What changed in this filing

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Item 1. Financial Statements

2024-11-13 compared with 2024-08-13 · 417 added, 240 removed, 519 unchanged (56% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

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Common stock, par value $ 0.0001 , 100,000,000 shares authorized;

1,044,081 and 1,041,582 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

1,044,914 and 1,041,582 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

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AND COMPREHENSIVE LOSS

For the Three Months

Ended June 30,

For the Six Months Ended

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Operating expenses:

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Interest and dividends, net

Other income (expense), net

Other income, net

Loss before income taxes

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$ ( 43,045,627 )

Stock-based compensation:

-restricted stock units

-stock options

Foreign currency translation

Issuance of September 2024 pre-funded and common warrants, net

Dividend - warrant modification

( 2,999,834 )

Balance at September 30, 2024

$ ( 46,405,117 )

Balance at January 1, 2023

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$ ( 26,657,789 )

Stock-based compensation:

-restricted stock units

-stock options

Stock repurchase

( 3,726,389 )

( 3,726,416 )

Foreign currency translation

( 3,612,590 )

Balance at September 30, 2023

$ ( 30,270,379 )

See accompanying notes to the unaudited condensed

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended

For the Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Net cash proceeds from sale of assets

Net cash used in investing activities

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sale of September 2024 Offering warrants

Payment of offering costs in connection with September 2024 Offering warrants

Note payable proceeds

Principal payments on note payable

Net cash provided by financing activities

Repurchase of common stock

( 3,726,416 )

Net cash provided by (used in) financing activities

( 3,726,416 )

Effect of foreign currency translation on cash

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Supplemental disclosure of cash flow information:

Cash paid for interest

Cash paid for taxes

Supplemental disclosures of non-cash activity:

Amount due from sale of assets

Dividend - warrant modification

$ ( 359,656 )

See accompanying notes to the unaudited condensed

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

30, 2024 AND 2023

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The Company is currently conducting the Phase 1 clinical trial

at clinical sites in the United States and plans to open additional sites in Eastern Europe in the third quarter of 2024.

at clinical sites in the United States and plans to open additional sites in Eastern Europe in the fourth quarter of 2024.

The Company’s

clinical development plan for PAS-004 is to begin a Phase 1 clinical trial in adult and pediatric neurofibromatosis type 1 (NF1)-associated

plexiform and/or cutaneous neurofibroma and ultimately seek FDA marketing approval in these patient populations.

clinical development plan for PAS-004 is to begin a Phase 1/2a clinical trial in adult patients with neurofibromatosis type 1 (NF1)-associated

plexiform and/or cutaneous neurofibromas followed by pediatric patients and ultimately seek FDA marketing approval in these patient populations.

Additionally, the Company has two programs that

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to address with these programs, which are currently amyotrophic lateral sclerosis (“ALS”) for PAS-003 and schizophrenia for

During the year ended December 31, 2023, we determined to cease further development of our PAS-002 program for multiple sclerosis

due to several factors including the significant capital, resources and time required to develop the program, and the current and projected

availability of effective treatment options for MS patients, among others.

During the year ended December 31, 2023, the Company

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Liquidity and Capital Resources

As of June 30, 2024, the Company had approximately

As of September 30, 2024, the Company had approximately

$ 9.4 million of cash and cash equivalents and working capital of approximately $ 9.1 million.

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losses and negative cash flows from operations since inception.

On June 30, 2024, the Company had cash and cash equivalents of approximately

On September 30, 2024, the Company had cash and cash equivalents of approximately

$9.4 million and an accumulated deficit of approximately $ 46.4 million.

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Research and Development

Research and development costs are charged to

operations when incurred and are included in operating expense, except for goodwill related to intellectual property and patents.

Our research and development costs consist principally of compensation of employees and consultants that perform the Company’s research

and development activities, payments to third parties for preclinical, clinical and regulatory activities, costs to acquire drug supply

and drug product from contract development and manufacturing organizations and third-party contractors relating to chemistry, manufacturing

and controls (“CMC”) efforts, , and research and development costs related to our discovery programs.

Depending upon the timing

of payments to the service providers, the Company recognizes prepaid expenses or accrued expenses related to these costs.

These accrued

or prepaid expenses are based on management’s estimates of the work performed under service agreements, milestones achieved and

experience with similar contracts.

The Company monitors each of these factors and adjusts estimates accordingly.

Research and development costs are charged

to operations when incurred and are included in operating expense, except for goodwill related to intellectual property and

Our research and development costs consist principally of compensation of employees and consultants that perform the

Company’s research and development activities, payments to third parties for preclinical, clinical and regulatory activities,

costs to acquire drug supply and drug product from contract development and manufacturing organizations and third-party contractors

relating to chemistry, manufacturing and controls (“CMC”) efforts, and research and development costs related to our

discovery programs.

Depending upon the timing of payments to the service providers, the Company recognizes prepaid expenses or

accrued expenses related to these costs.

These accrued or prepaid expenses are based on management’s estimates of the work

performed under service agreements, milestones achieved and experience with similar contracts.

The Company monitors each of these

factors and adjusts estimates accordingly.

General and Administrative

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integrin as a potential treatment for ALS.

There was no grant income recognized for the six months ended June 30, 2024 and 2023.

There was no grant income recognized for the nine months ended September 30, 2024 and 2023.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity

of three months or less when purchased to be cash equivalents, classified as trading securities.

The Company had cash equivalents of $ 7.1

million and $ 13.4 million as of June 30, 2024 and December 31, 2023, respectively.

Property and Equipment and Depreciation

The Company considers all short-term investments

with an original maturity of three months or less when purchased to be cash equivalents, classified as trading securities.

had cash equivalents of $ 4.5 million and $ 13.4 million as of September 30, 2024 and December 31, 2023, respectively.

Property and Equipment, net

Property and equipment is recorded at cost, net

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This liability is subject to re-measurement

at each balance sheet date until the IPO Warrants are exercised or expire, and any change in fair value is recognized in the Company’s

at each balance sheet date until the IPO Warrants are exercised or expired, and any change in fair value is recognized in the Company’s

condensed consolidated statement of operations and comprehensive loss.

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Depository Insurance Coverage of $ 250,000 .

As of June 30, 2024, the Company has not experienced losses on this account and management

As of September 30, 2024, the Company has not experienced losses on this account and management

believes the Company is not exposed to significant risks on such account.

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Fair Value Measurements

value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction

between market participants at the measurement date.

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs

used in measuring fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets

or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Fair value is defined as the price that would

be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The hierarchy gives

the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and

the lowest priority to unobservable inputs (Level 3 measurements).

These tiers include:

1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted

prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;

2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices

for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;

3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,

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Fair value measurements at reporting date using:

Quoted prices

in active markets for

identical liabilities

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observable inputs

Significant unobservable

Cash equivalents, June 30, 2024

Cash equivalents, September 30, 2024

Cash equivalents, December 31, 2023

Public warrant liabilities, June 30, 2024

Representative warrant liabilities, June 30, 2024

Public warrant liabilities, September 30, 2024

Representative warrant liabilities, September 30, 2024

Public warrant liabilities, December 31, 2023

Representative warrant liabilities, December 31, 2023

The following tables present a reconciliation

of the Level 3 Representative Warrants liabilities:

following tables present a reconciliation of the Level 3 Representative Warrants liabilities:

Three Months Ended

Representative warrant liabilities, April 1

September 30,

Representative warrant liabilities, July 1

Change in fair value

Representative warrant liabilities, June 30

Six months ended

Representative warrant liabilities, September 30

Nine Months Ended

September 30,

Representative warrant liabilities, January 1

Change in fair value

Representative warrant liabilities, June 30

The change in fair value of the Representative

Warrants liabilities is recorded in change in fair value of warrant liabilities on the condensed consolidated statement of operations

and comprehensive loss.

Representative warrant liabilities, September 30

The change in fair value of the Representative Warrants liabilities

is recorded in change in fair value of warrant liabilities on the condensed consolidated statement of operations and comprehensive loss.

The fair value of the cash equivalents is based

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The fair value of the liability associated with

the Public Warrants as of June 30, 2024 was based on the quoted closing price on The Nasdaq Capital Market and is classified as Level

The fair value of the liability associated with the Representative Warrants as of June 30, 2024 was based on an estimate of the relative

fair value to the Public Warrants, accounting for a small difference in the exercise price, and is classified as Level 3.

the Public Warrants as of September 30, 2024 was based on the quoted closing price on The Nasdaq Capital Market and is classified as Level

The fair value of the liability associated with the Representative Warrants as of September 30, 2024 was based on an estimate of the

relative fair value to the Public Warrants, accounting for a small difference in the exercise price, and is classified as Level 3.

In some circumstances, the inputs used to measure

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because including them would have had an anti-dilutive effect:

Six Months Ended

Nine Months Ended

September 30,

Stock options

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The relevant translation rates are as follows:

September 30,

Closing rate, British Pound (GBP) to $USD at period end

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standards for reporting and display of comprehensive income (loss) and its components in a full set of general-purpose financial statements.

As of June 30, 2024 and December 31, 2023, the Company had no material items of other comprehensive income (loss) except for the foreign

currency translation adjustment.

As of September 30, 2024 and December 31, 2023, the Company had no material items of other comprehensive income (loss) except for the

foreign currency translation adjustment.

Impairment of Long-Lived Assets and Goodwill

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goodwill impairment for all periods presented.

The Company’s has leases related to office

The Company determines whether a contract is or contains a lease at the time of the contract’s inception based on the presence

of identified assets and the Company’s right to obtain substantially all the economic benefit from or to direct the use of such

When the Company determines a lease exists, it records a right-of-use (“ROU”) asset and corresponding lease liability

on its balance sheet.

ROU assets represent the Company’s right to use an underlying asset for the lease term.

Lease liabilities

represent the Company’s obligation to make lease payments arising from the lease.

ROU assets are recognized at the lease commencement

date at the present value of the remaining future lease payments the Company is obligated for under the terms of the lease.

Lease liabilities

are recognized concurrent with the recognition of the ROU asset and represent the present value of lease payments to be made under the

These ROU assets and liabilities are adjusted for any prepayments, lease incentives received, and initial direct costs incurred.

As the discount rate implicit in the lease is not readily determinable in most of the Company’s leases, the Company uses its incremental

borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

the Company’s lease terms include an option to extend the lease for a set period, the Company evaluates the renewal option and should

it be reasonably certain that the Company will exercise that option, adjusts the ROU asset and liability accordingly.

The Company determines whether a contract is or

contains a lease at the time of the contract’s inception based on the presence of identified assets and the Company’s right

to obtain substantially all the economic benefit from or to direct the use of such assets.

When the Company determines a lease exists,

it records a right-of-use (“ROU”) asset and corresponding lease liability on its balance sheet.

ROU assets represent the Company’s

right to use an underlying asset for the lease term.

Lease liabilities represent the Company’s obligation to make lease payments

arising from the lease.

ROU assets are recognized at the lease commencement date at the present value of the remaining future lease payments

the Company is obligated for under the terms of the lease.

Lease liabilities are recognized concurrently with the recognition of the ROU

asset and represent the present value of lease payments to be made under the lease.

These ROU assets and liabilities are adjusted for

any prepayments, lease incentives received, and initial direct costs incurred.

As the discount rate implicit in the lease is not readily

determinable in most of the Company’s leases, the Company uses its incremental borrowing rate based on the information available

at the lease commencement date in determining the present value of lease payments.

If the Company’s lease terms include an option

to extend the lease for a set period, the Company evaluates the renewal option and should it be reasonably certain that the Company will

exercise that option, adjusts the ROU asset and liability accordingly.

Stock-Based Compensation

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Property and equipment, net consists of the following:

September 30,

Leasehold improvements

Laboratory equipment

Medical equipment

Office equipment

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Starting January 1, 2024, the monthly rent increased to $ 16,656 .

had no remaining lease payments as of June 30, 2024.

had no remaining lease payments as of September 30, 2024.

This lease was accounted for as an operating lease

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The interest rate used in calculating the fair value listed above was 7.8 %.

As of June 30, 2024 and December 31, 2023, the

Company recognized total ROU assets and lease liabilities as follows:

As of September 30, 2024 and December 31, 2023,

the Company recognized total ROU assets and lease liabilities as follows:

September 30,

Non-current leases - right of use assets

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Intangible assets, net consists of the following:

June 30, 2024

September 30, 2024

December 31, 2023

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Patents and intellectual property

( 1,102,787 )

Intangible assets, net

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$ ( 630,164 )

As of June 30, 2024, future expected amortization expense of Intangible

As of September 30, 2024, future expected amortization expense of Intangible

assets was as follows:

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Remaining future amortization expense

There were no changes to goodwill for the six

months ended June 30, 2024.

6 – STOCKHOLDERS’ EQUITY

Company is authorized to issue an aggregate of 105,000,000 shares.

There were no changes to goodwill for the nine

months ended September 30, 2024.

NOTE 6 – STOCKHOLDERS’ EQUITY

The Company is authorized to issue an aggregate

of 105,000,000 shares.

The authorized capital stock is divided into:

(i) 100,000,000 shares

of Common Stock having a par value of $ 0.0001 per share and (ii) 5,000,000 shares of preferred stock having a par value of $ 0.0001 per

The Company had 1,044,081 and 1,041,582 shares of its Common Stock

issued and outstanding at June 30, 2024 and December 31,2023, respectively.

holder of Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of the

stockholders.

Our Second Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws do not provide for

cumulative voting rights.

addition, the holders of our Common Stock will be entitled to receive ratably such dividends, if any, as may be declared by the Board

out of legally available funds;

however, the current policy of our Board is to retain earnings, if any, for operations and growth.

liquidation, dissolution or winding-up, the holders of our Common Stock will be entitled to share ratably in all assets that are legally

available for distribution.

of our Common Stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable

to the Common Stock.

The rights, preferences and privileges of the holders of Common Stock are subject to, and may be adversely affected

by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.

January 2, 2024, the Company amended its Second Amended and Restated Certificate of Incorporation to effect a one-for-twenty ( 1 :

stock split of our outstanding shares of Common Stock.

(i) 100,000,000 shares of Common Stock having a par value of $ 0.0001

per share and (ii) 5,000,000 shares of preferred stock having a par value of $ 0.0001 per share.

The Company had 1,044,914 and 1,041,582 shares

of its Common Stock issued and outstanding at September 30, 2024 and December 31, 2023, respectively.

Each holder of Common Stock is entitled to one vote

for each share of Common Stock held on all matters submitted to a vote of the stockholders.

Our Second Amended and Restated Certificate

of Incorporation and Second Amended and Restated Bylaws do not provide for cumulative voting rights.

In addition, the holders of our Common Stock are

entitled to receive ratably such dividends, if any, as may be declared by the Board out of legally available funds;

however, the current

policy of our Board is to retain earnings, if any, for operations and growth.

Upon liquidation, dissolution or winding-up, the holders

of our Common Stock will be entitled to share ratably in all assets that are legally available for distribution.

Holders of our Common Stock have no preemptive,

conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Stock.

preferences and privileges of the holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders

of shares of any series of our preferred stock that we may designate and issue in the future.

Effective January 2, 2024, the Company amended

its Second Amended and Restated Certificate of Incorporation to effect a one-for-twenty ( 1 :

20 ) reverse stock split of our outstanding

shares of Common Stock.

No fractional shares were issued as a result of the reverse stock split.

Any fractional

shares resulting from the reverse stock split were paid in cash.

The reverse stock split did not otherwise affect any of the rights currently

accruing to holders of our Common Stock.

Any fractional shares resulting from

the reverse stock split were paid in cash.

The reverse stock split did not otherwise affect any of the rights currently accruing to holders

of our Common Stock.

2023 Stock Incentive Plan

Board and stockholders have adopted and approved the Company’s 2023 Stock Incentive Plan (the “2023 Plan”) which took

effect on December 19, 2023.

The 2023 Plan allows for the issuance of securities, including stock options, restricted stock, and restricted

stock units (“RSUs”) to employees, Board members and consultants.

The initial number of shares of Common Stock available

for issuance under the 2023 Plan was 125,000 shares plus 28,389 unused shares reserved under the Company’s 2021 Stock Incentive

Plan, which will, on January 1 of each calendar year, beginning on January 1, 2024 and ending on and including January 1, 2033, unless

the Board decides otherwise, automatically increase to equal to the lessor of (A) three percent ( 3 %) of the number of shares of Common

Stock outstanding on the final day of the immediately preceding calendar year or (B) such smaller number of Shares as is determined by

January 1, 2024, the number of shares of Common Stock available for issuance under the 2023 Plan automatically increased by 31,254 shares.

As of June 30, 2024, a total of 184,643 shares of Common Stock were available under the 2023 Plan, of which 104,433 shares were issued

and outstanding and 80,210 shares were available for potential issuances.

Stock Issuances for the Three and Six Months Ended June 30, 2024

During the three and six months ended June 30, 2024, the Company issued

833 and 2,499 shares of Common Stock, respectively, due to the vesting of restricted stock units (“RSUs”) and recognized approximately

$ 24,000 and $ 72,000 of stock-based compensation expense, respectively, related to its outstanding RSUs.

Stock-based compensation expense

related to the Company’s RSUs is recognized within general and administrative expense on the condensed consolidated statements of

operations and comprehensive loss.

of June 30, 2024, the remaining unamortized RSU stock-based compensation expense was approximately $ 45,000 with remaining six months of amortization.

Stock Issuances for the Three and Six Months Ended June 30, 2023

During the three and six months ended June 30, 2023, the Company issued

833 and 4,999 shares of Common Stock, respectively, due to the vesting of RSUs, and recognized approximately $ 24,000 and $ 48,000 , respectively,

of stock-based compensation expense related to its outstanding RSUs.

Stock-based compensation expense related to the Company’s RSUs

is recognized within general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

of June 30, 2023, remaining unamortized RSU stock-based compensation expense was approximately $ 142,000 with remaining 18 months of

amortization.

Company did not grant any RSUs or restricted stock during the three and six months ended June 30, 2023.

7 – STOCK OPTIONS

Options Issued, Vested and Cancelled

During the three months ended June

The Board and stockholders have adopted and approved

the Company’s 2023 Stock Incentive Plan (the “2023 Plan”) which took effect on December 19, 2023.

The 2023 Plan allows

for the issuance of securities, including stock options, restricted stock, and restricted stock units (“RSUs”) to employees,

Board members and consultants.

The initial number of shares of Common Stock available for issuance under the 2023 Plan was 125,000

shares plus 28,389 unused shares reserved under the Company’s 2021 Stock Incentive Plan, which will, on January 1 of each calendar

year, beginning on January 1, 2024 and ending on and including January 1, 2033, unless the Board decides otherwise, automatically increase

to equal to the lessor of (A) three percent ( 3 %) of the number of shares of Common Stock outstanding on the final day of the immediately

preceding calendar year or (B) such smaller number of Shares as is determined by the Board.

On January 1, 2024, the number of shares of Common

Stock available for issuance under the 2023 Plan automatically increased by 31,254 shares.

As of September 30, 2024, a total of 197,393

shares of Common Stock were available under the 2023 Plan, of which 99,534 shares were issued and outstanding and 97,859 shares were available

for potential issuances.

Common Stock Issuances for the Three and Nine

Months Ended September 30, 2024

During the three and nine months ended September

30, 2024, the Company issued 833 and 3,332 shares of Common Stock, respectively, due to the vesting of restricted stock units (“RSUs”)

and recognized approximately $ 24,000 and $ 96,000 of stock-based compensation expense, respectively, related to its outstanding RSUs.

compensation expense related to the Company’s RSUs is recognized within general and administrative expense on the condensed consolidated

statements of operations and comprehensive loss.

As of September 30, 2024, the remaining unamortized

RSU stock-based compensation expense was approximately $ 21,000 with remaining three months of amortization.

2024 Offering

On September 26, 2024, the Company entered into

a securities purchase agreement (the “ September 2024 Offering”) with an institutional

investor, pursuant to which the Company agreed to sell pre-funded warrants (“Pre-Funded Warrants”) to purchase up to an aggregate

of 1,219,513 shares of common stock at an exercise price of $ 0.001 per share, Series A warrants to purchase up to an aggregate of 1,219,513

shares of common stock at an exercise price of $ 3.85 per share, and Series B warrants (together with the Series A Warrants, the “September

2024 PIPE Warrants”) to purchase up to an aggregate of 1,219,513 shares of common Stock with an exercise price of $ 3.85 per share.

The combined purchase price per Pre-Funded Warrant and accompanying September 2024 PIPE Warrants was $ 4.099 .

Aggregate gross proceeds

from the September 2024 Offering were approximately $ 4.5 million and the September 2024 Offering closed on September 30, 2024.

The Pre-Funded Warrants are exercisable immediately

upon issuance and expire when exercised in full.

The Series A Warrants are exercisable immediately upon issuance and have a term of exercise

equal to five (5) years from the date of issuance.

The Series B Warrants are exercisable immediately upon issuance and have a term of

exercise equal to eighteen (18) months from the date of issuance.

A holder of the Pre-Funded Warrants and the September

2024 PIPE Warrants may not exercise any portion of such holder’s Pre-Funded Warrants or September 2024 PIPE Warrants to the extent

that the holder, together with its affiliates, would beneficially own more than 4.99 % (or, at the election of the holder, 9.99 %) of the

Company’s outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from

the holder to the Company, the holder may increase the beneficial ownership limitation to up to 9.99 % of the number of shares of Common

Stock outstanding immediately after giving effect to the exercise.

In the event of certain fundamental transactions, holders of the September

2024 PIPE Warrants will have the right to receive the Black Scholes Value of their Warrant calculated pursuant to a formula set forth

in the Warrant, payable either in cash or in the same type or form of consideration that is being offered and being paid to the holders

of Common Stock.

In connection with the September

2024 Private Placement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”),

dated as of September 26, 2024, with the investor, pursuant to which the Company agreed to prepare and file a registration statement with

the Securities and Exchange Commission (the “SEC”) registering the resale of the shares of Common Stock underlying the Pre-Funded

Warrants and the September 2024 PIPE Warrants no later than fifteen (15) days after the date of the Registration Rights Agreement (the

“Registration Statement”), and to use its best efforts to have the registration statement declared effective as promptly as

practical thereafter, and in any event no later than forty-five (45) days following the date of the Registration Rights Agreement (or

ninety (90) days following the date of the Registration Rights Agreement in the event of a “full review” by the SEC).

Registration Statement was declared effective by the SEC on October 11, 2024.

The net proceeds to the Company from the September

2024 Private Placement were approximately $ 4.5 million, after deducting placement agent fees and offering expenses payable by the

In addition, the Company issued to the placement agent or its designees warrants (the “Placement Agent Warrants”)

to purchase up to an aggregate of 85,366 shares of Common Stock at an exercise price equal to $ 5.125 per share.

The Placement Agent Warrants

have substantially the same terms as the September 2024 PIPE Warrants, are exercisable immediately upon issuance and have a term of exercise

equal to five (5) years from the date of issuance.

The Company intends to use the net proceeds received from the September

2024 Private Placement for working capital and general corporate purposes.

The September

2024 PIPE warrants met the requirement for equity classification.

The Company computes the fair value of warrants and options using a Black-Scholes model.

The expected term used for warrants is the contractual life.

The Company is utilizing an expected volatility figure based on a review

of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned

public companies within its industry.

The risk-free interest rate was determined from the implied yields from U.S.

Treasury zero-coupon

bonds with a remaining term consistent with the expected term of the instrument being valued.

As of September 30, 2024, all 1,219,153 of

the Pre-Funded Warrants are paid and issued but unexercised.

In addition, the September 2024 PIPE Warrants have not been exercised as

of September 30, 2024.

Stock Issuances for the Three and Nine Months Ended September 30, 2023

During the three and nine months ended September

30, 2023, the Company issued 833 and 5,832 shares of common stock, respectively, due to the vesting of restricted stock units (“RSUs”),

and recognized approximately $ 24,175 and $ 71,736 , respectively, of stock-based compensation expense related to its outstanding restricted

Stock-based compensation expense related to the Company’s restricted stock units is recognized within selling, general

and administrative expense.

As of September 30, 2023, the remaining unamortized

RSU stock-based compensation expense was approximately $ 117,000 .

The Company did not grant any RSUs or restricted

stock awards during the three and nine months ended September 30, 2023.

Tender Offer (Common Stock Repurchase)

On July 20, 2023, the Company announced that its

Board of Directors authorized the repurchase, through a $ 4.0 million tender offer of up to approximately 5.7 million shares of the Company’s

outstanding common stock at a cash purchase price of $ 0.70 per share (the “Tender Offer”).

The Company launched the Tender

Offer on August 9, 2023 and it expired on September 8, 2023.

On September 14, 2023, the Company disclosed the

results of the Tender Offer.

A total of 266,171 shares of the Company’s common stock (the “Tender Offer Shares”) were

validly tendered and not properly withdrawn at a purchase price of $ 0.70 per for an aggregate purchase price of $ 3,726,416 , including

fees and expenses relating to the Tender Offer.

The Company had 1,040,998 shares of common stock outstanding following payment for the

shares of common stock purchased in the Tender Offer.

The Tender Offer Shares were retired and cancelled following the closing of the

Tender Offer.

Warrants modification

On November 29, 2021, the Company issued warrants

to purchase up to 434,000 shares of Common Stock with an exercise price of $ 70.00 per share (the “2021 PIPE Warrants”) in

a private placement.

Due to a certain anti-dilution provision, the exercise price of each 2021 PIPE Warrant was reduced to $ 20.00 per

share (the “Warrant Modification”) as a result of the September 2024 Offering.

The Company recognized the effect of the Warrant

Modification as a dividend of $ 359,656 .

NOTE 7 – STOCK OPTIONS

Stock Options Issued, Vested and Cancelled

During the three months ended September

30, 2024 , the Company did not issue any stock options.

During the three months ended June 30, 2024, stock options to purchase an

aggregate of 4,771 shares of Common Stock, subject to time-based milestone vesting conditions, vested.

the six months ended June 30, 2024, the Company issued stock options under the 2023 Plan to employees, to purchase an aggregate of 104,433

shares of Common Stock with a strike price equal to $ 8.13 per share and a term of ten years .

Of the stock options granted, stock options

to purchase an aggregate of 37,433 shares of Common Stock were fully vested at issuance and the remaining stock options are subject to

time-based vesting over a term ranging between one to three years .

These stock options had a total fair value of approximately $ 657,000 ,

as calculated using the Black-Scholes pricing model with the following assumptions:

volatility of 88.41 %, discount rate of 4.20 %, expected

term of 6.5 years, and an exercise price of $ 8.13 .

the six months ended June 30, 2024, stock options to purchase an aggregate of 47,538 shares of Common Stock, subject to time-based milestone

vesting conditions, vested.

the three months ended June 30, 2024 and 2023, total stock-based compensation expense related to the Company’s stock options was

During the three months ended September 30, 2024, 4,771 stock options subject

to time-based milestone vesting conditions, vested.

During the nine months ended September 30, 2024,

the Company granted stock options under the 2023 Plan to employees, to purchase an aggregate of 104,433 shares of Common Stock with a

strike price equal to $ 8.13 per share and a term of ten years .

Of the stock options granted, stock options to purchase an aggregate of

37,433 shares of Common Stock were fully vested at issuance and the remaining stock options are subject to time-based vesting over a term

ranging between one to three years .

These stock options had a total fair value of approximately $ 849,000 , as calculated using the Black-Scholes

pricing model with the following assumptions:

volatility of 88.41 %, discount rate of 4.20 %, expected term of 6.5 years, and an exercise

price of $ 8.13 .

During the nine months ended September 30, 2024,

stock options to purchase an aggregate of 52,309 shares of Common Stock, subject to time-based milestone vesting conditions, vested.

During the nine months ended September 30, 2024,

stock options to purchase an aggregate of 17,649 shares of Common Stock were cancelled in connection with the reduction in workforce related

to the closure of our research laboratory.

Stock-Based Compensation

three months ended September 30, 2024 and 2023, total stock-based compensation expense related to the Company’s stock options was

approximately $ 121,000 and $ 102,000 , respectively.

For the three months ended June 30, 2024, the Company recognized approximately $ 107,000

of stock-based compensation related to its stock options within general and administrative expense, and approximately $ 28,000 within

research and development expense on the condensed consolidated

statements of operations and comprehensive loss .

For the three months ended June 30, 2023, all

stock-based compensation expense was recorded within general and administrative expense on the condensed consolidated statements

of operations and comprehensive loss .

the six months ended June 30, 2024 and 2023, total stock-based compensation expense related to the Company’s stock options was

approximately $ 432,000 and approximately $ 348,000 , respectively.

For the six months ended June 30, 2024, the Company recognized approximately

$ 290,000 of stock-based compensation related to its options within general and administrative expense, and approximately $ 142,000 within

research and development expense.

For the six months ended June 30, 2023, all stock-based compensation expense was recorded within general and administrative expense.

following table summarizes the activity related to the Company’s stock options for the six months ended June 30, 2024:

For the three months ended September 30, 2024, the Company recognized approximately

$ 107,000 of stock-based compensation related to its stock options within general and administrative expense, and approximately $ 14,000

within research and development expense on the condensed consolidated statements of operations and comprehensive loss .

For the three months ended September 30, 2023, all stock-based compensation expense was recorded within general and administrative expense

on the condensed consolidated statements of operations and comprehensive loss .

For the nine months ended September 30, 2024 and

2023, total stock-based compensation expense related to the Company’s stock options was approximately $ 553,000 and approximately

$ 451,000 , respectively.

For the nine months ended September 30, 2024, the Company recognized approximately $ 398,000 of stock-based compensation

related to its options within general and administrative expense, and approximately $ 155,000 within research and development expense.

For the nine months ended September 30, 2023, all stock-based compensation expense was recorded within general and administrative expense.

The following

table summarizes the activity related to the Company’s stock options for the nine months ended September 30, 2024:

Number of Options Weighted average

share Weighted average

exercise price

per share Weighted average

contractual term

5 unchanged sentences

Expired/Cancelled ( 17,649 ) 9.35 - -

Outstanding, June 30, 2024 198,079 $ 20.21 8.89 -

Exercisable, June 30, 2024 103,038 $ 28.47 8.57 $ -

of June 30, 2024 , the remaining unamortized stock-based compensation expense related to

the stock options was approximately $ 610,000 with remaining 31 months of amortization.

of June 30, 2024 , the fair value of the Public Warrants was approximately $ 0.398 per Public

Warrant based on the closing price of the warrants on The Nasdaq Capital Market.

The fair value of the Representative Warrants was approximately

$ 0.414 per Representative Warrant, which was based on the relative fair value to the Public Warrants.

following table summarizes the Company’s outstanding warrants:

Outstanding, September 30, 2024 185,784 $ 20.21 9.13 -

Exercisable, September 30, 2024 95,514 $ 30.27 8.24 $ -

As of September

30, 2024 , the remaining unamortized stock-based compensation expense related to the stock options was approximately $ 476,000 with

remaining 28 months of amortization.

NOTE 8 – WARRANTS

As of September

30, 2024 , the fair value of the Public Warrants was approximately $ 0.698 per Public Warrant based on the closing price of the warrants

on The Nasdaq Capital Market.

The fair value of the Representative Warrants was approximately $ 0.726 per Representative Warrant, which

was based on the relative fair value to the Public Warrants.

The following table summarizes the Company’s

outstanding warrants:

Exercise Price Number of warrants (1) Weighted-average

remaining contractual

term (years) Weighted-average

contractual term

(years) Weighted average

exercise price

5 unchanged sentences

$ 120.00 13,800 1.96

During the three months ended June 30, 2024, the Company did not issue

any warrants.

During the six months ended June 30, 2024, the Company issued warrants

to purchase an aggregate of 1,500 shares of Common Stock in exchange for consulting services.

The warrants were issued on March 1, 2024

and become exercisable in twelve equal monthly instalments commencing on April 1, 2024 at $ 8.13 per share.

The warrants expire ten years

from the date of issuance.

For the three months ended June

30, 2024 and 2023, total stock-based compensation expense related to the Company’s warrants was approximately $ 2,360 and $ 0 , respectively,

and is recognized within general and administrative expense on the condensed consolidated statements of operations and comprehensive

For the six months ended June

30, 2024 and 2023, total stock-based compensation expense related to the Company’s warrants was approximately $ 3,147 and $ 0 , respectively,

and is recognized within general and administrative expense on the condensed consolidated statements of operations and comprehensive

warrants were expired/cancelled or exercised during the six months ended June 30, 2024 .

9 – COMMITMENTS AND CONTINGENCIES

$ 125.00 220,000 1.96

3,293,693 3.05 15.62

(1) The number of warrants do not include 1,219,153

Pre-Funded Warrants that were issued but not exercised as of September 30, 2024.

During the three months ended September 30, 2024,

the Company issued warrants to purchase an aggregate of 2,524,392 shares of Common Stock in connection with the September 2024 Offering

as described in Note 6 above, excluding the Pre-Funded Warrants.

This consisted of (i) Series A Warrants to purchase 1,219,513 shares

of Common Stock, (ii) Series B Warrants to purchase 1,219,513 shares of Common Stock, and (iii) Placement Agent Warrants to purchase 85,366

shares of Common Stock

The Series A Warrants have an exercise price of

$ 3.85 per share and have a term of exercise equal to five (5) years from the date of issuance.

The Series B Warrants have an exercise

price of $ 3.85 per share and have a term of exercise equal to eighteen (18) months from the date of issuance.

The Placement Agent Warrants

have an exercise price of $ 5.13 per share and have a term of exercise equal to five (5) years from the date of issuance.

The exercise price of each 2021 PIPE Warrant was

reduced from $ 70.00 per share to $ 20.00 per share in connection with the Warrant Modification.

The Company recognized the effect of the

Warrant Modification as a dividend of $ 359,656 .

three months ended September 30, 2024 and 2023, total stock-based compensation expense related to the Company’s warrants was approximately

$ 2,360 and $ 0 , respectively, and is recognized within general and administrative expense on the condensed consolidated statements

of operations and comprehensive loss .

During the nine months ended September 30, 2024,

the Company issued warrants to purchase an aggregate of 2,525,892 shares of Common Stock in exchange for consulting services.

were issued on March 1, 2024 and September 30, 2024 at $ 8.13 per share, $ 3.85 per share and $ 5.13 per share.

These warrants become exercisable

in twelve equal monthly instalments commencing the day after issue date.

The warrants expire ten years from the date of issuance.

nine months ended September 30, 2024 and 2023, total stock-based compensation expense related to the Company’s warrants was approximately

$ 5,507 and $ 0 , respectively, and is recognized within general and administrative expense on the condensed consolidated statements of operations

and comprehensive loss.

No warrants were expired/cancelled or exercised

during the nine months ended September 30, 2024 .

NOTE 9 – COMMITMENTS AND CONTINGENCIES

and Regulatory Environment

healthcare industry is subject to numerous laws and regulations of federal, state and local governments.

These laws and regulations include,

but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirement, reimbursement

for patient services and Medicare and Medicaid fraud and abuse.

Government activity has increased with respect to investigations and

allegations concerning possible violations of fraud and abuse statutes and regulations by healthcare providers.

The healthcare

industry is subject to numerous laws and regulations of federal, state and local governments.

These laws and regulations include, but

are not limited to, matters such as licensure, accreditation, government healthcare program participation requirement, reimbursement for

patient services and Medicare and Medicaid fraud and abuse.

Government activity has increased with respect to investigations and allegations

concerning possible violations of fraud and abuse statutes and regulations by healthcare providers.

of these laws and regulations could result in expulsion from government healthcare programs, together with the imposition of significant

5 unchanged sentences

well as regulatory actions unknown or unasserted at this time.

10 – DISCONTINUED OPERATIONS

During the year ended December 31, 2023, the Company sold and disposed

of our assets associated with the Clinics operations in Los Angeles, CA and disposed of our services in the U.K.

The lease associated

with the related property in Los Angeles was assumed by the buyer in the transaction.

of June 30, 2024 and December 31, 2023, the carrying amounts of the classes of assets and liabilities related to the discontinued operations

of the Clinics operations were $ 0 .

results of operations from discontinued operations for the three and six months ended June

30, 2024 and 2023, have been reflected in the condensed consolidated statements of operations and consist of the following:

NOTE 10 – DISCONTINUED OPERATIONS

During the year ended December 31, 2023, the Company

sold and disposed of our assets associated with the Clinics operations in Los Angeles, CA and disposed of our services in the U.K.

lease associated with the related property in Los Angeles was assumed by the buyer in the transaction.

As of September 30, 2024 and December 31, 2023,

the carrying amounts of the classes of assets and liabilities related to the discontinued operations of the Clinics operations were $ 0 .

The results of operations from discontinued operations for

the three and nine months ended September 30, 2024 and 2023, have been reflected in the condensed

consolidated statements of operations and consist of the following:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of services

General and administrative

Selling, general and administrative

Loss from discontinued operations

4 unchanged sentences

$ ( 437,015 )

Weighted-average common shares outstanding, basic and diluted

Basic and diluted loss per share from discontinued operations

accordance with U.S.

GAAP, only expenses specifically identifiable and related to a business to be disposed may be allocated to discontinued

As such, the general and administrative expenses recorded in discontinued operations include corporate costs incurred directly

in support of the Clinics business.

11 – RELATED PARTY TRANSACTIONS

In accordance with U.S.

GAAP, only expenses specifically

identifiable and related to a business to be disposed may be allocated to discontinued operations.

As such, the general and administrative

expenses recorded in discontinued operations include corporate costs incurred directly in support of the Clinics business.

NOTE 11 – RELATED PARTY TRANSACTIONS

PsychoGenics,

In April 2023 we entered into a contract with PsychoGenics, Inc.

In April 2023 we entered into a contract with

PsychoGenics, Inc.

(“PsychoGenics”) for the conduct of one of our preclinical studies.

PsychoGenics is a contract manufacturing organization

with extensive preclinical experience in CNS and orphan disorders.

Pursuant to the contract, we made aggregate payments to PsychoGenics

totalling approximately $ 0.3 million over the term of the contract.

PsychoGenics is a contract manufacturing

organization with extensive preclinical experience in CNS and orphan disorders.

Pursuant to the contract, we made aggregate payments to

PsychoGenics totaling approximately $ 0.3 million over the term of the contract.

The contract was completed in September 2023.

Leahy, a member of our Board, is the current Chief Executive Officer and a less than 5 % owner of PsychoGenics.

Agreement With Prof.

Emer Leahy, a member of our Board, is

the current Chief Executive Officer and a less than 5 % owner of PsychoGenics.

Consulting Agreement with Prof.

Lawrence Steinman

Steinman Consulting Agreement memorializes the compensation arrangements pursuant to which Prof.

Steinman has been compensated for his

services to our Company, as previously disclosed in our public filings.

The Steinman Consulting Agreement memorializes

the compensation arrangements pursuant to which Prof.

Steinman has been compensated for his services to our Company, as previously disclosed

in our public filings.

Pursuant to the Steinman Consulting Agreement, Prof.

provides a variety of consulting and advisory services relating principally to the clinical and commercial development of our product

candidates, including our research and development strategy through all phases of discovery and preclinical development, identifying

potential partners for our pre-clinical assets, and business development efforts related to our pre-clinical assets, among other things.

Steinman provides a variety of consulting and advisory services

relating principally to the clinical and commercial development of our product candidates, including our research and development strategy

through all phases of discovery and preclinical development, identifying potential partners for our pre-clinical assets, and business

development efforts related to our pre-clinical assets, among other things.

Pursuant to the Steinman Consulting Agreement, Prof.

Steinman receives $ 25,000 per quarter for his services.

12 – SUBSEQUENT EVENTS

Company has evaluated events and transactions subsequent to June 30, 2024 through the date these condensed consolidated financial statements

were included on Form 10-Q and filed with the SEC.

There are no subsequent events identified that would require disclosure.

receives $ 25,000 per quarter for his services.

NOTE 12 – SUBSEQUENT EVENTS

The Company has evaluated events and transactions subsequent to September

30, 2024 through the date these condensed consolidated financial statements were included on Form 10-Q and filed with the SEC.

this period, the Company did not have any material reportable subsequent events, except as disclosed below.

On November 12, 2024, Dr.

Graeme Currie resigned

from his position as Chief Development Officer effective as of November 15, 2024.

In the interim, the Company will proceed with clinical

development of its product candidates without disruption, in consultation with its existing consultants.

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

What changed 10-Q

Item 1. Financial Statements