MIRA PHARMACEUTICALS, INC. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the end of fiscal year 2023. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 76 Management’s Report on Internal Control Over Financial Reporting This annual report does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the company's registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies. Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 77 PART III Item 10. Directors, Executive Officers and Corporate Governance. March 2024 Changes to Our Management and Board of Directors Restructuring of the Board of Directors On March 9, 2024, after a series of discussions between our board of directors (the “Board”) and senior management regarding the need to have additional scientific expertise among the members of the Board, Ms. Talhia Tuck, Mr. Brad Kroenig and Mr. Hugh McColl, each voluntarily resigned from the Board, effective immediately. This action allowed the remaining members of the Board to appoint new members of the Board, as discussed below. The resignations of Ms. Tuck, Mr. Kroenig, and Mr. McColl were not the result of any disagreement with our company on any matter relating to its operations, policies or practices. Also on March 9, 2024, Dr. Chris Chapman notified the Board and senior company management of his resignation both as Executive Chairman and as an employee of our company, effective immediately, citing his desire to focus his time on his role as Chairman and Chief Executive Officer of Telomir Pharmaceuticals, Inc., given the recent initial public offering of that company. Dr. Chapman’s resignation was not the result of any disagreement with our company on any matter relating to its operations, policies or practices. On March 13, 2024, the remaining members of the Board (Erez Aminov and Michael Jerman) unanimously approved the appointment of (i) Mr. Aminov, our Chief Executive Officer, as Chairman of the Board and (ii) Dr. Matthew P. Del Giudice, Dr. Denil N. Shekhat and Mr. Edward MacPherson as members of the Board, to fill the vacancies on the Board occasioned by the resignations from the Board described above, for a term expiring at our 2024 annual meeting of shareholders. Resignation of Chief Science Officer We are focused on strengthening our clinical and regulatory development expertise with a view towards a future IND for one of our product candidates. As part of this development, on March 7, 2024, following discussions with our management, Adam Kaplin, M.D., Ph.D. resigned from his position as President and Chief Scientific Officer of the company to pursue other business endeavors, effective immediately. As described under “Key Consultants” below, in light of Mr. Kaplin’s resignation, we expanded the role of an existing consultant to assist in clinical and regulatory affairs. Current Directors and Executive Officers Our directors and executive officers and their ages as of the date of this Report are as follows: Name Age Position Erez Aminov 46 Chief Executive Officer and Chairman Michelle Yanez 52 Chief Financial Officer, Secretary and Treasurer Michael Jerman 40 Director Matthew Paul Del Giudice, M.D. 42 Director Denil Nanji Shekhat, M.D. 43 Director Edward MacPherson 36 Director The following is a brief biography of each of our current executive officers and directors: Erez Aminov has served as a director and our Chief Executive Officer since April 2023 and our Chairman since March 2024. Mr. Aminov is an experienced biotechnology consultant and investor and initially joined our as a consultant in 2022. Mr. Aminov’s experience in the biotech consulting sector began in 2021 when he founded Locate Venture Corp. in September 2021. Locate Venture is a strategy and investment consulting firm focused on advancing and supporting early-stage biotech startups. Prior to founding Locate Venture Corp., from February 2015 to September 2020, Mr. Aminov served as the President of Finds4less Inc., a global distributor of electronics and gaming products. In this role, Mr. Aminov provided strategic oversight and direction for all aspects of the company’s operations, while also spearheading new business development initiatives to capitalize on emerging market opportunities. Mr. Aminov’s more than two decades of experience includes experience with the biotech industry’s particular challenges, including creating strategic alliances and guiding startups toward growth and prosperity. Mr. Aminov earned a B.A. in Accounting from Touro University in New York. We believe that Mr. Aminov is qualified to serve as one of our directors based on his finance and investment experience, particularly with early stage life sciences companies. 78 Michelle Yanez, MBA has served as our Chief Financial Officer since April 2023, prior to which she served as our Corporate Controller since May 2022. Ms. Yanez is a senior financial executive with over 25 years of experience in public and privately held biotech, pharmaceutical, and life science companies. Ms. Yanez’ experience includes a broad range of responsibilities in a highly complex and regulated market. She also brings deep corporate governance experience through her work with corporate boards, including audit and finance committees. Since May 2022, Ms. Yanez is part-time Corporate Controller at Telomir Pharmaceuticals, Inc., a publicly traded pre-clinical-stage pharmaceutical company, focusing on the development and commercialization of therapeutic treatment for human stem cells (Nasdaq: TELO). From May 2002 until its acquisition in April 2022, Ms. Yanez held various positions, including the Director of Financial Reporting, of BioDelivery Sciences International, Inc. (Nasdaq: BDSI). In her role, she led financial offerings, managed due diligence for product acquisitions and financings and managed finance documents and filings for the tender offer, leading to the acquisition of BioDelivery Sciences in April 2022. Ms. Yanez also serves as a non-employee director of Inhibitor Therapeutics, Inc. (OTCQB: INTI), a publicly traded pharmaceutical development company focused on therapeutics for certain cancers and non-cancerous proliferation disorders, since December 2022. Ms. Yanez is a member of the Institute of Management Accountants and a member of the SEC Professionals Group. Ms. Yanez received her MBA degree cum laude from Rutgers Business School. Michael Jerman, CPA joined our company as a director in December 2023. He also serves as a member of the board of directors of Inhibitor Therapeutics, Inc. (OTC:INTI). Mr. Jerman has served as the managing partner at Hollywell Partners, a professional accounting and finance consulting firm, since May 2019, and has provided chief financial officer and other services to multiple private equity-backed companies in the energy, SaaS, and manufacturing industries. Prior to his role with Hollywell Partners, he was a Director with PwC in the US and UK from January 2007 to August of 2019 and was a Captain with the United States Air Force from July 2003 to June 2015. He has led global public and private client engagements in the industries of retail and consumer, energy, utilities and mining, and transportation and logistics. Mr. Jerman has significant experience in client equity and debt offerings, business combinations inclusive of public listing and reporting requirements, initial valuations and ongoing goodwill impairment analyses, share-based awards, restructuring, and global taxes, as well as stakeholder management, specifically with board and management presentation experience to include annual and quarterly requirements, fee negotiations, technical accounting and finance discussions, and fraud and non-compliance investigations. Mr. Jerman has specialized in rapid project mobilization and deployment of skilled resources for emergency issues, design, and implementation of small to large scale assurance requirements and advisory projects. Mr. Jerman’s additional experience includes leading PwC’s data acquisition methods and tools, client acquisitions and systems implementations to include new SOX-compliant control plan implementations across multiple systems, leading co-sourced internal audit projects, and time spent driving PwC’s lean efficiency initiatives. Mr. Jerman was a member of the PwC national office within the SEC PCAOB quality group supporting Europe and the EMEA regions with complex accounting and audit consultations. He earned a B.S. in accounting from the University of South Florida, an M.S. in accounting from the University of Tampa, and an M.B.A. from the University of Oxford. Dr. Matthew Paul Del Giudice joined our company as a director in March 2024. Dr. Del Giudice has practiced as a radiologist since 2014. He currently serves as a general overnight emergency radiologist at the Cleveland Clinic and as a real estate investor with Comfort Living, LLC. Prior to joining the Cleveland Clinic, from March 2021 to May 2022, Dr. Del Giudice was a general radiologist with Radiology and Imaging Specialists in Lakeland, Florida. From July 2015 to February 2021, Dr. Del Giudice was a radiologist with Radiology Partners Phoenix, and from July 2014 to June 2015, he practiced as a musculoskeletal radiologist at the University of Arizona Health Sciences Center – Tucson. Dr. Del Giudice received his B.S. from the University of Illinois at Urbana-Champaign, his M.D. from Loyola University Stritch School of Medicine, completed his radiology residency at Loyola University Medical Center, and his musculoskeletal radiology fellowship at the University of Arizona Health Sciences Center – Tucson. Dr. Del Giudice is licensed to practice medicine in Florida and Ohio. 79 Dr. Denil Nanji Shekhat joined our company as a director in March 2024. Dr. Shekhat has practiced as a radiologist since 2014 and currently practices at DNS Teleradiology in Wellington, Florida. Prior to starting DNS Teleradiology, Dr. Shekhat was a musculoskeletal specialist for Radiology Associates of Florida/ Radiology Partners from July 2018 to December 2023. From July 2015 to August 2018, Dr. Shekhat practiced as a general and musculoskeletal radiologist with Bethesda Radiology Associates. Dr. Shekhat received his B.A. in economics from Bowdoin College, his M.D. from the University of Tennessee Health Science Center, College of Medicine, completed his radiology residency at Baptist Memorial Hospital and his musculoskeletal radiology fellowship at the University of Arizona. Dr. Shekhat is currently licensed to practice medicine in Florida. Edward MacPherson joined our company as a director in March 2024. Mr. MacPerson currently serves as Chief Growth Officer for Power Digital, an industry leading digital marketing agency. Prior to joining Power Digital, from May 2016 to December 2023, he served as CEO and Head of Growth for Endrock Growth & Analytics, a company he founded and sold to Power Digital. Prior to founding Endrock Growth & Analytics, Mr. MacPherson held senior marketing and leadership positions at sunglass maker Prive Revaux (March 2018 to April 2020), curated meal company Menud (October 2014 to April 2018) and Rejuvenetics, LLC, a distributor of health and wellness products (December 2012 to March 2016). Mr. Macpherson holds a BA in Economics from Gettysburg College. Key Consultants On March 13, 2024, we entered into an Amended and Restated Consulting Agreement with Angel Pharmaceutical Consulting & Technologies Ltd., an Israeli consulting firm (“APCT”). All services provided to our company by APCT (which began in October 2023) are provided directly by Dr. Itzchak Angel, who shall be our Chief Scientific Advisor. Dr. Angel has over 30 years of experience in the pharmaceutical industry, guiding strategic drug and business development initiatives in both large and emerging companies. Dr. Angel has served as Head of Pharmacology of Synthelabo (Paris, France, now Sanofi) for numerous years, where he was instrumental in the development and bringing into the market of several drugs such as Xatral (Alfuzosin), Ambien (Zolpidem) and Mizollen (Mizolastine). He formerly served as President and Chief Executive Officer of stem-cell company Accellta (Haifa, Israel) and Vice President for Research and Development at Proteologics Ltd, and at D-Pharm Biopharmaceuticals (Rehovot, Israel) where he developed several neurology compounds (stroke, Alzheimer’s and Parkinson’s Disease) into advanced clinical development and was involved in submitting numerous INDs of drugs under development. Dr. Angel is the author of more than 100 book chapters, papers, and abstracts as well as the named inventor of a number of pharmaceutical patents. Dr. Angel received his B.S. and M.Sc. in Biology from Tel-Aviv University, Israel, cum laude in 1979, and received Ph.D. cum laude from the Hamburg University, Germany in 1982. As part of his consulting services, Dr. Angel shall assist our company with (i) pharmaceutical regulatory affairs, toxicology, drug research and pre-clinical and clinical testing, (ii) outsourcing and helping our company in managing third party vendors and (iii) working with our company in our interactions with regulatory bodies. Board Composition Our business and affairs are managed under the direction of our board of directors, which currently consists of five members. The number of directors is determined by our board of directors, subject to the terms of our amended and restated articles of incorporation and bylaws that. Our directors are elected for one-year terms. Family Relationships There are no family relationships among any of our directors and executive officers. 80 Director Independence Our board of directors has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment, and affiliations, our board of directors has determined that Michael Jerman, Dr. Matthew Del Giudice, Dr. Denil Shekhat and Edward MacPherson do not have any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and are independent directors under the Nasdaq Listing Rules. In making these determinations, our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the transactions described in the section of this Report titled “Item 13. Certain Relationships and Related Party Transactions.” Committees of the Board of Directors Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee. The functions of these committees are described below. Members will serve on these committees until their resignation or until otherwise determined by our board of directors. Our board of directors may establish other committees as it deems necessary or appropriate from time to time. Audit Committee Our audit committee consists of Michael Jerman, Dr. Denil Shekhat and Edward MacPherson, with Michael Jerman serving as the chair of the audit committee. Each member of the committee meets the requirements for independence under the listing standards of Nasdaq and SEC rules and regulations, including Rule 10A-3(b)(1) under the Exchange Act. Each member of our audit committee also meets the financial literacy requirements of the listing standards of Nasdaq. In addition, our board of directors has determined that Michael Jerman is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act. The audit committee’s main purpose is to oversee our corporate accounting and financial reporting process. Our audit committee is responsible for, among other things: ● selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements; ● helping to ensure the independence and performance of the independent registered public accounting firm; ● discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent registered public accounting firm, our interim and year-end results of operations; ● developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; ● reviewing our policies on risk assessment and risk management; ● reviewing related party transactions; ● reviewing and pre-approving, as required, all audit and all permissible non-audit services to be performed by the independent registered public accounting firm; and ● assisting our board of directors in monitoring the performance of our internal audit function. Our audit committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of Nasdaq, a copy of which is available on our website at www.mirapharmaceuticals.com. 81 Compensation Committee Our compensation committee consists of Dr. Denil Shekhat and Edward MacPherson, with Dr. Denil Shekhat serving as the chair of the compensation committee. Each member of the committee meets the requirements for independence under the listing standards of Nasdaq and SEC rules and regulations. Each member of our compensation committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act, or Rule 16b-3. In arriving at these determinations, our board of directors examined all factors relevant to determining whether any compensation committee member has a relationship to us that is material to that member’s ability to be independent from management in connection with carrying out such member’s duties as a compensation committee member. The compensation committee’s main purpose is to review and recommend policies relating to compensation and benefits of our officers and employees. Our compensation committee is responsible for, among other things: ● reviewing, approving, and determining, or making recommendations to our board of directors regarding, the compensation and compensation arrangements of our executive officers; ● administering our equity compensation plans; ● reviewing and approving, or making recommendations to our board of directors regarding, incentive compensation and equity compensation plans; and ● establishing and reviewing general policies relating to compensation and benefits of our employees. Our compensation committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of Nasdaq, a copy of which is available on our website. Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Dr. Matthew DelGuidice and Dr. Denil Shekhat with Dr. Matthew DelGuidice serving as the chair of the nominating and corporate governance committee. Each member of the committee meets the requirements for independence under the listing standards of Nasdaq and SEC rules and regulations. Our nominating and corporate governance committee is responsible for, among other things: ● identifying, evaluating, and selecting, or making recommendations to our board of directors regarding, nominees for election to our board of directors and its committees; ● developing and overseeing the annual evaluation of our board of directors and of its committees; ● considering and making recommendations to our board of directors regarding the composition of our board of directors and its committees; ● overseeing our corporate governance practices; and ● making recommendations to our board of directors regarding corporate governance guidelines. Our nominating and corporate governance committee operates under a written charter that satisfies the applicable listing standards of Nasdaq, a copy of which is available on our website. Compensation Committee Interlocks and Insider Participation None of the members of our compensation committee is a current or former executive officer or employee of our company. None of our executive officers serves as a member of the compensation committee of any entity that has one or more executive officers serving on our compensation committee. 82 Risk Oversight One of the key functions of our board of directors is informed oversight of our risk management process. Our board of directors administers this oversight function directly through our board of directors as a whole, and through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure, including risks associated with cybersecurity and data protection, and our audit committee has the responsibility to consider our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. Our audit committee will review legal, regulatory, and compliance matters that could have a significant impact on our financial statements. Our nominating and corporate governance committee will monitor the effectiveness of our corporate governance practices, including whether they are successful in preventing illegal or improper liability-creating conduct. Our compensation committee will assess and monitor whether any of our compensation policies and programs has the potential to encourage excessive risk taking. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our entire board of directors will be regularly informed through committee reports about such risks. Board Diversity Our nominating and corporate governance committee is responsible for reviewing with the board of directors, on an annual basis, the appropriate characteristics, skills, and experience required for the board of directors as a whole and its individual members. Although our board of directors does not have a formal written diversity policy with respect to the evaluation of director candidates, in its evaluation of director candidates, our nominating and corporate governance committee will consider factors including, without limitation, issues of character, integrity, judgment, potential conflicts of interest, other commitments, and diversity, and with respect to diversity, such factors as gender, race, ethnicity, experience, and area of expertise, as well as other individual qualities and attributes that contribute to the total diversity of viewpoints and experience represented on the board of directors. The nominating and corporate governance committee will ensure compliance with the new rule by Nasdaq for board diversity (the “Nasdaq Diversity Rule”), on or before the date required under the Nasdaq Diversity Rule. The Nasdaq Diversity Rule requires, assuming our shares of common stock are listed on the Nasdaq Capital Market and that we are a smaller reporting company, that we will have at least two directors serving on our board of directors, at least one of which identifies as female and the second of which identifies as female, underrepresented minority or LGBTQ+, by December 31, 2026, unless our board of directors is comprised of five or less directors. Code of Business Conduct and Ethics Our board of directors has adopted a code of business conduct and ethics applicable to all of our directors, officers (including our principal executive officer, principal financial officer, and principal accounting officer) and all global employees in accordance with applicable federal securities laws and corporate governance rules of the Nasdaq Capital Market. Our code of business conduct and ethics is available on our website. Any amendments to the code of business conduct and ethics, or waivers of its requirements, will, if required, be disclosed on our website. Insider Trading Policy Our board of directors has adopted an insider trading policy filed hereto as Exhibit 19.1 and is incorporated herein by this reference. Corporate Governance Guidelines Our board of directors has adopted corporate governance guidelines, a copy of which is available on our website. 83 Director Compensation We did not provide any cash compensation to any of our directors during the year ended December 31, 2023 in their capacity as directors. However, on April 28, 2023, each non-employee director was granted an additional option to purchase up to 10,000 shares of our common stock under the 2022 Omnibus Plan. Each such option was immediately vested in full upon grant and has a 10-year term. Certain of our former directors have received option grants as a result of their service to our company in a non-director capacity. Prior to his appointment as Executive Chairman, Dr. Chapman was a party to a consulting agreement with our company entered into in April 2022 and was granted additional options in his capacity as a consultant on June 15, 2022. Dr. Chapman also received employee related grants in April 2023 and August 2023. Mr. Kroenig previously provided consulting services to our company in 2022 and received an additional option grant on June 15, 2022, under which he has the right to purchase up to 10,000 shares of our common stock. Upon his appointment as our General Counsel, Mr. Christos Nicholoudis was granted an option to purchase shares of our common of 15,000 shares in April 2023, and 10,000 shares in August 2023. Item 11. Executive Compensation This section discusses the material components of the executive compensation program for the following persons: (i) all persons serving as our principal executive officers during 2023 and (ii) the most highly compensated of our other executive officers who received compensation during 2023 of at least $100,000 and who were executive officers on December 31, 2023. We refer to these persons as our “named executive officers” elsewhere in this Report. Our “named executive officers” and their positions are as follows: ● Erez Aminov, Chief Executive Officer and Chairman; ● Michelle Yanez, MBA, Chief Financial Officer, Secretary and Treasurer and; ● Adam Kaplin, MD, PhD, former President and Chief Scientific Officer; In April 2023, Mr. Aminov succeeded Mr. Uzonwanne as our Chief Executive Officer, and Ms. Yanez succeeded Mr. McNulty as our Chief Financial Officer. Summary Compensation Table The following table shows the compensation paid by us during the 2023 and 2022 fiscal years to our named executive officers. Name and principal position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) (6) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Erez Aminov, 2023 83,333 208,006 (1) - 1,368,600 - - 5,625 (2) 1,665,564 CEO 2022 - - - - - - - - Michelle Yanez, 2023 165,000 88,475 (1) - 282,215 - - 5,934 (2) 541,624 CFO 2022 110,000 - 36,950 - - 6,071 (2) 153,021 Adam Kaplin, 2023 50,000 - - 149,600 - - - 199,600 former President & CSO 2022 - 50,001 (3) - 739,000 - - - 789,001 Jude Uzonwanne, 2023 75,000 - - - - - 6,569 (2) 81,569 former CEO 2022 125,000 50,000 (4) - 739,000 (5) - - 8,385 (2) 922,385 Jim McNulty, 2023 154,000 - - - - - - 154,000 former CFO 2022 266,869 100,000 (3) - - - - - 366,869 (1) The amounts represent IPO bonuses paid in 2023. (2) Amount represents health insurance premiums paid. (3) The amounts represent milestone payments pursuant to prior employment agreements. (4) The bonus represents a paid sign-on amount. (5) Of these 2022 option grants, 75% were cancelled and non-exercisable as of April 2023, pursuant to the termination of Mr. Uzonwanne. (6) The reported amounts represent the aggregate grant date fair value of the awards computed in accordance with Financial Accounting Standards Board Account Standards Codification Topic 718, Stock Compensation, as modified or supplemented, or FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock options reported in this column are set forth in Note 8 to our Consolidated Financial Statements for the year ended December 31, 2022 included in this Report. In April 2023, we entered into an agreement with Mr. Uzonwanne in which the number of shares subject to his option agreement was reduced from 200,000 to 40,000. Narrative Disclosure to Summary Compensation Table Employment Agreements Except as set forth below, we currently have no written employment agreements with any of our named executive officers. 84 Erez Aminov Effective April 28, 2023, we entered into an employment agreement with Mr. Aminov, as amended on August 28, 2023, pursuant to which Mr. Aminov will serve as our Chief Executive Officer. Under his employment agreement, as amended, Mr. Aminov has agreed to devote at least 50% of his business time to the affairs of the Company. Mr. Aminov’s employment agreement provides that his employment will be on an at-will basis and can be terminated by either Mr. Aminov or our company at any time and for any reason. Under the agreement, Mr. Aminov will receive a base salary of $0.2 million per year, effective August 1, 2023. In the event that Mr. Aminov’s employment is terminated by our company without “Cause” or is terminated by Mr. Aminov for “Good Reason”, Mr. Aminov will be entitled to severance compensation in the form of salary continuation for a period of three months (subject to Mr. Aminov executing and delivering a customary general release in favor of the company). “Cause” is defined in the agreement to include dishonesty, misappropriation, willful misconduct, breach of the agreement, and other customary matters. “Good Reason” is defined to include a material adverse change in Mr. Aminov’s compensation or duties and level of responsibility. The employment agreement also contains customary confidentiality and invention-assignment covenants to which Mr. Aminov is subject. On August 17, 2023, Mr. Aminov received a $0.1 million cash bonus net of federal, state, local and income taxes related to the successful completion of the IPO. In March 2024, Mr. Aminov assumed the role of Chairman and on March 25, 2024, the Compensation Committee of the Board of Directors approved an increase to Mr. Aminov’s base salary of $0.8 million, bringing his total annual base salary to $0.28 million. Michelle Yanez On April 28, 2023, we entered into an employment agreement with Ms. Yanez pursuant to which Ms. Yanez will serve as our Chief Financial Officer on a full-time basis. Ms. Yanez’s employment agreement provides that her employment will be on an at-will basis and can be terminated by either Ms. Yanez or our company at any time and for any reason. Under the agreement, Ms. Yanez will receive an initial base salary of $0.17 per year. In the event that her employment is terminated by our company without “Cause” or is terminated by Ms. Yanez for “Good Reason”, Ms. Yanez will be entitled to severance compensation in the form of salary continuation for a period of three months (subject to Ms. Yanez executing and delivering a customary general release in favor of the company). “Cause” is defined in the agreement to include dishonesty, misappropriation, willful misconduct, breach of the agreement, and other customary matters. “Good Reason” is defined to include a material adverse change in Ms. Yanez’s compensation or duties and level of responsibility. The employment agreement also contains customary confidentiality and invention-assignment covenants to which Ms. Yanez is subject. On August 17, 2023, Ms. Yanez received a $0.05 million cash bonus net of federal, state, local and income taxes related to the successful completion of the IPO. On March 25, 2024, the Compensation Committee of the Board of Directors approved an increase in Ms. Yanez’s base salary of $0.06 million, bringing her annual base salary to $0.23 million. Chris Chapman On April 28, 2023, we entered into an employment agreement with Dr. Chapman, as amended on August 28, 2023, and October 13, 2023, pursuant to which Dr. Chapman served as our Executive Chairman. Dr. Chapman’s employment agreement, as amended, provided that his employment would be on a part-time basis whereby Dr. Chapman would devote time and effort to the business and affairs of the company on an as needed basis, and it further provides that such employment would be on an at-will basis and could be terminated by either Dr. Chapman or our company at any time and for any reason. Under the agreement, Dr. Chapman would receive a base salary of $0.05 million per year for a period of 90 days following the October 13, 2023 amendment, and following the 90-day period, Dr. Chapman’s base salary will increase to $0.15 million. In the event that Dr. Chapman’s employment is terminated by our company without “Cause” or is terminated by Dr. Chapman for “Good Reason”, Dr. Chapman would be entitled to severance compensation in the form of salary continuation for a period of three months (subject to Dr. Chapman executing and delivering a customary general release in favor of the company). “Cause” is defined in the agreement to include dishonesty, misappropriation, willful misconduct, breach of the agreement, and other customary matters. “Good Reason” is defined to include a material adverse change in Dr. Chapman’s compensation or duties and level of responsibility. The employment agreement also contains customary confidentiality and invention-assignment covenants to which Dr. Chapman is subject. On August 17, 2023, Dr. Chapman received a $0.05 million cash bonus net of federal, state, local and income taxes related to the successful completion of the IPO. On March 9, 2024, Dr. Chapman resigned from our company as Executive Chairman, and as an employee. 85 Consulting Relationship with Adam Kaplin Dr. Kaplin was a paid non-employee consultant to our company under which he provided services and consultation on an as-needed basis. Dr. Kaplin was paid $0.01 million a month for his services. We do not currently have a written consulting agreement with Dr. Kaplin. Grants of Plan-Based Awards in 2023 Estimated Future Payouts Under Non-Equity Incentive Plan Awards Estimated Future Payouts Under Equity Incentive Plan Awards All Other Stock Awards: Number of Shares of Stocks or All Other Option Awards: Number of Securities Underlying Exercise or Base Price of Option Closing stock price on Award Grant Date Fair Value of Stock and Name Grant Date (1) Threshold ($) Target ($) Maximum ($) Threshold (#) Target (#) Maximum (#) Units (#) Options (#) Awards ($/Sh) date ($/Sh) Option Awards Erez Aminov, CEO 4/28/2023 - - - - - - - 150,000 (2) $ 5.00 - (3) $ 112,200 8/17/2023 - - - - - - - 150,000 (4) $ 6.50 $ 6.50 $ 807,600 Michelle Yanez, CFO 4/28/2023 - - - - - - 46,667 (2) $ 5.00 - (3) $ 174,535 8/17/2023 - - - - - - 20,000 (4) $ 6.50 $ 6.50 $ 107,680 Adam Kaplin, former President & CSO 4/28/2023 - - - - - - - 40,000 (2) $ 5.00 - (3) $ 149,600 Jude Uzonwanne, former CEO - - - - - - - - - - $ - James McNulty, former CFO - - - - - - - - - - $ - (1) The “Grant Date” represents the date on which the Compensation Committee of the Board took action to grant the applicable award. (2) The stock awards disclosed in this item consist of options, as issued under our 2022 Omnibus Incentive Plan, which vest ratably in thirds beginning April 2023. (3) There was no closing stock price for our common stock since our IPO did not occur until August 2023. (4) The stock awards disclosed in this item consist of options, as issued under our 2022 Omnibus Incentive Plan, which vested 100% at grant. Outstanding equity awards The following table summarizes outstanding unexercised options held by each of our named executive officers, as of December 31, 2023. 86 OPTION AWARDS STOCK AWARDS Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Options Exercise Prices ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not vested (#) Erez Aminov 150,000 - - $ 6.50 8/16/33 - - - - 50,000 100,000 - $ 5.00 4/27/33 - - - - Michelle Yanez 20,000 - - $ 6.50 8/16/33 - - - - 15,556 31,111 - $ 5.00 4/27/33 - - - - 6,667 3,333 - $ 5.00 6/14/32 - - - - Adam Kaplin 13,334 26,666 - $ 5.00 4/27/33 - - - - 100,000 100,000 - $ 5.00 6/14/32 - - - - Jude Uzonwanne 50,000 - - $ 5.00 6/14/32 - - - - James McNulty - - - - - - - Option Exercises and Stock Vested No stock options were exercised by our executive officers during the year ended December 31, 2023: 2022 Omnibus Incentive Plan Our board of directors has adopted, and our stockholders have approved, our 2022 Omnibus Incentive Plan, or the 2022 Omnibus Plan. The 2022 Omnibus Plan authorizes the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any of our parent and subsidiary corporations’ employees, and the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors, and consultants and any of our future subsidiary corporations’ employees and consultants. The following is a summary of certain terms and conditions of the 2022 Omnibus Plan. This summary is qualified in its entirety by reference to the 2022 Omnibus Plan attached as an exhibit to this Report. You are encouraged to read the full text of the 2022 Omnibus Plan. As of December 31, 2023, there are options to purchase an aggregate of 1,210,001 shares of our common stock outstanding under the 2022 Omnibus Plan. 87 Administration The 2022 Omnibus Plan is administered by our board of directors or our compensation committee, or any other committee or subcommittee or one or more of our officers to whom authority has been delegated (collectively, the “Administrator”). The Administrator has the authority to interpret the 2022 Omnibus Plan and award agreements entered into with respect to the 2022 Omnibus Plan; to make, change and rescind rules and regulations relating to the 2022 Omnibus Plan; to make changes to, or reconcile any inconsistency in, the 2022 Omnibus Plan or any award agreement covering an award; and to take any other actions needed to administer the 2022 Omnibus Plan. Eligibility The Administrator may designate any of the following as a participant under the 2022 Omnibus Plan: any officer or employee, or individuals engaged to become an officer or employee, of our company or our affiliates; and consultants of our company or our affiliates, and our directors, including our non-employee directors. Types of Awards The 2022 Omnibus Plan permits the Administrator to grant stock options, stock appreciation rights (“SARs”), performance shares, performance units, shares of common stock, restricted stock, restricted stock units (“RSUs”), cash incentive awards, dividend equivalent units, or any other type of award permitted under the 2022 Omnibus Plan. The Administrator may grant any type of award to any participant it selects, but only our employees or our subsidiaries’ employees may receive grants of incentive stock options within the meaning of Section 422 of the Internal Revenue Code. Awards may be granted alone or in addition to, in tandem with, or (subject to the repricing prohibition described below) in substitution for any other award (or any other award granted under another plan of our company or any affiliate, including the plan of an acquired entity). Shares Reserved Under the 2022 Omnibus Incentive Plan The 2022 Omnibus Plan provides that 2,000,000 shares of our common stock are reserved for issuance under the 2022 Omnibus Plan, all of which may be issued pursuant to the exercise of incentive stock options. The number of shares available for issuance under our 2022 Omnibus Plan will also include an annual increase on the first day of each fiscal year equal to the lesser of: ● 200,000 shares; ● 1.0% of the outstanding shares of all class of our common stock as of the last day of the immediately preceding fiscal year; or ● such other amount as our board of directors may determine. The number of shares reserved for issuance under the 2022 Omnibus Plan will be reduced on the date of the grant of any award by the maximum number of shares, if any, with respect to which such award is granted. However, an award that may be settled solely in cash will not deplete the 2022 Omnibus Plan’s share reserve at the time the award is granted. If (a) an award expires, is canceled, or terminates without issuance of shares or is settled in cash, (b) the Administrator determines that the shares granted under an award will not be issuable because the conditions for issuance will not be satisfied, (c) shares are forfeited under an award, (d) shares are issued under any award and we reacquire them pursuant to our reserved rights upon the issuance of the shares, (e) shares are tendered or withheld in payment of the exercise price of an option or as a result of the net settlement of outstanding stock appreciation rights or (f) shares are tendered or withheld to satisfy federal, state or local tax withholding obligations, then those shares are added back to the reserve and may again be used for new awards under the 2022 Omnibus Plan. However, shares added back to the reserve pursuant to clauses (d), (e) or (f) in the preceding sentence may not be issued pursuant to incentive stock options. Options The Administrator may grant stock options and determine all terms and conditions of each stock option, which include the number of stock options granted, whether a stock option is to be an incentive stock option or non-qualified stock option, and the grant date for the stock option. However, the exercise price per share of common stock may never be less than the fair market value of a share of common stock on the date of grant and the expiration date may not be later than 10 years after the date of grant. Stock options will be exercisable and vest at such times and be subject to such restrictions and conditions as are determined by the Administrator, including with respect to the manner of payment of the exercise price of such stock options. 88 Stock Appreciation Rights The Administrator may grant SARs, which represent the right of a participant to receive cash in an amount, or common stock with a fair market value, equal to the appreciation of the fair market value of a share of common stock during a specified period of time. The 2022 Omnibus Plan provides that the Administrator will determine all terms and conditions of each SAR, including, among other things: (a) whether the SAR is granted independently of a stock option or relates to a stock option, (b) the grant price, which may never be less than the fair market value of our common stock as determined on the date of grant, (c) a term that must be no later than 10 years after the date of grant, and (d) whether the SAR will settle in cash, common stock or a combination of the two. Performance and Stock Awards The Administrator may grant awards of shares of common stock, restricted stock, RSUs, performance shares or performance units. Restricted stock means shares of common stock that are subject to a risk of forfeiture or restrictions on transfer, which may lapse upon the achievement or partial achievement of performance goals (as described below) or upon the completion of a period of service. An RSU grants the participant the right to receive cash or shares of common stock the value of which is equal to the fair market value of one share of common stock, to the extent performance goals are achieved or upon the completion of a period of service. Performance shares give the participant the right to receive shares of common stock to the extent performance goals are achieved. Performance units give the participant the right to receive cash or shares of common stock valued in relation to a unit that has a designated dollar value or the value of which is equal to the fair market value of one or more shares of common stock, to the extent performance goals are achieved. The Administrator will determine all terms and conditions of the awards including (a) whether performance goals must be achieved for the participant to realize any portion of the benefit provided under the award, (b) the length of the vesting or performance period and, if different, the date that payment of the benefit will be made, (c) with respect to performance units, whether to measure the value of each unit in relation to a designated dollar value or the fair market value of one or more shares of common stock, and (d) with respect to performance shares, performance units, and RSUs, whether the awards will settle in cash, in shares of common stock (including restricted stock), or in a combination of the two. Cash Incentive Awards The Administrator may grant cash incentive awards. An incentive award is the right to receive a cash payment to the extent one or more performance goals are achieved. The Administrator will determine all terms and conditions of a cash incentive award, including, but not limited to, the performance goals (described below), the performance period, the potential amount payable, and the timing of payment. While the 2022 Omnibus Plan permits cash incentive awards to be granted under the 2022 Omnibus Plan, we may also make cash incentive awards outside of the 2022 Omnibus Plan. Performance Goals For purposes of the 2022 Omnibus Plan, the Administrator may establish objective or subjective performance goals which may apply to any performance award. Such performance goals may include, but are not limited to, one or more of the following measures with respect to our company or any one or more of our subsidiaries, affiliates, or other business units: net sales; cost of sales; gross income; gross revenue; revenue; operating income; earnings before taxes; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings before interest, taxes, depreciation, amortization and exception items; income from continuing operations; net income; earnings per share; diluted earnings per share; total stockholder return; fair market value of a share of common stock; cash flow; net cash provided by operating activities; net cash provided by operating activities less net cash used in investing activities; ratio of debt to debt plus equity; return on stockholder equity; return on invested capital; return on average total capital employed; return on net capital employed; return on assets; return on net assets employed before interest and taxes; operating working capital; average accounts receivable (calculated by taking the average of accounts receivable at the end of each month); average inventories (calculated by taking the average of inventories at the end of each month); economic value added; succession planning; manufacturing return on assets; manufacturing margin; and customer satisfaction. Performance goals may also relate to a participant’s individual performance. The Administrator reserves the right to adjust any performance goals or modify the manner of measuring or evaluating a performance goal. 89 Dividend Equivalent Units The Administrator may grant dividend equivalent units. A dividend equivalent unit gives the participant the right to receive a payment, in cash or shares of common stock, equal to the cash dividends or other distributions that we pay with respect to a share of common stock. We determine all terms and conditions of a dividend equivalent unit award, except that dividend equivalent units may not be granted in connection with a stock option or SAR, and dividend equivalent unit awards granted in connection with another award cannot provide for payment until the date such award vests or is earned, as applicable. Other Stock-Based Awards The Administrator may grant to any participant shares of unrestricted stock as a replacement for other compensation to which such participant is entitled, such as in payment of director fees, in lieu of cash compensation, in exchange for cancellation of a compensation right or as a bonus. Transferability Awards are not transferable, including to any financial institution, other than by will or the laws of descent and distribution, unless the Administrator allows a participant to (a) designate in writing a beneficiary to exercise the award or receive payment under the award after the participant’s death, (b) transfer an award to a former spouse as required by a domestic relations order incident to a divorce, or (c) transfer an award without receiving any consideration. Adjustments If (a) we are involved in a merger or other transaction in which our shares of common stock are changed or exchanged; (b) we subdivide or combine shares of common stock or declare a dividend payable in shares of common stock, other securities, or other property (other than stock purchase rights issued pursuant to a stockholder rights agreement); (c) we effect a cash dividend that exceeds 10% of the fair market value of a share of common stock or any other dividend or distribution in the form of cash or a repurchase of shares of common stock that our board of directors determines is special or extraordinary, or that is in connection with a recapitalization or reorganization; or (d) any other event occurs that in the Administrator’s judgment requires an adjustment to prevent dilution or enlargement of the benefits intended to be made available under the 2022 Omnibus Plan, then the Administrator will, in a manner it deems equitable, adjust any or all of (1) the number and type of shares subject to the 2022 Omnibus Plan and which may, after the event, be made the subject of awards; (2) the number and type of shares of common stock subject to outstanding awards; (3) the grant, purchase, or exercise price with respect to any award; and (4) the performance goals of an award. In any such case, the Administrator may also provide for a cash payment to the holder of an outstanding award in exchange for the cancellation of all or a portion of the award, subject to the terms of the 2022 Omnibus Plan. The Administrator may, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, authorize the issuance or assumption of awards upon terms and conditions we deem appropriate without affecting the number of shares of common stock otherwise reserved or available under the 2022 Omnibus Plan. 90 Change of Control Upon a change of control (as defined in the 2022 Omnibus Plan), the successor or surviving corporation may agree to assume some or all outstanding awards or replace them with the same type of award with similar terms and conditions, without the consent of any participant, subject to the following requirements: ● Each award that is assumed must be appropriately adjusted, immediately after such change of control, to apply to the number and class of securities that would have been issuable to a participant upon the consummation of such change of control had the award been exercised, vested, or earned immediately prior to such change of control, and other appropriate adjustment to the terms and conditions of the award may be made. ● If the securities to which the awards relate after the change of control are not listed and traded on a national securities exchange, then (a) each participant must be provided the option to elect to receive, in lieu of the issuance of such securities, cash in an amount equal to the fair value of the securities that would have otherwise been issued, and (b) no reduction may be taken to reflect a discount for lack of marketability, minority, or any similar consideration, for purposes of determining the fair value of such securities. ● If a participant is terminated from employment without cause, or due to death or disability, or the participant resigns employment for good reason (as defined in any award or other agreement between the participant and our company or an affiliate) within two years following the change of control, then upon such termination, all of the participant’s awards in effect on the date of such termination will vest in full or be deemed earned in full. If the purchaser, successor, or surviving entity does not assume the awards or issue replacement awards, then immediately prior to the change of control date, unless the Administrator otherwise determines: ● Each stock option or SAR then held by a participant will become immediately and fully vested, and all stock options and SARs will be cancelled on the change of control date in exchange for a cash payment equal to the excess of the change of control price of the shares of common stock over the purchase or grant price of such shares under the award. ● Unvested restricted stock and RSUs (that are not performance awards) will vest in full. ● All performance shares, performance units and cash incentive awards for which the performance period has expired will be paid based on actual performance, and all such awards for which the performance period has not expired will be cancelled in exchange for a cash payment equal to the amount that would have been due under such awards, valued assuming achievement of target performance goals at the time of the change of control, prorated based on the number of full months elapsed in the performance period. ● All unvested dividend equivalent units will vest (to the same extent as the award granted in tandem with such units) and be paid. ● All other unvested awards will vest and any amounts payable will be paid in cash. Term of Plan Unless earlier terminated by our board of directors, the 2022 Omnibus Plan will terminate on, and no further awards may be granted, after the tenth (10 th ) anniversary of its effective date. Termination and Amendment of Plan 91 Our board of directors or the Administrator may amend, alter, suspend, discontinue, or terminate the 2022 Omnibus Plan at any time, subject to the following limitations: ● Our board of directors must approve any amendment to the 2022 Omnibus Plan if we determine such approval is required by prior action of our board of directors, applicable corporate law, or any other applicable law; ● Stockholders must approve any amendment to the 2022 Omnibus Plan, which may include an amendment to materially increase the number of shares reserved under the 2022 Omnibus Plan, if we determine that such approval is required by Section 16 of the Exchange Act, the Code, the listing requirements of any principal securities exchange or market on which the shares are then traded, or any other applicable law; and ● Stockholders must approve any amendment to the 2022 Omnibus Plan that would diminish the protections afforded by the participant award limits or repricing and backdating prohibitions. Amendment, Modification, Cancellation and Disgorgement of Awards Subject to the requirements of the 2022 Omnibus Plan, the Administrator may modify or amend any award or waive any restrictions or conditions applicable to any award or the exercise of the award, or amend, modify, or cancel any terms and conditions applicable to any award, in each case, by mutual agreement of the Administrator and the participant or any other person that may have an interest in the award, so long as any such action does not increase the number of shares of common stock issuable under the 2022 Omnibus Plan. We do not need to obtain participant (or other interested party) consent for any such action (a) that is permitted pursuant to the adjustment provisions of the 2022 Omnibus Plan; (b) to the extent we deem the action necessary to comply with any applicable law or the listing requirements of any principal securities exchange or market on which our common stock is then traded; (c) to the extent we deem the action is necessary to preserve favorable accounting or tax treatment of any award for us; or (d) to the extent we determine that such action does not materially and adversely affect the value of an award or that such action is in the best interest of the affected participant or any other person as may then have an interest in the award. The Administrator can cause a participant to forfeit any award, and require the participant to disgorge any gains attributable to the award, if the participant engages in any action constituting, as determined by the Administrator in its discretion, cause for termination, or a breach of a material company policy, any award agreement or any other agreement between the participant and us or one of our affiliates concerning noncompetition, nonsolicitation, confidentiality, trade secrets, intellectual property, nondisparagement or similar obligations. Any awards granted under the 2022 Omnibus Plan, and any shares of common stock issued or cash paid under an award, will be subject to recoupment our Compensation Recovery Policy (as described below), or any recoupment or similar requirement otherwise made applicable by law, regulation or listing standards to us, or that may be provided for in any cash or equity award granted by us. 92 Compensation of Directors The following table sets forth all compensation paid to our Board members during the year ended December 31, 2023: Name Fees Earned or Paid in Cash ($) (1) Stock Awards ($) Option Awards ($) (7) Non-Equity Incentive Plan Compensation ($) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Chris Chapman, PhD. (2) 128,629 - 493,600 - - - 622,229 Mike Jerman - - - - - - - Talhia Tuck (3) - - 35,150 - - - 35,150 Brad Kroenig (3) - - 35,150 - - - 35,150 Hugh McColl III (3) - - 35,150 - - - 35,150 Christos Nicholoudis, Esq. (4) 74,085 - 109,940 - - - 184,025 Dave Vorhoff, former director (5) - - 35,150 - - - 35,150 Brian Daly, former director (6) - - - - - - - (1) Cash payments made to Dr. Chapman and Mr. Nicholoudis are related to their employment agreements, respectively. (2) On March 9, 2024, Dr. Chapman resigned from our Company as Executive Chairman and as an employee. (3) On March 9, 2024, Ms. Tuck, Mr. Kroenig and Mr. McColl resigned from our Company as members of the Board of Directors. (4) On January 15, 2024, Mr. Nicholoudis resigned from our Company as General Counsel and as a member of the Board of Directors. (5) On October 19, 2023, Mr. Vorhoff resigned from our Company as a member of the Board of Directors. (6) On December 15, 2023, Mr. Daly resigned from our Company as a member of the Board of Directors. (7) The reported amounts represent the aggregate grant date fair value of the awards computed in accordance with Financial Accounting Standards Board Account Standards Codification Topic 718, Stock Compensation, as modified or supplemented, or FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock options reported in this column are set forth in Note 8 to our Consolidated Financial Statements for the year ended December 31, 2022 included in this Report. Compensation Recovery Policy On October 2, 2023, our Board of Directors adopted a policy (commonly known as a “clawback” policy) which provides for the recovery of erroneously awarded incentive compensation to certain of our officers in the event that we are required to prepare an accounting restatement due to material noncompliance by us with any financial reporting requirements under the federal securities laws. This policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended, related rules and the listing standards of Nasdaq Stock Market or any other securities exchange on which our shares are listed in the future. The policy is administered by our Board of Directors or, if so designated by the Board of Directors, the Compensation Committee. Any determinations made by the Board shall be final and binding on all affected individuals. The individuals covered by this policy (the “Covered Officers”) are any current or former employee who is or was identified as our president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a significant policy-making function, or any other person (including any executive officer of our subsidiaries or affiliates) who performs similar significant policy-making functions for us. The policy covers our recoupment of “Incentive-Based Compensation” (as defined in the policy) received by a person after beginning service as a Covered Executive and who served as a Covered Officer at any time during the performance period for that Incentive Compensation. In the event we are required to prepare an accounting restatement, the policy requires us to recover, reasonably promptly, any excess incentive compensation (as determined by our Board of Directors or Compensation Committee) received by any Covered Officer during the three completed fiscal years immediately preceding the date on which we are required to prepare such accounting restatement. The foregoing description of our Compensation Recovery Policy does not purport to be complete and is qualified in its entirety by the terms and conditions of such policy, a copy of which is filed as an exhibit to this Report and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth, as of the date of this Report, the ownership of our securities by: (i) each of our directors, (ii) all persons who, to our knowledge, are the beneficial owners of more than 5% of the outstanding shares of common stock, (iii) each of the executive officers, and (iv) all of our directors and executive officers, as a group. Each person named in this table has sole investment power and sole voting power with respect to the shares of common stock set forth opposite such person’s name, except as otherwise indicated. 93 Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percentage of Class as of March 28 2024 Directors and Executive Officers (1) Erez Aminov 623,500 4.15 % Michelle Yanez 57,779 * Michael Jerman 25,000 * Matthew Del Giudice 25,000 * Denil Nanji Shekhat 25,000 * Edward MacPherson 25,000 * All current directors and officers as a group (6 persons) (2) 781,279 5.21 % 5% Stockholders Brian McNulty (3) 5,110,270 34.57 % *Represents beneficial ownership of less than 1% (1) Unless otherwise denoted, the address of each noted person is 1200 Brickell Avenue, Suite 1950 #1183, Miami, Florida 33131. (2) Includes shares subject to options granted under our 2022 Omnibus Plan that are exercisable as of the Beneficial Ownership Date or within 60 days of the Beneficial Ownership Date held as follows: Mr. Aminov, 250,000 shares and Ms. Yanez, 57,779 shares, Mr. Jerman, 25,000 shares, Dr. Del Guidice, 25,000 shares, Dr. Shekhat, 25,000 shares, Mr. MacPherson, 25,000 shares, and all current officers and directors as a group, 407,779 shares. Excludes shares subject to options granted under our 2022 Omnibus Plan that are not exercisable within 60 days of the Beneficial Ownership Date. (3) Includes (i) 10,000 shares held directly by Mr. McNulty, (ii) 2,740,270 shares held by the Bay Shore Trust, (iii) 660,000 shares held by the Celeste J Williams Lifetime QTIP Trust, (iv) 1,000,000 shares issuable pursuant to warrants held by the Bay Shore Trust that are immediately exercisable, and (v) 700,000 shares issuable pursuant to warrants held by MIRALOGX LLC, that are immediately exercisable. As trustee of the Bay Shore Trust and the Celeste J Williams Lifetime QTIP Trust, Mr. McNulty has sole voting and dispositive power over the shares held by each trust, and, as a result is deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act) of the securities held by the trusts. The address for MIRALOGX LLC and the Bay Shore Trust is 900 West Platt Street, Suite 200, Tampa, Florida, 33606. DELINQUENT SECTION 16(A) REPORTS Section 16(a) of the Exchange Act requires directors and executive officers, and persons who own more than 10% of the Company’s common stock, to report to the SEC their initial ownership of the Company’s common stock and any subsequent changes in that ownership. Specific due dates for these reports have been established by the SEC and we are required to disclose in this Annual Report on Form 10-K any late filings or failures to file. Based solely on review of the copies of such reports furnished to us and written representations from reporting persons that no other reports were required during the fiscal year ended December 31, 2023, we believe that, during the 2023 fiscal year, all of the Company’s directors and executive officers complied with all Section 16(a) filing requirements applicable to them, with the exception of one late filing By the Bay Shore Trust, which was required to be filed on November 22, 2023, but was filed on December 27, 2023. Securities Authorized for Issuance Under Equity Compensation Plans The following table indicates shares of common stock authorized for issuance under our 2022 Omnibus Plan as of December 31, 2023: Plan category Number of securities to be issued upon exercise of outstanding options and warrants Weighted- average exercise price of outstanding options and warrants Number of securities remaining available for future issuance Equity compensation plans approved by security holders 2,973,571 $ 4.45 789,999 Equity compensation plans not approved by security holders - - - Total 2,973,571 $ 4.45 789,999 94 Item 13. Certain Relationships and Related Transactions, and Director Independence. The following is a description of transactions within the last two years to which we have been a party, in which the amount involved exceeded or will exceed $120,000, and in which any of our executive officers, directors or holders of more than 5% of our voting securities, or an immediate family member thereof, had or will have a direct or indirect material interest. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or amounts that would be paid or received, as applicable, in arm’s-length transactions with unrelated third parties. Line of Credit and Promissory Note with the Bay Shore Trust On April 28, 2023, we entered into the Bay Shore Note with the Bay Shore Trust, under which we have the right to borrow up to an aggregate of $5,000,000 from the Bay Shore Trust at any time up to the second anniversary of the issuance of the Bay Shore Note or, if earlier, upon the completion of our initial public offering. Our right to borrow funds under the Bay Shore Note is subject to the absence of a material adverse change in our assets, operations, or prospects. The Bay Share Note, together with accrued interest, will become due and payable on the second anniversary of the issuance of the note, provided that it may be prepaid at any time without penalty. The Bay Shore Note will accrue interest at a rate equal 7% per annum, simple interest, during the first year that the note is outstanding and 10% per annum, simple interest, thereafter. The Bay Shore Note is unsecured. As of June 30, 2023, the Bay Shore Note had an outstanding principal balance of $1.8 million and accrued and unpaid interest of $0.04 million. Under the Bay Shore Trust Conversion Agreement, the Bay Shore Trust agreed to convert, upon the completion of our initial public offering, $1,100,190 of the outstanding principal balance of the Bay Shore Note into shares of our common stock at a conversion price equal to our initial public offering price, which resulted in the issuance of 157,170 shares to the Bay Shore Trust upon the completion of our initial public offering. The note was paid off as of December 31, 2023. In consideration of the loan facility provided by the Bay Shore Trust, we issued to the Bay Shore Trust a common stock purchase warrant on April 28, 2023 giving the Bay Shore Trust the right to purchase up to 1,000,000 shares of common stock at an exercise price of $5.00 per share, which warrant will expire five years after the date of grant. Pursuant to a registration rights agreement, we have granted to Bay Shore Trust the right to require us, at any time after one year following our initial public offering, to register for resale the shares issuable upon the exercise of the warrant, with such registration rights being in the form of demand and “piggyback” registration rights that are subject to customary limitations and restrictions. Upon issuance, the warrant met the criteria to be classified as equity based on an analysis under Accounting Standards Codification (480) ASC 480, “ Distinguishing Liabilities from Equity ” and was measured at fair value, resulting in an initial fair value of approximately $3.5 million upon issuance of the warrant using Black-Scholes valuation techniques. Transactions with MIRALOGX LLC Since January 1, 2023, MIRALOGX has advanced funds on behalf of Bay Shore Trust to our company in order to fund operating activities. The total amount advanced and outstanding from MIRALOGX was $1.6 million immediately prior to being consolidated into the Bay Shore Note on June 30, 2023, and such amounts became a part of the outstanding balance of the Bay Shore Note as of June 30, 2023 and are payable under the terms of the Bay Shore Note. We are also a party to an Agreement for Shared Lease Costs, dated April 1, 2023, with MIRALOGX under which we have agreed to pay our pro rata share of the operating usage costs owing by MIRALOGX under an aircraft lease agreement between MIRALOGX and Supera Aviation I LLC (“Supera Aviation”) based on our usage of the leased aircraft each month. No amounts are payable by us under this agreement unless and to the extent we choose to utilize the leased aircraft. As such, we discontinued the use of the aircraft in March 2023. Prior to entering into this agreement, we were a party to an aircraft lease agreement with Supera Aviation from April 20, 2021, through March 31, 2023. We paid Supera Aviation an aggregate of $0.5 million during the first quarter of 2023 and $1.7 million in 2022. Supera Aviation is a company owned by Starwood Trust. 95 On November 15, 2023, we entered into an exclusive license agreement in with MIRALOGX to develop and commercialize a drug product containing 2-(2-chlorophenyl)-2-(methylamino) cyclopentan-1-one (sometimes referred to by the Parties as “M209” or “KETAMIR-2”) as an active agent in North America. The exclusive license in the license agreement includes our right to sublicense the licensed intellectual property. Pursuant to the terms of the license agreement, and subject to the conditions set forth therein, we paid MIRALOGX a one-time, nonrefundable payment of $100,000 upon the signing of the Agreement and will be obligated to pay quarterly royalty payments on sales of the Product in the Territory of 8% of net sales and 8% of other revenue (such as milestone or sublicense payments) from licensed products. Also, in consideration of License Agreement, we issued to MIRALOGX a common stock purchase warrant to purchase up to 700,000 shares of our common stock. The MIRALOGX Warrants are exercisable, in whole or in part, any time prior to November 15, 2028, at a cash exercise price of $2.00 per share. On November 15, 2023, we entered into a promissory note and loan agreement with MIRALOGX. Pursuant to the loan agreement, we may borrow up to $3.0 million from MIRALOGX to fund the development of licensed products under the license agreement. Together with any advance request, we will deliver to the Lender a budget for the requested advance. The budget may only include costs directly associated with preparing an IND application for KETAMIR-2, exclusive of personnel costs. Any advances made by the Lender to us pursuant to this note may be repaid by us (together with any and all interest accrued thereon) at any time without penalty or premium in accordance with the terms hereof. Amounts repaid hereunder may not be reborrowed. The loan agreement has a one-year term, and all outstanding principal and accrued but unpaid interest must be repaid in full on November 15, 2023. Interest on the amounts borrowed under the loan agreement accrues at an annual fixed rate of 8%. We may prepay all or a portion of the outstanding principal and accrued unpaid interest under the loan agreement at any time without a prepayment fee. Consulting and Employment Agreements with Dr. Chris Chapman On April 1, 2022, we entered into a Consulting Agreement with Dr. Chapman pursuant to which he provided regulatory and drug development consulting services to the Company on an as-requested basis. Pursuant to the Consulting Agreement, he was to be paid a one-time fee of $100,000 upon the completion of our initial public offering (of which $50,000 was prepaid in in the first quarter of 2022) plus a monthly fee of $20,000 thereafter. The monthly fee was to begin upon the completion of our initial public offering. He was also reimbursed for reasonable out-of-pocket expenses incurred in connection with his duties under the Consulting Agreement. The agreement had a term of one year with an automatic one-year extension, provided that either party could terminate the agreement without cause upon 30-days prior written notice. In his capacity as a consultant, Dr. Chapman was also granted on June 15, 2022, an option to purchase up to 200,000 shares of our common stock at an exercise price of $5.00 per share. Upon Dr. Chapman becoming Executive Chairman, received additional compensation in that capacity, and his employment agreement replaced his Consulting Agreement. See “Executive Compensation” above. Dr. Chapman resigned his positions with our company on March 9, 2024. Review and Approval of Related Party Transactions Our board of directors has adopted a written policy regarding the review and approval of related party transactions. Our audit committee charter provides that the audit committee shall review and approve or disapprove any related party transactions, which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed the lessor of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years and in which a related person has or will have a direct or indirect material interest. Our policy regarding transactions between us and related persons provides that a related person is defined as a director, executive officer, nominee for director or greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed year, and any of their immediate family members. 96 Certain of the foregoing disclosures are summaries of certain provisions of our related party agreements and are qualified in their entirety by reference to all of the provisions of such agreements. Because these descriptions are only summaries of the applicable agreements, they do not necessarily contain all of the information that you may find useful. Copies of certain of the agreements have been filed as exhibits to this Report and are available electronically on the website of the SEC at www.sec.gov . As a matter of corporate governance policy, we have not and will not make loans to officers or loan guarantees available to “promoters” as that term is commonly understood by the SEC and state securities authorities. All future transactions between us and our officers, directors or five percent stockholders, and respective affiliates will be on terms no less favorable than could be obtained from unaffiliated third parties and will be approved by a majority of our independent directors who do not have an interest in the transactions and who had access, at our expense, to our legal counsel or independent legal counsel. Item 14. Principal Accountant Fees and Services. Audit Fees. The aggregate fees billed by Cherry Bekaert LLP for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the years ended December 31, 2023 and December 31, 2022 totaled $0.06 million and $0.05 million, respectively. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings. Audit-Related Fees. The aggregate fees billed by Cherry Bekaert LLP for audit-related fees for the years ended December 31, 2023 and 2022 were $0.1 million and $0.01 million, respectively. The fees were provided in consideration of services consisting of review and update procedures associated with registration statements and other SEC filings. Tax Fees. The aggregate fees billed by Cherry Bekaert LLP for professional services rendered for tax compliance for the years ended December 31, 2023 were $0.02 million. There were no such fees incurred in 2022. The fees were provided in consideration of services consisting of preparation of tax returns and related tax advice. All Other Fees. None The Audit Committee of our board of directors has established its pre-approval policies and procedures, pursuant to which the Audit Committee approved the foregoing audit and non-audit services provided by Cherry Bekaert LLP in 2023. Consistent with the Audit Committee’s responsibility for engaging our independent auditors, all audit and permitted non-audit services require pre-approval by the Audit Committee. The full Audit Committee approves proposed services and fee estimates for these services. The Audit Committee chairperson has been designated by the Audit Committee to approve any audit-related services arising during the year that were not pre-approved by the Audit Committee. Any non-audit service must be approved by the full Audit Committee. Services approved by the Audit Committee chairperson are communicated to the full Audit Committee at its next regular meeting and the Audit Committee reviews services and fees for the fiscal year at each such meeting. Pursuant to these procedures, the Audit Committee approved the foregoing services provided by Cherry Bekaert LLP. 97 PART IV Item 15. Exhibits, Financial Statement Schedules. The information called for by this Item is incorporated herein by reference to the Exhibit Index in this Form 10-K. Number Description 3.1 Third Amended and Restated Articles of Incorporation of MIRA Pharmaceuticals, Inc. (incorporated by reference to Exhibit 3.1 to Form S-1 filed July 28, 2023). 3.2 Amended and Restated Bylaws of MIRA Pharmaceuticals, Inc. (incorporated by reference to Exhibit 3.3 to Form S-1 filed July 28, 2023). 4.1 Common Stock Purchase Warrant, dated April 28, 2023, between MIRA Pharmaceuticals, Inc. and Bay Shore Trust (incorporated by reference to Exhibit 4.2 to Form S-1 filed July 28, 2023). 4.2 Common Stock Purchase Warrant from the Company to MIRALOGX, dated November 15, 2023 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed November 20, 2023). 4.3 Representative’s Warrant, dated August 7, 2023 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed August 7, 2023). 4.4* Description of Securities of the Registrant 10.1+ 2022 Omnibus Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.1 to Form S-1 filed July 28, 2023). 10.2+ Form of Stock Option Award under 2022 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to Form S-1 filed July 28, 2023). 10.3 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.3 to Form S-1 filed July 28, 2023). 10.4 Confirmatory Patent Assignment and Royalty Agreement, dated November 1, 2021, between SRQ Patent Holdings II, LLC and MIRA Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.4 to Form S-1 filed July 28, 2023). 10.5 Amended and Restated Limited License Agreement, dated June 27, 2022, between MIRA Pharmaceuticals, Inc. and MyMD Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.5 to Form S-1 filed July 28, 2023). 10.6 Amendment No. 1, dated April 20, 2023, to Amended and Restated Limited License Agreement between MIRA Pharmaceuticals, Inc. and MyMD Pharmaceuticals, Inc. (incorporated by reference to Exhibit 10.6 to Form S-1 filed July 28, 2023). 10.7+ Employment Agreement, dated April 28, 2023, between MIRA Pharmaceuticals, Inc. and Erez Aminov (incorporated by reference to Exhibit 10.7 to Form S-1 filed July 28, 2023). 10.8+ Amendment to Employment Agreement, August 28, 2023, between MIRA Pharmaceuticals, Inc. and Erez Aminov (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed August 31, 2023). 10.9+ Employment Agreement, dated April 28, 2023, between MIRA Pharmaceuticals, Inc. and Michelle Yanez (incorporated by reference to Exhibit 10.8 to Form S-1 filed July 28, 2023). 10.10+ Employment Agreement, dated April 28, 2023 between MIRA Pharmaceuticals, Inc. and Chris Chapman (incorporated by reference to Exhibit 10.9 to Form S-1 filed July 28, 2023). 10.11+ Amendment to Employment Agreement, dated August 28, 2023, between MIRA Pharmaceuticals and Dr. Chris Chapman (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed August 31, 2023). 10.12+ Amendment to Employment Agreement, dated October 13, 2023, between MIRA Pharmaceuticals and Dr. Chris Chapman. 10.13 Promissory Note and Loan Agreement, dated April 28, 2023, between MIRA Pharmaceuticals, Inc. and Bay Shore Trust (incorporated by reference to Exhibit 10.10 to Form S-1 filed July 28, 2023). 10.14 Registration Rights Agreement, dated April 28, 2023, between MIRA Pharmaceuticals, Inc. and Bay Shore Trust (incorporated by reference to Exhibit 10.11 to Form S-1 filed July 28, 2023). 10.15 Agreement for Shared Lease Costs, dated April 1, 2023, between MIRA Pharmaceuticals, Inc., Telomir Pharmaceuticals, Inc., and MIRALOGX LLC (incorporated by reference to Exhibit 10.12 to Form S-1 filed July 28, 2023). 10.16 Master Collaboration Agreement, dated November 1, 2021, between MIRA Pharmaceuticals, Inc. and The Johns Hopkins University (incorporated by reference to Exhibit 10.13 to Form S-1 filed July 28, 2023). 98 10.17 Conversion Agreement, dated July 20, 2023, between MIRA Pharmaceuticals, Inc. and the Bay Shore Trust (incorporated by reference to Exhibit 10.14 to Form S-1 filed July 28, 2023). 10.18 Exclusive License Agreement, by and between the Company and MIRALOGX, dated as of November 30, 2023 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed November 20, 2023). 10.19 Promissory Note and Loan Agreement, by and between the Company and MIRALOGX, dated as of November 15, 2023 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed November 20, 2023). 14.1 Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to Form S-1 filed July 28, 2023). 19.1 Insider Trading Policy (incorporated by reference to Exhibit 99.5 to Form S-1 filed July 28, 2023). 21.1 List of Subsidiaries of Registrant (incorporated by reference to Exhibit 21.1 to Form S-1 filed July 28, 2023). 31.1* Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of the Interim Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1**# Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2**# Certification of the Interim Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1* Policy Relating to Recovery of Erroneously Awarded Compensation 99.1 Audit Committee Charter (incorporated by reference to Exhibit 99.1 to Form S-1 filed July 28, 2023). 99.2 Nominating and Corporate Governance Committee Charter (incorporated by reference to Exhibit 99.2 to Form S-1 filed July 28, 2023). 99.3 Compensation Committee Charter (incorporated by reference to Exhibit 99.3 to Form S-1 filed July 28, 2023). 99.4 Corporate Governance Guidelines (incorporated by reference to Exhibit 99.4 to Form S-1 filed July 28, 2023). 99.5 Related Person Transaction Policy and Procedures (incorporated by reference to Exhibit 99.6 to Form S-1 filed July 28, 2023). 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) + Denotes management contract or compensatory plan or arrangement. * Filed herewith ** Furnished herewith # A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Item 16. Form 10-K Summary None. 99 MIRA PHARMACEUTICALS, INC. INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2023 and 2022 F-3 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 F-4 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023 and 2022 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 F-6 Supplemental Cash Flow Information for the years ended December 31, 2023 and 2022 F-7 Notes to Consolidated Financial Statements F-8 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders MIRA Pharmaceuticals, Inc. Tampa, Florida Opinion on the Financial Statements We have audited the accompanying balance sheets of MIRA Pharmaceuticals, Inc. (the “Company”) as of December 31, 2023 and 2022, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming the Company will be able to continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred recurring net losses and negative operating cash flows since inception. These factors, among others, 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. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits 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. We have served as the Company’s auditor since 2022. /s/ Cherry Bekaert LLP Tampa, Florida April 1, 2024 F- 2 MIRA PHARMACEUTICALS, INC. BALANCE SHEETS 2023 2022 December 31, 2023 2022 ASSETS Current assets: Cash $ 4,602,566 $ 350,978 Deferred offering costs - 143,427 Other receivables 11,862 - Prepaid expenses 243,802 - Total current assets 4,858,230 494,405 Operating lease, right of use assets 5,061 164,910 Related party operating lease, right of use assets - 198,759 Operating lease, right of use assets - 198,759 Related party accounts receivable 69,152 - Total assets $ 4,932,443 $ 858,074 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Trade accounts payable and accrued liabilities $ 538,564 $ 811,738 Related party accounts payable - 116,350 Related party line of credit - 133,062 Related party accrued interest 14,472 34,987 Current portion of operating lease liabilities 5,061 75,143 Related party current portion of operating lease liabilities - 198,759 Current portion of operating lease liabilities - 198,759 Total current liabilities 558,097 1,370,039 Non-current operating lease liabilities - 84,267 Total liabilities 558,097 1,454,306 Stockholders’ Deficit Preferred Stock, $ 0.0001 par value, 10,000,000 shares authorized and none issued or outstanding. - - Common Stock, $ 0.0001 par value; 100,000,000 shares authorized, 14,780,885 and 13,313,000 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively. 1,478 6,657 Additional paid-in capital 25,657,930 8,699,830 Accumulated deficit ( 21,285,062 ) ( 9,302,719 ) Total stockholders’ equity (deficit) 4,374,346 ( 596,232 ) Total liabilities and stockholders’ equity (deficit) $ 4,932,443 $ 858,074 See notes to consolidated financial statements F- 3 MIRA PHARMACEUTICALS, INC. STATEMENTS OF OPERATIONS 2023 2022 Year Ended December 31, 2023 2022 Revenues $ - $ - Operating costs: General and administrative expenses 6,499,537 2,992,125 Related party travel costs 453,550 1,704,350 Research and development expenses 1,572,962 2,351,465 Total operating costs 8,526,049 7,047,940 Interest expense, net ( 3,456,294 ) ( 10,250 ) Net loss attributable to common stockholders $ ( 11,982,343 ) $ ( 7,058,190 ) Basic and diluted loss per share $ ( 0.64 ) $ ( 0.40 ) Weighted average common stock shares outstanding 18,566,158 17,566,533 See notes to consolidated financial statements F- 4 MIRA PHARMACEUTICALS, INC. STATEMENTS OF STOCKHOLDERS’ EQUITY Shares Amount Capital Receivable Deficit Equity Common Stock Additional Paid-In Stock Subscription Accumulated Total Stockholders’ Shares Amount Capital Receivable Deficit Equity Balances, January 1, 2022 12,673,800 $ 6,337 $ 4,499,550 $ - $ ( 2,244,529 ) $ 2,261,358 Sale of common stock 639,200 320 2,903,680 - - 2,904,000 Stock-based compensation - - 1,296,600 - - 1,296,600 Net loss - - - - ( 7,058,190 ) ( 7,058,190 ) Balances, December 31, 2022 13,313,000 $ 6,657 $ 8,699,830 $ - $ ( 9,302,719 ) $ ( 596,232 ) Common Stock Additional Paid-In Stock Subscription Accumulated Total Stockholders’ Shares Amount Capital Receivable Deficit Deficit Balances, January 1, 2023 13,313,000 $ 6,657 $ 8,699,830 $ - $ ( 9,302,719 ) $ ( 596,232 ) Stock-based compensation - ( 5,326 ) 2,556,272 - - 2,550,946 Issuance of common stock at IPO, net 1,275,000 128 7,704,152 - - 7,704,279 Issuance of common stock conversion of debt 157,170 16 1,100,080 - - 1,100,096 Issuance of common stock 35,715 4 249,996 - - 250,000 Issuance of Warrants - - 5,347,600 - - 5,347,600 Net loss - - - - ( 11,982,343 ) ( 11,982,343 ) Balances, December 31, 2023 14,780,885 $ 1,478 $ 25,657,930 $ - $ ( 21,285,062 ) $ 4,374,346 See notes to consolidated financial statements F- 5 MIRA PHARMACEUTICALS, INC. STATEMENTS OF CASH FLOWS 2023 2022 Year Ended December 31, 2023 2022 Cash flows from Operating activities Net loss $ ( 11,982,343 ) $ ( 7,058,190 ) Adjustments to reconcile net loss to net cash from operations Interest expense 3,456,294 10,250 Amortization of debt issuance costs 732,292 - Stock-based compensation expense 2,550,946 1,296,600 Non-cash investor relations fees 250,000 - Change in operating assets and liabilities: Right of use lease, net 5,500 ( 5,500 ) Accounts payable and accrued expenses ( 389,524 ) 152,081 Prepaid expenses ( 243,802 ) - Accounts receivable ( 11,862 ) - Related party line of credit 1,100,096 - Net cash flows used in operating activities ( 4,532,403 ) ( 5,604,759 ) Financing activities: Advances (to) from affiliates ( 69,152 ) 445,612 Advances received from related party line of credit 2,147,920 - Deferred offering costs 143,427 ( 43,427 ) Repayments under related party line of credit ( 1,142,483 ) ( 160,000 ) Proceeds from sale of common stock, less offering costs 7,704,279 2,904,000 Net cash flows provided by financing activities 8,783,991 3,146,185 Net change in cash 4,251,588 ( 2,458,574 ) Cash, beginning of year 350,978 2,809,552 Cash, end of period $ 4,602,566 $ 350,978 Cash paid for interest - - See notes to consolidated financial statements F- 6 MIRA PHARMACEUTICALS, INC. SUPPLEMENTAL CASH FLOW INFORMATION Non-cash Financing and Investing Activities: The Company recorded the fair value of a total of 1,000,000 shares of common stock issued to Bay Shore Trust during the year ended December 31, 2023 which totaled approximately $ 3.5 million to deferred finance costs. The Company had amortized approximately $ 0.7 million of deferred offering costs as non-cash amortization of debt issuances costs in accordance with Generally Accepted Accounting Principles. As of December 31, 2023, this agreement was paid in full. This resulted in a write-off of unamortized deferred financing costs, in the amount of $ 2.8 million which was recorded as interest expense. On November 15, 2023, the Company entered a warrant agreement and recorded the fair value of a total of 700,000 shares of common stock issued to MIRALOGX, LLC which totaled $ 1,832,600 to interest expense. The Company recorded the fair value of a total of 157,170 shares of common stock issued to Bay Shore Trust during the year ended December 31, 2023 totaling approximately $ 1.1 million to record Bay Shore Trust conversions of a line of credit and interest to shares of common stock. The Company recorded the fair value of a total of 35,715 shares of common stock issued to the MZ Group during the year ended December 31, 2023 totaling $ 0.25 million in lieu of fees for investor relation services. The Company recorded a right of use asset and a corresponding liability in the amount of $ 0.2 million in exchange for an operating lease liability as a result of the adoption of Accounting Standards Codification, (“ASC”), Topic 842, Leases, on January 1, 2022. See notes to consolidated financial statements F- 7 MIRA PHARMACEUTICALS, INC. NOTES TO THE FINANCIAL STATEMENTS Note 1. Description of business and summary of significant accounting policies : Overview MIRA Pharmaceuticals, Inc. (“MIRA” or the “Company” and formerly known as MIRA1a Therapeutics, Inc.) is a pre-clinical-stage pharmaceutical development company with two neuroscience programs targeting a broad range of neurologic and neuropsychiatric disorders. The Company has an exclusive licensing agreement for Ketamir-2, a unique, patent pending novel oral ketamine analog under investigation to potentially deliver ultra-rapid antidepressant effects, providing hope for individuals battling treatment-resistant depression (TRD) and major depressive disorder with suicidal ideation (MDSI). The Company’s novel oral pharmaceutical marijuana, MIRA-55, is currently under investigation for treating adult patients suffering from anxiety and cognitive decline, often associated with early-stage dementia. MIRA-55, if approved by the FDA, could mark a significant advancement in addressing various neuropsychiatric, inflammatory, and neurologic diseases and disorders. The U.S. Drug Enforcement Administration (DEA)’s scientific review of Ketamir-2 concluded that it would not be considered a controlled substance or listed chemical under the Controlled Substances Act (CSA) and its governing regulations. Additionally, we have submitted the required paperwork for MIRA-55 to be evaluated by the DEA. The Company was organized as a Florida corporation in September 2020 and commenced substantive operations in late 2020, at which time the Company commenced its pharmaceutical development program. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”). As used herein, the Company’s Common Stock, par value $ 0.0001 per share, is referred to as the “Common Stock” and the Company’s preferred stock, par value $ 0.0001 per share, is referred to as the “Preferred Stock”. Operating updates In early February 2024, we made a significant discovery during the manufacturing and scale-up process of our patented molecule known as “MIRA1a,” which we had been utilizing with a contract manufacturer. Through this process, we identified a novel and improved version of the molecule, MIRA-55. MIRA-55 exhibits enhanced potency and holds promise for improved efficacy compared to MIRA1a. As part of our due diligence and subsequent testing, we discovered that the pre-clinical studies we conducted, previously attributed to MIRA1a, were in fact performed on MIRA-55. Following this revelation, we promptly filed a provisional patent for MIRA-55, which encompasses all pre-clinical studies disclosed in our two registration statements on Form S-1, declared effective on August 2, 2023 and December 27, 2023 (File Nos. 333-273024 and 333-276118, respectively). Moreover, based on our pre-clinical analyses to date, we believe that MIRA-55 is an improvement over MIRA1a in that it displays enhanced potency and potential for efficacy. In early March 2024, we filed a provisional patent application for MIRA-55, aiming for global patent protection. If such patent is issued, we would own the patent rights to both MIRA1a and MIRA-55. Additional testing is required to confirm our preliminary beliefs. However, based on our discoveries to date, the Company has decided to advance MIRA-55 as our lead compound for our oral pharmaceutical marijuana drug candidate while still retaining our rights to MIRA1a. As such, we do not intend to move MIRA1a forward as of the date of this Report. F- 8 Initial public offering On August 7, 2023, the Company closed its initial public offering consisting of 1,275,000 shares at a price of $ 7.00 per share for approximately $ 8.9 million in gross proceeds. After deducting the underwriting commission and other deferred offering expenses totaling $ 1.2 million, the net proceeds to the Company were $ 7.7 million (the “IPO”). The shares were offered and sold pursuant to the Company’s Registration Statement on Form S-1, as amended (File No. 333-273024), originally filed with the Securities and Exchange Commission (the “SEC”) on June 29, 2023 (the “Registration Statement”) and the final quarterly report filed with the Commission pursuant to Rule 424(b)(4) of the Securities Act of 1933, as amended. The Registration Statement was declared effective by the Commission on August 2, 2023. The common stock began trading on The Nasdaq Capital Market on August 3, 2023 under the symbol “MIRA”. The closing of the IPO occurred on August 7, 2023. As of the completion of the IPO, among other things, certain of the Company’s then-outstanding convertible debt was converted into shares of common stock. See Note 5 for more information. Revenue recognition The Company currently has no source of revenue. Miscellaneous income, including interest, is recognized when earned by the Company. Income taxes The Company is taxed as a C corporation. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for temporary differences that will result in deductible amounts in future years and for loss carryovers. A valuation allowance is recognized regarding deferred tax assets, if any, if it is more likely than not that some portion of the deferred tax asset will not be realized. Research and development expenses Research and development costs are expensed in the period in which they are incurred and include the expenses paid to third parties, such as contract research organizations and consultants, who conduct research and development activities on behalf of the Company. Patent-related costs, including registration costs, documentation costs and other legal fees associated with the application, are expensed in the period in which they are incurred. F- 9 General and administrative expense General and administrative expenses are primarily comprised of personnel costs, marketing expenses, amortization, insurance expenses, professional services fees, travel and office expenses, and stock-based compensation. Advertising expenses The Company expenses advertising costs when incurred. Advertising expense for the years ended December 31, 2023 and 2022 is as follows: Schedule of Advertising Expenses December 31, 2023 December 31, 2022 Advertising expenses $ 102,000 $ - Leases The Company accounts for leases under the provisions of FASB ASC Topic 842, “Leases”, which requires the Company to recognize right-to-use (ROU) assets and lease liabilities for operating leases on the balance sheet. Use of estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results may differ from such estimates and such differences could be material. Cash The Company maintains cash balances with financial institutions that management believes are of high credit quality. The Company’s cash account at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk from its cash account. Stock-based compensation The Company accounts for stock-based compensation under the provisions of FASB ASC 718, “Compensation - Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors and consultants based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. The Company has elected to account for forfeiture of stock-based awards as they occur. Segment information ASC Topic 280, “ Disclosures about Segments of an Enterprise and Related Information ,” established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires those enterprises to report selected information about operating segments in interim financial reports issued to stockholders. Management has determined that the Company operates in one business segment, which is the research and development of neuroscience drug candidates. F- 10 Recent accounting pronouncements not yet adopted In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its financial statements and related disclosures. Management has considered all other recent accounting pronouncements that are issued, but not effective, and it does not believe that they will have a significant impact on the Company’s results of operations or financial position. Change in accounting principle In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes existing guidance for accounting for leases under Topic 840, Leases. The FASB also subsequently issued additional ASUs which amend and clarify Topic 842. The most significant change in the new leasing guidance is the requirement to recognize right-to-use (ROU) assets and lease liabilities for operating leases on the balance sheet. The Company adopted these ASUs effective January 1, 2022 using the modified retrospective approach. As a result of adopting these ASUs, the Company recorded ROU assets and lease liabilities of approximately $ 0.2 million and $ 0.2 million, respectively. Adoption of the new standard did not materially impact the Company’s net income and had no impact on cash flows. Fair value of financial instruments The Company measures the fair value of financial instruments in accordance with GAAP which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company considers the carrying amount of deferred offering costs to approximate fair value due to short-term nature of this instrument. GAAP describes three levels of inputs that may be used to measure fair value: Level 1 – quoted prices in active markets for identical assets or liabilities. Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable. Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions). Contingencies In the normal course of business, the Company may be subject to loss contingencies, such as legal proceedings, amounts arising from contractual arrangements and claims arising out of the Company’s business that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and tax matters. In accordance with ASC Topic 450, Accounting for Contingencies, (ASC 450), the Company records accruals for such loss contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company, in accordance with this guidance, does not recognize gain contingencies until realized or realizable. F- 11 Note 2. Liquidity and capital resources : In accordance with Accounting Standards Codification 205-40, Going Concern , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. As of December 31, 2023, the Company had cash of approximately $ 4.6 million. The Company used approximately $ 4.5 million of cash in operations during the year ended December 31, 2023 and had stockholders’ equity of approximately $ 4.4 million, versus stockholders’ deficit of approximately $ 0.6 million at December 31, 2022 Historically, the Company has been primarily engaged in developing MIRA-55. During these activities, the Company sustained substantial losses. The Company’s ability to fund ongoing operations and future clinical trials required for FDA approval is dependent on the Company’s ability to obtain significant additional external funding in the near term. Since inception, the Company financed its operations through the sale of Common Stock, the IPO and related party financings. Additional sources of financing may be sought by the Company. The Company expects to be able to fund operations through the fourth quarter of 2024, with available borrowings on the loan agreement (Note 4). Additional financing will be needed by the Company to fund its operations after such date to complete clinical developments and to commercially develop its product candidate. However, there can be no assurance that any fundraising will be achieved on commercially reasonable terms, if at all. The Company expects to continue to generate losses in the foreseeable future. The Company’s liquidity needs will be determined largely by the budgeted operational expenditures incurred in regard to the progression of its product candidates. Management believes that the Company has sufficient resources available to support its development activities and business operations and timely satisfy its obligations as they become due into the fourth quarter of 2024. The Company does not have sufficient cash and cash equivalents as of the date of filing this Annual Report on Form 10-K to support its operations for at least the 12 months following the date the financial statements are issued. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through 12 months after the date the financial statements are issued. To alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, the Company plans to secure additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations; however, none of these alternatives are committed at this time. There can be no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to it to fund continuing operations, if at all, identify and enter into any strategic transactions that will provide the capital that it will require or achieve the other strategies to alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern. If none of these alternatives are available, or if available, are not available on satisfactory terms, the Company will not have sufficient cash resources and liquidity to fund its business operations for at least the 12 months following the date the financial statements are issued. The failure to obtain sufficient capital on acceptable terms when needed may require the Company to delay, limit, or eliminate the development of business opportunities and its ability to achieve its business objectives and its competitiveness, and its business, financial condition, and results of operations will be materially adversely affected. In addition, the perception that the Company may not be able to continue as a going concern may cause others to choose not to deal with it due to concerns about its ability to meet its contractual obligations. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. F- 12 Note 3 Accounts payable and accrued liabilities : The following table represents the components of accounts payable and accrued liabilities as of: Schedule of Accounts Payable and Accrued Liabilities December 31, 2023 December 31, 2022 Trade accounts payable $ 538,564 $ 789,204 Accrued other - 22,534 Accounts payable and accrued liabilities $ 538,564 $ 811,738 Note 4. License agreement, related party : MIRALOGX On November 15, 2023, the Company and MIRALOGX, LLC, a Florida limited liability company (“MIRALOGX”), entered into an exclusive license agreement (the “License Agreement”) to develop and commercialize a drug product containing 2-(2- chlorophenyl)-2-(methylamino) cyclopentan-1-one (sometimes referred to by the Parties as “M209” or “KETAMIR-2”) (“the Product”) as an active agent in North America. (the “Territory”). The exclusive license in the License Agreement includes the right of the Company to sublicense the licensed intellectual property. Pursuant to the terms of the License Agreement, and subject to the conditions set forth therein, the Company paid MIRALOGX a one-time, nonrefundable payment of $ 0.1 million upon the signing of the Agreement and will be obligated to pay quarterly royalty payments on sales of the Product in the Territory of 8% of net sales and 8% of other revenue (such as milestone or sublicense payments) from licensed products. Also, in consideration of License Agreement, the Company issued to MIRALOGX a Common Stock Purchase Warrant to purchase up to 700,000 shares of the Company’s common stock (the “MIRALOGX Warrants”). The MIRALOGX Warrants are exercisable, in whole or in part, any time prior to November 15, 2028 at a cash exercise price of $ 2.00 per share. The Company and MIRALOGX have made customary representations and warranties in the License Agreement and have agreed to certain other customary covenants, including confidentiality, cooperation, and indemnity provisions. Either party may terminate the License Agreement for cause if the other party materially breaches or defaults in the performance of its obligations, and, if curable, such material breach remains uncured for 120 days. Unless earlier terminated, the License Agreement will continue in effect until the last to expire of the Patent Rights (the “Term”), unless earlier terminated. The Company and MIRALOGX have the same founder. F- 13 Note 5. Debt, related party : MIRALOGX On November 15, 2023, the Company entered into a Promissory Note and Loan Agreement (the “Loan Agreement”) with MIRALOGX. Pursuant to the Loan Agreement, the Company may borrow up to $ 3.0 million from MIRALOGX to fund the development of licensed products under the License Agreement (the “Loan”). Together with any Advance Request, the Company shall deliver to the Lender a budget for the requested Advance (the “Budget”). The Budget may only include costs directly associated with preparing an Investigational New Drug (“IND”) application for KETAMIR-2, exclusive of personnel costs. Any Advances made by the Lender to the Company pursuant to this Note may be repaid by the Company (together with any and all interest accrued thereon) at any time without penalty or premium in accordance with the terms hereof. Amounts repaid hereunder may not be reborrowed. The Loan Agreement has a one-year term, and all outstanding principal and accrued but unpaid interest must be repaid in full on November 15, 2024. Interest on the amounts borrowed under the Loan Agreement accrues at an annual fixed rate of 8 %. The Company may prepay all or a portion of the outstanding principal and accrued unpaid interest under the Loan Agreement at any time without a prepayment fee. The Company did not borrow any funds from the MIRALOGX loan as of December 31, 2023. Bay Shore Trust In May 2021, the Company entered into a revolving credit facility which allowed for borrowings of up to $ 5 million from Starwood Trust, a shareholder of the Company. The facility had an initial term of 24 months (extended to 36 months in March 2023), with a new maturity date of May 10, 2024 , at which time all outstanding borrowings and accrued interest, if any, were due in full. Borrowings accrued interest at a rate of 5 % per annum. In April 2023, the Company entered into a Promissory Note and Loan Agreement with the Bay Shore Trust, a trust established by a shareholder of the Company. Under this Promissory Note and Loan Agreement (the “Bay Shore Note”), the Company has the right to borrow up to an aggregate of $ 5 million from the Bay Shore Trust at any time up to the second anniversary of the issuance of the Bay Shore Note or, if earlier, upon the completion of the Company’s IPO. The Company’s right to borrow funds under the Bay Shore Note is subject to the absence of a material adverse change in the Company’s assets, operations, or prospects. The Bay Share Note, together with accrued interest, will become due and payable on the second anniversary of the issuance of the note, provided that it may be prepaid at any time without penalty. The Bay Shore Note will accrue interest at a rate equal 7 % per annum, simple interest, during the first year that the note is outstanding and 10 % per annum, simple interest, thereafter. The Bay Shore Note is unsecured. The Bay Shore Note replaced the revolving credit facility that the Company entered into with Starwood Trust, a separate trust established by a shareholder of the Company, in May 2021 and pursuant to which the Company had an outstanding principal balance of $ 0.2 million as of the date of the Bay Shore Note (which outstanding balance was retired with an advance under the Bay Shore Note). In consideration of the loan facility provided by the Bay Shore Trust, in April 2023, the Company issued to the Bay Shore Trust a common stock purchase warrant giving the Bay Shore Trust the right to purchase up to 1,000,000 shares of common stock at an exercise price of $ 5.00 per share, which warrant will expire five years after the date of grant. Pursuant to a registration rights agreement, the Company has granted to Bay Shore Trust the right to require the Company, at any time after one year following the Company’s IPO, to register for resale the shares issuable upon the exercise of the warrant, with such registration rights being in the form of demand and “piggyback” registration rights that are subject to customary limitations and restrictions. See Note 8 for additional details related to these warrants. F- 14 On July 20, 2023, the Company entered into a conversion agreement with the Bay Shore Trust under which the Bay Shore Trust had agreed to convert, upon the completion of the IPO, $ 1.1 million of the outstanding principal balance of the Bay Shore Note into shares of the Company’s common stock at a conversion price equal to the Company’s IPO price, which resulted in the issuance of 157,170 shares to the Bay Shore Trust. On August 14, 2023, the Company paid $ 1.0 million in full to Bay Shore Trust, which was the amount due. The company also paid accrued interest of $ 0.03 million. Both amounts are recorded in the accompanying statement of operations for the year ended December 31, 2023 as interest expense. There is a remaining amount of $ 0.01 in accrued interest due to Bay Shore Trust as of December 31, 2023. Note 6. Related party transactions : Due from Related Party – As of the year ended December 31, 2023, the Company paid $ 0.07 million in accounts payable on behalf of a related party. There was no such amount during the corresponding period in 2022. Due to Related Party – Amounts due to related parties as of December 31, 2023 and December 31, 2022, are recorded as related party accounts payable, in the accompanying balance sheets. As of December 31, 2022, amounts due to related parties totaled $ 0.1 million. The balance was paid in 2023 which resulted in a $ 0.0 balance as of December 31, 2023. Travel expenses – In April 2021, the Company entered into an airplane lease with an entity under common control that the Company incurs approximately $ 0.05 million of lease charges per month. The lease was renewable, at the Company’s discretion, for an additional one to three years, however, the Company terminated the lease at March 31, 2023, without any penalties. The Company may continue to incur related party travel-related expenses as they occur, which will be recorded in Related Party Travel Costs, in the condensed statement of operations. During the year ended December 31, 2023, the Company incurred $ 0.5 million, for travel-related expenses to the related party for monthly rental charges and airplane-related expenses. There was $ 1.7 million of related party travel expenses during the year ended December 31, 2022. License agreement - See Note 4. Line of credit - See Note 5. Note 7. Leases : The Company’s corporate headquarters was in Baltimore, Maryland, which includes a lease for office space. This lease began in November 2021 and was amended in April 2023. This space is approximately 550 square feet and has a remaining base rent of $ 0.01 million payable through April 2024. Rent is payable in monthly installments and is subject to yearly price increases. The Company had leased an office in Tampa, Florida, for its finance and general operations, which began in March 2022 for 37 months. On December 1, 2023, the Company formally terminated the lease with the landlord. There is a remaining deposit due from the landlord to the Company of $ 0.005 million, which is recorded in accounts receivable in the accompanying balance sheet as of December 31, 2023. The Company also leased a jet (Note 5) from a related party, which terminated on March 31 2023. Variable lease costs Variable lease costs primarily include utilities, property taxes, and other operating costs that are passed on from the lessor. Variable lease costs related to the aircraft include usage expenses, which includes pilot expenses, jet fuel and general flight expenses. F- 15 The components of lease expense were as follows: Schedule of Lease Expense 2023 2022 Year Ended December 31, Lease Costs 2023 2022 Operating Lease Cost Operating Lease $ 200,283 $ 333,046 Variable Lease Costs 311,126 637,420 Total Lease Cost $ 511,409 $ 970,466 Supplemental cash flow information related to leases were as follows: Schedule of Cash Flow Information Related to Leases Other Lease Information 2023 2022 Year Ended December 31, Other Lease Information 2023 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 511,409 $ 970,466 Schedule of Remaining Weighted-average Lease Term and Weighted-average Discount Rate Year Ended December 31, 2023 2022 Lease Term and Discount Weighted Average remaining lease term .33 years 3 years Weighted Average discount rate 5.0 % 5.0 % Maturity of Lease Liabilities Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows: Schedule of Maturity of Lease Liabilities Maturity of Lease Liabilities December 31, 2023 2024 $ 5,092 2025 - Total Lease payments 5,092 Less: Interest ( 32 ) Present Value of Lease Liabilities $ 5,061 F- 16 On April 1, 2023 the Company entered into an Agreement For Shared Lease Costs with MIRALOGX, LLC, (the “Shared Agreement”) who is a related party for the jet usage. Under the Shared Agreement, the Company agrees to make monthly contributions or payments in accordance with its monthly use of shared aircraft toward rent payments. However, the Company has not used the aircraft after the termination of the lease and there are no minimum payments due without usage. Note 8. Income taxes : The significant components of the Company’s net deferred tax assets are as follows as of December 31: Schedule of Deferred Tax Assets and Liabilities 2023 2022 December 31, 2023 2022 Deferred tax assets Net operating loss carry-forward $ 2,430,529 $ 1,061,300 Section 174 Qualified Research Expenditures 533,159 388,230 Stock compensation 650,018 330,633 ROU liability 1,291 91,333 Other 204 6,120 Deferred tax assets, Gross 3,615,201 1,877,616 Less: valuation allowance ( 3,613,901 ) ( 1,784,880 ) Deferred tax assets, Net 1,291 92,736 Deferred tax liabilities ROU asset ( 1,291 ) ( 92,736 ) Total net deferred tax asset $ - $ - Beginning in 2022, in accordance with Internal Revenue Code Section 174, Qualified Research Expenditures are capitalized for tax purposes and amortized over a period of five years. Accordingly, for income tax purposes, the Company has recorded a deferred tax asset totaling approximately $ 0.5 million related to the timing difference between GAAP and Tax recognition of these expenditures. The components of the provision for income taxes consist of the following: Schedule of Components of Income Tax Provision 2023 2022 Deferred tax: Deferred ( 1,829,030 ) ( 1,784,880 ) Change in valuation allowance 1,829,030 1,784,880 Total deferred - - Total provision for income taxes $ - $ - ASC Topic 740 requires that a deferred tax amount be reduced by a valuation allowance if, based on the weight of available evidence it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. The Company has recorded a full valuation allowance against its deferred tax assets generated by net operating loss carryforwards as it has determined that such amounts may not be recognizable, given the historical losses of the Company to date. As of December 31, 2023, the Company has a cumulative federal net operating loss carryforward of approximately $ 9.5 million. The net operating loss carryforwards have no expiration date. F- 17 Note 9. Stockholders’ equity : Capital stock The Company has the authority to issue 110,000,000 shares of capital stock, consisting of 100,000,000 shares of Common Stock and 10,000,000 shares of undesignated preferred stock (as amended and restated on June 28, 2023), whose rights and privileges will be defined by the Board of Directors when a series of preferred stock is designated. Reverse stock-split Effective June 28, 2023, the Company completed a 1-for-5 reverse stock split of its outstanding common stock upon the filing of the Company’s Third Amended and Restated Articles of Incorporation with the Florida Secretary of State. No fractional shares were issued in connection with the reverse stock split, and all such fractional shares resulting from the reverse stock split were rounded up to the nearest whole number. The shares issuable upon the exercise of our outstanding options and warrants, and the exercise prices of such options and warrants, have been adjusted to reflect the reverse stock split. Stock issuances At IPO in August 2023, 1,275,000 shares of the Company’s common stock were issued at a price of $ 7.00 per share which resulted in gross proceeds of $ 8.9 million and net proceeds of $ 7.7 million to the Company after the underwriter discount but before other IPO related expenses. Additionally, the Company issued its investor relations firm $ 0.25 million worth of restricted common stock upon closing of the IPO, which resulted in issuance of 35,715 shares of stock. During the year ended December 31, 2022, the Company sold 3.2 million shares of Common Stock at $ 1.00 per share, net of offering costs of $ 0.3 million, resulting in net proceeds of $ 2.9 million. 2022 Omnibus Incentive Plan In June 2022, the Company’s Board of Directors adopted, and its stockholders approved, the Company’s 2022 Omnibus Incentive Plan, as amended and restated in August 2023, (“2022 Omnibus Plan”). The 2022 Omnibus Plan authorizes the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees and any of its parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to the Company’s employees, directors, and consultants and any of its future subsidiary corporations’ employees and consultants. The 2022 Omnibus Plan provides that 2,000,000 shares of the Company’s Common Stock are reserved for issuance under the 2022 Omnibus Plan, all of which may be issued pursuant to the exercise of incentive stock options. Stock-based compensation The fair value of each option award is estimated on the grant date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected price volatility is based on the historical volatilities of a peer group as the Company does not have a trading history for its shares prior to its IPO. Industry peers consist of several public companies in the biotech industry similar to the Company in size, stage of life cycle and product indications. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. Expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus contract term. The risk-free rate is based on the 5-year U.S. Treasury yield curve in effect at the time of grant. The Company recognizes forfeitures as they occur. F- 18 During the year ended December 31, 2023, a total of 635,001 options to purchase Common Stock, with an aggregate fair market value of approximately $ 2.75 million were granted to the Company’s executive officers and management, and consultants of the Company. Options have a term of 10 years from the grant date. These option vest as follows: (i) executive officer options vested 100 % on date of grant and (ii) employee and consultant options vest 33.33 % at 6 month anniversary of date of grant, 33.33 % at 1 year anniversary at date of grant and the remaining vest at two-year anniversary of date of grant. As of December 31, 2023, there was approximately $ 1.3 million of unrecognized compensation cost related to unvested share-based compensation awards granted. These costs will be expensed over the next two years. The following is option activity during the year ended December 31, 2023: Schedule of Stock Option Activity Number of Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Outstanding as January 1, 2022 - $ - $ - Options granted 750,000 $ 5.00 Outstanding as December 31, 2022 750,000 $ 5.00 $ - Options granted 635,001 $ 5.55 Forfeitures ( 170,000 ) $ 5.00 Outstanding as December 31, 2023 1,215,001 $ 5.29 $ - Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Exercisable Aggregate Intrinsic Price $ 1.00 - 5.00 980,001 8.9 $ 5.00 382,500 $ - $ 5.01 - 10.00 235,000 9.6 $ 6.50 230,000 - 1,215,001 612,500 $ - Key assumptions used to value stock options during the year ended December 31, 2023 are as follows: Schedule of Key Assumptions Used to Value Stock Options Expected price volatility 88.01 - 116.64 % Risk-free interest rate 3.51 - 4.42 % Weighted average fair values (grants post-split) $ 3.515 - $ 5.384 Weighted average expected life in years 5 - 6 years Dividend yield - On March 25, 2024, a total of 100,000 options to purchase Common Stock, with an aggregate fair market value of approximately $ 0.1 million were granted to the Company’s Independent Board of Directors. These option vest as follows: (i) 50% on date of grant and (ii) 50% at 1 year anniversary at date of grant. On March 26, 2024, a total of 450,000 options to purchase Common Stock were granted to the Company’s executive officers. These option vest as follows: (i) 50% six months from the date of grant and (ii) 50% at 1 year anniversary at date of grant. Both aforementioned option grants have a term of 10 years from the grant date. Warrants MIRALOGX warrants The Company issued to MIRALOGX a common stock purchase warrant on November 15, 2023 giving MIRALOGX the right to purchase up to 700,000 shares of common stock at an exercise price of $ 2.00 per share. This warrant will expire five years after the date of grant. F- 19 The fair value of the warrants were estimated on the grant date using the Black-Scholes valuation model and level 3 inputs based on assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate, which resulted in $ 1.8 million of warrant expense. This cost was recorded as interest expense in General and Administrative expenses on the accompanying statement of operations and additional paid in capital on the accompanying balance sheet. Bay Shore Trust warrants In consideration of the line of credit provided by the Bay Shore Trust, the Company issued to the Bay Shore Trust a common stock purchase warrant on April 28, 2023 giving the Bay Shore Trust the right to purchase up to 1,000,000 shares of common stock at an exercise price of $ 5.00 per share. This warrant will expire five years after the date of grant. There are 1,000,000 warrants outstanding at December 31, 2023. The fair value of the warrants were estimated on the grant date using the Black-Scholes valuation model and level 3 inputs based on assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate, which resulted in $ 3.5 million of deferred financing costs. This cost was recorded as deferred financing costs and additional paid in capital on the accompanying balance sheet and is amortized straight-line over the term of the line of credit (which is 24 months). Associated amortization of deferred finance costs is recorded to interest expense on the condensed income statement of operations. Subsequent to the IPO, the Bay Shore Trust line of credit was paid in full early, of $ 2.8 million. These costs were recorded as interest expense on the accompanying statement of operations with the offsetting entry clearing the balance of amortization in deferred finance costs. Underwriter warrants In connection with the IPO, the Company issued 63,750 warrants to purchase common stock to the IPO underwriter (or its designees) at an exercise price of $ 7.00 which will expire in the four-and-a-half-year period commencing six months after the commencement of sales in the IPO. The warrants will be exercisable at any time and from time to time, in whole or in part, during the four-and-a-half-year period commencing six months after the commencement of sales in the IPO. The warrants provide for registration rights (including a one-time demand registration right and piggyback registration rights that expire 5 years from the commencement of sales of the offering) and customary anti-dilution provisions as permitted under FINRA Rule 5110(g)(8). Key assumptions used to value underwriter warrants in August 2023 are as follows: Schedule of Key Assumptions Used to Value Warrants Expected price volatility 98.53 % Risk-free interest rate 4.16 % Weighted average fair values $ 5.297 Weighted average expected life in years 5 years Dividend yield - Earnings Per Share During the year ended December 31, 2023 and 2022, outstanding stock options and warrants of 2,915,001 and 750,000 , respectively, were not included in the computation of diluted earnings per share, because to do so would have had an antidilutive effect. F- 20 Note 10. Employment Agreements : Erez Aminov On April 28, 2023, the Company entered into an employment agreement with Mr. Erez Aminov pursuant to which Mr. Aminov serves as the Company’s Chief Executive Officer on a full-time basis. Mr. Aminov’s employment agreement provides that his employment will be on an at-will basis and can be terminated by either Mr. Aminov or the Company at any time and for any reason. Under the agreement, Mr. Aminov will receive an initial base salary of $ 0.11 million per year. In the event that Mr. Aminov’s employment is terminated by the company without “Cause” or is terminated by Mr. Aminov for “Good Reason”, Mr. Aminov will be entitled to severance compensation in the form of salary continuation for a period of three months (subject to Mr. Aminov executing and delivering a customary general release in favor of the company). On August 17, 2023, Mr. Aminov received a $ 0.12 million cash bonus net of federal, state, local and income taxes related to the successful completion of the IPO. On August 28, 2023, the Company amended Mr. Aminov’s employment agreement to increase his yearly compensation from its current amount of $ 0.11 million to $ 0.2 million per year, effective August 1, 2023. In March 2024, Mr. Aminov assumed the role of Chairman and on March 25, 2024, the Compensation Committee of the Board of Directors approved increasing Mr. Aminov’s annual base salary to $ 0.28 million. Michelle Yanez On April 28, 2023, the Company entered into an employment agreement with Ms. Michelle Yanez pursuant to which Ms. Yanez serves as the Company’s Chief Financial Officer on a full-time basis. Ms. Yanez’s employment agreement provides that her employment will be on an at-will basis and can be terminated by either Ms. Yanez or the company at any time and for any reason. Under the agreement, Ms. Yanez will receive an initial base salary of $ 0.17 million per year. In the event that her employment is terminated by the company without “Cause” or is terminated by Ms. Yanez for “Good Reason”, Ms. Yanez will be entitled to severance compensation in the form of salary continuation for a period of three months (subject to Ms. Yanez executing and delivering a customary general release in favor of the company). On August 17, 2023, Ms. Yanez received a $ 0.05 million cash bonus net of federal, state, local and income taxes related to the successful completion of the IPO. On March 25, 2024, the Compensation Committee of the Board of Directors approved increasing Ms. Yanez’ annual base salary to $ 0.23 million. Chris Chapman On April 28, 2023, the Company entered into an employment agreement with Dr. Chris Chapman pursuant to which Dr. Chapman served as the Company’s Executive Chairman. Dr. Chapman’s employment agreement provided that his employment will be on a part-time basis whereby Dr. Chapman would devote 50% of his full business time and effort to the business and affairs of the company, and it further provided that such employment would be on an at-will basis and could be terminated by either Dr. Chapman or the company at any time and for any reason. Under the agreement, Dr. Chapman would receive an initial base salary of $ 0.15 million per year. In the event that Dr. Chapman’s employment is terminated by the company without “Cause” or is terminated by Dr. Chapman for “Good Reason”, Dr. Chapman would be entitled to severance compensation in the form of salary continuation for a period of three months (subject to Dr. Chapman executing and delivering a customary general release in favor of the company). On August 17, 2023, Dr. Chapman received a $ 0.05 million cash bonus net of federal, state, local and income taxes related to the successful completion of the IPO. On August 28, 2023, the Company amended Dr. Chapman’s employment agreement to indicate that he works part-time on an as needed basis for the Corporation, rather than fifty percent (50%) of the time, effective August 1st, 2023. On October 13, 2023, the Company amended Dr. Chapman’s employment agreement to reflect a temporary reduction in his compensation from $ 0.15 million per year to $ 0.05 million per year, to extend for a period of 90 days. After the 90-day period, Dr. Chapman’s compensation shall be reinstated to the amount in his employment agreement of $ 0.15 million per year. On March 13, 2024, Dr. Chapman resigned as both an employee and as the Chairman of the Board of Directors. F- 21 Christos Nicholoudis On April 28, 2023, the Company entered into an employment agreement with Christos Nicholoudis pursuant to which Mr. Nicholoudis served as the Company’s General Counsel. Under the agreement, Mr. Nicholoudis receive an initial base salary of $ 0.075 million per year. On August 17, 2023, Mr. Nicholoudis received a $ 0.025 million cash bonus net of federal, state, local and income taxes related to the successful completion of the IPO. Mr. Nicholoudis resigned on January 15, 2024, and there are no further payments due to him. Note 11. Subsequent Events : Section 16(b) disgorgement In January 2024, the Company recorded a related party receivable of $ 148,703 related to the recovery of short-swing profits due from The Bay Shore Trust, under Section 16(b) of the Securities Exchange Act of 1934, as amended. Once the receivable is paid in full, the Company will recognize these proceeds as a capital contribution from a stockholder with an increase to additional paid-in-capital in its balance sheet and as cash provided by financing activities in its statement of cash flows. Restructuring of the Board of Directors On March 9, 2024, after a series of discussions between our board of directors (the “Board”) and senior management regarding the need to have additional scientific expertise among the members of the Board, Ms. Talhia Tuck, Mr. Brad Kroenig and Mr. Hugh McColl, each voluntarily resigned from the Board, effective immediately. This action allowed the remaining members of the Board to appoint new members of the Board, as discussed below. The resignations of Ms. Tuck, Mr. Kroenig, and Mr. McColl were not the result of any disagreement with our company on any matter relating to its operations, policies or practices. Also on March 9, 2024, Dr. Chris Chapman notified the Board and senior company management of his resignation both as Executive Chairman and as an employee of our company, effective immediately, citing his desire to focus his time on his role as Chairman and Chief Executive Officer of Telomir Pharmaceuticals, Inc., given the recent initial public offering of that company. Dr. Chapman’s resignation was not the result of any disagreement with our company on any matter relating to its operations, policies or practices. On March 13, 2024, the remaining members of the Board (Erez Aminov and Michael Jerman) unanimously approved the appointment of (i) Mr. Aminov, our Chief Executive Officer, as Chairman of the Board and (ii) Dr. Matthew P. Del Giudice, Dr. Denil N. Shekhat and Mr. Edward MacPherson as members of the Board, to fill the vacancies on the Board occasioned by the resignations from the Board described above, for a term expiring at our 2024 annual meeting of shareholders. Resignation of Chief Science Officer We are focused on strengthening our clinical and regulatory development expertise with a view towards a future IND for one of our product candidates. As part of this development, on March 7, 2024, following discussions with our management, Adam Kaplin, M.D., Ph.D. resigned from his position as President and Chief Scientific Officer of the company to pursue other business endeavors, effective immediately. As described under “Key Consultants” below, in light of Mr. Kaplin’s resignation, we expanded the role of an existing consultant to assist in clinical and regulatory affairs. F- 22 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MIRA PHARMACEUTICALS, INC. Date: April 1, 2024 By: /S/ Erez Aminov Name: Erez Aminov Title: Chief Executive Officer (Principal Executive Officer) By: /S/ Michelle Yanez Name: Michelle Yanez Title: Chief Financial Officer (Principal Financial Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Person Capacity Date /s/ Erez Aminov Chief Executive Officer and Chairman April 1, 2024 Erez Aminov /s/ Michelle Yanez Chief Financial Officer April 1, 2024 Michelle Yanez /s/ Michael Jerman Director April 1, 2024 Michael Jerman /s/ Matthew Del Giudice Director April 1, 2024 Matthew Del Giudice /s/ Denil Shekhat Director April 1, 2024 Denil Shekhat /s/ Edward MacPherson Director April 1, 2024 Edward MacPherson 100