What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-05 compared with 2023-03-08 · 244 added, 216 removed, 506 unchanged (48% of the section changed)

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Other Information

Securities Trading Plans of Directors and Executive Officers

During the three months ended December 31, 2023, none of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement (as defined in Item 408(a)(1)(i) of Regulation S-K) or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Statements of Operations

Statements of Redeemable convertible preferred stock and stockholders’ equity(deficit )

Statements of Redeemable convertible preferred share and shareholders’ equity (deficit )

Statements of Cash Flows

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We have audited the accompanying balance sheets of Nuvectis Pharma, Inc.

(the "Company") as of December 31, 2022 and 2021, and the related statements of operations, changes in redeemable convertible preferred stock and stockholders’ equity (deficit) and cash flows for the years then ended, including the related notes (collectively referred to as the “financial statements”).

(the "Company") as of December 31, 2023 and 2022, and the related statements of operations, changes in redeemable convertible preferred stock and stockholders’ equity (deficit) and cash flows for the years then ended, including 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 result 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.

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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.

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TOTAL CURRENT ASSETS

Deferred offering costs

Liabilities, Redeemable Convertible Preferred Shares and Stockholders’ Equity (Deficit)

Liabilities and Shareholders’ Equity

CURRENT LIABILITIES

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COMMITMENTS AND CONTINGENCIES, see Note 5

REDEEMABLE CONVERTIBLE PREFERRED SHARES:

Convertible preferred A stock, $ 0.00001 par value – Zero and 6,630,000 shares authorized as of December 31, 2022 and December 31, 2021, respectively.

As of December 31, 2022 all issued and outstanding preferred A stock was converted to common stock.

As of December 31, 2021, 5,012,280 preferred A stock shares were issued and outstanding.

STOCKHOLDERS’ EQUITY (DEFICIT), see Note 4 :

Common Stock, $ 0.00001 par value – 60,000,000 and 12,870,000 shares authorized as of December 31, 2022 and December 31, 2021, respectively 14,642,483 and 4,505,514 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

SHAREHOLDERS’ EQUITY:

Common Shares, $ 0.00001 par value – 60,000,000 shares authorized as of December 31, 2023, and December 31, 2022, respectively, 17,418,886 , and 15,190,720 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

Additional paid in capital

Notes received for common shares

Accumulated deficit

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

TOTAL LIABILITIES, REDEEMABLE COVERTIBLE PREFERRED SHARES AND STOCKHOLDERS’ EQUITY (DEFICIT)

TOTAL SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

* Represent amount lower than $1,000 USD.

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Finance income

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

BASIC AND DILUTED NET LOSS PER COMMON SHARE OUTSTANDING, see Note 6

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

BASIC AND DILUTED NET LOSS PER COMMON SHARES OUTSTANDING, see Note 8

Basic and diluted weighted average number of common shares outstanding

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NUVECTIS PHARMA, INC.

STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (DEFICIT)

(USD in thousands, except share amounts)

Redeemable Convertible

Preferred Stock

Preferred Share

Common Shares

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$0.00001 Par Value

Stockholders’

Shareholders’

Equity (Deficit)

BALANCES AT DECEMBER 31, 2021

Issuance of Series A redeemable convertible preferred shares

Share-based payments

BALANCES AT DECEMBER 31, 2021

Conversion of Series A redeemable convertible preferred shares

( 5,012,280 )

Issuance of common stock upon initial public offering, net of offering costs of $ 2,892

Issuance of common stock, unexercised prefunded warrants and warrants in private placement, net of offering costs of $ 1,627

Issuance of common shares upon initial public offering, net of offering costs of $ 2,892

Issuance of common shares, unexercised prefunded warrants and warrants in private placement, net of offering costs of $ 1,627

Exercise of prefunded warrants

Issuance of restricted share awards

Share-based payments

BALANCES AT DECEMBER 31, 2022

Issuance of restricted share awards

Exercise of preferred investment options, net of offering costs of $ 755

Exercise of warrants

Issuance of common shares, net of offering costs of $ 174 - At-the-market

Exercise of options

Share-based payments

BALANCES AT DECEMBER 31, 2023

* Represent amount lower than $1,000 USD.

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Changes in operating assets and liabilities:

Increase in other current assets

Increase in accounts payable and accrued liabilities

Decrease/(increase) in other current assets

(Decrease)/increase in accounts payable

(Decrease)/increase in accrued liabilities

Increase in accrued compensation and benefits

Net cash used in operating activities

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CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of redeemable convertible preferred shares

Proceeds from issuance of common stock upon initial public offering

Proceeds from issuance of common shares - At-the market offering

Issuance costs related to At-the-market offering

Proceeds from issuance of common shares upon initial public offering

Issuance costs related to initial public offering

Proceeds from issuance of common stock and pre-funded warrants in private placement

Proceeds from issuance of common shares and pre-funded warrants in private placement

Proceeds from exercise of warrants, options, and preferred investment option

Issuance costs related to the exercise of warrants, and preferred investment option

Issuance costs related to private placement

Net cash provided by financing activities

INCREASE IN CASH AND CASH EQUIVALENTS

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

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Supplemental noncash disclosure of investing and financing activities:

Unpaid deferred offering costs

Issuance of common shares in return for note receivable

Unpaid issuance costs related to the private placement

* Represent amount lower than $1,000 USD.

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Nuvectis Pharma Inc.

(formerly Centry Pharma Inc.) (the “Company”) was incorporated under the laws of the State of Delaware on July 27, 2020 and commenced its principal operations in May 2021.

(the “Company”) was incorporated under the laws of the State of Delaware on July 27, 2020 and commenced its principal operations in May 2021.

The Company’s principal executive offices are located at Fort Lee in the state of New Jersey.

The Company is a biopharmaceutical company focused on the development of novel targeted small molecule therapeutics for the treatment of cancer in genetically defined patient populations.

The Company is a biopharmaceutical company, which operates as one segment, focused on the development of novel targeted small molecule therapeutics for the treatment of cancer in genetically defined patient populations.

The Company’s precision medicine approach translates key scientific insights relating to the oncogenic drivers and pathway addiction of cancer into potential potent and highly selective anticancer drugs.

In May 2021, the Company entered into a worldwide, exclusive license agreement with the CRT Pioneer Fund (“CRT”) (see note 5a).

In May 2021, the Company’s board of directors approved and declared a 100 :1 stock split of common and preferred shares.

In addition, on October 23, 2021 the Company’s Board of Directors approved a 39 :1 stock split of common stock.

All the share and per share amounts reflected in these financial statements and the notes thereto have been adjusted, on a retroactive basis, to reflect these share splits (see note 6).

In August 2021, the Company entered into a worldwide, exclusive license agreement with the University of Edinburgh, Scotland for the Company’s second drug candidate (see note 5a).

Initial Public Offering

On February 8, 2022, the Company completed an initial public offering (“IPO”) in which it sold 3,200,000 shares of common stock at $ 5.00 per share and received net proceeds of $ 13.6 million, after underwriting discounts and commissions, of $ 1.1 million and expenses of $ 1.8 million.

In connection with the closing of the IPO, 5,012,280 shares of Series A redeemable convertible preferred stock, automatically converted into an equal number of shares of common stock.

The Company’s shares began trading on the NASDAQ under symbol “NVCT” (see note 2r and 6b)

On February 8, 2022, the Company’s shares began trading on the NASDAQ under symbol “NVCT” (see note 6b)

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

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The Company had cash and cash equivalents of $ 19.1 million as of December 31, 2023 and has not generated positive cash flows from operations.

To date, the Company has been able to fund its operations primarily through the issuance and sale of common stock and redeemable convertible preferred shares.

On July 29, 2022, the Company completed a private placement in which it received approximately $ 14.3 million in net proceeds, after deducting placement agent fees and other offering expenses (see Note 6c).

To date, the Company has been able to fund its operations primarily through the issuance and sale of common shares and redeemable convertible preferred shares.

During the year ended December 31, 2023, the Company sold a total of 371,743 shares of common stock under the ATM for aggregate total gross proceeds of approximately $ 5.3 million at an average selling price of $ 14.23 per share, resulting in net proceeds of approximately $ 5.1 million after deducting commissions and other transaction costs.

See note 11.e for at-the-market activity subsequent to December 31, 2023.

Based on management’s cash flow projections, the Company believes that the Company’s currently available cash and cash equivalents as of December 31, 2023 is sufficient to fund the Company’s planned operations for a period greater than 12 months from the issuance of these financial statements.

The Company will need to raise additional capital in order to complete the clinical trials aimed at developing the product candidates until obtaining its regulation and marketing approvals.

There can be no assurances that the Company will be able to secure such additional financing if at all, or at terms that are satisfactory

There can be no assurances that the Company will be able to secure such additional financing if at all, or at terms that are satisfactory to the Company, and that it will be sufficient to meet its needs.

In the event the Company is not successful in obtaining sufficient funding, this could force the Company to delay, limit, or reduce our products’ development, clinical trials, commercialization efforts or other operations, or even close down or liquidate.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

to the Company, and that it will be sufficient to meet its needs.

Coronavirus Pandemic

The uncertainty to which the COVID-19 pandemic impacts the Company’s business, affects management’s judgment and assumptions relating to accounting estimates in a variety of areas that depend on these estimates and assumptions.

Management believes this uncertainty is immaterial to the business.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES:

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The preparation of the Company’s financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses in the Company’s financial statements and accompanying notes.

The most significant estimates in the Company’s financial statements relate to accruals for research and development expenses, valuation of equity awards, and valuation allowances for deferred tax assets.

The most significant estimates in the Company’s financial statements relate to accruals for research and development expenses, valuation of share based compensation awards, and valuation allowances for deferred tax assets.

These estimates and assumptions are based on current facts, future expectations, and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

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Accordingly, the functional currency of the Company is the dollar.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

Functional and Presentation Currency

Adjustments arising from foreign currency transactions between the purchase and the settlement dates are reflected in the statements of operations as a component of financial income (expense).

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and (ii) for other items (derived from non-monetary balance sheet items such as depreciation) — historical exchange rates.

The Company did not recognize net foreign currency transaction gains or losses in the years ended December 31, 2022 and December 31, 2021.

The Company did not recognize foreign currency transaction gains or losses in the years ended December 31, 2023 and December 31, 2022.

Cash and Cash Equivalents

The Company considers as cash equivalents all highly liquid investments, which include short-term bank deposits that are not restricted as to withdrawal or use, with maturities of three months or less at the date acquired.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

Concentrations of Credit Risk

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All costs associated with research and development are expensed as incurred.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

General and Administrative

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Management applies the guidance in ASC 450-20-25 when assessing losses resulting from contingencies.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability is recorded as accrued expenses in the Company’s financial statements.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability is recorded as

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

accrued expenses in the Company’s financial statements.

If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material are disclosed.

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The fair value of share-based payment transactions is recognized as an expense over the requisite service period.

The equity awards could come in the form of options, warrants and RSUs.

The equity awards could come in the form of options, warrants and RSAs.

The Company elected to recognize compensation costs for awards using the accelerated method based on the multiple-option award approach.

Performance based awards are expensed over the vesting period only if the achievement of performance criteria is probable.

The Company has elected to recognize forfeitures as they occur.

For stock options containing a market condition, the market conditions are required to be considered when calculating the grant date fair value.

For options containing a market condition, the market conditions are required to be considered when calculating the grant date fair value.

ASC 718 requires selection of a valuation technique that best fits the circumstances of an award.

(see note 7).

In order to reflect the substantive characteristics of the market condition option award, a Monte Carlo simulation valuation model was used to calculate the grant date fair value of such stock options.

Expense for the market condition stock options is recognized over the derived service period as determined through the Monte Carlo simulation model.

In order to reflect the substantive characteristics of the market condition option award, a Monte Carlo simulation valuation model was used to calculate the grant date fair value of such options.

Expense for the market condition options is recognized over the derived service period as determined through the Monte Carlo simulation model.

Comprehensive Loss

Comprehensive loss includes no items other than net loss.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

Deferred taxes

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The Company follows a two-step approach in recognizing and measuring uncertain tax positions.

The first step is to evaluate the tax position for recognition by determining if the available evidence indicates that it is more likely than not that the position will be sustained based on technical merits.

The first step is

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

to evaluate the tax position for recognition by determining if the available evidence indicates that it is more likely than not that the position will be sustained based on technical merits.

If this threshold is met, the second step is to measure the tax position as the largest amount that has more than a 50% likelihood of being realized upon ultimate settlement.

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Net Loss Per Share

The Company’s basic net loss per share is calculated by dividing net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding for the period, without consideration of potentially dilutive securities.

The Company’s basic net loss per share is calculated by dividing net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares and vested ordinary shares issuable for little or no further consideration outstanding during the period, without consideration of potentially dilutive securities.

The diluted net loss per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury share method or the if-converted method based on the nature of such securities.

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As such, net loss for the periods presented was not allocated to the Company’s preferred shares.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

The following potentially dilutive securities were excluded from the calculation of diluted net loss per Ordinary Share because their effect would have been anti-dilutive for the years presented:

For the year ended

Common shares issuable in relation to:

Redeemable convertible preferred shares

*- Adjusted to reflect stock splits, see note 6a.

Fair Value Measurement

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The fair value hierarchy gives the lowest priority to Level 3 inputs.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

The money market accounts included in cash and cash equivalents are considered Level 1.

The money market accounts totaling $ 17.1 million are included in cash and cash equivalents and are considered Level 1.

During the years ended December 31, 2023 and 2022, respectively, there were no transfers between fair value measure levels.

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The fair value of these financial instruments approximates their carrying values.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

Deferred Offering Costs

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The deferred offering costs were offset against the proceeds received upon the completion of the IPO or PIPE.

Deferred offering costs are recorded under other non-current assets on the accompanying balance sheets.

Redeemable Convertible Preferred Shares

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As such, all shares of redeemable preferred shares have been presented outside of permanent equity.

Upon the consummation of the IPO, all of the Company's preferred stocks were converted into common stock and reclassified from temporary equity, into permanent equity.

Upon the consummation of the IPO, all of the Company's preferred shares were converted into common shares and reclassified from temporary equity, into permanent equity.

The Company determines the accounting classification of warrants that are issued, as either liability or equity, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, (“ASC 480-10”), and then in accordance with ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity (“ASC 815-40”).

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If the warrants do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature.

If the warrants do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable GAAP.

If the warrants do not require liability

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the warrants are indexed to its common shares and whether the warrants are classified as equity under ASC 815-40 or other applicable GAAP.

After all relevant assessments are made, the Company concludes whether the warrants are classified as liability or equity.

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Equity-classified warrants are accounted for at consideration received on the issuance date with no changes in fair value recognized after the issuance date.

As of December 31, 2022, all of the Company’s outstanding warrants are equity-classified warrants.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

As of December 31, 2023 and 2022, respectively, all of the Company’s outstanding warrants are equity-classified warrants.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The guidance will be effective for Emerging Growth Companies (EGCs, as defined by the SEC) for the fiscal year beginning on January 1, 2023, including interim periods within that year.

No significant impact on the Company’s financial statements.

In August 2020, the FASB issued Accounting Standard Update No.

2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

ASU 2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas.

This guidance is effective for public business entities except for smaller reporting companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021.

For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted.

The Company adopted ASU 2020-06 on January 1, 2022, using the modified retrospective method, and such adoption did not impact the Company’s financial position, results of operations, cash flows or net loss per share.

The Company adopted ASU 2016-13 on January 1, 2023 and such adoption did not impact the Company’s financial position, results of operations, cash flows or net loss per share.

Recently Issued Accounting Pronouncements Not Yet Adopted

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

In December 2023, FASB issued an Accounting Standard Update No.

2023-09 “Income Taxes (Topic 740)” to enhance the transparency and decision usefulness of income tax disclosure.

The amendments in this Update mandate public entities to disclose specific categories in the rate reconciliation and additional information for reconciling items that meet quantitative threshold in the annual tax rate reconciliations.

Update requires to present a table showing percentages and currency amounts, outlining tax related aspects such as state/local income tax, foreign tax effect, changes in tax law, credits, valuation allowances, nontaxable and nondeductible items, unrecognized tax benefits.

Items that impact tax calculations by 5% and more are required to be disclosed separately, with certain categories required to be disaggregated by jurisdiction or nature.

Reconciling items are categorized based on state/local, foreign, or federal/national tax levels.

Some items can be presented on a net basis, while others need gross presentation.

Entities must provide explanations of the major state/local jurisdictions affecting taxes and explain individual reconciling items.

Additionally, the amendments in this Update require that all entities must disclose amount of income taxes paid disaggregated by federal(national) state and by individual jurisdictions in which income taxes paid if equal to or greater than 5% of total income taxes paid.

The amendments also require entities to disclose income from continuing operations before income tax expense, and income tax expenses categorized by federal/national, state, and foreign levels.

Moreover, certain previous disclosure requirements, like estimating changes in unrecognized tax benefits and cumulative temporary differences in deferred tax liabilities, are eliminated.

The amendment in this Update also replaces the term "public entity" with "public business entity" in Topic 740 definitions.

The amendments in this Updated are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued.

Retrospective application is permitted.

The Company is currently evaluating the impact that ASU No.

2023-09 will have on its consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU No.

2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The ASU improves reportable segments disclosure requirements,

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

primarily through enhanced disclosures about significant segment expenses.

The ASU also require that a public entity that has a single reportable segment to provide all the disclosures required by the amendments and all existing segment disclosures in Topic 280.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

NOTE 3 – RESEARCH AND DEVELOPMENT EXPENSES:

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Total research and development expenses

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

NOTE 4 – GENERAL AND ADMINISTRATIVE EXPENSES:

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Prior to licensing by the Company, CRT was the commercial owner of the CP800 Program, which it acquired from the Institute of Cancer Research in London, UK (“ICR”).

The ICR is a world-renowned research institute focused on the discovery and preclinical development of cancer therapeutics pursuant to the license agreement, the Company has an obligation to pay success-based milestones and royalties to CRT, as follows:

The ICR is a world-renowned research institute focused on the discovery and preclinical development of cancer therapeutics pursuant to the

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

license agreement, the Company has an obligation to pay success-based milestones and royalties to CRT, as follows:

1) pre-approval milestone payments of up to approximately $ 26.5 million including an upfront nonrefundable payment of $ 3.5 million and $ 1.0 million in patient recruitment milestones which has already been paid;

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and 3) mid-single digit to 10 % royalties on a tiered basis on net sales.

In addition, in connection with the licensing agreement, the Company will provide ICR with up to an additional $ 500,000 in research and development support over the next 18 months to conduct additional scientific research and preclinical testing for certain indications that the Company selects in connection with the CP800 Program.

According to the license agreement the Company has also exclusive license to intellectual property rights developed in the collaboration, to research, develop and commercialize products resulting from the collaboration.

On March 31, 2022, the Company and ICR revised the agreement for research and development support to a total of $ 865,000 (to allow for additional research activities).

$ 0.3 million and zero of expense of the research and development support was recognized during the year ended December 31, 2022 and 2021, respectively.

The expense from the revised agreement will be recognized over eighteen months beginning at the date of the revised agreement.

As of December 31, 2022, there are nine months remaining for this expense to be recognized.

On March 31, 2022, the Company and ICR revised the license agreement for research and development support to a total of $ 865,000 (to allow for additional research activities).

$ 0.6 million and $ 0.3 million of expense of the research and development support was recognized during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, all the expense has been recognized.

The license will remain in effect in each territory subject to the license and will continue until the Company’s obligation to pay royalties in such territory has expired.

The royalty term for each licensed product in each country commences with the first commercial sale of the applicable licensed product in

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

the applicable country and ends on the expiration of the last to expire of any patent specified by the license (with the key composition of matters patent expiring October 2034) or the expiration of any extended exclusivity period in the relevant country.

The royalty term for each licensed product in each country commences with the first commercial sale of the applicable licensed product in the applicable country and ends on the expiration of the last to expire of any patent specified by the license (with the key composition of matters patent expiring October 2034) or the expiration of any extended exclusivity period in the relevant country.

CRT may earlier terminate the license if the Company, or any of our affiliates or sub-licensees, challenge or seek to challenge the validity of any of the licensed patents or upon a change of control in which the Company becomes controlled by a Tobacco Party, as such term is defined in the license.

Either party may terminate the license upon material breach by the other party, and upon the appointment of a receiver or upon a winding-up order or similar or equivalent action.

For the year ended December 31, 2022, the Company paid $ 1.0 million in license fees associated with the achievement of certain milestones.

For the year ended December 31, 2021, the Company paid the upfront payment of $ 3.5 million.

During the years ended December 31, 2022 and 2021, respectively, these expenses were recorded as research and development expenses.

For the years ended December 31, 2023 and 2022, the Company paid zero and $ 1.0 million in license fees associated with the achievement of certain milestones, respectively.

These expenses were recorded as research and development expenses.

Any potential future research support, milestone or royalty payment amounts have not been accrued at December 31, 2023 and 2022 due to the uncertainty related to the achievement of these events, milestones or commitments to additional research.

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In collaboration with Edinburgh, the Company wishes to generate preclinical data to support Investigational New Drug (IND) submission and inform patient selection/enrichment strategies.

The aim of the development collaboration formed between the Parties under this Agreement is to progress the development of the Licensed Technology, which is licensed under the License Agreement) according to the Work Plan.

The aim of the development collaboration formed between the Parties under this Agreement is to progress the

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

development of the Licensed Technology, which is licensed under the License Agreement) according to the Work Plan.

The Company has agreed to provide funding to Edinburgh to support such collaboration.

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The royalty term for each licensed product in each country is the period commencing with the first commercial sale of the applicable licensed product in the applicable country and ending on the expiration of the last to expire of any patent specified by the license (statutory expiration for the NXP900 patent family is April 2036), or the expiration of any extended exclusivity period in the relevant country.

The Company may terminate the license if the Company determines that it is not scientifically or commercially viable to research, develop, or commercialize the licensed products which are the subject

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

of the license agreement.

The Company may terminate the license if the Company determines that it is not scientifically or commercially viable to research, develop, or commercialize the licensed products which are the subject of the license agreement.

UoE may terminate the agreement if the Company:

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or (vi) breaches certain diligence obligations or fails to pay any amount due under the license within a specified time frame.

As of December 31, 2022, the Company paid $ 0.5 million related to the one-year anniversary milestone and $ 0.4 million associated with the IPO.

As of December 31, 2022 the Company recorded a liability of $ 0.4 million associated with the private placement.

As of December 31, 2021, the Company paid the upfront payment of $ 3.5 million.

For the year ended December 31, 2023, the Company paid $ 1.0 million related to the achievement of certain milestones and $ 0.4 million associated with the private placement which was recorded as a liability and recorded as a research and development expense as of December 31, 2022.

For the year ended December 31, 2022, the Company paid $ 0.5 million related to the one-year anniversary milestone and $ 0.4 million associated with the IPO.

During the years ended December 31, 2023 and 2022, respectively, these expenses were recorded as research and development expenses.

As of December 31, 2023, the Company has paid UoE $ 0.8 million of the total $ 3.0 million related to the fund raising commitment.

Related Party Transactions

As for related party transactions, see note 10.

Contingencies

As of December 31, 2022, and as of December 31, 2021, no contingent liabilities have been recognized.

As of December 31, 2023, and 2022, no contingent liabilities have been recognized.

NOTE 6 – REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ DEFICIT:

In May 2021, the Company’s board of directors approved and declared a 100 :1 stock split of common shares with a par value of $ 0.00001 and preferred shares, with a par value of $ 0.00001 .

In addition, the Company increased the number of authorized common shares from 3,900,000 to 12,870,000 and preferred shares from 40,000 to 170,000 .

In addition, on October 23, 2021, the Company’s Board of Directors approved a 39 :1 stock split.

As a result of the above splits, all shares, options and warrants exercisable into common shares and restricted stock units, exercise prices and income or loss per share amounts have been adjusted on a retroactive basis for all periods presented to reflect such stock splits.

On February 3, 2022, the Company amended its certificate of incorporation such that the total number of shares of all classes of capital stock authorized to be issued was increased to 65,000,000 , with 5,000,000 shares designated as preferred stock with a par value of $ 0.00001 , and 60,000,000 shares designated as common stock with a par value of $ 0.00001 .

On February 8, 2022, the Company completed an IPO in which it sold 3,200,000 shares of common stock at $ 5.00 per share and received net proceeds of $ 13.6 million, after underwriting discounts and commissions, of $ 1.1 million and expenses of $ 1.8 million.

Additionally, on February 8, 2022, in connection with the closing of the IPO, 5,012,280 shares of Series A redeemable convertible preferred stock, respectively, automatically converted into an equal number of shares of common stock.

There were no shares of convertible preferred stock outstanding as of December 31, 2022.

On February 3, 2022, the Company amended its certificate of incorporation such that the total number of shares of all classes of capital shares authorized to be issued was increased to 65,000,000 , with 5,000,000 shares designated as preferred share with a par value of $ 0.00001 , and 60,000,000 shares designated as common share with a par value of $ 0.00001 .

On February 8, 2022, the Company completed an IPO in which it sold 3,200,000 common shares at $ 5.00 per share and received net proceeds of $ 13.6 million, after underwriting discounts and commissions, of $ 1.1 million and expenses of $ 1.8 million.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

Additionally, on February 8, 2022, in connection with the closing of the IPO, 5,012,280 shares of Series A redeemable convertible preferred shares, respectively, automatically converted into an equal number of shares of common share.

Beginning on the IPO date, there were no shares of convertible preferred shares outstanding as of December 31, 2023 and 2022.

Redeemable Convertible Preferred Shares

During June and July 2021, the Company entered into an investment agreement with its founders and certain new investors to issue 128,520 redeemable convertible preferred shares (“Preferred Stock”) in a total amount of approximately $ 15.3 million in which $ 1.73 million were invested by related parties on the same terms as all investors in the Preferred Stock.

During June and July 2021, the Company entered into an investment agreement with its founders and certain new investors to issue 128,520 redeemable convertible preferred shares (“Preferred Shares”) in a total amount of approximately $ 15.3 million in which $ 1.73 million were invested by related parties on the same terms as all investors in the Preferred Shares.

Conversion Rights —

Trigger Events — Upon either (a) the closing of a Deemed Liquidation Event, (b) an initial public offering the Corporation’s securities on a major public stock exchange (including, without limitation and for illustration purposes, the Nasdaq Stock Market’s National Market or the New York Stock Exchange) resulting in at least $ 15,000,000 of proceeds to the Corporation, or (c) the vote or written consent of the majority of the Preferred Stockholders (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), then (i) all outstanding shares of Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate as calculated as follows — each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price ($ 119.0476 ) by the Conversion Price ($ 3.05 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization or event with respect to the applicable Preferred Stock).

Such initial Conversion Price, and the rate at which shares of Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as detailed in the Company’s Certified of Incorporation in effect at the time of conversion (as of December 31, 2021 the conversion is $ 3.05 per share) (ii) such shares may not be reissued by the Corporation.

During February 2022 the company completed the IPO and the convertible preferred stock were converted to common shares.

Trigger Events — Upon either (a) the closing of a Deemed Liquidation Event, (b) an initial public offering the Corporation’s securities on a major public stock exchange (including, without limitation and for illustration purposes, the Nasdaq Stock Market’s National Market or the New York Stock Exchange) resulting in at least $ 15,000,000 of proceeds to the Corporation, or (c) the vote or written consent of the majority of the Preferred Shareholders (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), then (i) all outstanding shares of Preferred Shares shall automatically be converted into shares of Common Shares, at the then effective conversion rate as calculated as follows — each share of Preferred Shares shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Shares as is determined by dividing the Original Issue Price ($ 119.0476 ) by the Conversion Price ($ 3.05 per share, subject to appropriate adjustment in the event of any share dividend, share split, combination or other similar recapitalization or event with respect to the applicable Preferred Shares).

Such initial Conversion Price, and the rate at which shares of Preferred Shares may be converted into shares of Common Shares, shall be subject to adjustment as detailed in the Company’s Certified of Incorporation in effect at the time of conversion (as of December 31, 2021 the conversion is $ 3.05 per share) (ii) such shares may not be reissued by the Corporation.

During February 2022 the company completed the IPO and the convertible preferred shares were converted to common shares.

Rights of the Company’s common shares

The holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders.

The holders of our common stock do not have any cumulative voting rights.

Holders of our common stock are entitled to receive ratably any dividends declared by our board of directors out of funds legally available for that purpose, subject to any preferential dividend rights of any outstanding preferred stock.

The Company’s common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.

In the event of our liquidation, dissolution or winding up, holders of the Company common stock will be entitled to share ratably in all assets remaining after payment of all debts and other liabilities and any liquidation preference of any outstanding preferred stock.

Each ordinary share confers upon its holder the right to one vote and to receive dividends as declared by the Board of Directors of the Company.

Since its inception, the Company has not declared any dividends.

In the event of our liquidation, dissolution or winding up, holders of the Company common shares will be entitled to share ratably in all assets remaining after payment of all debts and other liabilities.

As of December 31, 2023, no dividends have been declared.

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On July 29, 2022, the Company closed a private placement offering (the “July Private Placement”), pursuant to the terms and conditions of a Securities Purchase Agreement (the “Agreement”), dated July 27, 2022.

In connection with the July Private Placement, the Company issued 1,015,598 shares of common stock (the “Shares”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 909,091 shares of common stock and preferred investment options (the “Preferred Investment Options”) to purchase up to an aggregate of 1,924,689 shares of common stock.

In connection with the July Private Placement, the Company issued 1,015,598 shares of common shares (the “Shares”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 909,091 shares of common shares and preferred investment options (the “Preferred Investment Options”) to purchase up to an aggregate of 1,924,689 shares of common shares.

The purchase price of each Share and each Pre-Funded Warrant was the $ 8.25 .

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The Pre-Funded Warrants had an exercise price of $ 0.001 per share, were exercisable on or after August 24, 2022, and are exercisable until the Pre-Funded Warrants were exercised in full.

Pre-Funded Warrants totaling 909,091 were exercised during the year ended December 31, 2022, and as such the Company issued 909,091 shares of common stock on that date.

The Preferred Investment Options are exercisable at any time on or after January 23, 2023 through January 29, 2026, at an exercise price of $ 9.65 per share, subject to certain adjustments as defined in the Agreement.

The Preferred Investment Options became exercisable on January 23, 2023 and are exercisable at any time on or after January 23, 2023 through January 29, 2026, at an exercise price of $ 9.65 per share, subject to certain adjustments as defined in the Agreement.

As of December 31, 2023, 1,001,091 Preferred Investment Options were exercised for $ 8.9 million, net of fees.

The Company agreed to pay the placement agent a fee and management fee equal to 7.0 % and 1.0 %, respectively, of the aggregate gross proceeds from the July Private Placement.

In addition, the Company issued warrants to the placement agent to purchase up to 115,481 shares of common stock.

In addition, the Company issued warrants to the placement agent to purchase up to 115,481 shares of common shares.

The placement agent warrants are in substantially the same form as the Preferred Investment Options, except that the exercise price is $ 10.31 .

The Preferred Investment Options, the Pre-Funded Warrants, and the placement agent warrants are collectively referred to as the “Private Placement Warrants”.

As of December 31, 2023 79,104 placement agent warrants were exercised for which the Company has received $ 0.8 million.

The Company evaluated the terms of the Private Placement Warrants and determined that they should be classified as equity instruments based upon accounting guidance provided in ASC 480 and ASC 815-40.

Since the Company determined that the Private Placement Warrants were equity-classified, the Company recorded the proceeds from the July Private Placement, net of issuance costs, within common stock at par value and the balance of the net proceeds to additional paid in capital.

Since the Company determined that the Private Placement Warrants were equity-classified, the Company recorded the proceeds from the July Private Placement, net of issuance costs, within common shares at par value and the balance of the net proceeds to additional paid in capital.

As of December 31, 2023, the outstanding Preferred Investment Options, and the placement agent warrants were not exercisable.

In connection with the July Private Placement, the Company entered into a Registration Rights Agreement with the certain purchasers defined therein, dated July 27, 2022 (the “July Registration Rights Agreement”).

The July Registration Rights Agreement required the Company to file a registration statement covering the resale of all of the securities with the Securities and Exchange Commission (the “SEC”).

The Company filed a registration statement on Form S-1 with the SEC on August 15, 2022.

The registration statement on Form S-1 was declared effective on August 24, 2022.

NOTE 7 – SHARE BASED PAYMENTS

Share Based Payments

In May 2021, the Company’s board of directors approved issuance of common shares in a total amount of 605,514 each with par value of $ 0.00001 per share including amount of 238,914 to service providers and an amount of 366,600 to the Company founders at an estimated value of approximately $ 1.4 million.

These common shares are fully vested on the grant date.

The fair value of common shares was evaluated

At-the-Market Agreement

On March 17, 2023, the Company filed a shelf registration statement on Form S-3 (the “S-3”), which was declared effective on March 29, 2023.

Under the S-3, the Company may sell up to a total of $ 150 million of its securities.

In connection with the S-3, the Company entered into an At-the-Market agreement (“ATM”) with H.C.

Wainwright & Co., LLC (“Agent”) relating to the sale of shares of common shares.

Under the ATM, the Company pays the Agents a commission rate of up to 3.0 % of the gross proceeds from the sale of any common shares.

During the year ended December 31, 2023, the Company sold a total of 371,743 shares of common shares under the ATM for aggregate total gross proceeds of approximately $ 5.3 million at an average selling price of $ 14.23 per share, resulting in net proceeds of approximately $ 5.1 million after deducting commissions and other transaction costs.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

at the grant date using hybrid pricing model with a combination of the Black-Scholes Option Pricing Model (OPM) and the P-WERM model for various possible scenarios.

For the various scenarios modeled, volatility is based on a combination of historical volatilities of companies in comparable stages as well as companies in the industry by statistical analysis of daily share pricing model.

The risk-free interest rate assumption is based on observed interest rates appropriate for the time period until a liquidity event occurs.

The expected term represents the period of time until a liquidity event occurs.

The following table summarizes assumptions used for the OPM model at the grant date:

NOTE 7 – SHARE BASED PAYMENTS

Share Based Payments

In January 2023, the Company granted 43,500 options with an exercise price of $ 7.51 per share, to a service provider, which will become exercisable between January 19, 2023, and January 18, 2025, into common shares based on the achievement of service condition, market condition or performance condition.

As of December 31, 2023, 21,000 options were exercisable.

Service condition options totaled 22,500 , had an estimated value based on Black-Scholes of approximately $ 74,000 and were exercisable as of December 31, 2023.

Performance condition options totaled 12,000 , had an estimated value based on Black-Scholes of approximately $ 39,000 and were exercisable as of December 31, 2023.

Market condition options totaling 9,000 options have a market condition which was achieved by December 31, 2023, and an estimated value of $ 20,000 based on a Monte Carlo model.

2,792 options have been exercised as of December 31, 2023.

The fair value of options was evaluated at the grant date using a Black-Scholes Option Pricing Model for various possible scenarios.

The following table summarizes assumptions used for the Black-Scholes model at the grant date:

Risk-free interest rate

Common stock price

Expected dividend yield

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Expected volatility

In February 2022, the Company granted to.

the underwriter of the IPO, 128,000 fully vested warrants upon the IPO, exercisable into common stock with an exercise price of $ 6.25 per share for 5 years after the grant date.

In February 2022, the Company granted to the underwriter of the IPO 128,000 fully vested warrants upon the IPO, exercisable into common shares with an exercise price of $ 6.25 per share for 5 years after the grant date.

The 128,000 fully vested warrants have an estimated value (based on Black-Scholes model) of approximately $ 458,000 and were recognized as a reduction from gross proceeds of the IPO.

No warrants have been exercised as of December 31, 2022.

As of December 31, 2023, IPO warrants totaling 105,920 were exercised for $ 0.7 million.

The following table summarizes assumptions used for the Black-Scholes model at the grant date:

Risk-free interest rate

Common share price

Common stock price

Expected dividend yield

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Expected volatility

In July 2022, the Company granted to the private placement agent of July Private Placement, 115,481 warrants which become exercisable any time between January 23, 2023 and January 29, 2026, exercisable into common stock with an exercise price of $ 10.31 per share.

The 115,481 warrants have an estimated value (based on Black-Scholes model) of approximately $ 618,000 .

No warrants have been exercised as of December 31, 2022.

As of December 31, 2023 79,104 placement agent warrants were exercised for which the Company has received $ 0.8 million.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

The following table summarizes assumptions used for the Black-Scholes model at the grant date:

Risk-free interest rate

Common share price

Common stock price

Expected dividend yield

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In February 2022, the Company’s board of directors approved an increase to total shares under the incentive plan to 1,500,000 .

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

The 2021 Plan provides for a variety of stock-based compensation awards, including stock options, restricted stock unit awards, or other stock.

Under the 2021 Plan, the Company generally grants stock-based awards with service-based vesting conditions only.

Options and restricted stock unit awards granted typically vest over a three-year period, but may be granted with different vesting terms.

An amendment to the 2021 Plan was approved by holders of a majority of the voting power of the common shares of the Company in June 2023 to increase the total shares under the incentive plan to 2,500,000 .

In addition, the amendment provides that on January 1 of each calendar year beginning in 2024 and ending in and including 2033, this authorization limit will automatically increase to the extent necessary so that the number of shares available for issuance pursuant to future awards granted after such date under the 2021 Plan is not less than (i) six percent ( 6 %) of the number of shares outstanding as of the last day of the immediately preceding calendar year or (ii) such lesser number of shares as may be determined by the Board.

The 2021 Plan provides for a variety of share-based compensation awards, including options, restricted share unit awards, or other shares.

Under the 2021 Plan, the Company generally grants share-based awards with service-based vesting conditions only.

Options and restricted share unit awards granted typically vest over a three-year period, but may be granted with different vesting terms.

Ron Bentsur, Dr.

Enrique Poradosu and Mr.

Shay Shemesh will be eligible for fully vested shares of common stock equal to 1 %, 0.5 % and 0.5 %, respectively, of the then fully diluted share count when the Company reaches an average capitalization over a 30 -day period of $ 350 million or higher.

Shay Shemesh will be eligible for fully vested common shares equal to 1 %, 0.5 % and 0.5 %, respectively, of the then fully diluted share count when the Company reaches an average capitalization over a 30 -day period of $ 350 million or higher.

As of December 31, 2023, the market capitalization has not been achieved.

The following table summarizes the Company’s stock option activity for the year ended December 31, 2022, for the 2021 Incentive Plan:

The following table summarizes the Company’s option activity for the year ended December 31, 2023, for the 2021 Incentive Plan:

Weighted average

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Expected to vest – December 31, 2023

As of December 31, 2022, there was $ 0.6 million of unrecognized stock-based compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of 1.82 years, excluding warrants which vest upon completion of an IPO or PIPE.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

As of December 31, 2023, there was $ 0.2 million of unrecognized share-based compensation expense related to unvested options that is expected to be recognized over a weighted-average period of 0.65 years.

The fair value of each option granted is estimated using the Black-Scholes option pricing method.

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The expected term of the options granted represents the period of time that the granted options are expected to remain outstanding based on common practice in the industry.

Common share price is calculated using the model described.

The following table summarizes the Black-Scholes assumptions used at the grant date:

Grant Dates May –

December 2022

November 2021

Risk-free interest rate

2.39 % - 2.88 %

0.80 % - 1.37 %

Expected dividend yield

Common share price

$ 7.02 - $ 11.99

$ 2.28 - $ 2.97

Expected term (in years)

Expected volatility

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

Restricted stock Units

Restricted stock units (RSUs) have been granted to employees and directors.

The value of an RSU award is based on the Company’s stock price on the date of grant using hybrid pricing model with a combination of the Black-Scholes Option Pricing Model (OPM) and the P-WERM model for various possible scenarios.

The shares underlying the RSU awards are not issued until the RSUs vest.

Upon vesting, each RSU converts into one share of the Company’s common stock.

The Company has granted RSUs pursuant to the 2021 plan.

On April 1, 2022, the Company issued 120,000 RSUs to Mr.

Ron Bentsur and 60,000 RSUs each to Dr.

Restricted Share Awards

Restricted stock awards (RSAs) have been granted to employees and directors.

The value of an RSA award is based on the Company’s stock price on the date of grant using hybrid pricing model with a combination of the Black-Scholes Option Pricing Model (OPM) and the P-WERM model for various possible scenarios.

The shares underlying the RSA awards are not issued until the RSAs vest.

Upon vesting, each RSA converts into one share of the Company’s common shares.

The Company has granted RSAs pursuant to the 2021 plan.

On April 1, 2022, the Company issued 120,000 RSAs to Mr.

Ron Bentsur and 60,000 RSAs each to Dr.

Enrique Poradosu and Mr.

Shay Shemesh.

All RSUs granted to these founders of the Company vest over three years with 1/3 vesting on each anniversary of the date of the grant.

The fair value of these RSUs was determined to be $ 1.7 million.

The following table summarizes the Company’s restricted stock unit activity for the year ended December 31, 2021, as described above from the 2021 Incentive Plan:

All RSAs granted to these founders of the Company vest over three years with 1/3 vesting on each anniversary of the date of the grant.

The fair value of these RSAs was determined to be $ 1.7 million.

On March 29, 2023, the vesting of the first 1/3 of the grant was extended to January 11, 2024, the second vesting extended to April 2, 2024 and the third vesting extended to April 2, 2025.

On January 12, 2023, the Company issued 210,000 RSAs to Mr.

Ron Bentsur and 115,000 RSAs each to Dr.

Enrique Poradosu and Mr.

Shay Shemesh.

All RSAs granted to these founders of the Company vest over three years with 1/3 vesting on each anniversary of the date of the grant.

The fair value of these RSAs was determined to be $ 3.3 million.

The following table summarizes the Company’s RSA activity for the year ended December 31, 2023, as described above from the 2021 Incentive Plan:

Weighted average

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Expected to vest – December 31, 2023

As of December 31, 2022, there was $ 1.3 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted average period of 2.2 years.

The total fair value of RSUs vested for the year ended December 31, 2022, was $ 48 thousand.

As of December 31, 2023, there was $ 2.5 million of total unrecognized compensation cost related to RSAs that is expected to be recognized over a weighted average period of 1.8 years.

The total fair value of RSAs vested for the year ended December 31, 2023, was $ 0.3 million.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

On July 27, 2021, Mr.

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Enrique Poradosu, and Mr.

Shay Shemesh were granted 96,759 RSUs, 48,399 RSUs and 48,399 RSUs, respectively, which were not part of the Incentive Plan and excluded from the table above.

On July 1, 2022 and December 13, 2022, the vesting of these grants was extended to January 1, 2023 and June 30, 2022, respectively.

Shay Shemesh were granted 96,759 RSAs, 48,399 RSAs and 48,399 RSAs, respectively, which were not part of the Incentive Plan and excluded from the table above.

On March 29, 2023, January 1, 2023, July 1, 2022 and December 13, 2022, the vesting of these grants was extended to July 15, 2024, April 1, 2023, January 1, 2023 and June 30, 2022, respectively.

Also see note 11 for subsequent vesting extensions.

Share compensation expense

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For the period ended December 31, 2022, the Company recognized expenses of $ 0.8 million as part of the general and administrative expenses and $ 0.9 million as part of the research and development expenses.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

NOTE 8 – NET LOSS PER SHARE:

Basic net loss per share is calculated by dividing the net loss attributable to the Company’s stockholders by the weighted average number of common shares outstanding.

Basic net loss per share is calculated by dividing the net loss attributable to the Company’s shareholders by the weighted average number of common shares outstanding.

For the year ended

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dollars except per share and share amounts

Loss attributable to common stockholders

Loss attributable to common shareholders

Basic and diluted net loss per common share

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Basic loss per share is calculated by dividing the result attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.

As of December 31, 2022 and December 31, 2021, the Company excluded potentially dilutive securities from the calculation of diluted net loss per Ordinary Share because their effects would have been anti-dilutive (see note 2n).

For the year ended December 31,

Weighted average of common shares

Unvested RSAs

( 1,135,053 )

Weighted average of common share outstanding

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

As of December 31, 2023 and 2022, respectively, the Company excluded potentially dilutive securities from the calculation of diluted net loss per Ordinary Share because their effects would have been anti-dilutive.

The following potentially dilutive securities were excluded from the calculation of diluted net loss per Ordinary Share because their effect would have been anti-dilutive for the years presented:

For the year ended

Common shares issuable in relation to:

NOTE 9 – INCOME TAXES:

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The U.S tax rate in 2023 and 2022 is 26.9 % comprising U.S statutory tax rates of 21 % and state tax rate of 5.9 %.

For the years ended December 31, 2022 and 2021, the Company’s effective tax rate is below the federal statutory income tax rate of 21 % primarily due to state income taxes, net of federal benefit and the Company’s position to establish a full valuation allowance on its deferred tax assets.

For the years ended years ended December 31, 2023 and 2022, the Company’s effective tax rate is below the federal statutory income tax rate of 21 % primarily due to state income taxes, net of federal benefit and the Company’s position to establish a full valuation allowance on its deferred tax assets.

Corporate Taxation in the U.S.

1 unchanged sentence

As of December 31, 2023, the Company has an accumulated tax loss carryforward of approximately $ 35.0 million (as of December 31, 2022, $ 23.0 million).

tax laws, subject to certain limitations, carryforward tax losses originating in tax years beginning after January 1, 2018, have no expiration date, but they are limited to 80% of the company’s taxable income in any given tax year.

tax laws, subject to certain limitations, carryforward tax losses originating in tax year have no expiration date, but they are limited to 80% of the company’s taxable income in any given tax year.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

A reconciliation of the statutory U.S.

federal rate to the Company’s effective tax rate is as follows:

For the year-ended

Percentage of pre-tax income

Statutory federal income tax rate

State taxes, net of federal tax benefit

Stock based compensation

Change in valuation allowance

Income taxes provision (benefit)

Tax Assessments

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Balance at end of the year

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

NOTE 10 – RELATED PARTY TRANSACTIONS:

As for related party transactions regarding equity grants, see note 7.

As for related party transactions regarding equity grants, see note 7 and note 11.

NOTE 11 – SUBSEQUENT EVENTS:

On January 12, 2023, the Company issued 210,000 RSUs to Mr.

Ron Bentsur and 115,000 RSUs each to Dr.

On January 4, 2024, the Company issued 130,000 RSAs each to Dr.

Enrique Poradosu and Mr.

Shay Shemesh.

On February 14, 2023, 105,920 warrants granted in February 2022 in association with the underwriter agreement associated with the Company’s IPO were exercised.

Gross proceeds from the exercise of these warrants were approximately $ 660 thousand.

NUVECTIS PHARMA, INC.

Notes to the Financial Statements (continued)

On February 14, 2023, a certain investor exercised 4,000 Preferred Investment Options granted in July 2022 in association with the Securities Purchase Agreement.

Gross proceeds from the exercise of these options were approximately $ 39 thousand.

On January 4, 2024, the vesting of the July 2021 grant to Mr.

Ron Bentsur, Dr.

Enrique Poradosu and Mr.

Shay Shemesh was extended to July 15, 2024

On January 4, 2024, the vesting of the April 2022 grant to Mr.

Ron Bentsur, Dr.

Enrique Poradosu and Mr.

Shay Shemesh first 1/3 vesting of the grant was extended to July 15, 2024, the second 1/3 vesting was extended to July 15, 2024 and the third vesting remained at April 2, 2025.

On January 4, 2024, the vesting of the January 2023 grant to Mr.

Ron Bentsur, Dr.

Enrique Poradosu and Mr.

Shay Shemesh first 1/3 vesting of the grant was extended to July 15, 2024, the second remained at January 12, 2025 and the third vesting remained at January 12, 2026.

Through the completion of the subsequent events review, the Company sold a total of 422,130 shares of common stock under the ATM for aggregate total gross proceeds of approximately $ 3.9 million at an average selling price of $ 9.31 per share, resulting in net proceeds of approximately $ 3.8 million after deducting commissions and other transaction costs.

Second Amended and Restated Certificate of Incorporation of Nuvectis Pharma, Inc., filed as exhibit 3.1 to the Form 8-K filed on February 4, 2022 and incorporated herein by reference.

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and The University Court of the University of Edinburgh, dated August 26, 2021, filed as exhibit 10.6 to the Form S-1/A filed on October 6, 2021 and incorporated herein by reference.

Nuvectis Pharma, Inc.

Insider Trading Policy *

List of subsidiaries of Nuvectis Pharma, Inc.

5 unchanged sentences

Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Clawback Policy*

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

33 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures