What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-08 compared with 2024-05-07 · 92 added, 69 removed, 351 unchanged (31% of the section changed)

4 unchanged sentences

(in thousands, except share and per share amounts)

March 31, 2024

June 30, 2024

December 31, 2023

14 unchanged sentences

Total current liabilities

Operating lease liabilities, noncurrent

Operating lease liabilities, non-current

Total liabilities

2 unchanged sentences

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized;

no shares issued and outstanding at March 31, 2024 and December 31, 2023

no shares issued and outstanding at June 30, 2024 and December 31, 2023

Common stock, $ 0.001 par value, 250,000,000 shares authorized;

39,985,866 and 32,165,478 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

40,112,268 and 32,165,478 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

8 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating Expenses:

21 unchanged sentences

Issuance of common stock in follow-on public offering, net of discounts and issuance costs of $ 1,329

Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees

Issuance of common stock under the at-the-market (ATM) sales agreement, net

Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes

2 unchanged sentences

Balances as of March 31, 2024

Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes

Exercise of stock options

Equity-based compensation

Balances as of June 30, 2024

COGNITION THERAPEUTICS, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(in thousands, except share amounts)

Comprehensive

6 unchanged sentences

Balances as of March 31, 2023

Issuance of common stock under the at-the-market (ATM) sales agreement, net of commissions and allocated fees

Equity-based compensation

Other comprehensive gain

Balances as of June 30, 2023

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

17 unchanged sentences

Proceeds from issuance of common stock in follow-on public offering, net

Proceeds from issuance of common stock under the ATM sales agreement, net of commissions and allocated fees

Proceeds from issuance of common stock under the ATM sales agreement, net

Proceeds from the exercise of common stock options

Payment of employee withholding taxes on vested restricted stock units

Payments on loan payable

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents

20 unchanged sentences

(the “Sales Agents”) providing for the offering, issuance and sale by the Company of up to $ 40,000 of its common stock from time to time in “at-the-market” offerings under the Shelf (the “ATM”).

During the three months ended March 31, 2024, the Company sold 191,273 shares of its common stock pursuant to the ATM for gross proceeds of approximately $ 393 .

During the six months ended June 30, 2024, the Company sold 191,273 shares of its common stock pursuant to the ATM for gross proceeds of approximately $ 393 .

Please refer to Note 7 for further details.

4 unchanged sentences

As part of the Purchase Agreement, the Company issued 189,856 shares of its common stock as consideration for Lincoln Park’s commitment to purchase shares of common stock under the Purchase Agreement.

During the three months ended March 31, 2024, the Company did not sell any shares of common stock to Lincoln Park.

As of March 31, 2024, $ 34,795 was available to draw pursuant to the Purchase Agreement.

During the six months ended June 30, 2024, the Company did not sell any shares of common stock to Lincoln Park.

As of June 30, 2024, $ 34,795 was available to draw pursuant to the Purchase Agreement.

Please refer to Note 7 for further details.

2 unchanged sentences

The gross proceeds from the March 2024 Offering were $ 13,225 and the net proceeds were approximately $ 11,896 , after deducting underwriting discounts and commissions and other offering related expenses payable by the Company.

The Company held cash and cash equivalents of $ 34,671 at March 31, 2024.

The Company expects that its cash and cash equivalents will enable it to fund its operating expenses and capital expenditure requirements through at least the one year period subsequent to the filing date of this Quarterly Report on Form 10-Q.

However, additional funding will be necessary beyond this point to fund the Company’s future preclinical and clinical activities.

The Company expects to

finance its future cash needs through a combination of grant awards, equity or debt financings, collaboration agreements, strategic alliances and licensing arrangements.

Liquidity and Going Concern

The Company’s Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

The Company has incurred recurring losses since inception, including net losses of $ 16,192 for the six months ended June 30, 2024 and $ 25,788 for the year ended December 31, 2023.

As of June 30, 2024, the Company had cash and cash equivalents of $ 28,533 compared to $ 29,922 of cash and cash equivalents as of December 31, 2023.

The Company has incurred losses and negative cash flows from operations and had an accumulated deficit of $ 157,381 as of June 30, 2024.

The Company expects to continue to incur losses for the foreseeable future.

As of August 8, 2024, the date of issuance of these Consolidated Financial Statements, the Company believes that its cash and cash equivalents as of June 30, 2024 is not sufficient to fund operations for the period through one year after the date of this filing and therefore substantial doubt exists about the Company’s ability to continue as a going concern.

To execute its business plans, the Company will need substantial funding to support its continuing operations and pursue its growth strategy.

Until such time that the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operations through the sale of common stock in public offerings and/or private placements, debt financings or other capital sources, including collaborations with other companies or other strategic transactions.

The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders.

If the Company is unable to obtain funding, the Company could be forced to delay, reduce or abandon its product development programs, which could have a material adverse effect on its business prospects.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements as of March 31, 2024, and for the three months ended March 31, 2024 and 2023, have been prepared in accordance with the rules and regulations of the SEC and generally accepted accounting principles in the United States of America (“U.S.

The accompanying consolidated financial statements as of June 30, 2024, and for the three and six months ended June 30, 2024 and 2023, have been prepared in accordance with the rules and regulations of the SEC and generally accepted accounting principles in the United States of America (“U.S.

GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X.

1 unchanged sentence

GAAP for complete financial statements.

In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of March 31, 2024, the statements of operations and comprehensive loss and stockholders’ equity for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023.

In the opinion of the Company’s management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of June 30, 2024, the statements of operations and comprehensive loss and stockholders’ equity for the three and six months ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023.

Such adjustments are of a normal and recurring nature.

The results for the three months ended March 31, 2024 are not necessarily indicative of the results for the year ending December 31, 2024, or for any future period.

The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024, or for any future period.

These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2023, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 26, 2024.

12 unchanged sentences

Deferred grant income represents grant proceeds received by the Company prior to the period in which the reimbursable research and development services are incurred.

For the three months ended March 31, 2024 and 2023, the Company generated grant income of $ 4,912 and $ 3,426 , respectively, primarily from reimbursements from the National Institute of Aging (the “NIA”), a division of the NIH for aging research.

The current and noncurrent portion of deferred grant income as of March 31, 2024 was $ 1,584 and $ 0 , respectively, as compared to the current and noncurrent portion of deferred grant income as of December 31, 2023 of $ 1,701 and $ 0 , respectively.

For the three and six months ended June 30, 2024, the Company generated grant income of $ 7,311 and $ 12,223 , respectively, as compared to $ 6,925 and $ 10,351 for the three and six months ended June 30, 2023, respectively, primarily from reimbursements from the National Institute of Aging (the “NIA”), a division of the NIH for aging research.

The current and non-current portion of deferred grant income as of June 30, 2024 was $ 1,453 and $ 0 , respectively, as compared to the current and non-current portion of deferred grant income as of December 31, 2023 of $ 1,701 and $ 0 , respectively.

The grants awarded relate to agreed-upon direct and indirect costs for specific studies or clinical trials, which may include personnel and consulting costs, costs paid to contract research organizations (“CROs”), research institutions and/or consortiums involved in the grants, as well as facilities and administrative costs.

4 unchanged sentences

To date, the Company has not been found to have breached the terms of any NIH grant.

As of March 31, 2024, the Company has been awarded grants with project periods that extend through May 31, 2027, subject to extension.

As of June 30, 2024, the Company has been awarded grants with project periods that extend through May 31, 2027, subject to extension.

Research and Development Costs

9 unchanged sentences

The Company recognizes compensation expense for these awards commencing in the period in which the vesting condition becomes probable of achievement.

The grant date fair value of stock options are estimated on the date of grant using the Black-Scholes option pricing model.

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

Forfeitures are recognized in the period in which they occur.

6 unchanged sentences

The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock.

Prior to the IPO, due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation , to estimate the fair value

of its common stock.

In determining the exercise prices for stock options granted, the Company has considered the estimated fair value of the common stock as of the measurement date.

42 unchanged sentences

In accordance with ASC 270, Interim Reporting , and ASC 740, Income Taxes , the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate, apply that rate in providing for income taxes on a current year-to-date (interim period) basis, and include the tax impact for discrete items within the interim period.

The Company maintains a full valuation allowance against all deferred tax assets as of March 31, 2024 and December 31, 2023, as management has determined that it is not more likely than not that the Company will realize these future tax benefits.

As of March 31, 2024 and December 31, 2023, the Company had no uncertain tax positions.

The Company maintains a full valuation allowance against all deferred tax assets as of June 30, 2024 and December 31, 2023, as management has determined that it is not more likely than not that the Company will realize these future tax benefits.

As of June 30, 2024 and December 31, 2023, the Company had no uncertain tax positions.

Financial Instruments and Fair Value Measurements

Financial assets and liabilities measured at fair value are summarized below:

As of March 31, 2024

As of June 30, 2024

Quoted Priced in

11 unchanged sentences

Accrued expense consists of the following:

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

Total payments of approximately $ 62 , including interest and principal, are due monthly from November 2023 through October 2024.

As of March 31, 2024 and December 31, 2023, the outstanding principal of the loan was $ 366 and $ 544 , respectively, and is included in other current liabilities on the consolidated balance sheet.

As of June 30, 2024 and December 31, 2023, the outstanding principal of the loan was $ 185 and $ 544 , respectively, and is included in other current liabilities on the consolidated balance sheet.

Commitments and Contingencies

Operating Leases

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of March 31, 2024 were as follows, in thousands:

March 31, 2024

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of June 30, 2024 were as follows:

June 30, 2024

December 31, 2023

2 unchanged sentences

Operating lease liabilities

Operating lease liabilities, net of current

Operating lease liabilities, non-current

Total operating lease liabilities

Operating lease costs for the three months ended March 31, 2024 and 2023 was $ 55 and $ 50 , respectively.

The maturities of the operating lease liabilities and minimum lease payments as of March 31, 2024 were as follows:

Operating lease costs for the three and six months ended June 30, 2024 was $ 55 and $ 109 , respectively, as compared to operating lease costs for the three and six months ended June 30, 2023 of $ 54 and $ 108 , respectively.

The maturities of the operating lease liabilities and minimum lease payments as of June 30, 2024 were as follows:

For the Years Ended December 31,

4 unchanged sentences

Present value of operating lease liabilities

The following table summarizes the lease term and discount rate as of March 31, 2024:

March 31, 2024

The following table summarizes the lease term and discount rate as of June 30, 2024 and December 31, 2023, respectively:

June 30, 2024

December 31, 2023

3 unchanged sentences

Operating leases

Operating cash flows used for operating leases for the three months ended March 31, 2024 and 2023 was $ 56 and $ 50 , respectively.

Operating cash flows used for operating leases for the six months ended June 30, 2024 and 2023 was $ 112 and $ 99 , respectively.

Litigation and Contingencies

1 unchanged sentence

When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the financial statements taken as a whole.

When a material loss contingency is

only reasonably possible, the Company does not record a liability but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made.

As of March 31, 2024 and December 31, 2023, there was no litigation or contingency with at least a reasonable possibility of a material loss.

When a material loss contingency is only reasonably possible, the Company does not record a liability but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made.

As of June 30, 2024 and December 31, 2023, there was no litigation or contingency with at least a reasonable possibility of a material loss.

Stockholders’ Equity

2 unchanged sentences

Common stockholders are entitled to dividends if and when declared by the Company’s board of directors subject to the rights of the preferred stockholders.

As of March 31, 2024, no dividends on common stock had been declared by the Company.

As of June 30, 2024, no dividends on common stock had been declared by the Company.

On December 23, 2022, the Company filed a shelf registration statement on Form S-3 with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants, subscription rights, and/or units of any combination thereof of up to $ 200,000 in aggregate (the “Shelf”).

1 unchanged sentence

The Company also simultaneously entered into a sales agreement with the Sales Agents providing for the offering, issuance and sale by the Company of up to $ 40,000 of its common stock from time to time in ATM offerings under the Shelf.

The Company sold 191,273 shares of common stock pursuant to the ATM during the three months ended March 31, 2024 for gross proceeds of approximately $ 393 .

As of March 31, 2024, there was $ 34,321 remaining of common stock available for sale under the ATM, subject to the limitations of General Instruction I.B.6 of Form S-3.

The Company sold 191,273 shares of common stock pursuant to the ATM during the six months ended June 30, 2024 for gross proceeds of approximately $ 393 .

As of June 30, 2024, there was $ 34,321 remaining of common stock available for sale under the ATM.

Lincoln Park Purchase Agreement

3 unchanged sentences

The Company recorded $ 318 to other expense, net in connection with the issuance of the Commitment Shares.

During the three months ended March 31, 2024, the Company did not sell any shares of common stock to Lincoln Park.

As of March 31, 2024, $ 34,795 was available to draw pursuant to the Purchase Agreement.

During the six months ended June 30, 2024, the Company did not sell any shares of common stock to Lincoln Park.

As of June 30, 2024, $ 34,795 was available to draw pursuant to the Purchase Agreement.

March 2024 Offering

10 unchanged sentences

All other types of awards may be issued to employees, directors, consultants, and other service providers.

As of March 31, 2024, the aggregate number of shares of common stock of the Company that may be issued under the 2021 Plan is 2,650,583 .

As of June 30, 2024, the aggregate number of shares of common stock of the Company that may be issued under the 2021 Plan is 2,582,736 .

The number of shares reserved for issuance under the 2021 Plan increased automatically on January 1, 2024 pursuant to an evergreen provision therein by 643,309 shares, representing 2 % of total common shares outstanding at December 31, 2023.

1 unchanged sentence

No more than 7,543,185 shares of common stock may be issued under the 2021 Plan through incentive stock options.

Shares subject to the 2021 Plan, the 2017 Plan or the 2007 Equity Incentive Plan (the “2007 Plan” and collectively with the 2017 Plan, the “Prior Plans”) that expire, terminate or are cancelled or forfeited for any reason after the effectiveness of the 2021 Plan will be added (or added back) to the shares available for issuance under the 2021 Plan.

Shares subject to the 2021 Plan, the 2017 Plan or the 2007 Equity Incentive Plan (the “2007 Plan” and collectively with the 2017 Plan, the “Prior Plans”) that expire, terminate

or are cancelled or forfeited for any reason after the effectiveness of the 2021 Plan will be added (or added back) to the shares available for issuance under the 2021 Plan.

The total number of shares underlying the Prior Plan awards that may be recycled into the 2021 Plan will not exceed 4,334,131 shares.

8 unchanged sentences

Under the ESPP, the Company may provide employees and employees of the Subsidiary with an opportunity to purchase shares of the Company’s common stock at a discounted purchase price.

As of March 31, 2024, subject to adjustment as provided in the ESPP, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.

As of June 30, 2024, subject to adjustment as provided in the ESPP, a total of 209,532 shares of common stock are authorized and reserved for issuance under the ESPP.

Subject to prior approval by the board of directors in each instance, on or about January 1, 2022 and each anniversary of such date thereafter prior to the termination of the ESPP, the number of shares of common stock authorized and reserved for issuance under the ESPP will be increased by a number of shares of common stock equal to the least of (i) 1,000,000 shares of common stock, (ii) 1 % of the shares of common stock outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares of common stock as determined by the board of directors.

Such shares of common stock may be newly issued shares, treasury shares or shares acquired on the open market.

In the event that any dividend or other distribution (whether in the form of cash, our common stock, or other

property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, or exchange of common stock or other securities, or other change in the structure affecting common stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, the compensation committee will, in such manner as it deems equitable, adjust the number of shares and class of common stock that may be delivered under the ESPP, the purchase price per share and the number of shares covered by each outstanding option under the ESPP, and the numerical limits described above.

In the event that any dividend or other distribution (whether in the form of cash, our common stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, or exchange of common stock or other securities, or other change in the structure affecting common stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, the compensation committee will, in such manner as it deems equitable, adjust the number of shares and class of common stock that may be delivered under the ESPP, the purchase price per share and the number of shares covered by each outstanding option under the ESPP, and the numerical limits described above.

Stock Options

The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Three Months Ended March 31,

Fair value of common stock

$ 1.98 – $ 1.98

$ 1.65 – $ 2.12

Six Months Ended June 30,

Expected volatility

20 unchanged sentences

Options Outstanding

Weighted-Average

Intrinsic Value

Contractual Life

Exercise Price

Balance, December 31, 2023

3 unchanged sentences

Options expired

Balance, March 31, 2024

Exercisable as of March 31, 2024

The weighted-average grant date fair value of stock options granted was $ 1.56 and $ 1.62 during the three months ended March 31, 2024 and 2023, respectively.

There were 205,000 and 412,720 stock options granted at an aggregate fair value of $ 320 and $ 668 for the three months ended March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024 and 2023, there were no stock options exercised.

Balance, June 30, 2024

Exercisable as of June 30, 2024

The weighted-average grant date fair value of stock options granted was $ 1.54 and $ 1.56 during the three and six months ended June 30, 2024, respectively.

The weighted-average grant date fair value of stock options granted was $ 1.57 and $ 1.61 during the three and six months ended June 30, 2023, respectively.

There were 42,500 and 247,500 stock options granted at an aggregate fair value of $ 65 and $ 385 for the three and six months ended June 30, 2024, respectively.

There were 163,549 and 576,269 stock options granted at an aggregate fair value of $ 257 and $ 925 for the three and six months ended June 30, 2023, respectively.

During the three and six months ended June 30, 2024, there were 73,350 stock options exercised, with an aggregate grant date fair value of $ 46 , for each respective period.

During the three and six months ended June 30, 2023, there were no stock options exercised.

The intrinsic value of stock options exercised during the three and six months ended June 30, 2024 was $ 91 , for each respective period.

Restricted Stock Units

3 unchanged sentences

RSUs with performance conditions for employees vest on the one-year anniversary of the performance achievement date.

During the three months ending March 31, 2024, the Company granted 796,200 RSU awards containing performance and time based vesting conditions to employees.

As of March 31, 2024, the Company determined that the achievement of the performance target was probable and therefore, recognized expense for these awards during the three months ended March 31, 2024.

The following table summarizes the Company’s RSU activity for the three months ended March 31, 2024:

During the three and six months ended June 30, 2024, the Company granted 42,500 and 838,700 , respectively, RSU awards containing performance and time based vesting conditions to employees.

As of June 30, 2024, the Company determined that the achievement of the performance target was probable and therefore, recognized expense for these awards during the three and six months ended June 30, 2024.

The following table summarizes the Company’s RSU activity for the six months ended June 30, 2024:

Weighted-Average

2 unchanged sentences

Outstanding at December 31, 2023

Outstanding at March 31, 2024

Outstanding at June 30, 2024

Equity-based Compensation Expense

The Company recorded total equity-based compensation expense in the statement of operations and comprehensive loss related to stock options and restricted stock units as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

1 unchanged sentence

Total equity-based compensation

As of March 31, 2024, total future compensation expense related to unvested awards yet to be recognized by the Company was $ 4,970 , which is expected to be recognized over a weighted-average remaining vesting period of

approximately 1.91 years.

As of June 30, 2024, total future compensation expense related to unvested awards yet to be recognized by the Company was $ 3,957 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 1.88 years.

Total unrecognized compensation expense related to unvested performance-based awards was $ 783 , which is expected to be recognized over a weighted-average remaining vesting period of approximately 1.29 years.

4 unchanged sentences

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-Q

Item 1. Financial Statements