What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-30 compared with 2025-03-27 · 3 added, 884 removed, 3 unchanged (100% of the section changed)

Financial Statements and Supplementary

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AUDITED FINANCIAL STATEMENTS:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID Number 688 ) F-2

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2024 AND 2023 F-3

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 F-4

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7

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 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.

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

Cash and cash equivalents

Research and development tax credit receivable

Other tax receivable

Prepaid expenses and other current assets

Prepaid expenses – related party

TOTAL CURRENT ASSETS

Operating lease – right of use asset

Acquired in-process research and development intangible assets

LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities – related parties

Deferred liabilities

Current portion of long-term debt, net

Operating lease, current liability

TOTAL CURRENT LIABILITIES

Long-term operating lease liability

TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES

Redeemable common stock, $ 0.001 par value;

0 and 75,697 shares issued and outstanding, respectively (Note 9)

STOCKHOLDERS’ EQUITY

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding

Common stock, $ 0.001 par value, 200,000,000 shares authorized, 22,280,451 and 17,950,776 shares issued and outstanding, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

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)

OPERATING EXPENSES

General and administrative

Research and development

Total operating expenses

LOSS FROM OPERATIONS

OTHER INCOME (EXPENSE), NET

Other income (expense), net

Total other income (expense), net

Net loss per common share – basic and diluted

Weighted average number of common shares outstanding – basic and diluted

COMPREHENSIVE LOSS

Other comprehensive income (loss) – foreign currency translation

Total comprehensive loss

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

Stockholders’

Income (loss)

Balance as of January 1, 2023

Issuance of common stock for cash, net

Reclassification to redeemable common stock

Cashless exercise of warrants

Stock-based compensation

Loss on foreign currency translation

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 )

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:

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation

Accretion of debt discount

Changes in operating assets and liabilities:

Research and development tax credit receivable

Other tax receivable

Prepaid expenses and other current assets

Prepaid expenses – related party

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities – related parties

Deferred liabilities

Accrued liability – long-term

Operating lease liability

Net cash used in operating activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from sale of common stock and warrants

Repayment of debt

Net proceeds from the exercise of stock options

Net cash provided by (used in) financing activities

Impact on cash from foreign currency translation

NET DECREASE IN CASH

CASH AT BEGINNING OF YEAR

CASH AT END OF YEAR

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

Cash paid for income taxes

Cash paid for interest expense

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

“INmune Bio”) was organized in the State of Nevada on September 25, 2015 and is a clinical stage biotechnology pharmaceutical

company focused on developing and commercializing its product candidates to treat diseases where the innate immune system is not functioning

normally and contributing to the patient’s disease.

INmune Bio has three product platforms.

The DN-TNF product platform utilizes

dominant-negative technology to selectively neutralize soluble TNF, a key driver of innate immune dysfunction and mechanistic target of

many diseases.

DN-TNF is currently being developed for Alzheimer’s and treatment resistant depression (“XPro”) and cancer

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

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

prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization

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 $ 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

currently evaluating different strategies to obtain the required funding of future operations.

Financing strategies may include, but are

not limited to, the public or private sale of equity, debt financings or funds from other capital sources, such as government funding,

collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties.

There can be no assurances

that the Company will be able to secure additional financing, or if available, that it will be sufficient to meet its needs or on favorable

Because management’s plans have not yet been finalized and are not within the Company’s control, the implementation

of such plans cannot be considered probable.

As a result, the Company has concluded that management’s plans do not alleviate substantial

doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements do not include

any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities

that might result from the outcome of this uncertainty.

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.

Fair Value of Financial Instruments

The Company measures certain assets and liabilities

in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following

three categories:

Quoted prices (unadjusted)

in active markets that are accessible at the measurement date for assets or liabilities.

Observable prices that

are based on inputs not quoted on active markets but corroborated by market data.

Unobservable inputs are

used when little or no market data is available.

Assets and liabilities are classified based on

the lowest level of input that is significant to the fair value measurements.

The Company reviews the fair value hierarchy classification

on a quarterly basis.

Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets

or liabilities within the fair value hierarchy.

The Company did not have any transfers of assets and liabilities between the levels of

the fair value measurement hierarchy during the years presented.

The carrying amounts of financial instruments

such as cash and cash equivalents, research and development tax credit receivable, other receivable, prepaid expenses, and accounts payable

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

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.

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;

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

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

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.

On June 10, 2021, the Company

and Xencor entered into a First Amendment to License Agreement pursuant to which, among other things, Section 3.2 of the Xencor License

Agreement was amended to change the due diligence milestones.

Pursuant to the Xencor License Agreement, Xencor granted the Company an

exclusive worldwide, royalty-bearing license in licensed patent rights, licensed know-how and licensed materials (as defined in the license

agreement) to make, develop, use, sell and import any pharmaceutical product that comprises, contains, or incorporates Xencor’s

proprietary protein known as “XPro” that inhibits soluble tumor necrosis factor (or all modifications, formulations and variants

of the licensed protein that specifically bind soluble tumor necrosis factor) alone or in combination with one or more active ingredients,

in any dosage or formulation (“Licensed Products”).

The Company believes the protein has numerous medical applications.

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

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)

Each Phase I initiation

Each Phase II initiation

Each Phase III initiation

Each NDA/EMA filing

Each NDA/EMA awarded

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.

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)

Each Phase I initiation

Each Phase III initiation

First commercial sale of product making use of licensed technology

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)

December 31, 2024:

Cash equivalents

Treasury bills

Money market funds

Total cash equivalents

(in thousands)

December 31, 2023:

Cash equivalents

Money market fund

Total cash equivalents

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

Operating lease, current liability 140 119

Long-term operating lease liability 244 397

Total lease liability $ 384 $ 516

Weighted-average remaining lease term 2.3 years 3.3 years

Weighted-average discount rate 12.0 % 12.0 %

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.

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.

The aggregate net proceeds were approximately $ 775,000 after offering expenses.

These shares were inadvertently sold under a registration

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

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

2021 Incentive Stock Plan.

The stock options had a fair value of approximately $ 11.6 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 3.90 % - 4.46 % based

on the applicable US Treasury bill rate (2) expected life of 5.5 – 10.0 years, (3) expected volatility of approximately 100 %

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

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 -

Options granted 665,000 $ 9.69 10.0 -

Options exercised -

Options cancelled ( 10,417 ) $ 12.44 - -

Outstanding at December 31, 2023 5,496,000 $ 8.73 6.18 -

Options granted 1,964,307 $ 7.06 10.0 -

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

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 a loan in June 2021.

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

At December 31, 2024

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

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

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

of its preferred stock with par value of $ 0.001 per share as Series A Junior Participating Preferred Stock.

The remaining 9,955,000 shares

of preferred stock with par value of $ 0.001 remain undesignated.

None of the preferred shares were issued and outstanding at December 31,

2024 and 2023.

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)

Current income tax expense

Deferred expense (benefit)

Deferred income tax

Net deferred taxes

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)

Federal tax benefit at statutory rate ( 21 %)

Stock-based compensation

State income tax benefit, net of federal tax effect

Foreign tax differential

Research credits

Return to provision adjustment

Change in valuation allowance

Income tax benefit

The principal components of deferred tax assets

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

(in thousands)

Deferred tax assets

Stock-based compensation

Research and development

Federal NOL carryforwards

State NOL carryforwards

Foreign NOL carryforwards

Total deferred tax assets

Less valuation allowance

Net deferred tax assets

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

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)

Total lease payments

imputed interest

Present value of future lease payments

operating lease, current liabilities

Long-term operating lease liabilities

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.

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.

The audited consolidated financial statements of the Company, together

with the reports thereon of Marcum LLP and CBIZ CPAs P.C., independent registered public accounting firms, are included in this Annual

Report on Form 10-K beginning on page F-1.

Changes in and Disagreements with Accountants

1 unchanged sentence

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