Alpha Cognition Inc.

Previous wording

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements for the three and nine months ended September 30,2024, and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States. This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors. See section heading “Special Note Regarding Forward-Looking Statements.”

Current wording

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements for the three months ended March 31, 2025, and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States. This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors. See section heading “Special Note Regarding Forward-Looking Statements.”

Previous wording

The Company is a biopharmaceutical company dedicated to developing treatments for patients suffering from neurodegenerative diseases, such as Alzheimer’s disease (“Alzheimer’s disease” or “AD”), for which there are limited or no treatment options. On July 26, 2024, the Company received approval by the FDA of the Company’s New Drug Application (the “NDA”) for ZUNVEYL® (benzgalantamine) previously known as ALPHA-1062 (“ZUNVEYL” or “ALPHA-1062”) oral tablet formulation for the treatment of mild-to-moderate Alzheimer’s disease. The Company will now focus on the development of commercial manufacturing and commercial sales of ZUNVEYL oral tablet formulation. The Company’s commercial development program for ZUNVEYL is primarily focused on building a long-term care commercial team that can focus on providing key points of differentiation, exploiting key issues with existing AChEI treatments, and franchising potential additional indications and new products. The company will target the largest volume nursing homes specializing in Alzheimer’s Disease, leveraging an account-based sales team with demonstrated success in LTC, positioning ZUNVEYL with Medicare payors, and developing strategic and clinical partnerships with consultant pharmacists and long-term care pharmacies. The company’s anticipated launch is in Q1 2025. Alpha Cognition has set the Wholesale Acquisition Cost (WAC) for its latest therapeutic product at $649 per month. This pricing reflects the company’s commitment to balancing patient access with the value of innovative healthcare solutions. By establishing a competitive WAC price, Alpha Cognition aims to enhance affordability and ensure patients can benefit from our advanced treatment options. Patients' out-of-pocket cost for treatment with ZUNVEYL will depend on their length of treatment and their insurance. The Company has three additional pre-clinical development programs: ZUNVEYL in combination with memantine for the treatment of moderate-to-severe Alzheimer’s disease, ALPHA-1062 sublingual formulation, ALPHA-1062 intranasal (“ALPHA-1062IN”) formulation for the treatment of cognitive impairment with mild traumatic brain injury (mTBI; otherwise known as concussion) and ALPHA-0602, ALPHA-0702 & ALPHA-0802, also referred to as ‘Progranulin’ and ‘Progranulin GEM’s’, for the treatment of neurodegenerative diseases including amyotrophic lateral sclerosis, otherwise known as ALS or Lou Gehrig’s disease and spinal muscular atrophy (SMA).

Current wording

The Company launched ZUNVEYL on March 17, 2024 and will target the largest volume nursing homes specializing in Alzheimer’s Disease, leveraging an account-based sales team with demonstrated success in LTC, positioning ZUNVEYL with Medicare payors, and developing strategic and clinical partnerships with consultant pharmacists and long-term care pharmacies. Alpha Cognition has set the Wholesale Acquisition Cost (WAC) for its latest therapeutic product at $749 per month. This pricing reflects the company’s commitment to balancing patient access with the value of innovative healthcare solutions. By establishing a competitive WAC price, Alpha Cognition aims to enhance affordability and ensure patients can benefit from our advanced treatment options. Patients’ out-of-pocket cost for treatment with ZUNVEYL will depend on their length of treatment and their insurance. The Company has three additional pre-clinical development programs: ZUNVEYL in combination with memantine for the treatment of moderate-to-severe Alzheimer’s disease, ALPHA-1062 sublingual formulation, ALPHA-1062 intranasal (“ALPHA-1062IN”) formulation for the treatment of cognitive impairment with mild traumatic brain injury (mTBI; otherwise known as concussion) and ALPHA-0602, ALPHA-0702 & ALPHA-0802, also referred to as ‘Progranulin’ and ‘Progranulin GEM’s’, for the treatment of neurodegenerative diseases including amyotrophic lateral sclerosis, otherwise known as ALS or Lou Gehrig’s disease and spinal muscular atrophy (SMA).

Previous wording

The Company is the parent company of Alpha Cognition Canada Inc. (“Alpha Canada” or “ACI Canada”) which is the parent company of Alpha Cognition USA Inc. (“ACI USA”). As of May 1, 2023, the Company’s common shares commenced trading on the CSE under the symbol “ACOG”, previously the Company’s shares were traded on the TSX-V until April 28, 2023, when the Company had them delisted. As of November 12, 2024, the Company’s common shares commenced trading on The Nasdaq Capital Market under the symbol “ACOG”, previously the Company’s common shares were quoted for trading on the OTCQB under the trading symbol “ACOGF”.

Current wording

The Company is the parent company of Alpha Cognition Canada Inc. (“Alpha Canada” or “ACI Canada”) which is the parent company of Alpha Cognition USA Inc. (“ACI USA”). As of May 1, 2023, the Company’s common shares commenced trading on the CSE under the symbol “ACOG”, previously the Company’s shares were traded on the TSX-V until April 28, 2023, when the Company had them delisted. As of November 12, 2024, the Company’s common shares commenced trading on The Nasdaq Capital Market under the symbol “ACOG”. The Company’s shares were voluntarily delisted from the CSE and OTCQB on December 17, 2024.

Previous wording

The Company has not generated revenues from its operations to date and as of September 30, 2024, and had a deficit of $70,626,302 (December 31, 2023 – $61,648,173) which has been primarily financed by equity. The Company had $3,666,389 in cash and cash equivalents, including restricted cash, and $3,005,836 in current liabilities (of which $107,010 is payable from the Company’s available restricted cash balance) as of September 30, 2024. The Company’s continuing operations, as intended, are highly dependent upon its ability to obtain additional funding and eventually generate cash flows. Management is of the opinion that it does not have sufficient working capital to fully meet the Company’s liabilities and commitments as outlined and planned in the following discussion. Management is of the opinion it will need to raise additional capital to cover upcoming planned Research and Development (“R&D”), commercialization of ZUNVEYL and operating costs. Possible sources of such capital may come from private placements and public offerings of the Company’s common shares and funds received from the exercise of warrants and share options. Additionally, the Company will also consider funding that may arise through partnership activities, including royalties, and debt. There is a risk that additional financing will not be available on a timely basis, on terms acceptable, or at all to the Company. These factors indicate the existence of a material uncertainty which causes significant doubt in the ability of the Company to continue as a going concern.

Current wording

As of March 31, 2025, the Company had a deficit of $78,291,581 (December 31, 2024 – $76,285,038) which has been primarily financed by equity. The Company had $45,622,229 in cash and cash equivalents, including restricted cash, and $2,807,397 in current liabilities (of which $23,936 is payable from the Company’s available restricted cash balance) as of March 31, 2025. The Company’s continuing operations, as intended, are highly dependent upon its ability to obtain additional funding and eventually generate cash flows. Management is of the opinion that it does have sufficient working capital to fully meet the Company’s liabilities and commitments as outlined and planned in the following discussion. Management is of the opinion it will need to raise additional capital to cover upcoming planned Research and Development (“R&D”), commercialization of ZUNVEYL and operating costs. Possible sources of such capital may come from private placements and public offerings of the Company’s common shares and funds received from the exercise of warrants and share options. Additionally, the Company will also consider funding that may arise through partnership activities, including royalties, and debt. There is a risk that additional financing will not be available on a timely basis, on terms acceptable, or at all to the Company.

Previous wording

The Company received grant revenue from the Army Medical Research and Material Command on June 5, 2023, for a pre-clinical study on the use of the ALPHA-1062 Intranasal to reduce blast of mTBI induced functional deficit and brain abnormalities. All funds relating to government grants are being recorded under the gross method of accounting for government grants whereby any income received and associated expenses incurred will be reported as grant income and included in research and development expenses, respectively on the statement of operations and comprehensive loss. When grant proceeds are initially received, they are recorded as deferred income and restricted cash. Grant proceeds used to pay for study costs and are expensed as incurred, with a corresponding amount of grant revenue recorded along with a reduction of the balance of the deferred income liability. The Company classifies the balance of cash received from grants as restricted cash, when the proceeds from the grant have been designated for use in specified research. During the three months ended September 30, 2024 and September 30, 2023, the Company recorded grant income of $61,122 and $32,757, respectively and during the nine months ended September 30, 2024, and September 30, 2023, the Company recorded grant income of $333,462 and $32,757, respectively, from its R&D Grant in the consolidated statements of operations and comprehensive loss.

Current wording

The Company received grant revenue from the Army Medical Research and Material Command on June 5, 2023, for a pre-clinical study on the use of the ALPHA-1062 Intranasal to reduce blast of mTBI induced functional deficit and brain abnormalities. All funds relating to government grants are being recorded under the gross method of accounting for government grants whereby any income received and associated expenses incurred will be reported as grant income and included in research and development expenses, respectively on the statement of operations and comprehensive loss. When grant proceeds are initially received, they are recorded as deferred income and restricted cash. Grant proceeds used to pay for study costs and are expensed as incurred, with a corresponding amount of grant revenue recorded along with a reduction of the balance of the deferred income liability. The Company classifies the balance of cash received from grants as restricted cash, when the proceeds from the grant have been designated for use in specified research. During the three months ended March 31, 2025 and 2024, the Company recorded grant income of $71,095 and $133,779, respectively, from its R&D Grant in the consolidated statements of operations and comprehensive loss.

Previous wording

Interest expense relates primarily to the interest paid on the Neurodyn Life Sciences Inc. (“NLS”) promissory note. Effective April 1, 2024, the Company and NLS agreed to another amendment to the promissory note pursuant to which the interest rate was increased from 5.5% to 7% and the maturity date was extended from July 2024 to July 2025. Additionally, $300,000 will be due on December 31, 2024, with the remaining principal balance due at maturity.

Current wording

Interest expense relates primarily to the interest paid on the Neurodyn Life Sciences Inc. (“NLS”) promissory note. Effective April 1, 2024, the Company and NLS agreed to another amendment to the promissory note pursuant to which the interest rate was increased from 5.5% to 7% and the maturity date was extended from July 2024 to July 2025. Additionally, $300,000 was paid on December 31, 2024, with the remaining principal balance due at maturity. The balance was repaid in full on January 29, 2025.

Previous wording

The change in the fair value of warrant liability consists of the Company’s revaluation of their liability classified warrants that have an exercise price in USD. The Company uses the Black-Scholes Option Pricing Model to determine the fair value of the warrant liability at the end of each reporting period. This model requires the input of subjective assumptions including expected share price volatility, risk-free interest rate, and term of the warrant. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings (loss) and equity.

Current wording

The change in the fair value of derivative liabilities consists of the Company’s revaluation of their liability classified warrants that have an exercise price in USD, recognition and revaluation of the conversion feature and warrant liabilities from the convertible debentures and warrants issued to agent. The Company uses the Black-Scholes Option Pricing Model to determine the fair value of the warrant liability at the end of each reporting period. This model requires the input of subjective assumptions including expected share price volatility, risk-free interest rate, and term of the warrant. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings (loss) and equity.

Previous wording

Research and development expenses decreased by $433,687, or 30%, from $1,429,716 for the three months ended September 30, 2023, to $996,029 for the three months ended September 30, 2024. Research and development costs decreased primarily due to lower product development costs and consulting fees for ALPHA-1062 in AD, offset by grant expenses of $61,122 which were incurred in 2024 following the receipt of the DOD grant in June 2023, and increased management fees and salaries. The Company’s research and development expenses are summarized below:

Current wording

Research and development expenses decreased by $509,205, or 56%, from $916,716 for the three months ended March 31, 2024, to $407,511 for the three months ended March 31, 2025. Research and development costs decreased primarily due to lower product development costs, and less time allocated to management and employees, which resulted in lower management fees and salaries, share-based compensation and employees. The Company’s research and development expenses are summarized below:

Previous wording

General and administrative expenses costs consist of personnel costs, consulting fees, other outside professional services including legal, human resources, audit and accounting services, and pre-commercialization expenses, including selling and marketing costs as well attendance to various conferences. Personnel costs consist of salaries, benefits, and share-based compensation. We expect to continue to incur expenses to support our continued operations as a public company, including expenses related to existing and future compliance with rules and regulations of the stock exchanges on which our securities are traded, insurance expenses, investor relations, audit fees, professional services and general overhead and administrative costs.

Current wording

General and administrative expenses costs consist of personnel costs, consulting fees, other outside professional services including legal, human resources, audit and accounting services, and commercial operations, including selling and marketing costs as well attendance to various conferences. Personnel costs consist of salaries, benefits, and share-based compensation. We expect to continue to incur expenses to support our continued operations as a public company, including expenses related to existing and future compliance with rules and regulations of the stock exchanges on which our securities are traded, insurance expenses, investor relations, audit fees, professional services and general overhead and administrative costs.

Previous wording

General and administrative expenses increased by $155,558 or 12%, from $1,336,197 for the three months ended September 30, 2023, to $1,491,755, for the three months ended September 30, 2024. Consulting fees, financing fees, registrar and filing fees, investor relations and other general and administrative costs were primarily higher in the three months ended September 30, 2024, in support of the Company’s US IPO filing and general business operating support. Share-based compensation was lower primarily due to fluctuations in the Company stock price and accounting for equity awards that were issued after September 30, 2023. The following table depicts the fluctuation in the general and administrative accounts:

Current wording

General and administrative expenses increased by $1,891,439 or 54%, from $3,474,208 for the three months ended March 31, 2024, to $5,365,647, for the three months ended March 31, 2025. Commercial operations, management fees and salaries, share-based compensation, employee costs and other general and administrative costs were primarily higher in the three months ended March 31, 2025, in support of the Company’s expansion in commercial operations and launch of ZUNVEYL. Share-based compensation was higher primarily due to the grant options issued during the three months ended March 31, 2025. The following table depicts the fluctuation in the general and administrative accounts:

Previous wording

The foreign exchange gain (loss) changes by $5,086, or 38%, from a loss of $13,301 for the three months ended September 30, 2023, to a loss of $8,217 for the three months ended September 30, 2024. The foreign exchange loss increased by $26,124, or 729%, from a loss of $3,584 as of September 30, 2023, to a loss of $29,708 as of September 30, 2024, due primarily to the fluctuations in exchange rate between the Canadian Dollar and the U.S. Dollar. This variance is largely due to the Company changing its functional currency from the CAD to the USD on August 31, 2023, therefore having less transactions needing to be denominated in a foreign currency. The change in mix and balance of the Company’s assets and liabilities over the periods also impacted the changes in foreign currency exchange (loss) gain.

Current wording

The foreign exchange gain (loss) changes by $13,672, or 93%, from a loss of $14,629 for the three months ended March 31, 2024, to a loss of $957 for the three months ended March 31, 2025, due primarily to the fluctuations in exchange rate between the Canadian Dollar and the U.S. Dollar. The change in mix and balance of the Company’s assets and liabilities over the periods also impacted the changes in foreign currency exchange (loss) gain.

Previous wording

The Company received grant revenue from the Army Medical Research and Material Command on June 5, 2023, for a pre-clinical study on the use of the ALPHA-1062 Intranasal to reduce blast of mTBI induced functional deficit and brain abnormalities. During the three months ended September 30, 2024 and 2023, the Company recorded grant income of $61,122 and $32,757, respectively. During the nine months ended September 30, 2024 and 2023, the Company recorded grant income of $333,462 and $32,757, respectively.

Current wording

The Company received grant revenue from the Army Medical Research and Material Command on June 5, 2023, for a pre-clinical study on the use of the ALPHA-1062 Intranasal to reduce blast of mTBI induced functional deficit and brain abnormalities. During the three months ended March 31, 2025 and 2024, the Company recorded grant income of $71,095 and $133,779, respectively.

Previous wording

During the three and nine months ended September 30, 2024, the Company recorded an impairment of intangible assets of $0 and $39,166, respectively, from the impairment of the ALPHA-0602 license as the Company decided to discontinue development of the ALPHA-602 technology, no impairments were reported in the comparable 2023 periods.

Current wording

During the three months ended March 31, 2025 and 2024, the Company recorded an impairment of intangible assets of $0 and $39,166, respectively, from the impairment of the ALPHA-0602 license as the Company decided to discontinue development of the ALPHA-602 technology.

Previous wording

The gain of $416,806 for the three months ended September 30, 2024 for the fair value of the warrant liabilities was a net change of $932,577, or 181%, compared to a loss of $515,771 for the three months ended September 30, 2023. The loss of $16,127 for the nine months ended September 30, 2024 for the fair value of the warrant liabilities was a net change of $516,302, or 97%, compared to a loss of $532,429 for the nine months ended September 30, 2023. The change was primarily due to the fluctuation in the Company’s stock price as well as the volatility of the financial markets, coupled with the addition of new warrants issued during the first quarter of 2023 which were priced differently that the Company’s functional currency at the time of issuance and new warrants issued during the third quarter of 2024 which have a variable exercise price.

Current wording

The gain of $1,147,882 for the three months ended March 31, 2025 for the fair value of the warrant liabilities was a net change of $1,767,871, or 285%, compared to a loss of $619,989 for the three months ended March 31, 2024. The change was primarily due to the additional derivatives from the convertible debentures conversion and US IPO in November 2024 and the fluctuation in the Company’s stock price.

Previous wording

The Company recorded a provision for loan losses of $55,000 relating to its loan to Alpha Seven during the nine months ended September 30, 2024, following a delay in Alpha Seven’s initial capital raise and therefore potential inability to repay the loan when due.

Current wording

The Company recorded a provision for loan losses of $55,000 relating to its loan to Alpha Seven during the three months ended March 31, 2024, following a delay in Alpha Seven’s initial capital raise and therefore potential inability to repay the loan when due.

Previous wording

Additionally, as a result of the closing of the Qualified Offering, the Company issued an additional 215,418 warrants exercisable to acquire 215,418 Common Shares with an exercise price of $7.19 per share and the exercise price of the Company’s existing 430,835 warrants issued in connection with the offering of the convertible notes was repriced from $10.55 per share to $7.19 per share.

Current wording

Additionally, as a result of the closing of the Qualified Offering, the Company issued an additional 215,418 warrants exercisable to acquire 215,421 Common Shares with an exercise price of $7.19 per share and the exercise price of the Company’s existing 430,835 warrants issued in connection with the offering of the convertible notes was repriced from $10.55 per share to $7.19 per share.

Previous wording

The following table provides information regarding our cash flows for the years ended September 30, 2024, and 2023:

Current wording

The following table provides information regarding our cash flows for the three months ended March 31, 2025, and 2024:

Previous wording

Cash provided by/(used in) investing activities

Current wording

Cash provided by/(used in) operating activities

Previous wording

Cash used in operating activities decreased by $1,317,244 to $5,451,927 for the nine months ended September 30, 2024, from $6,769,171 for the comparative period. The change in cash flows from operating activities represents the effect on cash flows from net losses adjusted for items not affecting cash, principally amortization and depreciation, accrued expenditures for government grant, share-based compensation, impairment of intangible assets, provision for loan losses, shares issued for services, and the changes in the value of conversion feature liability, warrant liabilities, and bonus rights liability, in addition to net changes in non-cash balances related to working capital items.

Current wording

Cash used in operating activities decreased by $427,212 to $2,044,280 for the three months ended March 31, 2025, from $2,471,492 for the comparative period. The change in cash flows from operating activities represents the effect on cash flows from net losses adjusted for items not affecting cash, principally amortization and depreciation, accrued expenditures for government grant, share-based compensation, impairment of intangible assets, provision for loan losses, shares issued for services, and the changes in the value of conversion feature liability, warrant liabilities, and bonus rights liability, in addition to net changes in non-cash balances related to working capital items.

Previous wording

Cash provided by financing activities for the nine months ended September 30, 2024, increased by $2,117,341 compared to the comparative period. During the nine months ended September 30, 2024, financing activities primarily consisted of raising proceeds of $3,732,469 from units issued for cash, raising proceeds of $4,545,000 from the issuance of convertible debentures, and receiving $373,825 in government grant proceeds offset by $357,228 of related grant expenses. The funds raised under financing activities were offset by share issuance costs of $405,753 and debt issuance costs of $459,360. During the nine months ended September 30, 2023, financing activities primarily consisted of raising proceeds of $5,851,148 from units issued for cash offset by share issuance costs of $394,736.

Current wording

Cash provided by financing activities for the three months ended March 31, 2025, decreased by $4,234,284 compared to the comparative period. During the three months ended March 31, 2025, financing activities was primarily due to the principal repayment of the promissory note of $911,463 and receiving $174,675 in government grant proceeds offset by $97,515 of related grant expenses. During the three months ended March 31, 2024, financing activities primarily consisted of raising proceeds of $3,732,469 from units issued for cash and receiving $180,000 in government grant proceeds offset by $106,735 of related expenses.

Previous wording

The preparation of these consolidated financial statements in conformity with US GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including valuing equity securities in share-based payment arrangements, estimating the fair value of financial instruments recorded as a warrant liability, useful lives of depreciable assets and definite lived intangible assets, and whether impairment charges may apply, and the determination of whether an asset constitutes a business a business combination or asset acquisition. Management bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. Actual results could differ materially from these estimates under different assumptions or conditions.

Current wording

The preparation of these consolidated financial statements in conformity with US GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including valuing equity securities in share-based payment arrangements, estimating the fair value of financial instruments recorded as a warrant liability, useful lives of depreciable assets and definite lived intangible assets, and whether impairment charges may apply, and the determination of whether an asset constitutes a business combination or asset acquisition. Management bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. Actual results could differ materially from these estimates under different assumptions or conditions.

Previous wording

The Company’s reporting currency is the USD. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s CAD operations are translated to USD at the exchange rate on the reporting date. The income and expenses are translated using average exchange rates. Foreign currency differences that arise on translation for consolidated purposes are recognized in other comprehensive loss on the consolidated statements of operations and comprehensive (loss) income.

Current wording

The functional currency of the Company and its subsidiaries is USD, being the currency of the primary economic environment in which each entity operates. The Company’s reporting currency is the USD. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s CAD operations are translated to USD at the exchange rate on the reporting date. The income and expenses are translated using average exchange rates. Foreign currency differences that arise on translation for consolidation purposes are recognized in net loss on the consolidated statements of operations and comprehensive (loss) income.

Previous wording

The Company’s financial instruments consist of cash, restricted cash, prepaid and other current assets, notes receivable, accounts payable and accrued liabilities, warrant liability, promissory note, and other liabilities.

Current wording

The Company’s financial instruments consist of cash, restricted cash, accounts receivable, accounts payable, promissory note, warrant liabilities, and other liabilities. The fair values of inventory, prepaid and other current assets, accounts payable, and promissory note approximate their carrying values either due to their current nature or current market rates for similar instruments.

Previous wording

We continue to assess the ability to continue as a going concern, which involves management judgement and analysis of resources and prospects. The Company has reported negative cash flow from operating activities since inception and expects to experience negative operating cash flows for the foreseeable future. The Company has not generated revenues from its operations to date and as of September 30, 2024, had a deficit of $70,626,302 (December 31, 2023 - $61,648,173) which has been primarily financed by equity. The Company had $3,773,399 in cash and restricted cash and $3,005,836 in current liabilities (of which $56,233 is payable from the Company’s available restricted cash balance) as of September 30, 2024. The Company’s continuing operations, as intended, are highly dependent upon its ability to obtain additional funding and generate cash flows. Based upon our current operating plan and our closing of our public offering of common shares for approximately $46.42 million in net proceeds on November 13, 2024, we estimate that our existing cash, cash equivalents and marketable securities as of the date of this filing would be sufficient to fund our projected base ongoing operating expenses, the initial costs to prepare for commercialization of ZUNVEYL in AD, planned CMC costs, ongoing operating costs and capital expenditures through at least the next 12 months. However, we may look to raise additional capital to continue to further advance our commercialization plans and ongoing operating costs through a debt financing in the next 12 months. We have based our estimates on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. In addition, we could utilize our available capital resources sooner than we expected. The Company is also contemplating raising additional capital by pursuing both dilutive and non-dilutive strategic sources of capital; to fully execute its commercial and operating plans following receipt of the NDA approval for ZUNVEYL from the FDA. Any additional capital would further support our planned costs to begin commercial activities including launching U.S. sales of ZUNVEYL in AD.

Current wording

We continue to assess the ability to continue as a going concern, which involves management judgement and analysis of resources and prospects. The Company has reported negative cash flow from operating activities since inception and expects to experience negative operating cash flows for the foreseeable future. As of March 31, 2025, the Company had a deficit of $78,291,581 (December 31, 2024 - $76,285,038) which has been primarily financed by equity. The Company had $45,622,229 in cash and restricted cash and $2,807,397 in current liabilities (of which $71,095 is payable from the Company’s available restricted cash balance) as of March 31, 2025. The Company’s continuing operations, as intended, are highly dependent upon its ability to obtain additional funding and generate cash flows. Based upon our current operating plan and our closing of our public offering of common shares for approximately $46.42 million in net proceeds on November 13, 2024, we estimate that our existing cash, cash equivalents and marketable securities as of the date of this filing would be sufficient to fund our projected base ongoing operating expenses, the initial costs to prepare for commercialization of ZUNVEYL in AD, planned CMC costs, ongoing operating costs and capital expenditures through at least the next 12 months from the date of this Form 10-Q. However, we may look to raise additional capital to continue to further advance our commercialization plans, R&D pipeline, and ongoing operating costs through a debt or equity financing in the next 12 months from the date of the filing of this Form 10-Q. We have based our estimates on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. In addition, we could utilize our available capital resources sooner than we expected. The Company is also contemplating raising additional capital by pursuing both dilutive and non-dilutive strategic sources of capital; to fully execute its commercial and operating plans following receipt of the NDA approval for ZUNVEYL from the FDA. Any additional capital would further support our planned costs to begin commercial activities including launching U.S. sales of ZUNVEYL in AD.