What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-05 compared with 2024-03-13 · 919 added, 677 removed, 379 unchanged (81% of the section changed)

Financial Statements and Supplementary Data.

Therapeutics, Inc.

Protara Therapeutics, Inc.

Index to Consolidated Financial Statements

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Notes to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

the Stockholders and the Board of Directors of Protara Therapeutics, Inc.

on the Financial Statements

Report of Independent Registered

Public Accounting Firm

To the Stockholders and the Board of Directors of Protara Therapeutics,

Opinion on the Financial Statements

We have audited the accompanying

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(the “Company”) as of December 31, 2024 and 2023, the related consolidated

statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years ended

December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion,

the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31,

2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in

conformity with U.S.

statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the

period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended

December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements

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the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

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We believe that our audits provide a reasonable basis for

The critical audit matter communicated below is

a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the

audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on

the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a

separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from

the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective

or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial

statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical

audit matter or on the account or disclosure to which it relates.

Clinical trial prepaid and accrued expenses

Description of the Matter

As discussed in Note 2 to the consolidated financial statements, depending

on the timing of payments to service providers, the Company records clinical trial prepaid or accrued expenses based on management’s

estimates of the work performed under the service agreements, milestones achieved and experience with similar contracts.

the Company’s accounting for clinical trial prepaid and accrued expenses is challenging due to the fact that information necessary

to estimate the clinical trial prepaid and accrued expenses is accumulated from multiple sources.

The determination of the clinical trial

prepaid and accrued expenses when the Company has either not been invoiced or has not received information regarding actual costs incurred

requires evaluation of the extent of completion of the services.

How We Addressed the Matter in Our Audit

As discussed in Note 2 to the consolidated financial statements, depending on the timing of payments to service providers, the Company records clinical trial prepaid or accrued expenses based on management’s estimates of the work performed under the service agreements, milestones achieved and experience with similar contracts.

Auditing the Company’s accounting for clinical trial prepaid and accrued expenses is challenging due to the fact that information necessary to estimate the clinical trial prepaid and accrued expenses is accumulated from multiple sources.

The determination of the clinical trial prepaid and accrued expenses when the Company has either not been invoiced or has not received information regarding actual costs incurred requires evaluation of the extent of completion of the services.

How We Addressed the

Matter in Our Audit

To test the clinical trial prepaid and accrued expenses, our audit procedures included, among others, i) confirming the completeness of the terms and conditions of certain significant service agreements directly with the vendor;

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/s/ Ernst & Young LLP

have served as the Company’s auditor since 2021

York, New York

Therapeutics, Inc.

Balance Sheets

thousands, except share and per share data)

We have served as the Company’s auditor since 2021

New York, New York

March 5, 2025

Protara Therapeutics, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

Current assets:

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Restricted cash, non-current

Marketable debt securities, non-current

Property and equipment, net

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Accounts payable

Accrued expenses

Accrued expenses and other current liabilities

Operating lease liability

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Preferred stock, $ 0.001 par value, authorized 10,000,000 shares:

Series 1 convertible preferred stock, 8,028 shares authorized at December 31, 2023 and 2022, 7,991 and 8,027 shares issued and outstanding as of December 31, 2023 and 2022, respectively.

Series 1 convertible preferred stock, 8,028 shares authorized at December 31, 2024 and 2023, 7,991 shares issued and outstanding as of December 31, 2024 and 2023.

Common stock, $ 0.001 par value, authorized 100,000,000 shares:

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Total liabilities and stockholders’ equity

accompanying notes to consolidated financial statements.

Therapeutics, Inc.

Statements of Operations and Comprehensive Loss

thousands, except share and per share data)

See accompanying notes to consolidated financial

Protara Therapeutics, Inc.

Consolidated Statements of Operations

and Comprehensive Loss

(in thousands, except share and per

Years Ended December 31,

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General and administrative

Loss on impairment of goodwill

Total operating expenses

Loss from operations

Income (Loss) from operations

Other income (expense), net:

Interest and investment income

Interest and investment income (expenses)

Other income (expense)

Other income (expense), net

Net loss per share attributable to common stockholders, basic and diluted

Weighted average shares outstanding, basic and diluted

Net income (loss)

Other comprehensive income (loss):

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Other comprehensive income (loss)

Comprehensive loss

accompanying notes to consolidated financial statements.

Therapeutics, Inc.

Statements of Changes in Stockholders’ Equity

thousands, except share and per share data)

Comprehensive income (loss)

Net income (loss) per share attributable to common stockholders, basic and diluted

Weighted-average shares outstanding, basic and diluted

See accompanying notes to consolidated financial

Protara Therapeutics, Inc.

Consolidated Statements of Changes

in Stockholders’ Equity

(in thousands, except share and per

Series 1 Convertible

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Balance at December 31, 2022

Settlement of restricted stock units

$ ( 159,964 )

Issuance of common stock upon settlement of restricted stock units

Stock-based compensation - restricted stock units

Stock-based compensation - stock options

Unrealized (loss) gain on marketable debt securities

Conversion of Series 1 Convertible Preferred Stock to common stock

Unrealized gain (loss) on marketable debt securities

Net income (loss)

Balance at December 31, 2023

$ ( 200,384 )

Settlement of restricted stock units

Issuance of common stock upon settlement of restricted stock units

Issuance of common stock upon exercise of stock options

Stock-based compensation - restricted stock units

Stock-based compensation - stock options

Conversion of series 1 convertible preferred stock to common stock

Net unrealized (loss) gain on marketable debt securities

Issuance of common stock, pre-funded warrants and warrants from private placement, net of offering costs of $ 3,034

Issuance of common stock and pre-funded warrants from public offering, net of offering costs of $ 6,665

Issuance of common stock from exercise of common warrants

Unrealized gain (loss) on marketable debt securities

Net income (loss)

Balance at December 31, 2024

$ ( 244,980 )

accompanying notes to consolidated financial statements.

Therapeutics, Inc.

Statements of Cash Flows

See accompanying notes to consolidated financial

Protara Therapeutics, Inc.

Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

Cash flows from operating activities:

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

Loss on impairment of goodwill

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Stock-based compensation

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Accounts payable

Accrued expenses

Accrued expenses and other current liabilities

Operating lease liabilities

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Cash flows from financing activities:

Repurchase of shares in connection with settlement of RSUs

Proceeds from public offering, net of offering costs of $ 6,051

Proceeds from private placement, net of offering costs of $ 3,034

Proceeds from exercise of common warrants

Proceeds from exercise of stock options

Taxes paid related to net share settlement of restricted stock units

Net cash provided by (used in) financing activities

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Cash paid for:

accompanying notes to consolidated financial statements.

Therapeutics, Inc.

Supplemental disclosure of non-cash investing and financing activities:

Proceeds from public offering – offering costs incurred but not paid

See accompanying notes to consolidated financial

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

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cancer, or NMIBC, and lymphatic malformations, or LMs.

The third program in the portfolio is Intravenous, or IV, Choline Chloride, an

investigational phospholipid substrate replacement therapy in development for patients receiving parenteral nutrition, or PN.

Additionally, the Company’s portfolio includes Intravenous, or IV, Choline

Chloride, an investigational phospholipid substrate replacement therapy in development for patients receiving parenteral support, or PS.

Liquidity and Capital Resources

Company is in the business of developing biopharmaceuticals and has no current or near-term revenues.

The Company has incurred substantial

clinical and other costs in its drug development efforts.

The Company will need to raise additional capital in order to fully realize

management’s plans.

Company believes that its current financial resources are sufficient to satisfy the Company’s estimated liquidity needs for at

least 12 months from the date of issuance of these consolidated financial statements.

The Company is in the business

of developing biopharmaceuticals and has no current or near-term revenues.

The Company has incurred substantial clinical and other costs

in its drug development efforts.

The Company will need to raise additional capital in order to fully realize management’s plans.

The Company believes that

its current financial resources are sufficient to satisfy the Company’s estimated liquidity needs for at least 12 months from the

date of issuance of these consolidated financial statements.

Summary of Significant Accounting Policies

of Presentation

accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the

United States of America (“U.S.

GAAP” or “GAAP”).

of Consolidation

consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany balances and

transactions have been eliminated in the accompanying consolidated financial statements.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities at the date of the consolidated

financial statements.

Significant items subject to such estimates include but are not limited to research and development accruals as

well as contingencies.

an ongoing basis, the Company’s management evaluates its estimates based on historical and anticipated results, trends, and various

other assumptions believed to be reasonable.

Basis of Presentation

The accompanying consolidated financial statements have been prepared

in accordance with accounting principles generally accepted in the United States of America, or GAAP.

Principles of Consolidation

The consolidated financial

statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany balances and transactions have been

eliminated in the accompanying consolidated financial statements.

Use of Estimates

The preparation of financial

statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,

revenues, expenses, and related disclosure of contingent assets and liabilities at the date of the consolidated financial statements.

Significant items subject to such estimates include but are not limited to research and development accruals as well as contingencies.

On an ongoing basis, the

Company’s management evaluates its estimates based on historical and anticipated results, trends, and various other assumptions

believed to be reasonable.

Actual results could differ from those estimates.

The results of any changes in accounting

estimates are reflected in the financial statements of the period in which the change becomes evident.

Therapeutics, Inc.

The results of any changes in accounting estimates are

reflected in the financial statements of the period in which the change becomes evident.

Cash and Cash Equivalents and Restricted

The Company considers all highly liquid instruments with an original

maturity of three months or less when acquired to be cash equivalents.

Cash and cash equivalents may be held in depository, money market

accounts and/or U.S.

Treasury securities, and are reported at fair value.

Protara Therapeutics,

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Cash Equivalents and Restricted Cash

Company considers all highly liquid instruments with an original maturity of three months or less when acquired to be cash equivalents.

Cash and cash equivalents are held in depository and money market accounts and are reported at fair value.

The Company’s restricted

cash balances consist of cash deposits to collateralize letter of credit obligations.

following table provides a reconciliation of cash, cash equivalents, and restricted cash in the consolidated balance sheets to the total

amount shown in the consolidated statements of cash flows:

The following table provides

a reconciliation of cash and cash equivalents, and restricted cash in the consolidated balance sheets to the total amount shown in the

consolidated statements of cash flows:

As of December 31,

Cash and cash equivalents

Restricted cash, non-current

Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows

Value Measurements

Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows

Fair Value Measurements

Accounting Standards Codification,

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in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).

value is defined as the exchange price, or an exit price, representing the amount that would be received upon the sale of an asset or

payment to transfer a liability in an orderly transaction between market participants.

As a basis for considering market participant

assumptions in fair value measurements, the three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value

1 Quoted prices in active markets for identical assets or liabilities.

2 Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities

in markets that are not active, or other inputs that are observable, either directly or indirectly.

3 Significant unobservable inputs that cannot be corroborated by market data.

carrying amounts of cash and cash equivalents, prepaid expenses and accounts payable approximate their fair values due to the short-term

nature of these instruments.

Debt Securities

The Company classifies

investments in marketable debt securities with remaining maturities when purchased of greater than three months as

available-for-sale.

Investments with a remaining maturity date greater than one year are classified as non-current.

securities sold is based on the specific identification method.

Interest earned on securities that are classified as

available-for-sale are included in interest and investment income.

Fair value is defined as

the exchange price, or an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer

a liability in an orderly transaction between market participants.

As a basis for considering market participant assumptions in fair value

measurements, the three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.

Level 3 Significant unobservable inputs that cannot be corroborated by market data.

The carrying amounts of cash

and cash equivalents, prepaid expenses and accounts payable approximate their fair values due to the short-term nature of these instruments.

Marketable Debt Securities

The Company classifies investments

in marketable debt securities with remaining maturities when purchased of greater than three months as available-for-sale.

with a remaining maturity date greater than one year are classified as non-current.

The cost of securities sold is based on the specific

identification method.

Interest earned on securities that are classified as available-for-sale are included in interest and investment

The Company records investments

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risk of these investments.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

The Company periodically evaluates the need for an allowance

for credit losses.

This evaluation includes consideration of several qualitative and quantitative factors, including whether it plans

to sell the security, whether it is more likely than not it will be required to sell any marketable debt securities before recovery of

its amortized cost basis, and if the entity has the ability and intent to hold the security to maturity, and the portion of any unrealized

loss that is the result of a credit loss.

Factors considered in making these evaluations include quoted market prices, recent financial

results, operating trends, and implied values from any recent transactions or offers of investee securities, credit quality of debt instrument

issuers, expected cash flows from securities, other publicly available information that may affect the value of the marketable debt security,

duration and severity of decline in value and the Company’s strategy and intentions for holding the marketable debt security.

Concentrations

of Credit Risk

instruments, which potentially subject the Company to concentrations of credit risk, consists principally of cash, cash equivalents,

restricted cash, and marketable debt securities.

Company currently invests its excess cash primarily in money market funds and high quality, investment grade marketable debt securities

of corporations.

The Company has adopted an investment policy that includes guidelines relative to credit quality, diversification and

maturities to preserve principal and liquidity.

and Equipment, net

and equipment, including leasehold improvements, are recorded at cost less accumulated depreciation and amortization.

Depreciation is

computed using the straight-line method over the estimated useful life of the asset.

Depreciation begins at the time the asset is placed

Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful

life of the asset.

Repairs and maintenance costs are expensed as incurred, whereas major improvements are capitalized as additions to

property and equipment.

estimated useful lives for significant property and equipment categories are as follows:

Classification

fixtures and other

Shorter of the useful life of asset or the lease term

Company enters into contracts in the normal course of business and assesses whether any such contracts contain a lease.

The Company determines

if an arrangement is a lease at inception if it conveys the right to control the identified asset for a period of time in exchange for

consideration.

Under ASC 842, lease expense is recognized as a single lease cost on a straight-line basis over the lease term.

term consists of non-cancelable periods and may include options to extend or terminate the lease term, when it is reasonably certain

such options will be exercised.

The Company periodically

evaluates the need for an allowance for credit losses.

This evaluation includes consideration of several qualitative and quantitative

factors, including whether it plans to sell the security, whether it is more likely than not it will be required to sell any marketable

debt securities before recovery of its amortized cost basis, and if the entity has the ability and intent to hold the security to maturity,

and the portion of any unrealized loss that is the result of a credit loss.

Factors considered in making these evaluations include quoted

market prices, recent financial results, operating trends, and implied values from any recent transactions or offers of investee securities,

credit quality of debt instrument issuers, expected cash flows from securities, other publicly available information that may affect the

value of the marketable debt security, duration and severity of decline in value and the Company’s strategy and intentions for holding

the marketable debt security.

Concentrations of Credit Risk

Financial instruments, which

potentially subject the Company to concentrations of credit risk, consists principally of cash and cash equivalents, restricted cash and

investments in marketable debt securities.

The Company invests its excess

cash primarily in money market funds and high quality investment grade marketable debt securities of governments and/or corporations.

The Company has adopted an investment policy that includes guidelines relative to credit quality, diversification and maturities to preserve

principal and liquidity.

Property and Equipment, net

Property and equipment, including

leasehold improvements, are recorded at cost less accumulated depreciation and amortization.

Depreciation is computed using the straight-line

method over the estimated useful life of the asset.

Depreciation begins at the time the asset is placed in service.

Leasehold improvements

are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset.

Repairs and maintenance

costs are expensed as incurred, whereas major improvements are capitalized as additions to property and equipment.

The estimated useful lives

for significant property and equipment categories are as follows:

Asset Classification Estimated Useful Life

Computer equipment 3 - 5 years

Furniture, fixtures and other 5 years

Laboratory equipment 7 years

Leasehold improvements Shorter of the useful life of asset or the lease term

The Company enters into contracts in the normal course of business

and assesses whether any such contracts contain a lease.

The Company determines if an arrangement is a lease at inception if it conveys

the right to control the identified asset for a period of time in exchange for consideration.

Under Accounting Standards Codification,

or ASC, 842, lease expense is recognized as a single lease cost on a straight-line basis over the lease term.

The lease term consists

of non-cancelable periods and may include options to extend or terminate the lease term, when it is reasonably certain such options will

be exercised.

Leases classified as operating

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Lease liabilities represent

the present value of future lease payments, net of lease incentives, discounted using an incremental borrowing rate, which is a management

estimate based on the information available at the commencement date of a lease arrangement.

ROU assets and lease liabilities are recognized

at the lease commencement date.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Company has elected to account for the lease and non-lease components for leases as a single component for classes of all underlying

assets and allocate all the contract consideration to the lease component only.

Lease cost for operating leases is recognized on a straight-line

basis over the lease term and is included in operating expenses on the statements of operations and comprehensive loss.

Variable lease

payments are included in lease operating expenses.

the present value of future lease payments, discounted using an incremental borrowing rate, which is a management estimate based on the

information available at the commencement date of a lease arrangement.

ROU assets and lease liabilities are recognized at the lease commencement

The Company has elected to

account for the lease and non-lease components for leases as a single component for classes of all underlying assets and allocate all

the contract consideration to the lease component only.

Lease cost for operating leases is recognized on a straight-line basis over the

lease term and is included in operating expenses on the statements of operations and comprehensive loss.

Variable lease payments are included

in lease operating expenses.

The Company recognizes costs

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such short-term leases are not recorded on the balance sheet.

of Long-Lived Assets

assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset

group may not be recoverable or that the useful life is shorter than originally estimated.

When such events occur, the Company compares

the carrying amounts of the asset or asset group to the undiscounted expected future cash flows.

If this comparison indicates that the

asset or asset group is impaired, the amount of impairment is measured as the difference between the carrying value and fair value of

the asset or asset group.

If the useful life is shorter than originally estimated, the Company will amortize the remaining carrying value

over the new shorter useful life.

To date, no such impairment loss has been recognized.

The Company identifies its

operating segments in accordance with Accounting Standards Codification 280, Segment Reporting, or ASC 280.

Operating segments are defined

as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating

decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief

operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes

of allocating resources.

Accordingly, the Company has determined it operates and manages its business in a single reportable operating

represented the excess of purchase price over the fair value of identifiable net assets acquired in a business combination.

has an indefinite useful life.

Goodwill was assessed annually for impairment as of December 31, or more frequently if an event occurs

or circumstances change that would indicate that it is more likely than not that the fair value of a reporting unit or the fair value

of an indefinite-lived intangible asset has declined below its carrying value.

In performing its annual goodwill impairment assessment,

the Company has the option under GAAP to qualitatively assess whether it is more likely than not that the fair value of a reporting unit

is less than its carrying value;

if the conclusion of the qualitative assessment is that there are no indicators of impairment, the Company

does not perform a quantitative assessment.

Otherwise, a quantitative assessment is performed and the fair value of the reporting unit

is determined.

was evaluated for impairment at the reporting unit level, which is defined as an operating segment, or one level below an operating segment.

The Company has determined that it operates as one reporting unit and has selected December 31 as the date to perform its annual impairment

of December 31, 2022, the Company elected to forego the qualitative screen and performed a quantitative annual goodwill impairment test

for the reporting unit.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

of December 31, 2022, the Company’s stock price and market capitalization declined 60 % from December 31, 2021, which reflected

the overall decline of similar companies with less than $ 250 million in market capitalizations, or microcap companies.

The life sciences

sector, which includes pre-commercialization and therefore net operating loss generating companies, relied heavily on the capital markets

to finance their operations and fund pre-clinical and clinical trials for their existing development programs.

As a result of a shift

in risk appetite in the overall financial markets, the availability of capital for life science sector companies decreased significantly

The challenging financing conditions had a negative impact on stock prices and respective market capitalizations, particularly

for microcap companies.

The Company considered the heightened financing risk that impacted the life sciences sector during 2022 to be

one of the key macroeconomic factors that led to a sustained decrease in the Company’s stock price and market capitalization leading

up to its annual goodwill impairment assessment date in late 2022.

Based upon the results of

its 2022 annual goodwill impairment test, the Company recorded a loss on impairment of goodwill of $ 29.5 million during the year ended

December 31, 2022, resulting in full impairment of goodwill.

following table provides a roll forward of the Company’s goodwill and accumulated impairment losses:

Goodwill, gross amount as of January 1, 2022

Loss on impairment

Goodwill as of December 31, 2022

and Development

and development expenses consist primarily of third-party costs incurred to develop drug candidates, personnel-related expenses, including

salaries, benefits, travel and stock-based compensation expense, depreciation and other allocated overhead costs, which include rent

and maintenance of facilities and other supplies.

Impairment of Long-Lived Assets

Long-lived assets are reviewed

for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable

or that the useful life is shorter than originally estimated.

When such events occur, the Company compares the carrying amounts of the

asset or asset group to the undiscounted expected future cash flows.

If this comparison indicates that the asset or asset group is impaired,

the amount of impairment is measured as the difference between the carrying value and fair value of the asset or asset group.

If the useful

life is shorter than originally estimated, the Company will amortize the remaining carrying value over the new shorter useful life.

date, no such impairment loss has been recognized.

Segment Information

In accordance with ASC 280, Segment Reporting, operating segments are

defined as components of an enterprise for which separate discrete information is available for evaluation by the chief operating decision

maker, or CODM, or decision-making group in deciding how to allocate resources and in assessing performance.

The Company views its operations

and manages its business as one operating and reporting segment.

See Note 16, Segment Information for further information.

Research and Development

Research and development

expenses consist primarily of third-party costs incurred to develop drug candidates, personnel-related expenses, including salaries, benefits,

travel and stock-based compensation expense, depreciation and other allocated overhead costs, which include rent and maintenance of facilities

and other supplies.

Research and development costs are expensed as incurred.

a compound receives regulatory approval, the Company records upfront and milestone payments made to third parties under licensing arrangements

as expense provided that there is no alternative future use of the rights in other research and development projects.

Nonrefundable

advance payments to vendors for goods or services that will be used or received in future research and development activities are deferred

and recognized as expense in the period in which the related goods are delivered or services are performed.

Where milestone payments

are due to third parties under research and development collaboration arrangements or other contractual agreements, the milestone payment

obligations are expensed when the milestone conditions are met and the amount of payment is reasonably estimable.

a compound receives regulatory approval, the Company records any milestone payments in identifiable intangible assets, less accumulated

amortization and, unless the asset is determined to have an indefinite life, the Company amortizes the payments on a straight-line

basis over the remaining agreement term or the expected product life cycle, whichever is shorter.

Before a compound receives

regulatory approval, the Company records upfront and milestone payments made to third parties under licensing arrangements as expense

provided that there is no alternative future use of the rights in other research and development projects.

Nonrefundable advance payments

to vendors for goods or services that will be used or received in future research and development activities are deferred and recognized

as expense in the period in which the related goods are delivered or services are performed.

Where milestone payments are due to third

parties under research and development collaboration arrangements or other contractual agreements, the milestone payment obligations are

expensed when the milestone conditions are met and the amount of payment is reasonably estimable.

Once a compound receives

regulatory approval, the Company records any milestone payments in identifiable intangible assets, less accumulated amortization and,

unless the asset is determined to have an indefinite life, the Company amortizes the payments on a straight-line basis over the remaining

agreement term or the expected product life cycle, whichever is shorter.

Certain third-party costs

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monitors each of these factors and adjusts estimates accordingly.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty

about the recovery of the expenditure.

All patent-related costs

incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery

of the expenditure.

Amounts incurred are classified as general and administrative expenses.

and Investment Income

income consists primarily of interest income, accretion income earned and amortization expense incurred and realized gains or losses related

to our marketable debt securities, interest income related to cash, cash equivalents and restricted cash and dividend income related

to money market funds.

Interest and Investment Income

Investment income consists

primarily of interest income, accretion income earned and amortization expense incurred and realized gains or losses related to our

marketable debt securities, interest income related to cash and cash equivalents and restricted cash and dividend income related to money

market funds.

Stock-Based Compensation

The Company’s stock-based

1 unchanged sentence

accounts for stock-based compensation using the fair value method.

Company measures all stock options and other stock-based awards granted to employees and directors based on the fair value on the date

of the grant and recognizes compensation expense of those awards over the requisite service period, which is generally the vesting period

of the respective award.

The Company measures all

stock options and other stock-based awards granted to employees and directors based on the fair value on the date of the grant and recognizes

compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award.

The Company recognizes forfeitures at the time forfeitures occur.

13 unchanged sentences

commensurate with the expected term at the time of grant or remeasurement.

stock-based compensation expense associated with purchase rights under the ESPP is measured at fair-value using a Black-Scholes option-pricing

model at commencement of each offering period and recognized over that offering period.

The Black-Scholes option pricing assumptions

are similar to those used for stock options with the exception of the expected term of purchase rights for the ESPP which is based on

the duration of an offering period.

fair values of RSUs are based on the fair market value of the Company’s common stock on the date of the grant.

RSUs are granted to directors pursuant to the Company’s equity plan.

Settlement for the RSUs is deferred until the earliest to

occur of (i) the director’s termination of service, (ii) death, (iii) disability or (iv) a change in control of the Company.

the event of a change in control of the Company, the RSUs will vest in full.

fair value of all stock-based awards is recognized as stock-based compensation expense on a straight-line basis over the vesting period,

which is typically one to four years for RSUs and four years for stock options.

Company classifies stock-based compensation expense in its statement of operations and comprehensive loss in the same way the payroll

costs or service payments are classified for the related stock-based award recipients.

tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial

statement carrying amounts of existing assets and liabilities and their respective tax basis, operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences

are expected to be recovered or settled.

The measurement of net deferred tax assets is reduced by the amount of any tax benefit that,

based on available evidence, is not expected to be realized, and a corresponding valuation allowance is established.

In making such a

determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary

differences, projected future taxable income, tax-planning strategies, and results of recent operations.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

The stock-based compensation

expense associated with purchase rights under the ESPP is measured at fair-value using a Black-Scholes option-pricing model at commencement

of each offering period and recognized over that offering period.

The Black-Scholes option pricing assumptions are similar to those used

for stock options with the exception of the expected term of purchase rights for the ESPP which is based on the duration of an offering

The fair values of RSUs are

based on the fair market value of the Company’s common stock on the date of the grant.

RSUs were historically granted to directors pursuant to the Company’s

Settlement for these RSUs is deferred until the earliest to occur of (i) the director’s termination of service, (ii)

death, (iii) disability or (iv) a change in control of the Company.

In the event of a change in control of the Company, the RSUs will

vest in full.

The fair value of all stock-based awards is recognized as stock-based

compensation expense on a straight-line basis over the vesting period, which is typically three years for RSUs and one or four years for

stock options.

The Company classifies stock-based

compensation expense in its statement of operations and comprehensive loss in the same way the payroll costs or service payments are classified

for the related stock-based award recipients.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.

amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.

A liability for unrecognized tax benefits is recorded for any tax benefits claimed in the Company’s tax returns that do not meet

these recognition and measurement standards.

The Company’s policy is to record interest and penalties on uncertain tax positions

as a component of income tax expense in the consolidated statement of operations and comprehensive loss.

Loss Per Share Attributable to Common Stockholders

net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares

of common stock outstanding during the period.

Diluted net loss per share is computed by dividing net loss attributable to common stockholders

by the weighted-average number of shares of common stock outstanding during the period plus the common equivalent shares for the period

including any dilutive effect from unvested restricted common stock, outstanding stock options and potential shares issuable under the

Adopted Accounting Pronouncements

June 2016, the Financial Accounting Standards Board, or the FASB, issued ASU 2016-13 - Measurement of Credit Losses on Financial Statements .

The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale

debt securities be recorded through an allowance for credit losses.

It also limits the amount of credit losses to be recognized for available-for-sale

debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit

losses if fair value increases.

In November 2019, the FASB issued ASU 2019-10 – Financial Instruments – Credit Losses

(Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates , which amended the effective date for certain

The standard is effective for public companies eligible to be smaller reporting companies for annual and interim periods beginning

after December 15, 2022.

On January 1, 2023, the Company adopted ASU 2016-13, using a modified retrospective approach.

The adoption of

this standard did not have an effect on the Company’s consolidated financial position, results of operations, or cash flows.

Accounting Pronouncements Not Yet Adopted

Company has evaluated other recently issued accounting pronouncements and has concluded that the impact of recently issued standards

that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements

were available to be issued.

Other than as described in Note 12 and, the Company did not identify any subsequent events that would

have required adjustment or disclosure in the financial statements.

Fair Value of Financial Instruments

tables below present information about the Company’s financial instruments that are measured at fair value on a recurring basis

as of December 31, 2023 and 2022 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine

such fair value, as described under Note 2, Summary of Significant Accounting Policies.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

Deferred tax assets and liabilities

are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts

of existing assets and liabilities and their respective tax basis, operating loss and tax credit carryforwards.

Deferred tax assets and

liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered

The measurement of net deferred tax assets is reduced by the amount of any tax benefit that, based on available evidence,

is not expected to be realized, and a corresponding valuation allowance is established.

In making such a determination, the Company considers

all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable

income, tax-planning strategies, and results of recent operations.

Tax benefits are recognized

only for tax positions that are more likely than not to be sustained upon examination by tax authorities.

The amount recognized is measured

as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.

A liability for unrecognized tax

benefits is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement

The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense

in the consolidated statement of operations and comprehensive loss.

Net Income (Loss) Per Share Attributable

to Common Stockholders

Basic net income (loss) per share is computed by dividing the net income

(loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

weighted-average number of shares of common stock outstanding during the period includes any contingently issuable shares for which there

is no circumstance under which those shares would not be issued and shares issuable upon the exercise of warrants to purchase common stock

for no or nominal consideration.

Diluted net income (loss)

per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common

stock outstanding during the period plus the common equivalent shares for the period including any dilutive effect from unvested restricted

stock units, outstanding stock options, potential shares issuable under the ESPP, and potential shares issuable upon conversion of preferred

stock or exercise of outstanding warrants to purchase common stock.

The Company accounts for warrants as either equity-classified or liability-classified

instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in the Financial Accounting

Standards Board, or the FASB, ASC, 480, Distinguishing Liabilities from Equity , or ASC 480, and ASC 815, Derivatives and Hedging ,

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition

of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including

whether the warrants are indexed to the Company’s own stock and whether the warrant holders could potentially require “net

cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

the Company determines if the warrants meet the definition of a derivative based on their contractual terms.

This assessment, which requires

the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while

the warrants are outstanding.

For issued or modified warrants

that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in

capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants

are required to be recorded at their initial fair value on the date of issuance, and at each balance sheet date thereafter.

the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the consolidated statements of

The Company also evaluates if changes in contractual terms or other considerations would result in the reclassification of

outstanding warrants from liabilities to stockholders’ equity (or vice versa).

The fair market value of

the warrants may be estimated using a Black-Scholes option-pricing model or potentially more complex valuation models depending on the

nature of the contractual terms.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

following tables present the Company’s financial assets and liabilities that are measured and carried at fair value and indicate

the level within the fair value hierarchy of the valuation techniques it utilizes to determine such fair value:

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update, or ASU,

2023-07 – Improvements to Reportable Segment Disclosures, which enhances the disclosures required for reportable segments in annual

and interim consolidated financial statements, including additional, more detailed information about a reportable segment’s expenses.

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

December 15, 2024.

Cash equivalents:

The Company adopted ASU 2023-07 for the year ended December 31, 2024 retrospectively to all periods presented in the

consolidated financial statement.

The adoption of this ASU had no impact on reportable segments identified and had no effect on the Company’s

consolidated financial position, results of operations, or cash flows.

Additional required disclosure has been included within Note 16.

Recent Accounting Pronouncements Not Yet

In December 2023, the FASB

issued ASU 2023-09 – Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax

The standard is effective for public companies for annual periods beginning after December 15, 2024.

Early adoption is available.

The Company is still evaluating the full extent of the potential impact of the adoption of ASU 2023-09, but believes it will not have

a material impact on its consolidated financial statements and disclosures.

In November 2024, the FASB

issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures, which enhances

the disclosures for various types of expenses.

The standard is effective for public companies for annual periods beginning after December

Early adoption is available.

The Company is still evaluating the full extent of the potential impact of the adoption of ASU

Subsequent Events

The Company evaluated subsequent events and transactions that occurred

after the balance sheet date up to the date that the financial statements were available to be issued.

Other than as described in Notes

11, 12 and 15,the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

Fair Value of Financial Instruments

The tables below present

information about the Company’s financial instruments that are measured and carried at fair value on a recurring basis as of December

31, 2024 and 2023 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value,

as described under Note 2, Summary of Significant Accounting Policies.

As of December 31, 2024

Cash and cash equivalents:

Money market funds (a)

2 unchanged sentences

Marketable debt securities:

Corporate bonds (c)

December 31, 2022

Cash equivalents:

Treasury securities (c)

As of December 31, 2023

Cash and cash equivalents:

Money market funds (a)

Corporate bonds (a)

Restricted cash, non-current:

2 unchanged sentences

Corporate bonds (c)

(a) Money market funds and bonds with original maturities of 90 days or less are included within Cash and cash equivalents in the consolidated balance sheets.

Agency bonds (c)

(a) Money market funds with original maturities of 90 days or less are included within cash and cash equivalents in the consolidated balance sheets.

(b) Restricted money market funds are included within Restricted cash, non-current in the consolidated balance sheets.

(c) Bonds with original maturities greater than 90 days are included within Marketable debt securities in the consolidated balance sheets and classified as current or noncurrent based upon whether the maturity of the financial asset is less than or greater than 12 months.

Treasury securities and bonds with original maturities greater than 90 days are included within Marketable debt securities in the consolidated balance sheets and classified as current or non-current based upon whether the maturity of the financial asset is less than or greater than 12 months.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Money market funds are classified

9 unchanged sentences

no transfers of financial instruments among Level 1, Level 2, and Level 3 during the period presented.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Non-Recurring

Fair Value Measurements

2022, the Company recorded a goodwill impairment loss of $ 29.5 million, refer to Note 2 for additional details on the impairment of goodwill.

In 2022, the fair value of the Company’s reporting unit was determined using an income approach based on discounted cash flows,

Determining fair value using a DCF analysis requires the exercise of significant judgment with respect to several assumptions

and estimates, including the amount and timing of expected future cash flows and appropriate discount rate to be applied.

cash flows used in the DCF analysis were based on the Company’s most recent internal long-range forecast and budget and, for years

beyond the budget, the Company’s estimates, which were based, in part, on industry benchmarks and forecasted growth rates.

discount rate used in the DCF analysis was intended to reflect the risks inherent in the expected future cash flows of the respective

programs within the Company’s portfolio.

The inputs to the DCF model were Level 3 valuation inputs.

Marketable Debt Securities

debt securities, all of which were classified as available-for-sale, consist of the following as of:

December 31, 2023

Marketable debt securities,

all of which were classified as available-for-sale, consist of the following as of:

As of December 31, 2024

Treasury securities – presented in marketable debt securities

As of December 31, 2023

Corporate bonds - presented in marketable debt securities

Agency bonds - presented in marketable debt securities

December 31, 2022

Corporate bonds - presented in marketable debt securities

Corporate bonds - presented in marketable debt securities, non-current

amount of realized gains and losses reclassified into earnings for the years ended December 31, 2023 and December 31, 2022 was $ 0 and

$ 17 , respectively.

These gains were included in investment income within the consolidated statements of operations and comprehensive

The Company has recorded

the securities at fair value in its consolidated balance sheets and unrealized gains and losses are reported as a component of accumulated

other comprehensive income (loss).

For the years ended December 31, 2024 and 2023 there were no realized gains or losses.

Gains, if any,

would be included in investment income within the consolidated statements of operations and comprehensive loss.

The remaining maturities

of all debt securities held at December 31, 2024 was less than one year.

There were no sales of securities in the periods presented.

Company has recorded the securities at fair value in its consolidated balance sheets and unrealized gains and losses are reported as

a component of accumulated other comprehensive income (loss).

The amount of realized gains and losses reclassified into earnings are

based on the specific identification of the securities sold or securities that reached maturity date.

The amount of realized gains and

losses reclassified into earnings have not been material to the Company’s consolidated statements of operations and comprehensive

the time of purchase, the Company determines the appropriate classification of investments based upon its intent with regard to such

The Company classifies investments in marketable debt securities with remaining maturities when purchased of greater than

three months as available-for-sale.

Investments with a remaining maturity date greater than one year are classified as non-current.

contractual maturities of all securities held at December 31, 2023 was 4 months or less.

There were no sales of securities in the periods

Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Credit Losses

with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of the excess, if any, is caused

by expected credit losses.

For the year ended December 31, 2023, it was determined that none of the unrealized loss is related to expected

credit losses as the Company has the ability and intent to hold all marketable securities that have been in a continuous loss position

until maturity or recovery.

Further, the entire portfolio is held with investment grade high credit quality institutions.

intends to continue investing only in such securities.

Expected credit losses, if they existed, would be recognized in other income (expense),

net within the Company’s consolidated statement of operations and comprehensive income.

The remaining unrealized losses, not related

to credit losses, net of taxes, are included in accumulated other comprehensive loss in stockholders’ equity within the Company’s

consolidated balance sheets.

debt securities in a loss position consist of the following as of:

December 31, 2023

In Continuous Loss Position

Securities with an amortized cost basis in excess

of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit losses.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

As of December 31, 2024, no securities were held

in a loss position.

As of December 31, 2023, marketable debt securities in a loss position consist of the following:

As of December 31, 2023

In Continuous

Loss Position

Less Than 12 Months

In Continuous Loss Position

In Continuous

Loss Position

Greater Than 12 Months

December 31, 2023

Corporate bonds – presented in marketable debt securities

Agency bonds – presented in marketable debt securities

and Investment Income

and investment income consists of the following for the year ended:

As of December 31, 2024 and 2023, it was determined

that there were no expected credit losses.

Interest and Investment Income

Interest and investment income consists of the

For the Year Ended

Interest income

Accretion/(Amortization) of discount/premium, net

Accretion of discount (Amortization of premium), net

Dividend income

Realized gain/loss

Total interest and investment income

Prepaid Expenses and Other Current Assets

expenses and other current assets consist of the following as of:

Prepaid expenses and other

current assets consist of the following:

Prepaid research and development

Prepaid insurance

Prepaid software

Prepaid retention bonuses

Accrued interest on marketable debt securities

Other prepaid expenses

Prepaid software

Other current assets

Therapeutics, Inc.

Notes to Consolidated Financial Statements

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Property and Equipment, net

and equipment, net consists of the following as of:

Property and equipment, net

consists of the following:

Computer equipment

6 unchanged sentences

Total property and equipment, net

expense was $ 341 and $ 247 for the years ended December 31, 2023 and 2022, respectively.

During the year ended December 31, 2023, $ 204

and $ 137 was included in research and development expense and general and administrative expense, respectively, within the consolidated

statements of operations and comprehensive loss.

During the year ended December 31, 2022, $ 137 and $ 110 was included in research and

development expense and general and administrative expense, respectively, within the consolidated statements of operations and comprehensive

As of December 31, 2023 and 2022, 100 % of the Company’s total property and equipment, net was attributable to the United

assets consists of the following as of:

Depreciation expense was

$ 332 and $ 341 for the years ended December 31, 2024 and 2023, respectively.

During the year ended December 31, 2024, $ 202 and $ 130 was

included in research and development expense and general and administrative expense, respectively, within the consolidated statements

of operations and comprehensive loss.

During the year ended December 31, 2023, $ 204 and $ 137 was included in research and development

expense and general and administrative expense, respectively, within the consolidated statements of operations and comprehensive loss.

As of December 31, 2024 and 2023, substantially 100 % of the Company’s total property and equipment, net was attributable to the

United States.

Other assets consists of the following:

Prepaid research and development, non-current

1 unchanged sentence

Other non-current assets

Accrued Expenses

expenses consist of the following as of:

Accrued Expenses and Other Current Liabilities

Accrued expenses and other

current liabilities consist of the following:

Employee costs

1 unchanged sentence

Other expenses

In December 2020, the Company

entered into an agreement to lease approximately 10,300 square feet of office space in New York, New York, the Office Lease, which commenced

in April 2021.

Annual rent is approximately $ 1,117 .

The Office Lease has a term of approximately seven years and contains provisions for

a free-rent period, annual rent increases and an allowance for tenant improvements.

The Company has an option to extend the term by five

years, however, the Company determined at the lease commencement date that it was not reasonably certain to exercise the renewal option

and such renewal was excluded from the operating lease right-of-use, or ROU, asset and operating lease liability recorded for this lease.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Operating leases

In December 2020, the Company entered into an agreement to lease approximately

10,300 square feet of office space in New York, New York, or the Office Lease, which commenced in April 2021.

Annual rent is approximately

The Office Lease has a term of approximately seven years and contains provisions for a free-rent period, annual rent increases

and an allowance for tenant improvements.

The Company has an option to extend the term by five years, however, the Company determined

at the lease commencement date that it was not reasonably certain to exercise the renewal option and such renewal was excluded from the

operating lease ROU asset and operating lease liability recorded for this lease.

The Company is responsible

3 unchanged sentences

$ 745 secured by cash balances included in restricted cash, non-current, within the consolidated balance sheets.

June 2021, the Company amended the existing agreement with its contract development and manufacturing organization, or CDMO, establishing

a term of eight-years from the amendment date.

Leases classified as operating

leases are included in operating lease right-of-use, or ROU, assets, operating lease liabilities and operating lease liabilities, non-current,

in the Company’s consolidated balance sheets.

The Office Lease and the CDMO leased spaces are included in operating lease ROU assets

and operating lease liabilities within the consolidated balance sheets.

Cash paid for operating lease liabilities was $ 1,234 and $ 1,327

during the years ended December 31, 2023 and 2022, respectively.

components of lease expense were as follows:

In June 2021, the Company

amended the existing agreement with its contract development and manufacturing organization, or CDMO, establishing a term of eight-years

from the amendment date.

Leases classified as operating leases are included in operating lease

ROU assets, operating lease liabilities and operating lease liabilities, non-current, in the Company’s consolidated balance sheets.

The Office Lease and the CDMO leased spaces are included in operating lease ROU assets and operating lease liabilities within the consolidated

balance sheets.

The Office Lease and the CDMO leased spaces are located within the United States.

Cash paid for operating lease liabilities

was $ 1,327 and $ 1,234 during the years ended December 31, 2024 and 2023, respectively.

Lease expense consists of the following:

For the Year Ended

1 unchanged sentence

Operating lease expense

Short-term lease expense

lease expense for the years ended December 31, 2023 and 2022, respectively was not material.

weighted average remaining lease term and the weighted average discount rate for operating leases were:

For the year ended

Variable lease expense for the year ended December 31, 2024 was $ 99 .

Variable lease expense for the year ended December 31, 2023 was not material.

The weighted average discount

rate and weighted-average remaining lease term for operating leases were:

Weighted-average discount rate 7.0 % 7.0 %

Weighted-average remaining lease term – operating lease (in months) 43 55

total remaining operating lease payments included in the measurement of lease liabilities on the Company’s consolidated balance

sheet as of December 31, 2023, was as follows:

For the year ending December 31:

As of December 31, 2024,

the expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:

the year ending December 31:

Total future operating lease payments

1 unchanged sentence

Present value of future minimum lease payments

Therapeutics, Inc.

Notes to Consolidated Financial Statements

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

1 unchanged sentence

Employment Agreements

Company’s executive officers have entered into at-will employment agreements.

Collaborations

and License Agreements

License Agreement

Executive Employment Agreements

The Company’s executive officers have entered

into at-will employment agreements.

Collaborations and License Agreements

Choline License Agreement

On September 27, 2017, the

5 unchanged sentences

the “Licensed IND”, “Existing Study Data” and the “Licensed Know-How” for one or more of the licensed

Certain milestone and royalty

payments may also be payable to Dr.

Regardless of whether development or commercialization is undertaken by the Company under

the Choline License Agreement, during the term of the Choline License Agreement, the Company shall pay Dr.

Buchman a minimum annual royalty

that ranges from $ 25 to $ 75 .

The Company will also pay Dr.

Buchman up to $ 775 in additional milestone payments upon the achievement of

various regulatory approval milestones.

Further, the Company agreed to sales royalties described further in Item 1.

the years ended December 31, 2023 and 2022, the Company recorded research and development expense of $ 27 and $ 2 , in connection with the

Choline License Agreement.

December 22, 2017, the Company entered into an agreement, or the Feinstein Agreement, with The Feinstein Institute for Medical Research,

or the Feinstein Institute, a not-for-profit corporation with 50 research labs and 2,500 clinical research studies.

Pursuant to the Feinstein

Agreement, the Company acquired an exclusive license relating to treatment of fatty liver diseases in humans for which Choline may be

an effective therapeutic.

In consideration for the rights and license granted, the Feinstein Institute would receive a royalty of one

percent ( 1 %) of the first one hundred million dollars ($ 100,000 ) of net sales of IV Choline Chloride and a royalty of one and one-half

percent ( 1.5 %) of all net sales thereafter.

In addition, the Company would pay the Feinstein Institute twelve and one-half percent ( 12.5 %)

of net proceeds resulting from agreements entered within 2 years from the effective date, and seven and one-half percent ( 7.5 %) of net

proceeds resulting from agreements entered into thereafter.

Pursuant to the Feinstein Agreement additional payments would be due to the

Feinstein Institute for license maintenance payments and for meeting milestone events.

Pursuant to the Feinstein Agreement, upon the

achievement of certain future new drug application milestones, the Company would be obligated to remit an aggregate of $ 275 .

the years ended December 31, 2023 and 2022, the Company recorded research and development expense of $ 15 and $ 17 , respectively, in connection

with the Feinstein Agreement.

Research and License Agreement

November 28, 2018, the Company entered into a sponsored research and license agreement, or the Iowa Agreement, with the University of

Pursuant to the Iowa Agreement, the University of Iowa, which is engaged in clinical research to improve the diagnosis and treatment

of lymphangioma using a pharmaceutical product (OK-432), would assist the Company in collecting case reports, forms, source data, and

safety data available to the University of Iowa in support of the development of the Company’s proprietary Streptococcus Pyogenes

investigational product, TARA-002 for the LMs indication.

During the term of the services, the Company would generally pay the University

of Iowa thirty thousand dollars ($30) per year to fund the project, plus additional amounts upon the realization of certain milestones.

More specifically, upon forty-five (45) days of an approval of TARA-002 by the FDA, the Company would pay up to $1,750 to the University

of Iowa for meeting these milestones.

Furthermore, the Company would pay the University of Iowa royalties of up to 1.75% for net sales

ranging from $0 - $25,000, 2.25% for net sales ranging from $25,000 to $50,000, and 2.50% for net sales in excess of $50,000.

to the Iowa Agreement, the University of Iowa would be entitled to additional payments for the Company achieving annual net sales of

product according to the milestones.

For annual net sales of product up to $25,000:

for annual net sales of product of up to $50,000:

and for annual net sales of product of up to $100,000:

Therapeutics, Inc.

Notes to Consolidated Financial Statements

Certain milestone and royalty payments may also be payable to Dr.

Regardless of whether development or commercialization is undertaken by the Company under the Choline License Agreement, during the term

of the Choline License Agreement, the Company shall pay Dr.

Buchman a minimum annual royalty that ranges from $ 25 to $ 75 .

will also pay Dr.

Buchman up to $ 775 in additional milestone payments upon the achievement of various regulatory approval milestones.

Further, the Company has an obligation to pay Dr.

Buchman sales royalties based on aggregate net sales of IV Choline Chloride in each

calendar quarter, with the tiered royalty rates ranging from 5.0 % to 10.5 % of net sales.

In the event of development or commercialization

activity by any sublicensees, the Company also agreed to pay Dr.

Buchman a royalty in the mid-single digit percentage of (i) net cash

receipts, after payment of taxes, received by the Company from sublicensees for their sales of licensed products and (ii) any other consideration

received by the Company from such sublicensees;

in each case, including a fair monetary value for any transaction that is not a bona fide

arms-length transaction or that is for consideration other than monetary.

Further, in the event of a sale or transfer of a priority review

voucher regarding the license product, regardless of whether any development or commercialization activity is undertaken by the Company

or the Company’s sublicensees, the Company agreed to pay Dr.

Buchman a milestone payment representing the mid-single digit percentage

of (i) net cash receipts, after payment of taxes and (ii) any other consideration;

in each case, received by the Company, the Company’s

affiliates, or the Company’s sublicensees, including a fair monetary value for any transaction that is not a bona fide arms-length

transaction or that is for consideration other than monetary.

During the years ended December

31, 2024 and 2023, the Company recorded research and development expense of $ 52 and $ 27 , in connection with the Choline License Agreement.

License Agreement

On December 22, 2017, the Company entered into an agreement, or the

Feinstein Agreement, with The Feinstein Institute for Medical Research, or the Feinstein Institute, a not-for-profit corporation with

50 research labs and 2,500 clinical research studies.

Pursuant to the Feinstein Agreement, the Company acquired an exclusive license relating

to treatment of fatty liver diseases in humans for which Choline may be an effective therapeutic.

In consideration for the rights and

license granted, the Feinstein Institute would receive a royalty of one percent ( 1 %) of the first one hundred million dollars ($ 100,000 )

of net sales of IV Choline Chloride and a royalty of one and one-half percent ( 1.5 %) of all net sales thereafter.

In addition, the Company

would pay the Feinstein Institute twelve and one-half percent ( 12.5 %) of net proceeds resulting from agreements entered within two years

from the effective date, and seven and one-half percent ( 7.5 %) of net proceeds resulting from agreements entered into thereafter.

to the Feinstein Agreement additional payments would be due to the Feinstein Institute for license maintenance payments and for meeting

milestone events.

Pursuant to the Feinstein Agreement, upon the achievement of certain future new drug application milestones, the Company

would be obligated to remit an aggregate of $ 275 .

During the years ended December

31, 2024 and 2023, the Company recorded research and development expense of $ 15 and $ 15 , respectively, in connection with the Feinstein

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

to the Iowa Agreement there were no research and development expenses recognized during the years ended December 31, 2023 and 2022.

Sponsored Research and License Agreement

On November 28, 2018, the Company entered into a sponsored research

and license agreement, or the Iowa Agreement, with the University of Iowa.

Pursuant to the Iowa Agreement, the University of Iowa, which

is engaged in clinical research to improve the diagnosis and treatment of lymphangioma using a pharmaceutical product (OK-432), would

assist the Company in collecting case reports, forms, source data, and safety data available to the University of Iowa in support of the

development of the Company’s proprietary Streptococcus Pyogenes investigational product, TARA-002 for the LMs indication.

the term of the services, the Company would generally pay the University of Iowa thirty thousand dollars ($30) per year to fund the project,

plus additional amounts upon the realization of certain milestones.

More specifically, upon forty-five (45) days of an approval of TARA-002

by the Food and Drug Administration, or the FDA, the Company would pay up to $1,750 to the University of Iowa for meeting these milestones.

Furthermore, the Company would pay the University of Iowa royalties of up to 1.75% for net sales ranging from $0 - $25,000, 2.25% for

net sales ranging from $25,000 to $50,000, and 2.50% for net sales in excess of $50,000.

Pursuant to the Iowa Agreement, the University

of Iowa would be entitled to additional payments for the Company achieving annual net sales of product according to the milestones.

annual net sales of product up to $25,000:

for annual net sales of product of up to $50,000:

and for annual net sales of product

of up to $100,000:

There were no research and

development expenses recognized, pursuant to the Iowa Agreement, during the years ended December 31, 2024 and 2023.

Chugai Agreement

On June 17, 2019, the Company

19 unchanged sentences

of the payment payable upon FDA approval of the New Product.

to the agreement there were no research and development expenses recognized during the years ended December 31, 2023 and 2022.

There were no research and

development expenses recognized, pursuant to the Chugai Pharmaceutical Agreement, during the years ended December 31, 2024 and 2023.

Contingencies

time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.

Management is of the opinion that the ultimate outcome of these matters would not have a material adverse impact on the financial position

of the Company or the results of its operations.

the normal course of business, the Company enters into contracts in which it makes representations and warranties regarding the performance

of its services and that its services will not infringe on third-party intellectual rights.

There have been no significant events related

to such representations and warranties in which the Company believes the outcome could result in losses or penalties in the future.

From time to time, the Company

may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.

Management is of

the opinion that the ultimate outcome of these matters would not have a material adverse impact on the financial position of the Company

or the results of its operations.

In the normal course of business,

the Company enters into contracts in which it makes representations and warranties regarding the performance of its services and that

its services will not infringe on third-party intellectual rights.

There have been no significant events related to such representations

and warranties in which the Company believes the outcome could result in losses or penalties in the future.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Stockholders’ Equity

of December 31, 2023, the Company had 100,000,000 shares of common stock authorized for issuance, $ 0.001 par value per share, of which

11,364,903 and 11,267,389 shares were issued and outstanding as of December 31, 2023 and 2022, respectively.

holders of the Company’s common stock are entitled to one vote per share.

As of December 31, 2024,

the Company had 100,000,000 shares of common stock authorized for issuance, $ 0.001 par value per share, of which 35,044,772 and 11,364,903

shares were issued and outstanding as of December 31, 2024 and 2023, respectively.

The holders of the Company’s

common stock are entitled to one vote per share.

Preferred Stock

As of December 31, 2024 and

1 unchanged sentence

of Series 1 Convertible Preferred Stock are authorized for issuance.

As of December 31, 2023 and 2022, 7,991 and 8,027 shares were issued

and outstanding, respectively.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

of Series 1 Convertible Preferred Stock

As of December 31, 2024 and 2023, 7,991 shares were issued and outstanding.

Description of Series 1 Convertible Preferred Stock

Each share of Series 1 Convertible

13 unchanged sentences

such transaction.

terms of the Series 1 Convertible Preferred Stock provide that, in the event of a fundamental transaction (as such term is described

in the certificate of designation of preferences, rights and limitations of series 1 convertible non-voting preferred stock), each share

of Series 1 Convertible Preferred Stock outstanding will thereafter be convertible into the kind and amount of securities, cash and/or

other property which a holder of the number of shares of Common Stock of the Company issuable upon conversion of one share of Series

1 Convertible Preferred Stock immediately prior to such fundamental transaction would have been entitled to receive pursuant to such

fundamental transaction, provided that, if the value of the aggregate of such securities, cash and/or other property the which the holder

of one share of Series 1 Convertible Preferred Stock would be entitled to upon conversion thereof would be less than the stated value,

then each outstanding share of Series 1 Convertible Preferred Stock will instead be convertible into such kind of securities, cash and/or

other property with an aggregate value equal to the stated value.

share of Series 1 Convertible Preferred Stock is entitled to a preference of $ 10.00 per share upon liquidation of the Company, and thereafter

will share ratably in any distributions or payments on an as-converted basis with the holders of Common Stock.

holders of Series 1 Convertible Preferred Stock are not entitled to vote.

August 2023, approximately 36 shares of Series 1 Convertible Preferred Stock were converted into 35,823 shares of common stock.

The terms of the Series 1

Convertible Preferred Stock provide that, in the event of a fundamental transaction (as such term is described in the certificate of designation

of preferences, rights and limitations of series 1 convertible non-voting preferred stock), each share of Series 1 Convertible Preferred

Stock outstanding will thereafter be convertible into the kind and amount of securities, cash and/or other property which a holder of

the number of shares of common stock of the Company issuable upon conversion of one share of Series 1 Convertible Preferred Stock immediately

prior to such fundamental transaction would have been entitled to receive pursuant to such fundamental transaction, provided that, if

the value of the aggregate of such securities, cash and/or other property the which the holder of one share of Series 1 Convertible Preferred

Stock would be entitled to upon conversion thereof would be less than the stated value, then each outstanding share of Series 1 Convertible

Preferred Stock will instead be convertible into such kind of securities, cash and/or other property with an aggregate value equal to

the stated value.

Each share of Series 1 Convertible

Preferred Stock is entitled to a preference of $ 10.00 per share upon liquidation of the Company, and thereafter will share ratably in

any distributions or payments on an as-converted basis with the holders of Common Stock.

The holders of Series 1 Convertible

Preferred Stock are not entitled to vote.

During August 2023, approximately

36 shares of Series 1 Convertible Preferred Stock were converted into 35,823 shares of common stock.

Subsequent to December 31,

2024, in February 2025, approximately 1,191 shares of Series 1 Convertible Preferred Stock were converted into 1,190,996 shares of common

Additionally, in March 2025, approximately 1,185 shares of Series 1 Convertible Preferred Stock were converted

into 1,185,248 shares of common stock.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

2024 Private Placement

On April 5, 2024, the Company

entered into a subscription agreement with certain purchasers, or the Purchasers, pursuant to which the Company agreed to sell

and issue to the Purchasers, in a private placement, or the April 2024 Private Placement, an aggregate of 9,143,380 shares of the Company’s

common stock, or the April 2024 Shares, and, for certain purchasers, pre-funded warrants, or the April 2024 Pre-Funded Warrants, to purchase

an aggregate of 1,700,000 shares of the Company’s common stock.

In each case, the April 2024 Shares or April 2024 Pre-Funded Warrants

were issued with warrants, or the Common Warrants, to purchase an aggregate of up to 10,843,380 shares of the Company’s common stock.

Each April 2024 Share, along with its attached Common Warrant, had a purchase price of $ 4.15 , and each April 2024 Pre-Funded Warrant,

along with its attached Common Warrant, had a purchase price of $ 4.149 .

The closing date of the April 2024 Private Placement was April

The April 2024 Private Placement resulted in gross proceeds of approximately $ 44,998 and

net proceeds of approximately $ 41,964 , reflecting approximately $ 3,034 of placement agent’s fees, legal costs and other expenses

connected with the transaction.

The April 2024 Pre-Funded

Warrants are exercisable at any time, at an exercise price of $ 0.001 per share.

The Common Warrants are exercisable on or prior to the

earlier of (i) April 10, 2027 and (ii) 90 days after the public announcement that the Company has demonstrated a six-month complete response

rate of minimum 42% from at least 25 Bacillus Calmette-Guérin, or BCG,-Unresponsive patients in the ADVANCED-2 (Cohort B) clinical

trial, at an exercise price of $ 5.25 per share.

The April 2024 Pre-Funded

Warrants and the Common Warrants are exercisable so long as the aggregate number of shares of the Company’s common stock beneficially

owned by the holder (together with its affiliates) would not exceed 9.99 %, or for certain holders, 4.99 % of the number of shares of the

Company’s common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in

accordance with the terms of such April 2024 Pre-Funded Warrant or Common Warrant, as applicable.

Such percentage may be increased or

decreased to any number not in excess of 19.99 % at the holder’s election upon notice to the Company, any such increase not to take

effect until the sixty-first day after notice to the Company.

Both the April 2024 Pre-Funded

Warrants and the Common Warrants contain standard adjustments to the exercise price, inclusive of stock splits, stock dividends and pro

rata distributions and contain customary terms regarding the treatment of such April 2024 Pre-Funded Warrants or Common Warrants in the

event of a fundamental transaction, which include but are not limited to a merger or consolidation involving the Company, a sale of all

or substantially all of the assets of the Company or a business combination resulting in any person acquiring more than 50% of the outstanding

shares of common stock of the Company.

Company concluded that the April 2024 Pre-Funded Warrants and Common Warrants met the requirements to be classified in stockholders’

fair market value of the April 2024 Pre-Funded Warrants was estimated as the difference between the share price of our stock on the agreement

date and the exercise price of the April 2024 Pre-Funded Warrant.

fair market value of the Common Warrants at their issuance was estimated using the Black-Scholes option-pricing model.

The assumed dividend

yield was based upon the Company’s expectation of not paying dividends in the foreseeable future.

Expected volatility for the Company’s

common stock was determined based on the historical volatility of the Company over the full term of the warrant.

The risk-free interest

rate was based upon the U.S.

Treasury yield curve commensurate with the expected term at the time of grant.

The expected term of the Common

Warrants was calculated utilizing the three-year expiration date, taking into consideration the possibility of an accelerated expiration

date pursuant to the terms of the Common Warrants.

estimated fair market values of the April 2024 Shares, April 2024 Pre-Funded Warrants and Common Warrants have been recorded in additional

paid in capital.

of December 31, 2024, 725,000 Common Warrants have been exercised.

As of December 31, 2024, no Common Warrants have expired and no

April 2024 Pre-Funded Warrants have been exercised or expired.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

2024 Public Offering

December 9, 2024, the Company entered into an underwriting agreement, or the Underwriting Agreement, with TD Securities (USA) LLC, Cantor

Fitzgerald & Co.

and LifeSci Capital LLC, as representatives, or the Representatives, of the several underwriters named therein, or

collectively, the Underwriters, pursuant to which the Company agreed to sell and issue to the Underwriters an aggregate of 13,690,000

shares, or the December 2024 Shares, of common stock of the Company, par value $ 0.001 per share and, for certain purchasers, pre-funded

warrants, or the December 2024 Pre-Funded Warrants, to purchase an aggregate of 2,325,372 shares of Common Stock, or the December 2024

Public Offering.

The price to the public in the December 2024 Public Offering was $ 6.25 per December 2024 Share and $ 6.249 per December

2024 Pre-Funded Warrant, which is the price per share at which the December 2024 Shares were sold to the public in the December 2024 Public

Offering, minus the $ 0.001 exercise price per December 2024 Pre-Funded Warrant.

In addition, under the terms of the Underwriting Agreement

the Company granted the Underwriters the option, for 30 days, to purchase up to an additional 2,402,305 shares of common stock at the

public offering price, less underwriting discounts and commissions, or the Underwriters’ Option.

December 2024 Public Offering closed on December 11, 2024, resulting in gross proceeds of approximately $ 100.1 million and net proceeds

of approximately $ 93.4 million, reflecting approximately $ 6.7 million of underwriters’ fees, legal costs and other expenses connected

with the transaction.

December 2024 Pre-Funded Warrants are exercisable at any time, at an exercise price of $ 0.001 per share.

The December 2024 Pre-Funded

Warrants contain standard adjustments to the exercise price, including for stock splits, stock dividends and pro rata distributions and

contain customary terms regarding the treatment of such December 2024 Pre-Funded Warrants in the event of a fundamental transaction, which

include but are not limited to a merger or consolidation involving the Company, a sale of all or substantially all of the assets of the

Company or a business combination resulting in any person acquiring more than 50% of the outstanding shares of Common Stock of the Company.

Additionally, the December 2024 Pre-Funded Warrants include restrictions on exercise in the event the Purchaser’s beneficial ownership

of the Company’s common stock would exceed 4.99 % of the number of shares of Common Stock outstanding immediately after giving effect

to the exercise.

Company concluded that the December 2024 Pre-Funded Warrants met the requirements to be classified in stockholders’ equity.

fair market value of the December 2024 Pre-Funded Warrants has been determined as the spread between the price paid by the Underwriters

and the share price of our stock on the agreement date.

The estimated fair values of the December 2024 Shares and December 2024 Pre-Funded

Warrants have been recorded in additional paid in capital.

of December 31, 2024, no December 2024 Pre-Funded Warrants have expired or have been exercised.

to December 31, 2024, on January 8, 2025, the Underwriters notified the Company of their determination to exercise the Underwriters’

Option in part, and purchased an additional 438,738 shares of Common Stock, at the public offering price less underwriting discounts and

Closing for the partial exercise of the Underwriters’ Option occurred on January 13, 2025.

The transaction costs will

be charged to additional paid in capital in the period the Underwriters’ Option was exercised.

exercise of the Underwriters’ Option resulted in gross proceeds of approximately $ 2.7 million and net proceeds of approximately

$ 2.5 million, reflecting approximately $ 0.2 million of underwriters’ fees, legal costs and other expenses connected with the transaction.

Stock-Based Compensation

2014 Equity Incentive Plan

On October 3, 2014, the stockholders

approved the 2014 Equity Incentive Plan.

On June 20, 2017, the Company’s Board of Directors amended the 2014 Equity Incentive Plan,

or the Amended and Restated 2014 Plan.

On July 31, 2017, the stockholders approved this amendment.

On January 1, 2020, Protara Therapeutics,

amended its Amended and Restated 2014 Equity Incentive Plan to increase the number of shares of stock available for issuance under

the 2014 Equity Incentive Plan to 1,048,300 shares and made conforming changes and updates pursuant to Section 162(m) of the Code.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

The Amended and Restated

2014 Plan provided for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock and stock unit

awards, performance units, stock grants and qualified performance-based awards.

The Amended and Restated 2014 Plan provided that the number

of shares reserved and available for issuance would automatically increase each January 1, by four percent of the Company’s common

stock on the immediately preceding December 31, adjusted for the number of shares of the Company’s common stock issuable upon conversion

of any security that the Company may issue that is convertible into or exchangeable for the Company’s common stock, or such lesser

number of shares as determined by the Company’s Board of Directors.

Terms of the stock awards,

including vesting requirements, are determined by the Board of Directors, subject to the provisions of the plans.

Certain awards provide

for accelerated vesting if there is a change in control as defined in the Amended and Restated 2014 Plan.

On January 1, 2023, pursuant

to the annual evergreen feature of the Amended and Restated 2014 Plan, the number of shares authorized under the Amended and Restated

2014 Plan, was increased by 861,933 shares to 3,563,303 shares.

On January 1, 2024, pursuant

to the annual evergreen feature of the Amended and Restated 2014 Plan, the number of shares authorized under the Amended and Restated

2014 Plan, was increased by 911,380 shares to 4,474,683 shares.

Following the approval of the Company’s 2024 Equity Incentive

Plan, or 2024 EIP, by the stockholders of the Company on June 7, 2024, no additional awards will be made under the Amended and Restated

As of December 31, 2024,

there were 3,700,664 shares of common stock subject to outstanding awards.

2017 Equity Incentive Plan

On August 10, 2017, Private

ArTara, (a predecessor of the Company), its Board of Directors and its stockholders approved the ArTara Therapeutics, Inc.

Incentive Plan to enable Private ArTara and its affiliates to recruit and retain highly qualified personnel and to incentivize personnel

for productivity and growth.

The 2017 Equity Incentive

Plan provided for the grant of a total of 2,000,000 shares for the issuance of stock options, stock appreciation rights, restricted stock

and restricted stock units to among others, members of the Board of Directors, employees, consultants and service providers to the Company

and its affiliates.

As of January 9, 2020, in connection with the Merger, no additional awards will be made under the 2017 Equity Incentive

As of December 31, 2024,

there were 134,328 shares of common stock subject to outstanding awards.

2020 Inducement Plan

5 unchanged sentences

material to such persons entering into employment with the Company.

2020 Inducement Plan provides for a total of 600,000 shares for the issuance of the Company’s common stock.

The Compensation Committee

also adopted a form of stock option grant notice and stock option agreement and forms of restricted stock unit grant notice and restricted

stock unit agreement for use with the Inducement Plan.

of December 31, 2023, there were 409,000 shares of common stock subject to outstanding awards and 191,000 shares of common stock available

for future issuance under the 2020 Inducement Plan.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Equity Incentive Plan

August 10, 2017, Private ArTara, (a predecessor of the Company), its Board of Directors and its stockholders approved the ArTara Therapeutics,

2017 Equity Incentive Plan to enable Private ArTara and its affiliates to recruit and retain highly qualified personnel and to incentivize

personnel for productivity and growth.

2017 Equity Incentive Plan provided for the grant of a total of 2,000,000 shares for the issuance of stock options, stock appreciation

rights, restricted stock and restricted stock units to among others, members of the Board of Directors, employees, consultants and service

providers to the Company and its affiliates.

As of January 9, 2020, in connection with the Merger, no additional awards will be made

under the 2017 Equity Incentive Plan.

Equity Incentive Plan

October 3, 2014, the stockholders approved the 2014 Equity Incentive Plan.

On June 20, 2017, the Company’s Board of Directors amended

the 2014 Equity Incentive Plan, or the Amended and Restated 2014 Plan.

On July 31, 2017, the stockholders approved this amendment.

January 1, 2020, Protara Therapeutics, Inc.

amended its Amended and Restated 2014 Equity Incentive Plan to increase the number of shares

of stock available for issuance under the 2014 Equity Incentive Plan to 1,048,300 shares and made conforming changes and updates pursuant

to Section 162(m) of the Code.

Amended and Restated 2014 Plan provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted

stock and stock unit awards, performance units, stock grants and qualified performance-based awards.

The Amended and Restated 2014 Plan

provides that the number of shares reserved and available for issuance will automatically increase each January 1, by four percent of

the Company’s common stock on the immediately preceding December 31, adjusted for the number of shares of the Company’s common

stock issuable upon conversion of any security that the Company may issue that is convertible into or exchangeable for the Company’s

common stock, or such lesser number of shares as determined by the Company’s Board of Directors.

of the stock awards, including vesting requirements, are determined by the Board of Directors, subject to the provisions of the plans.

Certain awards provide for accelerated vesting if there is a change in control as defined in the plans.

January 1, 2023, pursuant to the annual evergreen feature of the Amended and Restated 2014 Plan, as amended, the number of shares authorized

under the Amended and Restated 2014 Plan, as amended, was increased by 861,933 shares to 3,563,303 shares.

As of December 31, 2023, there

were 2,883,056 shares of common stock subject to outstanding awards and 547,382 shares of common stock available for future issuance

under the Amended 2014 Plan.

January 1, 2024, pursuant to the annual evergreen feature of the Amended and Restated 2014 Plan, as amended, the number of shares authorized

under the Amended and Restated 2014 Plan, as amended, was increased by 911,380 shares to 4,474,683 shares.

Employee Stock Purchase Plan

On October 3, 2014, the stockholders

approved the 2014 Employee Stock Purchase Plan, or the 2014 ESPP.

The 2014 ESPP initially authorized the issuance of up to 3,513 shares

of the Company’s common stock.

The number of shares increases each January 1, commencing on January 1, 2015 and ending on (and including)

January 1, 2024, by an amount equal to the lesser of one percent of the outstanding shares as of the end of the immediately preceding

fiscal year, 7,025 shares or any lower amount determined by the Company’s Board of Directors prior to each such January 1st.

January 1, 2023, pursuant to the increase per the 2014 ESPP, the number of shares authorized under the 2014 ESPP was increased by 7,025

shares to 39,087 shares.

As of December 31, 2023, the authorized number of shares under the 2014 ESPP is 39,087 and the number of shares

available for issuance is 39,087 .

During the years ended December 31, 2023 and 2022, no shares were issued under the 2014 ESPP.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

The 2020 Inducement Plan provides for a total of 600,000 shares for

the issuance of the Company’s common stock.

The Compensation Committee also adopted a form of stock option grant notice and stock

option agreement and forms of restricted stock unit grant notice and restricted stock unit agreement for use with the 2020 Inducement

As of December 31, 2024,

there were 512,900 shares of common stock subject to outstanding awards and 87,100 shares of common stock available for future issuance

under the 2020 Inducement Plan.

Subsequent to December 31, 2024, on March 3, 2025, the Compensation

Committee approved a Certificate of First Amendment to the 2020 Inducement Plan to increase the number of shares provided for under the

plan by 600,000 shares to 1,200,000 shares.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

January 1, 2024, pursuant to the increase per the 2014 ESPP, the number of shares authorized under the 2014 ESPP was increased by 7,025

shares to 46,112 shares.

following table summarizes restricted stock unit activity:

2024 Equity Incentive

On June 7, 2024, the stockholders

approved the 2024 EIP.

The 2024 EIP provides for the grant of 1,500,000 shares of common stock for stock options, stock appreciation rights,

restricted stock, restricted stock units, performance units, performance shares and other stock and cash awards.

Terms of the stock awards,

including vesting requirements, are determined by the Board of Directors, subject to the provisions of the 2024 EIP.

As of December 31, 2024,

there were 93,000 shares of common stock subject to outstanding awards and 1,407,000 shares of common stock available for future issuance

under the 2024 EIP.

2024 Employee Stock

Purchase Plan

On June 7, 2024, the stockholders

of the Company approved the 2024 Employee Stock Purchase Plan, or 2024 ESPP.

The number of shares authorized under the 2024 ESPP is 1,000,000 .

As of December 31, 2024,

the number of shares available for issuance was 1,000,000 .

During year ended December 31, 2024, no shares were issued under the 2024 ESPP.

Restricted Stock Units

The following table summarizes restricted stock

unit activity:

Average Grant

1 unchanged sentence

Non-vested at December 31, 2024

fair value of RSUs is amortized on a straight-line basis over the requisite service period of the respective awards.

As of December 31,

2023, the unamortized value of RSUs was $ 569 .

The fair value of RSUs is

amortized on a straight-line basis over the requisite service period of the respective awards.

As of December 31, 2024, the unamortized

value of RSUs was $ 376 .

As of December 31, 2024, the weighted average remaining amortization period was 1.58 years.

As of December 31, 2023 and 2022, 289,500 and 289,500 RSUs, respectively, have vested that have not yet been settled into shares of the

Company’s common stock.

the year ended December 31, 2023, the Company issued 61,691 shares of the Company’s common stock from the net settlement of 94,528

The Company paid $ 91 in connection with the net share settlement of these RSUs.

Company determined the fair value of stock options granted utilizing the Black-Scholes valuation model and based upon the assumptions

as provided below:

For the Years Ended

As of December 31,

2024 and 2023, 289,500 RSUs have vested that have not yet been settled into shares of the Company’s common stock.

During the year ended December

31, 2024, the Company issued 73,909 shares of the Company’s common stock from the net settlement of 111,579 RSUs.

The Company paid

$ 83 in connection with the net share settlement of these RSUs.

Stock Options

The Company determined the

fair value of stock options granted utilizing the Black-Scholes valuation model and based upon the assumptions as provided below:

For the Year Ended

Exercise price

1.91 - $ 5.18

$ 2.77 - $ 6.90

Dividend yield

6 unchanged sentences

Expected life (in years)

following table summarizes stock option activities for the year ended December 31, 2023:

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

The following table summarizes

stock option activities for the year ended December 31, 2024:

Options Weighted

Price Weighted

Term (years) Aggregate

Outstanding at December 31, 2023 2,900,205 $ 9.50 8.03 $ 20

Granted 1,394,700 2.04

Exercised ( 47,580 ) 2.83

Forfeited ( 302,137 ) 3.14

Expired ( 89,710 ) 12.97

Outstanding at December 31, 2024 3,855,478 $ 7.30 7.66 $ 6,736

1 unchanged sentence

Exercisable as of December, 31 2024 1,963,151 $ 11.73 6.71 $ 1,580

(1) Aggregate intrinsic value represents the difference between the exercise price of the option and the closing market price of our common stock on December 31, 2023.

The intrinsic value of options exercised during the years ended December 31, 2023 and 2022 was $ 0 and no options were exercised.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

weighted average grant date fair value per share of the options granted during the years ended December 31, 2023 and 2022 was $ 2.36 and

$ 4.80 , respectively.

As of December 31, 2023, there was approximately $ 5,699 of unrecognized share-based compensation for unvested stock

option grants which is expected to be recognized over a weighted average period of 2.59 years.

The total unrecognized share-based compensation

cost will be adjusted for actual forfeitures as they occur.

of Stock-Based Compensation Expense

following tables summarize total stock-based compensation costs recognized:

For the Years Ended

(1) Aggregate intrinsic

value represents the difference between the exercise price of the option and the closing market price of our common stock on December 31,

The intrinsic value of options exercised during the years ended December 31, 2024 and 2023 were $ 23 and $ 0 , respectively.

The weighted average grant

date fair value per share of the options granted during the years ended December 31, 2024 and 2023 was $ 1.62 and $ 2.36 , respectively.

As of December 31, 2024, there was approximately $ 3,566 of unrecognized share-based compensation for unvested stock option grants which

is expected to be recognized over a weighted average period of 2.43 years.

The total unrecognized share-based compensation cost will be

adjusted for actual forfeitures as they occur.

Summary of Stock-Based Compensation Expense

The following tables summarize total stock-based compensation expense

For the Year Ended

Stock Options

compensation expense was reflected within the consolidated statements of operations and comprehensive loss:

For the Years Ended

Research and development

Stock-based compensation

expense was reflected within the consolidated statements of operations and comprehensive loss as:

For the Year Ended

General and administrative

and State income tax expense is as follows:

For the Years Ended

Research and development

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Federal and State income tax expense is as follows:

For the Year Ended

Total current

2 unchanged sentences

Total income tax expense (benefit)

income taxes, if applicable, are provided for the differences between the basis of assets and liabilities for financial reporting and

income tax purposes.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

tax effects of temporary differences that give rise to significant portions of the deferred tax assets are as follows:

Deferred income taxes, if

applicable, are provided for the differences between the basis of assets and liabilities for financial reporting and income tax purposes.

The tax effects of temporary

differences that give rise to significant portions of the deferred tax assets are as follows:

Deferred tax assets:

11 unchanged sentences

Deferred tax assets, net of valuation allowance and deferred tax liabilities

reconciliation of the provision for income taxes with the amounts computed by applying the statutory Federal income tax to income before

provision for income taxes is as follows:

For the Years Ended

A reconciliation of the provision

for income taxes with the amounts computed by applying the statutory Federal income tax to income before provision for income taxes is

For the Year Ended

federal statutory rate

4 unchanged sentences

Stock-based compensation

Goodwill impairment

Change in valuation allowance

Effective tax rate

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

For the year ended December

1 unchanged sentence

estimate of state taxes, net of federal benefit, of 11.8 %, as well as state tax rate and apportionment changes of 8.1 %, which collectively

are offset by a valuation allowance 33.9 %.

For the year ended December 31, 2022, the Company’s effective tax rate was 0 %, which

consisted principally of a federal rate of 21 %, the Company’s estimate of state taxes, net of federal benefit, of 2.2 %, research

and development credits of 3.3 % and a true-up to the prior year’s tax return of 0.7 %, offset by goodwill impairment of 10.4 % and

a valuation allowance 17.0 %.

As of December 31, 2023 and 2022 for U.S.

federal and state income

tax reporting purposes, the Company has approximately $ 187,492 and $ 114,800 , respectively, of unused net operating losses, or NOLs, available

for carry forward to future years.

As a result of the Tax Cuts and Jobs Act of 2017, or TCJA, for U.S.

income tax purposes, NOLs generated

in tax years beginning before January 1, 2018 can still be carried forward for up to 20 years, but net operating losses generated for

tax years beginning after December 31, 2017 carryforward indefinitely and can be used to offset taxable income.

Of the total Federal NOL,

$ 600 can be carried forward until 2037;

and $ 128,196 can be carried forward indefinitely.

The New York state and city NOLs may be carried

forward through the year 2043 and may be applied against future taxable income.

Further, the benefit from utilization of NOL carry forwards

could be subject to limitations due to material ownership changes that could occur as the Company continues to issue additional shares

of common stock pursuant to its capital raising plans.

Based on such limitations, the Company has significant NOLs for which realization

of tax benefits is uncertain.

The Company has not performed a study to determine whether or not there is such a limitation.

Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Company remains subject to examination by tax authorities for all tax years.

are offset by a valuation allowance impact of 44.5 %.

For the year ended December 31, 2023, the Company’s effective tax rate was

0% , which consisted principally of a federal rate of 21 %, the Company’s estimate of state taxes, net of federal benefit, of 7.8 %,

state tax rate and apportionment changes of 4.0 %, which collectively are offset by a valuation allowance impact of 33.9 %.

As of December 31, 2024 and

December 31, 2023 for U.S.

federal and state income tax reporting purposes, the Company has approximately $ 244,842 and $ 187,492 , respectively,

of unused net operating losses, or NOLs, available for carry forward to future years.

As a result of the Tax Cuts and Jobs Act of 2017,

or TCJA, for U.S.

income tax purposes, NOLs generated in tax years beginning before January 1, 2018 can be carried forward for up to 20

years, but net operating losses generated for tax years beginning after December 31, 2017 may be carried forward indefinitely and can

be used to offset 80 % of taxable income.

Of the total Federal NOL carried forward, $ 600 can be carried forward until 2037 ;

and $ 148,192

can be carried forward indefinitely.

The New York state and city NOLs may be carried forward through the year 2044 and may be applied

against future taxable income.

Further, the benefit from utilization of NOL carry forwards could be subject to limitations due to material

ownership changes that could occur as the Company continues to issue additional shares of common stock pursuant to its capital raising

Based on such limitations, the Company has significant NOLs for which realization of tax benefits is uncertain.

The Company has

not performed a study to determine whether or not there is such a limitation.

The Company remains subject

to examination by tax authorities for all tax years.

Based on a history of cumulative

losses at the Company and the results of operations for the years ended December 31, 2023 and 2022, the Company determined that it is

more likely than not that it will not realize benefits from the net deferred tax assets.

The Company will not record income tax benefits

in the financial statements until it is determined that it is more likely than not that the Company will generate sufficient taxable income

to realize the deferred income tax assets.

As a result of the analysis, the Company determined that a full valuation allowance against

the deferred tax assets, net, was required.

As of December 31, 2023 and 2022, the Company has recorded a valuation allowance of $ 52.7

million and $ 39.0 million, respectively.

losses at the Company and the results of operations for the years ended December 31, 2024 and December 31, 2023, the Company determined

that it is more likely than not that it will not realize benefits from the net deferred tax assets.

The Company will not record income

tax benefits in the financial statements until it is determined that it is more likely than not that the Company will generate sufficient

taxable income to realize the deferred income tax assets.

As a result of the analysis, the Company determined that a full valuation allowance

against the deferred tax assets, net, was required.

As of December 31, 2024 and December 31, 2023, the Company has recorded a valuation

allowance of $ 72.5 million and $ 52.7 million, respectively.

As of December 31, 2024 and

2022, management does not believe that the Company has any material uncertain tax positions that would require it to measure and reflect

the potential lack of sustainability of a position on audit in its consolidated financial statements.

The Company will continue to evaluate

its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary.

Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

December 31, 2023, management does not believe that the Company has any material uncertain tax positions that would require it to measure

and reflect the potential lack of sustainability of a position on audit in its consolidated financial statements.

The Company will continue

to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary.

The Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

Employee Benefit Plan

3 unchanged sentences

Under the 401(k) Plan, the Company matches 100 % of employee contributions up to 4 % of employee compensation.

years ended December 31, 2023 and 2022, the Company recorded expense of $ 237 and $ 223 , respectively, representing employer contributions

years ended December 31, 2024 and 2023, the Company recorded expenses of $ 251 and $ 237 , respectively, representing employer contributions

under the 401(k) Plan.

Net Loss per Common Share

following table sets forth the computation of the net loss per share attributable to common stockholders, basic and diluted:

Net loss attributable to common stockholders

Weighted-average common shares outstanding – basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

the Company was in a net loss position for all periods presented, net loss per share attributable to common stockholders was the same

on a basic and diluted basis, as the inclusion of all potential common equivalent shares outstanding would have been anti-dilutive.

Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation

of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an

anti-dilutive effect:

Stock options issued and outstanding

Restricted stock units issued and outstanding

Conversion of Series 1 Convertible Preferred Stock

Net Income (Loss) per Common Share

The following table sets

forth the computation of the net income (loss) per share attributable to common stockholders, basic and diluted:

For the Year Ended

Net income (loss) attributable to common stockholders

Weighted-average shares of common stock outstanding, basic and diluted

Net income (loss) per share attributable to common stockholders, basic and diluted

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Since the Company was in

a net loss position for all periods presented, net income (loss) per share attributable to common stockholders was the same, on a basic

and diluted basis, as the inclusion of all potential common equivalent shares outstanding would have been anti-dilutive.

The Company excluded

the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted

net income (loss) per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive

Common Warrants

Series 1 Convertible Preferred Stock

Stock options

Underwriters’ Option

Restricted stock units

Total potentially dilutive shares

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Subject to the terms of the

Underwriting Agreement, the Underwriters’ Option allowed for the purchase of an additional 2,402,305 shares of common stock.

to December 31, 2024, on January 8, 2025, the Underwriters notified the Company of their determination to exercise the Underwriters’

Option in part, and purchased an additional 438,738 shares of Common Stock, see Note 11 for further discussion.

Segment Information

The Company’s Chief

Executive Officer is the CODM.

The CODM allocates resources and assesses performance of the Company’s single reportable segment

by regularly reviewing the segment net income (loss) that also is reported on the income statement as consolidated net income (loss).

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The following table sets

forth information about the Company’s single reportable segment and the significant expenses reviewed by the CODM, including a reconciliation

to consolidated net income (loss):

For the Year Ended

Research and development expenses:

TARA-002 in NMIBC

TARA-002 in LMs

IV Choline Chloride

Other research and development

General and administrative expenses

Stock-based compensation expense

Income (loss) from operations

Other income (expense), net

Segment net income (loss)

Adjustments and reconciling items

Net income (loss)

Other research and development

expenses consist of personnel-related expenses as well as other external research and development expenses that are not directly attributable

to a specific program.

Changes in and Disagreements With Accountants on Accounting

and Financial Disclosure.

Not Applicable.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data