RELMADA THERAPEUTICS INC

NOTE 1 - BUSINESS

Relmada Therapeutics Inc. (Relmada or the Company) (a Nevada corporation) is a clinical-stage, publicly traded biotechnology company focused on the development of esmethadone (d-methadone, dextromethadone, REL-1017), an N-methyl-D-aspartate (NMDA) receptor antagonist. Esmethadone is a New Chemical Entity (NCE) that potentially addresses areas of high unmet medical need in the treatment of central nervous system (CNS) diseases and other disorders. The Company is also developing a novel psilocybin (REL-P11) in doses that we believe are lower than those associated with psychedelic effects for the treatment of metabolic indications.

In addition to the normal risks associated with a new business venture, there can be no assurance that the Company’s research and development will be successfully completed or that any product will be approved or commercially viable. The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with the Food and Drug Administration (FDA) and other governmental regulations and approval requirements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The consolidated financial statements include the Company’s accounts and those of the Company’s wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

Liquidity

As shown in the accompanying consolidated financial statements, the Company incurred negative operating cash flows of $51,659,206 for the year ended December 31, 2023 and has an accumulated deficit of $560,902,681 from inception through December 31, 2023.

Relmada has funded its past operations through equity raises. There were no equity raises in the year ended December 31, 2023.

Management believes that the Company’s existing cash and cash equivalents will enable them to fund operating expenses and capital expenditure requirements for at least 12 months from the issuance of these consolidated financial statements. Beyond that point management will evaluate the size and scope of any subsequent operations and clinical trials that will affect the timing of additional financings through public or private sales of equity or debt securities or from bank or other loans or through strategic collaboration and/or licensing agreements. Any such expenditures related to any subsequent clinical trials will not be incurred until such additional financing is raised. Further, additional financing related to subsequent trials does not affect the Company’s conclusion that based on the cash on hand and the budgeted cash flow requirements, the Company has sufficient funds to maintain operations for at least 12 months from the issuance of these consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates. The significant estimates are stock-based compensation expenses, and recorded amounts related to income taxes.

Cash and Cash Equivalents

The Company considers cash deposits and all highly liquid investments with a maturity of three months or less when purchased to be cash and cash equivalents. The Company’s cash and cash equivalents are held at two high-credit-quality financial institutions. The Company’s cash and cash equivalents of $4,091,568 at December 31, 2023 at these institutions exceed federally insured limits.

Short-term Investments

The Company’s investments consist entirely of mutual funds. The securities are measured at fair value based on the net asset value (“NAV”). The Company adopted FASB ASU 2016-01, Financial Instruments, which requires substantially all equity investments in nonconsolidated entities to be measured at fair value with recurring changes recognized in earnings, except for those accounted for using equity method accounting. Changes in fair value of the securities are recorded as part of other income on the consolidated statement of operations. Short term investment activity is presented in the investing activities section on the consolidated statement of cash flows.

Short-term investments at December 31, 2023 consisted of mutual funds with a fair value of $92,232,292.

Patents

Costs related to filing and pursuing patent applications are recorded as general and administrative expense and expensed as incurred since recoverability of such expenditures is uncertain.

Leases

The Company recognizes its leases with a term of greater than a year on the balance sheet by recording right-of-use assets and lease liabilities. Leases can be classified as either operating leases or finance leases. Operating leases will result in straight-line lease expense, while finance leases will result in front-loaded expense. The Company’s lease consists of an operating leases for office space. The Company does not recognize a lease liability or right-of-use asset on the balance sheet for short-term leases. Instead, the Company recognizes short-term lease payments as an expense on a straight-line basis over the lease term. A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Gain on Settlement

The Company recognizes a gain when cash (or other assets, such as claims to cash) has been received without the expectation of repayment. A gain is recorded when the assets are readily convertible to know amounts of cash or claims to cash. Gains are reported as part of other income (expense) on the consolidated statement of operations. The Company recorded a gain on settlement of $0 and $6,351,606 included in other income (expense) for the years ended December 31, 2023 and 2022, respectively.

Fair Value of Financial Instruments

The Company’s financial instruments primarily include cash, short term investments derivative liabilities and accounts payable. Due to the short-term nature of cash and accounts payable the carrying amounts of these assets and liabilities approximate their fair value. Derivatives are recorded at fair value at each period end.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include 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, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

Level 3 Inputs - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The Company’s short-term investment instruments of $92,232,292 at December 31, 2023 are classified using Level 1 inputs within the fair value hierarchy because they are valued using NAV. Unrealized gains and losses are recorded in the consolidated statement of operations as unrealized gain on short-term investments. The Company recorded an unrealized gain of $3,823,234 and an unrealized loss of $4,220,255, included in other income (expense) for the years ended December 31, 2023 and 2022, respectively.

Fair Value on a Recurring Basis

As required by Accounting Standard Codification (ASC) Topic No. 820 - 10Fair Value Measurement, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. At December 31, 2023 and 2022, the Company had recorded a valuation allowance to the full extent of the Company’s net deferred tax assets since the likelihood of realization of the benefit does not meet the more likely than not threshold.

The Company files a U.S. Federal income tax return and various state returns. Uncertain tax positions taken on our tax returns will be accounted for as liabilities for unrecognized tax benefits. The Company will recognize interest and penalties, if any, related to unrecognized tax benefits in general and administrative expenses in the statements of operations. There were no liabilities recorded for uncertain tax positions at December 31, 2023 and 2022. The open tax years, subject to potential examination by the applicable taxing authority, for the Company are from June 30, 2018 forward.

Research and Development

Research and development costs primarily consist of research contracts for the advancement of product development, salaries and benefits, stock-based compensation, and consultants. The Company expenses all research and development costs in the period incurred. The Company makes an estimate of costs in relation to clinical study contracts. The Company analyzes the progress of studies, including the progress of clinical studies and phases, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability.

Stock-Based Compensation

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award - the requisite service period. The grant-date fair value of employee share options is estimated using the Black-Scholes option pricing model adjusted for the unique characteristics of those instruments.

Net Loss per Common Share

Basic net loss per common share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per common share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents are comprised of Class A convertible preferred stock, Series A preferred stock, options and warrants to purchase common stock. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net losses in each period.

The potentially dilutive securities that would be anti-dilutive due to the Company’s net loss are not included in the calculation of diluted net loss per share attributable to common stockholders. The anti-dilutive securities are as follows (in common stock equivalent shares):

Recent Accounting Pronouncements

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. The amendments in this ASU require that an entity (acquirer) recognize, and measure contract assets and contract liabilities acquired in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, as if it had originated the contracts as of the acquisition date. The amendments in this ASU were effective for annual and interim periods beginning after December 15, 2022. The Company adopted this standard effective January 1, 2023 and the standard did not have a significant impact on our consolidated financial statements.

In November 2023, The FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” which expands annual and interim disclosures for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

NOTE 3 - PREPAID EXPENSES

Prepaid expenses consisted of the following (rounded to nearest $00):

NOTE 4 - ACCRUED EXPENSES

Accrued expenses consisted of the following (rounded to nearest $00):

NOTE 5 - STOCKHOLDERS’ EQUITY

Common Stock

During the year ended December 31, 2023, the Company did not issue any shares of common stock for the exercise of warrants. During the year ended December 31, 2022, the Company issued 181,336 shares of common stock for the exercise of warrants for proceeds of $1,264,523.

During the year ended December 31, 2023, the Company did not issue any shares of common stock for the exercise of options. During the year ended December 31, 2022, the Company issued 83,698 shares of common stock for the exercise of options for proceeds of $703,720.

On May 15, 2020, the Company entered into an Open Market Sale Agreement with Jefferies LLC, as sales agent (“Jefferies”), pursuant to which the Company offered to sell, from time to time, through Jefferies, shares of the Company’s common stock, having an aggregate offering price of up to $75,000,000. The Company was not obligated to sell any shares under the agreement. During the years ended December 31, 2023 and 2022, the Company issued 0 and 2,094,243 shares of common stock for net cash proceeds of $0 and $42,728,599 under the agreement, respectively. As of December 31, 2023, no shares were available to be issued under this agreement.

On April 6, 2022, the Company entered into a new Open Market Sale Agreement with Jefferies, as sales agent, pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock, having an aggregate offering price of up to $100,000,000. We are not obligated to sell any shares under the agreement. As of December 31, 2023, no shares have been issued under this agreement.

During the years ended December 31, 2023 and 2022, there were no common stock shares issued for issuances of restricted common stock.

Stock-based compensation - options

In December 2014, the Board of Directors adopted and the shareholders approved Relmada’s 2014 Stock Option and Equity Incentive Plan, as amended (the “2014 Plan”), which allows for the granting of 5,152,942 common stock awards, stock appreciation rights, and incentive and nonqualified stock options to purchase shares of the Company’s common stock to designated employees, non-employee directors, and consultants and advisors.

In May 2021, the Company’s Board of Directors adopted and shareholders approved the Company’s 2021 Equity Incentive Plan (the “2021 Plan”), which allowed for the granting of 1,500,000 options or other stock awards.

In May 2022, the Company’s Board of Directors adopted, and shareholders approved an amendment to the 2021 Plan to increase the shares of the Company’s common stock available for issuance thereunder by 3,900,000 shares.

In May 2023, the Company’s Board of Directors adopted and shareholders approved an amendment to the 2021 Plan to increase the shares of the Company’s common stock available for issuance thereunder by 2,500,000 shares.

These combined plans allowed for the granting of up to 13,052,942 options or other stock awards.

Stock options are exercisable generally for a period of 10 years from the date of grant and generally vest either over four years or upon achievement of certain specified corporate or other milestones. As of December 31, 2023, there were no shares available to be granted under either the 2014 or 2021 Plan. The shareholders will vote at their annual meeting in 2024 on a management proposal to increase the shares available to be issued under the 2021 Plan. There can be no assurance such amendment will be approved. As of December 31, 2023, options for 4,363,250 shares of common stock had been issued subject to approval by the shareholders of this amendment. If the amendment is not approved, such options will be forfeited.

The Company uses the simplified method for share-based compensation to estimate the expected term for employee option awards for share-based compensation in its option-pricing model.

From November 13, 2023 through December 15, 2023, the Company awarded a total of 5,010,000 options to consultants and employees with an exercise price ranging from $2.48 to $2.82 and a 10-year term vesting over a 4-year period. The options granted include time-based vesting grants. The options have an aggregate fair value of approximately $10,703,070 calculated using the Black Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 3.93 –4.68% (2) expected life of 6.25 years, (3) expected volatility of 113-114%, and (4)zero expected dividends.

From August 1, 2023 through September 18, 2023,10,000 options were issued to various employees with an exercise price ranging from $2.56 to $2.96 and a 10-year term, vesting over a 4-year period. The options granted include time-based vesting grants. The options have an aggregate fair value of approximately $23,840 calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 4.20–4.44% (2) expected life of 6.25 years, (3) expected volatility of 113-114%, and (4)zero expected dividends.

From April 10, 2023 through June 20, 2023,60,000 options were issued to various employees with an exercise price ranging from $2.28 to $3.32 and a 10-year term, vesting over a 4-year period. The options granted include time-based vesting grants. The options have an aggregate fair value of approximately $148,420 calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 3.43 –3.91% (2) expected life of 6.25 years, (3) expected volatility of 114%, and (4)zero expected dividends.

From January 6, 2023 through February 21, 2023,620,000 options were issued to various consultants and employees with an exercise price ranging from $3.18 to $4.30 and a 10-year term, vesting over a 4-year period. The options have an aggregate fair value of approximately $1,933,613 calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 3.46 –4.12% (2) expected life of 6.25 years, (3) expected volatility of 115-116%, and (4)zero expected dividends.

From December 16, 2022 through December 21, 2022, the Company awarded a total of 2,800,000 options to consultants and employees with an exercise price ranging from $3.20 to $3.37 and a 10-year term vesting over a 4-year period. The options granted include time-based vesting grants. The options have an aggregate fair value of $8,169,325 calculated using the Black Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 3.60 –3.78% (2) expected life of 6.25 years, (3) expected volatility of 115%, and (4)zero expected dividends.

On December 16, 2022, the Company awarded a total of 199,432 options to employees with an exercise price of $3.37 and a 10-year term vesting immediately. The options have an aggregate fair value of $561,902 calculated using the Black Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 3.61% (2) expected life of 5 years, (3) expected volatility of 120%, and (4)zero expected dividends.

From July 1, 2022 through September 29, 2022,260,000 options were issued to various consultants with an exercise price ranging from $18.30 to $36.19 and a 10-year term, vesting over a 4 year period. The options granted include time-based vesting grants. The options have an aggregate fair value of approximately $5.0 million calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 2.9 –3.94% (2) expected life of 6.25 years, (3) expected volatility of 93-94%, and (4)zero expected dividends.

From April 25, 2022 through May 5, 2022,260,000 options were issued to various consultants with an exercise price ranging from $22.40 to $25.52 and a 10-year term, vesting over a 4-year period. The options granted include time-based vesting grants. The options have an aggregate fair value of approximately $4.6 million, calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 2.85 –3.04% (2) expected life of 6.25 years, (3) expected volatility of 95%, and (4)zero expected dividends.

On March 28, 2022, the Company awarded a total of 15,000 options to an employee with an exercise price of $25.76 and a 10-year term vesting over a 4-year period. The options granted include time-based vesting grants. The options have an aggregate fair value of $307,845 calculated using the Black Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 2.55% (2) expected life of 6.25 years, (3) expected volatility of 98%, and (4)zero expected dividends.

From January 5, 2022 through March 14, 2022,110,000 options were issued to various consultants with an exercise price ranging from $18.00 to $21.46 and a 10-year term, vesting over a 4-year period. The options granted include time-based vesting grants. The options have an aggregate fair value of approximately $1.6 million, calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.53 –2.00% (2) expected life of 6.25 years, (3) expected volatility of 98%, and (4)zero expected dividends.

On January 1, 2022,50,000 options were issued to a consultant with an exercise price of $22.53 and a 10-year term, vesting over a 1-year period. The options granted include performance vesting based on the Company’s achievement of performance metrics. The options have an aggregate fair value of $847,583, calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.53% (2) expected life of 5.5 years, (3) expected volatility of 96%, and (4)zero expected dividends.

Options

A summary of the changes in options outstanding for the years ended December 31, 2023 and 2022 is as follows:

On September 5, 2023, Dr. Eric Schmidt, a member of the Board of Directors (the “Board”), notified the Company that he would resign from the Board, effective immediately. On September 22, 2023, the Board voted and approved that all of Dr. Schmidt’s unvested options would vest immediately and be exercisable through the original term of the respective grants. In addition, the Board approved the extension of the exercise period for the options which were vested on September 5, 2023 from 90 days to the original term of the respective options. As a result of the modifications, the Company recorded approximately $1.2 million of stock-based compensation during the year ended December 31, 2023.

At December 31, 2023, the Company has unrecognized stock-based compensation expense of approximately $62,386,500 related to unvested stock options over the weighted average remaining service period of 2.5 years. The weighted average fair value of options granted during the years ended December 31, 2023 and 2022 was approximately $2.61 and $7.40 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Warrants

A summary of the changes in outstanding warrants during the years ended December 31, 2023 and 2022 is as follows:

There were no warrants issued during the year ended December 31, 2023.

On September 20, 2022, the Company entered into an agreement with an investor to exchange 1,452,016 shares of outstanding common stock for 1,452,016 prefunded warrants. The 1,452,016 shares of common stock were returned. These warrants have an exercise price of $0.001 and a 9.99% beneficial ownership limitation. On October 19, 2022 a cashless exercise of the 1,452,016 prefunded warrants was transacted with 1,451,795 shares of common shares issued and the remaining 221 warrants being cancelled.

At December 31, 2023, the Company had approximately $3,200,000 of unrecognized stock-based compensation expense related to outstanding warrants. At December 31, 2023, the aggregate intrinsic value of warrants vested and outstanding was approximately $19,000.

Stock-based compensation by class of expense

The following summarizes the components of stock-based compensation expense which includes common stock, stock options, warrants and restricted stock in the consolidated statements of operations (rounded to nearest $00):

NOTE 6 - INCOME TAXES

No provision or benefit for federal or state income taxes has been recorded because the Company has incurred net losses for all periods presented and has recorded a valuation allowance against its deferred tax assets.

The components of the Company’s deferred tax assets are as follows at:

The Company has maintained a full valuation allowance against its deferred tax assets at December 31, 2023 and 2022. A valuation allowance is required to be recorded when it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Since the Company cannot be assured of realizing the net deferred tax asset, a full valuation allowance has been provided. The valuation allowance (decreased)/increased for the years ended December 31, 2023 and 2022 by approximately $(6,259,000) and $20,201,000, respectively. Deferred tax asset for net operating loss carryforwards at December 31, 2023 was adjusted with the corresponding offset to valuation allowance.

At December 31, 2023, the Company had federal, New York State and New York City net operating loss (NOL) carryforwards of approximately $100,077,000, $15,016,000 and $14,998,000 respectively, which begin expiring in 2027, 2032 and 2032, respectively. Approximately $88,611,000 federal NOL can be carried forward indefinitely but it is limited to 80% of future taxable income. The Company also has federal research and development tax credit carryforwards of approximately $2,237,600 that will begin to expire in 2042. The Company’s ability to use its NOL carryforwards may be limited if it experiences an “ownership change” as defined in Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended. An ownership change generally occurs if certain stockholders increase their aggregate percentage ownership of a corporation’s stock by more than 50 percentage points over their lowest percentage ownership at any time during the testing period, which is generally the three-year period preceding any potential ownership change.

Sections 382 and 383 of the Internal Revenue Code of 1986 subject the future utilization of net operating losses and certain other tax attributes, such as research and development tax credits, to an annual limitation in the event of certain ownership changes, as defined. The Company has undergone and ownership change and has determined that various “changes in ownership” as defined by IRS Section 382 did occur. Accordingly, about $111,168,000 of the Company’s NOL carryforwards are limited. Approximately, $41,562,000 of NOLs and $7,346,000 of R&D Credits are expected to expire unused. The deferred tax assets associated with the attributes that will expire without utilization have been written-off. There are $1,109,000 of NOLs available for use after the October 13, 2022 change in 2023. In subsequent years, the NOLs available from the October 13, 2022 change under section 382 are $740,000, annually.

A reconciliation of the statutory tax rate to the effective tax rate is as follows:

The Company does not have any uncertain tax positions at December 31, 2023 and 2022, that would affect its effective tax rate. The Company does not anticipate a significant change in the amount of unrecognized tax benefits over the next twelve months. Because the Company is in a loss carryforward position, the Company is generally subject to US federal and state income tax examinations by tax authorities for all years for which a loss carryforward is available. If and when applicable, the Company will recognize interest and penalties as part of income tax expense.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

License Agreements

Wonpung

On August 20, 2007, the Company entered into a License Development and Commercialization Agreement with Wonpung Mulsan Co, a shareholder of the Company. Wonpung has exclusive territorial rights in countries it selects in Asia to market up to two drugs the Company is currently developing and a right of first refusal (ROFR) for up to an additional five drugs that the Company may develop in the future as defined in more detail in the license agreement. If the parties cannot agree to terms of a license agreement, then the Company shall be able to engage in discussions with other potential licensors. As of March 19, 2024, no discussions are active between the Company and Wonpung.

The Company received an upfront license fee of $1,500,000 and will earn royalties of up to 12% of net sales for up to two licensed products it is currently developing. The licensing terms for the ROFR products are subject to future negotiations and binding arbitration. The terms of each licensing agreement will expire on the earlier of any time from 15 years to 20 years after licensing or on the date of commercial availability of a generic product to such licensed product in the licensed territory.

Third Party Licensor

Based upon a prior acquisition, the Company assumed an obligation to pay a third party (Dr. Charles E. Inturrisi and Dr. Paolo Manfredi – see below): (A) royalty payments up to 2% on net sales of licensed products that are not sold by sublicensee and (B) on each and every sublicense earned royalty payment received by licensee from its sublicensee on sales of license product by sublicensee, the higher of (i)20% of the royalties received by licensee; or (ii) up to 2% of net sales of sublicensee. The Company will also make milestone payments of up to $4 or $2 million, for the first commercial sale of product in the field that has a single active pharmaceutical ingredient, and for the first commercial sale of product in the field of product that has more than one active pharmaceutical ingredient, respectively. As of December 31, 2023, the Company has not generated any revenue related to this license agreement.

Inturrisi / Manfredi

In January 2018, we entered into an Intellectual Property Assignment Agreement (the Assignment Agreement) and License Agreement (the “License Agreement” and together with the Assignment Agreement, the Agreements) with Dr. Charles E. Inturrisi and Dr. Paolo Manfredi (collectively, the Licensor). Pursuant to the Agreements, Relmada assigned its existing rights, including patents and patent applications, to esmethadone in the context of psychiatric use (the Existing Invention) to Licensor. Licensor then granted Relmada under the License Agreement a perpetual, worldwide, and exclusive license to commercialize the Existing Invention and certain further inventions regarding esmethadone in the context of other indications such as those contemplated above. In consideration of the rights granted to Relmada under the License Agreement, Relmada paid the Licensor an upfront, non-refundable license fee of $180,000. Additionally, Relmada will pay Licensor $45,000 every three months until the earliest to occur of the following events: (i) the first commercial sale of a licensed product anywhere in the world, (ii) the expiration or invalidation of the last to expire or be invalidated of the patent rights anywhere in the world, or (iii) the termination of the License Agreement. Relmada will also pay Licensor tiered royalties with a maximum rate of 2%, decreasing to 1.75%, and 1.5% in certain circumstances, on net sales of licensed products covered under the License Agreement. Relmada will also pay Licensor tiered payments up to a maximum of 20%, and decreasing to 17.5%, and 15% in certain circumstances, of all consideration received by Relmada for sublicenses granted under the License Agreement. As of December 31, 2023, no events have occurred, and the Company continues to pay Licensor $45,000 every three months.

Arbormentis, LLC

On July 16, 2021, the Company entered into a License Agreement with Arbormentis, LLC, a privately held Delaware limited liability company, by which the Company acquired development and commercial rights to a novel psilocybin and derivate program from Arbormentis, LLC, worldwide excluding the countries of Asia. The Company will collaborate with Arbormentis, LLC on the development of new therapies targeting neurological and psychiatric disorders, leveraging its understanding of neuroplasticity, and focusing on this emerging new class of drugs targeting the neuroplastogen mechanism of action. Under the terms of the License Agreement, the Company paid Arbormentis, LLC an upfront fee of $12.7 million, consisting of a mix of cash and warrants to purchase the Company’s common stock, in addition to potential milestone payments totaling up to approximately $160 million related to pre-specified development and commercialization milestones. Arbormentis, LLC is also eligible to receive a low single digit royalty on net sales of any commercialized therapy resulting from this agreement. The license agreement is terminable by the Company but is perpetual and not terminable by the licensor absent material breach of its terms by the Company.

The new licensed program stems from an international collaboration among U.S., European and Swiss scientists that has focused on the discovery and development of compounds that may promote neural plasticity. Dr. Paolo Manfredi, Relmada’s Acting Chief Scientific Officer and co-inventor of REL-1017, and Dr. Marco Pappagallo, Relmada’ s Safety/Adjudication Officer, are among the scientists affiliated with Arbormentis, LLC.

Leases and Subleases

On August 1, 2021, the Company relocated its corporate headquarters to 2222 Ponce de Leon, Floor 3, Coral Gables, FL 33134, pursuant to a lease agreement with monthly rent of approximately $11,000. The lease period was forfive months. The lease agreement expired on December 31, 2021 and was renewed for the calendar year 2022, 2023 and 2024 with monthly rent of approximately $9,000, $7,000 and $7,000, respectively.

Beginning on January 1, 2023, we also leased office space at 880 Third Avenue, 12 th Floor, New York, NY 10022 with monthly rent of approximately $14,500 that was terminated on November 30, 2023.

Beginning on December 1, 2023, we leased office space at 12 E 49 th Street, New York, NY 10022 for with monthly rent of approximately $12,000 that expires on July 31, 2024.

In accordance with ASC 842,Leases, the Company recognizes rent expense evenly over the 12 months.

The Company incurred rent expense of approximately $283,600 and $129,600 for the years ended December 31, 2023 and 2022, respectively.

On June 8, 2017, the Company entered into an Amended and Restated License Agreement with Actinium. Pursuant to the terms of the agreement, Actinium licensed the furniture, fixtures, equipment and tenant improvements located in the office (FFE) for a license fee of $7,529 per month until December 8, 2022. Actinium had at any time during the term of this agreement the right to purchase the FFE for $496,914, less any previously paid license fees. On July 7, 2022, Actinium exercised its right to purchase the FFE for $52,698. The license of FFE qualifies as a sales-type lease. At inception, the Company derecognized the underlying assets of $493,452, recognized discounted lease payments receivable of $397,049 using the discount rate of 8.38% and recognized loss on sales-type lease of fixed assets of $96,403. As of December 31, 2023 and 2022, there was no unearned interest income.

Legal

From time to time, the Company may become involved in lawsuits and other legal proceedings that arise in the course of business. Litigation is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. Except as disclosed below, the Company is currently not aware of any legal proceedings or potential claims against it whose outcome would be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.

NOTE 8 - OTHER POSTRETIREMENT BENEFIT PLAN

Relmada participates in a multiemployer 401(k) plan that permits eligible employees to contribute funds on a pretax basis subject to maximum allowed under federal tax provisions. The Company matches 100% of the first 3% of employee contributions, plus 50% of employee contributions that exceed 3% but do not exceed 5%.

The employees choose an amount from various investment options for both their contributions and the Company’s matching contribution. The Company’s contribution expense was $140,982 and $105,216 for the years ended December 31, 2023 and 2022, respectively.

NOTE 9 - SUBSEQUENT EVENTS

The Company’s management reviewed all material events through the date the financial statements were issued for subsequent event disclosure consideration.

From January 1, 2024 through March 19, 2024,50,000 options were issued to an advisor with an exercise price of $3.44 and a 10-year term, vesting over a 4-year period. These options awarded are subject to shareholder approval.

On January 31, 2024 Executive officers purchased 171,645 shares of common stock at a weighted average purchase price of $3.86.

Subsequent to December 31, 2023,74,999 outstanding options were exercised for total cash proceeds of $246,747.

Exhibits

Certain of the agreements filed as exhibits to this Report contain representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These representations and warranties:

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at any other time. Investors should not rely on them as statements of fact.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities and on the dates indicated.