OS Therapies Inc 10-Q

Item 1. Financial Statements OS Therapies Incorporated Balance Sheets (unaudited) March 31, 2024 December 31, 2023 ASSETS Current Assets Cash $ 100,231 $ 38,982 Deferred Offering Costs 941,338 751,050 Total Current Assets 1,041,569 790,032 Long Term Assets Fixed Assets (Net) 7,355 8,050 TOTAL ASSETS $ 1,048,924 $ 798,082 LIABILITIES AND STOCKHOLDERS’ Deficit Current Liabilities Accounts Payable $ 2,799,120 $ 2,715,399 Accrued Interest on Convertible Notes 2,276,347 2,026,323 Accrued Expenses 162,500 162,500 Accrued Payroll and Payroll Taxes – Related Party 42,676 112,137 Accrued Payroll and Payroll Taxes 49,357 33,543 Redemption Premium 5,055,804 4,580,304 Short-Term Loan 100,000 — Preferred Dividends Payable 375,000 343,750 Convertible Notes – A (Net Debt Discount) 1,053,383 1,051,032 Convertible Notes – A (Related Party Net Debt Discount) 100,000 100,000 Convertible Notes – B (Net Debt Discount) 5,154,000 5,154,000 Convertible Notes – C (Net Debt Discount) 3,945,020 3,873,417 Convertible Notes – D (Net Debt Discount) 2,000,000 1,950,160 Convertible Notes – E (Net Debt Discount) 1,100,000 1,100,000 Convertible Notes – F (Net Debt Discount) 2,112,174 1,381,732 Make-whole Stock Liability 130,000 130,000 Total Current Liabilities 26,455,381 24,714,297 Long-Term Liabilities TEDCO Grant 100,000 100,000 Total Long-Term Liabilities 100,000 100,000 Total Liabilities 26,555,381 24,814,297 STOCKHOLDERS’ DEFICIT Common Stock, par value $ 0.001 , 50,000,000 shares authorized, 11,982,082 and 10,680,000 issued and outstanding, respectively 11,982 10,680 Preferred Stock, par value $ 0.001 , 5,000,000 shares authorized, 0 and 1,302,082 shares Preferred Stock A issued and outstanding, respectively — 1,302 Additional paid-in capital 5,489,990 5,489,990 Accumulated deficit ( 31,008,429 ) ( 29,518,187 ) Total Stockholders’ Deficit ( 25,506,457 ) ( 24,016,215 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 1,048,924 $ 798,082 The accompanying notes are an integral part of these unaudited financial statements. 1 OS Therapies Incorporated Statements of Operations (unaudited) For the three months ended March 31, 2024 2023 OPERATING EXPENSES Research & Development $ 361,809 $ 753,784 General & Administrative 268,423 294,247 Loss from Operations ( 630,232 ) ( 1,048,031 ) OTHER INCOME/EXPENSE Interest Expense ( 828,760 ) ( 798,938 ) Total Other Expense ( 828,760 ) ( 798,938 ) NET LOSS ( 1,458,992 ) ( 1,846,969 ) Cumulative Series A Preferred Stock Dividend Requirement ( 31,250 ) ( 31,250 ) NET LOSS available to common shareholders $ ( 1,490,242 ) $ ( 1,878,219 ) Weighted Average # of Shares – Class A 11,409,692 10,213,333 Basic & Diluted Loss per Common Share – Class A $ ( 0.13 ) $ ( 0.18 ) The accompanying notes are an integral part of these unaudited financial statements . 2 OS Therapies Incorporated Statements of Stockholders’ Deficit For the Three Months Ended March 31, 2024 and 2023 (unaudited) Common Stock CS – Shares CS – Par Amount Preferred Stock Shares Par Amount Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Deficit Balances, December 31, 2022 9,980,000 $ 9,980 1,302,082 $ 1,302 $ 4,033,093 $ ( 21,601,603 ) $ ( 17,557,228 ) Conversion of Make Whole Liability to Common Stock 700,000 700 — — 699,300 — 700,000 Preferred Dividends — — — — — ( 31,250 ) ( 31,250 ) Net loss — — — — — ( 1,846,969 ) ( 1,846,969 ) Balances, March 31, 2023 10,680,000 $ 10,680 1,302,082 $ 1,302 $ 4,732,393 $ ( 23,479,822 ) $ ( 18,735,447 ) Balances, December 31, 2023 10,680,000 $ 10,680 1,302,082 $ 1,302 $ 5,489,990 $ ( 29,518,187 ) $ ( 24,016,215 ) Conversion of Preferred Stock to Common Stock 1,302,082 1,302 ( 1,302,082 ) ( 1,302 ) — — — Preferred Dividends — — — — — ( 31,250 ) ( 31,250 ) Net Loss — — — — — ( 1,458,992 ) ( 1,458,992 ) Balances, March 31, 2024 11,982,082 $ 11,982 — $ — $ 5,489,990 $ ( 31,008,429 ) $ ( 25,506,457 ) The accompanying notes are an integral part of these unaudited financial statements . 3 OS Therapies Incorporated Statements of Cash Flows For the Three Months Ended March 31, 2024 and 2023 (unaudited) Three Months Ended March 31, 2024 Three Months Ended March 31, 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 1,458,992 ) ( 1,846,969 ) Depreciation expense 695 100 Amortization of Debt Discounts Issuance and Warrants 578,736 616,153 Make-whole expense — 116,688 Adjustments to reconcile net loss to net cash used in operating activities: Accounts Payable 41,453 446,028 Accrued Expenses — 10,000 Accrued Interest on Convertible Notes 250,025 182,785 Accrued Payroll and payroll taxes ( 53,646 ) 47,029 Net cash used in operating activities ( 641,729 ) ( 428,186 ) CASH FLOWS FROM INVESTING ACTIVITIES Shareholder Loan Repayment — 1,145 Net cash provided by investing activities — 1,145 CASH FLOWS FROM FINANCING ACTIVITIES Deferred Offering Costs ( 148,022 ) ( 164,225 ) Short-Term Loan 100,000 — Net Proceeds from Convertible Debt A, B, C, D, E & F 751,000 775,000 Net cash provided by financing activities 702,978 610,775 Net change in cash 61,249 183,734 Cash – beginning of period 38,982 171,480 Cash – end of period $ 100,231 355,214 Cash paid for interest $ — — NON CASH INVESTING AND FINANCING ACTIVITIES Discount on Notes Payable – redemption premium 475,500 350,000 Dividends Payable 31,250 31,250 Deferred offering costs recorded as accounts payable 42,266 95,340 Conversion of Make-Whole Liability to Common Stock & APIC — 700,000 The accompanying notes are an integral part of these unaudited financial statements. 4 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS, LIQUIDITY, AND RISK FACTORS OS Therapies Incorporated (“we,” “us,” “our,” the “Company”) is a Delaware corporation incorporated on June 24, 2019. It is based in Rockville, Maryland. The Company is the successor to an LLC formed in 2018. The Company intends to focus on the identification, development, and commercialization of treatments for Osteosarcoma and other related diseases. As of March 31, 2024, there is one ongoing clinical trial for Osteosarcoma therapy. Liquidity The Company has prepared its financial statements on a going concern basis, which assumes that the Company will realize its assets and satisfy its liabilities in the normal course of business. However, the Company has incurred net losses since its inception and has negative operating cash flows. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning the Company’s ability to continue as a going concern. As of March 31, 2024, the Company had cash of $ 100,231 . For the foreseeable future, the Company’s ability to continue its operations is dependent upon its ability to obtain additional capital. The Company is currently seeking to raise additional capital through a public or private financing of equity; although there can be no assurances the Company will be successful in such a campaign. NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of US Securities and Exchange Commission (“SEC”). The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is December 31. These financial statements should be read in conjunction with the audited financial statements and related disclosures for the year ended December 31, 2023 included in the Company’s Special Financial Report on Form 10-K for the year then ended. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in its financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates. Cash Cash consists primarily of deposits with commercial banks and financial institutions. The Company maintains cash balances at various financial institutions. Both interest and non-interest bearing accounts with the same insured depository institution are insured by the Federal Deposit Insurance Corporation (FDIC) for a combined total of $ 250,000 . In the normal course of business, the Company may have deposits that exceed the FDIC insured limit. The Company believes that it is not subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. As of March 31, 2024 and December 31, 2023, Chase Bank Checking account had $ 5,144 and $ 88 respectively. As of March 31, 2024 and December 31, 2023, SVB Bank Checking account had $ 95,087 and $ 38,894 respectively. There were no accounts in excess of the FDIC limits. 5 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.) Fixed Asset Policy A capital asset is defined as a unit of property that has an economic useful life that extends beyond 12 months. Any items costing below the threshold or not fitting the definition of a capital asset will be expensed in the financial statements. All capital assets are recorded at historical cost as of the date acquired. Computer assets will be capitalized and Straight-Line depreciated over 5 -years for financial statement purposes. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparison of the book values of the assets to future net undiscounted cash flows that the assets or the asset groups are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book value of the assets exceed their fair value, which is measured based on the estimated discounted future net cash flows arising from the assets or asset groups. No impairment losses on long-lived assets have been recorded for the three months ended March 31, 2024 or the year ended December 31, 2023. Deferred Offering Costs Deferred offering costs consist of capitalized underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Proposed Public Offering and that will be charged to stockholders’ equity upon the completion of the Proposed Public Offering. Should the Proposed Public Offering prove to be unsuccessful, these deferred costs, as well as additional expenses incurred, will be charged to operations. At March 31, 2024, the Company had $ 941,338 in capitalized deferred offering costs. At December 31, 2023, the Company had $ 751,050 in capitalized deferred offering costs. Debt Discount and Redemption Premium The Company evaluated the Notes in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and determined the Notes are considered share-settled debt and should be recorded as a liability. This conclusion was determined based on the debt providing the holder with a variable number of shares at settlement with an aggregate fair value equal to the debt instrument’s outstanding principal. The general measurement guidance in ASC 480 requires obligations that can be settled in shares with a fixed monetary value at settlement (e.g., share-settled debt) to be carried at fair value unless other accounting guidance specifies another measurement attribute. It has been determined that the appropriate guidance for share-settled debt is ASC 835. As a result, the Notes will be recorded at the amortized cost. The initial fair value of the redemption value relating to the convertible debt instruments are capitalized and amortized over the term of the related debt using the straight-line method, which approximates the interest method. If a loan is paid in full, any unamortized financing costs will be removed from the related accounts and charged to operations. Amortization of debt discount is recorded as a component of interest expense. In accordance with ASU 2015-03, Interest — Imputation of Interest, the unamortized debt discount is presented in the accompanying balance sheet as a direct deduction from the carrying amount of the related debt. Research and Development Costs Research and development expenses are charged to operations as incurred. Research and development expenses include, among other things, salaries, costs of outside collaborators and outside services, and supplies. Revenue Recognition As of the date of incorporation, the Company adopted ASU 2014-09, Revenue from Contracts with Customers , and all subsequent amendments to the ASU (collectively, “ASC 606”), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets. 6 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.) Stock-Based Compensation The Company, in accordance with ASC 718, employs the use of stock-based compensation. The compensation expense related to stock granted to employees and non-employees is measured at the grant date based on the estimated fair value of the award and is recognized on a straight-line basis over the requisite service period. Forfeitures are recognized as a reduction of stock-based compensation expense as they occur. Stock-based compensation expense for an award with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. Short-term Leases For short-term leases, 12 months or less, we record rent expense. Our only lease currently meets this exemption and has been expensed. We have not renewed the current lease due to landlord restrictions; the ownership is renovating the premises. We have temporarily moved our primary office to 115 Pullman Crossing Road, Suite #103 in Grasonville, Maryland 21638. The space is the primary office of our Chief Financial Officer and is being provided rent free. Income taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the enactment date. A valuation allowance is recorded if it is “more likely than not” that some portion or all of the deferred tax assets will not be realized in future periods. The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50 % likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. As of March 31, 2024 and December 31, 2023, the Company had no unrecognized uncertain income tax positions. Basic and Diluted Loss per Share The Company computes loss per share in accordance with ASC 260, Earnings per Share (“ASC 260”). ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statements of operations. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible notes payable using the if-converted method. Diluted EPS excludes all dilutive potential shares if their effect is antidilutive. 7 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (cont.) Below is a table listing all preferred stock and common stock equivalents: Common Stock Equivalents March 31, 2024 (unaudited) December 31, 2023 Convertible Debt $ 11,559,098 $ 11,034,773 Make-Whole Liability 65,000 65,000 Warrants 605,689 604,281 Preferred Stock — 1,302,082 Total $ 12,229,787 $ 13,006,136 Fair Value Measurements The Company applies ASC 820 Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying value of the Company’s prepaid expenses, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. The redemption feature of the debt instruments is recorded at fair value (See Note 3). The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. Recent Accounting Pronouncements The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial position, results of operations, or cash flows. NOTE 3 — RELATED PARTY TRANSACTIONS Accrued Payroll At March 31, 2024 and December 31, 2023, the Company had a payroll payable to the CEO of $ 330,000 and $ 300,000 , respectively, and related payroll taxes payable of $ 9,224 and $ 7,830 , respectively. During the period ending March 31, 2024 and December 31, 2023 the company made advances on the payroll payable and the CEO made repayments. 8 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 3 — RELATED PARTY TRANSACTIONS (cont.) The following summarizes activity in respect to payroll advances to the CEO: Balance December 31, 2022 $ — Advances during 2023 316,198 Repayment ( 125,000 ) Balance December 31, 2023 $ 191,198 Advances during 2024 80,350 Repayment ( 5,000 ) Balance March 31, 2024 $ 266,548 In the second quarter of 2024, a bonus check was issued to Paul Romness, CEO. The bonus paycheck is comprised of the remaining balance of backpay, less all 2023 payroll advances. The payroll taxes were paid that were associated with the back pay and as of April 29, 2024 the back pay, related payroll taxes and associated payroll advances are fully paid. Related Parties — Convertible Debt Of the total outstanding notes at March 31, 2024, 8.67 % of Group A and 4.55 % of Group E are held by related parties. Ted Search and John Ciccio, collectively known as Mill River Partners LLC, are members of the Board and hold convertible notes with face amounts of $ 150,000 and $ 150,000 as of March 31, 2024 and December 31, 2023, respectively. Related Party Accounting Fees The company has a bill in accounts payable of $ 58,100 for the period ended March 31, 2024 and $ 32,102 for the period ended December 31, 2023 to Shore Accountants MD Inc., an outside accounting firm that handles payroll and bookkeeping and is 100 % owned by Christopher Acevedo, the Company’s CFO. NOTE 4 — CONVERTIBLE DEBT Convertible Debt The Convertible Notes are separated into seven groups — A, B, C, D, E, F and BlinkBio — per the table below. Group Rate Maturity Collateral Conversion Rate March 31, 2024 Carrying Amount December 31, 2023 Carrying Amount A 10 % 10/31/2024 None 80 % – 87.5 % $ 1,153,383 $ 1,151,032 B 6 % 10/31/2024 None 80 % $ 5,154,000 $ 5,154,000 C 6 % 10/31/2024 None 80 % $ 3,945,020 $ 3,873,417 D 6 % 10/31/2024 None 50 % $ 2,000,000 $ 1,950,160 E 6 % 10/31/2024 None 50 % $ 1,100,000 $ 1,100,000 F 6 % 10/31/2024 None 50 % $ 2,112,174 $ 1,381,732 Blink Bio 10 % 3/15/2022 None 100 % $ — $ — 9 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 4 — CONVERTIBLE DEBT (cont.) Group A Commencing in July 2018 through November 2021, the Company entered into an unsecured Subordinated Convertible Promissory Note Agreement (the “Agreements”) with certain lenders (together, the “Holders” or individually, the “Holder”). Interest on the unpaid principal balance accrues at a rate of 10 % per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Unless earlier converted into shares of Equity Securities, the principal and accrued interest will be due and payable by the Company on demand by the Holders at any time after the earlier of (i) the Maturity Date (as defined in each Agreement) and (ii) the closing of the Next Equity Financing (as defined below). The stated Maturity Date was extended in October 2023, under the same terms, until October 31, 2024. The Notes will automatically convert into the type of Equity Securities issued in the Next Equity Financing upon closing. The number of shares of such Equity Securities to be issued will be equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest due on the Note on the date of conversion of 80 – 87.5 % of the price paid per share for Equity Securities by the investors in the Next Equity Financing. Equity Securities refers to Company’s common stock or preferred stock and Next Equity Financing refers to the next sale (or series of related sales) by the Company of its equity securities from which the Company receives gross proceeds of not less than $ 3,000,000 (including the aggregate amount of debt securities converted into Equity Securities upon conversion or cancellation of promissory notes) or $ 5,000,000 , depending upon the signed agreement terms. In the event that the Company raises aggregate additional cash proceeds of at least $ 3,000,000 or $ 5,000,000 through the sale of the Company’s equity securities, excluding the sales or conversions of Notes under the Agreement, the outstanding principal amount due will automatically, and without any action on part of the holder, be converted into fully paid and non-assessable units of the Company’s equity stock sold in such qualified financing at 12.5 % of the equity stock conversion price. The Company, at its option, may pay and all accrued, but unpaid, interest and other charges in cash or by the issuance of additional equity stock at a rate of the applicable conversion price. The Company evaluated the Notes in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and determined the Notes are considered share-settled debt and should be recorded as a liability. This conclusion was determined based on the debt providing the holder with a variable number of shares at settlement with an aggregate fair value equal to the debt instrument’s outstanding principal. The general measurement guidance in ASC 480 requires obligations that can be settled in shares with a fixed monetary value at settlement (e.g., share-settled debt) to be carried at fair value unless other accounting guidance specifies another measurement attribute. It has been determined that the appropriate guidance for share-settled debt is ASC 835. As a result, the Notes were recorded at the amortized cost. The convertible debt balance at March 31, 2024 and December 31, 2023 is summarized as follows: Debt A As of March 31, 2024 As of December 31, 2023 Principal amount outstanding $ 1,154,000 $ 1,154,000 Less: discounts (issuance, redemptions) ( 185,224 ) ( 185,224 ) Amortization of discounts 184,607 182,256 Carrying value 1,153,383 1,151,032 Less Related Party Portion ( 100,000 ) ( 100,000 ) Convertible Notes – A $ 1,053,383 $ 1,051,032 10 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 4 — CONVERTIBLE DEBT (cont.) Group B Commencing in May 2020, the Company entered into an unsecured Subordinated Convertible Promissory Note Agreement (the “Agreements”) with certain lenders (together, the “Holders” or individually, the “Holder”), pursuant to which the Company issued a Subordinated Convertible Promissory Note (individually the “Note” or together the “Notes”) to the Holders, principally the Investors brought in by an investment bank. Interest on the unpaid principal balance accrues at a rate of 6 % per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Unless earlier converted into shares of Equity Securities, the principal and accrued interest will be due and payable by the Company on demand by the Holders at any time after the earlier of (i) the Maturity Date (as defined in each Agreement) and (ii) the closing of the Next Equity Financing (as defined below). The stated Maturity Date was extended in October 2023, under the same terms, until October 31, 2024. The Notes will automatically convert into the type of Equity Securities issued in the Next Equity Financing upon closing. The number of shares of such Equity Securities to be issued will be equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest due on the Note on the date of conversion of 80 % of the price paid per share for Equity Securities by the investors in the Next Equity Financing. No such Next Equity Financing has occurred through March 31, 2024. Equity Securities refers to Company’s common stock or preferred stock and Next Equity Financing refers to the next sale (or series of related sales) by the Company of its equity securities from which the Company receives gross proceeds of not less than $ 10,000,000 (including the aggregate amount of debt securities converted into Equity Securities upon conversion or cancellation of promissory notes). In the event that the Company raises aggregate additional cash proceeds of at least $ 10,000,000 through the sale of the Company’s equity securities, excluding the sales or conversions of Notes under the Agreement, the outstanding principal amount due will automatically, and without any action on part of the holder, be converted into fully paid and non-assessable units of the Company’s equity stock sold in such qualified financing at 12.5 % of the equity stock conversion price. The Company, at its option, may pay all accrued, but unpaid, interest and other charges in cash or by the issuance of additional equity stock at a rate of the applicable conversion price. The Company evaluated the Notes in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and determined the Notes are considered share-settled debt and should be recorded as a liability. This conclusion was determined based on the debt providing the holder with a variable number of shares at settlement with an aggregate fair value equal to the debt instrument’s outstanding principal. The general measurement guidance in ASC 480 requires obligations that can be settled in shares with a fixed monetary value at settlement (e.g., share-settled debt) to be carried at fair value unless other accounting guidance specifies another measurement attribute. It has been determined that the appropriate guidance for share-settled debt is ASC 835. As a result, the Notes were recorded at the amortized cost. The convertible debt balance at March 31, 2024 and December 31, 2023 is summarized as follows: Debt B As of March 31, 2024 As of December 31, 2023 Principal amount outstanding $ 5,154,000 $ 5,154,000 Less: discounts (issuance, redemptions, warrants) ( 1,818,939 ) ( 1,818,939 ) Amortization of discounts 1,818,939 1,818,939 Carrying value $ 5,154,000 $ 5,154,000 11 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 4 — CONVERTIBLE DEBT (cont.) Group C Commencing in July 2021, the Company entered into an unsecured Subordinated Convertible Promissory Note Agreement (the “Agreements”) with certain lenders (together, the “Holders” or individually, the “Holder”), pursuant to which the Company issued a Subordinated Convertible Promissory Note (individually the “Note” or together the “Notes”) to the Holders, principally the Investors brought in by an investment bank. Interest on the unpaid principal balance accrues at a rate of 6 % per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Unless earlier converted into shares of Equity Securities, the principal and accrued interest will be due and payable by the Company on demand by the Holders at any time after the earlier of (i) the Maturity Date (as defined in each Agreement) and (ii) the closing of the Next Equity Financing (as defined below). The stated Maturity Date was extended in October 2023, under the same terms, until October 31, 2024. The Notes will automatically convert into the type of Equity Securities issued in the Next Equity Financing upon closing. The number of shares of such Equity Securities to be issued will be equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest due on the Note on the date of conversion of 80 % of the price paid per share for Equity Securities by the investors in the Next Equity Financing. No such Next Equity Financing has occurred through March 31, 2024. Equity Securities refers to Company’s common stock or preferred stock and Next Equity Financing refers to the next sale (or series of related sales) by the Company of its equity securities from which the Company receives gross proceeds of not less than $ 10,000,000 (including the aggregate amount of debt securities converted into Equity Securities upon conversion or cancellation of promissory notes). In the event that the Company raises aggregate additional cash proceeds of at least $ 10,000,000 through the sale of the Company’s equity securities, excluding the sales or conversions of Notes under the Agreement, the outstanding principal amount due will automatically, and without any action on part of the holder, be converted into fully paid and non-assessable units of the Company’s equity stock sold in such qualified financing at 12.5 % of the equity stock conversion price. The Company, at its option, may pay all accrued, but unpaid, interest and other charges in cash or by the issuance of additional equity stock at a rate of the applicable conversion price. The Company evaluated the Notes in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and determined the Notes are considered share-settled debt and should be recorded as a liability. This conclusion was determined based on the debt providing the holder with a variable number of shares at settlement with an aggregate fair value equal to the debt instrument’s outstanding principal. The general measurement guidance in ASC 480 requires obligations that can be settled in shares with a fixed monetary value at settlement (e.g., share-settled debt) to be carried at fair value unless other accounting guidance specifies another measurement attribute. It has been determined that the appropriate guidance for share-settled debt is ASC 835. As a result, the Notes were recorded at the amortized cost. The convertible debt balance at March 31, 2024 and December 31, 2023 is summarized as follows: Debt C As of March 31, 2024 As of December 31, 2023 Principal amount outstanding $ 3,945,020 $ 3,945,020 Less: discounts (issuance, redemptions, warrants) ( 1,088,223 ) ( 1,063,223 ) Amortization of discounts 1,088,223 1,016,620 Carrying value $ 3,945,020 $ 3,873,417 12 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 4 — CONVERTIBLE DEBT (cont.) Group D Commencing in November 2022, the Company entered into an unsecured Subordinated Convertible Promissory Note Agreement (the “Agreements”) with certain lenders (together, the “Holders” or individually, the “Holder”), pursuant to which the Company issued a Subordinated Convertible Promissory Note (individually the “Note” or together the “Notes”) to the Holders, principally the Investors brought in by an investment bank. Interest on the unpaid principal balance accrues at a rate of 6 % per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Unless earlier converted into shares of Equity Securities, the principal and accrued interest will be due and payable by the Company on demand by the Holders at any time after the earlier of (i) the Maturity Date (as defined in each Agreement) and (ii) the closing of the Next Equity Financing (as defined below). The stated Maturity Date was extended in October 2023, under the same terms, until October 31, 2024. The Notes will automatically convert into the type of Equity Securities issued in the Next Equity Financing upon closing. The number of shares of such Equity Securities to be issued will be equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest due on the Note on the date of conversion of 50 % of the price paid per share for Equity Securities by the investors in the Next Equity Financing. No such Next Equity Financing has occurred through March 31, 2024. Equity Securities refers to Company’s common stock or preferred stock and Next Equity Financing refers to the next sale (or series of related sales) by the Company of its equity securities from which the Company receives gross proceeds of not less than $ 10,000,000 (including the aggregate amount of debt securities converted into Equity Securities upon conversion or cancellation of promissory notes). In the event that the Company raises aggregate additional cash proceeds of at least $ 10,000,000 through the sale of the Company’s equity securities, excluding the sales or conversions of Notes under the Agreement, the outstanding principal amount due will automatically, and without any action on part of the holder, be converted into fully paid and non-assessable units of the Company’s equity stock sold in such qualified financing at 50 % of the equity stock conversion price. In connection with the Group D Convertible Notes, the Company agreed to issue an additional 400,000 shares of common stock as of March 31, 2024 to the Group D Holders, prorated based on such Holder’s investment amount, as an inducement for their investment in the Group D Convertible Notes. The Company, at its option, may pay all accrued, but unpaid, interest and other charges in cash or by the issuance of additional equity stock at a rate of the applicable conversion price. The Company evaluated the Notes in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and determined the Notes are considered share-settled debt and should be recorded as a liability. This conclusion was determined based on the debt providing the holder with a variable number of shares at settlement with an aggregate fair value equal to the debt instrument’s outstanding principal. The general measurement guidance in ASC 480 requires obligations that can be settled in shares with a fixed monetary value at settlement (e.g., share-settled debt) to be carried at fair value unless other accounting guidance specifies another measurement attribute. It has been determined that the appropriate guidance for share-settled debt is ASC 835. As a result, the Notes were recorded at the amortized cost. The convertible debt balance at March 31, 2024 and December 31, 2023 is summarized as follows: Debt D As of March 31, 2024 As of December 31, 2023 Principal amount outstanding $ 2,000,000 $ 2,000,000 Less: discounts (issuance, redemptions, warrants) ( 1,864,654 ) ( 1,864,654 ) Amortization of discounts 1,864,654 1,814,814 Carrying value $ 2,000,000 $ 1,950,160 13 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 4 — CONVERTIBLE DEBT (cont.) Group E Commencing in February 2023, the Company entered into an unsecured Subordinated Convertible Promissory Note Agreement (the “Agreements”) with certain lenders (together, the “Holders” or individually, the “Holder”), pursuant to which the Company issued a Subordinated Convertible Promissory Note (individually the “Note” or together the “Notes”) to the Holders, principally the Investors brought in by an investment bank. Interest on the unpaid principal balance accrues at a rate of 6 % per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Unless earlier converted into shares of Equity Securities, the principal and accrued interest will be due and payable by the Company on demand by the Holders at any time after the earlier of (i) the Maturity Date (as defined in each Agreement) and (ii) the closing of the Next Equity Financing (as defined below). The stated Maturity Date was extended in October 2023, under the same terms, until October 31, 2024. The Notes will automatically convert into the type of Equity Securities issued in the Next Equity Financing upon closing. The number of shares of such Equity Securities to be issued will be equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest due on the Note on the date of conversion of 50 % of the price paid per share for Equity Securities by the investors in the Next Equity Financing. No such Next Equity Financing has occurred through March 31, 2024. Equity Securities refers to Company’s common stock or preferred stock and Next Equity Financing refers to the next sale (or series of related sales) by the Company of its equity securities from which the Company receives gross proceeds of not less than $ 10,000,000 (including the aggregate amount of debt securities converted into Equity Securities upon conversion or cancellation of promissory notes). In the event that the Company raises aggregate additional cash proceeds of at least $ 10,000,000 through the sale of the Company’s equity securities, excluding the sales or conversions of Notes under the Agreement, the outstanding principal amount due will automatically, and without any action on part of the holder, be converted into fully paid and non-assessable units of the Company’s equity stock sold in such qualified financing at 50 % of the equity stock conversion price. In connection with the Group E Convertible Notes, the Company agreed to issue an additional 220,000 shares of common stock as of March 31, 2024 to the Group E Holders, prorated based on such Holder’s investment amount, as an inducement for their investment in the Group E Convertible Notes. The Company, at its option, may pay all accrued, but unpaid, interest and other charges in cash or by the issuance of additional equity stock at a rate of the applicable conversion price. The Company evaluated the Notes in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and determined the Notes are considered share-settled debt and should be recorded as a liability. This conclusion was determined based on the debt providing the holder with a variable number of shares at settlement with an aggregate fair value equal to the debt instrument’s outstanding principal. The general measurement guidance in ASC 480 requires obligations that can be settled in shares with a fixed monetary value at settlement (e.g., share-settled debt) to be carried at fair value unless other accounting guidance specifies another measurement attribute. It has been determined that the appropriate guidance for share-settled debt is ASC 835. As a result, the Notes were recorded at the amortized cost. The convertible debt balance at March 31, 2024 and December 31, 2023 is summarized as follows: Debt E As of March 31, 2024 As of December 31, 2023 Principal amount outstanding $ 1,100,000 $ 1,100,000 Less: discounts (issuance, redemptions, warrants) ( 550,000 ) ( 550,000 ) Amortization of discounts 550,000 550,000 Carrying value 1,100,000 1,100,000 Less related party portion ( 50,000 ) ( 50,000 ) Convertible Notes – E $ 1,050,000 $ 1,050,000 14 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 4 — CONVERTIBLE DEBT (cont.) Group F Commencing in June 2023, the Company entered into an unsecured Subordinated Convertible Promissory Note Agreement (the “Agreements”) with certain lenders (together, the “Holders” or individually, the “Holder”), pursuant to which the Company issued a Subordinated Convertible Promissory Note (individually the “Note” or together the “Notes”) to the Holders, principally the Investors brought in by an investment bank. Interest on the unpaid principal balance accrues at a rate of 6 % per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Unless earlier converted into shares of Equity Securities, the principal and accrued interest will be due and payable by the Company on demand by the Holders at any time after the earlier of (i) the Maturity Date (as defined in each Agreement) and (ii) the closing of the Next Equity Financing (as defined below). The stated Maturity Date was extended in October 2023, under the same terms, until October 31, 2024. The Notes will automatically convert into the type of Equity Securities issued in the Next Equity Financing upon closing. The number of shares of such Equity Securities to be issued will be equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest due on the Note on the date of conversion of 50 % of the price paid per share for Equity Securities by the investors in the Next Equity Financing. No such Next Equity Financing has occurred through March 31, 2024. Equity Securities refers to Company’s common stock or preferred stock and Next Equity Financing refers to the next sale (or series of related sales) by the Company of its equity securities from which the Company receives gross proceeds of not less than $ 10,000,000 (including the aggregate amount of debt securities converted into Equity Securities upon conversion or cancellation of promissory notes). In the event that the Company raises aggregate additional cash proceeds of at least $ 10,000,000 through the sale of the Company’s equity securities, excluding the sales or conversions of Notes under the Agreement, the outstanding principal amount due will automatically, and without any action on part of the holder, be converted into fully paid and non-assessable units of the Company’s equity stock sold in such qualified financing at 50 % of the equity stock conversion price. In connection with the Group F Convertible Notes, the Company agreed to issue an additional 536,700 shares of common stock as of March 31, 2024 to the Group F Holders, prorated based on such Holder’s investment amount, as an inducement for their investment in the Group F Convertible Notes. The Company, at its option, may pay all accrued, but unpaid, interest and other charges in cash or by the issuance of additional equity stock at a rate of the applicable conversion price. The Company evaluated the Notes in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and determined the Notes are considered share-settled debt and should be recorded as a liability. This conclusion was determined based on the debt providing the holder with a variable number of shares at settlement with an aggregate fair value equal to the debt instrument’s outstanding principal. The general measurement guidance in ASC 480 requires obligations that can be settled in shares with a fixed monetary value at settlement (e.g., share-settled debt) to be carried at fair value unless other accounting guidance specifies another measurement attribute. It has been determined that the appropriate guidance for share-settled debt is ASC 835. As a result, the Notes were recorded at the amortized cost. The convertible debt balance at March 31, 2024 and December 31, 2023 is summarized as follows: Debt F As of March 31, 2024 As of December 31, 2023 Principal amount outstanding $ 2,683,500 $ 1,932,500 Less: discounts (issuance, redemptions, warrants) ( 1,391,750 ) ( 966,250 ) Amortization of discounts 820,424 415,482 Carrying value $ 2,112,174 $ 1,381,732 15 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 4 — CONVERTIBLE DEBT (cont.) Redemption Liability The fair value of the redemption liability is calculated under Level 3 of the fair value hierarchy, is determined based upon a Probability-Weighted of Expected Returns Model (“PWERM”). This PWERM was determined to be the most appropriate method of estimating the value of possible redemption or conversion outcomes over time, since the Company has not entered into a priced equity round through March 31, 2024. The fair value of the redemption liability is calculated using the initial value of the convertible note less the debt discount rate of 12.5 % in Group A, 20 % in Groups B and C, and 50 % in Groups D, E and F. The redemption liability is then amortized over the remaining life of the note, utilizing the interest rates of 10 % and 6 % respectively for the groups. The life of each note in Group A is for a set period of 3 years, and is variable in Groups B, C, D, E and F, with a range of 12 months to 3 years. The Company retains the option to negotiate an extended maturity date for Groups B, C, D, E and F. The new embedded redemption values were $ 475,500 and $ 1,541,250 for the periods ended March 31, 2024 and December 31, 2023, respectively. The redemption liability is re-measured at each period end and is summarized as follows: As of March 31, 2024 As of December 31, 2023 New Embedded Redemption Value – Group A 144,250 144,250 New Embedded Redemption Value – Group B 1,130,800 1,130,800 New Embedded Redemption Value – Group C 789,004 789,004 New Embedded Redemption Value – Group D 1,000,000 1,000,000 New Embedded Redemption Value – Group E 550,000 550,000 New Embedded Redemption Value – Group F 1,441,750 966,250 Ending Balance $ 5,055,804 $ 4,580,304 Fees Associated with Convertible Debt Raise The fees associated with the convertible debt raise are legal and investment fees associated with the issuance of the convertible notes for Groups A, B, C and D. There were no related parties who received these fees. The fees are amortized over the life of the convertible note utilizing an interest rate of 10 % for Group A and 6 % for Groups B, C and D. The debt issuance liability is re-measured at each period end and is summarized in the table below. As of March 31, 2024 As of December 31, 2023 Debt Issuance Costs Group A $ — $ — Group B — — Group C — 9,133 Group D — — Total Net Debt Issuance $ — $ 9,133 16 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 4 — CONVERTIBLE DEBT (cont.) Make-whole liability — Shares due Noble Capital In March 2020, the Company signed a new advisory agreement with Noble Capital, in lieu of cash remuneration and the company agreed to issue 4 % of the Company’s shares, with an anti-dilution clause. The make-whole liability represents the shares earned for the anti-dilution of their stock position over 2020 and 2021. The 2021 year-end had the Company owing an aggregate of 466,404 shares valued in the amount of $ 408,413 , after issuing 400,000 shares in 2020. In 2021, the Company recorded an associated expense to advisory fees of $ 152,482 to recognize the share value earned on the anti-dilution compensation in 2021. In 2022, the Company set aside 141,248 shares to satisfy the anti-dilution clause. In 2022, the Company recorded an associated expense to advisory fees of $ 282,496 to recognize the share value earned on the anti-dilution compensation in the 2022. For the three months ended March 31, 2024 and 2023, the Company recorded an additional 0 and 33,344 shares, respectively, with an associated expense to advisory fees of $ 0 and $ 66,688 , respectively, on the anti-dilution compensation. On July 1, 2023, the make-whole liability for Noble Capital was determined to be contractually nullified. The Company unwound the liability, and it is reflected in our Statement of Stockholders’ Deficit. Make-whole liability — Shares Officers & Directors In January 2023, 700,000 shares of Class A common stock were issued to officers, key employees, key advisors and directors, leaving 40,000 shares in the balance to be issued to Joacim Borg, a director with a value of $ 80,000 . On March 1, 2023, the Company hired Alan Musso, former CFO, and, as part of his compensation contract, he was awarded 25,000 shares of common stock with a value of $ 2.00 per share, the $ 50,000 in compensation of which is reflected in the make-whole stock liability. Alan resigned on June 30, 2023, and Christopher Acevedo, current CFO, took his position. Mr. Acevedo will be awarded the balance of Mr. Musso’s shares upon a successful initial public offering. The Company’s make-whole share liability is summarized in the table below as of March 31, 2024. Name Position # Shares Value Date Earned Alan Musso Former CFO 6,250 $ 12,500 March 1, 2023 Christopher Acevedo Current CFO 18,750 37,500 Upon IPO Joacim Borg Director 40,000 80,000 July 1, 2022 TOTAL 65,000 $ 130,000 Warrants for Placement Agent — Noble Capital In March 2020, the Company signed a new advisory agreement with Noble Capital, in lieu of cash remuneration it was provided a 10 % warrant fee, in addition to cash remuneration on debt raises from Noble procured investments. The terms of the warrants are five years at an exercise price that equates to the average price the convertible debt holders paid in each debt raise round. The number of warrants earned in 2020 was 248,855 valued at $ 248,855 . The number of warrants earned in 2021 was 213,782 , valued at $ 427,564 . The total warrants earned as of December 31, 2022 was 162,644 , valued at $ 325,288 . No warrants were earned in 2023 or in the three months ending March 31, 2024. 17 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 4 — CONVERTIBLE DEBT (cont.) Warrants earned in 2022, 2021 and 2020 have been accounted for as a discount to the associated convertible debt with the discounts amortized over the term of the related debt. The debt discount accretion expense in warrants in the three months ended March 31, 2024 and 2023 was $ 49,840 and $ 83,069 , respectively. The total unamortized discount of those warrants is $ 0 and $ 49,840 as of March 31, 2024 and December 31, 2023, respectively. Short-term Loan An investor lent the Company $ 100,000 on March 7, 2024. The note is a demand note, carrying interest at 8 % and was used for working capital purposes. The company intends to repay the loan in 2024. NOTE 5 — TEDCO GRANT In May of 2021, the Company received the first of two tranches from TEDCO’s Rural & Underserved Business Recovery from Impact of COVID-19 (RUBRIC) Grant in the amount of $ 50,000 . A second tranche of $ 50,000 was received in October 2021 for a total reimbursable grant amount of $ 100,000 . The Company is obligated to report on and pay to TEDCO 3% of their quarterly revenues for a five-year period following the reward date. Income from grants and investments are not considered revenues. Royalties due to TEDCO are capped at 150 % of the amount of the award or $ 150,000 total. The Company has the option to eliminate the quarterly royalty obligation by making an advance payment prior to the end of the five-year period, in which case, the Company will receive a 10 % reduction of the royalty cap percentage for each year prior to the expiration of the five -year reimbursement period that the grant is repaid in full. If the Company ceases to meet eligibility requirements the reimbursement obligation will become due to TEDCO immediately; however the discount for meeting the obligation will still apply. NOTE 6 — COMMITMENTS AND CONTINGENCIES Employee Commitments There are no employee commitments as the Company operates on an at-will employment basis. Rental Agreement The Company had a rental agreement with BXP Shady Grove Lot 7 LLC, beginning in April 2023 and ending in December 2023. The payment term of the license agreement was $ 1,000 per month. Rent expense for the year ended December 31, 2023 was $ 12,000 . The Company has not renewed its lease and has a mailing address at 115 Pullman Crossing Road, Suite 103, Grasonville, Maryland 21638. License Obligation and Manufacturing Agreements Advaxis The Company entered into an exclusive license agreement with Advaxis, Inc. in September 2018, as amended, pursuant to which it acquired the right to develop and commercialize Advaxis HER2 Construct, the Company’s product candidate and the use of Advaxis HER2 Construct patents. Per the agreement, all milestone payments are non-creditable and non-refundable and will be due and payable upon the occurrence of the corresponding milestone event. For clarity, each milestone payment is payable only once. As of December 31, 2020, the Funding Milestone had been achieved and payment in full was made in January 2021. As of May 2021, the second milestone had been completed and paid. For the three months ended March 31, 2024, no payments were made. 18 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 6 — COMMITMENTS AND CONTINGENCIES (cont.) The milestone events and financial terms are as follows: Milestone Amount 1. OST has secured funding of at least Two Million Three Hundred Thirty-Seven Thousand Five Hundred US Dollars ($2,337,500), in the aggregate (The Funding Milestone) (paid) License Commencement Payment $ 1,550,000 2. The earlier to occur of: (A) OST having secured at least Eight Million US Dollars, in the aggregate or (B) Completion of the first Clinical Trial (with “Completion” meaning that the final patient has enrolled in first Clinical Trial) (paid) $ 1,375,000 3. The earlier to occur of: (A) receipt of Regulatory Approval from the FDA for the First Indication of the first Licensed Product or (B) Initiation of the first Registrational Trial of the first Licensed Product in the Field $ 5,000,000 4. Cumulative Net Sales of all Licensed Products in excess of Twenty Million US Dollars ($20,000,000) $ 1,500,000 5. Cumulative Net Sales of all Licensed Products in excess of Fifty Million US Dollars ($50,000,000) Cumulative Net Sales of all Licensed Products in ex $ 5,000,000 6. Cumulative Net Sales of all Licensed Products in excess of One Hundred Million US Dollars ($100,000,000) $ 10,000,000 All milestone payments are non-creditable and non-refundable and are due and payable upon the occurrence of the corresponding date or milestone, regardless of any failure by the Company to provide the notice required by Section 6.4a of the licensing agreement. For clarity, each milestone payment is payable only once. As of December 31, 2020, the first milestone had been achieved. As of January 7, 2021, the license commencement payment was paid in full. As of May 21, 2021, the second milestone had been completed and paid in full. Additionally, on an aggregate basis across all licensed products during the royalty term, the Company will pay quarterly to Advaxis royalties on net sales of licensed products, royalty rates range from a percentage in the high single digits to low double digits. No royalties were payable in the three months ended March 31, 2024. BlinkBio In July 2020, the Company entered into a Licensing Agreement with BlinkBio, Inc., to utilize their proprietary technology. As of August 2020, the $ 300,000 License fee was fully paid and recorded in license expense. These payments have been recorded in the Licensing expenses of the accompanying Statement of Operations. No payments were due or made in 2024. A payment schedule is set for future milestones, is summarized below: Milestone Bearing Event Milestone Payment 1. License Fee to utilize proprietary technology (paid) $ 300,000 + $ 2.4 million Convertible Note 2. Commencement of a toxicology study commented pursuant to Good Laboratory Practices (per 21 CFR Part 58) such that any resulting positive data would be admissible to applicable Regulatory Authorities to support an IND (commonly referred to as “GLP-Tox”) $ 375,000 3. Completion of a Phase I Clinical Trial $ 1,500,000 4. Completion of a Phase II Clinical Trial $ 2,500,000 5. Filing of an NDA, BLA or MAA registration (or the equivalent in any other territory around the world) $ 6,000,000 6. Regulatory Approval in the first of the United States, within the EU or within the UK $ 12,000,000 19 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 6 — COMMITMENTS AND CONTINGENCIES (cont.) The Company will make the cash payments set forth in the table above by wire transfer of immediately available funds, to BlinkBio within thirty (30) days of the occurrence of each milestone set forth with respect to the first Product to attain each such milestone, except that the first Milestone above will apply with respect to The Company’s first product candidate. During the Royalty Term, the Company will pay BlinkBio a royalty of six percent ( 6 %) on Net Sales on a Product-by-Product and country-by-country basis during the Royalty Term, in a country in which no Valid Claim Covers the manufacture, use, or sale of a Product, the royalty on Net Sales of such Product in such country will be reduced to three percent ( 3 %). No royalties were due in the three months ended March 31, 2024, no payments were made in the year 2023. For the avoidance of doubt, each Milestone payment will be payable only once, and the aggregate amount of Milestone payments payable hereunder will not exceed $ 22,375,000 . A Milestone may be achieved by the Company or a Commercial Sublicensee. George Clinical Inc. In June 2020, the Company entered into a Research Service Agreement, as amended, with George Clinical Inc., to use their clinical research services for the Company’s study: “ An Open Label, Phase 2 Study of Maintenance Therapy with OST-HER2 after Resection of Recurrent Osteosarcoma ”. Under the terms of the agreement, the Company is required to pay to George Clinical certain fees described in the fee schedule below. The total budget under the agreement is approximately $ 2,436,928 . For the three months ended March 31, 2024 and year ended December 31, 2023, we paid $ 86,687 and $ 921,300 , respectively, to George Clinical. These payments have been recorded as research and development expenses in our Statement of Operations and Comprehensive Loss. The fee schedule for certain fees and corresponding payment amounts is set forth below. George Clinical Payment Schedule Payment Amount 1. Service Fee Advance (paid) $ 49,989 2. Service Fee Advance of $212,335 minus the amount already paid, plus PTC Fee Advance of $31,325 (paid) $ 193,671 3. Statistics Fees – 35% on Electronic Data Capture (EDC) Go Live Date $ 47,740 4. Statistics Fees – 35% on Development of SAP tables $ 47,740 5. Statistics Fees – 30% on Final Analysis $ 40,920 6. Service Fees – Remainder Due Split monthly over course of study George Clinical will track and invoice the Company for the number of task units completed and pass through costs will be invoiced each month in arrears based on actual costs without mark-up. The PTC Advance Fee will be used to offset final pass through fees payable. As of March 31, 2024, the balance due to George Clinical was $ 644,287 . Legal Proceedings From time to time, the Company may be involved in disputes, including litigation, relating to claims arising out of operations in the normal course of business. Any of these claims could subject the Company to costly legal expenses and, while management generally believes that there will be adequate insurance to cover different liabilities at such time the Company becomes a public company and commences clinical trials, the Company’s future insurance carriers may deny coverage or policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on the results of operations and financial position. Additionally, any such claims, whether or not successful, could damage the Company’s reputation and business. The Company is currently not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, could have a material adverse effect on the Company’s results of operations or financial position. 20 OS Therapies Incorporated Notes to the Unaudited Financial Statements For the Three Months Ended March 31, 2024 and 2023 NOTE 7 — EQUITY Common Stock In 2021, the Company split Common Stock into two classes with fifty million shares of Class A Common Stock, $ 0.001 par value per share (“Class A Common Stock”) designated and twenty million shares of Class B Common Stock, $ 0.001 par value per share (“Class B Common Stock”). On February 9, 2024, the Company changed the name of the Class A Common Stock and Class B Common Stock to combine into the name Common Stock, with 50,000,000 shares authorized. As of March 31, 2024 and December 31, 2023, the Company had 11,982,082 and 10,680,000 shares of Common Stock outstanding, respectively. Common Stock has voting rights . Preferred Stock In 2021, 5,000,000 shares of Preferred Stock were authorized, 1,400,000 was designated as Series A Preferred Stock, with 1,302,082 shares issued of Series A Preferred Stock. Series A Preferred Stock has 5 % cumulative coupon and liquidation priority above all Common Shares. The coupon dividends are computed at 5 % of the principal per annum and are recorded monthly. On February 9, 2024, the Series A Preferred Stock outstanding was converted to Common Stock on a 1:1 basis upon the filing of the Company’s third amended and restate certificate of incorporation. Effective February 9, 2024, the company had five million shares of authorized Preferred Stock, none of which were outstanding. The dividend due for the three months ended March 31, 2024 and the year ended December 31, 2023 was $ 31,250 and $ 125,000 , respectively, for a total accrued dividend payable at March 31, 2024 of $ 375,000 . The Preferred Stock has the following rights and privileges: Voting — Votes together with the Common Stock on all matters on an as-converted basis. Approval of a majority of the New Preferred Stock voting as a separate class will be required to, among other things: (i) adversely change rights of the New Preferred Stock, (ii) change the authorized number of shares of New Preferred Stock. Conversion — Each share of New Preferred Stock is convertible into one share of Common Stock (subject to proportional adjustments for stock splits, stock dividends and the like) at any time at the option of the holder. Conversion ratio will be subject to adjustment on a broad-based, weighted average basis in the event of subsequent issuances at a price less than the original issue price (as adjusted) subject to customary exceptions. Liquidation — One times the original issue price of the New Preferred Stock plus declared but unpaid dividends on each share of New Preferred Stock (or, if greater, the amount that the New Preferred Stock would receive on an as-converted basis) will be paid first on each share of New Preferred Stock, and the balance of proceeds to be paid to Common Stock. A merger, reorganization, or similar transaction (including a sale, exclusive license or other disposition of all or substantially all of the assets of the Company or its subsidiaries) will be treated as a liquidation, thereby triggering payment of the liquidation preference described above. For the avoidance of doubt, the liquidation preference is intended to provide the Investor (and its permitted assigns) with an aggregate liquidation payment of $ 2,500,000 . Total, as of March 31, 2024 Total, as of December 31, 2023 Shares Issued to Investors — 1,302,082 Total Shares Issued — 1,302,082 NOTE 8 — SUBSEQUENT EVENTS The Company has issued $ 0.75 million in Group F Convertible Notes (see Note 4) through April 22, 2024. These notes carry a 6 % interest rate and mature on October 31, 2024 . 21