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Item 8. Financial Statements and Supplementary Data

2025-03-27 compared with 2024-03-28 · 645 added, 481 removed, 242 unchanged (82% of the section changed)

Financial Statements and Supplementary Data

TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements and Supplementary

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AUDITED FINANCIAL STATEMENTS:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Stockholders and Board of Directors of

Raton, Florida

on the Financial Statements

We have audited the accompanying consolidated balance sheets of INmune

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive

loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related

notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in

all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its

cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted

in the United States of America

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

INmune Bio Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of INmune Bio Inc.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements

of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended

December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial

statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023., and the

results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting

principles generally accepted in the United States of America .

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

fully described in Note 2, the Company has incurred significant net losses, negative cash flows from its operating activities and requires

additional funds to sustain its operations.

These conditions raise substantial doubt about the Company's ability to continue as a going

Management's plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the 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.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As more fully described in Note 2, the Company has incurred significant

losses and negative cash flows from its operating activities and is projecting insufficient liquidity to meet its obligations and sustain

its operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans

in regard to these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal

control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

have served as the Company’s auditor since 2017.

BALANCE SHEETS

thousands, except share and per share amounts)

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Marcum LLP

We have served as the Company’s auditor since 2017.

Houston, Texas

March 27, 2025

INMUNE BIO INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

CURRENT ASSETS

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TOTAL CURRENT LIABILITIES

Long-term debt, net

Long-term operating lease liability

Accrued liability – long-term

TOTAL LIABILITIES

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TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

accompanying notes to these consolidated financial statements.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

THE YEARS ENDED DECEMBER 31, 2023 AND 2022

See accompanying notes to these consolidated financial

INMUNE BIO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

thousands, except share and per share amounts)

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LOSS FROM OPERATIONS

OTHER EXPENSE, NET

Other expense, net

Total other expense, net

OTHER INCOME (EXPENSE), NET

Other income (expense), net

Total other income (expense), net

Net loss per common share – basic and diluted

1 unchanged sentence

COMPREHENSIVE LOSS

Other comprehensive loss – foreign currency translation

Other comprehensive income (loss) – foreign currency translation

Total comprehensive loss

accompanying notes to these consolidated financial statements.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THE YEARS ENDED DECEMBER 31, 2023 AND 2022

thousands, except share amounts)

See accompanying notes to these consolidated financial

INMUNE BIO INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

(In thousands, except share amounts)

Comprehensive

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Issuance of common stock for cash, net

Exercise of warrants for cash

Stock-based compensation

Loss on foreign currency translation

Balance as of December 31, 2022

Issuance of common stock for cash

Reclassification to redeemable common stock

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Balance as of December 31, 2023

Common stock issued for cash

Common stock and warrants issued for cash

Reclassification from redeemable common stock

Exercise of warrants for cash

Stock-based compensation

Gain on foreign currency translation

Balance as of December 31, 2024

$ ( 163,104 )

accompanying notes to these consolidated financial statements.

STATEMENTS OF CASH FLOWS

THE YEARS ENDED DECEMBER 31, 2023 AND 2022

See accompanying notes to these consolidated financial

INMUNE BIO INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

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Stock-based compensation

Impairment of right of use asset

Accretion of debt discount

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CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from sale of common stock

Net proceeds from sale of common stock and warrants

Repayment of debt

Net proceeds from the exercise of warrants

Net cash (used in) provided by financing activities

Net proceeds from the exercise of stock options

Net cash provided by (used in) financing activities

Impact on cash from foreign currency translation

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Cash paid for interest expense

accompanying notes to these consolidated financial statements.

TO CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND BASIS OF PRESENTATION

and Business Overview

See accompanying notes to these consolidated financial

INMUNE BIO INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND BASIS

OF PRESENTATION

Organization and Business Overview

INmune Bio Inc.

(the “Company” or

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normally and contributing to the patient’s disease.

INmune Bio has two product platforms.

INmune Bio has three product platforms.

The DN-TNF product platform utilizes

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(“INB03”) and an out-licensing strategy.

The Natural Killer Cell Priming Platform includes INKmune aimed at priming the patient’s

NK cells to eliminate minimal residual disease in patients with cancer.

INmune Bio’s product platforms utilize a precision medicine

approach for the treatment of a wide variety of hematologic malignancies, solid tumors and chronic inflammation.

of Presentation and Principles of Consolidation

accompanying consolidated financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles

(“US GAAP”) in the United States of America and the rules of the Securities and Exchange Commission (“SEC”).

consolidated financial statements herein have been prepared in accordance with US GAAP and include the accounts of INmune Bio, its wholly-owned

UK subsidiary, and its wholly-owned Australia subsidiary (collectively, the “Company”).

All significant intercompany accounts

and transactions have been eliminated.

2 – GOING CONCERN

The CORDStrom product platform is a pooled, human umbilical cord mesenchymal stem

cell product currently being developed to treat recessive dystrophic epidermolysis bullosa (“RDEB”).

The Natural Killer Cell

Priming Platform includes INKmune aimed at priming the patient’s NK cells to eliminate minimal residual disease in patients with

INmune Bio’s product platforms utilize a precision medicine approach for the treatment of a wide variety of hematologic

malignancies, solid tumors and chronic inflammation.

Basis of Presentation and Principles of

Consolidation

The accompanying consolidated financial statements

of the Company have been prepared in accordance with Generally Accepted Accounting Principles (“US GAAP”) in the United States

of America and the rules of the Securities and Exchange Commission (“SEC”).

The consolidated financial statements herein have been prepared in accordance

with US GAAP and include the accounts of INmune Bio, its wholly-owned United Kingdom subsidiary, and its wholly-owned Australia subsidiary

(collectively, the “Company”).

All significant intercompany accounts and transactions have been eliminated.

NOTE 2 – GOING CONCERN

These consolidated financial statements have been

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of assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred significant losses and negative cash flows from operations since inception and expects to incur additional losses

until such time that it can generate significant revenue from the commercialization of its product candidates.

The Company had net losses

of approximately $ 30.0 million and $ 27.3 million and negative cash flows from operating activities of approximately $ 12.0 million and

$ 22.7 million for the years ended December 31, 2023 and 2022, respectively, and an accumulated deficit of approximately $ 121.0 million

and $ 91.0 million as of December 31, 2023 and 2022, respectively.

Given the Company’s projected operating requirements and its existing

cash and cash equivalents, the Company is projecting insufficient liquidity to sustain its operations through one year following the date

that the financial statements are issued.

These conditions and events raise substantial doubt about the Company’s ability to continue

as a going concern.

The Company has incurred significant losses and

negative cash flows from operations since inception and expects to incur additional losses until such time that it can generate significant

revenue from the commercialization of its product candidates.

The Company had net losses of approximately $ 42.1 million and $ 30.0 million

and negative cash flows from operating activities of approximately $ 33.4 million and $ 12.0 million for the years ended December 31, 2024

and 2023, respectively, and an accumulated deficit of approximately $ 163.1 million and $ 121.0 million as of December 31, 2024 and 2023,

respectively.

Given the Company’s projected operating requirements and its existing cash and cash equivalents, the Company is projecting

insufficient liquidity to sustain its operations through one year following the date that the financial statements are issued.

These conditions

and events raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the

issuance of these financial statements.

In response to these conditions, management is

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that might result from the outcome of this uncertainty.

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts

of assets, liabilities, revenue, and expenses.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Preparing financial statements in conformity with

US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.

Actual results and outcomes may differ from management’s estimates and assumptions.

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and accrued liabilities approximate the related fair values due to the short-term maturities of these instruments.

and Uncertainties

Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited

to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, compliance

with government regulations and the need to obtain additional financing to fund operations.

Product candidates currently under development

will require significant additional research and development efforts, including extensive preclinical studies, clinical trials and regulatory

approval prior to commercialization.

These efforts require significant amounts of additional resources, adequate personnel, infrastructure

and extensive compliance and reporting.

Company’s product candidates are still in development and, to date, none of the Company’s product candidates have been approved

can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the

Company’s intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory

approval or that any approved products will be commercially viable.

Even if the Company’s product development efforts are successful,

it is uncertain when, if ever, the Company will generate any revenue from any of its products.

The Company operates in an environment

of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies.

Company relies and expects to continue to rely on a small number of vendors to manufacture supplies and materials for its use in the

clinical trial programs.

Risks and Uncertainties

is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development

by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government

regulations and the need to obtain additional financing to fund operations.

Product candidates currently under development will require

significant additional research and development efforts, including extensive preclinical studies, clinical trials and regulatory approval

prior to commercialization.

These efforts require significant amounts of additional resources, adequate personnel, infrastructure and

extensive compliance and reporting.

The Company’s

product candidates are still in development and, to date, none of the Company’s product candidates have been approved for sale.

be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s

intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory approval

or that any approved products will be commercially viable.

Even if the Company’s product development efforts are successful, it

is uncertain when, if ever, the Company will generate any revenue from any of its products.

The Company operates in an environment of

rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies.

relies and expects to continue to rely on a small number of vendors to manufacture supplies and materials for its use in the clinical

trial programs.

These programs could be adversely affected by a significant interruption in these manufacturing services.

and Cash Equivalents

Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

Company holds cash in banks in excess of Federal Deposit Insurance Corporation insurance limits.

However, the Company believes risk of

loss is minimal as the cash is held by large, highly-rated financial institutions.

and Development Tax Incentive Receivable

Company, through its wholly-owned subsidiary in Australia, participates in the Australian research and development tax incentive program,

such that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such

incentives are reflected as a reduction of research and development expense.

The Australian research and development tax incentive is

recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the

amount of the consideration can be reliably measured.

At each period end, management estimates the reimbursement available to the Company

based on available information at the time.

Company, through its wholly-owned subsidiary in the United Kingdom, participates in the research and development program provided by

the United Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed

by the United Kingdom government, and such incentives are reflected as a reduction of research and development expense.

The United Kingdom

research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant

expenditure has been incurred and the amount of the consideration can be reliably measured.

At each period end, management estimates

the reimbursement available to the Company based on available information at the time.

Company capitalizes costs incurred in connection with in-process research and development purchased from others if the asset has alternative

uses and such uses are not restricted under applicable license agreements;

patent applications (principally legal fees), patent purchases,

and trademarks related to its cell line as intangible assets.

Acquired in-process research and development costs that do not have alternative

uses are expensed as incurred.

When the assets are determined to have a finite life (upon completion of the development of the in-process

research and development for its DN-TNF platform), the useful life will be determined, and the in-process research and development intangible

assets will be amortized.

the fourth quarter and if business factors indicate more frequently, the Company performs an assessment of the qualitative factors affecting

the fair value of our in-process research and development.

If the qualitative assessment suggests that impairment is more likely than

not, a quantitative analysis is performed.

The quantitative analysis involves a comparison of the fair value of the in-process research

and development with the carrying amount.

If the carrying amount of the in-process research and development exceeds its fair value, an

impairment loss is recognized in an amount equal to that excess.

During the years ended December 31, 2023 and 2022, the Company performed

a qualitative assessment of its in-process research and development and determined that there were no indicators of impairment.

and Diluted Loss per Share

loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common

shares during the period.

Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period.

Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

For all periods presented, there is no

difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

December 31, 2023, the Company had 5,496,000 potentially issuable shares of common stock upon the exercise of stock options and 45,386

potentially issuable shares of common stock upon the exercise of warrants.

December 31, 2022, the Company had 4,841,417 potentially issuable shares of common stock upon the exercise of stock options and 74,074

potentially issuable shares of common stock upon the exercise of warrants.

Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration

the Company expects to receive in exchange for those goods or services.

The Company recognizes revenue following the five-step model

prescribed under ASC Topic 606:

(1) identify contract(s) with a customer;

Cash and Cash Equivalents

The Company considers all highly liquid instruments

purchased with an original maturity of three months or less to be cash equivalents.

The Company holds cash in banks in excess of Federal

Deposit Insurance Corporation insurance limits.

However, the Company believes risk of loss is minimal as the cash is held by large, highly-rated

financial institutions.

Research and Development Tax Incentive Receivable

The Company, through its wholly-owned subsidiary

in Australia, participates in the Australian research and development tax incentive program, such that a percentage of our qualifying

research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of

research and development expense.

The Australian research and development tax incentive is recognized when there is reasonable assurance

that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured.

At each period end, management estimates the reimbursement available to the Company based on available information at the time.

The Company, through its wholly-owned subsidiary

in the United Kingdom, participates in the research and development program provided by the United Kingdom tax relief program, such that

a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government, and such incentives

are reflected as a reduction of research and development expense.

The United Kingdom research and development tax incentive is recognized

when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the

consideration can be reliably measured.

At each period end, management estimates the reimbursement available to the Company based on available

information at the time.

Intangible Assets

The Company capitalizes costs incurred in connection

with in-process research and development purchased from others if the asset has alternative uses and such uses are not restricted under

applicable license agreements;

patent applications (principally legal fees), patent purchases, and trademarks related to its cell line

as intangible assets.

Acquired in-process research and development costs that do not have alternative uses are expensed as incurred.

the assets are determined to have a finite life (upon completion of the development of the in-process research and development for its

DN-TNF platform), the useful life will be determined, and the in-process research and development intangible assets will be amortized.

During the fourth quarter and if business factors

indicate more frequently, the Company performs an assessment of the qualitative factors affecting the fair value of our in-process research

and development.

If the qualitative assessment suggests that impairment is more likely than not, a quantitative analysis is performed.

The quantitative analysis involves a comparison of the fair value of the in-process research and development with the carrying amount.

If the carrying amount of the in-process research and development exceeds its fair value, an impairment loss is recognized in an amount

equal to that excess.

During the years ended December 31, 2024 and 2023, the Company performed a qualitative assessment of its in-process

research and development and determined that there were no indicators of impairment.

Basic and Diluted Loss per Share

Basic loss per share is computed by dividing net

loss available to common shareholders by the weighted average number of outstanding common shares during the period.

Diluted loss per

share gives effect to all dilutive potential common shares outstanding during the period.

Dilutive loss per share excludes all potential

common shares if their effect is anti-dilutive.

For all periods presented, there is no difference in the number of shares used to calculate

basic and diluted shares outstanding due to the Company’s net loss position.

At December 31, 2024, the Company had 7,203,307 potentially issuable shares

of common stock upon the exercise of stock options and 3,944,238 potentially issuable shares of common stock upon the exercise of warrants.

At December 31, 2023, the Company had 5,496,000

potentially issuable shares of common stock upon the exercise of stock options and 45,386 potentially issuable shares of common stock

upon the exercise of warrants.

Revenue Recognition

The Company recognizes revenue when the customer

obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange

for those goods or services.

The Company recognizes revenue following the five-step model prescribed under ASC Topic 606:

contract(s) with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction price;

(4) allocate the transaction price to the performance obligations in the contract;

and (5) recognize

revenues when (or as) the Company satisfies the performance obligations.

The Company records the expenses related to revenue in research

and development expense, in the periods such expenses were incurred.

Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable.

Company’s 2023 and 2022 revenue was from the sale of MSC’s to one customer and was recognized when the MSC’s were delivered

to the customers.

Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which

requires the input of highly subjective assumptions, including expected volatility and expected life.

Changes in these inputs and assumptions

can materially affect the measure of estimated fair value of our share-based compensation.

These assumptions are subjective and generally

require significant analysis and judgment to develop.

When estimating fair value, some of the assumptions will be based on, or determined

from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements.

The appropriate

weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances.

The Company accounts for

forfeitures of stock options as they occur.

and Development

and development (“R&D”) costs are expensed as incurred.

Research and development credits are recorded by the Company

as a reduction of research and development costs.

Major components of research and development costs include cash compensation, stock-based

compensation, clinical trials and related clinical manufacturing, costs of drug development, costs of materials and supplies, facilities

cost, overhead costs, costs of pre-clinical trials, regulatory and compliance costs, and fees paid to consultants and other entities

that conduct certain research and development activities on the Company’s behalf.

Company recognizes grants as contra research and development expense in the consolidated statement of operations on a systematic basis

over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.

Company follows the liability method of accounting for income taxes.

Under this method, deferred income tax assets and liabilities are

recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective

income tax basis (temporary differences).

The effect on deferred income tax assets and liabilities of a change in tax rates is recognized

in income in the period that includes the enactment date.

Currency Translation

Company’s financial statements are presented in the U.S.

dollar (“$”), which is the Company’s reporting currency,

while its functional currencies are the U.S.

Dollar for its U.S.

based operations, British Pound (“GBP”) for its United Kingdom-based

operations and Australian Dollars (“AUD”) for its Australian-based operations.

All assets and liabilities are translated

at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations

items are translated at the weighted average exchange rate for the period.

The resulting translation adjustments are reported under other

comprehensive income.

Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in

the statement of operations and comprehensive loss.

Accounting Pronouncements

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

the transaction price to the performance obligations in the contract;

and (5) recognize revenues when (or as) the Company satisfies the

performance obligations.

The Company records the expenses related to revenue in research and development expense, in the periods such

expenses were incurred.

The Company records deferred revenues when cash

payments are received or due in advance of performance, including amounts which are refundable.

The Company’s 2024 and 2023 revenue was

from the sale of mesenchymal stromal cells to one customer in the United Kingdom and was recognized when the MSC’s were delivered

to the customer.

Stock-Based Compensation

The Company utilizes the Black-Scholes option

pricing model to estimate the fair value of stock option awards at the date of grant, which requires the input of highly subjective assumptions,

including expected volatility and expected life.

Changes in these inputs and assumptions can materially affect the measure of estimated

fair value of our share-based compensation.

These assumptions are subjective and generally require significant analysis and judgment to

When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions

may be derived from our historical experience with stock-based payment arrangements.

The appropriate weight to place on historical experience

is a matter of judgment, based on relevant facts and circumstances.

The Company accounts for forfeitures of stock options as they occur.

Research and Development

Research and development (“R&D”)

costs are expensed as incurred.

Research and development credits are recorded by the Company as a reduction of research and development

Major components of research and development costs include cash compensation, stock-based compensation, clinical trials and related

clinical manufacturing, costs of drug development, costs of materials and supplies, facilities cost, overhead costs, costs of pre-clinical

trials, regulatory and compliance costs, and fees paid to consultants and other entities that conduct certain research and development

activities on the Company’s behalf.

The Company recognizes grants as contra research

and development expense in the consolidated statement of operations on a systematic basis over the periods in which the entity recognizes

as expenses the related costs for which the grants are intended to compensate.

The Company follows the liability method of accounting

for income taxes.

Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable

to differences between the financial statement carrying values and their respective income tax basis (temporary differences).

on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment

Foreign Currency Translation

The Company’s financial statements are presented

dollar (“$”), which is the Company’s reporting currency, while its functional currencies are the U.S.

based operations, British Pound (“GBP”) for its United Kingdom-based operations and Australian Dollars (“AUD”)

for its Australian-based operations.

All assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’

equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the

The resulting translation adjustments are reported under other comprehensive income.

Gains and losses resulting from the translations

of foreign currency transactions and balances are reflected in the statement of operations and comprehensive loss.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07,

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which enhances

the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements, including those

companies with a single operating segment.

ASU 2023-07 is effective retrospectively for fiscal years beginning after December 15, 2023

and for interim periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-07 for the year ended December

See Note 13 for segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Income

Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information

in the rate reconciliation and income taxes paid disaggregated by jurisdiction.

The standard is effective for public companies for fiscal

years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact that the adoption

of ASU 2023-09 may have on its consolidated financial statements.

Company has evaluated all transactions through the financial statement issuance date for subsequent disclosure consideration.

4 – RESEARCH AND DEVELOPMENT ACTIVITY

to UK tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in the UK for expenses incurred in

R&D subject to certain requirements.

The Company’s UK subsidiary submits R&D tax credit requests annually for research

and development expenses incurred.

At December 31, 2023 and 2022, the Company had a research and development tax credit receivable of

$ 0 and $ 2,690,000 , respectively for R&D expenses incurred in the UK.

During the years ended December 31, 2023 and 2022, the Company

received $ 2,710,000 and $ 0 of R&D tax credit reimbursements, respectively from the UK.

According to AUS tax law, the Company is allowed an R&D tax credit

that reduces a company’s tax bill in AUS for expenses incurred in R&D subject to certain requirements.

The Company’s Australian

subsidiary submits R&D tax credit requests annually for research and development expenses incurred.

At December 31, 2023 and 2022,

the Company had a research and development tax credit receivable of $ 1,905,000 and $ 5,409,000 , respectively, for R&D expenses incurred

in Australia.

During the years ended December 31, 2023 and 2022, the Company received $ 6,557,000 and $ 0 of R&D tax credit reimbursements,

respectively from Australia.

The guidance in ASU 2023-09 improves the

transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated

by jurisdiction.

The standard is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption

The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03,

Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income

Statement Expenses (“ASU 2024-03”).

ASU 2024-03 requires additional disclosure of specific types of expenses included

in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

ASU 2024-03 is effective

for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

ASU 2024-03 may be applied prospectively with the option for retrospective application for all prior periods presented.

The Company is

currently evaluating the impact of adopting this guidance on the Company’s current financial position, results of operations or financial

statement disclosures.

Subsequent Events

The Company has evaluated all transactions through

the financial statement issuance date for subsequent disclosure consideration.

NOTE 4 – RESEARCH AND DEVELOPMENT

According to UK tax law, the Company is allowed

an R&D tax credit that reduces a company’s tax bill in the UK for expenses incurred in R&D subject to certain requirements.

The Company’s UK subsidiary submits R&D tax credit requests annually for research and development expenses incurred.

31, 2024 and 2023, the Company had a research and development tax credit receivable of $ 0 for R&D expenses incurred in the UK.

the years ended December 31, 2024 and 2023, the Company received $ 0 and $ 2,710,000 of R&D tax credit reimbursements, respectively,

According to AUS tax law, the Company is allowed

an R&D tax credit that reduces a company’s tax bill in AUS for expenses incurred in R&D subject to certain requirements.

The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred.

At December 31, 2024 and 2023, the Company had a research and development tax credit receivable of $ 1,181,000 and $ 1,905,000 , respectively,

for R&D expenses incurred in Australia.

During the years ended December 31, 2024 and 2023, the Company received $ 2,475,000 and $ 6,557,000

of R&D tax credit reimbursements, respectively, from Australia.

License Agreement

October 3, 2017, the Company entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc.

3, 2017, the Company entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc.

which discovered and developed a proprietary biological molecule that inhibits soluble tumor necrosis factor.

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additional alternative applications of the technology are available under the Xencor License Agreement.

Company also agreed to pay Xencor a 5 %

royalty on Net Sales of all Licensed Products in a given calendar year, which are payable on a country-by- country and licensed product

by licensed product basis until the date that is the later of (a) the expiration of the last to expire valid claim covering such Licensed

Product in such country or (b) ten years following the first sale to a third party of the licensed product in such country.

License Agreement

October 29, 2015, the Company entered into an exclusive license agreement (the “INKmune License Agreement”) with Immune Ventures,

LLC (“Immune Ventures”).

Pursuant to the INKmune License Agreement, the Company was granted exclusive worldwide rights to

the patents, including rights to incorporate any improvements or additions to the patents that may be developed in the future.

In consideration

for the patent rights, the Company agreed to the following milestone payments:

also agreed to pay Xencor a 5 % royalty on Net Sales of all Licensed Products in a given

calendar year, which are payable on a country-by- country and licensed product by licensed product basis until the date that is the later

of (a) the expiration of the last to expire valid claim covering such Licensed Product in such country or (b) ten years following the

first sale to a third party of the licensed product in such country.

INKmune License Agreement

On October 29, 2015, the Company entered into

an exclusive license agreement (the “INKmune License Agreement”) with Immune Ventures, LLC (“Immune Ventures”).

Pursuant to the INKmune License Agreement, the Company was granted exclusive worldwide rights to the patents, including rights to incorporate

any improvements or additions to the patents that may be developed in the future.

In consideration for the patent rights, the Company

agreed to the following milestone payments:

(in thousands)

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Each NDA/EMA awarded

addition, the Company agreed to pay the licensor a royalty of 1 % of net sales during the life of each patent granted to the Company.

In addition, the Company agreed to pay the licensor

a royalty of 1 % of net sales during the life of each patent granted to the Company.

The License is owned by Immune Ventures.

RJ Tesi, the Company’s President and a member of our Board of Directors, David Moss, its

Chief Financial Officer and Treasurer and Mark Lowdell, its Chief Scientific Officer, are the owners of Immune Ventures.

No sales have

occurred under this license.

During December 2023, the Company initiated a Phase I trial with INKmune in patients with metastatic castration-resistant

prostate cancer and has recorded a $ 25,000 payable to Immune Ventures as of December 31, 2023.

term of the agreement began on October 29, 2015 and ends on a country-by-country basis on the date of the expiration of the last to expire

patent rights where patent rights exists, unless terminated earlier in accordance with the agreement.

Upon the termination of the agreement,

we shall have a fully paid up, perpetual, royalty-free license without further obligation to Immune Ventures.

The agreement can be terminated

by Immune Ventures if, after 60 days from the Company’s receipt of notice that the Company has not made a payment under the agreement,

and the Company still does not make this payment.

On July 20, 2018 and October 30, 2020, the parties amended the agreement under

which the Company was required achieve milestones pursuant to the agreement.

April 17, 2023, the parties executed an additional amendment to the agreement under which the Company removed the due diligence requirements

to achieve reasonable commercial efforts to bring INKmune to market.

This removed all requirements of clinical trial timelines and the

filing timelines of an NDA or equivalent.

All other provisions in the INKmune License Agreement shall continue in full force and effect.

of Pittsburg License Agreement

October 3, 2017, the Company entered into an Assignment and Assumption Agreement with Immune Ventures related to intellectual property

licensed from the University of Pittsburgh.

Pursuant to the Assignment and Assumption Agreement (“Assignment Agreement”),

Immune Ventures assigned all of its rights, obligations and liabilities under an Exclusive License Agreement between the University of

Pittsburgh – Of the Commonwealth System of Higher Education (“Licensor”) and Immune Ventures to INmune Bio (“Licensee”),

(the “PITT Agreement”).

Consideration

under the PITT Agreement includes:

(i) annual maintenance fees, (ii) royalty payments based on the sale of products making use of the

licensed technology, and (iii) milestone payments.

maintenance fees under the PITT Agreement include:

$ 10,000 due on June 26 of each year 2023-2024;

and $ 25,000 due on June 26 of each

year 2025 and annually thereafter until first commercial sale.

The Company had no amounts owed pursuant to the PITT Agreement as of December

first commercial sale of a product making use of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties

equal to 2.5 % of Net Sales each calendar quarter.

As of December 31, 2023, there have been no commercial sales of product making use

of the licensed technology under the PITT Agreement.

under the PITT Agreement the Licensee is required to make milestone payments as follows:

the Company’s President and a member of our Board of Directors, David Moss, its Chief Financial Officer and Treasurer and Mark Lowdell,

its Chief Scientific Officer, are the owners of Immune Ventures.

No sales have occurred under this license.

During December 2023, the

Company initiated a Phase I trial with INKmune in patients with metastatic castration-resistant prostate cancer and has recorded a $ 25,000

payable to Immune Ventures as of December 31, 2024.

The term of the agreement began on October 29,

2015 and ends on a country-by-country basis on the date of the expiration of the last to expire patent rights where patent rights exists,

unless terminated earlier in accordance with the agreement.

Upon the termination of the agreement, we shall have a fully paid up, perpetual,

royalty-free license without further obligation to Immune Ventures.

The agreement can be terminated by Immune Ventures if, after 60 days

from the Company’s receipt of notice that the Company has not made a payment under the agreement, and the Company still does not

make this payment.

On July 20, 2018 and October 30, 2020, the parties amended the agreement under which the Company was required

achieve milestones pursuant to the agreement.

On April 17, 2023, the parties executed an additional

amendment to the agreement under which the Company removed the due diligence requirements to achieve reasonable commercial efforts to

bring INKmune to market.

This removed all requirements of clinical trial timelines and the filing timelines of an NDA or equivalent.

other provisions in the INKmune License Agreement shall continue in full force and effect.

University of Pittsburg License Agreement

On October 3, 2017, the Company entered into an

Assignment and Assumption Agreement with Immune Ventures related to intellectual property licensed from the University of Pittsburgh.

Pursuant to the Assignment and Assumption Agreement (“Assignment Agreement”), Immune Ventures assigned all of its rights,

obligations and liabilities under an Exclusive License Agreement between the University of Pittsburgh – Of the Commonwealth System

of Higher Education (“Licensor”) and Immune Ventures to INmune Bio (“Licensee”), (the “PITT Agreement”).

Consideration under the PITT Agreement includes:

maintenance fees, (ii) royalty payments based on the sale of products making use of the licensed technology, and (iii) milestone payments.

Annual maintenance fees under the PITT Agreement

include $ 25,000 due on June 26, 2025 and thereafter until first commercial sale.

The Company had no amounts owed pursuant to the PITT

Agreement as of December 31, 2024.

Upon first commercial sale of a product making

use of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties equal to 2.5 % of Net Sales each calendar

As of December 31, 2024, there have been no commercial sales of product making use of the licensed technology under the PITT

Moreover, under the PITT Agreement the Licensee

is required to make milestone payments as follows:

(in thousands)

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First commercial sale of product making use of licensed technology

PITT Agreement expires upon the earlier of:

(i) expiration of the last claim of the Patent Rights forming the subject matter of the PITT

or (ii) the date that is 20 years from the effective date of the agreement (June 26, 2037).

Licensee may terminate the PITT Agreement upon 3 months prior written notice provided all payments under the license are current.

Licensor may terminate the PITT Agreement upon written notice if:

(i) Licensee defaults as to performance of material obligations which

have not been cured within 60 days after receiving written notice;

or (ii) Licensee ceases to carry out its business, becomes bankrupt

or insolvent, applies for or consents to the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any

law for the aid of debtors.

5 – FAIR VALUE MEASUREMENTS

following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis:

The PITT Agreement expires upon the earlier of:

(i) expiration of the last claim of the Patent Rights forming the subject matter of the PITT Agreement;

or (ii) the date that is 20 years

from the effective date of the agreement (June 26, 2037).

The Licensee may terminate the PITT Agreement

upon 3 months prior written notice provided all payments under the license are current.

The Licensor may terminate the PITT Agreement

upon written notice if:

(i) Licensee defaults as to performance of material obligations which have not been cured within 60 days after

receiving written notice;

or (ii) Licensee ceases to carry out its business, becomes bankrupt or insolvent, applies for or consents to

the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.

NOTE 5 – FAIR VALUE MEASUREMENTS

The following table presents the hierarchy

for assets and liabilities measured at fair value on a recurring basis:

(in thousands)

Active Market

Observable Inputs

December 31, 2024:

Cash equivalents

Money market fund

Treasury bills

Money market funds

Total cash equivalents

(in thousands)

Active Market

Observable Inputs

December 31, 2023:

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Total cash equivalents

September 2021, the Company signed a lease with a third party for office space in Boca Raton, Florida.

The lease agreement has a 64-month

term and commenced during the fourth quarter of 2021.

is a summary of the Company’s right-of-use assets and liabilities:

(in thousands, except years and rate)

NOTE 6 – LEASE

In September 2021, the Company signed a lease with a third party for

office space in Boca Raton, Florida.

The lease agreement has a 64-month term and commenced during the fourth quarter of 2021.

Below is a summary of the Company’s right-of-use

assets and liabilities:

(in thousands, except years and rate) December 31,

2024 December 31,

Right-of-use asset $ 307 $ 414

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Total lease liability $ 384 $ 516

Weighted-average remaining lease term

Weighted-average remaining lease term 2.3 years 3.3 years

Weighted-average discount rate 12.0 % 12.0 %

7 – RELATED PARTY TRANSACTIONS

During the years ended December 31, 2023 and 2022,

the Company paid UCL $ 573,000 and $ 586,000 , respectively, for medical research performed on behalf of the Company.

UCL is a wholly owned

subsidiary of the University of London.

The Company’s Chief Scientific and Manufacturing Officer is a professor at the University

2022, the Company paid CTI $ 153,000 pursuant to its former sublease agreement with CTI and $ 5,000 for research and development performed

on behalf of the Company.

The Company had no transactions with CTI in 2023.

the years ended December 31, 2023 and 2022, the Company paid AmplifyBio $ 77,000 and $ 230,000 , respectively, to perform certain research

and development on behalf of the Company.

NOTE 7 – RELATED PARTY TRANSACTIONS

At December 31, 2024 and 2023,

the Company recorded $ 0 and $ 112,000 , respectively, of prepaid expenses – related party for payments made to UCL in advance

of medical research to be provided.

During the years ended December 31, 2024 and 2023, the Company paid UCL $ 321,000 and $ 573,000 ,

respectively.

UCL is a wholly owned subsidiary of the University of London.

The Company’s Chief Scientific and Manufacturing Officer

is a professor at the University of London.

years ended December 31, 2024 and 2023, the Company paid AmplifyBio $ 384,000 and $ 77,000 , respectively, to perform certain research and

development on behalf of the Company.

The CEO of AmplifyBio is on the Board of Directors of the Company.

June 10, 2021, the Company entered into a Loan and Security Agreement (the “Term Loan”) with Silicon Valley Bank and SVB

Innovation Credit Fund VIII, L.P., together (the “Lenders”).

The Term Loan provides for a $ 15.0 million term loan,

of which the Company borrowed the entire amount on June 10, 2021 and is secured by the Company’s assets.

The Term Loan also

provides for the Company to request an additional $ 5.0 million term loan from the Lenders, which may be granted or denied at the

sole discretion of the Lenders.

term loan and debt discount are as follows as of December 31, 2023:

(in thousands)

Current portion

debt discount

Current portion of debt,

the years ended December 31, 2023 and 2022, the Company recognized interest expense of $ 2,278,000 and $ 2,014,000 , respectively, related

to the Term Loan.

Term Loan provides for an annual interest rate equal to the greater of (i) the prime rate then in effect as reported in The Wall Street

Journal plus 4.50 % and (ii) 7.75 %.

At December 31, 2023, the interest rate was 13.0 %.

Term Loan includes a final payment fee equal to 6.5 % of the original principal amount borrowed payable on the earlier of the repayment

of the loan in full and the maturity date.

The Company has the option to prepay the outstanding balance of the term loan in full, subject

to a prepayment premium of 1 % of the original principal amount borrowed for any prepayment before the maturity date.

the occurrence of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the

Term Loan, the breach of certain of its other covenants under the Term Loan, or the occurrence of a material adverse change, the Lenders

will have the right, among other remedies, to declare all principal and interest immediately due and payable, and will have the right

to receive the final payment fee and, if the payment of principal and interest is due prior to maturity, the applicable prepayment fee.

9 – STOCKHOLDERS’ EQUITY

Stock – At the Market Offering

March 2021, the Company entered into a sales agreement (“Sales Agreement”) with BTIG, LLC (“BTIG”), as sales

agent, to establish an At-The-Market (“ATM”) offering program of up to $ 45 million of common stock, subject to certain

limitations on the amount of common stock that may be offered and sold by the Company set forth in the sales agreement.

During August

2023, the Company and BTIG entered into Amendment No.

1 to the Sales Agreement.

The Company is required to pay BTIG a commission of 3 %

of the gross proceeds from the sale of shares.

During 2021, the Company entered

into a Loan and Security Agreement (the “Term Loan”) with Silicon Valley Bank and SVB Innovation Credit Fund VIII, L.P., together

(the “Lenders”) in which the Company borrowed $ 15 million.

The Term Loan was secured by the Company’s assets.

December 2024, the Company paid off the Term Loan in full.

During February 2025, the Company entered into a letter agreement with the

Lenders whereby the Term Loan was terminated.

years ended December 31, 2024 and 2023, the Company recognized interest expense of $ 789,000 and $ 2,278,000 , respectively, related to the

NOTE 9 – STOCKHOLDERS’ EQUITY

Registered Direct Offerings

During September 2024, the Company entered into

securities purchase agreements with investors whereby the Company sold 2,341,260 shares of the Company’s common stock

and warrants to purchase an additional 2,341,260 shares of the Company’s common stock exercisable six months from the

issuance date in a registered direct offering in exchange for gross proceeds of $ 13.0 million (net proceeds of approximately $ 12.0 million).

Directors and

officers that participated in the offering paid a combined offering price of $ 6.50 per share and warrant, and other investors paid

$ 5.50 per share and warrant.

The exercise price of the warrants is $ 6.40 , and are exercisable beginning on March 16, 2025 and

will terminate on March 16, 2030 unless accelerated pursuant to the terms of the warrant agreements.

The Company determined the warrants

were equity classified.

The fair value of the warrants was approximately $ 9.1 million and was calculated using the Black-Scholes

option-pricing model.

Variables used in the Black-Scholes option-pricing model include:

(1) discount rate of 3.41 % based on the applicable

US Treasury bill rate (2) expected life of 5.5 years, (3) expected volatility of approximately 92 % based on the trading

history of the Company, and (4) zero expected dividends.

During April 2024, the Company entered into a

securities purchase agreement with an investor whereby the Company sold 986,000 shares of the Company’s common stock and

warrants to purchase an additional 986,000 shares of the Company’s common stock in a registered direct offering in exchange

for gross proceeds of approximately $ 9.7 million (net proceeds of approximately $ 8.9 million).

The exercise price of the warrants

is $ 9.84 and the term of the warrants is the earlier of (1) April 29, 2026 or (2) thirty trading days following the reporting of

positive top line data in the Phase 2 Alzheimer’s program of XPro1595.

The Company determined that the warrants were equity

The fair value of the warrants was approximately $ 5.8 million and was calculated using the Black-Scholes option-pricing

Variables used in the Black-Scholes option-pricing model include:

(1) discount rate of 4.97 % based on the applicable US Treasury

bill rate (2) expected life of 2.0 years, (3) expected volatility of approximately 77 % based on the trading history of

the Company, and (4) zero expected dividends.

During April 2024, the Company entered into securities

purchase agreements with investors whereby the Company sold 571,592 shares of the Company’s common stock and warrants

to purchase an additional 571,592 shares of the Company’s common stock in a registered direct offering in exchange for

gross proceeds of approximately $ 4.8 million (net proceeds of approximately $ 4.5 million).

Directors and

officers that participated in the offering paid a combined offering price of $ 8.445 per share and warrant, and other investors paid

$ 8.32 per share and warrant.

The exercise price of the warrants is $ 9.152 , and the term is the earlier of two years from the issuance

of the warrants and thirty trading days following the release of top line data in the Phase 2 Alzheimer’s program, provided that

directors and officers of the Company that are subject to a blackout with respect to trading in the Company’s stock will have an

additional 60 days from the termination of the blackout date to exercise the warrant.

The Company determined the warrants were equity

The fair value of the warrants was approximately $ 3.0 million and was calculated using the Black-Scholes option-pricing

Variables used in the Black-Scholes option-pricing model include:

(1) discount rate of 4.89 % based on the applicable US Treasury

bill rate (2) expected life of 2.0 years, (3) expected volatility of approximately 78 % based on the trading history of

similar companies, and (4) zero expected dividends.

Common Stock – At the Market Offering

During March 2021, the Company entered into a

sales agreement (“Sales Agreement”) with BTIG, LLC (“BTIG”), as sales agent, to establish an At-The-Market (“ATM”)

offering program of up to $ 45 million of common stock, which the Company amended in August 2023.

The Company was required to pay

BTIG a commission of 3 % of the gross proceeds from the sale of shares.

During the year ended December 31, 2024, the Company issued

and sold 198,364 shares of common stock at an average price of $ 10.56 per share under the ATM program.

The aggregate net

proceeds were approximately $ 2.0 million after BTIG’s commission expenses.

During August 2024, the Company entered into an

amended and restated at-the-market sales agreement with RBC Capital Markets LLC and BTIG (together, the “Sales Agents”) relating

to the offer and sale of shares of our common stock with an aggregate offering price of up to $ 75.0 million.

This amended and restated

at-the-market sales agreement replaced the Sales Agreement entered into with BTIG in March 2021, as amended in August 2023.

is required to pay the Sales Agents a commission of 3 % of the gross proceeds from the sale of shares.

the year ended December 31, 2024, the Company issued and sold 48,762 shares of common stock at an average price of $ 6.96 per

share under the ATM program.

The aggregate net proceeds were approximately $ 0.3 million after commission expenses.

At December 31,

2024, the Company had $ 74.7 million of common stock available under the amended and restated at-the-market agreement.

July 2023, the Company sold 75,697 shares of its common stock at an average price of $ 10.56 per share under the ATM program.

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statement filed with the SEC that had in fact expired prior to the time the shares were sold.

Consequently, the Company may

be subject to claims for rescission by purchasers who purchased shares of common stock under the ATM program.

Under Section

12(a)(1) of the Securities Act, a purchaser of security in a transaction made in violation of Section 5 of the Securities Act may obtain

recovery of the consideration paid in connection with its purchase, plus statutory interest, or, if it had already sold the shares, recover

damages resulting from its purchase.

While the Company believes, it is unlikely that a successful claim will be asserted against the

Company by any purchasers who purchased shares of common stock under the ATM Agreement in July 2023, the Company cannot guarantee that

no such legal claims will be asserted against the Company by any purchasers.

In addition, the Company could become subject to enforcement

actions and/or penalties and fines by federal authorities, and the Company is unable to predict the likelihood of any such enforcement

actions being brought, or the amount of any such potential penalties or fines.

As of December 31, 2023, there have been no claims or

demands to exercise such rights.

As a result of these potential rescission rights, the Company reclassified 75,697 shares,

with an aggregate purchase price of $ 799,000 of its common stock as temporary equity presented outside stockholders’ equity.

The reclassification of these shares shall remain for a period of one year from transaction date.

These shares have been treated as issued

and outstanding for financial reporting purposes.

December 31, 2023, the Company has $ 28.7 million of common stock available under the ATM program.

Stock – Issuance to Directors and Officers

the year ended December 31, 2022, directors and officers of the Company purchased 82,900 shares of the Company’s common

stock from the Company at $ 8.43 per share (which was the closing price of the Company’s common stock on March 22, 2022) for

gross proceeds of $ 699,000 .

June 1, 2023, the Company’s shareholders approved an amendment to the 2021 Incentive Stock Plan (“2021 Amended and Restated

Incentive Stock Plan”) to increase the shares of the Company’s common stock available for issuance thereunder to 4,000,000 shares.

2023, the Company granted certain employees and directors options to purchase 665,000 shares of its common stock pursuant to

the 2017 and 2019 Incentive Stock Plans and 2021 Amended and Restated Incentive Stock Plan.

The stock options had a fair value of approximately

$ 4.9 million that was calculated using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing

model include:

(1) discount rate of 3.84 % – 3.99 % based on the applicable US Treasury bill rate (2) expected life of 6.0 – 6.25 years,

(3) expected volatility of approximately 91 % based on the trading history of similar companies, and (4) zero expected dividends.

As of December 31, 2023, the

Company reclassified 75,697 shares, with an aggregate purchase price of $ 799,000 of its common stock as temporary equity

presented outside stockholders’ equity as a result of potential rescission rights.

There have been no claims or demands to

exercise such rights.

As of December 31, 2024, the rescission rights for these shares have lapsed and the shares were reclassified

to permanent equity.

Stock options

On June 1, 2023, the Company’s shareholders

approved an amendment to the 2021 Incentive Stock Plan (“2021 Amended and Restated Incentive Stock Plan”) to increase the

shares of the Company’s common stock available for issuance thereunder to 4,000,000 shares.

the Company granted certain employees and directors options to purchase 1,964,307 shares of its common stock pursuant to the

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- 106 % based on the trading history of similar companies, and (4) zero expected dividends.

December 31, 2023, the Company had 1,952,525 shares reserved for issuance pursuant to the 2021 Amended and Restated Incentive Stock Plan.

following table summarizes stock option activity:

(in thousands, except share and per share amounts)

During 2023, the Company granted certain employees

and directors options to purchase 665,000 shares of its common stock pursuant to the 2017 and 2019 Incentive Stock Plans and

2021 Amended and Restated Incentive Stock Plan.

The stock options had a fair value of approximately $ 4.9 million that was calculated

using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing model include:

(1) discount rate of 3.84 %

– 3.99 % based on the applicable US Treasury bill rate (2) expected life of 6.0 – 6.25 years, (3)

expected volatility of approximately 91 % based on the trading history of similar companies, and (4) zero expected dividends.

At December 31, 2024, the Company had 121,243

shares reserved for issuance pursuant to the 2021 Amended and Restated Incentive Stock Plan and 15,975 shares available pursuant to the

2019 Stock Incentive Plan.

The following table summarizes stock option activity :

(in thousands, except share and per share amounts) Number of

Shares Weighted-

Price Weighted-

(years) Aggregate

Outstanding at December 31, 2022 4,841,417 $ 8.60 6.28 -

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Options cancelled ( 149,000 ) $ 9.90 - -

Options exercised ( 108,000 ) $ 3.91 - -

Outstanding at December 31, 2024 7,203,307 $ 8.29 6.49 $ 1,218

Exercisable at December 31, 2024 4,988,685 $ 8.68 5.20 $ 1,218

the years ended December 31, 2023 and 2022, the Company recognized stock-based compensation expense of $ 7,368,000 and $ 7,149,000 , respectively,

related to stock options.

As of December 31, 2023, there was $ 8,592,000 of total unrecognized compensation cost related to non-vested

stock options which is expected to be recognized over a weighted-average period of 2.05 years.

During the years ended December 31, 2024 and 2023, the Company

recognized stock-based compensation expense of $ 7,605 ,000 and $ 7,368 ,000, respectively, related to stock options.

As of December 31,

2023, there was $ 12,213,000 of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized

over a weighted-average period of 2.37 years.

The Company issued warrants to the Company’s

lenders upon obtaining its loan in June 2021.

lenders upon obtaining a loan in June 2021.

The warrants have a 10 -year term and an exercise price of $ 14.05 .

1 unchanged sentence

and 2023, respectively, 45,386 of these warrants are outstanding and the intrinsic value of these warrants is $0 .

the year ended December 31, 2023, a third party exercised 28,688 warrants on a cashless basis in exchange for 4,781 shares of common

the year ended December 31, 2022, a third party exercised 19,792 warrants in exchange for 19,792 shares of common stock for

cash proceeds of approximately $ 30,000 .

Compensation by Class of Expense

The following summarizes the components of stock-based compensation

expense in the consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively:

2024, the Company issued 1,557,592 warrants to investors in connection with the sale of common stock.

At December 31, 2024, 1,557,592 of

these warrants are outstanding and are exercisable for cash at a weighted average price of $ 9.59 per share.

The intrinsic value of

these warrants was $0 as of December 31, 2024.

During September

2024, the Company issued 2,341,260 warrants to investors in connection with the sale of common stock.

At December 31, 2024, 2,341,260 of

these warrants are outstanding and are exercisable for cash at a weighted average price of $ 6.40 per share.

The intrinsic value of

these warrants was $0 as of December 31, 2024.

During the year ended December 31, 2023, a third

party exercised 28,688 warrants on a cashless basis in exchange for 4,781 shares of common stock.

Stock-based Compensation by Class of Expense

The following summarizes the components of stock-based

compensation expense in the consolidated statements of operations for the years ended December 31, 2024 and 2023, respectively:

(in thousands)

Research and development

General and administrative

Rights Agreement

December 30, 2020, the Board of Directors (the “Board”) of the Company approved and adopted a Rights Agreement, dated as

of December 30, 2020, by and between the Company and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend

of one preferred share purchase right (each, a “Right”) for each outstanding share of the Company’s common stock held

by stockholders as of the close of business on January 11, 2021.

When exercisable, each right initially would represent the right to

purchase from the Company one one-thousandth of a share of a newly designated series of preferred stock, Series A Junior Participating

Preferred Stock, par value $ 0.001 per share, of the Company, at an exercise price of $ 300.00 per one one-thousandth of a Series A Junior

Participating Preferred Share, subject to adjustment.

Subject to various exceptions, the Rights become exercisable in the event any person

(excluding certain exempted or grandfathered persons) becomes the beneficial owner of twenty percent or more of the Company’s

common stock without the approval of the Board.

The Rights Agreement was amended in 2021, 2022 and 2023 to extend the expiration date

and shall expire on December 30, 2024.

Shareholder Rights Agreement

On December 30, 2020, the Board of Directors (the

“Board”) of the Company approved and adopted a Rights Agreement, dated as of December 30, 2020, by and between the Company

and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend of one preferred share purchase right (each,

a “Right”) for each outstanding share of the Company’s common stock held by stockholders as of the close of business

on January 11, 2021.

When exercisable, each right initially would represent the right to purchase from the Company one one-thousandth

of a share of a newly designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $ 0.001 per share,

of the Company, at an exercise price of $ 300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to

Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered

persons) becomes the beneficial owner of twenty percent or more of the Company’s common stock without the approval of the Board.

The Rights Agreement was amended in 2021, 2022, 2023 and 2024 to extend the expiration date and shall expire on December 30, 2025.

Preferred Stock

In 2020, the Company designated 45,000 shares

4 unchanged sentences

2024 and 2023.

10 – INCOME TAXES

provision for income taxes consists of the following components :

NOTE 10 – INCOME TAXES

Loss before income taxes summarized by region

was as follows:

(in thousands)

United States

Total loss before income taxes

The provision for income taxes consists of the

following components:

Current expense (benefit)

3 unchanged sentences

Net deferred taxes

reconciliation of income tax benefit computed using the federal statutory income tax rate to the Company’s tax expense is as follows:

A reconciliation of income tax benefit computed

using the federal statutory income tax rate to the Company’s tax expense is as follows:

(in thousands, except percentage)

7 unchanged sentences

Income tax benefit

principal components of deferred tax assets and liabilities consist of the following at December 31, 2023 and 2022, respectively:

The principal components of deferred tax assets

and liabilities consist of the following at December 31, 2024 and 2023, respectively:

(in thousands)

8 unchanged sentences

Net deferred tax assets

At December 31, 2023, the Company had a federal

net operating loss carryforward of approximately $ 32.6 million.

The net operating loss carryforwards for 2017 will begin to expire in

the year ending December 31, 2037.

The net operating loss carryforwards starting in 2018 have no expiration.

Company’s gross deferred tax assets of $ 19.6 million and $ 13.7 million at December 31, 2023 and 2022, respectively, primarily consist

of net operating loss carryforwards for income tax purposes.

A valuation allowance is required to be recorded when it is not more likely

than not that some portion or all of the net deferred tax assets will be realized.

Since the Company cannot be assured of generating

taxable income and thereby realizing the net deferred tax assets, a full valuation allowance has been recorded.

The change in the

valuation allowance was $ 5,872,000 during the year ended December 31, 2023.

Company recognizes uncertain tax positions in accordance with ASC 740 on the basis of evaluating whether it is more likely than not that

the tax positions will be sustained upon examination by tax authorities.

For those tax positions that meet the more-likely-than not recognition

threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement.

As of December 31, 2023, and 2022, the Company has no significant uncertain tax positions.

There are no unrecognized tax benefits included

on the balance sheet that would, if recognized, impact the effective tax rate.

The Company does not anticipate there will be a significant

change in unrecognized tax benefits within the next 12 months.

11 – COLLABORATIVE AGREEMENTS

September 2020, the Company was awarded a grant of up to $ 2.9 million from the National Institutes of Health (“NIH”).

grant will support a Phase 2 study of XPro in patients with treatment resistant depression.

As of December 31, 2023, the Company has

not received any proceeds pursuant to this grant.

We file income tax returns in the United States,

the United Kingdom and Australia.

The Company is no longer subject to Internal Revenue Service tax examinations by tax authorities

for years prior to 2021.

The United Kingdom and Australia are no longer subject to income tax examination for years prior to

2023 and 2022, respectively.

As of December 31, 2024, the Company has a federal net operating loss

carryforward of approximately $ 41.4 million, a United Kingdom net operating loss carryforward of $ 17.4 million and an Australia net operating

loss carryforward of $ 19.7 million.

The federal net operating loss carryforwards for 2017 will begin to expire in the year ending December

The remaining federal net operating loss carryforwards generated after 2017 have no expiration.

The United Kingdom and Australia

net operating losses have no expiration.

The Company has net operating loss carryforwards in California and Florida of $ 14.9 million and

$ 24.2 million, respectively, of which the California net operating losses will begin to expire in the year ending December 31, 2037, and

the Florida net operating losses have no expiration.

The Company’s gross deferred tax assets

of $ 25.7 million and $ 19.6 million at December 31, 2024 and 2023, respectively, primarily consist of net operating loss carryforwards

for income tax purposes.

A valuation allowance is required to be recorded when it is not more likely than not that some portion or all

of the net deferred tax assets will be realized.

Since the Company cannot be assured of generating taxable income and thereby realizing

the net deferred tax assets, a full valuation allowance has been recorded.

The change in the valuation allowance was $ 6,081,000 during

the year ended December 31, 2024.

The Company recognizes uncertain tax positions

in accordance with ASC 740 on the basis of evaluating whether it is more likely than not that the tax positions will be sustained upon

examination by tax authorities.

For those tax positions that meet the more-likely-than not recognition threshold, we recognize the largest

amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement.

As of December 31, 2024, and 2023,

the Company has no significant uncertain tax positions.

There are no unrecognized tax benefits included on the balance sheet that would,

if recognized, impact the effective tax rate.

The Company does not anticipate there will be a significant change in unrecognized tax benefits

within the next 12 months.

NOTE 11 – COLLABORATIVE AGREEMENTS

During September 2020, the Company was awarded

a grant from the National Institutes of Health (“NIH”).

The grant will support a Phase 2 study of XPro in patients with treatment

resistant depression.

During 2024, the grant was reduced from approximately $ 2.9 million to approximately $ 2.0 million.

As of December

31, 2024, the Company has not received any proceeds pursuant to this grant.

12 – COMMITMENTS AND CONTINGENCIES

September 2021, the Company signed a lease agreement with a third party for office space in Boca Raton, Florida.

The operating lease

has a 64-month term and commenced during the fourth quarter of 2021.

minimum payments pursuant to the leases are as follows:

During September

2021, the Company signed a lease agreement with a third party for office space in Boca Raton, Florida.

The operating lease has a 64 -month

term and commenced during the fourth quarter of 2021.

Future minimum payments pursuant

to the leases are as follows:

(in thousands, except years)

4 unchanged sentences

Long-term operating lease liabilities

the years ended December 31, 2023 and 2022, the Company recognized $ 163,000 and $ 209,000 , respectively, in operating lease expense, which

is included in general and administrative expenses in the Company’s consolidated statement of operations.

Company is subject to claims and suits that arise from time to time in the ordinary course of our business.

Although management currently

believes that resolving claims against the Company, individually or in aggregate, will not have a material adverse impact in the Company’s

During the years ended December 31, 2024 and 2023,

the Company recognized $ 161,000 and $ 163,000 , respectively, in operating lease expense, which is included in general and administrative

expenses in the Company’s consolidated statement of operations.

has an ongoing dispute with a vendor in which the Company believes that the vendor did not properly provide services for which they have

invoiced the Company.

As of December 31, 2024, the Company has outstanding invoices with the vendor which aggregate approximately $ 1.6 million,

of which the Company has recorded approximately $ 0.2 million, which is the Company’s estimate of the obligation incurred, and

the remaining $ 1.4 million has not been recorded by the Company as the Company believes the invoices were sent erroneously.

and the vendor are still attempting to resolve the dispute and legal proceedings have not been threatened.

is subject to claims and suits that arise from time to time in the ordinary course of our business.

Although management currently believes

that resolving claims against the Company, individually or in aggregate, will not have a material adverse impact in the Company’s

consolidated financial statements, these matters are subject to inherent uncertainties and management’s view of these matters may

change in the future.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

13 – SEGMENT INFORMATION

operates as one operating segment.

The Company’s chief operating decision maker (“CODM”) is its Chief Financial Officer,

who reviews the financial statements on a consolidated basis.

The CODM uses the Company’s long-range plan to allocate resources.

The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results using

consolidated loss from operations.

Significant expenses

within loss from operations, as well as within net loss, include research and development and general and administrative expenses, which

are each separately presented on the Company’s Consolidated Statements of Operations and Comprehensive Loss.

Other segment items

within net loss include other income (expense), net.

The Company’s long-lived

assets consist primarily of acquired in-process research and development intangible assets which are located in the United States.

14 – SUBSEQUENT EVENTS

Cordstrom License Agreement

On February 6, 2025, the Company and GOSH entered into a license agreement

for the exclusive commercial use to clinical trial data associated with the Mission EB study investigating the potential of CORDStrom

to treat RDEB in pediatric patients.

The Company owns the intellectual property covering CORDStrom, the investigational medicinal product

used in the Mission EB study.

In addition, the Company owns intellectual property and maintains trade secret protections covering the

manufacturing of CORDStrom.

With this license to the clinical trial data, the Company intends to prepare applications seeking marketing

authorization of CORDStrom for treatment of pediatric RDEB in each of the FDA, EMA, and MHRA.

Terms of the license agreement include an

upfront payment of £ 250,000 (approximately $ 0.3 million at February 6, 2025) and a single milestone payment of up to £ 6,000,000

(approximately $ 7.5 million at February 6, 2025) due on the first to occur marketing authorization to be granted by the FDA, EMA or MHRA.

In addition to these financial terms, the Company has also agreed to certain patient access obligations, including sponsoring the supply

of CORDStrom to UK patients enrolled in an open label continuation of the Mission EB study.

Sales of Common Stock

During the period from January 1, 2025 through March 27, 2025, the

Company sold 649,860 shares of its common stock through its ATM program for net proceeds of $ 5.3 million.

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data