoted prices in active markets, that are observable either directly or indirectly, and are classified as Level 2 fair value instruments. 56 6. Other Current Assets Other current assets consisted of the following at December 31: Schedule of Other Current Assets 2024 2023 Current: Prepaid clinical trial costs $ 6,768,668 $ 8,763,150 Miscellaneous receivable 1,600,621 805,882 Directors & officers’ insurance 256,629 157,453 Other 841,329 281,364 Total $ 9,467,247 $ 10,007,849 7. Property and Equipment Property and equipment consisted of the following at December 31: Summary of Property and Equipment 2024 2023 Furniture and equipment $ 2,025,875 $ 1,788,195 Leasehold improvements 302,577 302,577 Property and equipment, Gross 2,328,452 2,090,772 Less: Accumulated depreciation ( 1,991,937 ) ( 1,861,990 ) Total $ 336,515 $ 228,782 Depreciation expense was $ 129,947 and $ 142,772 for the years ended December 31, 2024 and 2023, respectively. 8. Accrued Expenses Accrued expenses consisted of the following at December 31: Schedule of Accrued Expenses 2024 2023 Clinical trial costs $ 16,708,499 $ 6,464,772 Accrued compensation 3,987,786 1,763,316 Other 1,384,803 641,512 Employee stock purchase plan 103,860 57,494 Total $ 22,184,948 $ 8,927,094 57 9. Commitments Operating and Finance Leases The Company leases its corporate space in Minneapolis, Minnesota, with an operating lease in place through April 30, 2026. The lease provides for monthly rent, real estate taxes, and operating expenses. Rent expense is recorded on a straight-line basis over the lease term. In March 2023, the Company signed the fourth amendment to extend this lease through April 30, 2026. This amendment provides for monthly rent, real estate taxes and operating expenses. In May 2018, the Company entered into a non-cancelable finance lease agreement for office equipment with a five-year term. The underlying assets are included in furniture and equipment. The lease contains a bargain purchase option at the end of the lease. The finance lease expired in May 2023 and the equipment was acquired for the bargain purchase option price. When an implicit rate is not provided, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. Supplemental balance sheet information consisted of the following at December 31, 2024: Schedule of Supplemental Balance Sheet Information Related to Leases Operating Lease Right-of-use assets $ 215,502 Operating lease liability $ 225,921 Less: short term portion ( 171,952 ) Long term portion $ 53,969 Maturity analysis under lease agreements consisted of the following as of December 31, 2024: Schedule of Maturity Analysis Under Lease Agreements Operating Leases 2025 $ 220,389 2026 74,170 Total minimum lease payments 294,559 Less: Present value discount ( 68,638 ) Present value of net minimum lease payments $ 225,921 Weighted Average Remaining Lease Term Discount Rate Operating lease 1.3 years 10.5 % Lease costs for the period ended December 31: Schedule of Lease Costs 2024 2023 Operating lease cost $ 213,104 $ 212,238 Finance lease cost: Amortization - 2,411 Interest - 4 Variable lease cost 111,246 101,957 Lease costs $ 324,350 $ 316,610 Supplemental cash flow information related to leases for the period ended December 31: Schedule of Supplemental Cash Flow Information Related to Leases 2024 2023 Cash paid for amounts included in operating and finance leases: Operating cash outflow from operating leases $ 324,783 $ 308,914 Operating cash outflow from finance leases - 4 Financing cash outflow from finance leases - 2,449 Total cash paid for amounts included in operating and finance leases $ 324,783 $ 311,367 58 Clinical Research Studies The Company enters into contracts in the normal course of business to conduct research and development programs internally and through third parties that include, among others, arrangements with vendors, consultants, CMOs, and CROs. The Company has a license agreement in place with Pfizer to research, develop, manufacture and commercialize gedatolisib. In conjunction with the license agreement, the Company completed a Phase 1b clinical trial – B2151009 related to gedatolisib. These patients subsequently transitioned to an Expanded Access study – CELC-G-001. Contracts related to the Expanded Access study are generally based on time and material. In addition, contracts related to the Company’s Phase 3 clinical studies (VIKTORIA-1 and VIKTORIA-2) and the Phase 1b/2 clinical trial (CELC-G-201) are generally cancelable with reasonable notice within 120 days and the Company’s obligations under these contracts are primarily based on services performed through termination dates plus certain cancelation charges, if any, as defined in each of the respective agreements. In addition, these agreements may, from time to time, be subjected to amendments as a result of any change orders executed by the parties. As of December 31, 2024, the Company had five material non-cancelable contractual commitments with respect to these arrangements, which totaled approximately $ 9.7 million. 10. Stockholders’ Equity Capital Stock At December 31, 2023, the Company’s authorized capital stock consisted of 65,000,000 shares of $ .001 par value common stock, of which 25,506,012 shares were outstanding, and 2,500,000 shares of $ .001 par value preferred stock, of which 854,134 shares were outstanding. In 2024, several of the Company’s preferred shareholders elected to convert 536,557 shares of Series A Convertible Preferred Stock into 5,365,570 shares of common stock, in accordance with the Securities Purchase Agreement dated May 15, 2022. The cost basis of the shares transferred is $ 5.75 per share. In 2024, several of the Company’s investors exercised 1,827,357 common stock warrants at exercise prices ranging between $ 8.05 and $ 9.50 per share, which generated approximately $ 14.7 million in cash. The 1,827,357 common stock warrants were net of shares withheld for exercise price. At December 31, 2024, the Company’s authorized capital stock consisted of 95,000,000 shares of common stock, of which 37,143,242 shares were outstanding, and 2,500,000 shares of preferred stock, including 1,850,000 shares designated as Series A Preferred Stock, of which 317,577 shares were outstanding. As of December 31, 2024, no dividends have been declared on the Company’s capital stock. Sale and Issuance of Stock On April 22, 2024, pursuant to an Open Market Sale Agreement SM with Jefferies LLC, as agent, the Company sold 285,714 shares of common stock in a single transaction at a price of $ 17.50 per share, generating gross proceeds of $ 5.0 million. On May 8, 2024, pursuant to an Open Market Sale Agreement with Jefferies LLC, as agent, the Company sold 149,700 shares of common stock in a single transaction at a price of $ 17.65 per share, generating gross proceeds of $ 2.6 million. Commissions and other offering expenses related to the Open Market Sale Agreement transactions in April and May 2024 were $ 0.3 million. 59 On May 30, 2024, the Company entered into an underwriting agreement with Leerink Partners LLC, TD Securities (USA) LLC and Stifel, Nicolaus & Company, Incorporated as representatives of the several underwriters relating to the issuance and sale of 3,871,000 shares of common stock, at a price to the public of $ 15.50 , generating gross proceeds of approximately $ 60.0 million. The offering closed on May 31, 2024 and resulted in net proceeds to the Company of approximately $ 56.3 million after deducting underwriting discounts and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes, which may include capital expenditures, research and development expenditures, clinical trial expenditures, expansion of business development activities and other general corporate purposes. Pre-Funded Warrants On October 18, 2023, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain investors (the “Investors”) pursuant to which the Company agreed to sell to the Investors in a private placement pre-funded warrants to purchase up to 5,747,787 shares of the Company’s common stock, par value $ 0.001 per share. Each Warrant to purchase one share had a purchase price of $ 8.699 per share, and an exercise price of $ 0.001 per share for the common stock issuable upon exercise of the Warrant. The closing of the Private Placement occurred on October 20, 2023, and resulted in gross proceeds to the Company of approximately $ 50.0 million, before deducting offering expenses of approximately $ 0.1 million. Each Warrant is immediately exercisable and will not expire. Under the terms of the Warrants, the Company may not effect the exercise of any such Warrant, and a holder will not be entitled to exercise any portion of any Warrant, if, upon giving effect to such exercise, the aggregate number of shares of common stock beneficially owned by the holder (together with its affiliates, other persons acting or who could be deemed to be acting as a group together with the holder or any of the holder’s affiliates, and any other persons whose beneficial ownership of common stock would or could be aggregated with the holder’s or any of the holder’s affiliates for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) would exceed 4.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is calculated in accordance with Section 13(d) of the Exchange Act and the applicable regulations of the SEC (the “Maximum Percentage”). A holder may reset the Maximum Percentage to a higher percentage (not to exceed 19.99%), effective 61 days after written notice to the Company, or a lower percentage, effective immediately upon written notice to the Company. Any such increase or decrease will apply only to that holder and not to any other holder of Warrants. The Securities Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties and termination provisions. Warrants Schedule of Warrants At December 31, 2024: Issue Date Expiration Date # of Warrants Outstanding Exercise Price Offering 1/21/2016 1/14/2026 33,719 $ 7.56 private placement offering - issued to placement agent 5/2/2016 5/2/2026 21,530 $ 7.56 private placement offering - issued to placement agent 4/28/2017 4/28/2027 33,250 $ 8.42 private placement offering - issued to placement agent 5/17/2017 5/17/2027 15,365 $ 8.42 private placement offering - issued to placement agent 9/22/2017 9/19/2025 70,000 $ 10.45 IPO - issued to underwriter 4/8/2021 4/8/2031 26,042 $ 14.40 debt financing - issued to lender 5/30/2024 5/30/2034 84,227 $ 14.84 debt financing – issued to lender 5/30/2024 5/30/2034 19,649 $ 14.84 debt financing – issued to lender 12/9/2022 see below 5,217,370 $ 8.05 securities purchase agreement - issued to institutional and other accredited investors 10/18/2023 see above 5,747,787 $ 0.001 private placement offering - issued to investors Total Warrants Outstanding 11,268,939 60 At December 31, 2024 and 2023, the Company had warrants to purchase 11,268,939 and 13,011,520 shares of common stock outstanding, at a weighted average exercise price of $ 4.04 and $ 4.53 , respectively. A total of 1,842,913 and 2,369 warrants were exercised in the years ended December 31, 2024 and 2023, respectively. There were 3,544 warrants that expired in 2024. 11. Stock-Based Compensation 2012 Equity Incentive Plan The 2012 Equity Incentive Plan, as amended, was adopted by the Company’s board and approved by the members of Celcuity LLC on August 10, 2012. The Company reserved a maximum of 625,000 shares of common stock for issuance under the 2012 Equity Incentive Plan. The 2012 Equity Incentive Plan provides for options, restricted stock awards, performance stock awards or stock bonuses. The exercise price of each option granted under the 2012 Equity Incentive Plan is not less than 100% of the fair market value of one share on the date of grant. The maximum permitted term of options granted under the 2012 Equity Incentive Plan is ten years. The Company’s board administers the 2012 Equity Incentive Plan and determines the provisions of incentive awards, including eligible recipients, number of shares subject to an incentive award, exercise price, vesting schedule, duration of an incentive award and other restrictions an incentive award may be subject to. The 2012 Equity Incentive Plan was frozen on September 6, 2017 and new awards are issued under the terms of the 2017 Amended and Restated Stock Incentive Plan. 2017 Stock Incentive Plan The 2017 Amended and Restated Stock Incentive Plan (the “2017 Plan”) was adopted by the Company’s board on September 6, 2017, became effective following the corporate conversion on September 15, 2017, and was approved by stockholders at the Company’s annual stockholder meeting on May 10, 2018. The 2017 Plan was amended and approved by stockholders at the Company’s annual stockholder meeting on May 14, 2020. The Company initially reserved a maximum of 750,000 shares of common stock for issuance under the 2017 Plan. The number of shares reserved for issuance was automatically increased by 255,060 and 216,673 shares on January 1, 2024 and 2023, respectively, and will increase automatically on January 1 of each of 2025 through 2027 by the number of shares equal to 1.0% of the aggregate number of outstanding shares of Company common stock as of the immediately preceding December 31. However, the Company’s board may reduce the amount of the increase in any particular year. At each of the Annual Meetings held on May 12, 2021 and May 12, 2022, the stockholders approved a 500,000 increase for a total of 1,000,000 increase, to the number of shares reserved for issuance under the 2017 Plan. At each of the Annual Meetings held on May 11, 2023 and May 9, 2024, the stockholders approved 1,500,000 increases for a total increase of 3,000,000 to the number of shares reserved for issuance under the 2017 Plan. The 2017 Plan provides for options, restricted stock awards, stock appreciation rights, restricted stock units, performance awards and stock bonuses. The exercise price of each option granted under the 2017 Plan is not less than 100% of the fair market value of one share on the date of grant. The maximum permitted term of options granted under the 2017 Plan is ten years. The 2017 Plan is generally administered by the compensation committee of the Company’s board, which has the authority to interpret the 2017 Plan, grant awards and make all other determinations necessary for the administration of the 2017 Plan. The following table summarizes the activity for all stock options outstanding for the years ended December 31: Schedule of Stock Options Activity 2024 2023 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Options outstanding at beginning of year 2,815,392 $ 7.95 1,976,586 $ 6.34 Granted 1,716,729 16.14 1,003,298 10.69 Exercised ( 103,245 ) 7.45 ( 98,695 ) 3.94 Forfeited ( 121,899 ) 11.57 ( 65,797 ) 7.45 Balance at December 31: 4,306,977 $ 11.13 2,815,392 $ 7.95 Options exercisable at December 31: 2,011,474 $ 7.35 1,524,731 $ 6.44 Weighted Average Grant Date Fair Value for options granted during the year: $ 11.22 $ 7.48 61 The following table summarizes additional information about stock options outstanding and exercisable at December 31, 2024: Schedule of Stock Options Outstanding and Exercisable Options Outstanding Options Exercisable Options Outstanding Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Options Exercisable Weighted Average Exercise Price Aggregate Intrinsic Value 4,306,977 7.96 $ 11.13 $ 13,914,458 2,011,474 $ 7.35 $ 11,781,660 The Company recognized stock-based compensation expense for stock options of $ 6,626,402 and $ 4,716,475 for the years ended December 31, 2024 and 2023, respectively. In May 2022, the Company modified the exercise price on 776,324 stock option awards to $ 5.50 , the closing market price on the Nasdaq Capital Market on May 17,2022. The effect of this modification on stock-based compensation was $ 106,000 and $ 134,000 for the years ended December 31, 2024 and 2023, respectively. The effect of this modification on stock-based compensation over the remaining service period will be approximately $ 57,000 . In December 2021, the Company modified the exercise price on 311,000 stock option awards to $ 13.44 , the closing market price on the Nasdaq Capital Market on December 15, 2021. No director or officer awards were modified. The effect on stock-based compensation was $ 63,000 and $ 65,000 for the years ended December 31, 2024 and 2023, respectively. The effect on stock-based compensation over the remaining service period will be approximately $ 35,000 . In May 2020, the Company modified the exercise price on 203,750 stock option awards to $ 5.10 , the closing market price on the Nasdaq Capital Market on May 14, 2020. No director or officer awards were modified. The effect on stock-based compensation was $ 696 and $ 19,000 for the years ended December 31, 2024 and 2023, respectively. There is no effect on stock-based compensation remaining. The Black-Scholes option-pricing model was used to estimate the fair value of equity-based awards and the Monte Carlo simulation model was used to estimate the fair value of the performance-based awards, with the following weighted-average assumptions for the years ended December 31: Schedule of Assumptions for Fair Value of Equity-based Awards 2024 2023 Risk-free interest rate 3.48 % - 4.71 % 3.41 % - 4.86 % Expected volatility 71.2 % - 76.20 % 77.1 % - 79.8 % Expected life (years) 5.25 to 10.00 5.25 to 6.08 Expected dividend yield 0 % 0 % The inputs for the Black-Scholes valuation model and the Monte Carlo simulation model require management’s significant assumptions. Prior to the Company’s initial public offering, the price per share of common stock was determined by the Company’s board based on recent prices of common stock sold in private offerings. Subsequent to the initial public offering, the price per share of common stock is determined by using the closing market price on the Nasdaq Capital Market on the grant date. The risk-free interest rates are based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal to the expected life at the grant date. The expected life is based on the simplified method for the time-based awards and the life of the option for the performance-based awards, in accordance with the SEC Staff Accounting Bulletin Nos. 107 and 110. The expected volatility is estimated based on historical volatility information of peer companies that are publicly available in combination with the Company’s calculated volatility since being publicly traded for the time-based awards. For the performance-based awards, the Company’s full historical volatility was used to value the options. All assumptions used to calculate the grant date fair value of non-employee options are generally consistent with the assumptions used for options granted to employees. In the event the Company terminates any of its consulting agreements, the unvested options issued in connection with the agreements would also be cancelled. The Company had 1,079 and 1,958 shares of restricted stock outstanding at December 31, 2024 and 2023, respectively, and 2,308 and 3,273 shares of restricted stock vested during the years ended December 31, 2024 and 2023, respectively. The Company recognized stock-based compensation expense for restricted stock of $ 22,220 and $ 18,499 for the years ended December 31, 2024 and 2023, respectively. The total remaining shares available for grant under the Company’s 2017 Plan as of December 31, 2024 was 1,177,450 . 62 Total unrecognized compensation cost related to stock options and restricted stock is estimated to be recognized at December 31: Schedule of Unrecognized Compensation Cost 2025 $ 7,776,307 2026 6,307,024 2027 5,165,880 2028 1,964,136 Total estimated compensation cost to be recognized $ 21,213,347 2017 Employee Stock Purchase Plan The Company’s 2017 Employee Stock Purchase Plan (the “ESPP”) was adopted by the Company’s board on September 6, 2017 and approved by stockholders at the Company’s annual stockholder meeting on May 10, 2018. The Company initially reserved a total of 100,000 shares for issuance under the ESPP. The number of shares reserved for issuance was automatically increased by 127,530 and 108,337 shares on January 1, 2024 and 2023, respectively and will increase automatically on each subsequent January 1 by the number of shares equal to 0.5% of the total outstanding number of shares of Company common stock as of the immediately preceding December 31. However, the Company’s board may reduce the amount of the increase in any particular year. The total remaining shares available for issuance under the employee stock purchase plan as of December 31, 2024 is 360,950 . The ESPP provides participating employees with an opportunity to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP is available to all employees unless they are employed for less than 20 hours per week or own 5% or more of the total combined voting power or value of the Company’s common stock. The ESPP is administered using overlapping 24 month offering periods, referred to as an Offering Period. Each Offering Period has four six-month purchase periods. A new Offering Period and purchase period begin every six months on May 1 and November 1 of each year. Participating employees may purchase common stock, on a voluntary after tax-basis, at a price equal to 85% of the fair market value of a share of common stock on either the offering date or the purchase date, whichever is lower. If the purchase date has a lower price, the employee will automatically be placed in the Offering Period beginning immediately after the purchase date. The Company recognized stock-based compensation expense related to the ESPP of $ 339,719 and $ 166,460 for the years ended December 31, 2024 and 2023, respectively. The Company recognized total stock-based compensation expense as follows for the years ended December 31: Schedule of Stock-based Compensation Expenses Years Ended December 31: 2024 2023 Stock-based compensation expense in operating expenses: Research and development $ 4,404,518 $ 2,700,318 General and administrative 2,583,823 2,201,116 Total $ 6,988,341 $ 4,901,434 Stock-based compensation expense $ 6,988,341 $ 4,901,434 12. Debt On May 30, 2024, the Company entered into an Amended and Restated Loan and Security Agreement (the “A&R Loan Agreement”) with Innovatus Life Sciences Lending Fund I, LP, a Delaware limited partnership (“Innovatus”), as collateral agent, and the Lenders including Innovatus in its capacity as a Lender and Oxford Finance LLC (“Oxford”), pursuant to which Innovatus and Oxford, as Lenders, have agreed to make certain term loans (“Term Loans”) to the Company in the aggregate principal amount of up to $ 180 million. The A&R Loan Agreement amends and restates, in its entirety, that certain Loan and Security Agreement, dated April 8, 2021, as amended, between the Company and Innovatus, as collateral agent, and the Lenders named therein (the “Prior Loan Agreement”). 63 Funding of the first $ 100 million under the A&R Loan Agreement occurred on May 30, 2024, including tranche payments of $ 16.8 million (the “Term A Loan”) and $ 21.5 million (the “Term B Loan”) reflecting repayment of the principal amount of loans under the Prior Loan Agreement plus accrued payment-in-kind interest, in addition to $ 61.7 million of new borrowings (the “Term C Loan”). The Company will be eligible to draw on a fourth tranche of $ 30 million (the “Term D Loan”) and fifth tranche of $ 50 million (the “Term E Loan”), in each case upon achievement of certain clinical trial milestones and satisfaction of certain financial covenants determined on a pro forma as-funded basis. The Lenders may, in their sole discretion upon the Company’s request, make additional term loans to the Company of $ 45 million (the “Term F Loan”). Funding of these additional tranches is also subject to other customary conditions and limits on when the Company can request funding for such tranches. Costs associated with the new borrowings was approximately $ 2.4 million. Pursuant to the A&R Loan Agreement, the Company is entitled to make interest-only payments for thirty-six months, or up to forty-eight months if certain conditions are met. The Term Loans will mature on May 1, 2029 and will bear interest at a rate equal to the sum of (a) the greater of (i) the Prime Rate (as defined in the A&R Loan Agreement) or (ii) 7.75%, plus (b) 2.85%, provided that 1.0% of such interest will be payable in-kind by adding an amount equal to such 1.0% of the outstanding principal amount to the then outstanding principal balance on a monthly basis through May 31, 2027. The A&R Loan Agreement is secured by all assets of the Company. Proceeds will be used for working capital purposes and to fund the Company’s general business requirements, including the Phase 3 VIKTORIA-2 clinical trial. The A&R Loan Agreement contains customary representations and warranties and covenants, subject to customary carve-outs, and includes financial covenants related to liquidity and other financial measures. Innovatus has the right, at its election and until August 9, 2025, to convert up to 20 % of the outstanding principal of the Term A Loan into shares of the Company’s common stock at a price per share of $ 10.00 (the “Conversion Right”). Innovatus will continue to have the right to exercise a previously disclosed warrant granted to it under the Prior Loan Agreement to purchase 26,042 shares of common stock at a price per share of $ 14.40 through April 8, 2031. The A&R Loan Agreement contains a Final Fee, which is equal to 4.5 % of the initial funding of the agreement and is due on the earliest to occur of (a) the Maturity Date, (b) the acceleration of any Term Loan, and (c) the prepayment of the Term Loans. There is also a contingent non-utilization fee for both the Term D and Term E loans. If the Company achieves the Term D Milestone and (i) fails to draw the full amount of the Term D Loan during the Term D Draw Period and (ii) fails to notify Collateral Agent, at any time before the date that is four weeks after the Company’s achievement of the Term D Milestone, of the Company’s intent not to draw the full amount of the Term D Loan, a non-utilization fee of $ 900,000 , with respect to the Term D Loan shall become due and payable on the earliest of (i) the termination of the Term D Draw Period, (ii) the Maturity Date, (iii) the acceleration of any Term Loan, and (iv) the prepayment in whole of the Term Loans. If the Company achieves the Term E Milestone and (i) fails to draw the full amount of the Term E Loan during the Term E Draw Period and (ii) fails to notify Collateral Agent, at any time before the date that is four weeks after the Company’s achievement of the Term E Milestone, of the Company’s intent not to draw the full amount of the Term E Loan, a non-utilization fee of $ 1,500,000 , with respect to the Term E Loan shall become due and payable on the earliest of (i) the termination of the Term E Draw Period, (ii) the Maturity Date, (iii) the acceleration of any Term Loan, and (iv) the prepayment in whole of the Term Loans. After the 18-month anniversary of the Effective Date, the Company shall have the option to prepay all, but not less than all, of the Term Loans advanced by the Lenders under the A&R Loan Agreement, provided the Company (i) provides written notice to Collateral Agent of its election to prepay the Term Loans at least seven Business Days prior to such prepayment, and (ii) pays to Lenders on the date of such prepayment, payable to each Lender in accordance with its respective Pro Rata Share, an amount equal to the sum of (A) all outstanding principal of the Term Loans plus accrued and unpaid interest thereon through the prepayment date, (B) the Final Fee, (C) the Prepayment Fee, plus (D) all other outstanding Obligations that are due and payable, including, without limitation, Lenders’ Expenses and interest at the Default Rate with respect to any past due amounts. At May 30, 2024, the Company recognized the Final Fee of $ 4.5 million as additional debt principal and a corresponding debt discount to be amortized over the life of the loan. In connection with the funding of each of the Term C Loan, the Term D Loan, the Term E Loan and the Term F Loan, the Company agreed to issue to Innovatus and Oxford warrants to purchase that number of shares of the Company’s common stock equal to 2.5 % of the principal amount of the applicable Term Loan divided by the exercise price, which shall, with respect to the Term C Loan, be equal to the lower of (i) the volume weighted average closing price of the Company’s common stock for the five-trading day period ending on the last trading day immediately preceding the execution of the A&R Loan Agreement or (ii) the closing price on the last trading day immediately preceding the execution of the A&R Loan Agreement. Accordingly, on May 30, 2024, the Company issued 103,876 warrants with an exercise price of $ 14.84 per share. The relative fair value of the warrants was approximately $ 1.2 million. For the additional Term Loans, the exercise price will be based on the lower of (i) the exercise price for the Warrants issued pursuant to the Term C Loan or (ii) the volume weighted average closing price of the Company’s common stock for the five-trading day period ending on the last trading day immediately preceding the applicable Term Loan funding. The Warrants may be exercised on a cashless basis and are exercisable through the tenth anniversary of the applicable funding date. The number of shares of common stock for which each Warrant is exercisable and the associated exercise price are subject to certain proportional adjustments as set forth in such Warrant. 64 The Company evaluated the change of terms under ASC 470-50, “Debt – Modification and Extinguishment”, and concluded the change in terms did not result in significant and consequential changes to the economic substance of the debt and thus resulted in a modification of the debt and not an extinguishment of the debt. Long-term debt consisted of the following at December 31, 2024 and 2023: Schedule of Long-term Debt 2024 2023 Note payable $ 100,000,000 $ 35,000,000 Add: Final fee 4,500,000 - Add: PIK interest (added to principal) 593,288 2,565,660 Less: unamortized debt issuance costs ( 1,613,734 ) ( 480,810 ) Less: unamortized debt discount ( 5,752,418 ) ( 49,439 ) Total long-term debt $ 97,727,136 $ 37,035,411 Future principal payments, including the incurred PIK interest and Final Fee, are as follows: Schedule of Long Term Debt Future Principal Payments Years Ending December 31, 2027 $ 30,615,349 2028 52,483,455 2029 21,994,484 Total $ 105,093,288 13. Income Taxes Following the conversion of Celcuity LLC to Celcuity Inc. on September 15, 2017, Celcuity Inc. began filing federal and state returns where required. No income tax benefit was recorded for the years 2024 and 2023, due to net losses and recognition of a valuation allowance. The following table presents a reconciliation of the tax expense computed at the statutory federal rate and the Company’s tax expense for the years ended December 31: Schedule of Effective Income Tax Rate Reconciliation 2024 2023 Tax benefit at statutory federal rate $ ( 23,474,000 ) $ ( 13,394,000 ) State income tax benefit, net of federal tax effect ( 95,000 ) ( 82,000 ) Change in valuation allowance on deferred tax assets 24,081,000 13,542,000 Research & Development Credits ( 1,236,000 ) ( 550,000 ) Other permanent items 724,000 484,000 Income tax benefits $ - $ - 65 Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred tax assets relate primarily to its net operating loss carryforwards and other balance sheet basis differences. In accordance with ASC 740, “Income Taxes,” the Company recorded a valuation allowance to fully offset the net deferred tax asset, because it is more likely than not that the Company will not realize future benefits associated with these deferred tax assets at December 31, 2024. The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets are at December 31: Schedule of Deferred Tax Assets and Liabilities 2024 2023 Deferred tax assets (liabilities): Accrued expenses $ 459,000 $ 207,000 Share-based compensation 2,861,000 2,141,000 Property and equipment 420,000 393,000 Right-of-use assets ( 45,000 ) ( 85,000 ) Lease liability 48,000 87,000 IRC 174 Expenditures 30,133,000 13,900,000 Start-up expenditures 12,998,000 11,029,000 Net operating losses and tax credits 13,340,000 8,461,000 Valuation allowance ( 60,214,000 ) ( 36,133,000 ) Net deferred tax assets $ - $ - At December 31, 2024, the Company had federal and state net operating loss carryforwards of approximately $ 43.2 million and $ 0.8 million, respectively. The federal and state net operating loss carryforwards for 2017 will begin to expire in the year ending December 31, 2037. The federal net operating loss carryforwards starting in 2018 have no expiration. These deferred tax assets were subject to a full valuation allowance as of December 31, 2024 and December 31, 2023. At December 31, 2024, the Company had federal and state research and development tax credit carryforwards resulting in deferred tax assets of approximately $ 2.9 million and $ 1.6 million, respectively. The federal and state credit carryforwards will begin to expire in the years ending December 31, 2038 and December 31, 2033, respectively. These deferred tax assets were subject to a full valuation allowance as of December 31, 2024 and December 31, 2023. Under the provisions of Section 382 of the Internal Revenue Code of 1986, certain substantial changes in the Company’s ownership, including a sale of the Company, or significant changes in ownership due to sales of equity, may limit in the future the amount of net operating loss carryforwards available to offset future taxable income. The Company recognizes uncertain tax positions in accordance with ASC 740 on the basis of evaluating whether it is more-likely-than not that the tax positions will be sustained upon examination by tax authorities. For those tax positions that meet the more-likely-than not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement. As of December 31, 2024, and 2023, the Company has no significant uncertain tax positions. There are no unrecognized tax benefits included on the balance sheet that would, if recognized, impact the effective tax rate. The Company does not anticipate there will be a significant change in unrecognized tax benefits within the next 12 months. Prior to the conversion, Celcuity was a limited liability company and therefore was taxed as a partnership for income tax purposes. Accordingly, no benefit for income taxes was recorded prior to the conversion. For years prior to 2021, the Company is no longer subject to U.S. federal or state income tax examinations and remains open for the unutilized tax attributes as of December 31, 2024, carried forward from these years. The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of general and administrative expenses. 14. Subsequent Event In January 2025, the Board of Directors approved a repricing of certain outstanding stock options previously granted to employees. As of the repricing date, the exercise prices of these options were reduced to $ 11.92 per share, from their previous exercise prices ranging from $ 12.80 to $ 18.73 per share. This adjustment was made in response to the decline in the company’s stock price, with the intent of retaining and motivating key employees. As a result of this repricing, approximately 837,000 stock options held by 44 employees were affected. The repriced options will continue to vest according to their original schedule. In March 2025, an investor exercised 695,650 warrants at an exercise price of $ 8.05 , which generated approximately $ 5.6 million in cash. The warrants were issued pursuant to a private placement that closed and was funded on December 9, 2022. 66 ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.