COMPASS Pathways plc 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2024. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Based on our evaluation under that framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2024. This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm because we are not an accelerated filer or large accelerated filer. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations on Effectiveness of Controls Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ITEM 9B. OTHER INFORMATION (a) The following summary contains a description of material U.S. federal income tax and UK tax consequences of the acquisition, ownership and disposition of our ordinary shares or ADSs. This summary should not be considered a comprehensive description of all the tax considerations that may be relevant to beneficial owners of ADSs. U.S. Federal Income Tax Considerations for U.S. holders The following is a description of the material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of our ordinary shares or ADSs. It is not a comprehensive description of all tax considerations that may be relevant to a particular person’s decision to acquire securities. This discussion applies only to a U.S. Holder holds our ordinary shares or ADSs as a capital asset for tax purposes (generally, property held for investment). In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including state and local tax consequences, estate tax consequences, alternative minimum tax consequences, the special tax accounting 166 Table of Contents rules under Section 451(b) of the Code, the potential application of the Medicare contribution tax, and tax consequences applicable to U.S. Holders subject to special rules, such as: • banks, insurance companies, and certain other financial institutions; • U.S. expatriates and certain former citizens or long-term residents of the United States; • dealers or traders in securities who use a mark-to-market method of tax accounting; • persons holding ordinary shares or ADSs as part of a hedging transaction, “straddle,” wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to ordinary shares or ADSs; • persons whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar; • brokers, dealers or traders in securities, commodities or currencies; • tax-exempt entities or government organizations; • S corporations, partnerships, or other entities or arrangements classified as partnerships for U.S. federal income tax purposes; • regulated investment companies or real estate investment trusts; • persons that own or are deemed to own 10% or more of the voting power or value of our ordinary shares or ADSs; • persons who acquired our ordinary shares or ADSs pursuant to the exercise of any employee share option or otherwise as compensation; • persons holding our ordinary shares or ADSs in connection with a trade or business, permanent establishment, or fixed base outside the United States; and • persons who own (directly or through attribution) 10% or more (by vote or value) of our outstanding ordinary shares. If an entity that is classified as a partnership for U.S. federal income tax purposes holds ordinary shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding ordinary shares or ADSs and partners in such partnerships are encouraged to consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of ordinary shares or ADSs. The discussion is based on the Internal Revenue Code of 1986, as amended, or the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury Regulations, and the income tax treaty between the UK and the United States, all as of the date of this Annual Report, changes to any of which may affect the tax consequences described herein-possibly with retroactive effect. A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of ordinary shares or ADSs and is: • an individual who is a citizen or individual resident of the United States; • a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; • an estate the income of which is subject to U.S. federal income taxation regardless of its source; or • a trust if (1) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust or (2) the trust has a valid election to be treated as a U.S. person under applicable U.S. Treasury Regulations. Generally, a U.S. Holder of an ADS should be treated for U.S. federal income tax purposes as holding the ordinary shares represented by our ADS. Accordingly, no gain or loss will be recognized upon an exchange of ADSs for ordinary shares. The U.S. Treasury has expressed concerns that intermediaries in the chain of ownership between the holder of an ADS and the 167 Table of Contents issuer of the security underlying our ADS may be taking actions that are inconsistent with the beneficial ownership of the underlying security. Accordingly the creditability of foreign taxes, if any, as described below, could be affected by actions taken by intermediaries in the chain of ownership between the holders of ADSs and our company if as a result of such actions the holders of ADSs are not properly treated as beneficial owners of the underlying ordinary shares. These actions would also be inconsistent with the claiming of the reduced tax rate, described below, applicable to dividends received by certain non-corporate holders. PERSONS CONSIDERING AN INVESTMENT IN ORDINARY SHARES OR ADSs SHOULD CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES APPLICABLE TO THEM RELATING TO THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE ORDINARY SHARES OR ADSs, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE AND LOCAL TAX LAWS. Passive Foreign Investment Company Rules If we are classified as a passive foreign investment company, or PFIC, in any taxable year, a U.S. Holder will be subject to special rules generally intended to reduce or eliminate any benefits from the deferral of U.S. federal income tax that a U.S. Holder could derive from investing in a non-U.S. company that does not distribute all of its earnings on a current basis. A non-U.S. corporation will be classified as a PFIC for any taxable year in which, after applying certain look-through rules, either: • at least 75% of its gross income is passive income (such as interest income); or • at least 50% of its gross assets (determined on the basis of a quarterly average) is attributable to assets that produce passive income or are held for the production of passive income. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation, the equity of which we own, directly or indirectly, 25% or more (by value). Based on the composition of our income and assets and the value of our assets, we believe that we were a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2023 and we believe that we were not a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2024. However, no assurances regarding our PFIC status can be provided for any past, the current, or any future taxable years. The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis applying principles and methodologies that in some circumstances are unclear and subject to varying interpretation. If we are treated as a non-publicly traded CFC for the year being tested for purposes of the PFIC rules, the value of our assets will be measured by the adjusted tax basis of our assets. If we are a publicly traded CFC or not a CFC for such year, the value of our assets generally will be determined by reference to the market price of our ordinary shares or ADSs from time to time, which may fluctuate considerably. Under the income test, our status as a PFIC depends on the composition of our income which will depend on the transactions we enter into in the future and our corporate structure. The composition of our income and assets is also affected by the spending of the cash we raise in any offering. If we are classified as a PFIC in any year with respect to which a U.S. Holder owns the ordinary shares or ADSs, we will continue to be treated as a PFIC with respect to such U.S. Holder in all succeeding years during which the U.S. Holder owns the ordinary shares or ADSs, regardless of whether we continue to meet the tests described above unless (i) we cease to be a PFIC and the U.S. Holder has made a “deemed sale” election under the PFIC rules, or (ii) the U.S. Holder makes a Qualified Electing Fund Election, or QEF Election, with respect to all taxable years during such U.S. Holders holding period in which we are a PFIC. If the “deemed sale” election is made, a U.S. Holder will be deemed to have sold the ordinary shares or ADSs the U.S. Holder holds at their fair market value and any gain from such deemed sale would be subject to the rules described below. After the deemed sale election, so long as we do not become a PFIC in a subsequent taxable year, the U.S. Holder’s ordinary shares or ADSs with respect to which such election was made will not be treated as shares in a PFIC and the U.S. Holder will not be subject to the rules described below with respect to any “excess distribution” the U.S. Holder receives from us or any gain from an actual sale or other disposition of the ordinary shares or ADSs. U.S. Holders should consult their tax advisors as to the possibility and consequences of making a deemed sale election if we cease to be a PFIC and such election becomes available. For each taxable year we are treated as a PFIC with respect to U.S. Holders, U.S. Holders will be subject to special tax rules with respect to any “excess distribution” such U.S. Holder receives and any gain such U.S. Holder recognizes from a sale or other disposition (including, under certain circumstances, a pledge) of ordinary shares or ADSs, unless (i) such U.S. Holder makes a QEF Election or (ii) our ordinary shares or ADSs constitute “marketable” securities, and such U.S. Holder makes a 168 Table of Contents mark-to-market election as discussed below. Distributions a U.S. Holder receives in a taxable year that are greater than 125% of the average annual distributions a U.S. Holder received during the shorter of the three preceding taxable years or the U.S. Holder’s holding period for the ordinary shares or ADSs will be treated as an excess distribution. Under these special tax rules: • the excess distribution or gain will be allocated ratably over a U.S. Holder’s holding period for the ordinary shares or ADSs; • the amount allocated to the taxable year of disposition or distribution, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as ordinary income; and • the amount allocated to each other year will be subject to the highest tax rate in effect for that year for individuals or corporations, as appropriate, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the ordinary shares or ADSs cannot be treated as capital, even if a U.S. Holder holds the ordinary shares or ADSs as capital assets. If we are a PFIC, a U.S. Holder will generally be subject to similar rules with respect to distributions we receive from, and our dispositions of the stock of, any of our direct or indirect subsidiaries that also are PFICs, as if such distributions were indirectly received by, and/or dispositions were indirectly carried out by, such U.S. Holder. U.S. Holders should consult their tax advisors regarding the application of the PFIC rules to our subsidiaries. U.S. Holders can avoid the interest charge on excess distributions or gain relating to the ordinary shares or ADSs by making a mark-to-market election with respect to the ordinary shares or ADSs, provided that the ordinary shares or ADSs are “marketable.” Ordinary shares or ADSs will be marketable if they are “regularly traded” on certain U.S. stock exchanges or on a foreign stock exchange that meets certain conditions. For these purposes, the ordinary shares or ADSs will be considered regularly traded during any calendar year during which they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Any trades that have as their principal purpose meeting this requirement will be disregarded. Our ADSs have been listed on Nasdaq, which is a qualified exchange for these purposes. Consequently, if our ADSs remain listed on Nasdaq and are regularly traded, and you are a holder of ADSs, we expect the mark-to-market election would be available to you if we are a PFIC. Each U.S. Holder should consult its tax advisor as to the whether a mark-to-market election is available or advisable with respect to the ordinary shares or ADSs. A U.S. Holder that makes a mark-to-market election must include in ordinary income for each year an amount equal to the excess, if any, of the fair market value of the ordinary shares or ADSs at the close of the taxable year over the U.S. Holder’s adjusted tax basis in the ordinary shares or ADSs. An electing holder may also claim an ordinary loss deduction for the excess, if any, of the U.S. Holder’s adjusted basis in the ordinary shares or ADSs over the fair market value of the ordinary shares or ADSs at the close of the taxable year, but this deduction is allowable only to the extent of any net mark-to-market gains for prior years. Gains from an actual sale or other disposition of the ordinary shares or ADSs will be treated as ordinary income, and any losses incurred on a sale or other disposition of the shares will be treated as an ordinary loss to the extent of any net mark-to-market gains for prior years. Once made, the election cannot be revoked without the consent of the Internal Revenue Service, or the IRS, unless the ordinary shares or ADSs cease to be marketable. However, a mark-to-market election generally cannot be made for equity interests in any lower-tier PFICs that we own, unless shares of such lower-tier PFIC are themselves “marketable.” As a result, even if a U.S. Holder validly makes a mark-to-market election with respect to our ordinary shares or ADSs, the U.S. Holder may continue to be subject to the PFIC rules (described above) with respect to its indirect interest in any of our investments that are treated as an equity interest in a PFIC for U.S. federal income tax purposes. U.S. Holders should consult their tax advisors to determine whether any of these elections would be available and if so, what the consequences of the alternative treatments would be in their particular circumstances. We do not intend to provide information necessary for U.S. holders to make QEF elections which, if available, would result in tax treatment different from the general tax treatment for PFICs described above . Unless otherwise provided by the U.S. Treasury, each U.S. shareholder of a PFIC is required to file an annual report containing such information as the U.S. Treasury may require. A U.S. Holder’s failure to file the annual report will cause the statute of limitations for such U.S. Holder’s U.S. federal income tax return to remain open with regard to the items required to be included in such report until three years after the U.S. Holder files the annual report, and, unless such failure is due to 169 Table of Contents reasonable cause and not willful neglect, the statute of limitations for the U.S. Holder’s entire U.S. federal income tax return will remain open during such period. U.S. Holders should consult their tax advisors regarding the requirements of filing such information returns under these rules. WE STRONGLY URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING THE APPLICATION OF THE PFIC RULES TO YOUR INVESTMENT IN THE ORDINARY SHARES OR ADSs. Taxation of Distributions Subject to the discussion above under “Passive Foreign Investment Company Rules,” distributions paid on ordinary shares or ADSs, other than certain pro rata distributions of ordinary shares or ADSs, will generally be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we may not calculate our earnings and profits under U.S. federal income tax principles, we expect that distributions generally will be reported to U.S. Holders as dividends. Subject to applicable limitations and the discussions above regarding concerns expressed by the U.S. Treasury, dividends paid to certain non-corporate U.S. Holders may be taxable at preferential rates applicable to “qualified dividend income” if we are a “qualified foreign corporation” and certain other requirements are met. However, the qualified dividend income treatment will not apply if we are treated as a PFIC with respect to the U.S. Holder. The amount of the dividend will be treated as foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code. Dividends will generally be included in a U.S. Holder’s income on the date of the U.S. Holder’s receipt of the dividend. The amount of any dividend income paid in foreign currency will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of actual or constructive receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt. Such gain or loss would generally be treated as U.S.-source ordinary income or loss. The amount of any distribution of property other than cash (and other than certain pro rata distributions of ordinary shares or ADSs or rights to acquire ordinary shares or ADSs) will be the fair market value of such property on the date of distribution. For foreign tax credit limitation purposes, our dividends will generally be treated as passive category income. Because no UK taxes will be withheld from dividends on ordinary shares or ADSs, there will be no creditable foreign taxes associated with any dividends that a U.S. Holder will receive. The rules governing foreign tax credits are complex and U.S. Holders should therefore consult their tax advisers regarding the effect of the receipt of dividends for foreign tax credit limitation purposes. Sale or Other Taxable Disposition of Ordinary Shares and ADSs Subject to the discussion above under “Passive Foreign Investment Company Rules,” gain or loss realized on the sale or other taxable disposition of ordinary shares or ADSs will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the ordinary shares or ADSs for more than one year at the time of sale or other taxable disposition. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the ordinary shares or ADSs disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. Subject to the PFIC rules described above, long-term capital gains recognized by certain non-corporate U.S. Holders (including individuals) will be, under current law, subject to reduced rates of U.S. federal income tax. The deductibility of capital losses is subject to limitations. If the consideration received by a U.S. Holder is not paid in U.S. dollars, the amount realized will be the U.S. dollar value of the payment received determined by reference to the spot rate of exchange on the date of the sale or other disposition. However, if the ordinary shares or ADSs are treated as traded on an “established securities market” and you are either a cash basis taxpayer or an accrual basis taxpayer that has made a special election (which must be applied consistently from year to year and cannot be changed without the consent of the IRS), you will determine the U.S. dollar value of the amount realized in a non-U.S. dollar currency by translating the amount received at the spot rate of exchange on the settlement date of the sale. If you are an accrual basis taxpayer that is not eligible to or does not elect to determine the amount realized using the spot rate on the settlement date, you will recognize foreign currency gain or loss to the extent of any difference between the U.S. dollar amount realized on the date of sale or disposition and the U.S. dollar value of the currency received at the spot rate on the settlement date. Information Reporting and Backup Withholding 170 Table of Contents Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding on a duly executed IRS Form W-9 or otherwise establishes an exemption. The amount of any backup withholding from a payment to a U.S. Holder may be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS. Information with Respect to Foreign Financial Assets Certain U.S. Holders who are individuals (and, under regulations, certain entities) may be required to report information relating to the ordinary shares or ADSs, subject to certain exceptions (including an exception for ordinary shares or ADSs held in accounts maintained by certain U.S. financial institutions), by filing IRS Form 8938 (Statement of Specified Foreign Financial Assets) with their federal income tax return. Such U.S. Holders who fail to timely furnish the required information may be subject to a penalty. Additionally, if a U.S. Holder does not file the required information, the statute of limitations with respect to tax returns of the U.S. Holder to which the information relates may not close until three years after such information is filed. U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to their ownership and disposition of the ordinary shares or ADSs. UK Taxation The following is intended as a general guide to current UK tax law and HM Revenue & Customs, or HMRC, published guidance (which is not binding) applying as at the date of this Annual Report (both of which are subject to change at any time, possibly with retrospective effect) relating to the holding of ADSs. It does not constitute legal or tax advice and does not purport to be a complete analysis of all UK tax considerations relating to the holding of ADSs, or all of the circumstances in which holders of ADSs may benefit from an exemption or relief from UK taxation. It is written on the basis that we do not (and will not) directly or indirectly derive 75% or more of its qualifying asset value from UK land, and that we are and will remain solely resident in the UK for tax purposes and will therefore be subject to the UK tax regime and not the U.S. tax regime save as set out above under “U.S. Federal Income Tax Considerations for U.S. Holders.” Except to the extent that the position of non-UK resident persons is expressly referred to, this guide relates only to persons who are resident (and in the case of individuals, domiciled or deemed domiciled) for tax purposes solely in the UK and do not have a permanent establishment, branch or agency (or equivalent) in any other jurisdiction with which the holding of our ADSs is connected, or UK Holders, who are absolute beneficial owners of our ADSs (and do not hold our ADSs through an Individual Savings Account or a Self-Invested Personal Pension). This guide may not relate to certain classes of UK Holders, such as (but not limited to): • persons who are connected with us; • financial institutions; • insurance companies; • charities or tax-exempt organizations; • collective investment schemes; • pension schemes; • market makers, intermediaries, brokers or dealers in securities or persons who hold ADSs otherwise than as an investment; • persons who have (or are deemed to have) acquired their ADSs by virtue of an office or employment or who are or have been our officers or employees or any of our affiliates; and • individuals who are subject to UK taxation on a remittance basis or to whom split-year treatment applies. 171 Table of Contents The decision of the First-tier Tribunal (Tax Chamber) in HSBC Holdings PLC and The Bank of New York Mellon Corporation v HMRC (2012) cast some doubt on whether a holder of a depositary receipt is the beneficial owner of the underlying shares. However, based on published HMRC guidance we would expect that HMRC will regard a holder of ADSs as holding the beneficial interest in the underlying shares and therefore these paragraphs assume that a holder of ADSs is the beneficial owner of the underlying ordinary shares and any dividends paid in respect of the underlying ordinary shares (where the dividends are regarded for UK purposes as that person’s own income) for UK direct tax purposes. THESE PARAGRAPHS ARE A SUMMARY OF CERTAIN UK TAX CONSIDERATIONS AND ARE INTENDED AS A GENERAL GUIDE ONLY. IT IS RECOMMENDED THAT ALL HOLDERS OF ADSs OBTAIN ADVICE AS TO THE CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSAL OF OUR ADSs IN THEIR OWN PARTICULAR CIRCUMSTANCES FROM THEIR OWN TAX ADVISORS. IN PARTICULAR, NON-UK RESIDENT OR DOMICILED PERSONS OR PERSONS SUBJECT TO TAXATION IN ANY JURISDICTION OTHER THAN THE UK ARE ADVISED TO CONSIDER THE POTENTIAL IMPACT OF ANY RELEVANT DOUBLE TAXATION AGREEMENTS. Dividends Withholding Tax Dividends that we pay will not be subject to any withholding or deduction for or on account of UK tax. Income Tax An individual UK Holder may, depending on his or her particular circumstances, be subject to UK tax on dividends received from us. An individual holder of ADSs who is not resident for tax purposes in the UK should not be chargeable to UK income tax on dividends received from us unless he or she carries on (whether solely or in partnership) a trade, profession or vocation in the UK through a permanent establishment, branch or agency to which our ADSs are attributable. There are certain exceptions for trading in the UK through independent agents, such as some brokers and investment managers. Dividend income is treated as the top slice of the total income chargeable to UK income tax for an individual UK Holder. An individual UK Holder who receives a dividend in the 2024/2025 tax year will be entitled to a tax-free allowance of £500. Income within the dividend allowance counts towards an individual’s basic, higher or additional rate limits and may, therefore, affect the level of personal allowance to which they are entitled. Dividend income received during the 2024/2025 tax year in excess of the relevant tax-free allowance will (subject to the availability of any income tax personal allowance) be taxed at 8.75% to the extent the excess amount falls within the basic rate band, 33.75% to the extent the excess amount falls within the higher rate band, and 39.35% to the extent the excess amount falls within the additional rate band. Corporation Tax A corporate holder of ADSs who is not resident for tax purposes in the UK should not be chargeable to UK corporation tax on dividends received from us unless it carries on (whether solely or in partnership) a trade in the UK through a permanent establishment to which our ADSs are attributable. Corporate UK Holders should not be subject to UK corporation tax on any dividend received from us so long as the dividends qualify for exemption, which should be the case, although certain conditions must be met. It should be noted that the exemptions, whilst of wide application, are not comprehensive and are subject to anti-avoidance rules in relation to a dividend. If the conditions for the exemption are not satisfied, or such anti-avoidance provisions apply or such UK Holder elects for an otherwise exempt dividend to be taxable, UK corporation tax will be chargeable on the amount of any dividends (at the current rate of 25% for companies with profits of more than £250,000 or 19% for companies with profits not exceeding £50,000 with a marginal relief applying to profits between £50,000 and £250,000, in each case for the 2024/2025 tax year). Chargeable Gains A disposal or deemed disposal of ADSs by a UK Holder may, depending on the UK Holder’s circumstances and subject to any available exemptions or reliefs (such as the annual exemption), give rise to a chargeable gain or an allowable loss for the purposes of UK capital gains tax (for individual UK Holders) and corporation tax on chargeable gains (for corporate UK Holders). If an individual UK Holder who is subject to UK income tax at either the higher or the additional rate is liable to UK capital gains tax on the disposal of ADSs, the capital gains tax rate is 24% (for the period of the 2024/2025 tax year from October 30, 2024; the rate from April 6, 2024 to October 29, 2024 was 20%). For an individual UK Holder who is subject to 172 Table of Contents UK income tax at the basic rate and liable to UK capital gains tax on such disposal, the current applicable rate would be 1 8 % (for the period of the 2024/2025 tax year from October 30, 2024; the rate from April 6, 2024 to October 29, 2024 was 10%), save to the extent that any capital gains when aggregated with the UK Holder’s other taxable income and gains in the relevant tax year exceed the unused basic rate tax band. In that case, the capital gains tax rate currently applicable to the excess would be 2 4 % (for the period of the 2024/2025 tax year from October 30, 2024; the rate from April 6, 2024 to October 29, 2024 was 20%)... If a corporate UK Holder becomes liable to UK corporation tax on the disposal (or deemed disposal) of ADSs, the main rate of UK corporation tax would apply (currently at 25% for companies with profits of more than £250,000 or 19% for companies with profits not exceeding £50,000 with a marginal relief applying to profits between £50,000 and £250,000, in each case for the 2024/2025 tax year). A holder of ADSs that is not resident for tax purposes in the UK should not normally be liable to UK capital gains tax or corporation tax on chargeable gains on a disposal (or deemed disposal) of ADSs, unless the person is carrying on (whether solely or in partnership) a trade, profession or vocation in the UK through a branch or agency (or, in the case of a corporate holder of ADSs, through a permanent establishment) to which our ADSs are attributable. However, an individual holder of ADSs who has ceased to be resident for tax purposes in the UK or is treated as resident outside the UK for the purposes of a double taxation treaty for a period of five years or less and who disposes of ADSs during that period of temporary non-residence may be liable on his or her return to the UK (or upon ceasing to be regarded as resident outside the UK for the purposes of any relevant double taxation treaty) to UK tax on any capital gain realized (subject to any available exemption or relief). Stamp Duty and Stamp Duty Reserve Tax The discussion below relates to the holders of our ordinary shares or ADSs wherever resident, however it should be noted that special rules may apply to certain persons such as market makers, brokers, dealers or intermediaries. Issue of Ordinary Shares As a general rule (and except in relation to depositary receipt systems and clearance services (as to which see below)), no UK stamp duty or stamp duty reserve tax, or SDRT, is generally payable on the issue of the ordinary shares underlying our ADSs. Transfer of Ordinary Shares An unconditional agreement to transfer ordinary shares will normally give rise to a charge to SDRT at the rate of 0.5% of the amount or value of the consideration payable for the transfer. The purchaser of the ordinary shares is liable for the SDRT. Transfers of ordinary shares by way of a written instrument of transfer are generally also subject to stamp duty at the rate of 0.5% of the amount or value of the consideration given for the transfer (rounded up to the nearest £5.00). Stamp duty is normally paid by the purchaser. The charge to SDRT will be cancelled or, if already paid, repaid (generally with interest), where a transfer instrument has been duly stamped within six years of the charge arising, (either by paying the stamp duty or by claiming an appropriate relief) or if the instrument is otherwise exempt from stamp duty. Clearance Services and Depositary Receipts Under current UK tax law (as set out in section 20 and Schedule 11 of the Finance Act of 2024), with effect from 1 January 2024, a higher rate of 1.5% UK stamp duty or UK SDRT (which we refer to as the 1.5% Charge) should not arise in respect of an issue of ordinary shares, or an unconditional agreement to issue ordinary shares, to a clearance service or a depositary receipt system. Further, subject to the below, no 1.5% Charge should arise in respect of a transfer of ordinary shares, or an unconditional agreement to transfer ordinary shares, to a clearance service or depositary receipt system, where the transfer is carried out in the course of “capital-raising arrangements”, being arrangements pursuant to which the relevant ordinary shares are issued by the company for the purpose of raising new capital. Where any ordinary shares are subject to restriction that has the effect of preventing the transfer of such ordinary shares into a clearance service or depositary receipt system in the course of capital-raising arrangements, such ordinary shares must be transferred as soon as reasonably practicable after the time at which the restriction ceases to have effect in order to prevent the 1.5% Charge from applying. Where a clearance service has made and maintained an election under section 97A of the UK Finance Act 1986, or a section 97A election, no 1.5% Charge will apply on any transfer of ordinary shares, or an unconditional agreement to transfer ordinary shares, to that clearance service. It is understood that HMRC regards the facilities of DTC as a clearance service for these purposes, and we are not aware of any section 97A election having been made by the DTC. 173 Table of Contents If arising, any UK stamp duty or UK SDRT payable on a transfer of ordinary shares to a depositary receipt system or clearance service will in practice generally be paid by the transferors or participants in the clearance service or depositary receipt system. Issue of ADSs No UK stamp duty or UK SDRT should be payable on the issue of ADSs in the Company. If arising, any stamp duty or SDRT payable on a transfer of ordinary shares to a depositary receipt system or clearance service will in practice generally be paid by the transferors or participants in the clearance service or depositary receipt system. Transfer of ADSs within a clearance system No UK SDRT should be required to be paid in respect of a paperless transfer of ADSs through the facilities of DTC, provided that no section 97A election has been made and maintained by DTC, and such ADSs are held through DTC at the time of any agreement for their transfer. We are not aware of any section 97A election having been made by the DTC. Issue or Transfers of ADRs On the basis of current published HMRC guidance, an ADR is not regarded as stock or a marketable security for the purposes of UK stamp duty or a chargeable security for the purposes of UK SDRT and, as such, no UK stamp duty or SDRT should be required to be paid on the issue or transfer of (including an agreement to transfer) ADRs in the Company. Chargeable Gains Tax – Warrants For UK corporate holders of warrants, the precise UK corporation tax treatment of warrants is dependent on whether or not the warrants are considered to constitute derivative contracts for UK tax purposes. Warrants treated as derivative contracts for UK tax purposes Where a warrant constitutes a derivative contracts for UK tax purposes, the amounts that are required to be brought into account for UK corporation tax purposes by a UK corporate holder of warrants are, broadly, those amounts which are recognized under relevant generally accepted accounting principles in determining the relevant UK corporation’s profits and losses (including those of a capital nature) arising from the warrants, as well as certain related expenses. UK corporate holders of warrants who consider that any of the warrants may constitute derivative contracts for UK tax purposes should consult with their tax advisors as to the tax implications of such treatment. UK non-corporate holders, and warrants not treated as derivative contracts for UK tax purposes Where (for UK corporate holders of warrants) a warrant does not constitute a derivative contract for UK tax purposes, or for UK non-corporate holders of warrants, then (depending on the circumstances) neither the grant nor the exercise of a warrant should generally give rise to a UK chargeable gains / capital gains tax charge, and the relevant UK holder’s base cost in the warrant, or (following exercise) the asset which was the subject of the warrant should broadly comprise, in the case of the warrant, any amounts paid by the relevant UK holder for the acquisition of the warrant, and in the case of the asset which was the subject of the warrant, any such amounts, together with any amounts paid for the exercise of the relevant warrant. A disposal or deemed disposal of a warrant or (following the exercise of a warrant) the asset underlying the warrant by a UK Holder (may, depending on the UK Holder’s circumstances and subject to any available exemptions or reliefs (such as the annual exemption), give rise to a chargeable gain or an allowable loss for the purposes of UK corporation tax on chargeable gains and capital gains tax. If an individual UK Holder who is subject to UK income tax at either the higher or the additional rate is liable to UK capital gains tax on the disposal of our warrants or (following exercise of a warrant) the underlying assets, the current applicable rate will be 24% (for the period from 30 October 2024 to the end of the 2024/2025 tax year). For an individual UK Holder who is subject to UK income tax at the basic rate and liable to UK capital gains tax on such disposal, the current applicable rate would be 18% (for the period from 30 October 2024 to the end of the 2024/2025 tax year), save to the extent that any capital gains when aggregated with the UK Holder’s other taxable income and gains in the relevant tax year exceed 174 Table of Contents the unused basic rate tax band. In that case, the rate currently applicable to the excess would be 24% (for the period from 30 October 2024 to the end of the 2024/2025 tax year). If a corporate UK Holder becomes liable to UK corporation tax on the disposal (or deemed disposal) of a warrant or (following the exercise of a warrant) the asset underlying the warrant, the main rate of UK corporation tax would apply (at 25% for the tax year 2024/2025 for companies with profits of more than £50,000 whilst the prior rate of 19% will apply to companies with profits not exceeding £250,000 with a tapered rate applying to profits between £50,000 and £250,000). A holder of warrants (or the underlying asset thereof) that is not resident for tax purposes in the UK should not normally be liable to UK capital gains tax or corporation tax on chargeable gains on a disposal (or deemed disposal) of a warrant or (following exercise) the asset underlying the warrant, unless the person is carrying on (whether solely or in partnership) a trade, profession or vocation in the UK through a branch or agency (or, in the case of a corporate holder of warrants or (following exercise) the underlying assets, through a permanent establishment) to which our warrants (or, following an exercise, the underlying assets) are attributable. However, an individual holder of warrants who has ceased to be resident for tax purposes in the UK or is treated as resident outside the UK for the purposes of a double taxation treaty for a period of five years or less and who disposes of warrants (or, following exercise, the underlying asset) during that period of temporary non-residence may be liable on his or her return to the UK (or upon ceasing to be regarded as resident outside the UK for the purposes of double taxation treaty) to UK tax on any capital gain realized (subject to any available exemption or relief) despite the fact that the individual may not be resident in the UK at the time of the disposal. Stamp Duty and Stamp Duty Reserve Tax - Warrants The UK stamp duty and UK stamp duty reserve tax implications of both the issue, the exercise and the transfer of warrants is complex. Specific professional advice should be sought before incurring or reimbursing the costs of a UK stamp duty or UK SDRT charge in any circumstances relating to a warranty (including the issuance, exercise or transfer of any warrant). (b) Rule 10b5-1 Plans During the three months ended December 31, 2024, none of our directors or executive officers adopted , terminated or modified the amount, pricing or timing provisions in any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.” ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not Applicable. 175 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Our board of directors has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior officers. The full text of our code of business conduct and ethics is posted on the Investor Relations section of our website at ir.compasspathways.com. Our website is not incorporated by reference in this filing. We will disclose any amendments to our code of business conduct and ethics, or waivers of its requirements granted to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, on our website or in filings under the Exchange Act as required by applicable law or the listing standards of the Nasdaq Stock Market. The remaining information called for by this item, including information about our Directors, Executive Officers and Audit Committee and our insider trading policy (a copy of our insider trading policy is filed as Exhibit 19.1 to this report), will be set forth in our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2024 and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information called for by this item will be set forth in our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2024 and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information called for by this item will be set forth in our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2024 and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information called for by this item will be set forth in our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2024 and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information called for by this item will be set forth in our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2024 and is incorporated herein by reference. 176 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Listing of Documents 1. Financial Statements The following financial statements are submitted in a separate section beginning on page F-1 of this Annual Report, as follows: Page Report of Independent Registered Public Accounting Firm (PCAOB ID 876) F- 1 Consolidated Balance Sheets F- 3 Consolidated Statements of Operations and Comprehensive Loss F- 4 Consolidated Statements of Shareholders’ Equity F- 5 Consolidated Statements of Cash Flows F- 6 Notes to Consolidated Financial Statements F- 8 2. Financial Statement Schedules All other schedules have been omitted because they are not required, not applicable, or the required information is otherwise included. 3. Exhibits The documents listed in the Exhibit Index of this Annual Report are incorporated by reference or are filed with this Annual Report, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K). INDEX Exhibit Number Description Incorporation by reference Schedule/Form File Number Exhibit File Date 3.2 Articles of Association of COMPASS Pathways plc. Form F-1/A 333-248484 3.2 9/14/2020 4.1 Deposit Agreement Form F-6/A 333-248514 99.(A) 9/17/2020 4.2 Form of American Depositary Receipt (included in exhibit 4.1). 4.3 Description of Securities Form 10-K 001-39522 4.3 02/28/2023 4.4 Form of Lender Warrant Form 8-K 001-39522 4.1 07/05/2023 4.5 Form of PIPE Investor Warrant Form 8-K 001-39522 4.1 08/16/2023 4.6 F orm of Pre-funded Warrant Form 8-K 001-39522 4.1 01/10/2025 177 Table of Contents 4.7 F orm of ADS Warrant Form 8-K 001-39522 4.2 01/10/2025 10.1 Investment and shareholders’ agreement by and between COMPASS Rx Limited and the shareholders named therein, dated April 17, 2020 and amended and restated on August 7, 2020. Form F-1 333-248484 10.1 8/28/2020 10.2# 2020 Employee Share Option and Incentive Plan with Non-Employee Sub-Plan and U.S. Sub-Plan, as amended. Form F-1/A 333-248484 10.2 9/14/2020 10.3# 2020 Employee Share Purchase Plan Form F-1/A 333-248484 10.3 9/14/2020 10.4 Form of Deed of Indemnity between COMPASS Pathways plc and each of its Directors and Officers. Form F-1/A 333-248484 10.6 9/14/2020 10.5# Form of Non-Qualified Share Option Agreement for Company Employees under the 2020 Share Option and Incentive Plan. Form 8-K 001-39522 10.2 02/04/2022 10.6# Restricted share unit award agreement for company employees under the COMPASS Pathways plc 2020 Share Option and Incentive Plan Form 10-K 001-39522 10.12 02/28/2023 10.7# Employment Agreement with Matthew Owens 10-K 001-39522 10.20 02/24/2022 10.8 Service Agreement by and between Movassate Family Trust and COMPASS Pathways Inc dated August 3, 2021 10-K 001-39522 10.22 02/24/2022 10.9 Master Research Collaboration Agreement by and among COMPASS Pathfinder Limited, King’s College London and South London and Maudsley NHS Foundation Trust, dated March 22, 2022 10-Q 001-39522 10.1 05/10/2022 10.10# Employment Agreement dated August 1, 2022 by and between COMPASS Pathways plc and Kabir Nath. 8-K 001-39522 10.1 07/19/2022 10.11# Form of Inducement Award Non-Qualified Share Option Agreement. 10-Q 001-39522 10.3 8/04/2022 10.12 License Agreement between Fora Space Limited and COMPASS Pathfinder Limited dated April 4, 2023. 10-Q 001-39522 10.1 05/11/2023 10.13† Loan and Security Agreement, dated as of June 30, 2023, by and among the COMPASS Pathways plc, and is entered into by and among COMPASS Pathways plc and its subsidiaries, the lenders party thereto and Hercules Capital, Inc., in its capacity as administrative agent and collateral agent. 8-K 001-39522 10.1 07/05/2023 10.14 Securities Purchase Agreement, dated August 16, 2023, by and among the Company and the Purchasers. 8-K 001-39522 10.1 08/16/2023 10.15 Lease Agreement between Azul NYC LLC and COMPASS Pathways, Inc. dated September 28, 2023. 10-Q 001-39522 10.2 11/2/2023 10.16# Employment Agreement dated May 7, 2020 by and between Compass Pathways and Mary-Rose Hughes, as amended 10-K 001-39522 10.24 02/29/2024 10.17# Employment Agreement dated December 6, 2023, by and between Compass Pathways and Teri Loxam. 8-K 001-39522 10.1 12/07/2023 10.18# Amendment to Employment Agreement dated August 1, 2023 by and between Kabir Nath and Compass Pathways, Inc. dated August 1, 2023 10-K 001-39522 10.26 02/29/2024 10.19# Employment Agreement with Matthew Owens, as amended effective March 6, 2024 10-Q 001-39522 10.1 05/08/2024 10.20# Employment Agreement dated April 15, 2024 with Kabir Nath 10-Q 001-39522 10.2 05/08/2024 178 Table of Contents 10.21* First Amendment dated October 30, 2024 to the Loan and Security Agreement, dated as of June 30, 2023, by and among the COMPASS Pathways plc, and its subsidiaries, the lenders party thereto and Hercules Capital, Inc., in its capacity as administrative agent and collateral agent 10.22#* Settlement Agreement with Matthew Owens dated December 19, 2024 19.1* C ompass Pathways plc I nsider Trading Policy 21.1 Subsidiaries of COMPASS Pathways plc. Form F-1 333-248484 21.1 8/28/2020 23.1* Consent of PricewaterhouseCoopers LLP, an Independent Registered Public Accounting Firm 31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)-14(a)/15d-14(a), by Principal Executive Officer 31.2* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)-14(a)/15d-14(a), by Principal Finance Officer 32.1** Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Principal Executive Officer and Principle Financial Officer 97.1 Compass Pathways plc Compensation Recovery Policy 10-K 001-39522 97.1 2/29/2024 101.INS* XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). _________________ # Indicates a management contract or any compensatory plan, contract or arrangement. † Certain confidential portions (indicated by brackets and asterisks) have been omitted from this exhibit pursuant to Item 601(b)(10)(iv). The Company undertakes to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request. * Filed herewith ** The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. 179 Table of Contents ITEM 16. FORM 10-K SUMMARY Not applicable. INDEX TO THE FINANCIAL STATEMENTS Consolidated Financial Statements of Compass Pathways Plc INDEX TO ANNUAL CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID 876 ) F- 1 Consolidated Balance Sheets F- 3 Consolidated Statements of Operations and Comprehensive Loss F- 4 Consolidated Statements of Shareholders’ Equity F- 5 Consolidated Statements of Cash Flows F- 6 Notes to Consolidated Financial Statements F- 8 180 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Compass Pathways plc Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Compass Pathways plc (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, of shareholders’ equity, and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Benefit from Research and Development Tax Credit As disclosed in Notes 2 and 3 to the consolidated financial statements, the Company’s balance of UK research and development (“R&D”) tax credit was $20.7 million. As a company that carries out extensive R&D activities, the Company benefits from the UK R&D tax credit regime under the scheme for small or medium-sized enterprises (“SME’s”). Under the SME regime, the Company is able to surrender some of its trading losses that arise from qualifying R&D activities for a cash rebate of a portion of such qualifying R&D expenditure. As disclosed by management, they evaluate each reporting period which UK R&D tax credit programs they expect to be eligible for, that they plan to submit a claim for and have reasonable assurance that the amount will ultimately be realized. For the year ended December 31, 2024 management believes that the Company meets the R&D intensity condition and has therefore calculated its R&D tax credit at the enhanced rate on the basis that it is research intensive. F-1 Table of Contents The principal consideration for our determination that performing procedures relating to benefit from research and development tax credit is a critical audit matter is a high degree of auditor effort in performing procedures and evaluating audit evidence related to the benefit from R&D tax credit. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, (i) evaluating management’s assessment of the nature of the activities performed by the Company and their qualification for the R&D tax credit program available for SME’s, (ii) testing the underlying expenditure and the appropriateness of management’s allocation of qualifying expenses, including determining the amount expected to be realized based on relevant criteria outlined in the tax credit program, and (iii) evaluating the appropriateness of management’s assessment as to whether the Company qualifies to claim under the R&D intensive scheme at an enhanced rate. /s/ PricewaterhouseCoopers LLP Reading, United Kingdom February 27, 2025 We have served as the Company's auditor since 2018. F-2 Table of Contents COMPASS PATHWAYS PLC Consolidated Balance Sheets (in thousands, except share and per share amounts) (expressed in U.S. Dollars, unless otherwise stated) December 31, 2024 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 165,081 $ 220,198 Restricted cash 389 440 Prepaid expenses and other current assets 35,821 40,658 Total current assets 201,291 261,296 NON-CURRENT ASSETS: Operating lease right-of-use assets 2,006 4,306 Deferred tax assets 3,774 3,336 Long-term prepaid expenses and other assets 6,595 7,049 Total assets $ 213,666 $ 275,987 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 12,283 $ 5,892 Accrued expenses and other liabilities 14,495 11,301 Debt, current portion 5,513 — Operating lease liabilities - current 1,725 2,411 Total current liabilities 34,016 19,604 NON-CURRENT LIABILITIES Debt, non-current portion 24,652 28,757 Operating lease liabilities - non-current 303 1,882 Total liabilities 58,971 50,243 Commitments and contingencies (Note 12) SHAREHOLDERS' EQUITY: Ordinary shares, £ 0.008 par value; 68,552,215 and 61,943,471 shares authorized, issued and outstanding at December 31, 2024 and 2023, respectively 702 635 Additional paid-in capital 704,919 621,645 Accumulated other comprehensive loss ( 16,194 ) ( 16,926 ) Accumulated deficit ( 534,732 ) ( 379,610 ) Total shareholders' equity 154,695 225,744 Total liabilities and shareholders' equity $ 213,666 $ 275,987 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents COMPASS PATHWAYS PLC Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share amounts) (expressed in U.S. Dollars, unless otherwise stated) Year Ended December 31, 2024 2023 OPERATING EXPENSES: Research and development $ 119,039 $ 87,518 General and administrative 59,166 49,401 Total operating expenses 178,205 136,919 LOSS FROM OPERATIONS: ( 178,205 ) ( 136,919 ) OTHER INCOME (EXPENSE), NET: Benefit from R&D tax credit 21,097 12,875 Interest income 8,268 4,623 Foreign exchange (losses) gains ( 1,032 ) 3,686 Interest expense ( 4,479 ) ( 2,204 ) Other income 823 255 Total other income, net 24,677 19,235 Loss before income taxes ( 153,528 ) ( 117,684 ) Income tax expense ( 1,594 ) ( 780 ) Net loss ( 155,122 ) ( 118,464 ) Net loss per share attributable to ordinary shareholders—basic and diluted $ ( 2.30 ) $ ( 2.32 ) Weighted average ordinary shares outstanding—basic and diluted 67,482,902 51,028,024 Net loss ( 155,122 ) ( 118,464 ) Other comprehensive income (loss): Foreign exchange translation adjustment 732 ( 59 ) Comprehensive loss ( 154,390 ) ( 118,523 ) The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents COMPASS PATHWAYS PLC Consolidated Statements of Shareholders’ Equity (in thousands, except share and per share amounts) (expressed in U.S. Dollars, unless otherwise stated) ORDINARY SHARES DEFERRED SHARES ADDITIONAL PAID-IN CAPITAL ACCUMULATED OTHER COMPREHENSIVE LOSS ACCUMULATED DEFICIT TOTAL SHAREHOLDERS' EQUITY £ 0.008 PAR VALUE £ 21,921.504 PAR VALUE SHARES AMOUNT SHARES AMOUNT AMOUNT AMOUNT AMOUNT AMOUNT Balance at December 31, 2022 42,631,794 $ 440 1 $ 28 $ 458,825 $ ( 16,867 ) $ ( 261,146 ) $ 181,280 Issuance of ordinary shares under ATM facility, net of issuance costs 2,937,622 29 — — 28,091 — — 28,120 Issuance of ordinary shares under PIPE offering, net of issuance costs 16,076,750 163 — — 116,652 — — 116,815 Issuance of warrants to purchase ordinary shares — — — — 687 — — 687 Exercise of share options 166,801 2 — — — — — 2 Issuance of ordinary shares to settle vested restricted stock units 78,022 1 — — ( 1 ) — — — Cancellation of deferred share — — ( 1 ) ( 28 ) 28 — — — Issuance of ordinary shares under employee share purchase plan 52,482 — — — 351 — — 351 Shares tendered for withholding taxes — — — — ( 265 ) — — ( 265 ) Share-based compensation expense — — — — 17,277 — — 17,277 Unrealized loss on foreign currency translation — — — — — ( 59 ) — ( 59 ) Net loss — — — — — — ( 118,464 ) ( 118,464 ) Balance at December 31, 2023 61,943,471 $ 635 — $ — $ 621,645 $ ( 16,926 ) $ ( 379,610 ) $ 225,744 Issuance of ordinary shares under ATM facility, net of issuance costs 2,509,798 25 — — 26,194 — — 26,219 Issuance of warrants to purchase ordinary shares 3,752,050 38 — — 37,220 — — 37,258 Exercise of share options 189,214 2 — — 219 — — 221 Issuance of ordinary shares to settle vested restricted stock units 83,527 1 — — ( 1 ) — — — Issuance of ordinary shares under employee share purchase plan 74,155 1 — — 364 — — 365 Shares tendered for withholding taxes — — — — ( 239 ) — — ( 239 ) Share-based compensation expense — — — — 19,517 — — 19,517 Unrealized gain on foreign currency translation — — — — — 732 — 732 Net loss — — — — — — ( 155,122 ) ( 155,122 ) Balance at December 31, 2024 68,552,215 $ 702 — $ — $ 704,919 $ ( 16,194 ) $ ( 534,732 ) $ 154,695 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents COMPASS PATHWAYS PLC Consolidated Statements of Cash Flows (in thousands) (expressed in U.S. Dollars, unless otherwise stated) Year Ended December 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 155,122 ) $ ( 118,464 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 233 242 Non-cash interest 1,408 636 Loss on disposal of property and equipment — 40 Non-cash loss (gain) on foreign currency remeasurement 755 ( 2,617 ) Non-cash share-based compensation 19,517 17,277 Non-cash lease expenses 2,300 2,027 Changes in operating assets and liabilities Prepaid expenses and other current assets 3,220 10,458 Deferred and prepaid tax assets 686 ( 1,661 ) Long-term prepaid expenses and other assets 135 ( 5,842 ) Operating lease liabilities ( 2,265 ) ( 1,959 ) Accounts payable 6,590 864 Accrued expenses and other liabilities 3,357 1,623 Net cash used in operating activities ( 119,186 ) ( 97,376 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment — ( 66 ) Proceeds from disposal of property and equipment — 2 Net cash used in investing activities — ( 64 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of ordinary shares, net of issuance costs 26,219 144,935 Proceeds from the exercise of warrants 37,258 — Proceeds from the issuance of shares under the employee share purchase plan 365 351 Payments of withholding tax on stock award ( 239 ) ( 265 ) Net proceeds from issuance of long-term debt — 29,585 Payment of issuance cost of long-term debt — ( 778 ) Proceeds from exercise of share options 221 2 Net cash provided by financing activities 63,824 173,830 Effect of exchange rate changes on cash, cash equivalents and restricted cash 194 867 Net (decrease)/increase in cash, cash equivalents and restricted cash ( 55,168 ) 77,257 Cash, cash equivalents and restricted cash, beginning of the period 220,638 143,381 Cash, cash equivalents and restricted cash, end of the period $ 165,470 $ 220,638 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 3,070 $ 1,254 Cash paid for taxes $ 1,121 $ 2,442 In 2023, the Company received $ 124.9 million in gross proceeds for the PIPE offering, of which $ 8.1 million was paid for issuance costs and the net proceeds of $ 116.8 million has been included in the proceeds from issuance of ordinary shares, net of issuance costs within the cash flows from financing activities. F-6 Table of Contents The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of each of the periods, shown above: Year Ended December 31, 2024 2023 Cash and cash equivalents $ 165,081 $ 220,198 Short-term restricted cash 389 440 Total cash, cash equivalents and restricted cash $ 165,470 $ 220,638 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents COMPASS PATHWAYS PLC Notes to Consolidated Financial Statements 1. Nature of Business Compass Pathways plc, or the Company, is a biotechnology company dedicated to accelerating patient access to evidence-based innovation in mental health. The Company is developing its investigational COMP360 psilocybin treatment through late-stage clinical trials in Europe and North America for patients with treatment-resistant depression. The Company is subject to risks and uncertainties common to clinical stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary intellectual property and technology, compliance with government regulations and the ability to secure additional capital to fund operations. Therapeutic candidates currently under development will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s therapeutic development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from sales. The Company has funded its operations with proceeds from the sale of its ordinary shares, American Depository Shares, or ADSs, including in its offerings pursuant to its at-the-market, or ATM, offering program, proceeds from a loan agreement with Hercules Capital, Inc., and proceeds from a private placement transaction, or the PIPE. The Company is party to a Sales Agreement for its ATM offering program, dated October 8, 2021, with TD Securities (USA) LLC, or TD Cowen, under which the Company may issue and sell from time to time up to $ 150.0 million of its ADSs, each representing one ordinary share, through TD Cowen as the sales agent. Sales of the Company’s ADSs, if any, will be made at market prices. Since the establishment of the ATM offering program, t hrough December 31, 2024, the Company sold 5,491,836 ADSs under the ATM offering program, resulting in $ 54.8 million in net proceeds. On June 30, 2023, the Company entered into a Loan Agreement with Hercules, which provided for aggregate maximum borrowings of up to $ 50.0 million, including a term loan of $ 30.0 million, which was funded on June 30, 2023. On August 16, 2023, the Company entered into a Securities Purchase Agreement, pursuant to which the Company agreed to sell and issue in a private placement transaction (i) 16,076,750 ADSs and (ii) PIPE Warrants to purchase up to 16,076,750 ADSs, at a purchase price of approximately $ 7.78 per ADS and accompanying PIPE Warrant to purchase one ADS. Each PIPE Warrant has an exercise price of $ 9.93 per ADS and is exercisable for a three year period beginning in February 2024. The PIPE Warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares underlying the PIPE Warrants. Through December 31, 2024, PIPE Warrants were exercised for 3,752,050 ADS, resulting in $ 37.3 million in exercise proceeds. The Company will receive up to an additional approximately $ 122.4 million in gross proceeds if the PIPE Warrants are fully exercised. The Company has incurred recurring losses since its inception, including net losses of $ 155.1 million and $ 118.5 for the years ended December 31, 2024 and 2023, respectively. In addition, as of December 31, 2024, the Company had an accumulated deficit of $ 534.7 million. The Company expects to continue to generate operating losses for the foreseeable future. The Company believes the cash and cash equivalents on hand as of December 31, 2024 of $ 165.1 million, together with the net proceeds raised to date during the first quarter of 2025 of $ 140.4 million, will be sufficient to fund its operating expenses and capital expenditure requirements at least through the planned 26-week data read-out from our COMP006 study, which is expected in the second half of 2026 . The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company’s inability to raise capital as and when needed have a negative impact on its financial condition and ability to pursue its business strategies. There can be no assurance that the current operating plan will be achieved or that additional funding will be available on terms acceptable to the Company, or at all. The Company may raise additional capital through a combination of equity offerings, debt financings, collaborations, and other strategic transactions, including marketing, distribution or licensing arrangements. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations, and financial conditions. Market volatility, geopolitical tensions resulting from the ongoing war between Ukraine and Russia, conflict in the Middle East, fluctuating inflation and interest rates and the related impact on U.S., UK and global economies, instability in the banking system, the risk of economic slowdown or recession in the U.S., the potential for significant changes in U.S. policies F-8 Table of Contents or regulatory environment or other factors could adversely impact the Company’s operations, financial results and ability to raise additional funding . 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated on consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting periods. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ materially from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. The Company does not currently have any material cash equivalents. Restricted Cash Restricted cash as of December 31, 2024 and 2023 represents a collateral deposit for employee credit cards. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the inputs for the first two are considered observable and the inputs for the last are considered unobservable: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques The carrying amounts reflected in the consolidated balance sheets for the Company’s cash and cash equivalents, restricted cash, other current assets, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The carrying value of the Company’s outstanding debt approximates fair value, reflecting interest rates currently available to the Company. F-9 Table of Contents Concentration of Credit Risk Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents. The Company places cash and cash equivalents in diversified and established financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Company has cash and cash equivalents in excess of the FDIC insured limit. The Company has no significant off-balance-sheet risk or concentration of credit risk, such as foreign exchange contracts, options contracts, or other foreign hedging arrangements. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets, which are as follows: Estimated Useful Life Lab equipment 5 years Office equipment 3 - 5 years Furniture and fixtures 3 years Leasehold improvements Shorter of useful life or remaining lease term Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the consolidated statements of operations and comprehensive loss. Expenditures for repairs and maintenance are charged to expenses as incurred. Impairment of Long-Lived Assets The Company evaluates assets for potential impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value. The Company has not recognized any impairment losses or had triggering events related to its underlying assets for the years ended December 31, 2024 and 2023. Segment Information In November 2023, the FASB issued ASU 2023-07 - Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which improved segment disclosure requirements, primarily through enhanced disclosure requirements for significant segment expenses. The improved disclosure requirements apply to all public entities that are required to report segment information, including those with only one reportable segment. The Company has adopted the guidance for the fiscal year ended December 31, 2024. Operating segments are identified as components of an entity that meet all of the following criteria: i) engage in business activities from which it may incur expenses; ii) operating results are regularly reviewed by the chief operating decision maker, to allocate resources and assess performance; iii) discrete financial information is available. The Company’s chief operating decision maker ("CODM"), is the Chief Executive Officer. The Company views its operations and manages its business as one operating segment. The CODM uses ‘total operating expenses,’ research and development and general and administrative ‘expenses by category,’ ‘loss before income taxes’ and ‘total assets’ to assess performance and decide how to allocate resources. The CODM also uses ‘total operating expenses’ ‘expenses by category’ and ‘loss before income taxes’ to monitor budget versus actual results to assess performance. Loss before income taxes is reported on the consolidated statements of operations and comprehensive loss. The measure of assets is reported on the consolidated balance sheets as total assets. As the Company operates in one operating segment, all required financial segment information can be found in these consolidated financial statements. All additional disclosures can be found in Note 13 below. F-10 Table of Contents Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries, share-based compensation and benefits, travel, and external costs of outside vendors engaged to conduct clinical development activities, clinical trials and the cost to manufacture clinical trial materials. Research Contract Costs, Prepayments and Accruals The Company has entered into various research and development-related contracts with research institutions and other companies. These agreements are generally cancellable, and related payments are recorded as research and development expenses as incurred. The Company records prepayments and accruals for estimated ongoing research costs and receives updated estimates of costs and amounts owed on a monthly basis from its third-party service providers. When evaluating the adequacy of the prepayments and accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted cost estimates from third-party service providers. Estimates are made in determining the prepaid and accrued balances at the end of any reporting period. The Company considers any prepayment that is more than 12 months in advance of the associated expense to be long-term. Actual results could differ from the Company’s estimates. The Company’s historical prepayments and accrual estimates have not been materially different from the actual costs. Share-Based Compensation The Company accounts for all share-based payment awards granted to employees and non-employees as share-based compensation expense at fair value. The Company grants equity awards under its share-based compensation programs, which may include share options and restricted share units. The measurement date for employee and non-employee awards is the date of grant, and share-based compensation costs are recognized as an expense over the requisite service period, which is the vesting period, on a straight-line basis. Share-based compensation expense is classified in the accompanying consolidated statements of operations and comprehensive loss based on the function to which the related services are provided. The Company recognizes share-based compensation expense for the portion of awards that have vested. Forfeitures are recorded as they occur. On October 1, 2021, the Company launched the Share Incentive Plan, or the SIP, and Employee Share Purchase Plan, or the ESPP, through which employees can purchase shares at a discounted price. The Company estimates the fair value of stock options and shares to be issued under the SIP and ESPP using the Black-Scholes option-pricing model on the date of grant. The fair value of shares to be issued under these plans are recognized and amortized on a straight-line basis over the purchase period, which is generally six months. There have been no performance or market conditions attached to the share options granted by the Company to date. The fair value of each share option grant is estimated on the date of grant using the Black-Scholes option pricing model. See Note 8 for the Company’s assumptions used in connection with option grants made during the periods covered by these consolidated financial statements. Assumptions used in the option pricing model include the following: Expected volatility . The Company lacks sufficient company-specific historical and implied volatility information for its ordinary shares. Therefore, it estimates its expected share volatility using a blended rate of: (1) historical volatility of publicly traded peer companies and (2) the Company’s historical volatility since being publicly traded since September 2020. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. Expected term. The expected term of the Company’s share options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The Company utilizes this method due to the lack of historical exercise data and the plain nature of its share-based awards. Risk-free interest rate . The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods that are approximately equal to the expected term of the award. Expected dividend. Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and does not expect to pay any cash dividends in the foreseeable future. In addition, the Loan Agreement with Hercules currently prohibits dividends that may be declared or paid on our ordinary shares. F-11 Table of Contents Fair value of ordinary shares. The fair value of ordinary shares is determined by reference to the closing price of ADSs on the Nasdaq Global Select Market on the day prior to or day of the grant. Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheets as right-of-use assets and current and non-current lease liabilities, as applicable. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets and to allocate all the contract consideration to the lease component only. All the Company’s leases are classified as operating leases. Lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the lease. As the Company’s leases do not typically provide an implicit rate, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. As the Company does not have a rating agency-based credit rating, quotes were obtained from lenders to establish an estimated secured rate to borrow based on Company and market-based factors as of the respective lease measurement dates. The Company has elected not to recognize leases with an original term of one year or less on the consolidated balance sheets. The Company typically only includes the non-cancelable lease term in its assessment of a lease arrangement unless there is an option to extend the lease that is reasonably certain of exercise. Prospectively, the Company will adjust the right-of-use assets for straight-line rent expense or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date. Operating lease costs are recognized on a straight-line basis over the lease term, and they are categorized within research and development and general and administrative expenses in the consolidated statements of operations and comprehensive loss. The operating lease cash flows are categorized under net cash used in operating activities in the consolidated statements of cash flows. Foreign Currency Translation The functional currency is the currency of the primary economic environment in which an entity’s operations are conducted. On January 1, 2023, Compass Pathways plc and its wholly owned subsidiary Compass Pathfinder Holdings Limited changed their functional currency to the U.S. dollar. Compass Pathways plc and Compass Pathfinder Holdings Limited have no operating activities and their primary functions are to serve as a financing vehicle to fund the operations of the Company’s operating entities, to serve as the listing company needed to access U.S. capital markets, and to hold investments. Therefore, its financing source is the primary indicator of its cash flows and its functional currency. The change in functional currency from the British Pound Sterling was due to a change in the source of the Company’s financing and cash flows going forward, which is primarily U.S. Dollars (“USD”). The functional currency of Compass Pathfinder Holdings Limited’s wholly owned non-U.S. subsidiary, Compass Pathfinder Limited, is British Pound Sterling and the functional currency of its U.S. subsidiary, Compass Pathways Inc. is USD. The functional currency of these subsidiaries is the same as the local currency. The translated balances of monetary and non-monetary assets and liabilities recorded in the reporting entity’s consolidated financial statements as of the end of the prior reporting period become the new accounting basis for those assets and liabilities in the period of the change. To the extent that the distinct and separable operation has monetary assets and liabilities denominated in the old functional currency, such balances will create transaction gains and losses subsequent to the change in functional currency. The balance recorded in the cumulative translation reserve, included within accumulated other comprehensive loss, in the consolidated balance sheets for prior periods is not reversed upon the change in functional currency. The Company translates the assets and liabilities of Compass Pathfinder Limited into USD at the exchange rate in effect on the balance sheet date. Income and expenses are translated at the average exchange rate in effect during the period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the consolidated statements of shareholders’ equity as a component of accumulated other comprehensive loss. F-12 Table of Contents Corporate Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in its tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that deferred tax assets will be recovered in the future to the extent management believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed as the amount of benefit to recognize in the consolidated financial statements. The amount of benefit that may be used is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate, as well as the related net interest and penalties. As of December 31, 2024 and 2023, the Company has not identified any material uncertain tax positions. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations and comprehensive loss. As of December 31, 2024 and 2023 no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheets. Benefit from Research and Development Tax Credit As a company that carries out extensive research and development (“R&D”) activities, the Company benefits from the UK R&D tax credit regime under the scheme for small or medium-sized enterprises, (“SME’s”). Under the SME regime, the Company is able to surrender some of its trading losses that arise from qualifying R&D activities for a cash rebate of a portion of such qualifying R&D expenditure. Up until April 1, 2023 the effective rate was 33.3% on in-house expenditures and 21.7% on work that was contracted out (to unconnected subcontractors). On and after April 1, 2023, the effective rates reduced to 18.6% and 12.1%, respectively. New rules were introduced by the Finance Act 2024 for an enhanced effective rate of relief for loss making research intensive SMEs, which are approximately 27.0% for qualifying in-house expenditures and approximately 17.5% for qualifying subcontracted expenditures (to unconnected subcontractors). To be eligible as a research intensive company (the R&D intensity condition), the qualifying R&D expenditure for tax purposes must be at least 40% of the aggregate expenditure across the consolidated group. The threshold has decreased from 40% to 30% from January 1, 2025. Aggregate expenditure is defined as being brought into account in calculating the profits for the period of any trade carried on by the company, but payments between connected companies can be excluded to avoid double counting. For the year ended December 31, 2023 as a result of an intercompany loan between two group companies, a large exchange loss was generated in one company and a corresponding gain in the other. There is uncertainty over the ability to net off this exchange gain and loss when calculating aggregate expenditure, which is not covered by HMRC guidance. The outcome of this will determine whether the Company can claim the enhanced rate of relief as a research intensive company. Confirmation of the position has been sought from HMRC under a non-statutory clearance application and the Company is awaiting a response. For the year ended December 31, 2023, the Company has accounted for its R&D tax credit on the basis that it was not research intensive. For the year ended December 31, 2024 the Company believes that it would meet the R&D intensity condition regardless of whether it can net off the exchange gains and losses arising from the intercompany loan, and has therefore calculated its R&D tax credit at the enhanced rate on the basis that it is research intensive. F-13 Table of Contents The enhanced rate for a payable credit is 14.5% compared to the standard rate of 10%, which when applied to qualifying expenditure enhanced by 86% to 186%, gives an effective rate of 27% on qualifying in house expenditure and 17.5% for qualifying subcontracted expenditure (to unconnected subcontractors). The Company currently meets the conditions of the SME regime. A large portion of costs relating to R&D, clinical trials and clinical manufacturing activities are eligible for inclusion within these tax credit cash rebate claims. The Company is subject to corporation tax in the UK. Due to the nature of the business, the Company has generated losses since inception. The benefit from R&D tax credits is recognized in the consolidated statements of operations and comprehensive loss as a component of other income, net, and represents the sum of the R&D tax credits recoverable in the UK. The UK R&D tax credit is fully refundable to the Company and is not dependent on current or future taxable income. As a result, the Company has recorded the entire benefit from the UK R&D tax credit as a benefit which is included in net loss before income tax and accordingly, not reflected as part of the income tax provision. If, in the future, any UK R&D tax credits generated are needed to offset a corporation tax liability in the UK, that portion would be recorded as a benefit within the income tax provision and any refundable portion not dependent on taxable income would continue to be recorded within other income, net. For accounting periods starting on or after April 1, 2024, the SME and RDEC regimes have been merged, which will impact us for the first time from January 1, 2025. Under this new merged regime, for non-research intensive companies, the effective net credit will be 16.2% for in-house expenditure, and 10.5% for subcontracted expenditure (paid to unconnected subcontractors), but this merged regime will apply to both SME and large companies. An enhanced rate of relief is available for research intensive companies, which is approximately 27.0% for qualifying expenditure and approximately 17.5% for qualifying subcontracted expenditure, but as well as meeting the R&D intensity condition, the Company must be a loss making SME. The Company may not be able to continue to claim enhanced R&D tax credits under the research intensive regime in the future depending on its rate of growth such that it is no longer an SME or because of the profile of its expenditure. Having qualified as a research intensive company in the current year, even if the R&D expenditure threshold is not met in the subsequent year, while the company remains an SME and loss making, it will continue to be eligible for the enhanced rate unless it fails the test for a second consecutive year. There is a cap on repayable credits to a multiple of payroll taxes (broadly, to a maximum payable credit equal to £20,000 plus three times the total PAYE and NICs liability of the company) subject to an exemption which prevents the cap from applying. That exemption requires the company to be creating, taking steps to create or managing intellectual property, as well as having qualifying R&D expenditure in respect of connected parties which does not exceed 15% of the total claimed. If the exemption does not apply, this could restrict the amount of payable credit that we claim. SME R&D reliefs (whether by way of additional deductions or payable tax credits) are also on a per project basis and each project is limited to a maximum cap of €7.5 million. From January 1, 2025, the cap will no longer be applicable. Unsurrendered UK losses may be carried forward indefinitely to be offset against future taxable profits, subject to numerous utilization criteria and restrictions. The amount that can be offset each year is limited to £ 5.0 million plus an incremental 50 % of UK taxable profits. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in shareholders’ equity that result from transactions and economic events other than those with shareholders. For the years ended December 31, 2024 and 2023, the only component of accumulated other comprehensive loss is foreign currency translation adjustment. F-14 Table of Contents Net Loss per Share The Company has reported losses since inception and has computed basic net loss per share attributable to ordinary shareholders by dividing net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, without consideration for potentially dilutive securities. The Company computes diluted net loss per ordinary share after giving consideration to all potentially dilutive ordinary shares, including unvested restricted shares, outstanding options and warrants. Because the Company has reported net losses since inception, these potential ordinary shares have been anti-dilutive and basic and diluted loss per share were the same for all periods presented. Long-term Debt On June 30, 2023, the Company entered into the Loan Agreement with Hercules. The Company assessed all terms and features of the Loan Agreement in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the debt. The Company determined that all features of the Loan Agreement are clearly and closely associated with a debt host and, as such, do not require separate accounting as a derivative liability. Debt issuance costs consist of costs incurred in obtaining long-term financing. These costs are classified on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability. These expenses are deferred and amortized as part of interest expense in the consolidated statements of operations and comprehensive loss using the effective interest rate method over the term of the debt agreement. Warrants On June 30, 2023, the Company entered into a warrant agreement with Hercules. The Company assessed all terms and features of the Warrant Agreement in order to determine accounting classification of the warrants as equity or liability. As part of this analysis, the Company determined it appropriate to account for the warrants issued under the Loan Agreement as equity. On August 18, 2023, in connection with the PIPE, the Company issued and sold PIPE Warrants to purchase up to 16,076,750 ADSs, each representing one ordinary share, at an exercise price of $ 9.93 per ADS. The PIPE Warrants are exercisable for a three year period beginning in February 2024. The Company assessed all terms and features of the PIPE Warrant Agreement in order to determine accounting classification of the warrants as equity or liability. As part of this analysis, the Company determined it appropriate to account for the PIPE Warrants as equity. The Company measured warrants at inception at fair value using the Black-Scholes valuation model. Assumptions used in the warrant pricing model include the following: Expected volatility . The Company lacks sufficient company-specific historical and implied volatility information for its ordinary shares. Therefore, it estimates its expected share volatility using a blended rate of: (1) historical volatility of publicly traded peer companies and (2) the Company’s historical volatility since being publicly traded since September 2020. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. Expected term. The expected term of the Hercules warrants is ten years . The expected term of the PIPE Warrants is three and a half years. Risk-free interest rate . The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of the issuance for time periods that are approximately equal to the expected term of the warrant. Expected dividend. Expected dividend yield of zero is based on the fact that the Company has never paid cash dividends on ordinary shares and does not expect to pay any cash dividends in the foreseeable future. In addition, the Loan Agreement with Hercules currently prohibits, and any future debt financing arrangements may contain terms prohibiting or limiting the number of dividends that may be declared or paid on our ordinary shares. Fair value of ordinary shares. The fair value of the warrants is determined by reference to the closing price of ADSs on the Nasdaq Global Select Market on the day of issuance. F-15 Table of Contents Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures, designed to improve income tax disclosure requirements, primarily through increased disaggregation disclosures within the effective tax rate reconciliation as well as enhanced disclosures on income taxes paid. The guidance is effective for all fiscal years beginning after December 15, 2024. The new standard can be adopted on a prospective basis with an option to be adopted retrospectively and early adoption is permitted. The Company is not early adopting the standard. We are currently evaluating this guidance to determine its impact on our consolidated financial statement disclosures. In November 2024, the FASB issued ASU 2024-03 - Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, designed to improve disclosures, primarily through increased expense disaggregation. The guidance is effective for all fiscal years beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The new standard can be adopted on a prospective basis with an option to be adopted retrospectively and early adoption is permitted. The Company is not early adopting the standard. We are currently evaluating this guidance to determine its impact on our consolidated financial statement disclosures. 3. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): December 31, 2024 2023 UK R&D tax credit $ 20,712 $ 27,877 Prepaid research and development 11,332 6,826 Prepaid income tax 197 1,123 VAT recoverable 1,109 1,052 Prepaid insurance premium 280 1,885 Other current assets 2,191 1,895 $ 35,821 $ 40,658 During the year ended December 31, 2024, the Company received $ 14.9 million and $ 13.6 million from the UK government for the 2022 and 2023 R&D tax credit, respectively. 4. Long-term Prepaid Expenses and Other Assets Long-term prepaid expenses and other assets consisted of the following (in thousands): December 31, 2024 2023 Prepaid research and development - long-term 5,737 5,955 Investment 469 469 Property and equipment 189 423 Other assets 200 202 $ 6,595 $ 7,049 F-16 Table of Contents 5. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): December 31, 2024 2023 Accrued compensation and benefit costs $ 7,914 $ 7,069 Accrued research and development expense 3,724 2,117 Accrued professional expenses 1,532 1,077 Income taxes payable — — Other liabilities 1,325 1,038 $ 14,495 $ 11,301 The costs associated with the strategic reorganization, during the fourth quarter of 2024, were not material. 6. Debt On June 30, 2023 (the “Effective Date”), the Company entered into the Loan Agreement with Hercules, which provided for aggregate maximum borrowings of up to $ 50.0 million, consisting of (i) a term loan of $ 30.0 million, which was funded on the Effective Date, (ii) subject to the Company achieving certain performance milestones and available until June 30, 2025, an additional term loan of $ 10.0 million, and (iii) subject to the approval of Hercules’ investment committee in its sole discretion, and available during the interest-only period, an additional term loan of $ 10.0 million. The term loan will mature on July 1, 2027. The outstanding principal balance of the term loan bears interest at an annual rate equal to the greater of either (i) the prime rate as reported in The Wall Street Journal plus 1.50 % or (ii) 9.75 %. Accrued interest is payable monthly following the funding of each term loan. In addition to accrued interest, payment-in-kind (PIK) interest of 1.40 % will be added to the balance of the loan. Payments under the Loan Agreement are interest only until the first principal payment is due on July 1, 2025 (or if the Borrowers achieve certain performance milestones, the interest only period may be extended to January 2, 2026 and, upon the achievement of certain additional performance milestones, the interest only period may be extended to July 1, 2026), followed by equal monthly payments of principal and interest through the scheduled maturity date, July 1, 2027. The Company incurred fees and transaction costs totaling $ 3.3 million associated with the initial term loan, which are recorded as a reduction to the carrying value of the long-term debt in the consolidated balance sheets. These fees included $ 0.4 million of facility fees, $ 0.8 million of company fees, $ 0.7 million in warrants, and $ 1.4 million of end of term charges. The fees, transaction costs, and the end of term charge are amortized to interest expense through the maturity date using the effective interest method. The effective interest rate of the Loan Agreement was 15.6 % as of December 31, 2024. The Company issued warrants to Hercules to purchase the Company’s Ordinary Shares equal to the quotient derived by dividing (i) the amount equal to (a) 2.5 % times (b) the aggregate principal amount of term loan advances made and funded under the Loan Agreement by (ii) the exercise price of the warrants. Upon receipt of the first term loan, 94,222 shares became exercisable to Hercules with a fair market value of $ 0.7 million. The Loan Agreement includes a financial covenant requiring us to maintain a minimum level of $ 22.5 million of cash during the period commencing on July 1, 2024 (subject to adjustment if certain performance milestones are met). If the Company meets the performance milestones, the minimum cash covenant will not apply if its market capitalization is at least $ 750.0 million. The Company was in compliance with all covenants of the Loan Agreement as of December 31, 2024. F-17 Table of Contents Long-term debt consisted of the following (in thousands): December 31, 2024 Term loan payable $ 30,000 End of term charge 1,425 Future principal payments and end of term charge $ 31,425 PIK interest payable 649 Unamortized debt issuance costs ( 1,909 ) Carrying value of long-term debt $ 30,165 Less: current portion ( 5,513 ) Non-current portion $ 24,652 Future principal payments, including End of Term Charge, are as follows (in thousands): Year ending December 31, 2025 6,587 Year ending December 31, 2026 14,172 Year ending December 31, 2027 10,666 Total $ 31,425 Interest expense associated with the Loan Agreement for the years ended December 31, 2024 and 2023 was $ 4.5 million and $ 2.2 million, respectively. 7. Shareholders’ Equity Ordinary Shares Each ordinary share entitles the holder to one vote on all matters submitted to a vote of the Company’s shareholders. Ordinary shareholders are entitled to receive dividends, if any, as may be declared by the board of directors. Through December 31, 2024 , no cash dividends had been declared or paid by the Company. On October 8, 2021, the Company entered into a Sales Agreement with Cowen and Company, LLC, or Cowen, under which the Company may issue and sell from time to time up to $ 150.0 million of its ADSs, each representing one ordinary share, through Cowen as the sales agent. Sales of the Company’s ADSs, if any, will be made at market prices. Through December 31, 2024, we sold 5,491,836 ADSs, resulting in $ 54.8 million in net proceeds. During the years ended December 31, 2024 and 2023 , the Company issued ordinary shares in the amount of 189,214 and 166,801 , respectively, to settle share options exercised by employees and non-employees. During the year ended December 31, 2024, a total of 107,644 restricted share units vested, of which 83,527 shares were issued and 24,117 shares were settled. During the year ended December 31, 2023, a total of 96,177 restricted share units vested, of which 69,120 shares were issued and 27,057 shares were settled. During the year ended December 31, 2023, a total of 78,022 ordinary shares were issued in settlement of restricted share units, of which 8,902 shares were vested and not issued at December 31, 2022. During the years ended December 31, 2024 and 2023 the Company issued in total 74,155 and 52,482 shares, respectively, under the employee share purchase plan. Deferred Shares Immediately prior to the completion of the Company’s IPO in September 2020, the different classes of issued share capital of Compass Pathways plc were reorganized by way of a reverse share split, which was retroactively restated in our consolidated financial statements. As part of this reverse share split, the nominal value of Compass Pathways plc’s ordinary shares changed from £ 0.001 per share to £ 0.008 per share and a single, non-voting deferred share with a nominal value of F-18 Table of Contents £ 21,921.504 in the capital of the Company was created and transferred to the Company. On June 28, 2023, the single deferred share was cancelled. Warrants On June 30, 2023, the Company entered into a Warrant Agreement with Hercules, which provides Hercules with the right to purchase a number of shares of the Company’s Ordinary Shares equal to the quotient derived by dividing (i) the amount equal to (a) 2.5 % times (b) the aggregate principal amount of term loan advances made and funded under the Loan Agreement by (ii) the exercise price. Upon receipt of each term loan, the Warrant will automatically become exercisable and will expire in 10 years (on June 30, 2033). On June 30, 2023, with the receipt of the first term loan, 94,222 shares became exercisable to Hercules with a fair market value of $ 0.7 million. On August 18, 2023, in connection with the PIPE, the Company issued and sold warrants to purchase up to 16,076,750 ADSs, each representing one ordinary share, at a purchase price of $ 9.93 per ADS. The PIPE Warrants became exercisable for a three year period beginning in February 2024. Through December 31, 2024, PIPE Warrants were exercised for 3,752,050 ADSs, resulting in $ 37.3 million in exercise proceeds. 8. Share-Based Compensation 2017 Equity Incentive Plan Under the Company’s historical shareholder and subscription agreements, the Company was authorized to issue restricted shares, restricted share units, as well as options, as incentives to its employees, non-employees and members of its board of directors. To the extent such incentives were in the form of share options, the options were granted pursuant to the terms of the 2017 Equity Incentive Plan, or the 2017 Plan. In July 2019, the Company’s board of directors adopted the 2017 Plan. The 2017 Plan provided for the grant of Enterprise Management Incentive, or EMI, options, to its UK employees, for the grant of options to its U.S. employees and non-employees of the Company. The 2017 Plan was administered by the board of directors. Options granted under the 2017 Plan, typically vest over a three or four-year service period with 33.3 % and 25 % respectively, of the award vesting on the first anniversary of the commencement date and the balance vesting monthly over the remaining years. Options granted under the 2017 Plan generally expire 10 years from the date of grant. Restricted share units granted under the 2017 Plan typically vest over a four-year service period with 25 % of the award vesting on the first anniversary of the commencement date and quarterly thereafter. The options granted on June 30, 2020 were subject to 25 % vesting upon the earlier occurrence of (i) the one year anniversary of the date of grant, or (ii) the date of the listing of the Company's ordinary shares on any stock exchange, followed by straight line vesting for three years for the remaining 75 % of the allocation until vested in full. The restricted share units granted on June 30, 2020 were subject to 25 % vesting upon the earlier of (i) the one year anniversary of the date of grant, or (ii) the first day following the six-month anniversary of the listing of the Company's ordinary shares on any stock exchange on which the closing price of the shares is 20 % higher than the listing price for at least five consecutive trading days. As of December 31, 2024, the Company was authorized to issue a total of 1,291,641 ordinary shares underlying outstanding options granted under the 2017 Plan prior to the IPO. 2020 Employee Share Purchase Plan The Company’s 2020 Employee Share Purchase Plan, or the ESPP, was adopted by the Board in September 2020 and approved by shareholders in September 2020 and became effective upon the effectiveness of the Company’s Registration Statement on Form F-1 in connection with the IPO. The ESPP initially reserved and authorized the issuance of up to a total of 340,053 ordinary shares to participating employees. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and each January 1 thereafter through termination of the 2020 Plan, by the lesser of (i) 1 % of the outstanding number of ordinary shares on the immediately preceding December 31, (ii) 510,080 ordinary shares or (iii) such lesser number of ordinary shares as determined by the plan administrator. The number of shares reserved under the ESPP is subject to change in the event of a share split, share dividend or other change in our capitalization. F-19 Table of Contents On October 1, 2021, the Company launched the SIP and the ESPP, through which employees can purchase shares at a discounted price. At the end of six months , shares will automatically be purchased at the lower of the opening and closing price of the shares for the saving period minus a 15 % discount. 2020 Share Option Plan In September 2020, the Company’s board of directors adopted, and the Company’s shareholders approved, the 2020 Share Option and Incentive Plan, or the 2020 Plan, which became effective upon the effectiveness of the Company’s Registration Statement on Form F-1 in connection with the IPO. The 2020 Plan allows the compensation and leadership development committee to make equity-based and cash-based incentive awards to the Company’s officers, employees, directors and other key persons (including consultants). Options granted under the 2020 Plan generally expire 10 years from the date of grant and typically vest over a 4 year service period with 25 % of the options vesting on the first anniversary of the commencement date and the balance vesting monthly over the remaining years. The Company initially reserved 2,074,325 of its ordinary shares for the issuance of awards under the 2020 Plan. The 2020 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2022, by up to 4 % of the outstanding number of ordinary shares on the immediately preceding December 31, or such lesser number of shares as determined by our compensation and leadership development committee. This number is subject to adjustment in the event of a sub-division, consolidation, share dividend or other change in our capitalization. The total number of ordinary shares that may be issued under the 2020 Plan is 7,938,129 shares as of December 31, 2024 , of which 768,108 shares remained available for future grant. The options granted in 2024 under the 2020 Plan to employees generally expire 10 years from the date of grant. There are three potential vesting terms for the 2024 grants including: (i) 25 % per year over four year service period, (ii) four year service period with 25 % of the vesting on the first anniversary of the commencement date and the balance vesting monthly over the remaining years; and (iii) monthly vesting over four year service period. 2022 Inducement Option Award During 2022, the Company granted a non-qualified share option to purchase up to 600,000 ordinary shares as an inducement grant to our chief executive officer. The non-qualified share option has a 10 year term and one-fourth vested on August 1, 2023 and the remaining three-fourths will vest in equal monthly installments over the following 36 months. The non-qualified share option has other terms that mirror those of non-qualified share options granted under the Company’s 2020 Plan and the Company’s standard form of non-qualified share option agreement. Restricted Share Units A summary of the changes in the Company’s unvested restricted share units during the year ended December 31, 2024 is as follows: Number of Shares Weighted Average Grant Date Fair Value Unvested and Outstanding as of December 31, 2023 320,203 $ 11.79 Granted 518,868 10.72 Vested ( 107,644 ) 11.72 Forfeited ( 72,874 ) 11.79 Unvested and Outstanding as of December 31, 2024 658,553 $ 10.96 As of December 31, 2024 and 2023, there was $ 5.5 million and $ 3.0 million of unrecognized compensation cost related to unvested restricted share units, respectively, which is expected to be recognized over a weighted-average period of 2.8 years and 2.6 years , respectively. The exercise price of restricted share units is at a nominal value less than £ 0.01 per share. F-20 Table of Contents Share Options The following table summarizes the Company’s share options activity for the year ended December 31, 2024: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2023 6,969,328 $ 13.14 7.73 $ 14,070 Granted 2,974,472 $ 9.34 Exercised ( 189,214 ) $ 1.14 Cancelled or forfeited ( 1,518,967 ) $ 13.30 Outstanding as of December 31, 2024 8,235,619 $ 12.01 6.95 $ 6,009 Exercisable as of December 31, 2024 4,827,397 $ 13.34 5.77 $ 4,782 Unvested as of December 31, 2024 3,408,222 $ 10.14 8.62 $ 1,227 The aggregate intrinsic value of options exercised during the years ended December 31, 2024, and 2023 was $ 1.2 million and $ 1.4 million, respectively. The aggregate intrinsic value of share options is calculated as the difference between the exercise price of the share options and the fair value of the Company’s ordinary shares for those share options that had exercise prices lower than the fair value of the Company’s ordinary shares. The weighted average grant-date fair value of share options granted was $ 7.00 and $ 7.70 per share during the years ended December 31, 2024 and 2023. As of December 31, 2024 and 2023, there was $ 25.5 million and $ 29.6 million of unrecognized compensation cost related to unvested share options, which is expected to be recognized over a weighted-average period of 2.4 years and 2.5 years , respectively. Share Option Valuation The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the share options granted to employees and directors during the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, 2024 2023 Expected option life (years) 5.1 years 5.7 years Expected volatility 86.05 % 87.33 % Risk-free interest rate 4.12 % 3.63 % Expected dividend yield — % — % Fair value of underlying ordinary shares $ 9.62 $ 10.32 Share-based Compensation Expense Share-based compensation expense recorded as research and development and general and administrative expenses is as follows (in thousands): Year Ended December 31, 2024 2023 Research and development 10,309 8,910 General and administrative 9,208 8,367 Total stock based compensation expense $ 19,517 $ 17,277 F-21 Table of Contents 9. Income Taxes Income (loss) before provision for income taxes consisted of the following (in thousands): Year Ended December 31, 2024 2023 United Kingdom ( 156,711 ) ( 120,320 ) Foreign 3,183 2,636 Loss before provision for income taxes ( 153,528 ) ( 117,684 ) The provision for income taxes for the years ended December 31, 2024 and 2023 was computed at the UK statutory income tax rate. The income tax provision for the years then ended comprised (in thousands): Year Ended December 31, 2024 2023 Current income tax provision United Kingdom $ — $ — Foreign 2,031 1,893 Total current expense: $ 2,031 $ 1,893 Deferred income tax benefit: United Kingdom — — Foreign ( 437 ) ( 1,113 ) Total deferred income tax benefit: $ ( 437 ) $ ( 1,113 ) Total provision for income taxes $ 1,594 $ 780 A reconciliation of income tax expense computed at the statutory UK corporation tax rate to income taxes as reflected in the consolidated financial statements is as follows (in thousands): Year Ended December 31, 2024 2023 Corporation tax at UK statutory rate $ ( 38,382 ) $ ( 27,656 ) Permanent differences 27 1 UK R&D tax credit 14,375 10,720 Change in valuation allowance 25,410 20,971 State income taxes 57 23 Deferred tax asset true-up 676 187 Return to provision ( 1,214 ) ( 2,259 ) Share-based compensation 774 33 Change in UK tax rate — ( 1,258 ) Other ( 129 ) 18 $ 1,594 $ 780 F-22 Table of Contents Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 consist of the following (in thousands): Year Ended December 31, 2024 2023 Net operating loss carryforward $ 84,927 $ 64,747 Reserves and accruals 647 564 Share-based compensation 18,205 14,159 Charitable contributions 126 36 Total deferred tax assets 103,905 79,506 Valuation allowance $ ( 100,090 ) $ ( 76,072 ) Depreciation ( 41 ) ( 98 ) Total deferred tax liabilities ( 41 ) ( 98 ) Net deferred tax assets $ 3,774 $ 3,336 As of December 31, 2024 and 2023, the Company had UK net operating loss carryforwards of approximately $ 339.7 million, and $ 252.3 million, respectively, that can be carried forward indefinitely. Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2024 and 2023 related primarily to the increases in net operating loss and were as follows (in thousands): Year Ended December 31, 2024 2023 Valuation allowance at beginning of year $ 76,072 $ 51,909 Increases recorded to income tax provision 25,411 20,971 Increases recorded to CTA ( 1,393 ) 3,192 Valuation allowance at end of year $ 100,090 $ 76,072 Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2024 and 2023, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance against its net UK deferred tax assets as of December 31, 2024 and 2023. The deferred tax asset recognized relates entirely to the US entity. The Company applies the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon the ultimate settlement with the relevant taxing authority. There were no material uncertain tax positions as of December 31, 2024 and 2023. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense when in a taxable income position. As of December 31, 2024 and 2023, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations and comprehensive loss. The Company and its subsidiaries file corporation tax returns in the UK and income tax returns in the U.S. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the federal, state, or foreign tax authorities, if such tax attributes are utilized in a future period. F-23 Table of Contents During the second quarter of 2021, the Finance Act 2021 (the Act) was enacted in the UK. The Act increased the main corporation tax rate from 19% to 25% effective April 1, 2023 and enhanced the first-year capital allowance on qualifying new plant and machinery assets effective April 1, 2021. The effects on the Company’s existing deferred tax balances have been recorded and are offset by the valuation allowance maintained against the Company’s UK net deferred tax assets. 10. Net Loss Per Share The Company computes basic net loss per share by dividing net loss by the weighted-average number of shares outstanding. The Company computes diluted net loss per share by dividing net loss by the weighted-average number of shares and dilutive potential share equivalents then outstanding during the period. The Company’s potentially dilutive securities, which include unvested ordinary shares, unvested restricted share units, options granted and warrants, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of ordinary shares outstanding used to calculate both basic and diluted net loss per share attributable to ordinary shareholders is the same. The Company excluded the following potential ordinary shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to ordinary shareholders for the years ended December 31, 2024 and 2023 because including them would have had an anti-dilutive effect: Year Ended December 31, 2024 2023 Unvested restricted share units 658,553 320,203 Share options 8,235,619 6,969,328 Warrants 12,418,922 16,170,972 21,313,094 23,460,503 11. Right of use assets New York, USA In September 2023, the Company entered into a lease agreement for office space located in New York, NY, that was undergoing construction to get the space ready for use. The required improvements were subsequently completed in October 2023 and the space was made available for use, resulting in the lease commencing on October 9, 2023. The stated lease term is three years . Lease payments will be made on a monthly basis and increase approximately 3.5 % each year over the lease term. The total commitment for lease payments over the stated term is $ 0.7 million. The lease agreement has a noncancellable lease term of 2 years due to a one-time termination option, which becomes effective following the two-year anniversary of the commencement date. If exercised, the Company would pay the landlord a termination fee equal to three months of the lease payments in effect at the time of termination. Soho, London, UK In April 2023, the Company entered into a two-year operating lease with Fora Space Limited commencing on September 1, 2023. The noncancellable term is 24 months and there is no option to extend the lease. The recurring residency fee per month is £ 130,000 , and the Company paid a refundable deposit of £ 156,000 at the execution of the agreement. Denmark Hill, London, UK In March 2022, the Company entered into an agreement for a lease with South London and Maudsley NHS Foundation Trust for land and buildings at 5 Windsor Walk, Maudsley Hospital, Denmark Hill, London, UK. The lease commenced on June 21, 2022 and has a contractual term of five years . The rent is £ 180,000 per year, with no deposit payable. The following table summarizes our costs included in our consolidated statements of operations and comprehensive loss related to right of use lease assets we have entered for the years ended December 31, 2024 and 2023 (in thousands): F-24 Table of Contents Year Ended December 31, 2024 2023 Lease cost Operating lease cost $ 2,570 $ 2,331 Short-term lease cost — 279 $ 2,570 $ 2,610 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 2,533 $ 2,264 Right-of-use assets obtained in exchange for new operating lease liabilities $ 17 $ 4,184 Weighted average remaining lease term (in years) 1.14 1.96 Weighted average discount rate 8.50 % 8.49 % The following table summarizes the future minimum lease payments due under operating leases as of December 31, 2024, (in thousands): December 31, 2025 1,800 December 31, 2026 226 December 31, 2027 94 Total future minimum lease payments $ 2,120 Less: imputed interest 92 Total $ 2,028 12. Commitments and Contingencies Legal Proceedings From time to time, the Company may be a party to litigation or subject to claims incident to the ordinary course of business. The Company was not a party to any material litigation and did not have material contingency reserves established for any liabilities as of December 31, 2024 or 2023. Indemnification In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations. In accordance with its Articles of Association, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. There have been no claims to date, and the Company has director and officer insurance that may enable it to recover a portion of any amounts paid for future potential claims. F-25 Table of Contents 13. Segment Reporting The Company has one operating segment. The table below is a summary of the segment loss, including significant segment expenses (in thousands): Year ended December 31, 2024 2023 Operating expenses: Research and Development: Development expenses $ 76,993 $ 48,306 Personnel expenses 26,707 23,533 Non-cash share-based compensation expense 10,309 8,910 Facilities and other expenses 1 5,030 6,769 General and Administrative: Personnel expenses 23,422 18,192 Legal and professional fees 14,535 9,800 Facilities and other expenses 1 12,001 13,042 Non-cash share-based compensation expense 9,208 8,367 Total operating expenses 178,205 136,919 Operating loss ( 178,205 ) ( 136,919 ) Benefit from R&D tax credit 21,097 12,875 Interest income 8,268 4,623 Interest expense ( 4,479 ) ( 2,204 ) Foreign exchange (losses) gains ( 1,032 ) 3,686 Other income 823 255 Income tax expense ( 1,594 ) ( 780 ) Net loss $ ( 155,122 ) $ ( 118,464 ) 1 Other expenses include subscriptions and memberships, consulting fees and company insurance. 14. Related Party Transactions Pursuant to the terms of a consulting agreement between the Company and Alithos, Inc., a company founded by our co-founder, former chief executive officer, former chairman and greater than 5% shareholder, George Goldsmith, the Company provided consulting services to Alithos. Through December 31, 2024, the Company recorded $ 0.1 million in other income as a result of this transaction. 15. Subsequent Events In January 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with TD Securities (USA) LLC (“TD Cowen”), in which the Company issued and sold (i) 24,014,728 American Depositary Shares, each representing one ordinary share, nominal value £ 0.008 each, of the Company and accompanying warrants to purchase up to 24,014,728 ADSs, and (ii) in lieu of ADSs, to certain investors, pre-funded warrants to purchase up to 11,044,720 ADSs and accompanying 2025 ADS Warrants to purchase up to 11,044,720 ADSs. The offering price is $ 4.2750 per ADS and accompanying 2025 ADS Warrant, and $ 4.2649 per Pre-Funded Warrant and accompanying 2025 ADS Warrant. Gross proceeds from the 2025 Financing were approximately $ 150 million and the Company may receive up to approximately $ 353 million in additional gross proceeds if the 2025 ADS Warrants are fully exercised for cash. The Pre-Funded Warrants have an exercise price of $ 0.0001 per ADS and are exercisable immediately. The Pre-Funded Warrants expire when exercised in full. The 2025 ADS Warrants have an exercise price of $ 5.7960 per ADS and are F-26 Table of Contents exercisable following a specified data milestone. The 2025 ADS Warrants will expire after three years . Once the ADS Warrants become exercisable, the Company may force the exercise of the 2025 ADS Warrants (by way of cash or cashless exercise, at the Company’s option), in whole or in part, by delivering a notice of forced exercise to the holders, provided that the closing price for the Company’s ADSs on Nasdaq exceeded the warrant exercise price of $ 5.796 for the three consecutive trading days prior to the date on which the notice of forced exercise is delivered. On February 27, 2025, we entered into a new Sales Agreement to govern our ATM offering program with TD Cowen under which we may issue and sell from time to time up to $ 150.0 million of our ADSs, subject to the terms of the Sales Agreement and only after the registration statement covering such ATM offering program has been declared effective. F-27 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934 the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. COMPASS PATHWAYS PLC Date: February 27, 2025 By: /s/ Kabir Nath Kabir Nath Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Kabir Nath Chief Executive Officer (Principal Executive Officer) February 27, 2025 Kabir Nath /s/ Teri Loxam Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) February 27, 2025 Teri Loxam /s/ Gino Santini Chair of Board of Directors February 27, 2025 Gino Santini /s/ Annalisa Jenkins Director February 27, 2025 Annalisa Jenkins, MBBS /s/ Daphne Karydas Director February 27, 2025 Daphne Karydas /s/ Thomas Lönngren Director February 27, 2025 Thomas Lönngren /s/ Robert McQuade Director February 27, 2025 Robert McQuade /s/ Linda McGoldrick Director February 27, 2025 Linda McGoldrick /s/ David Norton Director February 27, 2025 David Norton Director Wayne Riley, M.D., MPH, M.B.A. F-28