Rocket One Inc.

Current report

For the year ended December 31, 2024, general and administrative expenses amounted to approximately $5.0 million as compared to $4.2 million for the year ended December 31, 2023, an increase of $0.8 million, or 17.9%. For the years ended December 31, 2024 and 2023, general and administrative expenses consisted of the following (rounded to the nearest $1,000):

Current report

During the year ended December 31, 2024, the increase in general and administrative expenses of approximately $754,000 was primarily attributed to an increase other general and administrative expenses of approximately $246,000, which primarily consisted of an increase in conference fees of approximately $154,000, and an increase in travel expenses of approximately $32,000, an increase in compensation and related expenses of approximately $681,000, comprising of an increase in stock-based compensation of approximately $612,000 related to the issuance of stock options to executives and board of director members and an increase in health insurance, and an increase in rent of approximately $14,000, offset by a decrease in professional and consulting expenses of approximately $187,000.

Current report

For the year ended December 31, 2024, net other income was approximately $27,000, which primarily resulted from $27,000 of dividend and interest income.

Current report

Net Loss

Current report

For the year ended December 31, 2024 and 2023, we incurred a net loss of approximately $8.2 million, or $1.28 per common share (basic and diluted), and $8.1 million, or $2.38 per common share (basic and diluted), respectively.

Current report

During the year ended December 31, 2024, we issued 2,500,000 shares (the “Warrant Shares”) of our common stock upon the exercise of the 2,500,000 January 2023 Existing Warrants (as defined herein) for net proceeds of approximately $3.7 million, after deducting placement agent fees and other offering expenses of approximately $0.4 million. The Warrant Shares were issued as a result of a March 27, 2024 inducement offer agreement, which closed on April 1, 2024, with a holder (the “Holder”) of certain of our existing warrants (“January 2023 Existing Warrants”) to immediately exercise, for cash, an aggregate of 2,500,000 January 2023 Existing Warrants to purchase shares of our common stock at a reduced exercise price of $1.6775 per share.

Current report

On November 8, 2024, we entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) under which we may offer and sell shares of our common stock having an aggregate sales price of up to $2,700,000 through Wainwright as the sales manager pursuant to our effective shelf registration statement on Form S-3, including an accompanying prospectus (File No. 333-272620), and a prospectus supplement dated November 8, 2024. Sales of shares of the Company’s common stock through Wainwright, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Wainwright will use commercially reasonable efforts to sell shares of the Company’s common stock from time to time, based on instructions from us (including any price, time or size limits or other parameters or conditions we may impose). We will pay Wainwright a commission equal to 3.0% of the aggregate gross proceeds from the sales of shares of the Company’s common stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright for certain specified expenses in connection with the ATM Agreement. The offering of shares pursuant to the ATM Agreement will terminate on the earlier of (1) the sale, pursuant to the ATM Agreement, of shares having an aggregate offering price of $2,700,000 and (2) the termination of the ATM Agreement by either us or Wainwright, as set forth therein. From November 8, 2024 to December 31, 2024 we issued 1,137,250 shares of our common stock for net proceeds of approximately $1.0 million pursuant to the ATM Agreement.

Current report

For the year ended December 31, 2024, net cash used in operating activities was approximately $7.0 million, which primarily resulted from a net loss of approximately $8.2 million, offset by $0.8 million in stock-based compensation, a decrease in prepaid expense of $0.2 million and an increase in accounts payable and accrued expenses of $0.2 million.

Current report

Critical Accounting Estimates

Current report

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:

Current report

While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those estimates and the differences could be material.

Current report

See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for an additional discussion of our significant accounting policies.

Current report

The Company accounts for stock-based payment awards exchanged for services at the estimated grant date fair value of the award. Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant. Options are generally issued fully vested. The Company accounts for forfeited awards as they occur.

Current report

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Current report

Expected Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Current report

Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Current report

Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.

Current report

Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

Current report

The Company grants restricted stock awards under its equity incentive plan. Restricted stock awards are granted to employees and non-employees. The restricted stock awards are measured based on the grant-date fair value. In general, the restricted stock awards vest over a service period of zero to three years. Stock-based compensation expense is generally recognized based on the straight-line basis over the requisite service period and forfeitures are accounted for as they occur.

Current report

The Company has issued warrants to non-employees. The warrants are measured based on the grant-date fair value. In general, the warrants vest over a term of zero to ten years. Stock-based compensation expense is generally recognized based on the straight-line basis over the vesting term.

Current report

Recently Issued Accounting Standards Not Yet Effective or Adopted

Current report

Income Taxes (Topic 740)

Current report

In December 2023, the Financial Accounting Standards Board (“FASB”) issued guidance within Accounting Standards Update (“ASU”) 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in the ASU are intended to provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The ASU requires disclosure in the rate reconciliation of specific categories as well as additional information for reconciling items that meet a quantitative threshold.

Current report

The ASU requires disclosure of the following information about income taxes paid on an annual basis:

Current report

The ASU is effective for annual periods beginning after December 15, 2024. The amendments should be applied on a prospective basis. The Company is evaluating the impact that the adoption of this ASU will have on the Company’s consolidated financial statements, as it may require additional disclosures in the notes to our condensed consolidated financial statements.

Previous report

For the year ended December 31, 2023, General and Administrative Expenses were approximately $4.2 million, which primarily consisted of approximately $1.6 million related to payroll expenses and stock-based compensation, approximately $2.1 million for professional fees and approximately $0.5 million for other expenses.

Previous report

For the year ended December 31, 2022, General and Administrative Expenses were approximately $6.1 million, which primarily consisted of approximately $2.6 million related to payroll expenses and stock-based compensation, approximately $2.5 million for professional fees and approximately $1.0 million for other expenses.

Previous report

For the year ended December 31, 2022, net other expenses were approximately $0.3 million, which primarily resulted from $0.6 million of losses on marketable securities and $0.4 million change in fair value of investments in joint ventures, partially offset by $0.1 million of unrealized gains on marketable securities, $0.5 million of other income related to a research and development tax credit pursuant to Australian regulations and $0.1 million in dividend income.

Previous report

For the year ended December 31, 2022, net cash used in operating activities was approximately $9.3 million, which primarily resulted from a net loss of approximately $11.4 million and $0.1 million unrealized gain on marketable securities, partially offset by approximately $0.6 million in stock-based compensation, $0.6 million realized loss on marketable securities, $0.4 million change in fair value of investments in joint ventures and changes in operating assets and liabilities of approximately $0.6 million.

Previous report

For the year ended December 31, 2022, net cash provided by investing activities was approximately $1.2 million which was primarily related to the sale of marketable securities.

Previous report

Critical Accounting Policies and Significant Judgments and Estimates

Previous report

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of expenses during the reporting period. In accordance with GAAP, we evaluate our estimates and judgments on an ongoing basis. The most significant estimates relate to the valuation of stock options and the valuation allowance of deferred tax assets resulting from net operating losses. We base our estimates and assumptions on current facts, our limited historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Previous report

We define our critical accounting policies as those accounting principles that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements appearing elsewhere in Annual Report on Form 10-K, we believe the following are the critical accounting policies used in the preparation of our consolidated financial statements that require significant estimates and judgments:

Previous report

We expense stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. We record the expense for stock-based compensation awards subject to performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. All stock-based compensation costs are recorded in general and administrative or research and development costs in the statements of operations based upon the underlying employees’ or non-employees’ roles.

Previous report

Significant Accounting Policies

Previous report

See Note 2 to the consolidated financial statements for a discussion of significant accounting policies and recent accounting pronouncements.

Previous report

JOBS Act

Previous report

On April 5, 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

Previous report

We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our consolidated financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.

Previous report

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including, without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of Sarbanes-Oxley and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. However, beginning December 31, 2024, we will no longer be an “emerging growth company,” and will no longer have the ability to delay adoption of these new or revised accounting standards, or to take advantage of reduced corporate governance disclosures.