Grace Therapeutics, Inc. 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures As of the end of the period covered by this Annual Report on Form 10-K, our management, with the participation of our chief executive officer (“CEO”) and principal financial officer (“PFO”), has performed an evaluation of the effectiveness of our disclosure controls and procedures within the meaning of Rules 13a-15 (e) and 15d-15(e) of the Exchange Act. Based upon this evaluation, our management has concluded that, as of March 31, 2024, our existing disclosure controls and procedures were effective. It should be noted that while the CEO and PFO believe that our disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect the disclosure controls and procedures to be capable of preventing all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Management’s Report on Internal Controls over Financial Reporting Our management, with the participation of our CEO and PFO, is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of our consolidated financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, 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. Our management conducted an assessment of the design and operation effectiveness of our internal control over financial reporting as of March 31, 2024. In making this assessment, we used the criteria established within the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, our management has concluded that, as of March 31, 2024, our internal control over financial reporting was effective. Changes in Internal Control over Financial Reporting No changes were made to our internal controls over financial reporting that occurred during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We are a non-accelerated filer under the Exchange Act and not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. Therefore, this Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding our management’s assessment of internal control over financial reporting. Item 9B. Other Information During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 63 PART III Item 10. Directors, Executive Officers and Corporate Governance The following table sets forth information with respect to our current directors and executive officers: Name Age Position(s) held within Acasti In Office Since Current Term to Expire Directors Vimal Kavuru 55 Chairman of the Board August 2021 2024 A. Brian Davis 57 Director, Chairman of Audit Committee and Chairman of Governance and Human Resources Committee October 2023 2024 S. George Kottayil 61 Director October 2023 2024 Edward Neugeboren 55 Director October 2023 2024 Executive Officers Prashant Kohli 52 Chief Executive Officer and Director CEO since April 2023, director since October 2023 2024 Robert J. DelAversano 53 Vice President, Finance, Principal Financial Officer and Principal Accounting Officer January 2024 - Dr. R. Loch Macdonald 63 Chief Medical Officer May 2023 - Carrie D'Andrea 53 VP Clinical Operations May 2023 - Amresh Kumar 45 VP of Program Management May 2023 - The following is a brief biography of our current directors and executive officers: Vimal Kavuru Mr. Kavuru has created and led several pharmaceutical companies. Mr. Kavuru brings, in his vision and management, a broad-based understanding of the global pharmaceutical industry with expertise in strategic planning, product and business development, and operations. In addition to previously serving as the Chairman of the Grace Therapeutics Inc. (“Grace Therapeutics”) board of directors, Mr. Kavuru is the Founder, Chairman and Chief Executive Officer of Rising Pharma Holdings, Inc., a U.S. generic pharmaceutical company, and Acetris Pharma Holdings, LLC, a generic pharmaceutical company serving U.S. government agencies, positions Mr. Kavuru has held since January 2013 and January 2016, respectively. Previously, Mr. Kavuru founded Citron Pharma and Lucid Pharma, each of which were sold to Aceto Corporation in 2016, Casper Pharma LLC, an emerging specialty brand pharmaceutical company, and Gen-Source RX, a national distributor of generic pharmaceuticals that was acquired by Cardinal Health in 2014. In 2007, Mr. Kavuru also co-founded Celon Labs, a specialty oncology and critical care pharmaceutical company that was acquired by Zanzibar Pharma Limited, a portfolio company of CDC Group. Mr. Kavuru was initially elected to the Board as a nominee of former shareholders of Grace Therapeutics in connection with Acasti’s acquisition of Grace Therapeutics. He is a registered pharmacist in the state of New York, holds a B.S. in Pharmacy from HKE College of Pharmacy, Bulgarga, India, and attended Long Island University, Brooklyn, New York with specialization in industrial pharmacy. A. Brian Davis Mr. Davis has nearly three decades of experience as a Chief Financial Officer and other executive financial positions in commercial and development-stage publicly traded life science companies. Mr. Davis has extensive knowledge and background related to public company accounting and financial reporting rules and regulations as well as the evaluation of financial results, internal controls and business processes. Since December 2021, Mr. Davis has been the Chief Financial Officer of XyloCor Therapeutics, Inc., a clinical-stage gene therapy company developing potential therapies for patients with cardiovascular disease. Mr. Davis was the Chief Financial Officer of Verrica Pharmaceuticals Inc., a publicly traded, NDA-stage dermatology therapeutics company, from October 2019 to July 2021. Prior to joining Verrica, Mr. Davis was the Chief Financial Officer of Strongbridge Biopharma plc, a public commercial-stage biopharmaceutical company, from March 2015 to September 2019. Mr. Davis was previously the Chief Financial Officer at Tengion, Inc., a publicly traded regenerative medicine company until Tengion, Inc. filed for bankruptcy in December 2014, and Neose Technologies, Inc., a publicly traded biopharmaceutical company. Mr. Davis is licensed as a certified public accountant, and received a B.S. in accounting from Trenton State College and an M.B.A. from The Wharton School at the University of Pennsylvania. S. George Kottayil 64 Dr. Kottayil has over two decades of experience in the pharmaceutical industry with specific expertise in product development and drug delivery. He has several approved patents to his credit and is an inventor on multiple FDA approved drug products, a few that have achieved significant success. He co-founded two pharmaceutical drug development and drug delivery technology companies and was CEO and a member of each of their boards of directors. Most recently, from October 2014, he co-founded and was CEO and director of Grace Therapeutics, a drug delivery company with a focus on rare and orphan disease which was acquired by Acasti in August 2021. Dr. Kottayil served as Acasti’s Chief Operating Officer from September 2021 to May 2023. Dr. Kottayil has held senior positions in product development, business operations and general management at small to medium life science companies, successfully advancing drug products from bench to FDA approval and launch. He directed business operations at Unimed Pharmaceuticals Inc., a division of Solvay Pharmaceuticals, now Abbvie, from January 1993 to June 2002, and played a key role in product development and obtaining FDA approval for the company’s NDA products. Dr. Kottayil graduated with a Ph.D. in Organic and Medicinal Chemistry from the University of Kentucky. Edward Neugeboren Mr. Neugeboren has over three decades of healthcare experience in pharmaceutical operations, business development, corporate management, investment banking, asset management and institutional equity research. Since January of 2016, Mr. Neugeboren has served as the Chief Strategy Officer of Cronus Pharma, LLC, a fully integrated research and development, manufacturing and sales, and marketing pharmaceutical company. Mr. Neugebroren leads Cronus Pharma’s commercial operations, strategic planning and acquisitions and is also responsible for developing and executing overall corporate strategy as well as corporate and portfolio acquisitions and licensing. Previously, Mr. Neugeboren was the Chief Strategy Officer for the parent pharmaceutical group comprised of Rising Pharma Holdings, Inc., a generic pharmaceutical company and Casper Pharma, LLC, a specialty pharmaceutical company. Additionally, Mr. Neugeboren is Founder and Managing Partner of QuadView Healthcare Advisors, previously named ArcLight Advisors, LLC, a healthcare investment banking and business development firm. Mr. Neugeboren was previously a Managing Director of Ledgemont Capital Group, LLC, an investment banking firm providing strategic and financial advisory services to emerging healthcare and technology companies. Mr. Neugeboren was also a Managing Partner of Third Ridge Capital Management, LLC, a long/short U.S. equity hedge fund. Mr. Neugeboren holds Series 24, 7 and 63 FINRA security licenses and has graduated with a BA in Economics from Union College. Prashant Kohli Prashant Kohli has over 20 years of commercialization experience leading strategy, sales, marketing, and product management. Prior to joining Acasti in August 2021, Mr. Kohli was VP, Commercial Operations of Grace Therapeutics since December 2017. He has expertise crafting go-to-market plans for products with unique value proposition that address critical unmet needs. He has built, deployed, and led sales and marketing from the ground-up with significant experience in organization design, recruiting, performance management, incentive compensation, and P&L accountability. He has successfully implemented evidence-based, consultative-selling model that is rooted in deep understanding of the health ecosystem including patients, providers, health systems, government, and payers. He has also designed strategic marketing plans that generate leads and increase share-of-voice, augmenting the salesforce with digital tactics that increase reach and frequency. He has extensive commercial experience with specialty and small molecule drugs including in rare and orphan diseases. Prashant has worked at Archi-Tech Systems, Cardinal Health, IMS Health, Rosenbluth, and Dun & Bradstreet. He has a BA in Computer Science and Math from Augustana College and an MBA from The Wharton School. Robert J. DelAversano Mr. DelAversano, is a certified public accountant and has over twenty-five years of experience in accounting including thirteen years in public accounting. Mr. DelAversano joined the Company in November 2023 as Vice President, Finance. From 2018 to July 2023, Mr. DelAversano worked in roles of increasing seniority at OncoSec Medical Incorporated (“OncoSec”), a clinical-stage immuno-oncology company, which positions included Vice President of Finance, Principal Accounting Officer and Controller, and Executive Director of Finance, where he had global responsibility for accounting, external financial reporting, and financial controls covering all aspects of OncoSec’s business. Prior to joining OncoSec, Mr. DelAversano was the Director of Financial Reporting and Taxation at Brio Financial Group (“Brio”), where he served as the firm’s Director of Financial Reporting and Taxation, consulting with various public companies in financial reporting, internal control development and evaluation, budgeting and forecasting. Prior to joining Brio, Mr. DelAversano was a manager at Bartolomei Pucciarelli, LLC and oversaw its accounting and tax practice with industry focuses in manufacturing, wholesalers and medical devices services. Mr. DelAversano received a B.S. in Accounting from Rider University. Dr. R. Loch Macdonald Dr. Macdonald is a world-renowned practicing neurosurgeon-scientist and respected authority in subarachnoid hemorrhage. Dr. Macdonald was as Professor, Department of Surgery, Division of Neurosurgery at the University of Toronto from January 2007 until December 2019, and was Head, Division of Neurosurgery, St. Michael's Hospital, University of Toronto from January 2007 until 65 December 2015. He was Professor, Department of Neurological Surgery, Barrow Neurological Surgery, Barrow Neurological Institute, Phoenix, Arizona, from April 2018 until August 2018; Fellow, Department of Neurosurgery, University of Illinois Hospitals in Chicago, Illinois from December 2018 until June 2019; Clinical Professor, Department of Neurological Surgery, University of California San Francisco Fresno, in Fresno, California from July 2019 until September 2021; and from October 2021 to the present has been Neurosurgeon, Community Physicians Group, Community Neurosciences Institute, Community Regional Medical Center and Medical Director of Neurosciences Research, Community Health Partners. Dr Macdonald was also a founder of Edge Therapeutics, Inc. in 2009, where he was a member of the board of directors between 2009 and 2018 and was Chief Scientific Officer between 2011 and 2018. Dr. Macdonald completed his medical degree at the University of British Columbia, Vancouver, British Columbia and his PhD in Experimental Surgery at the University of Alberta in Edmonton, Alberta. He completed his Neurosurgery residency at the University of Toronto. Carrie D’Andrea Ms. D’Andrea is a highly experienced professional with 25 years of experience in the pharmaceutical and biotechnology industry who has built and led the planning, implementation, management, and execution of global Phase 2 and Phase 3 trials for a drug candidate for subarachnoid hemorrhage. Ms. D'Andrea was the Vice President of Clinical Operations for Edge Therapeutics Inc. from October 2014 until March 2019 and for EryDel SpA from October 2020 until April 2021. Ms. D’Andrea was a clinical operations consultant at Aegle Research from July 2021-August 2022 and Praxis Precisions Medicines from September 2022-May 2023. Ms. D’Andrea was named a Healthcare Businesswomen’s Association Rising Star in 2009 and Ms. D'Andrea received her master's degree in Pharmaceutical Quality and Regulatory Affairs from Temple University and teaches Clinical Trial Design and Operations at Rutgers University in the Master of Business and Science Program. Amresh Kumar Mr. Kumar is an experienced drug development, CMC, and program management expert supporting investigational and marketed products for rare diseases and neurology. Mr. Kumar is the former product leader of GTX-104 while at Grace Therapeutics (which was acquired by the Company in August 2021). Mr. Kumar acted as the Sr. Director of Program Management at Foresee Pharmaceuticals Inc. from April 2022 until May 2023 and as Program Leader and Associate Director - R&D at Grace Therapeutics between March 2015 and January 2022. Mr. Kumar received a PhD in Pharmaceutical Science from Sunrise University, India, focusing on complex injectable drug delivery systems of highly soluble oncology drugs. He has published many research articles and has more than 10 granted patents and many patent applications worldwide to his credit. Cease Trade Orders, Bankruptcies, Penalties or Sanctions To the knowledge of Acasti, none of our current directors or executive officers are, or have been, as at the date of this Annual Report on Form 10-K or within the 10 years prior to the date of this Annual Report on Form 10-K, a director, or executive officer of any Company (including Acasti) that: (a) was subject to a cease trade order, an order similar to a cease trade order, or an order that denied the relevant Company access to any exemption under applicable securities legislation, that was in effect for a period of more than 30 consecutive days that was issued while the director or executive officer was acting in the capacity as director or executive officer; or (b) was subject to an order that was issued after the director or executive officer ceased to be a director, CEO or CFO and which resulted from an event that occurred while that person was acting in the capacity as director, CEO or CFO. To the knowledge of Acasti, other than Mr. Davis, who was previously the CFO at Tengion, Inc., a publicly traded regenerative medicine company, when it filed for bankruptcy in December 2014, none of Acasti’s current directors or executive officers: (a) are, or have been, as at the date of this Annual Report on Form 10-K or within the 10 years prior to the date of this Annual Report on Form 10-K, a director or executive officer of any Company (including Acasti) that, while that person was acting in that capacity, or within two years of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (b) have, within the 10 years prior to the date of this Proxy Statement/Prospectus, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or 66 compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director or director nominee. To the knowledge of Acasti, no current director or executive officer has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body. Family Relationships There are no family relationships between any directors or officers of the Company. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and greater-than-10% stockholders to file forms with the SEC to report their ownership of Company securities and any changes in ownership. We have reviewed all forms filed electronically with the SEC. Based on that review and on written information given to us by our officers and directors, we believe that all of our directors, officers and greater-than-10% stockholders filed the required reports on a timely basis under Section 16(a) during 2022, except for Mr. Macdonald, who on May 26, 2023 filed a Form 3 that was due May 18, 2023. Code of Business Conduct and Ethics The Board adopted a Code of Business Conduct and Ethics (“Code of Conduct”), for our directors, officers and employees on May 31, 2007, as amended from time to time. Our Code of Conduct can be found on SEDAR at www.sedar.com and on our website on www.acasti.com. A copy of the Code of Conduct can also be obtained by contacting our corporate secretary. We intend to disclose future amendments to or waivers from certain provisions of our Code of Conduct provisions on our website. Since its adoption by the Board, any breach of the Code of Conduct must be brought to the attention of the Board by our CEO or other senior executives. No report has ever been filed which pertains to any conduct of a director or executive officer that constitutes a breach to our Code of Conduct. The Board actively monitors compliance with the Code Conduct and promotes a business environment where employees are encouraged to report malfeasance, irregularities, and other concerns. The Code of Conduct provides for specific procedures for reporting non-compliant practices in a manner which, in the opinion of the Board, encourages and promotes a culture of ethical business conduct. The Board has also adopted a disclosure policy, insider trading policy, majority voting policy, management and board compensation policies, and a whistle blower policy. In addition, under the Civil Code of Québec, to which we are subject as a legal person incorporated under the Business Corporations Act (Québec) (L.R.Q., c. S-31), a director must immediately disclose to the board any situation that may place him or her in a conflict of interest. Any such declaration of interest is recorded in the minutes of proceedings of the Board. In such instances, the director abstains, except if otherwise required, from the discussion and voting on the question. In addition, it is our policy that an interested director recuse himself or herself from the decision-making process pertaining to a contract or transaction in which he or she has an interest. Audit Committee The audit committee of the Board (the "Audit Committee") is responsible for assisting the Board in fulfilling its oversight responsibilities with respect to financial reporting, including: • reviewing our procedures on overall financial reporting and internal control framework; • reviewing and approving the engagement of our external auditor; • reviewing annual and quarterly financial statements and all other material continuous disclosure documents, including our annual and quarterly reports; • assessing our financial and accounting personnel; • assessing our accounting policies; 67 • reviewing our risk management procedures; and • reviewing any significant transactions outside our ordinary course of business and any pending litigation involving us. The Audit Committee has direct communication channels with our management performing financial functions and our external auditor to discuss and review such issues as the Audit Committee may deem appropriate. The Audit Committee is composed of Mr. Davis, as Chairperson, Mr. Kavuru and Mr. Neugeboren. Each of Mr. Davis, Mr. Kavuru and Mr. Neugeboren is “financially literate” and “independent” within the meaning of the Exchange Act and applicable Nasdaq rules concerning director independence. The Audit Committee’s charter can be found on the Company’s website at https://www.acasti.com/en/investors/corporate-governance/governance-documents. Audit Committee Financial Expert Our Board has determined that Mr. Davis is an “audit committee financial expert,” as defined by applicable regulations of the Securities and Exchange Commission (“SEC”). The SEC has indicated that the designation of Mr. Davis as an audit committee financial expert does not make him an “expert” for any purpose, impose any duties, obligations or liability on Mr. Davis that are greater than those imposed on members of the Audit Committee and Board who do not carry this designation, or affect the duties, obligations or liability of any other member of the Audit Committee or Board. Item 11. Executive Compensation Our executive compensation program is intended to attract, motivate and retain high-performing senior executives, encourage and reward superior performance, and align the executives’ interests with ours as well as those of our shareholders by providing compensation that is competitive with the compensation received by executives employed by comparable companies, and ensuring that the achievement of annual objectives is rewarded through the payment of bonuses, and providing executives with long-term incentives through the grant of stock options. Our governance and human resources committee (“GHR”) committee, has authority to retain the services of independent compensation consultants to advise its members on executive and Board compensation and related matters, and to determine the fees and the terms and conditions of the engagement of those consultants. During our fiscal year ended March 31, 2022, the GHR committee retained compensation consulting services from FW Cook to review our executive compensation programs, including base salary, short-term and long-term incentives, total cash compensation levels and total direct compensation of certain senior positions, against those of a peer group of 20 broadly similar size, as measured by market capitalization (peer market cap all averaged less than $500M in 2021), biotechnology and pharmaceutical companies listed or headquartered in North America. The consultants also reviewed Board compensation, including advisory fees and equity incentives. All of the services provided by the consultants were provided to the GHR committee. The GHR committee assessed the independence of the consultants and concluded that its engagement of the consultants did not raise any conflict of interest with us or any of our directors or executive officers. The GHR committee continued to rely on the review of FW Cook performed during the fiscal year ended March 31, 2022 and did not retain the services of FW Cook during the fiscal year ended March 31, 2023 and, during the fiscal year ended March 31, 2024, retained the services of Pearl Meyer to review our executive compensation programs for the current fiscal year. Compensation for our Chief Executive Officer (“CEO”) paid during the fiscal year ended March 31, 2024 was below the peer company median based on FW Cook’s review conducted during the fiscal year ended March 31, 2022. Use of Fixed and Variable Pay Components Compensation of our named executive officers (“NEOs"), is revised each year and has been structured to encourage and reward executive officers on the basis of short-term and long-term corporate performance. For the year ended March 31, 2024, our NEOs consisted of Prashant Kohli, our current CEO, Jan D’Alvise, our former CEO, Amresh Kumar, Vice President – Program Management, Carrie D’Andrea, Vice President – Clinical Operations, Pierre Lemieux, our former Chief Operations Officer (Canada), and Brian Ford, our former interim Chief Financial Officer. In the context of its analysis of compensation for our fiscal year ended March 31, 2024, the following components were examined by the GHR committee: • base salary; • short term incentive plan, consisting of a cash bonus; • long term incentive plan, consisting of stock options and equity incentive grants based on performance and/or time vesting conditions; and 68 • other elements of compensation, consisting of group benefits and perquisites. For executives, more than half of their target compensation (base salary + target STIP awards + target LTIP awards) is considered “at risk.” We believe this mix results in a strong pay-for-performance relationship and alignment with shareholders and is competitive with other firms of comparable size in similar fields. The CEO (or any person acting in that capacity) makes recommendations to the GHR committee as to the compensation of our executive officers, other than the CEO, for review and approval by the Board. The GHR committee makes recommendations to the Board as to the compensation of the CEO, for approval. The CEO’s salary is based on comparable market consideration, and the GHR committee’s assessment of the CEO's performance, with regard to our financial performance, and progress in achieving key strategic business goals. Qualitative factors beyond the quantitative financial metrics are also a key consideration in determination of individual executive compensation payments. How executives achieve their financial results and demonstrate leadership consistent with our values are key to individual compensation decisions. Base Salary We intend to be competitive over time with comparator companies and to attract and retain top talent. The GHR committee reviews compensation matters periodically to help ensure that it meets this strategic imperative. Base salary is set to reflect an individual’s skills, experience, and contributions within a salary structure consistent with peer group data. Base salary structure is revised annually by the GHR committee as financial and market conditions evolve. Short Term Incentive Plan (STIP) Our Short-Term Incentive Plan (“STIP"), provides for potential rewards when a threshold of corporate performance is met compared to the Board’s primary stated objectives for the fiscal year. Corporate performance is assessed against a table of weighted performance categories and sub-goals within each weighted category, which assessment of goal achievement funds the corporate bonus pool. These performance goals take into account the achievement of corporate milestones within timelines and budget and individual objectives determined annually by the Board according to short-term priorities. The corporate bonus pool is allocated based on achievement of personal objectives assessed through a performance grid, with pre-specified, objective performance criteria. For the most senior participants in the STIP, greater weight is assigned to corporate objectives. Target payout is expressed as a percentage of base salary, and is determined by benchmarking against peer group data. Annual salary for STIP purposes is the annual salary in effect at the end of the plan year (i.e., prior to any annual salary increases awarded for the subsequent year). The STIP is a variable compensation plan, and all STIP payments are subject to Board approval. Participants must be employed by us at the end of the fiscal year to qualify. Long Term Incentive Plan (LTIP) Our Long Term Incentive Plan (“LTIP”) has been adopted as a reward and retention mechanism. Participation is determined annually at the discretion of the Board. The Acasti Pharma Inc. Stock Option Plan (the “Stock Option Plan”) is intended to align the long-term interests of participants with those of shareholders, in order to promote creation of shareholder value. The GHR committee determines the number of stock options to be granted to a participant based on peer group data and taking into account corporate performance and the employee’s level in the organization. The LTIP calculation for NEOs is determined by both reviewing grant values and a dilution- based methodology that considers the annual grant rate as a percent of shares outstanding. All grants to NEOs during the fiscal year ended March 31, 2024, had a grant value that was below the median of the peer data prepared by FW Cook during the fiscal year ended March 31, 2022. Our directors and executive officers are not permitted to purchase financial instruments, such as prepaid variable forward contracts, equity swaps, collars or units of exchange funds that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the director or officer. Stock Option Plan Our Stock Option Plan was adopted by the Board on October 8, 2008, and has been amended from time to time, as most recently amended on September 28, 2022. The amendment provided for a change to the existing limits for common shares reserved for issuance under the Stock Option Plan. The Stock Option Plan continues to provide for the granting of options to purchase common shares. The exercise price of the stock options granted under the Stock Option Plan may not be lower than the closing price of the common shares on the Nasdaq Stock Market LLC ("Nasdaq”) at the close on the day preceding the grant. The maximum number of common shares that may be issued upon exercise of options granted under the amended Stock Option Plan shall not exceed 20% of the aggregate number of issued and outstanding shares 69 of the Company as of July 28, 2022. The terms and conditions for acquiring and exercising options are set by the Board, subject among others, to the following limitations: the term of the options cannot exceed ten years and (i) all options granted to a director will be vested evenly on a monthly basis over a period of at least 12 months, and (ii) all options granted to an employee will be vested evenly on a quarterly basis over a period of at least 36 months. The total number of shares issued to any one consultant within any twelve-month period cannot exceed 2% of the Company’s total issued and outstanding shares (on a non-diluted basis). The Company is not authorized to grant within any twelve-month period such number of options under the Stock Option Plan that could result in a number of common shares issuable pursuant to options granted to (a) related persons exceeding 2% of the Company’s issued and outstanding common shares (on a non-diluted basis) on the date an option is granted, or (b) any one eligible person in a twelve-month period exceeding 2% of the Company’s issued and outstanding common shares (on a non-diluted basis) on the date an option is granted. The grant of options is part of the long-term incentive component of executive and director compensation and an essential part of the Company’s compensation framework. Qualified directors, employees and consultants may participate in the Stock Option Plan, which is designed to encourage option holders to link their interests with those of the Company’s shareholders, in order to promote an increase in shareholder value. As of March 31, 2024, four employees and three non-employee directors were eligible to receive awards under the Stock Option Plan. Awards and the determination of any exercise price are made by the Board, after recommendation by the GHR committee. Awards are established, among other things, according to the role and responsibilities associated with the participant’s position and his or her influence over appreciation in shareholder value. Any award grants a participant the right to purchase a certain number of common shares during a specified term in the future, after a vesting period and/or specific performance conditions, at an exercise price equal to at least 100% of the market price (as defined below) of the Company’s common shares on the grant date. The “market price” of common shares as of a particular date generally means the closing price per common share on Nasdaq. Previous awards may sometimes be taken into account when new awards are considered. In accordance with the Stock Option Plan, all of an option holder’s options will immediately fully vest on the date of a Change of Control event (as defined in the Stock Option Plan), subject to the terms of any employment agreement or other contractual arrangement between the option holder and the Company. However, in no case will the grant of options under the Stock Option Plan, together with any proposed or previously existing security-based compensation arrangement, result in (in each case, as determined on the grant date) the grant to any one consultant within any 12-month period, of options reserving for issuance a number of common shares exceeding in the aggregate 2% of the Company’s issued and outstanding common shares (on a non-diluted basis); or the grant to any one employee, director and/or consultant that provides investor relations services, within any 12-month period, of options reserving for issuance a number of Common shares exceeding in the aggregate 2% of the Company’s issued and outstanding common shares (on a non-diluted basis). Options granted under the Stock Option Plan are non-transferable and are subject to a minimum vesting period of 36 months for management, and 12 months for non-executive Board members, in each case with gradual and equal vesting on no less than a quarterly basis, in the case of management, and monthly in the case of non-executive Board members. Options are exercisable, subject to vesting and/or performance conditions, at a price equal to the closing price of the common shares on Nasdaq, on the day prior to the grant of such options. In addition, and unless otherwise provided for in the relevant agreement between the Company and the holder, options will also lapse upon termination of employment or the end of the business relationship with the Company except that they may be exercised for 90 days after termination, ceasing to hold office or the end of the business relationship (30 days for investor relations services employees), in each case to the extent that they will have vested on such date of termination of employment, end of the business relationship or ceasing to hold office, as applicable, except in the case of death, disability or retirement, in which case this period is extended to 12 months. Subject to the approval of relevant regulatory authorities, including Nasdaq, if applicable, and compliance with any conditions attached to that approval (including, in certain circumstances, approval by disinterested shareholders), if applicable, the Board has the right to amend or terminate the Stock Option Plan. However, unless option holders’ consent to the amendment or termination of the Stock Option Plan in writing, any such amendment or termination of the Stock Option Plan cannot affect the conditions of options that have already been granted and that have not been exercised under the Stock Option Plan. As of March 31, 2024, there were 1,483,140 common shares reserved for issuance under the Stock Option Plan and Equity Incentive Plan (as defined below) and 721,793 options outstanding under the Stock Option Plan. Equity Incentive Plan On May 22, 2013, the Acasti Pharma Inc. Equity Incentive Plan (the “Equity Incentive Plan”) was adopted by the Board in order to, among other things, provide us with a share-related mechanism to attract, retain and motivate qualified directors, employees and consultants. The adoption of the Equity Incentive Plan was initially approved by shareholders on June 27, 2013, and has been amended from time to time, as most recently amended on August 4, 2022, and approved by shareholders on September 28, 2022. 70 Eligible persons may participate in the Equity Incentive Plan. “Eligible persons” under the Equity Incentive Plan consist of any director, officer, employee, or consultant (as defined in the Equity Incentive Plan) of our Company or a subsidiary. A participant is an eligible person to whom an award has been granted under the Equity Incentive Plan. The Equity Incentive Plan provides us with the option to grant to eligible persons bonus shares, restricted shares, restricted share units, performance share units, deferred share units and other share-based awards. The Board has the discretion to determine that any unvested or unearned restricted share units, deferred share units, performance share units or other share-based awards or restricted shares subject to a restricted period outstanding immediately prior to the occurrence of a change in control will become fully vested or earned or free of restriction upon the occurrence of a change in control. The Board may also determine that any vested or earned restricted share units, deferred share units, performance share units or other share-based awards will be cashed out based on the market price of our common shares as of the date a change in control is deemed to have occurred, or as of such other date as the Board may determine prior to the change in control. Further, the Board has the right to provide for the conversion or exchange of any restricted share unit, deferred share unit, performance share unit or other share-based award into or for rights or other securities in any entity participating in or resulting from the change in control. The Equity Incentive Plan is administered by the Board and the Board has sole and complete authority, in its discretion, to determine the type of awards under the Equity Incentive Plan relating to the issuance of common shares (including any combination of bonus shares, restricted share units, performance share units, deferred share units, restricted shares or other share-based awards) in such amounts, to such persons and under such terms and conditions as the Board may determine, in accordance with the provisions of the Equity Incentive Plan and the recommendations made by the GHR committee. Subject to the adjustment provisions provided for in the Equity Incentive Plan and the applicable rules and regulations of all regulatory authorities to which we are subject (including any stock exchange), the total number of common shares reserved for issuance pursuant to awards granted under the Equity Incentive Plan will be equal to a number that will not exceed 20% of the issued and outstanding common shares as of July 28, 2022, which number shall include common shares issuable pursuant to options issued under the stock option plan. As of March 31, 2024, there were 1,483,140 common shares reserved for issuance under the Equity Incentive Plan and Stock Option Plan and no awards outstanding under the Equity Incentive Plan. Other Forms of Compensation Retirement Plans . We sponsor a voluntary Registered Retirement Savings Plan ("RRSP"), matching program, which is open to all eligible employees, including NEOs, who reside in Canada. The RRSP matching program matches employees’ contributions up to a maximum of $1,500 per fiscal year for eligible employees who participate in the program. We currently have no eligible employees who reside in Canada. We have also implemented a 401K plan for US employees. Because of the size of our current employee population in the US and to assure passage of anti-discrimination testing, the 401K plan has a “safe harbor” provision which provides a contribution of 3% of salary to the 401K accounts of all eligible US employees, including NEOs who reside in the US. Other Benefits and Perquisites. Our executive employee benefit program also includes life, medical, dental and disability insurance. These benefits and perquisites are designed to be competitive overall with equivalent positions in comparable organizations. We do not have a pension plan for employees. Compensation Governance Compensation of our executive officers and directors is recommended to the Board by the GHR committee. In its review process, the GHR committee informally reviews executive and corporate performance on a quarterly basis, with input from management. Annually, the GHR committee conducts a more formal review and assessment of executive and corporate performance. The GHR committee is composed of the following members: Mr. Kavuru (Chairman), Mr. Davis and Mr. Neugeboren, each of whom is independent within the meaning of applicable Nasdaq rules. The GHR committee establishes management compensation policies and oversees their general implementation. All members of the GHR committee have direct experience which is relevant to their responsibilities as GHR committee members. All GHR committee members are or have held senior executive or director roles within significant businesses in our industry, some also having public companies experience, and have a level of financial understanding which allows them to assess the costs versus benefits of compensation plans. The GHR committee’s members’ combined experience in our sector provides them with a good understanding of our success factors and risks, which are highly relevant to determining metrics for measuring success. We do not believe that our compensation program results in unnecessary or inappropriate risk taking, including risks that are likely to have a material adverse effect on us. Payments of bonuses, if any, are not made unless performance goals are met. 2024 Summary Compensation Table 71 The following table sets forth the compensation information for NEOs, which includes all persons who served as our principal executive officer during the fiscal year ended March 31, 2024, our two most highly compensated executive officers other than our principal executive officer, who were serving as executive officers as of March 31, 2024, and two individuals who would have been our most highly compensated executive officers but for the fact that they were no longer serving as executive officers as of March 31, 2024. Name and Principal Position Year Salary ($) Bonus ($) Option Awards ($) (1) (2) All Other Compensation ($)(3) Total Compensation ($) Jan D'Alvise (4) March 31, 2024 $ 51,577 $ - $ - $ 579,450 $ 631,027 Former President and CEO March 31, 2023 $ 494,761 $ 210,642 $ 426,799 $ - $ 1,132,202 Prashant Kohli (5) March 31, 2024 $ 399,970 $ 200,000 $ 387,660 $ - $ 987,630 CEO March 31, 2023 $ 379,370 $ 75,270 $ 57,103 $ - $ 511,743 Amresh Kumar (6) March 31, 2024 $ 243,269 $ 82,500 $ 52,250 $ - $ 378,019 VP Program Management March 31, 2023 $ - $ - $ - $ - $ - Carrie D'Andrea (7) March 31, 2024 $ 248,250 $ 82,500 $ 52,250 $ - $ 383,000 VP Clinical Operations March 31, 2023 $ - $ - $ - $ - $ - Pierre Lemieux (8) March 31, 2024 $ 84,558 $ - $ - $ 347,316 $ 431,874 Former COO, Canada and CSO March 31, 2023 $ 304,450 $ 111,585 $ 125,753 $ - $ 541,788 Brian Ford (9) March 31, 2024 $ 177,689 $ - $ 116,588 $ 227,203 $ 521,480 Former Interim CFO March 31, 2023 $ 278,825 $ 100,522 $ 125,753 $ - $ 505,100 (1) Calculated in accordance with Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) Topic 718, “Compensation — Stock Compensation.” The fair value of stock options is estimated at the grant date using the Black-Scholes option pricing model. This model requires the input of a number of parameters, including share price, share exercise price, historical volatility, expected term risk-free interest rates and expected dividend yields. Although the assumptions used reflect management’s best estimates, they involve inherent uncertainties based on market conditions generally outside of the Company's control. (2) The fair value of the option-based awards granted on June 22, 2022, was $4.56 (after accounting for the Company’s 1-for-6 reverse stock split, which was effective on July 10, 2023 (the “Reverse Stock Split”)). (3) Other compensation consist of severance payments made. (4) Ms. D’Alvise ceased to be the Company’s President and CEO effective April 4, 2023. (5) Mr. Kohli, the Company’s former Chief Commercial Officer, was appointed CEO effective April 4, 2023. (6) Mr. Kumar was appointed VP of Program Management effective May 8, 2023. (7) Ms. D'Andrea was appointed VP of Clinical Operations effective May 8, 2023. (8) Dr. Lemieux ceased to be the Company's Chief Operating Officer (Canada) effective May 8, 2023. (9) Mr. Ford ceased to be the Company’s Chief Financial Officer on May 8, 2023, and was appointed as the Company’s interim Chief Financial Officer. On January 5, 2024, we announced the appointment of Robert J. DelAversano as the Company's new Principal Financial Officer, succeeding Mr. Ford. Mr. Ford continues to serve as a financial consultant on an as-needed basis. Outstanding Equity Awards at March 31, 2024 The following tables provide information about the number and value of the outstanding option-based awards held by the NEOs as of March 31, 2024 72 Option awards Name Number of securities underlying unexercised options (#) exercisable Number of securities underlying unexercised options (#) unexercisable Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) Option exercise price ($) Option expiration date Jan D'Alvise, Former President and CEO — — — $ — Prashant Kohli, CEO 15,515 5,169 — $ 9.90 November 12, 2031 7,294 5,206 — $ 5.34 June 22, 2032 52,084 156,250 — $ 2.64 July 14, 2033 41,668 — — $ 2.13 December 19, 2033 Amresh Kumar, VP Program Management 10,500 31,500 — $ 2.64 July 14, 2033 Carrie D'Andrea, VP Clinical Operations 10,500 31,500 — $ 2.64 July 14, 2033 Pierre Lemieux, Former COO, Canada — — — $ — Brian Ford, Former Interim CFO 35,990 11,994 — $ 9.90 November 12, 2031 16,044 11,456 — $ 5.34 June 22, 2032 The option awards and exercise prices listed above have been adjusted to account for the Reverse Stock Split. The option awards listed in the table above vest with respect to 1/12 on each quarterly anniversary thereafter over the following three years, subject to the executive officer’s continuous service with the Company through the vesting date. The option awards listed above will be cancelled 90 days after termination date, as per the Stock Option Plan. Employment Agreements with Named Executive Officers Jan D’Alvise, Former President and CEO On June 1, 2016, the Company entered into an executive employment agreement with Ms. D’Alvise. Pursuant to her executive employment agreement, Ms. D’Alvise’s annual base salary was set at $330,000 and she was eligible to receive annual performance bonuses based on a target amount of 50% of her annual base salary with a maximum of up to 80% of her annual base salary. In accordance with the terms and provisions of the executive employment agreement the Company entered into with Ms. D’Alvise, the Company had the right to terminate the executive’s employment at any time for “good and sufficient cause”, as defined in the employment agreement, without notice or severance. The Company had the right to terminate the executive’s employment at any time without cause or upon a Change of Control, as defined in the Stock Option Plan, by providing the executive with sixty days’ notice of termination and payment equal to twelve months’ base salary plus any bonus payable. The executive was able to resign from employment upon providing the Company with at least sixty days’ advance written notice. The executive was able to terminate employment with “good reason”, as defined in the executive employment agreement, in which case the Company would be required to make payment equal to twelve months’ base salary plus any bonus payable. Ms. D’Alvise ceased to be the Company’s President and CEO effective April 4, 2023. Prashant Kohli, Chief Executive Officer Mr. Kohli became Chief Executive Officer of Acasti on April 4, 2023. Pursuant to his employment arrangement, Mr. Kohli’s annual base salary is set at $400,000 and he is eligible to receive annual performance bonuses of up to 50% of his annual base salary. In accordance with the terms of Mr. Kohli’s employment arrangement, his employment could be terminated by the Company or by Mr. Kohli at any time with or without cause. Amresh Kumar, VP Program Management On May 8, 2023 we entered into a employee agreement with Amresh Kumar, pursuant to which he is entitled to an annual salary of $275,000 and he is eligible to receive annual performance bonuses of up to 30% of his annual base salary. Carrie D’Andrea, VP Clinical Operations 73 On May 8, 2023 we entered into a consulting agreement with Carrie D'Andrea (“Ms. D’Andrea's Consulting Agreement”). Ms. D’Andrea’s Consulting Agreement provides, among other things, that Ms. D'Andrea will serve as a non-employee vice-president of clinical operations on a full-time basis, in exchange for a fee of $18,000 per month. There is no arrangement or understanding between Ms. D’Andrea and any other persons pursuant to which Ms. D’Andrea was selected as an officer. On July 1, 2023, we entered into an employment agreement with Ms. D'Andrea, pursuant to which she is entitled to an annual salary of $275,000 and she is eligible to receive annual performance bonuses of up to 30% of her annual base salary. Pierre Lemieux, Former COO (Canada) On September 26, 2017, the Company entered into an executive employment agreement with Dr. Pierre Lemieux. Pursuant to his executive employment agreement, Dr. Lemieux’s annual base salary was set at CAD$253,700 and he was eligible to receive annual performance bonuses of up to 40% of his annual base salary. In accordance with the terms and provisions of Dr. Lemieux’s executive employment agreement, the Company had the right to terminate the executive’s employment at any time for “good and sufficient cause”, as defined in the employment agreement, without notice or severance. The Company had the right to terminate the executive’s employment at any time without cause or upon a Change of Control, as defined in the Stock Option Plan, by providing the executive with thirty days’ notice of termination and payment equal to twelve months’ base salary plus any bonus payable. The executive was entitled to resign from employment upon providing us with at least sixty days' advance written notice. The executive was able to resign from employment upon providing the Company with at least sixty days’ advance written notice. The executive was able to terminate employment with “good reason”, as defined in the executive employment agreement, in which case the Company would be required to make payment equal to twelve months’ base salary. Dr. Lemieux ceased to be the Company's Chief Operating Officer (Canada) effective May 8, 2023. Dr. Lemieux received total payments of $431,874 upon termination, that included a one-time separation payment of $347,316. Brian Ford, Interim CFO On September 13, 2021, we entered into an executive employment agreement with Mr. Ford. Pursuant to his executive employment agreement, Mr. Ford’s annual base salary was set at CAD$350,000 and he was eligible to receive annual performance bonuses of up to 40% of his annual base salary. In accordance with the terms and provisions of the executive employment agreement we entered into with Mr. Ford, we were entitled to terminate his employment at any time with cause. We were entitled to terminate the executive’s employment without cause by providing the executive employee, with either a payment equal to six months of base salary, plus two months of base salary for each completed year of service, to a maximum of twelve months in total, or a payment equal to twelve months of base salary in the event that such a termination occurs within three months following a change of control, as defined in our stock option plan. The executive was entitled to resign from employment and upon providing us with at least eight weeks of advance written notice. Effective May 8, 2023, Mr. Ford employment as the Company’s Chief Financial Officer was terminated and he is entitled to severance payment in accordance with the terms of his executive employment agreement. Clawback Policy We have a compensation recoupment, or clawback, policy, which we adopted to comply with Nasdaq listing standards implementing Exchange Act Rule 10D-1. The clawback policy includes mandatory recoupment of excess incentive-based compensation received by a covered executive (including the Named Executive Officers) on or after October 2, 2023 in the event of a restatement of the Company’s consolidated financial statements due to material non-compliance with any financial reporting requirement under federal securities laws, as required by Exchange Act Rule 10D-1. Non-Executive Director Compensation Our non-executive directors’ compensation consists of an annual fixed compensation of $60,000 for the chairman of the Board and $35,000 for the other non-executive Board members. In addition, the chairperson of the Audit Committee and the chairperson of the GHR committee receive additional compensation of $15,000 and $12,000, respectively, while members of the Audit Committee and the GHR committee receive additional compensation of $7,500 and $6,000, respectively. The directors are also entitled to a fee of $1,000 per non-regularly scheduled Board meeting as well as a reimbursement for traveling and other reasonable expenses properly incurred by them in attending meetings of the Board or any committee or in otherwise serving us, in accordance with our policy on travel and expenses. Following their first election to our Board, non-executive directors are eligible to receive an initial equity grant of up to 150% of their annual cash retainer worth of stock options vesting monthly in equal installments over a 12-month period, subject to the other terms and conditions set forth under the heading “Stock Option Plan.” In addition to their initial grant, non-executive directors are eligible to receive an annual equity-based award equal to 100% of their total annual cash retainer vesting monthly in equal installments over a 12-month period. These awards will be granted at the same time that we are performing our annual performance review for our employees, subject to availability of common shares and subject to the terms and conditions described under the headings “Stock Option Plan” and 74 “Equity Incentive Plan.” The level of these awards are intended to be consistent with equivalent awards by comparable companies obtained from our benchmarking exercise and in accordance with the recommendations obtained from our independent compensation consultant. The following table sets forth compensation for each non-executive director for the fiscal year ended March 31, 2024. Mr. Kohli does not receive any additional compensation for his service as a director. Information regarding the compensation for Mr. Kohli is reflected in the “2024 Summary Compensation Table” set forth above. The total compensation for our non-executive directors during fiscal year ended March 31, 2024, was as follows: Name Fees earned or paid in cash ($) Stock awards ($) Option awards ($) (1) Non-equity incentive plan compensation ($) Nonqualified deferred compensation earnings ($) All other compensation ($) Total ($) Vimal Kavuru (2) 85,100 — 42,332 — — — 127,432 Donald Olds (3) 30,400 — 29,972 — — — 60,372 Michael Derby (3) 25,400 — 33,378 — — — 58,778 Brian Davis (4) 33,600 — 23,897 — — — 57,497 George Kottayil (4) 21,000 — 23,897 — — — 44,897 Edward Neugeboren (4) 29,100 — 23,897 — — — 52,997 (1) Calculated in accordance with FASB ASC Topic 718, “Compensation — Stock Compensation.” The fair value of stock options is estimated at the grant date using the Black-Scholes option pricing model. This model requires the input of a number of parameters, including share price, share exercise price, expected share price volatility, expected time until exercise and risk-free interest rates. Although the assumptions used reflect management’s best estimates, they involve inherent uncertainties based on market conditions generally outside of the Company's control. (2) Mr. Kavuru had 37,017 option awards outstanding at March 31, 2024. (3) Mr. Olds and Mr. Derby did not stand for re-election at the Company's 2023 Annual General Meeting held on October 10, 2023. Mr. Olds and Mr. Derby had 30,939 and 26,667 option awards outstanding at March 31, 2024, respectively. (4) Mr. Davis, Mr. Kottayil, and Mr. Neugeboren each had 22,500 option awards outstanding at March 31, 2024. Item 402(v) Pay Versus Performance The disclosure included in this section is prescribed by SEC rules and does not necessarily align with how the Company or the GHR committee view the link between the Company’s performance and named executive officer pay. This disclosure is intended to comply with the requirements of Item 402(v) of Regulation S-K applicable to “smaller reporting companies.” Required Tabular Disclosure of Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. The following table sets forth information concerning Compensation Actually Paid (“CAP”) to our Principal Executive Officers (“PEO”) and non-PEO NEOs versus our total shareholder return (“TSR”) and net income (loss) performance results for the fiscal years ended March 31, 2024, 2023, and 2022. The amounts set forth below under the headings “Compensation Actually Paid to PEO” and “Average Compensation Actually Paid to Non-PEO NEOs” have been calculated in a manner consistent with Item 402(v) of Regulation S-K. Use of the term CAP is required by the SEC’s rules and as a result of the calculation methodology required by the SEC, such amounts differ from compensation actually received by the individuals and the compensation decisions described in the “Executive Compensation Summary” section above. The 2023 CAP to our PEO and the average CAP to our non-PEO NEOs reflects the following adjustments required by the applicable SEC rules from the total compensation reported in the Summary Compensation Table (“SCT”): 75 Year Summary compensation table total for PEO 1 ($) Compensation actually paid to PEO 1 ($) Summary compensation table total for PEO 2 ($) Compensation actually paid to PEO 2 ($) Average summary compensation table total for non-PEO NEOs ($) Average compensation actually paid to non-PEO NEOs ($) Value of initial fixed $100 investment based on: Total shareholder return (TSR) ($) Net income (loss) ($ in 000s) (a) (b) (c) (d) (e) (f) (g) (h) (i) March 31, 2024 631,027 631,027 987,630 1,224,297 428,593 718,671 12.11 (12,853 ) March 31, 2023 1,132,202 705,403 511,743 454,640 504,564 596,611 9.32 (42,429 ) March 31, 2022 1,546,663 445,161 655,256 141,000 729,703 766,415 26.27 (9,819 ) (1) Our Total Shareholder Return (“TSR”) for each of the applicable fiscal years is calculated based on a fixed investment of $100 at the applicable measurement point (March 31, 2021) on the same cumulative basis as is used in Item 201(e) of Regulation S-K. (2) Net loss is as reported in our consolidated financial statements. The 2024 CAP to our PEOs and the average CAP to our non-PEO NEOs reflects the following adjustments required by the applicable SEC rules from the total compensation reported in the SCT: PEO 1 PEO 2 Average of Non-PEO NEOs Total Reported in 2024 SCT $ 631,027 $ 987,630 $ 428,593 Less: value of equity award reported in the SCT $ — $ (387,660 ) $ (221,088 ) Add: year-end value of equity awards granted in 2024 that are unvested and outstanding $ — $ 201,041 $ 120,473 Add: change in fair value (from prior year-end) of prior year equity awards that are unvested and outstanding $ — $ 23,482 $ 140,187 Add: fair market value of equity awards granted in 2024 and that vested in 2024 $ — $ 229,097 $ 127,068 Add: change in fair value (from prior year-end) of prior year equity awards that vested in 2024 $ — $ 170,707 $ 123,438 Compensation Actually Paid for 2024 $ 631,027 $ 1,224,297 $ 718,671 In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table above. Compensation Actually Paid and Net Income (Loss) Due to the nature of our consolidated financial statements and primary focus on research and development of novel therapies, we have not historically utilized net income (loss) as a performance measure for our executive compensation program. As a result, we do not believe there is any meaningful relationship between our net loss and compensation actually paid to our NEOs during the periods presented. Compensation Actually Paid and TSR We do not utilize TSR in our executive compensation program. However, we do utilize several other performance measures to align executive compensation with performance. As described in more detail above, part of the compensation NEOs are eligible to receive consists of annual performance-based cash bonuses that are designed to provide appropriate incentives to the Company’s executives to achieve defined annual corporate goals and to reward executives for individual achievement towards these goals, subject to certain employment criteria. Additionally, the Board views stock options, which are an integral part of our executive compensation program, as related to company performance although not directly tied to TSR, because they provide value only if the market price of our common shares increase, and if the executive officer continues in the Company’s employment over the vesting period. These stock option awards align the Company’s executive officers’ interests with those of its shareholders by providing a continuing financial incentive to maximize long-term value for Shareholders and by encouraging the Company’s executive officers to continue in employment for the long-term. 76 The following graphs sets forth the relationship between CAP to our PEO 1, CAP to our PEO 2, the average of CAP to our Non-PEO NEOs, and the Company's net loss TSR over the period covering 2024, 2023, and 2022. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Equity Compensation Plan Information 77 The following table sets forth certain information regarding the Company’s equity compensation plans as of March 31, 2024: Plan category (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted- average exercise price of outstanding options, warrants and rights (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders (Stock Option Plan)(1): 721,793 $ 3.68 761,347 Equity compensation plans approved by security holders (Equity Incentive Plan)(2): — $ — — Equity compensation plans not approved by security holders: — $ — — Total 721,793 $ 3.68 761,347 Notes: (1) The total number of common shares reserved for issuance under the Company’s Stock Option Plan is limited by the number of awards that are outstanding under the Company’s Equity Incentive Plan such that the total number of common shares available for issuance under both stock-based compensation plans shall not exceed 1,483,140. A summary of certain material provisions of the Company’s stock option plan is available under “Item 11. Executive Compensation – Summary of our Compensation Programs – Stock Option Plan.” (2) The total number of common shares reserved for issuance under the Company’s Equity Incentive Plan is limited by the number of options that are outstanding under the Stock Option Plan such that the total number of common shares available for issuance under both stock-based compensation plans shall not exceed 1,483,140. A summary of certain material provisions of the Equity Incentive Plan is available under “Item 11. Executive Compensation – Summary of our Compensation Programs – Equity Incentive Plan.” Security Ownership of Certain Beneficial Owners The following table sets forth certain information regarding beneficial ownership of our common shares as of May 31, 2024 by each director and the named executive officers identified above, and all directors and executive officers as a group. Beneficial ownership is 78 determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. All common shares have the same voting rights. For the purposes of calculating percentage ownership, as of May 31, 2024, 9,399,404 common shares were issued and outstanding, and, for any individual who beneficially owns common shares represented by options exercisable within 60 days of May 31, 2024, these shares are treated as if outstanding for that person, but not for any other person. Name and Address of Beneficial Owner (1) Amount and Nature of Beneficial Ownership Percentage of Common Shares Prashant Kohli (2) 168,775 1.40% Amresh Kumar (3) 26,763 * Carrie D'Andrea (4) 15,645 * Brian Davis (5) 12,430 * Vimal Kavuru (6) 460,215 4.88% George Kottayil (7) 507,128 5.39% Edward Neugeboren (8) 50,325 * Brian Ford (9) 58,324 * Jan D'Alvise — — Pierre Lemieux — — SS Pharma LLC (10) 931,743 9.91% Shore Pharma LLC (11) 1,188,076 12.64% AIGH Capital Management, LLC, AIGH Investment Partners LLC, and Orin Hirschman (12) 567,812 6.04% Bank of America Corporation (13) 494,698 5.26% Rajitha Grace 2018 Irrevocable Trust (14) 781,592 8.32% Directors and officers as a group (9 persons) 1,270,771 13.13% * Less than 1%. Notes: 1. Unless otherwise indicated, the address of each of the executive officers and directors named above is 103 Carnegie Center Suite 300 Princeton, New Jersey 08540 2. Includes 147,418 common shares that Prashant Kohli may acquire through the exercise of share options within 60 days hereof, with exercise prices ranging between $2.13 and $9.90. 3. Includes 15,645 common shares that Amresh Kumar may acquire through the exercise of share options within 60 days hereof, with exercise price of $2.64. 4. Includes 15,645 common shares that Carrie D'Andrea may acquire through the exercise of share options within 60 days hereof, with exercise price of $2.64. 5. Includes 12,430 common shares that Brian Davis may acquire through the exercise of share options within 60 days hereof, with exercise price of $2.13. 6. Includes 426,323 common shares held by Kavuru 2017 Grace Therapeutics for which Vimal is trustee, and 33,892 common shares that Vimal Kavuru may acquire through the exercise of share options within 60 days hereof, with exercise prices ranging between $2.13 and $9.90. 7. Includes 494,698 common shares, of which 124,344 shares are held directly by Kottayil Grace Pharma LLC by which Mr. Kottayil is a Manager and Member of, and 12,430 common shares that George Kottayil may acquire through the exercise of share options within 60 days hereof, with exercise price of $2.13. 8. Includes 37,895 common shares and 12,430 common shares that Edward Neugeboren may acquire through the exercise of share options within 60 days hereof, with exercise price of $2.13. 9. Includes 58,324 common shares that Brian Ford may acquire through the exercise of share options within 60 days hereof, with exercise prices ranging between $5.05 and $9.90. 10. The principal office and business address of SS Pharma LLC is 330 S Poplar Ave, Suite 103-I, Pierre, SD 57501. SS Pharma LLC is a holding company owned by Rajitha Grace 2023 Grantor Trust. Information was provided by our transfer agent, Computershare Investor Services Inc. 11. The principal office and business address of Shore Pharma LLC is 330 S Poplar Ave, Suite 103-I, Pierre, SD 57501. Shore Pharma LLC is a holding company owned by The ANSUSHRA 2023 Grantor Trust. Information was provided by our transfer agent, Computershare Investor Services Inc. 12. The principal office and business address of AIGH Capital Management, LLC, AIGH Investment Partners LLC, and Orin Hirschman is 6006 Berkeley Avenue Baltimore, MD 21209. Mr. Hirschman, is the Managing Member of AIGH Capital Management, LLC and president of AIGH LLC, with respect to shares of Common Stock indirectly held through AIGH CM, 79 directly by AIGH LLC and Mr. Hirschman and his family directly. Information obtained from Schedule 13-G filed on March 27, 2024. 13. The principal office and business address of Bank of America Corporate Center is 100 N Tryon Street Charlotte, NC 28255. Information obtained from Schedule 13-G filed on December 31, 2023. 14. The principal office and business address of Rajitha Grace 2018 Irrevocable Trust is 330 S Poplar Ave, Suite 103-I, Pierre, SD 57501. Information was provided by our transfer agent, Computershare Investor Services Inc. Changes in Control There existed no change in control arrangements at March 31, 2024 Item 13. Certain Relationships and Related Transactions and Director Independence . Related Party Transaction As set forth in its charter, the Audit Committee is tasked with the review and approval of any proposed transactions with related persons of the Company. After initial review and approval of any proposed transaction with a related person, the Audit Committee continues to oversee and review any such transactions on a quarterly basis to ensure that such transaction continues to fall within the parameters of such initial approval. Other than as set forth below, since April 1, 2022, there were no transactions or any currently proposed transactions in which the Company was or is to be a participant and the amounts exceeds $120,000, and in which any related person had or will have a direct or indirect interest. Private Placement Offering On September 24, 2023, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and accredited investors in connection with a private placement offering of our securities (the “Offering”). Pursuant to the Purchase Agreement, sold 1,951,371 Class A common shares, no par value per share (the “Common Shares”), at a purchase price of $1.848 per Common Share and pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 2,106,853 Common Shares at a purchase price equal to the purchase price per Common Share less $0.0001. Each Pre-funded Warrant is exercisable for one Common Share at an exercise price of $0.0001 per Common Share, was immediately exercisable, and will expire once exercised in full. Pursuant to the Purchase Agreement, we also issued to such institutional and accredited investors common warrants (the “Common Warrants”) to purchase Common Shares, exercisable for an aggregate of 2,536,391 Common Shares. Under the terms of the Purchase Agreement, for each Common Share and each Pre-funded Warrant issued in the Offering, an accompanying five-eighths (0.625) of a Common Warrant was issued to the purchaser thereof. Each whole Common Warrant is exercisable for one Common Share at an exercise price of $3.003 per Common Share, was immediately exercisable, and will expire on the earlier of (i) the 60th day after the date of the acceptance by the U.S. Food and Drug Administration (the “FDA”) of a New Drug Application for our product candidate GTX-104 or (ii) five years from the date of issuance. The Offering closed on September 25, 2023. The net proceeds to us from the Offering were approximately $7.3 million, after deducting fees and expenses. Shore Pharma LLC, an entity controlled by Vimal Kavuru, the Chair of our Board, and SS Pharma LLC, the beneficial owners of 6.9% and 5.5%, respectively, of the Common Shares prior to the Offering, each a related party of Acasti, participated in the Offering. Each of Shore Pharma LLC and SS Pharma LLC purchased $1,250,000 of securities from us in the Offering. Director Independence Our board of directors (the "Board") believes that, in order to maximize its effectiveness, the Board must be able to operate independently. A majority of directors must satisfy the applicable tests of independence set forth in the Nasdaq rules and promulgated by the SEC, such that the Board complies with all independence requirements under applicable corporate and securities laws and stock exchange requirements applicable to us. No director will be independent unless the Board has affirmatively determined that the director has no material relationship with us or any of our affiliates, either directly or indirectly or as a partner, shareholder or officer of an organization that has a relationship with us or our affiliates. Such determinations will be made on an annual basis and, if a director joins the board of directors between annual meetings, at such time. Independent Directors 80 The Board determined that Mr. Kavuru, Mr. Davis and Mr. Neugeboren are independent within the meaning of the Nasdaq rules. In making its independence determination, the Board considered Mr. Kavuru’s participation in the Offering, as described above. Chairman of the Board Mr. Kavuru acts as chairman of the Board. His duties and responsibilities consist of the oversight of the quality and integrity of the Board’ practices. Board Mandate The Board is responsible for overseeing management in carrying out the business and affairs of the Company. Directors are required to act and exercise their powers with reasonable prudence in the best interests of the Company. The Board agrees with and confirms its responsibility for overseeing management's performance in the following particular areas: • approving and monitoring the Company’s compliance procedures; • establishing and developing the Company’s corporate governance principles and committees; • evaluating the strategic plan of the Company; • identification and oversight of the principal risks associated with the business of the Company and application of appropriate systems to manage and mitigate such risks; • planning for succession of management; • the Company's policies regarding communications with its shareholders and others; and • the integrity of the internal controls and management information systems of the Company. In carrying out its mandate, the Board relies primarily on management to provide it with regular detailed reports on the operations of the Company and its financial position. The Board reviews and assesses these reports and other information provided to it at meetings of the Board and/or of its committees. At least annually, the Board approves a strategic plan for the Company, taking into account, among other things, the opportunities and risks of the Company’s business, its risk appetite, emerging trends, and the competitive environment in the industry. Position Descriptions A written position description has been approved for the chairs of each committee of the Board. The primary role and responsibility of the chair of each committee of the Board is to: (i) in general, ensure that the committee fulfills its mandate, as determined by the Board and in accordance with the committee’s charter; (ii) chair meetings of the committee; (iii) report to the Board; and (iv) act as liaison between the committee and the Board and our management. The Board has adopted a written position description for the chairman of the Board. The chairman of the Board is responsible for leading the board to fulfill its duties under the Board’s mandate as independent of management and acting as an advisor to the chief executive officer. The chairman’s duties include, but are not limited to, setting meeting agendas, approving and supervising management’s progress towards achieving strategic goals, chairing meetings and working with the respective committee and management to ensure, to the greatest extent possible, the effective functioning of the committee and the Board. The chairman must oversee that the relationship between the Board, management of the Company, the Company’s shareholders and other stakeholders are effective, efficient, and further to the best interests of the Company. Orientation and Continuing Education We provide orientation for new appointees to the Board and committees in the form of informal meetings with members of the Board and senior management, complemented by presentations on the main areas of our business. The Board does not formally provide continuing education to its directors, as directors are experienced members. The Board relies on third-party professional assistance, when judged necessary, in order to be educated/updated on a particular topic. Nomination of Directors The Board receives recommendations from the GHR committee, but retains responsibility for managing its own affairs by, among other things, giving its approval for the composition and size of the Board, and the selection of candidates nominated for election to the Board. 81 The GHR committee initially evaluates candidates for nomination for election as directors, having regard to the background, diversity, employment, and qualifications of possible candidates. The selection of the nominees for the Board is made by the other members of the Board, based on our needs and the qualities required for the Board, including ethical character, integrity and maturity of judgment of the candidates; the level of experience of the candidates; their ideas regarding the material aspects of our business; the expertise of the candidates in fields relevant to us while complementing the training and experience of the other members of the Board; the will and ability of the candidates to devote the necessary time to their duties to the Board and its committees; the will of the candidates to serve on the Board for numerous consecutive financial periods; and the will of the candidates to refrain from engaging in activities which conflict with the responsibilities and duties of a director. The Board researches the training and qualifications of potential new directors which seem to correspond to the selection criteria of the Board and, depending on the results of said research, organizes meetings with the potential candidates. In the case of incumbent directors whose terms of office are set to expire, the Board will review such directors’ overall service to us during their term of office, including the number of meetings attended, level of participation, quality of performance and any transactions of such directors with us during their term of office. We may use various sources in order to identify the candidates for the Board, including our own contacts and the references of other directors, officers, advisors and executive placement agencies. We will consider director candidates recommended by shareholders and will evaluate those director candidates in the same manner in which we evaluate candidates recommended by other sources. In making recommendations for director nominees for the annual meeting of shareholders, we will consider any written recommendations of director candidates by shareholders received by our corporate secretary not later than 120 days before the anniversary of the previous year’s annual meeting of shareholders. Recommendations must include the candidate’s name, contact information and a statement of the candidate’s background and qualifications, and must be mailed to us. Following the selection of the candidates by the board of directors, we will propose a list of candidates to the shareholders, for our annual meeting of shareholders. The Board does not have a separate nominating committee and has not adopted any formal written director term limit policy. Proposed nominations of director candidates are evaluated by our GHR committee. GHR Committee The mandate of the GHR committee consists of the evaluation of the proposed nominations of senior executives and director candidates to our Board; recommending for board approval, if appropriate; revisions of our corporate governance practices and procedures; developing new charters for any new committees established by the Board; monitoring relationships and communication between management and the Board; monitoring emerging best practices in corporate governance and oversight of governance matters; and assessing the Board and its committees. The GHR committee is also in charge of establishing the procedures which must be followed by us to comply with applicable requirements of Nasdaq regarding corporate governance. The GHR committee has the responsibility of evaluating the compensation, performance incentives as well as the benefits granted to our management in accordance with their responsibilities and performance as well as to recommend the necessary adjustments to our Board. The GHR committee also reviews the amount and method of compensation granted to the directors. The GHR committee may retain an external firm in order to assist it during the execution of its mandate. The GHR committee considers time commitment, comparative fees, and responsibilities in determining compensation. The GHR committee’s charter can be found on the Company’s website at https://www.acasti.com/en/investors/corporate-governance/governance-documents. Periodic Assessments The Board, its committees and each director are subject to periodic evaluations of their efficacy and contribution. The evaluation procedure consists of identifying any shortcomings and implementing adjustments proposed by directors at the beginning and during meetings of the Board and of each of its committees. Among other things, these adjustments deal with the level of preparation of directors, management and consultants employed by us, the relevance and sufficiency of the documentation provided to directors and the time allowed to directors for discussion and debate of items on the agenda. Director Term Limits The Board actively considers the issue of term limits from time to time. At this time, the Board does not believe that it is in our best interests to establish a limit on the number of times a director may stand for election. While such a limit could help create an environment where fresh ideas and viewpoints are available to the Board, a director term limit could also disadvantage us through the loss of the beneficial contribution of directors who have developed increasing knowledge of, and insight into, us and our operations over a period 82 of time. As we operate in a unique industry, it is difficult to find qualified directors with the appropriate background and experience and the introduction of a director term limit would impose further difficulty. Policies Regarding the Representation of Women on the Board and Among Executive Officers We have not adopted a formal written policy regarding diversity amongst executive officers and members of the Board, including mechanisms for Board renewal, in connection with, among other things, the identification and nomination of women directors. Nevertheless, we recognize that gender diversity is a significant aspect of diversity and acknowledge the important role that women with appropriate and relevant skills and experience can play in contributing to the diversity of perspective on the Board. Rather than considering the level of representation of women for directorship and executive officer positions when making Board or executive officer appointments, we consider all candidates based on their merit and qualifications relevant to the specific role. While we recognize the benefits of diversity at all levels within our organization, we do not currently have any targets, rules or formal policies that specifically require the identification, consideration, nomination, or appointment of candidates for directorship or executive management positions or that would otherwise force the composition of our Board and executive management team. Item 14. Principal Accounting Fees and Services Audit Fees Our current independent registered public accounting firm is KPMG LLP, U.S. ("KPMG"). Change in Accountant On December 11, 2023, the Audit Committee (the “Audit Committee”) of the Company's Board of Directors (the "Board") recommended to the Board and the Board approved the dismissal of Ernst & Young LLP (Canada) ("E&Y") who had been serving as the Company’s independent registered public accounting firm since February 22, 2023. The report of E&Y on the consolidated financial statements of the Company as of and for the fiscal year ended March 31, 2023 did not contain any adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles. On December 11, 2023, in connection with the Company’s dismissal of E&Y, the Audit Committee recommended to the Board and the Board approved the engagement of KPMG as its new independent registered public accounting firm to audit the Company’s consolidated financial statements for the fiscal year ending March 31, 2024. The decision to engage KPMG was recommended by the Audit Committee, and approved by the Board, after taking into account KPMG’s location in the United States, the results of a competitive review process and other business factors. Prior to our engagement of E&Y on February 22, 2023, KPMG LLP, Montreal, Quebec, Canada (“KPMG Canada”) was previously our independent registered public accounting firm. On February 22, 2023, the Audit Committee and Board approved the dismissal of KPMG Canada as our independent registered public accounting firm. Independent Registered Public Accounting Firm Fees and Services Audit Fees “Audit fees” consist of fees for professional services for the audit of our annual financial statements and fees related to securities filings. Audit fees for KPMG were $300 thousand for the fiscal year ended March 31, 2024. Our previous independent registered public accounting firms were E&Y, which audited our annual financial statements for our fiscal year ended March 31, 2023, and KPMG Canada, which audited our annual financial statements for our fiscal year ended March 31, 2022. Audit fees for E&Y were CAD $143 thousand and CAD $425 thousand for the fiscal years ended March 31, 2024 and March 31, 2023, respectively. Audit fees for KPMG Canada, were nil and CAD $64 thousand for the fiscal years ended March 31, 2024 and March 31, 2023, respectively. Audit-Related Fees “Audit-related fees” consist of fees for professional services that are reasonably related to the performance of the audit or review of our financial statements, and which are not reported under “Audit Fees” above. KPMG Canada, billed nil and CAD $52 thousand for audit related fees for the fiscal years ended March 31, 2024, and March 31, 2023, respectively. Tax Fees “Tax fees” consist of fees for professional services for tax compliance, tax advice and tax planning. E&Y billed CAD $47 thousand and nil for tax fees for the fiscal years ended March 31, 2024, and March 31, 2023, respectively. All Other Fees 83 “Other fees” include all other fees billed for professional services other than those mentioned hereinabove. We incurred no other fees for the fiscal years ended March 31, 2024 and March 31, 2023. Pre-Approval Policies and Procedures The Audit Committee approves all audit, audit-related services, tax services and other non-audit related services provided by the external auditors in advance of any engagement. Under the Sarbanes-Oxley Act of 2002, audit committees are permitted to approve certain fees for non-audit related services pursuant to a de minimus exception prior to the completion of an audit engagement. Non-audit related services satisfy the de minimus exception if the following conditions are met: • the aggregate amount of all non-audit services that were not pre-approved is reasonably expected to constitute no more than five per cent of the total amount of fees paid by us and our subsidiaries to our external auditors during the fiscal year in which the services are provided; • we or our subsidiaries, as the case may be, did not recognize the services as non-audit services at the time of the engagement; and • the services are promptly brought to the attention of the audit committee and approved, prior to the completion of the audit, by the audit committee or by one or more of its members to whom authority to grant such approvals had been delegated by the audit committee. None of the services described above under “Principal Accounting Fees and Services” were approved by the Audit Committee pursuant to the de minimus exception. 84 PART IV Item 15. Exhibits, Financial Statement Schedules (a)(1) Financial Statements—The consolidated financial statements included in Item 8 are filed as part of this Annual Report on Form 10-K. (a)(2) Financial Statement Schedules—All schedules have been omitted because they are not applicable or required, or the information required to be set forth therein is included in the consolidated financial statements or notes thereto included in Item 8 of this Annual Report on Form 10-K. (a)(3) Exhibits—The exhibits required by Item 601 of Regulation S-K are listed in paragraph (b) below. (b) Exhibits—The exhibits listed on the Exhibit Index below are filed herewith or are incorporated by reference to exhibits previously filed with the SEC. EXHIBITS INDEX Exhibit No. Description 2.1 Agreement and Plan of Merger dated as of May 7, 2021 among Acasti Pharma Inc., Acasti Pharma U.S., Inc. and Grace Therapeutics Inc. (incorporated by reference to Exhibit 2.1 from Form 8-K filed with the SEC on May 7, 2021) 3.1 Articles of Incorporation, as amended (incorporated by reference to Exhibit 4.1 from Form S-3 (File No. 333-274899) filed with the SEC on October 6, 2023) 3.2 Amended and Restated General By-Law (incorporated by reference to Exhibit 3.4 from Form 10-Q (File No. 001-35776) filed with the SEC on August 11, 2023) 3.3 Advance Notice bylaw No. 2013-1 (incorporated by reference to Exhibit 4.3 from Form S-8 (File No. 333-191383) filed with the Commission on September 25, 2013) 4.1 Specimen Certificate for Common Shares of Acasti Pharma Inc. (incorporated by reference to Exhibit 2.1 from Form 20-F (File No. 001-35776) filed with the Commission on June 6, 2014) 4.2 Description of Securities (incorporated by reference to Exhibit 4.6 from Form 10-K (File No. 001-35776) filed with the SEC on June 21, 2022) 4.3 Form of Common Warrant, dated September 25, 2023 (incorporated by reference to Exhibit 4.1 from Form 8-K (File No. 001-35776) filed with the SEC on September 26, 2023) 4.4 Form of Pre-Funded Warrant, dated September 25, 2023 (incorporated by reference to Exhibit 4.2 from Form 8-K (File No. 001-35776) filed with the SEC on September 26, 2023) 10.1+ Acasti Pharma Inc. Stock Option Plan, as amended August 4, 2022 (incorporated by reference from Schedule A to the definitive proxy statement filed with the SEC on August 31, 2022) 10.2+ Form of Stock Option Agreement for Employees under the Acasti Pharma Inc. Stock Option Plan (incorporated by reference to Exhibit 10.1 from Form 10-Q (File No. 001-35776) filed with the SEC on August 11, 2023) 10.3+ Form of Stock Option Agreement for Non-Employee Directors under the Acasti Pharma Inc. Stock Option Plan (incorporated by reference to Exhibit 10.2 from Form 10-Q (File No. 001-35776) filed with the SEC on August 11, 2023) 10.4+ Acasti Pharma Inc. Equity Incentive Plan, as amended August 4, 2022 (incorporated by reference from Schedule B to the definitive proxy statement filed with the SEC on August 31, 2022) 10.5+ Offer Letter by and between Robert J. DelAversano and the Company, dated November 21, 2023 (incorporated by reference to Exhibit 10.1 from Form 8-K (File No. 001-35776) filed with the Commission on January 8, 2024) 85 10.6 Settlement Agreement, dated October 18, 2023, by and between the Company and Aker BioMarine Antarctic AS (incorporated by reference to Exhibit 10.1 from Form 8-K (File No. 001-35776) filed with the SEC on October 23, 2023) 10.7 Form of Securities Purchase Agreement, dated September 24, 2023, by and between Acasti Pharma Inc. and each of the Purchasers signatory thereto (incorporated by reference to Exhibit 10.1 from Form 8-K (File No. 001-35776) filed with the SEC on September 26, 2023) 16.1 Letter from KPMG LLP (Canada), dated February 22, 2023 (incorporated by reference to Exhibit 16.1 from Form 8-K (File No. 001-35776) filed with the SEC on February 22, 2023) 16.2 Letter from Ernst & Young LLP (Canada), dated December 15, 2023 (incorporated by reference to Exhibit 16.1 from Form 8-K (File No. 001-35776) filed with the SEC on December 15, 2023) 21.1* List of Subsidiaries 23.1* Consent of KPMG LLP, an Independent Registered Public Accounting Firm. 23.2* Consent of Ernst & Young LLP, an Independent Registered Public Accounting Firm. 31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. 31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. 32.1* Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1* Acasti Pharma Inc. Incentive Compensation Recoupment Policy 101.INS* Inline 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 and contained in Exhibit 101) * Filed or furnished herewith. + Management contract, compensatory plan or arrangement. Item 16. Form 10-K Summary None. 86 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: June 21, 2024 ACASTI PHARMA INC. By: /s/ Prashant Kohli Name: Prashant Kohli Title: Chief Executive Officer and (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Prashant Kohli Chief Executive Officer June 21, 2024 Prashant Kohli (Principal Executive Officer) /s/ Robert DelAversano Principal Financial Officer June 21, 2024 Robert DelAversano (Principal Financial Officer and Principal Accounting Officer) /s/ Brian Davis Director June 21, 2024 Brian Davis /s/Vimal Kavuru Director June 21, 2024 Vimal Kavuru /s/Edward Neugeboren Director June 21, 2024 Edward Neugeboren /s/George Kottayil Director June 21, 2024 George Kottayil 87 ACASTI PHARMA INC. Consolidated Financial Statements For the years ended March 31, 2024 and 2023 Reports of Independent Registered Public Accounting Firms 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 the Consolidated Financial Statements F- 7 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Acasti Pharma Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Acasti Pharma Inc. and subsidiaries (the Company) as of March 31, 2024, the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ KPMG LLP We have served as the Company’s auditor since 2023. Philadelphia, Pennsylvania June 21, 2024 F- 1 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Acasti Pharma Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Acasti Pharma Inc. (the “Company”) as of March 31, 2023, the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the year ended March 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023 and the results of its operations and its cash flows for the year ended March 31, 2023, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Ernst & Young LLP We served as the Company’s auditor in 2023. Montréal, Canada June 23, 2023, except for the effects of the reverse stock split described in Note 1, as to which the date is June 21, 2024 F- 2 ACASTI PHARMA INC. Consolidated Balance Sheets March 31, 2024 March 31, 2023 (Expressed in thousands except share data) $ $ Assets Current assets: Cash and cash equivalents 23,005 27,875 Short-term investments — 15 Receivables 722 802 Prepaid expenses 283 598 Total current assets 24,010 29,290 Operating lease right of use asset — 463 Equipment, net 24 104 Intangible assets 41,128 41,128 Goodwill 8,138 8,138 Total assets 73,300 79,123 Liabilities and Shareholders’ equity Current liabilities: Trade and other payables 1,684 3,336 Operating lease liability — 75 Total current liabilities 1,684 3,411 Derivative warrant liabilities 4,359 — Operating lease liability — 410 Deferred tax liability 5,514 7,347 Total liabilities 11,557 11,168 Commitments and contingencies (Note 13) Shareholders’ equity: Class A common shares, no par value per share; unlimited shares authorized; 9,399,404 and 7,435,533 shares issued and outstanding as of March 31, 2024 and 2023, respectively 261,038 258,294 Class B, C, D and E common shares, no par value per share; unlimited shares authorized; none issued and outstanding — — Additional paid-in capital 17,862 13,965 Accumulated other comprehensive loss ( 6,038 ) ( 6,038 ) Accumulated deficit ( 211,119 ) ( 198,266 ) Total shareholders' equity 61,743 67,955 Total liabilities and shareholders’ equity 73,300 79,123 The accompanying notes are an integral part of these consolidated financial statements F- 3 ACASTI PHARMA INC. Consolidated Statements of Operations and Comprehensive Loss Year ended March 31, 2024 Year ended March 31, 2023 (Expressed in thousands, except share and per data) $ $ Operating expenses Research and development expenses, net of government assistance ( 4,683 ) ( 9,972 ) General and administrative expenses ( 6,432 ) ( 7,614 ) Sales and marketing ( 252 ) ( 661 ) Restructuring cost ( 1,485 ) — Impairment of intangible assets — ( 28,682 ) Impairment of goodwill — ( 4,826 ) Impairment of assets held for sale — ( 400 ) Loss from operating activities ( 12,852 ) ( 52,155 ) Foreign exchange loss ( 16 ) ( 72 ) Change in fair value of derivative warrant liabilities ( 2,728 ) 10 Interest income and other expense, net 911 246 Total other income (expense), net ( 1,833 ) 184 Loss before income tax benefit ( 14,685 ) ( 51,971 ) Income tax benefit 1,832 9,542 Net loss and total comprehensive loss ( 12,853 ) ( 42,429 ) Basic and diluted loss per share ( 1.35 ) ( 5.71 ) Weighted average number of shares outstanding 9,529,123 7,435,472 The accompanying notes are an integral part of these consolidated financial statements F- 4 ACASTI PHARMA INC. Consolidated Statements of Shareholders’ Equity Class A common shares Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total shareholders' equity (Expressed in thousands expect share data) Number Amount $ $ $ $ $ Balance, March 31, 2023 7,435,533 258,294 13,965 ( 6,038 ) ( 198,266 ) 67,955 Net loss and total comprehensive loss for the period — — — — ( 12,853 ) ( 12,853 ) Stock-based compensation — — 913 — — 913 Issuance of common shares and pre-funded warrants through private placement, net of offering costs 1,951,371 2,744 2,963 — — 5,707 Issuance of common shares upon the exercise of stock options 12,500 — 21 — — 21 Balance at March 31, 2024 9,399,404 261,038 17,862 ( 6,038 ) ( 211,119 ) 61,743 Class A common shares Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total shareholders' equity (Expressed in thousands expect share data) Number Amount $ $ $ $ $ Balance, March 31, 2022 7,381,425 257,990 12,154 ( 6,037 ) ( 155,837 ) 108,270 Net loss and total comprehensive loss for the period — — — — ( 42,429 ) ( 42,429 ) Cumulative translation adjustment — — — ( 1 ) — ( 1 ) Stock-based compensation — — 1,811 — — 1,811 Net proceeds from shares issued under the at-the-market (ATM) program 54,108 304 — — — 304 Balance at March 31, 2023 7,435,533 258,294 13,965 ( 6,038 ) ( 198,266 ) 67,955 The accompanying notes are an integral part of these consolidated financial statements F- 5 ACASTI PHARMA INC. Consolidated Statements of Cash Flows Year ended March 31, 2024 Year ended March 31, 2023 (Expressed in thousands) $ $ Cash flows used in operating activities: Net loss ( 12,853 ) ( 42,429 ) Adjustments: Depreciation of equipment 11 124 Gain on sale of equipment ( 59 ) — Impairment of intangible assets — 28,682 Impairment of goodwill — 4,826 Impairment of assets held for sale — 400 Stock-based compensation 913 1,811 Change in fair value of warrant liabilities 2,728 ( 10 ) Deferred income tax benefit ( 1,832 ) ( 9,542 ) Unrealized foreign exchange (gain) loss — 5 Loss on disposal 39 39 Changes in operating assets and liabilities: Receivables 80 ( 302 ) Prepaid expenses 315 72 Trade and other payables ( 1,652 ) 411 Operating lease right of use asset ( 23 ) — Net cash used in operating activities ( 12,333 ) ( 15,913 ) Cash flows from investing activities: Purchase of equipment ( 22 ) ( 17 ) Proceeds from sale of equipment 111 — Purchase of short-term investments ( 6,554 ) ( 5,015 ) Maturity of short-term investments 6,569 18,185 Net cash provided by investing activities 104 13,153 Cash flows from financing activities: Net proceeds from issuance of common shares and warrants from private placement 7,338 — Proceeds from issuance of common shares from exercise of stock options 21 — Net proceeds from shares issued under the at-the-market (ATM) program — 304 Net cash provided by financing activities 7,359 304 Effect of exchange rate fluctuations on cash and cash equivalents — ( 8 ) Net decrease in cash and cash equivalents ( 4,870 ) ( 2,464 ) Cash and cash equivalents, beginning of year 27,875 30,339 Cash and cash equivalents, end of year 23,005 27,875 Cash and cash equivalents are comprised of: Cash 3,280 17,803 Cash equivalents 19,725 10,072 F- 6 ACASTI PHARMA INC. Notes to the Consolidated Financial Statements (Expressed in thousands except share and per share data) 1. Nature of Operations Acasti Pharma Inc. (“Acasti” or the “Company”) is incorporated under the Business Companies Act (Québec) (formerly Part 1A of the Companies Act (Québec)). The Company is domiciled in Canada and its principal executive office is located at 103 Carnegie Center Suite 300 Princeton, New Jersey 08540. The Company’s Class A common shares, no par value per share (“Common Shares”), are listed on the Nasdaq Capital Market (“Nasdaq”) and, through March 27, 2023, the Company's Common Shares were also listed on the TSX Venture Exchange (“TSXV”), in each case, under the symbol “ACST”. On March 13, 2023, the Company received approval to voluntarily delist from the TSXV. Effective as at the close of trading on March 27, 2023, the Company's Common Shares are no longer listed and posted for trading on the TSXV. In August 2021, the Company completed the acquisition via a share-for-share merger of Grace Therapeutics, Inc. (“Grace Therapeutics”), a privately held emerging biopharmaceutical company focused on developing innovative drug delivery technologies for the treatment of rare and orphan diseases. The post-merger Company is focused on building a late-stage specialty pharmaceutical company specializing in rare and orphan diseases and developing and commercializing products that improve clinical outcomes using its novel drug delivery technologies. The Company seeks to apply new proprietary formulations to existing pharmaceutical compounds to achieve enhanced efficacy, faster onset of action, reduced side effects, more convenient delivery and increased patient compliance; all of which could result in improved patient outcomes. The active pharmaceutical ingredients chosen by the Company for further development may be already approved in the target indication or could be repurposed for use in new indications. The Company has incurred operating losses and negative cash flows from operations in each year since its inception. The Company expects to incur significant expenses and continued operating losses for the foreseeable future. In May 2023, the Company implemented a strategic realignment plan to enhance shareholder value that resulted in the Company engaging a new management team, streamlining its research and development activities and greatly reducing its workforce. Following the realignment, the Company is a smaller, more focused organization, based in the United States, and concentrated on its development of its lead product GTX-104. Further development of GTX-102 and GTX-101 will occur at such time when the Company is able to secure additional funding, or enters into strategic partnerships for license or sale with third parties. On September 24, 2023, the Company entered into a securities purchase agreement with certain institutional and accredited investors. Gross proceeds to the Company from this private placement were approximately $ 7,500 , before deducting fees and expenses. The Company issued and sold an aggregate of 1,951,371 Common Shares, pre-funded warrants (the "Pre-funded Warrants") to purchase up to an aggregate of 2,106,853 Common Shares, each at a purchase price of $ 1.8481 per Common Share and accompanying common warrants (the "Common Warrants" and, together with the Pre-funded Warrants, the "Warrants") to purchase up to an aggregate of 2,536,391 Common Shares. The Company currently intends to use the net proceeds from the private placement for clinical trial expenses to further the Phase 3 clinical trial for GTX-104, pre-commercial planning, working capital and other general corporate purposes. The Company believes its existing cash and cash equivalents, will be sufficient to fund the Company’s operations into the second calendar quarter of 2026. The Company will require additional capital to fund its daily operating needs beyond that time. The Company does not expect to generate revenue from product sales unless and until it successfully completes drug development and obtains regulatory approval, which the Company expects will take several years and is subject to significant uncertainty. To date, the Company has financed its operations primarily through public offerings and private placements of its Common Shares, warrants and convertible debt and the proceeds from research tax credits. Until such time that the Company can generate significant revenue from drug product sales, if ever, it will require additional financing, which is expected to be sourced from a combination of public or private equity or debt financing or other non-dilutive sources, which may include fees, milestone payments and royalties from collaborations with third parties. Arrangements with collaborators or others may require the Company to relinquish certain rights related to its technologies or drug product candidates. Adequate additional financing may not be available to the Company on acceptable terms, or at all. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and its ability to pursue its business strategy. The Company plans to raise additional capital in order to maintain adequate liquidity. Negative results from studies or trials, if any, or depressed prices of the Company’s stock could impact the Company’s ability to raise additional financing. Raising additional equity capital is subject to market conditions that are not within the Company’s control. If the Company is unable to raise additional funds, the Company may not be able to realize its assets and discharge its liabilities in the normal course of business. The Company remains subject to risks similar to other development stage companies in the biopharmaceutical industry, including F- 7 compliance with government regulations, protection of proprietary technology, dependence on third-party contractors and consultants and potential product liability, among others. Reverse stock split On June 29, 2023, the Board of Directors of the Company approved an amendment to the Company's Articles of Incorporation to implement a reverse stock split of the Company's Common Shares, at a ratio of 1-for-6 (the “Reverse Stock Split”). On July 4, 2023, the Company filed Articles of Amendment to its Articles of Incorporation with the Registraire des entreprises du Québec , to implement the Reverse Stock Split. All references in these financial statements to number of Common Shares, warrants and options, price per share and weighted-average number of shares outstanding have been adjusted to reflect the Reverse Stock Split, which became effective on July 10, 2023. 2. Summary of significant accounting policies Basis of presentation These consolidated financial statements of Acasti Pharma Inc., which include the accounts of its subsidiaries, have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). All intercompany transactions and balances are 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, liabilities, income, and expenses. Actual results may differ from these estimates. Estimates are based on management’s best knowledge of current events and actions that management may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Estimates and assumptions include the measurement of stock-based compensation, derivative warrant liabilities, accruals for research and development contracts and contract organization agreements, and valuation of intangibles and goodwill. Estimates and assumptions are also involved in determining the extent to which research and development expenses qualify for research and development tax credits. The Company recognizes tax credits once it has reasonable assurance that they will be realized. Cash equivalents Cash equivalents comprise of highly liquid investments purchased with original maturities of 90 days or less. Cash equivalents consist of guaranteed investment certificates. Equipment Equipment is measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset, including all costs incurred in bringing the asset to its present location and condition. Gains and losses on disposal of equipment are determined by comparing the proceeds from disposal with the carrying amount of equipment. Depreciation is recognized on a declining basis over the estimated useful lives of equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Items of equipment are depreciated from the date that they are available for use or, in respect of assets not yet in service, from the date they are ready for their intended use. Intangible assets - acquired in-process research and development In a business combination, the fair value of in-process research and development (“IPR&D”) acquired is capitalized and accounted for as indefinite-lived intangible assets, and not amortized until the underlying project receives regulatory approval, at which point the intangible assets will be accounted for as definite-lived intangible assets and amortized over the remaining useful life or discontinued. If discontinued, the intangible asset will be written off. Research and development (“R&D”) costs incurred after the acquisition are expensed as incurred. The estimated fair values of identifiable intangible assets were determined using the multi-period excess earnings method, which is a valuation methodology that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. The significant assumptions used in the valuation are the discount rate, the probability of clinical success of research and development programs, obtaining regulatory approval and forecasted net sales, including milestone payments and royalty revenues. F- 8 Impairment of long-lived assets The Company reviews the recoverability of its finite long-lived assets whenever events or changes in circumstances indicate that it is carrying amount may not be recoverable. The carrying amount is first compared with the undiscounted cash flows. If the carrying amount is higher than the sum of undiscounted cash flows, then the Company determines the fair value of the underlying asset group. Any impairment loss to be recognized is measured as the difference by which the carrying amount of the asset group exceeds the estimated fair value of the asset group. Goodwill and indefinite-lived assets are not amortized but are subject to an impairment review annually and more frequently when indicators of impairment exist. An impairment of goodwill could occur if the carrying amount of a reporting unit exceeds the fair value of that reporting unit. An impairment of indefinite-lived intangible assets would occur if the fair value of the intangible asset is less than the carrying value. The Company tests its goodwill for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. If the Company concludes it is more likely than not that fair value of the reporting unit is less than its carrying amount, a quantitative impairment test is performed. The Company tests indefinite-lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. If the Company concludes it is more likely than not that the fair value is less than it's carrying amount, a quantitative impairment test is performed. The Company's annual impairment test is performed in the fourth quarter of the fiscal year. Research and development costs Research and developments expenditures are expensed as incurred. These costs consist of employees’ salaries and benefits related to research and development activities, contractors and consultants that conduct the Company’s clinical trials, laboratory material and small equipment, clinical trial materials, stock-based compensation expense, and other non-clinical costs and regulatory fees. Advance payments for goods and services that will be used in future research and development are recognized in prepaids or other assets and are expensed when the services are performed, or the goods are used. Stock-based compensation The Company has in place a stock option plan for directors, officers, employees, and consultants of the Company, with grants under the stock option plan approved by the Company’s Board of Directors. The plan provides for the granting of options to purchase Common Shares and the exercise price of each option equals the closing trading price of Common Shares on the day prior to the grant. The Company accounts for stock-based compensation arrangements in accordance with provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation . ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company measures the cost of such awards based on the fair value of the award at grant date and recognizes stock-based compensation expense in the Consolidated Statements of Operations and Comprehensive Loss on a tranche by tranche basis. The fair value of options is estimated for each tranche of an award that vests on a graded basis. The fair value of options is estimated using the Black-Scholes option pricing model, which uses various inputs including fair value of the Common Shares at the grant date, expected term, historical volatility, risk-free interest rate and expected dividend yields of the Common Shares. The Company applies an estimated forfeiture rate derived from historical employee termination behavior in determining compensation expense. If the actual forfeitures differ from those estimated by management, adjustment to compensation expense may be required in future periods. Government grants Government grants are recorded as a reduction of the related expense or cost of the asset acquired. Government grants are recognized when there is reasonable assurance that the Company has met the requirements of the approved grant program and there is reasonable assurance that the grant will be received. 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. Operating 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. The interest rate implicit in lease contracts is typically not readily determinable. As a result, 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 F- 9 economic environment. The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. The Company’s lease expense is recognized in research and development expenses. The Company does not have financing leases. In accordance with FASB ASC 842— Leases (“Topic 842”), components of a lease should be split into three categories: lease components, non-lease components and non-components. The fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components. Entities may elect not to separate lease and non-lease components. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets and allocate all of the contract consideration to the lease component only. Income taxes Income taxes comprises current and deferred taxes. The provision for income taxes is computed using the asset and liability method. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognized in respect of temporary differences between the carrying amounts (tax base) of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured at the tax rate expected to apply when the underlying asset or liability is realized (settled) based on the rates that are enacted at the reporting date. Deferred tax assets and liabilities are offset if the Company has the right to set off the amount owed by with the amount owed by the other party, the Company intends to set off and the offset right is enforceable at law. A deferred tax asset is recognized for unused tax losses, and tax credits, reduced by a valuation allowance. A valuation allowance is recorded to reduce the carrying amount of deferred income tax assets when it is more likely than not that these assets will not be realized. tax benefits related to tax positions not deemed to meet the “more-likely-than-not” threshold are not permitted to be recognized in the consolidated financial statements. Earnings per share The Company presents basic and diluted earnings per share ("EPS") data for its Common Shares. Basic EPS is calculated by dividing the net income or loss attributable to the holders of Common Shares by the weighted average number of Common Shares outstanding during the year. Diluted EPS is determined by adjusting the net income or loss attributable to the holders of Common Shares and the weighted average number of Common Shares outstanding adjusted for the effects of all dilutive potential Common Shares, which comprise warrants and share options granted to employees. The basic and diluted EPS are the same due to loss position. Segment reporting An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses. The Company has one reportable operating segment: the development and commercialization of pharmaceutical applications of its patent portfolio and licensed rights. The majority of the Company’s assets are located in Canada and the United States. Derivative warrant liabilities Derivative warrant liabilities are recognized initially at fair value. Subsequent to initial recognition, derivative warrant liabilities are measured at fair value, with changes in fair value are recognized in the Consolidated Statement of Operations and Comprehensive Loss . Fair value measurements Certain of the Company’s accounting policies and disclosures require the determination of fair value, for both financial assets and liabilities. In establishing fair value, the Company uses a fair value hierarchy based on levels as defined below: • Level 1: defined as observable inputs such as quoted prices in active markets. • Level 2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable. • Level 3: defined as inputs that are based on little or no observable market data, therefore requiring entities to develop their own assumptions. The Company has determined that the carrying values of its short-term financial assets and liabilities (cash and cash equivalents, short-term investments and trade and other payables) approximate their fair value given the short-term nature of these instruments. The Company measured its derivative warrant liabilities at fair value on a recurring basis using level 3 inputs . F- 10 Financial Instruments Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are all invested in accordance with the Company’s Investment Policy with the primary objective being the preservation of capital and the maintenance of liquidity, which risk is managed by dealing only with highly rated Canadian and U.S. institutions. The Company maintains its cash and cash equivalents at accredited financial institutions in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Recent accounting pronouncements The Company has considered recent accounting pronouncements and concluded that they are either not applicable to the business or that the effect is not expected to be material to the consolidated financial statements as a result of future adoption. 3. Fair value measurements Assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 are as follows: Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) $ $ $ $ Assets Guaranteed investment certificates and term deposits classified as cash equivalents 19,725 19,725 — — Total assets 19,725 19,725 — — Liabilities Derivative warrant liabilities 4,359 — — 4,359 Total liabilities 4,359 — — 4,359 Assets measured at fair value on a recurring basis as of March 31, 2023 are as follows: Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) $ $ $ $ Assets Term deposits classified as cash equivalents 10,072 10,072 — — Guaranteed investment certificate classified as a short-term investment 15 15 — — Total assets 10,087 10,087 — — There were no changes in valuation techniques or transfers between Levels 1, 2 or 3 during the years ended March 31, 2024 and 2023. The Company’s derivative warrant liabilities are measured at fair value on a recurring basis using unobservable inputs that are classified as Level 3 inputs. Refer to Note 10(b) for the valuation techniques and assumptions used in estimating the fair value of the derivative warrant liabilities. F- 11 4. Receivables March 31, 2024 March 31, 2023 $ $ Sales tax receivables 316 338 Government assistance 356 412 Interest receivable 15 52 Other receivable 35 — Total receivables 722 802 Government assistance is comprised of research and development investment tax credits from the Québec provincial government, which relate to quantifiable research and development expenditures under the applicable tax laws. The amounts recorded as receivables are subject to a government tax audit and the final amounts received may differ from those recorded. 5. Equipment The following is a summary of equipment, net: March 31, 2024 Cost Accumulated depreciation Write-off Net book value $ $ $ Furniture and office equipment 18 ( 13 ) ( 4 ) 1 Computer equipment 114 ( 76 ) ( 34 ) 4 Laboratory equipment 571 ( 519 ) ( 52 ) — Software 19 0 0 19 722 ( 608 ) ( 90 ) 24 March 31, 2023 Cost Accumulated depreciation Write-off Net book value $ $ $ $ Furniture and office equipment 19 ( 11 ) ( 1 ) 7 Computer equipment 108 ( 47 ) ( 22 ) 39 Laboratory equipment 586 ( 512 ) ( 16 ) 58 713 ( 570 ) ( 39 ) 104 Depreciation expense was $ 11 and $ 124 for the years ended March 31, 2024 and 2023, respectively. 6. Intangible assets and goodwill Individual IPR&D projects and goodwill are tested for impairment on an annual basis in the fourth quarter, and in between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of each technology or our reporting unit below its carrying value. In April 2023, the Company announced its strategic realignment plan to prioritize resources to GTX-104, from GTX-101 and GTX-102 triggering a comprehensive review as of March 31, 2023. The estimated fair values of identifiable intangible assets were determined using the multi-period excess earnings method. The estimated fair value of the reporting unit was determined using the projected discounted cash flow model. The impairment assessments resulted in the following activity during the years ended March 31, 2024 and 2023: GTX-104 GTX-102 GTX-101 Total $ $ $ $ Intangible assets – in-process research and development Balance, March 31, 2022 27,595 31,908 10,307 69,810 Impairment — ( 22,712 ) ( 5,970 ) ( 28,682 ) Balance, March 31, 2023 27,595 9,196 4,337 41,128 Impairment — — — — Balance, March 31, 2024 27,595 9,196 4,337 41,128 During 2023, the impairment of $ 28,682 of the intangible assets resulted in a recovery of $ 8,633 of the related deferred tax liability. F- 12 $ Goodwill Balance, March 31, 2022 12,964 Impairment ( 4,826 ) Balance, March 31, 2023 8,138 Impairment — Balance, March 31, 2024 8,138 The multi-period excess earnings method models used to estimate the fair value of assets of our IPR&D reflect significant assumptions and are level 3 unobservable data regarding the estimates a market participant would make in order to evaluate a drug development asset, including the following: • Probability of clinical success of research and development and obtaining regulatory approval; • Forecasted net sales from up-front and milestone payments, royalties and product sales; and • A discount rate reflecting our weighted average cost of capital and specific risk inherent in the underlying assets. The Company's IPR&D projects, consistent with others in our industry, have risks and uncertainties associated with the timely and successful completion of the development and commercialization of product candidates, including our ability to confirm safety and efficacy based on data from clinical trials, our ability to obtain necessary regulatory approvals and our ability to successfully complete these tasks within budgeted costs. It is not permitted to market a human therapeutic without obtaining regulatory approvals, and such approvals require the completion of clinical trials that demonstrate that a product candidate is safe and effective. In addition, the availability and extent of coverage and reimbursement from third-party payers, including government healthcare programs and private insurance plans as well as competitive product launches, affect the revenues a product can generate. Consequently, the eventual realized values, if any, of acquired IPR&D projects may vary from their estimated fair values. 7. Trade and other payables March 31, 2024 March 31, 2023 $ $ Trade payables 1,007 1,242 Accrued liabilities and other payables 176 946 Employee salaries and benefits payable 501 1,148 Total trade and other payables 1,684 3,336 8. Leases The Company has historically entered into lease arrangements for its research and development and quality control laboratory facility located in Sherbrooke, Québec. In March 2022, the Company renewed the lease agreement effective April 1, 2022, resulting in a commitment of $ 556 over a 24 -month base lease term with an option to renew for an additional 48 -month term. In April 2023, the Company elected not to renew the additional 48-month option to renew, and terminated the lease on March 31, 2024. Supplemental balance sheet information related to leases was as follows: March 31, 2024 March 31, 2023 $ $ Operating lease right of use asset — 463 Operating lease liability, current — 75 Operating lease liability, long-term — 410 Total operating lease liability — 485 Supplemental lease expense related to leases is as follows: F- 13 Year ended March 31, 2024 Year ended March 31, 2023 $ $ Operating lease cost 93 206 Total lease expense 93 206 The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating lease for the year ended March 31, 2024: Operating cash flows for operating lease $ 93 Weighted-average remaining lease term (in years) - Weighted-average discount rate 4.3 % As the Company's lease does not provide an implicit rate, the Company utilized 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 of March 31, 2024, there were no future minimum lease payments. 9. Shareholders' equity Common Shares Authorized capital stock ➣ Class A common shares ("Common Shares"), voting ( one vote per share), participating and without par value. As of March 31, 2024, there were 9,399,404 Common Shares issued and outstanding. ➣ Class B common shares, voting ( ten votes per share), non-participating, without par value and maximum annual non-cumulative dividend of 5 % on the amount paid per share. Class B common shares are convertible, at the holder’s discretion, into Common Shares, on a one-for-one basis, and Class B common shares are redeemable at the holder’s discretion for CAD $ 4.80 per share, subject to certain conditions. As of March 31, 2024, there were no Class B common shares issued and outstanding. ➣ Class C common shares, non-voting, non-participating, without par value and maximum annual non-cumulative dividend of 5 % on the amount paid per share. Class C common shares are convertible, at the holder’s discretion, into Common Shares, on a one-for-one basis, and Class C common shares are redeemable at the holder’s discretion for CAD $ 1.20 per share, subject to certain conditions. As of March 31, 2024, there were no Class C common shares issued and outstanding. ➣ Class D and E common shares, non-voting, non-participating, without par value and maximum monthly non-cumulative dividend between 0.5 % and 2 % on the amount paid per share. Class D and E common shares are convertible, at the holder’s discretion, into Common Shares, on a one-for-one basis, and Class D and E common shares are redeemable for the price paid for such shares, plus a redemption premium described in the Company's Articles of Incorporation, as amended, at the holder’s discretion, subject to certain conditions. As of March 31, 2024, there were no Class D or E common shares issued and outstanding. Private Placement In September 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and accredited investors in connection with a private placement of the Company's securities (the “Offering”). Pursuant to the Purchase Agreement, the Company agreed to offer and sell 1,951,371 Common Shares, at a purchase price of $ 1.848 per Common Share and Pre-funded Warrants to purchase up to 2,106,853 Common Shares at a purchase price equal to the purchase price per Common Share less $0.0001. Each Pre-funded Warrant is exercisable for one Common Share at an exercise price of $ 0.0001 per Common Share, is immediately exercisable, and will expire once exercised in full. Pursuant to the Purchase Agreement, the Company also issued to such institutional and accredited investors Common Warrants to purchase Common Shares, exercisable for an aggregate of 2,536,391 Common Shares. Under the terms of the Purchase Agreement, for each Common Share and each Pre-funded Warrant issued in the Offering, an accompanying five-eighths (0.625) of a Common Warrant was issued to the purchaser thereof. Each whole Common Warrant is exercisable for one Common Share at an exercise price of $ 3.003 per Common Share, is immediately exercisable, and will expire on the earlier of (i) the 60th day after the date of the acceptance by the U.S. Food and Drug Administration of a New Drug Application for the Company’s product candidate GTX-104 or (ii) five years from the date of issuance. F- 14 The Offering closed on September 25, 2023. The Offering included the issuance of Common Shares, Pre-funded Warrants, and Common Warrants to related parties Shore Pharma LLC, an entity that was controlled by Vimal Kavuru, the Chair of our Board of Directors, at the time of the Offering and SS Pharma LLC, resulting in proceeds of $ 2,500 . The net proceeds to the Company from the Offering were $ 7,338 , after deducting fees and expenses. At-the-Market (“ATM”) Program In June 2020, the Company entered into an amended and restated sales agreement (the “Sales Agreement”) with B. Riley FBR, Inc. (“B.Riley”), Oppenheimer & Co. Inc. and H.C. Wainwright & Co., LLC (collectively, the “Agents”) to amend the Company’s existing ATM program. Under the terms of the Sales Agreement, which had a three-year term, the Company could issue and sell from time to time, Common Shares having aggregate gross proceeds of up to $ 75,000 through the Agents. Subject to the terms and conditions of the Sales Agreement, the Agents would use their commercially reasonable efforts to sell the Common Shares from time to time, based upon the Company’s instructions. The Company had no obligation to sell any of the Common Shares and could, at any time, suspend sales under the Sales Agreement. The Company and the Agents could terminate the Sales Agreement in accordance with its terms. Under the terms of the Sales Agreement, the Company provided the Agents with customary indemnification rights and the Agents were entitled to compensation at a commission rate equal to 3.0 % of the gross proceeds from each sale of the Common Shares. The Sales Agreement expired pursuant to its terms on June 29, 2023. During the year ended March 31, 2024, no Common Shares were sold under the ATM program. During the year ended March 31, 2023, 54,108 Common Shares were sold for total net proceeds of $ 304 with commissions, legal expenses and costs related to the share sale amounting to $ 10 . The Common Shares were sold at the prevailing market prices, which resulted in an average price of approximately $ 5.70 per share. Warrants On May 9, 2023, warrants issued pursuant to the Company’s May 2018 Canadian public offering to acquire 137,370 Common Shares at an exercise price of CAD $ 62.88 expired. As further discussed above, on September 25, 2023, the Company issued Warrants exercisable for 4,643,244 Common Shares in the Offering pursuant to the terms of the Purchase Agreement entered into with certain institutional and accredited investors. The Common Warrants issued as a part of the Offering are derivative warrant liabilities given the warrant indenture did not meet the fixed-for-fixed criterion and that the Common Warrants are not indexed to the Company’s own stock. Proceeds were allocated amongst Common Shares, Pre-funded Warrants, and Common Warrants by applying the residual method, with fair value of the Common Warrants determined using the Black-Scholes model, resulting in an initial warrant liability of $ 1,631 and $ 45 of issuance costs allocated to Common Warrants. Accordingly, $ 2,822 and $ 3,047 of gross proceeds were allocated to Common Shares and Pre-funded Warrants, respectively; and $ 78 and $ 84 of issuance costs were allocated to Common Shares and Pre-funded Warrants, respectively. The derivative warrant liabilities are measured at fair value at each reporting period and the reconciliation of changes in fair value is presented in the following table: March 31, 2024 March 31, 2023 $ $ Beginning balance — 10 Issued during the year 1,631 — Change in fair value 2,728 ( 10 ) Ending balance 4,359 — The warrant liability was determined based on the fair value of warrants at the issue date and the reporting dates using the Black-Scholes model with the following weighted-average assumptions will expire on the earlier of (i) the 60th day after the date of the acceptance by the U.S. Food and Drug Administration of a New Drug Application for the Company's product candidate GTX-104 or (ii) five years from the date on issuance. F- 15 September 25, 2023 March 31, 2024 Risk-free interest rate 5.00 % 4.69 % Share price $ 1.78 $ 3.43 Expected warrant life 2.54 2.03 Dividend yield 0 % 0 % Expected volatility 80.90 % 85.94 % The weighted-average assumptions were prorated based on the probability of the warrant liability expiring on the 60th day after the date of the acceptance by the U.S. Food and Drug Administration of a New Drug Application for the Company's product candidate GTX-104 and of it expiring on five years from the date of issuance. The weighted-average fair values of the Common Warrants were determined to be $ 0.64 and $ 1.72 per Common Warrant, as of September 25, 2023 and March 31, 2024, respectively. The risk-free interest rate at the issue date and on the reporting date of March 31, 2024 was based on the interest rate corresponding to the U.S. Treasury rate issue with a remaining term equal to the expected term of the warrants. The expected volatility was based on the historical volatility for the Company. At March 31, 2024, the Company had outstanding Common Warrants to purchase 2,536,391 Common Shares, with an exercise price of $ 3.003 , all of which were classified as derivative warrant liability. At March 31, 2024, the Company had outstanding Pre-funded Warrants to purchase 2,106,853 Common Shares, with an exercise price of $ 0.0001 , all of which were classified within shareholders' equity. During the years ended March 31, 2024 and 2023, no warrants were exercised. 10. Stock-based compensation At March 31, 2024, the Company had in place a stock option plan for directors, officers, employees, and consultants of the Company (“Stock Option Plan”). As of March 31, 2024, there were 738,725 awards available under the plan for issuance. The Stock Option Plan provides for the granting of options to purchase Common Shares. Under the terms of the Stock Option Plan, the exercise price of the stock options granted under the Stock Option Plan may not be lower than the closing price of the Company’s Common Shares on the Nasdaq Capital Market at the close of such market the day preceding the grant. The maximum number of Common Shares that may be issued upon exercise of options granted under the amended Stock Option Plan shall not exceed 20% of the aggregate number of issued and outstanding shares of the Company as of July 28, 2022. The terms and conditions for acquiring and exercising options are set by the Company’s Board of Directors, subject to, among others, the following limitations: the term of the options cannot exceed ten years and (i) all options granted to a director will be vested evenly on a monthly basis over a period of at least twelve (12) months, and (ii) all options granted to an employee will be vested evenly on a quarterly basis over a period of at least thirty-six (36) months. The total number of options issued to any one consultant within any twelve-month period cannot exceed 2 % of the Company’s total issued and outstanding Common Shares (on a non-diluted basis). The total number of options issued within any twelve-month period to all directors, employees and/or consultants of the Company (or any subsidiary of the Company) conducting investor relations services, cannot exceed in the aggregate 2 % of the Company’s issued and outstanding Common Shares (on a non-diluted basis), calculated at the date an option is granted to any such person. The following table summarizes information about activities within the Stock Option Plan for the year ended March 31, 2024: Number of options Weighted average exercise price Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) $ $ Outstanding, March 31, 2023 740,957 13.60 8.19 8,121 Granted 607,670 2.50 Exercised ( 12,500 ) 1.27 Forfeited/Cancelled ( 614,334 ) 12.89 Outstanding, March 31, 2024 721,793 3.68 9.08 527 Exercisable, March 31, 2024 312,924 4.65 8.84 188 F- 16 Forfeited and cancelled options were as a result of the Company's restructuring that occurred during the year ended March 31, 2024. On July 14, 2023, the Company's Board of Directors approved the grant of options to purchase 446,502 Common Shares at an exercise price of $ 2.64 per Common Share under the Company's Stock Option Plan. On December 19, 2023, the Company's Board of Directors approved the grant of options to purchase 161,168 Common Shares at an exercise price of $ 2.125 per Common Share under the Company's Stock Option Plan. The weighted-average grant date fair value of awards for options granted during the years ended March 31, 2024 and 2023 was $ 2.13 and $ 4.32 , respectively. The fair value of options granted was estimated using the Black-Scholes option pricing model, resulting in the following weighted-average assumptions for the options granted: March 31, 2024 March 31, 2023 Weighted-average Weighted-average Exercise price $ 2.50 $ 5.10 Share price $ 2.50 $ 5.10 Dividend — — Risk-free interest 3.95 % 3.28 % Estimated life (years) 5.62 5.73 Expected volatility 117.94 % 117.56 % Stock-based compensation expense recognized under ASC 718 related to the stock option plan is summarized as follows: March 31, 2024 March 31, 2023 $ $ Research and development expenses 198 591 General and administrative expenses 697 1,123 Sales and marketing expenses 18 97 913 1,811 As of March 31, 2024, there was $ 467 of total unrecognized compensation cost, related to non-vested stock options, which is expected to be recognized over a remaining weighted-average vesting period of 1.24 years. Equity incentive plan The Company established an equity incentive plan (the “Equity Incentive Plan”) for employees, directors, and consultants. The Equity Incentive Plan provides for the issuance of 1,483,140 restricted share units, performance share units, restricted shares, deferred share units and other stock-based awards, subject to restricted conditions as may be determined by the Board of Directors. There were no such awards outstanding as of March 31, 2024 , and no stock-based compensation was recognized for the year ended March 31, 2024 . 11. Loss per share The Company has generated a net loss for all periods presented, therefore diluted loss per share is the same as basic loss per share since the inclusion of potentially dilutive securities would have had an anti-dilutive effect. All currently outstanding options and warrants could potentially be dilutive in the future. The Company excluded the following potential Common Shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common shareholders for the periods indicated because including them would have had an anti-dilutive effect: March 31, 2024 March 31, 2023 Options outstanding 721,793 740,974 September 2023 Common Warrants 2,536,391 — May 2018 public offering warrants — 137,370 Basic and diluted net loss per share is calculated based upon the weighted-average number of Common Shares outstanding during the period. Common Shares underlying the Pre-funded Warrants are included in the calculation of basic and diluted earnings per share. F- 17 12. Income taxes Income tax (benefit) expense: Year ended March 31, 2024 Year ended March 31, 2023 $ $ Current tax (benefit) expense 2 — Deferred tax (benefit) expense ( 1,834 ) ( 9,542 ) Income tax (benefit) expense ( 1,832 ) ( 9,542 ) A reconciliation between tax expense and the product of accounting income multiplied by the basic income tax rate for the years ended March 31, 2024 and 2023 is as follows: Year ended March 31, 2024 Year ended March 31, 2023 $ $ Tax at Canadian Rate ( 3,891 ) ( 13,772 ) Difference in foreign tax rates ( 77 ) ( 1,315 ) Non-deductible stock-based compensation 242 480 Non-deductible change in fair value of warrants 3 ( 3 ) Non-deductible transaction costs 723 — Non-deductible goodwill impairment — 1,453 Other non-deductible items 15 — Non-refundable federal investment tax credit — ( 642 ) State non income taxes 1 — Change in tax rates ( 486 ) — Change in valuation allowance 1,635 4,263 Other 3 ( 6 ) Total tax (benefit) expense ( 1,832 ) ( 9,542 ) Net deferred income tax assets as of March 31, 2024, and 2023 were comprised of the following: March 31, 2024 March 31, 2023 $ $ Deferred income tax assets Tax losses carried forward 40,659 38,628 Research and development expenses 8,522 7,672 Property, plant and equipment 523 905 Intangible assets 328 — Operating lease right of use liability — 129 Financing expenses 169 267 Net federal investment tax credits 2,882 3,950 Other deductible temporary differences 56 92 Total deferred income tax assets 53,139 51,643 Valuation allowance ( 47,284 ) ( 46,664 ) Deferred income tax liabilities Intangible assets ( 11,369 ) ( 12,198 ) Operating lease asset — ( 123 ) Other taxable temporary differences — ( 5 ) Deferred tax liabilities ( 11,369 ) ( 12,326 ) Net deferred tax liabilities ( 5,514 ) ( 7,347 ) As at March 31, 2024, the amounts and expiry dates of tax attributes and temporary differences, which are available to reduce future F- 18 years’ taxable income, were as follows: March 31, 2024 Federal Provincial United States $ $ $ Tax losses carried forward 2028 571 571 2029 1,302 1,297 2030 1,657 1,651 2031 1,810 1,794 2032 1,484 1,461 2033 2,879 2,879 2034 3,678 3,568 2035 4,397 4,397 2036 6,470 6,371 2037 401 396 2038 14,856 13,821 2039 32,424 32,381 2040 23,576 23,439 2041 13,999 13,999 2042 9,417 9,416 2043 11,568 11,558 2044 7,206 7,206 No expiry 15,443 Total 137,695 136,205 15,443 Research and development expenses, without time limitation 25,708 27,887 Scientific Research & Experimental Development Expenditures investment tax credit carryforwards 3,922 — Unrecognized tax benefits The Company does not expect a significant change to the amount of unrecognized tax benefits over the next 12 months. However, any adjustments arising from certain ongoing examinations by tax authorities could alter the timing or amount of taxable income or deductions, of the allocation of income among tax jurisdictions, and these adjustments could differ from the amount accrued. The Company’s federal and provincial income tax returns filed for all years remain subject to examination by the taxation authorities. Government assistance Government assistance is comprised of research and development investment tax credits receivable from the Quebec provincial government which relate to qualifiable research and development expenditures under the applicable tax laws. The amounts recorded as receivables are subject to a government tax audit and the final amounts received may differ from those recorded. For the years ended March 31, 2024 and 2023, the Company recorded ($ 55 ) and $ 165 , respectively, as a reduction of research and development expenses in the Consolidated Statements of Operations and Comprehensive Loss. March 31, 2024 March 31, 2023 $ $ Investment tax credit 356 412 Unrecognized Canadian federal investment tax credits may be used to reduce future Canadian federal income tax and expire as follows: F- 19 $ 2029 9 2030 23 2031 36 2032 345 2033 353 2034 348 2035 415 2036 229 2037 252 2038 259 2039 355 2040 226 2041 146 2042 312 2043 614 2044 - 3,922 13. Commitments and contingencies Research and development contracts and contract research organizations agreements The Company utilizes contract manufacturing organizations (“CMOs”) for the development and production of clinical materials and contract research organizations (“CROs”) to perform services related to its clinical trials. Pursuant to the agreements with these CMOs and CROs, the Company has either the right to terminate the agreements without penalties or under certain penalty conditions. As of March 31, 2024, the Company has no commitments from CMOs and $ 6,020 of c ommitments for the next twelve months to CROs. Raw krill oil supply contract On October 25, 2019, the Company signed a supply agreement with Aker BioMarine Antarctic AS. (“AKBM”) to purchase raw krill oil product for a committed volume of commercial starting material for CaPre, one of the Company’s former drug candidates, for a total fixed value of $ 3,100 based on the value of krill oil at that time. As of March 31, 2022, the remaining balance of commitment amounted to $ 2,800 . During the second calendar quarter of 2022, AKBM informed the Company that AKBM believed it had satisfied the terms of the supply agreement as to their obligation to deliver the remaining balance of raw krill oil product, and that the Company was therefore required to accept the remaining product commitment. The Company disagreed with AKBM’s position and believed that AKBM was not entitled to further payment under the supply agreement. Accordingly, no liability was recorded by the Company. The dispute remained unresolved as of both March 31, 2023 and 2022. On October 18, 2023, the Company entered into an agreement with AKBM to settle any and all potential claims regarding amounts due under the supply agreement (“Settlement Agreement”). Pursuant to the terms of the Settlement Agreement, in exchange for a release and waiver of claims arising out of the supply agreement by AKBM and any of AKBM’s affiliates, the Company and AKBM agreed to the following: (a) AKBM retained ownership of all raw krill oil product, including amounts previously delivered to the Company, (b) AKBM acquired and took ownership of all production equipment related to the production of CaPre, (c) AKBM acquired and took ownership of all data from research, clinical trials and pre-clinical studies with respect to CaPre, and (d) AKBM acquired and took ownership over all rights, title and interest in and to all intellectual property rights, including all patents and trademarks, related to CaPre owned by the Company. Pursuant to the terms of the Settlement Agreement, AKBM acknowledged that the CaPre assets were transferred on an “as is” basis, and in connection therewith the Company disclaimed all representations and warranties in connection with the CaPre assets, including any representations with respect to performance or sufficiency. The value of the raw krill oil previously delivered to the Company, the production equipment, and the intellectual property rights related to CaPre were fully impaired in prior reporting periods and had a carrying value of nil as of March 31, 2023. As of March 31, 2024, no liability was recorded by the Company. F- 20 Legal proceedings and disputes In the ordinary course of business, the Company is at times subject to various legal proceedings and disputes. The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its consolidated financial statements. These legal contingencies may be adjusted to reflect any relevant developments. Where a loss is not probable or the amount of loss is not estimable, the Company does not accrue legal contingencies. While the outcome of legal proceedings is inherently uncertain, based on information currently available, management believes that it has established appropriate legal reserves. Any incremental liabilities arising from pending legal proceedings are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows. However, it is possible that the ultimate resolution of these matters, if unfavorable, may be material to the Company’s financial position, results of operations, or cash flows. No reserves or liabilities have been accrued as at March 31, 2024 . 14. Restructuring Costs On May 8, 2023, the Company communicated its decision to terminate a substantial amount of its workforce as part of a plan that intended to align the Company’s organizational and management cost structure to prioritize resources to GTX-104, thereby reducing losses to improve cash flow and extend available cash resources. The Company incurred $ 1,485 of costs primarily consisting of employee severance costs and legal fees. F- 21