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Item 7. Management’s Discussion and Analysis

2025-04-02 compared with 2024-04-29 · 575 added, 283 removed, 4 unchanged (100% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial

statements and the related notes included elsewhere in this Annual Report.

Some of the information contained in this discussion and analysis

or set forth elsewhere in this Annual Report, including information with respect to our plans, objectives, expectations, projections,

and strategy for its business and related financing, includes forward-looking statements that involve risks and uncertainties.

of many factors, including those factors set out in the “Risk Factors” section of this Annual Report, our actual results

could differ materially from the results described in or implied by these forward-looking statements.

See also the section titled “Cautionary

Note Regarding Forward-Looking Statements” in this Annual Report.

otherwise indicated or as the context requires, the historical financial information included or discussed in this Management’s

Discussion and Analysis of Financial Condition and Results of Operations is that of Semper Paratus Acquisition Corporation prior to the

Business Combination because the Business Combination was consummated after the period covered by the financial statements included in

this Annual Report.

In addition, accordingly, unless otherwise indicated or the context requires, historical references to the “Company,”

“we,” “us,” and “our” in this section also generally refer to Semper Paratus Acquisition Corporation

prior to the closing of the Business Combination.

are a clinical-stage specialty immunotherapy company harnessing one of nature’s most powerful immunological weapons, CD8+ cytotoxic

T lymphocytes (“CD8+ CTLs”), to develop off-the-shelf, precision T cell therapies for the treatment of infectious diseases,

cancers, and neurological disorders with the aim of addressing the significant unmet needs of large patient populations.

We believe that

sustainability and commercial success in the forthcoming era of medicine will rely on ensuring patient accessibility through advanced

science and innovative business models.

We aspire to be the first biotechnology company offering commercially attractive, economically

viable, and cost-effective personalized T cell therapies.

believe our allogeneic, precision T cell technology platform, ExacTcell, represents a significant scientific breakthrough that has the

potential to produce a new class of off the shelf – manufactured and stored for immediate use – drugs with diverse applications

spanning virology, oncology, and neurology.

ExacTcell is a set of processes and methodologies to develop, enrich, and expand single HLA

restricted CTL therapies with proactively selected, precisely defined targets.

HLA molecules are proteins that play an important role

in the immune system’s ability to recognize “self” versus “foreign.” CTLs, also known as killer T cells,

are white blood cells that are part of the immune system and destroy infected, malignant, or otherwise damaged cells.

We are focused

on using ExacTcell to develop allogeneic therapeutics, meaning therapeutics that are intended to be infused in patients other than the

original donor.

ExacTcell therapies are based on carefully selected, naturally occurring CTLs that recognize targets of interest from

the body’s native T cell receptor pool, unlike genetically engineered T cell therapies.

Our confidence in ExacTcell is reflected

in our development pipeline, which has been carefully tailored to address the unmet needs of large patient populations grappling with

life-threatening viral diseases, both viral and non-viral induced cancers, and neurological disorders such as multiple sclerosis.

first clinical product of ExacTcell, TVGN 489, is being developed to fill a critical gap in COVID-19 therapeutics for the immunocompromised

and the high-risk elderly, with potential applications in both treatment and prevention of Long COVID.

TVGN 489 consists of CTLs active

against multiple precise, well defined, and well characterized targets across the SARS-CoV-2 genome.

We hope to launch a pivotal trial

of TVGN 489 in COVID-19 patients with B cell malignancies in as soon as late 2024, with studies of other highly vulnerable populations

TVGN 489 is also in preclinical development for treatment and prevention of Long COVID.

date, we have not generated any revenue.

As a result, we have never been profitable and have incurred net losses since the commencement

of our operations.

We do not expect to generate product revenue unless and until we obtain marketing approval for and successfully commercialize

TVGN 489 or another product candidate, and we cannot assure you that we will ever generate significant revenue or profits.

to incur significant expenses related to expanding our research and development capability, building our manufacturing infrastructure

including through acquisition, and our commercialization organization, including reimbursement, marketing, managed market, distribution

functions, and training, and deploying a specialty medical science liaison team.

Paratus Acquisition Corporation

were incorporated as a Cayman Islands exempted company on April 21, 2021.

We were formed for the purpose of entering into a merger, share

exchange, asset acquisition, stock purchase, reorganization or other similar business transaction with one or more businesses (an “Initial

Business Combination”).

November 8, 2021, we consummated the initial public offering (the “IPO”) of 30,000,000 units (“Units”) with respect

to the ordinary shares included in the Units being offered (the “Public Shares”) at $10.00 per Unit generating gross proceeds

of $300,000,000.

Simultaneously with the closing of the IPO, we consummated the sale of 1,360,000 private placement units (“Private

Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to our sponsor, Semper Paratus Sponsor

LLC (the “Original Sponsor”) and underwriter Cantor Fitzgerald & Co.

(“Cantor”), generating gross proceeds

of $13,600,000.

Simultaneously with the closing of the IPO, we consummated the closing of the sale of 4,500,000 additional Units upon

receiving notice of the underwriter’s election to fully exercise its overallotment option (“Overallotment Units”),

generating additional gross proceeds of $45,000,000, and the private placement of an additional 90,000 Private Placement Units to the

Original Sponsor, generating gross proceeds of $900,000.

Following the closing of the IPO, $351,900,000 from the net proceeds of the

sale of the Units in the IPO and the Private Placement Units was placed in a trust account (the “Trust Account”) for investment

government securities with a maturity of 180 days or less or in any open-ended investment company that holds itself as a money

market fund until the earlier of the completion of an Initial Business Combination and the distribution of the Trust Account.

May 4, 2023, we entered into a purchase agreement (the “Purchase Agreement”) with the Sponsor and the Original Sponsor, pursuant

to which the Sponsor purchased from the Original Sponsor (x) 7,988,889 Class A ordinary shares and (y) 1,000,000 Private Placement Units,

each consisting of one Class A ordinary share and one-half of one redeemable warrant that is exercisable for one Class A ordinary share,

free and clear of all liens and encumbrances (other than those contained in the Letter Agreement, dated November 3, 2021, that we entered

into with our officers, directors and the Original Sponsor, and the Underwriting Agreement, dated November 3, 2021, that we entered into

with Cantor as representative of the several underwriters (the “Underwriting Agreement”)), for an aggregate purchase price

of $1.00 (the “Purchase Price”) payable at the time of the Initial Business Combination.

The transactions contemplated by

the Purchase Agreement closed June 7, 2023, and the Original Sponsor transferred the Private Placement Units and the Class A ordinary

shares to the Sponsor.

to the Business Combination (defined below), our management had broad discretion with respect to the specific application of the net

proceeds of its IPO and the sale of Private Placement Warrants, although substantially all of the net proceeds were intended to be applied

generally toward consummating a business combination.

Amendments and Share Redemptions

February 3, 2023, our shareholders approved an amendment (the “First Extension Charter Amendment”) to our Amended and Restated

Memorandum and Articles of Association to extend the date by which we were required to consummate an Initial Business Combination from

February 8, 2023, to December 15, 2023.

Under Cayman Islands law, the First Extension Charter Amendment took effect upon approval by

the shareholders.

In connection with the meeting, shareholders holding approximately 32,116,947 Public Shares exercised their right to

redeem their shares for a pro rata portion of the funds in the Trust Account.

As a result, approximately $333 million (approximately

$10.38 per Public Share) was removed from the Trust Account to pay such holders.

December 14, 2023, our shareholders approved an amendment (the “Second Extension Charter Amendment”) to our Amended and

Restated Memorandum and Articles of Association to extend the date by which we were required to consummate an Initial Business

Combination to September 15, 2024.

Under Cayman Islands law, the Second Extension Charter Amendment took effect upon approval by the

shareholders.

In connection with the meeting, shareholders holding approximately 880,873 Public Shares exercised their right to

redeem their shares for a pro rata portion of the funds in the Trust Account.

As a result, approximately $9.71 million

(approximately $11.03 per Public Share) was removed from the Trust Account to pay such holders.

Approximately $16.7 million remained

in the Trust Account as of December 31, 2023, and we had 1,502,180 public shares outstanding as of December 31, 2023.

January 31, 2024, our shareholders approved the proposals relating to the entry into and consummation of the Merger Agreement.

In connection

with the Meeting, shareholders holding 1,432,457 Public Shares exercised their right to redeem their shares for a pro rata portion of

the funds in the Trust Account.

As a result, approximately $16.0 million (approximately $11.14 per Public Share) was removed from the

Trust Account to pay such holders.

Following these redemptions, approximately $0.8 million remained in the Trust Account.

the Closing Date, pursuant to the Merger Agreement, Merger Sub merged with and into Tevogen Bio, with Tevogen Bio being the surviving

company and our wholly owned subsidiary (the “Merger,” and together with the other transactions contemplated by the Merger

Agreement, the “Business Combination”).

Prior to the effective time of the Merger (the “Effective Time”), pursuant

to the Merger Agreement, we changed our jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing

and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”).

In connection

with the Domestication, we changed our name to “Tevogen Bio Holdings Inc.” Also in connection with the Domestication, our

governing documents were amended and restated.

the Effective Time, in accordance with the terms and subject to the conditions of the Merger Agreement, each share of common stock of

Tevogen Bio issued and outstanding immediately prior to the Effective Time was converted into the right to receive the number of shares

of duly authorized, validly issued, fully paid, and nonassessable shares of our common stock, par value $0.0001 per share (the “Common

Stock”), equal to the quotient obtained by dividing (x) the quotient obtained by dividing (i) $1,200,000,000 by (ii) ten dollars

($10.00) by (y) the aggregate number of shares of the common stock of Tevogen Bio that were issued and outstanding immediately prior

to the Effective Time (the “Exchange Ratio”).

of Operations

of December 31, 2023, we had not commenced any operations.

All activity through December 31, 2023, relates to our formation, the IPO,

the search for an Initial Business Combination, and the consummation of the Business Combination with Tevogen Bio.

We did not generate

any operating revenues prior to the completion of the Business Combination.

We generated non-operating income in the form of interest

income from the proceeds derived from the IPO placed in the Trust Account.

the year ended December 31, 2023, we had a net loss of $67,325, which consisted of unrealized gain on investment held in the Trust

Account of $2,734,426, offset by general and administrative expenses of $2,273,970, change in the fair value of warrants of $21,750, interest expense of $256,031, and impairment of amounts due from related party of $250,000.

the year ended December 31, 2022, we had a net income of $4,408,361, which consisted of unrealized gain on investment held in the Trust

Account of $4,948,194 and change in the fair value of warrants of $413,250, offset by general and administrative expenses of $953,083.

and Capital Resources

the year ended December 31, 2023, net cash used in operating activities was $1,376,351, net loss of $67,325 was impacted by the unrealized

gain on investments held in the Trust Account of $2,734,426, offset by non-cash interest expense of $256,031, the change in the fair value of warrants of $21,750 and changes

in operating assets and liabilities of $1,147,619.

the year ended December 31, 2022, net cash used in operating activities was $215,395, net income of $4,408,361 was impacted by the unrealized

gain on investments held in the Trust Account of $4,948,194, a change in the fair value of warrants of $413,250 and changes in operating

assets and liabilities of $737,688.

of December 31, 2023, we had $8,835 in cash and $16,681,497 remained in the Trust Account.

See “Overview – Charter

Amendments and Share Redemptions” above for a discussion of withdrawals from the Trust Account in connection with redemptions

Our primary sources of funds

to meet our near-term liquidity and capital requirements include cash on hand, including the funding the funding we have received

from the sale of our Series A Preferred Stock, and the funding we expect to receive from the sale of our Series A-1 Preferred Stock.

On February 14, 2024, we entered into a securities purchase agreement with an investor pursuant to which an investor agreed to

purchase shares of our Series A Preferred Stock for an aggregate purchase price of $8.0 million.

On March 27, 2024, we entered into

an agreement pursuant to which that amount was reduced to $2.0 million and the investor agreed to purchase shares of our Series A-1

Preferred Stock for an aggregate purchase price of $6.0 million.

As of the date of this Annual Report, we have received only $1.2

million of the $6.0 million aggregate purchase price for the shares of Series A-1 Preferred Stock.

Even if we receive all of

such proceeds, we will still need additional capital to fully implement our business, operating, and development plans.

expect to devote substantial financial resources to our ongoing and planned activities, particularly as we conduct our planned clinical

trials of TVGN 489 and other product candidates.

Identifying potential product candidates and conducting pre-clinical testing and clinical

trials is a time-consuming, expensive, and uncertain process that takes years to complete, and we may never generate the necessary data

or results required to obtain marketing approval and achieve product sales.

In addition, our product candidates, if approved, may not

achieve commercial success.

expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance our pre-clinical

studies and clinical trials.

In addition, if we obtain marketing approval for TVGN 489 in any indication or for any other product candidate

we are developing or develop in the future, we expect to incur significant commercialization expenses related to product manufacturing,

sales, marketing, and distribution.

Furthermore, we expect to incur additional costs associated with operating as a public company.

we will need to obtain substantial additional funding.

such time, if ever, as we can generate substantial revenues from product sales, we expect to finance our cash needs through a combination

of public and private equity offerings and debt financings, strategic alliances, collaborations, and marketing, distribution, or licensing

arrangements.

However, adequate additional financing may not be available to us on acceptable terms, or at all, and may be impacted by

the economic climate and market conditions.

See the risk factor in this Annual Report with the caption beginning “We will require

substantial additional financing to pursue our business objectives ….”

Sheet Arrangements

have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2023 and 2022.

not participate in transactions that create relationships with entities or financial partnerships, often referred to as variable

interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or

commitments of other entities, or purchased any non-financial assets.

of December 31, 2023 and 2022, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term

was entitled to deferred underwriting commissions of $14,700,000 in the aggregate, consisting of $13,800,000 deferred underwriting commissions,

and $900,000 cash underwriting discount agreed to be deferred until consummation of the Business Combination.

The deferred fee was to

become payable to the underwriter from the amounts held in the Trust Account solely in the event that we completed a Business Combination,

subject to the terms of the Underwriting Agreement.

June 28, 2023, we entered into a fee reduction agreement with Cantor (the “Fee Reduction Agreement”) pursuant to which Cantor

agreed to forfeit $9,700,000 of the deferred underwriting fees payable, resulting in a remainder of $5,000,000 of deferred underwriting

fees payable (the “Reduced Deferred Fee”) to Cantor that became payable upon the closing of the Business Combination.

Reduced Deferred Fee was payable to Cantor in the form of 500,000 shares of our common stock.

The Fee Reduction Agreement only applied

to the consummation of the Transaction with Tevogen Bio and no other potential Business Combinations that we may contemplate or consummate.

April 5, 2012, the JOBS Act was signed into law.

The JOBS Act contains provisions that, among other things, relax certain reporting requirements

for qualifying public companies.

We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply

with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies.

We have elected

to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards

on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

As such, our financial statements

may not be comparable to companies that comply with public company effective dates.

to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we are not required to, among other things,

(i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404

of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies

under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or (iii) comply with any requirement that may be adopted by the

PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the

audit and the financial statements (auditor discussion and analysis).

These exemptions will apply for a period of five years following

the completion of our IPO or until we are otherwise no longer an emerging growth company, whichever is earlier.

Accounting Estimates

preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted

in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during

the periods reported.

Actual results could materially differ from those estimates.

We have identified the following critical accounting

account for the Private Placement Warrants included in Private Placement Units and the redeemable warrants (the “Public Warrants”)

that were included in units that we issued in our IPO (collectively, the “Warrants”) in accordance with Accounting Standards

Codification (“ASC”) 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815”),

under which the Private Placement Warrants do not meet the criteria for equity classification and must be recorded as liabilities.

the Private Placement Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Placement Warrants are measured

at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value

recognized in the statements of operations in the period of change.

Shares Subject to Possible Redemption

account for our ordinary shares that were subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing

Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as liability instruments and are measured

at fair value.

Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within

the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified

as temporary equity.

At all other times, ordinary shares are classified as shareholders’ equity.

Our ordinary shares featured certain

redemption rights that are considered to have been outside of our control and subject to occurrence of uncertain future events.

ordinary shares subject to possible redemption are presented as temporary equity outside of the shareholders’ equity section of

our balance sheets.

We recognize changes in redemption value immediately as they occur and adjust the carrying value of redeemable ordinary

shares to equal the redemption value at the end of each reporting period.

Increases or decreases in the carrying amount of redeemable

ordinary shares are affected by charges against additional paid in capital and accumulated deficit.

Issued Accounting Pronouncements

June 2016, the Financial Accounting Standards Bureau (“FASB”) issued Accounting Standards Update 2016-13 – Financial

Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected.

The measurement

of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and

reasonable and supportable forecasts that affect the collectability of the reported amount.

Since June 2016, FASB issued clarifying updates

to the new standard including changing the effective date for smaller reporting companies.

The guidance is effective for fiscal years

beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted.

We adopted ASU 2016-13

on January 1, 2023.

The adoption of ASU 2016-13 did not have a material impact on its financial statements.

December 2023, FASB issued Accounting Standards Update 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”),

which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid.

requires entities to annually disclose the income tax rate reconciliation using both amounts and percentages, considering several categories

of reconciling items, including state and local income taxes, foreign tax effects, tax credits and nontaxable or nondeductible items,

among others.

Disclosure of the reconciling items is subject to a quantitative threshold and disaggregation by nature and jurisdiction.

ASU 2023-09 also requires entities to disclose net income taxes paid or received to federal, state and foreign jurisdictions, as well

as by individual jurisdiction, subject to a five percent quantitative threshold.

ASU 2023-09 may be adopted on a prospective or retrospective

basis and is effective for fiscal years beginning after December 15, 2024 with early adoption permitted.

We are evaluating the impact

of ASU 2023-09 on disclosures in our Financial Statements.

does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material

effect on our condensed financial statements.

should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated

financial statements and related notes included elsewhere in this Annual Report.

This discussion and other parts of this Annual Report

contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and

As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report,

our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the

following discussion and analysis.

References to the “Company,”

“we,” “us,” and “our” in this section generally refer to Tevogen Bio Inc before the Business Combination

and to Tevogen Bio Holdings Inc.

and its subsidiary collectively from and after the Business Combination, unless the context otherwise

We are a clinical-stage specialty

immunotherapy company harnessing one of nature’s most powerful immunological weapons, CD8+ CTLs, to develop off-the-shelf, precision

T cell therapies for the treatment of infectious diseases, cancers, and other disorders, with the aim of addressing the significant unmet

needs of large patient populations.

We believe the full potential of T cell therapies remains largely untapped, and aspire to be the first

biotechnology company offering commercially attractive, economically viable, and cost-effective personalized T cell therapies.

We believe our allogeneic, precision

T cell technology, ExacTcell TM , has the potential to mainstream cell therapy with a new class of off-the-shelf T cell therapies

with diverse applications across virology, oncology, and other areas.

ExacTcell is a set of processes and methodologies to develop, enrich,

and expand single human HLA restricted CTL therapies with proactively selected, precisely defined targets.

We are focused on using ExacTcell

to develop therapeutics that are intended to be infused in patients other than the original donor.

ExacTcell is designed to maximize

the immunologic specificity of our products in order to eliminate malignant and virally infected cells while allowing healthy cells to

remain intact.

In addition, through our Tevogen.AI artificial intelligence initiative, we are exploring ways to deploy artificial intelligence-powered

target detection to further accelerate our product development pace.

The first clinical product of

ExacTcell, TVGN 489, is initially being developed to fill a critical gap in COVID-19 therapeutics for the immunocompromised and the high-risk

elderly, with potential applications in both treatment and prevention of Long COVID.

We have completed a Phase 1 proof-of-concept clinical

trial of TVGN 489 for the treatment of ambulatory, high-risk adult COVID-19 patients.

No dose-limiting toxicities or significant treatment-related

adverse events were observed in the treatment arm of the trial.

Secondary endpoints showing a rapid reduction of viral load and that infusion

of TVGN 489 did not prevent development of the patients’ own T cell-related (cellular) or antibody-related (humoral) anti-COVID-19

immunity were also met.

None of the patients who participated in the trial reported progression of infection, reinfection, or the development

of Long COVID during the six-month follow-up period.

Our commercial success depends

in part on our ability to obtain and maintain patent and other protection for our products and methods, preserve the confidentiality of

our trade secrets, operate without infringing, misappropriating, or otherwise violating the valid, enforceable proprietary rights of others,

and prevent others from infringing, misappropriating, or otherwise violating our proprietary rights.

We rely on a combination of patents,

patent applications, trademarks, and trade secrets to establish and protect our intellectual property rights.

Our ability to stop third

parties from making, using, selling, offering to sell, or importing our products without the right to do so may depend on the extent to

which we have rights under valid and enforceable patents, trademarks or trade secrets that cover these activities.

As our patents were developed

internally, historical expenditures related to their development were all expensed as incurred per GAAP.

We believe these patents have

significant value as the basis of our product pipeline.

Our continued investment in our pipeline highlights our belief in future commercial

viability of these products.

On February 14, 2024

(the “Closing Date”), pursuant to the agreement and plan of merger dated June 28, 2023 (the “Merger Agreement”)

by and among Semper Paratus, Semper Merger Sub, Inc., a wholly owned subsidiary of Semper Paratus (“Merger Sub”), SSVK Associates,

LLC, Tevogen Bio, and Dr.

Ryan Saadi, in his capacity as seller representative, Merger Sub merged with and into Tevogen Bio, with Tevogen

Bio being the surviving company and a wholly owned subsidiary of Semper Paratus (the “Merger,” and together with the other

transactions contemplated by the Merger Agreement, the “Business Combination”) and Semper Paratus was renamed Tevogen Bio

Holdings Inc.

(the “Closing”).

See Note 4 to our consolidated financial statements in this Annual Report for additional information

regarding the net assets acquired through the Merger.

The Merger was accounted for as a reverse recapitalization under GAAP because the

Company was determined to be the accounting acquirer.

Since commencing operations

in June 2020, we have devoted substantially all our efforts and financial resources to establishing corporate governance, recruiting essential

staff, establishing research and development capability including securing laboratory space and equipment, conducting scientific research,

securing intellectual property rights to our inventions related to our product candidates and ExacTcell, carrying out drug discovery including

pre-clinical studies and our Phase 1 clinical trial of TVGN 489, raising capital, and pursuing the Business Combination.

To date, we have not

generated any revenue.

Our net loss for the years ended December 31, 2024 and 2023 was $13.7 million and $60.5 million, respectively.

Net loss for the year ended December 31, 2024 was primarily attributable to a $53.6 million loss from operations that primarily resulted

from non-cash, stock-based compensation expense recognized with the liquidity event condition contained in certain stock awards was satisfied

upon the closing of the Business Combination as well as $7.5 million in transaction costs in connection with the Business Combination,

partially offset by the change in fair value of convertible promissory notes of $48.5 million.

As of December 31, 2024, we had cash of

$1.3 million.

On February 14, 2024,

we entered into a securities purchase agreement with The Patel Family, LLP (the “Patel Family”) pursuant to which the Patel

Family purchased 500 shares of our Series A Preferred Stock for an aggregate purchase price of $2.0 million.

On March 27, 2024, we entered

into an Amended and Restated Securities Purchase Agreement with the Patel Family pursuant to which we amended and restated the original

agreement and the Patel Family agreed to purchase 600 shares of our Series A-1 Preferred Stock for an aggregate purchase price of $6.0

million, of which $3.0 million has been received through the date of this Annual Report.

On August 21, 2024, we entered into a securities

purchase agreement with the Patel Family, pursuant to which the investor purchased 600 shares of our Series C Preferred Stock for an aggregate

purchase price of $6.0 million.

As described in more

detail in “— Liquidity and Capital Resources—Funding Requirements ” below, on June 6, 2024, we entered into

a Loan Agreement (the “Loan Agreement”) with the Patel Family providing for (i) an unsecured line of credit facility (the

“Facility”), pursuant to which the Patel Family agreed to lend us up to an initial amount of $36.0 million (the “Maximum

Loan Amount”) of term loans in $1.0 million increments on a monthly basis, over a draw period of thirty-six months, and (ii) a contingent

option for the Patel Family to purchase at least $14.0 million of our Common Stock in a future private placement (the “Optional

The Loan Agreement also contains a contingent option for the Patel Family to purchase at least $14.0 million of our Common

Stock plus up to the then-remaining available amount under the Facility, in a future private placement if the ten-day trailing volume

weighted average price per share of the Common Stock (the “Trailing VWAP”) reaches $10.00 per share.

Pursuant to the terms

of the Loan Agreement, we also issued to the Patel Family 1,000,000 shares of Common Stock as a commitment fee (the “Commitment

Shares”), subject to forfeiture by the Patel Family of the Commitment Shares or an equal number of shares of Common Stock in the

event the Patel Family fails to (i) make a deposit under the Facility when due or (ii) pay the purchase price for the Optional PIPE within

30 days after the Threshold Price Notice Date (as defined in the Loan Agreement) in the event we have satisfied all applicable closing

In addition, in January

2025, we received a grant of $2.0 million from KRHP to further our development

of off-the-shelf, genetically unmodified precision T cell therapeutics to treat infectious diseases and cancers.

KRHP is affiliated with

the Patel Family.

Based on cash

on hand as of the date of this Annual Report of approximately $1.3 million, the amounts available under our Loan Agreement, and the

$8.0 million of additional committed grant funding from KRHP, we have concluded that we have sufficient cash to fund our operations

for at least the next 12 months from the issuance date of our consolidated financial statements.

We do not expect to generate

product revenue unless and until we obtain marketing approval or other authorization for and successfully commercialize TVGN 489 or another

product candidate.

We expect to incur expenses related to expanding our research and development capability, building our manufacturing

infrastructure including through acquisitions, and developing our commercialization organization, including reimbursement, marketing,

managed market, and distribution functions, and training and deploying a specialty medical science liaison team.

Components of our Results of Operations

To date, we have not generated

any revenue, and we do not expect to generate any revenue from the sale of products unless and until we obtain marketing approval or other

authorization for and commercialize TVGN 489 or another product candidate.

Operating Expenses

Research and Development Expenses

Research and development expenses

consist primarily of costs incurred for our research activities, including staffing, discovery efforts, preclinical studies, and clinical

development of TVGN 489, and preclinical studies of other product candidates, and include:

of supplies and equipment and leasing lab spaces;

incurred to conduct the necessary pre-clinical studies required by FDA to obtain the regulatory approval necessary to conduct

TVGN 489 clinical trials;

benefits, and other related costs for personnel engaged in research and development functions;

of funding research performed by third parties, including pursuant to agreements with CROs, and investigative site costs to conduct

our pre-clinical studies and clinical trials;

manufacturing

costs, including expenses incurred under agreements with CMOs, including manufacturing scale-up expenses, and the cost of acquiring

and manufacturing pre-clinical study and clinical trial materials;

of outside consultants, including their fees, stock-based compensation, and related travel expenses;

of laboratory supplies and acquiring materials for pre-clinical studies and clinical trials; and

facility-related

expenses, which include direct depreciation costs of equipment and expenses for rent and maintenance of facilities and other operating

Research and development activities

are central to the biotechnology business model.

Product candidates in later stages of clinical development generally have higher development

costs than those in earlier stages, primarily due to the increased study sizes, which also leads generally to longer patient enrollment

times in later-stage clinical trials.

We expect our research and development expenses to increase significantly over the next several

years as we increase manufacturing, shipping, and storage of clinical batches required for clinical trials, incur increased personnel

costs, including stock-based compensation, conduct planned clinical trials for TVGN 489 and other clinical and pre-clinical activities

for other product candidates, and prepare regulatory filings for any of our product candidates.

The successful development of

our current or future product candidates is highly uncertain.

At this time, we cannot reasonably estimate or know the nature, timing,

and costs of the efforts that will be necessary to complete the development of any product candidates.

The success of TVGN 489 and our

other product candidates will depend on several factors, including the following:

respect to products other than TVGN 489, successfully completing pre-clinical studies;

initiating future clinical trials;

enrolling patients in and completing clinical trials;

for and receiving marketing approvals from applicable regulatory authorities;

and maintaining intellectual property protection and regulatory exclusivity for TVGN 489 and any other product candidates we are

developing or may develop in the future and enforcing, defending, and protecting these rights;

arrangements with third-party manufacturers, or establishing adequate commercial manufacturing capabilities;

sales, marketing, and distribution capabilities and launching sales of our products, if and when approved, whether alone or in collaboration

adoption of TVGN 489 and any other product candidates, if and when approved, by patients and the medical community;

effectively with potential therapeutic alternatives in our target disease areas;

reimbursement by private and public payors including health technology appraisal entities in non-U.S.

A change in the outcome of any

of these variables concerning the development, manufacturing, or commercialization activities of a product candidate could result in a

significant change in the costs and timing associated with the development of that product candidate.

For example, if we are required

to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are

unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are

not positive or are only modestly positive, if there are safety concerns, or if we determine that the observed safety or efficacy profile

would not be competitive in the marketplace, we could be required to expend significant additional financial resources and time on the

completion of clinical development.

We anticipate that product commercialization may take several years, and we expect to spend a significant

amount in development costs.

General and Administrative Expenses

General and administrative expenses

primarily consist of personnel expenses, which include salaries, benefits, and stock-based long term incentive compensation for employees.

These expenses also encompass corporate facility costs such as rent, utilities, depreciation, and maintenance, as well as costs not classified

under research and development expenses.

Legal fees pertaining to intellectual property and corporate matters, as well as fees for accounting

and consulting services, are also included in general and administrative expenses.

We expect that our general and

administrative expenses will increase in the future to support our continued research and development activities, potential commercialization

efforts, and increased costs of operating as a public company.

These increases will likely include increased costs related to the hiring

of additional personnel and fees to outside consultants, lawyers, accountants, and recruitment firms, among other expenses.

costs associated with being a public company will also include expenses related to services associated with maintaining compliance with

SEC and Nasdaq requirements, insurance, and investor relations costs.

If any of our current or future product candidates obtains marketing

approval, we expect that we would incur significantly increased expenses associated with sales and marketing efforts.

Interest Expense, Net

Interest expense, net consists

primarily of interest on our former convertible promissory notes and Loan Agreement, partially offset by interest earned on bank deposits.

(See “— Liquidity and Capital Resources — Sources of Liquidity ” below.)

Merger Transaction Costs

Transaction costs we incurred in relation

to the Business Combination were initially capitalized as deferred transaction costs up through the Closing Date, at which time such costs

were charged to expense in our statements of operations less the amount of cash received in the Business Combination.

Change in Fair Value of Convertible Promissory Notes

accounting standards provide

entities with an option to measure many financial instruments and certain other items at fair value.

As a result of us electing this option,

we recorded all convertible promissory notes at fair value with changes in fair value reported in our statements of operations at each

balance sheet date through the settlement of the convertible promissory notes in connection with the Closing, at which time the convertible

promissory notes were converted into our Common Stock.

Loss on Issuance of Commitment Shares

Our other expenses consist

of losses on the issuance of the Commitment Shares for the year ended December 31, 2024 associated with the Loan Agreement.

Since we intend

to elect the fair value option for future draws under the Loan Agreement, we expense all issuance costs associated with the Loan Agreement,

which are comprised of the fair value of the Commitment Shares as well as the issuance date fair value of the $14 million Purchase Option

and Additional Amount Purchase Option.

For more information about the Loan Agreement, see “— Liquidity and Capital Resources—Funding

Requirements ” below.

Income Tax Provision

Since inception, we have incurred

significant net losses.

As of December 31, 2024, we had net operating loss carryforwards (“NOLs”) for federal and state income

tax purposes of $25.6 million and $27.8 million, respectively.

We have provided a valuation allowance against the full amount of our net

deferred tax assets since, in the opinion of our management, based upon our historical and anticipated future losses, it is more likely

than not that the benefits will not be realized.

Our utilization of our NOLs may

be subject to a substantial annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders

over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, respectively,

as well as similar state provisions.

Results of Operations

Comparison of the years ended December 31, 2024

The following table summarizes

our results of operations for the years ended December 31, 2024 and 2023:

Year ended December 31,

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

(53,564,488 )

Interest expense, net

Merger transaction costs

Change in fair value of warrants

Change in fair value of convertible promissory notes

(50,428,303 )

Loss on issuance of commitment shares

$ (13,727,380 )

$ (60,477,680 )

Research and Development Expenses

We do not track our internal

research and development costs on a program-by-program basis.

The following table summarizes our research and development expenses for

the years ended December 31, 2024 and 2023:

Year ended December 31,

Personnel costs

Stock-based compensation

Other clinical and pre-clinical development expenses

Facilities and other expenses

Total research and development expenses

Research and development expenses

for the year ended December 31, 2024 were $31.0 million, compared to $4.4 million for the year ended December 31, 2024.

The increase was

primarily attributable to an increase in stock-based compensation due to stock compensation expense related to the restricted stock units

(“RSUs”) granted to Dr.

Saadi on the Closing Date.

General and Administrative Expenses

The following table summarizes

our general and administrative expenses for the years ended December 31, 2024 and 2023:

Year ended December 31,

Personnel costs

Stock-based compensation

Legal and professional fees

Facilities and other expenses

Total general and administrative expenses

General and administrative expenses

for the year ended December 31, 2024 were $22.5 million compared to $4.4 million for the year ended December 31, 2023.

The increase was

primarily attributable to stock-based compensation expense of $13.8 million, of which $7.7 million was recognized as a non-cash stock-based

compensation expense from certain stock-based awards that continue to vest through satisfaction of service conditions subsequent to the

satisfaction of the liquidity condition upon the Closing, and $2.3 million was recognized as restricted stock compensation expense related

to the RSUs granted.

The increase of $0.6 million in personnel costs was primarily attributable to an increase in headcount and an increase

in premium for our director and officer insurance policy.

The increase of $4.0 million in legal and professional fees was primarily attributable

to the additional services incurred as a result of the Merger.

Interest Expense, Net

We recognized $0.2 million and

$1.2 million in interest expense for the years ended December 31, 2024 and 2023, respectively, which was attributable primarily to the

outstanding principal balance associated with our convertible promissory notes that converted into Common Stock in connection with the

Merger Transaction Costs

Merger transaction costs in excess of cash

received from the Business Combination of $7.5 million were recognized as period expenses for the year ended December 31, 2024.

Change in Fair Value of Convertible Promissory

We recognized a non-cash gain

of $48.5 million and a non-cash loss of $50.4 million for the change in fair value of the convertible promissory notes for the years ended

December 31, 2024 and 2023, respectively.

The change was primarily a result of the increase in the underlying estimated fair value of

our Common Stock during the year ended December 31, 2023 compared to a decrease in the underlying estimated fair value of our Common Stock

from January 1, 2024 to the settlement of the convertible promissory notes upon the Closing.

Loss on Issuance of Commitment Shares

We incurred losses on the issuance

of Commitment Shares during the year ended December 31, 2024, associated with the Loan Agreement.

Liquidity and Capital Resources

Sources of Liquidity

As of December 31, 2024, we had

$1.3 million in cash, as compared to $1.1 million in cash as of December 31, 2023.

To date, we have not yet commercialized any products

or generated any revenue from product sales and have financed our operations primarily with proceeds from the sale of convertible promissory

notes and preferred stock, funds drawn on the Loan Agreement, and grant funding.

Since January 2021, we have raised aggregate gross proceeds

of $24.0 million from the sale of convertible promissory notes, $2.0 million from the sale of our Series A Preferred Stock, $3.0 million

from deposits related to the future sale of our Series A-1 Preferred Stock, and $6.0 million from the sale of our Series C Preferred Stock.

In June 2024, we entered into the Loan Agreement, which provided up to $36.0 million of term loans that can be drawn in $1.0 million increments

each month over thirty-six months, as described below.

As of December 31, 2024, we had drawn $1.0 million with a remaining $30.0 million available

for future financing over the remaining 30 months.

We drew an additional $1.0 million on February 10, 2025.

In addition, in

January 2025, we received a grant of $2.0 million from KRHP.

We expect to receive an additional $8.0 million grant from KRHP during the second quarter of 2025.

The following table summarizes

our cash flows for the years ended December 31, 2024 and 2023:

Year ended December 31,

Cash provided by (used in)

Operating activities

$ (11,998,730 )

$ (8,171,118 )

Investing activities

Financing activities

Net change in cash

$ (4,431,868 )

Cash Flows from Operating Activities

During the year ended December

31, 2024, we used $12.0 million of net cash in operating activities.

Cash used in operating activities reflected our net loss of $13.7

million offset by $1.7 million of non-cash charges related to the change in the fair value of the convertible promissory notes, depreciation

expense, reductions in the operating right of use (“ROU”) assets, non-cash interest on the convertible promissory notes, and

the net change in our operating assets and liabilities attributable to the timing of our payments to our vendors for research and development

During the year ended December

31, 2023, we used $8.2 million of net cash in operating activities.

Cash used in operating activities reflected our net loss of $60.5

million offset by $52.0 million of non-cash charges related to the change in the fair value of the convertible promissory notes, depreciation

expense, reductions in the ROU assets, non-cash interest on the convertible promissory notes, and a $0.3 million net change in our operating

assets and liabilities attributable to the timing of our payments to our vendors for research and development activities.

Cash Flows from Investing Activities

During the years ended December

31, 2024 and 2023, we used $0.0 million and $0.1 million respectively, for the purchase of property and equipment.

Cash Flows from Financing Activities

During the year ended December

31, 2024, we received $12.3 million of net cash from financing activities attributable to $2.0 million in proceeds from the sale of Series

A Preferred Stock, $6.0 million in proceeds from the sale of Series C Preferred Stock, $3.0 million of non-refundable prepaid proceeds

towards the anticipated issuance of Series A-1 Preferred Stock, $1.0 million drawn under the Loan Agreement, and $0.2 million of cash

in connection with the Merger.

During the year ended December

31, 2023, we received $4.0 million of net cash from financing activities attributable to the proceeds from the convertible promissory

notes, less $0.1 million related to payments of deferred transaction costs.

Funding Requirements

sources of funds to meet our near-term liquidity and capital requirements include cash on hand, including the funding we have

received from the sale of our Series A and Series C Preferred Stock and the funding we expect to receive from the sale of our Series

A-1 Preferred Stock, our access to an unsecured line of credit (limited to a $1.0 million monthly draw) under the Loan Agreement

described below, and the $8.0 million of grant funding that KRHP has committed to provide to be used towards the Company’s

ongoing operational expenses.

On February 14, 2024, we entered into a securities

purchase agreement with an investor pursuant to which the investor agreed to purchase shares of our Series A Preferred Stock for an

aggregate purchase price of $8.0 million.

On March 27, 2024, we entered into an agreement pursuant to which that amount was reduced

to $2.0 million and the investor agreed to purchase shares of our Series A-1 Preferred Stock for an aggregate purchase price of $6.0

We have not yet received $3.0 million of the $6.0 million purchase price for the Series A-1 Preferred Stock.

receive such proceeds, we will still need additional capital to fully implement our business, operating, and development plans.

August 21, 2024, we entered into a securities purchase agreement with an investor pursuant to which the investor agreed to purchase

shares of our Series C Preferred Stock for an aggregate purchase price of $6.0 million.

On June 6, 2024, we entered into

the Loan Agreement, pursuant to which the Patel Family agreed to provide to us up to the Maximum Loan Amount of $36.0 million under the Facility.

The Patel Family is also the investor in our Series A, Series A-1, and Series C Preferred Stock.

The Facility permits us to borrow up to $1.0

million monthly in a single monthly draw over a period of up to three years.

Draws accrue interest at a fixed annual rate of the lower

of (i) the daily secured overnight financing rate, measured on the date we receive the draw (the “Deposit Date”), plus 2.00%

and (ii) 7.00%, accruing quarterly beginning on the Deposit Date and payable quarterly beginning on the three-month anniversary of the

Deposit Date.

Interest will be payable in shares of Common Stock with an effective purchase price of $1.50 per share, and each draw will

mature 48 months after the Deposit Date.

Prepayment will be permitted without penalty.

We may repay or prepay any amount of outstanding

principal balance under the Facility at our election in cash or in shares of Common Stock with an effective purchase price of the greater

of $1.50 per share and the 10-day trailing volume weighted average price of the Common Stock (the “Trailing VWAP”) as of the

trading day prior to payment, subject to certain requirements related to resale registration.

Pursuant to the Loan Agreement, we also

agreed to provide the Patel Family an option to purchase $14.0 million of shares of our Common

Stock plus an additional amount up to the total then-remaining available and undrawn portion of the Maximum Loan Amount (which amount

would thereafter no longer be available under the Facility).

The Optional PIPE would be priced at a 30% discount to the Trailing VWAP

on the date such price first reaches at least $10.00 per share (the “Threshold Price Date”) and will be exercisable by the

Patel Family by written notice within three business days after we have notified the Patel Family of the Threshold Price Date (the date

of such notice, the “Threshold Price Notice Date”).

Pursuant to the terms of the Loan Agreement, we issued to the Patel Family

the Commitment Shares, subject to forfeiture by the Patel Family of the Commitment Shares or an equal number of shares of Common Stock

in the event the Patel Family fails to (i) make a deposit under the Facility when due or (ii) pay the purchase price for the Optional

PIPE within 30 days after the Threshold Price Notice Date in the event we have satisfied all applicable closing conditions.

assurance as to the amount of proceeds we will ultimately receive under the Loan Agreement.

As of December 31, 2024, we have drawn an

aggregate of $1.0 million under the Loan Agreement.

We expect to devote considerable

financial resources to our ongoing and planned activities, particularly as we conduct our planned clinical trials of TVGN 489 and other

product candidates.

Identifying potential

product candidates and conducting pre-clinical testing and clinical trials is a time-consuming, expensive, and uncertain process that

takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product

In addition, our product candidates, if approved, may not achieve commercial success.

We expect our expenses

to increase in connection with our ongoing activities, particularly as we advance our pre-clinical studies and clinical trials.

if we obtain marketing approval for TVGN 489 in any indication or for any other product candidate we are developing or develop in the

future, we expect to incur commercialization expenses related to product manufacturing, sales, marketing, and distribution.

we expect to continue to incur increased costs associated with operating as a public company.

Accordingly, we will need additional funding

to fully implement our business plans.

Our future capital requirements

will depend on many factors, including:

progress, costs, and results of our planned clinical trials of TVGN 489 and other planned and future clinical trials;

scope, progress, costs, and results of our pre-clinical testing and clinical trials of TVGN 489 for additional combinations, targets,

and indications;

number of and development requirements for additional indications for TVGN 489 or for any other product candidates;

ability to scale up our manufacturing processes and capabilities to support clinical trials of TVGN 489 and other product candidates

we are developing and may develop in the future;

costs, timing, and outcome of regulatory review of TVGN 489 and other product candidates we are developing and may develop in the

changes in the regulatory environment and enforcement rules;

ability to establish and maintain strategic collaboration, licensing, or other arrangements and the financial terms of such arrangements;

costs and timing of future commercialization activities, including product manufacturing, sales, marketing, and distribution, for

TVGN 489 and other product candidates we are developing and may develop in the future for which we may receive marketing approval;

ability to obtain and maintain acceptance of any approved products by patients, the medical community, and third-party payors;

amount and timing of revenue, if any, received from commercial sales of TVGN 489 and any other product candidates we are developing

or develop in the future for which we receive marketing approval;

changes in pharmaceutical pricing and reimbursement infrastructure;

availability of raw materials for use in production of our product candidates; and

costs and timing of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and

proprietary rights, and defending any intellectual property-related claims.

As of December 31, 2024, we had

cash of $1.3 million.

We believe that our cash balance and amounts available under the Loan Agreement, which allows us to draw down term

loans of $1.0 million per month over thirty-six months, will allow us to have adequate cash and financial resources, to operate for at

least the next 12 months from the date of issuance of our consolidated financial statements included in this Annual Report.

In addition, KRHP has committed to provide an additional $8.0 million of

grant funding to the Company to be used towards the Company’s ongoing operational expenses.

The grant funding will be used to satisfy

the Company’s obligations as they come due through March 31, 2026.

The Company does not plan to initiate a clinical trial until

additional funding is received.

We regularly evaluate different

strategies to obtain funding for operations for subsequent periods.

These strategies may include but are not limited to private placements

of securities, licensing and/or marketing arrangements, partnerships with other pharmaceutical or biotechnology companies, and public

offerings of securities.

We may not be able to obtain financing on acceptable terms and may not be able to enter into strategic alliances

or other arrangements on favorable terms.

The terms of any financing may adversely affect the holdings or the rights of our stockholders.

If we are unable to obtain sufficient funding, we could be required to delay, reduce or eliminate research and development programs, product

portfolio expansion, or future commercialization efforts, which could adversely affect our business prospects.

Contractual Obligations and Commitments

The following table summarizes

our contractual obligations and commitments as of December 31, 2024:

lease commitments (1)

Agreement repayment (3)

contractual obligations

obligations pursuant to our office and laboratory leases in Philadelphia, Pennsylvania and Warren, New Jersey.

notes payable obligations assumed as part of the Merger.

obligations to settle outstanding balances on our Loan Agreement, if paid in cash at time of settlement, as well as accrued interest.

The commitment amounts in the

table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed

or minimum services to be used, fixed, minimum, or variable price provisions, and the approximate timing of the actions under the contracts.

Our contracts with CROs, CMOs, and other third parties for the manufacture of our product candidates and to support pre-clinical research

studies and clinical testing are generally cancelable by us upon prior notice and do not contain any minimum purchase commitments.

due upon cancellation consisting only of payments for services provided or expenses incurred, including noncancelable obligations of our

service providers, up to the date of cancellation are not included in the table above as the amount and timing of such payments are not

Critical Accounting Policies and Estimates

This discussion and analysis

of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance

The preparation of the consolidated financial statements requires us to make estimates and judgments that affect the reported

amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements.

On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, the fair value of our Common

Stock, the fair value of our convertible promissory notes, and stock-based compensation.

We base our estimates on historical experience,

known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form

the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

results may differ from these estimates under different assumptions or conditions, including those factors set out in the “ Risk

Factors ” section and elsewhere in this Annual Report, including the section entitled “ Special Note Regarding Forward-Looking

While our significant accounting

policies are described in more detail in Note 3 to our consolidated financial statements, we believe the following accounting policies

are the most critical to the judgments and estimates used in the preparation of our consolidated financial statements or involve a significant

level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results

of operation.

Research and Development Expenses

Research and development activities

are expensed as incurred.

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued

research and development expenses, including those related to clinical trials and product candidate manufacturing.

This process involves

reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed

on our behalf and estimating the level of service performed and the associated cost incurred for the services when we have not yet been

invoiced or otherwise notified of actual costs.

Our service providers invoice us in arrears or require prepayments for services performed,

as well as on a pre-determined schedule or when contractual milestones are met.

We make estimates of our accrued expenses as of each balance

sheet date in the consolidated financial statements based on facts and circumstances known to us at that time.

We periodically confirm

the accuracy of the estimates with the service providers and make adjustments if necessary.

Examples of estimated accrued research and

development expenses include fees paid to:

in connection with preclinical and clinical development activities;

in connection with clinical trials;

in connection with the process development and scale-up activities and the production of preclinical and clinical trial materials.

Costs for clinical trials and

manufacturing activities are recognized based on an evaluation of our vendors’ progress towards completion of specific tasks, using

data such as participant enrollment, clinical site activations, or information provided to us by our vendors regarding their actual costs

Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from

the period in which the services were performed.

We determine accrual estimates through reports from and discussions with applicable personnel

and outside service providers as to the progress or state of completion of studies, or the services completed.

Our estimates of accrued

expenses as of each balance sheet date are based on the facts and circumstances known at the time.

Costs that are paid in advance of performance

are deferred as a prepaid expense and amortized over the service period as the services are provided.

Although we do not expect our

estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed

relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low

in any particular period.

To date, there have not been any material adjustments to our prior estimates of accrued research and development

However, due to the nature of estimates, we cannot assure you that we will not make changes to our estimates in the future as

we become aware of additional information about the status or conduct of our clinical trials and other research activities.

Fair Value Measurements

Our recurring fair value measurements primarily

consist of the convertible promissory notes prior to the Merger, for which we elected the fair value option, the freestanding $14 million

purchase option under the Loan Agreement, and the bifurcated purchase option that is embedded within the loan commitment under the Loan

We used the Probability Weighted Expected

Return Method (“PWERM”) valuation methodology to determine the fair value of the convertible promissory notes prior to the

Merger for all the periods presented.

The PWERM is a scenario-based methodology that estimates the fair value based upon an analysis of

future values for the company, assuming various outcomes.

The value is based on the probability-weighted present value of expected future

investment returns considering each of the possible outcomes available.

The future value under each outcome is discounted back to the

valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value.

assumptions used in determining the fair value of convertible promissory notes include volatility, discount rate, and probability of a

future liquidity event.

In February 2024, concurrent with the Merger, we converted our outstanding convertible promissory notes into 10,337,419

shares of Common Stock.

We used a Monte Carlo Simulation (“MCS”)

valuation methodology to determine the fair value of the freestanding $14 million purchase option and embedded purchase option associated

with the Loan Agreement at inception and as of December 31, 2024.

The MCS methodology simulates our future stock price to estimate if

and when the Trailing VWAP will reach $10.00 per share, and discounts the resulting payoff back to each valuation date using a present

value factor.

Significant assumptions used in determining the fair value of these options include volatility and discount rate.

Stock-Based Compensation

Awards under our compensation

plans are accounted for in accordance with Accounting Standards Codification 718, Compensation – Stock Compensation .

cost is measured at the grant date fair value of the award and is recognized over the vesting period of the award.

We use the straight-line

method to record compensation expense of awards with service-based vesting conditions.

We account for forfeitures of stock-based awards

as they occur.

We recognize share-based compensation expense for awards with performance conditions when it is probable that the condition

will be met, and the award will vest.

Prior to the Merger, we estimated the fair value of our Common Stock in accordance with the guidance

outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company

Equity Securities Issued as Compensation .

Recent Accounting Pronouncements

See Note 3 to our consolidated

financial statements found in this Annual Report for a description of recent accounting pronouncements applicable to our financial statements.

Quantitative and Qualitative Disclosures About Market Risk.

are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to

provide the information under this item.

Financial Statements and Supplementary Data.

information appears following Item 16 of this Annual Report on Form 10-K and is incorporated herein by reference.

information appears following Item 16 of this Annual Report and is incorporated herein by reference.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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 7. Management’s Discussion and Analysis