Alpha Cognition Inc.

NOTE 1 – NATURE OF OPERATIONS

Alpha Cognition Inc. (“ACI” or the “Company”) is a commercial stage, biopharmaceutical company dedicated to developing treatments for patients suffering from neurodegenerative diseases, such as Alzheimer’s Disease, for which there are limited or no treatment options. The Company focuses on the commercial manufacturing and commercial sales of its ZUNVEYL oral tablet formulation, which was launched on March 19, 2025. The Company’s commercial program for ZUNVEYL is primarily focused on its 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. As of November 12, 2024, the Company’s common shares commenced trading on the NASDAQ stock exchange under the symbol “ACOG”. The Company’s common shares traded on the Canadian Securities Exchange (“CSE”) under the symbol “ACOG” from May 1, 2023 to December 17, 2024 on which date they were voluntarily delisted.

On November 5, 2024, the Company completed a reverse stock split on the ratio of one share issued for every previously issued and outstanding twenty-five shares. All current and comparative references to the number and price per share for common shares, preferred shares, options, warrants, ACI Canada legacy performance options and weighted average number of shares, loss per share, have been restated to give effect to this reverse stock split.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Note 2A Revisions to Previously Issued Consolidated Financial Statements and Financial Information –

During the preparation of its consolidated financial statements for the year ended December 31, 2025, the Company identified an error in its previously reported consolidated financial statements for the year ended December 31, 2024. Specifically, certain options denominated in Canadian dollars (the “CAD Options”) were previously classified as equity awards. Upon further evaluation of the terms of the CAD Options and the applicable accounting guidance, the Company determined that because the exercise price of the CAD Options is denominated in a currency that is different than the one in which a substantial portion of the Company’s shares are traded, the CAD Options are considered to be indexed to a factor other than a market, performance, or service condition. Accordingly, the CAD Options should have been classified as liability-classified awards measured at fair value beginning with the Company’s US initial public offering in November 2024, with subsequent changes in fair value recognized in earnings each reporting period.

In accordance with Staff Accounting Bulletin (“SAB”) 99, Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements, the Company evaluated the materiality of the error from qualitative and quantitative perspectives, and concluded that the error was immaterial to any prior annual or interim financial statements.

However, the Company has corrected the error in the current year comparative consolidated financial statements by adjusting the information, as applicable, as of and for the fiscal year ended December 31, 2024. A summary of the corrections to the affected financial statement line items in these consolidated financial statements is presented below.

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Cash Flows

The Company will also revise previously reported quarterly financial information for the identified error based on the summary presented herein in its future filings with the SEC, as applicable. A summary of the corrections to the affected financial statement line items to the Company’s previously issued condensed consolidated financial statements for each quarterly period is presented in Note 18 of the notes to the consolidated financial statements.

Note 2B

Basis of Presentation – The accompanying consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

**Principles of Consolidation–**These consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Alpha Cognition Canada Inc. (“ACI Canada”) and ACI Canada’s wholly owned subsidiary Alpha Cognition USA Inc. (“ACI USA”). All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated upon consolidation.

**Functional and Reporting Currency–**The functional currency of an entity is the currency of the primary economic environment in which the entity operates. The functional currency of the Company and each of its subsidiaries is the United States Dollar (“USD”). The Company’s consolidated reporting currency is USD and, unless specifically noted otherwise, all amounts presented are in USD. Foreign currency differences that arise from translating a subsidiary’s financial statements to USD are recognized in other comprehensive loss on the consolidated statements of operations and comprehensive loss.

***Liquidity -***The Company does not have sufficient operating revenue to finance its existing obligations and has relied on external financing, such as debt and equity raises, to generate capital to maintain its capacity to meet working capital requirements. The Company has successfully raised funds that exceed the Company’s working capital requirements for the next 12 months from the date of issuance of these consolidated financial statements. The Company expects to continue to rely on debt and the issuance of shares, and possibly other non-dilutive financing options to finance its ongoing operations and plans for commercialization of ZUNVEYL. However, there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company.

Use of Estimates and Assumptions – The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and disclosure of contingent liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. The Company’s most significant estimates relate to the fair value of its warrant liabilities, CAD Options liability, and stock option grants, and its estimates of the standalone selling prices of certain performance obligations. On an ongoing basis, management evaluates its estimates, to ensure that those estimates effectively reflect changes in the Company’s business and new information as it becomes available. 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.

Concentrations of Credit and Supply Risk* –*The Company’s financial instruments subject to concentrations of credit risk consists primarily of cash and cash equivalents and accounts receivable. Cash is deposited with financial institutions with high credit quality which are typically in excess of insured limits. During the year ended December 31, 2025, and 2024, the Company did not experience any loss related to these concentrations.

The Company considers its significant customers to be those that represent more than 10% of total revenue or accounts receivable. As of and for the year ended December 31, 2025, the Company had three customers that accounted for approximately 48%,22% and 17% of total revenue and these three same customers that accounted for 60%,17% and 19% of accounts receivable, respectively. As of and for the year ended December 31, 2024, the Company had no significant customers.

The Company relies on a single, Taiwan-based vendor for the supply of its active pharmaceutical ingredient (“API”) and a single, U.S.-based vendor for the manufacture of ZUNVEYL. The Company does not have long-term supply agreements with these vendors, or such agreements may be terminable by the vendor upon limited notice. As a result, the Company is exposed to supply interruption risk in the event that these vendors experience operational, regulatory, financial, or other difficulties, or otherwise fail to meet the Company’s quality, quantity, or timing requirements. The loss of, or a significant disruption in, supply from these vendors, or the Company’s inability to obtain alternative sources of API or manufacturing services on commercially reasonable terms and within required timelines, could have a material adverse effect on the Company’s ability to manufacture and supply its products, which could adversely impact its business, results of operations, and financial condition.

Cash and Cash Equivalents*–*The Company considers cash to include currency on hand, demand deposits with banks or other financial institutions, and other kinds of accounts that have the general characteristics of demand deposits in that the Company may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. The Company considers cash equivalents to include term deposits, certificates of deposit, and all highly liquid instruments with original maturities of three months or less.

Inventory– The Company values its inventories at the lower of cost or estimated net realizable value. The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing costs, on a first-in, first-out basis. The Company classifies inventory as long-term when consumption or sale of the inventory is expected beyond its normal operating cycle of twelve months. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and it writes down any excess and obsolete inventories to their estimated realizable value in the period in which the impairment is first identified. Such impairment charges, should they occur, are recorded within cost of sales. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required which would be recorded as cost of sales in the consolidated statements of operations.

The Company began to capitalize inventory costs related to ZUNVEYL following receipt of regulatory approval in July 2024. Prior to this, inventory costs were expensed as research and development expense as incurred. Raw materials capitalized in inventory consist of materials, including active pharmaceutical ingredients, to be consumed in production of inventory related to FDA approved products.

Equipment– Equipment is stated at historical cost less accumulated depreciation. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in the consolidated statement of operations. Repairs and maintenance are expensed as incurred. Depreciation is charged over the estimated useful lives using the straight-line method as follows:

Intangible Assets* –*The Company’s intangible assets consist of exclusive licenses that allow the Company to further develop and exploit the ALPHA-1062 and ALPHA-0602 Technology described in Note 16. The licenses are carried at cost and amortized on a straight-line basis over their estimated useful life of 15 years. During the year ended December 31, 2024, the Company wrote off the ALPHA-0602 licenses in the amount of $39,166 on the consolidated statements of operations and comprehensive loss.

Leases– The Company does not recognize a right of use asset or corresponding lease liability for any lease that, at the commencement date, has a term of 12 months or less and does not include an option to renew the lease or purchase the underlying asset that the Company is reasonably certain to exercise. Instead, the total cash payments due under a short-term lease are expensed on a straight-line basis over the term of the lease. During the years ended December 31, 2025 and 2024, all of the Company’s leases were short-term leases.

Impairment of Long-Lived Assets*–*The Company reviews long-lived assets, primarily comprised of equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net cash flows which the assets are expected to generate. If the carrying value of such assets are considered to not be recoverable, an impairment loss is recognized equal to the amount by which the carrying value of the long-lived asset exceeds its fair value. The Company did not identify any indicators of impairment in 2025. During the year ended December 31, 2024, the Company recorded $39,166 of impairment related to its ALPHA-0602 licenses intangible asset.

Convertible Debentures and Conversion Feature Liability* –*The Company’s convertible debentures, which were converted into shares of common stock in November 2024, contained a host liability and an embedded conversion feature that required bifurcation (see Note 7). As such, the embedded conversion feature was initially recorded at fair value and then will be remeasured to fair value each reporting period and on settlement with the change recognized as a gain or loss in the consolidated statements of operations and comprehensive loss.

Warrant Liabilities – As described in Note 9, certain freestanding warrants to purchase common stock are accounted for as liabilities. As such, the estimated fair value of each warrant will be remeasured at the end of each reporting period and on settlement and the change is recognized as a gain or loss in the consolidated statements of operations and comprehensive loss.

Revenue Recognition– Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company applies the following five-step revenue recognition model in accordance with ASC Topic 606, Revenue from Contracts with Customers, to determine revenue:

At contract inception, the Company identifies the goods or services promised in the contract and assesses whether each is distinct for the purpose of identifying performance obligations. A promised good or service is distinct if (1) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer; and (2) the Company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company evaluates whether such options provide a material right to the customer. If so, they are treated as separate performance obligations.

The transaction price of a customer contract is determined and allocated to the identified performance obligations in proportion to their standalone selling prices (“SSP”). SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Judgment is required in estimating SSP, and the Company considers market conditions, entity-specific factors, and estimated costs in making this determination.

If the consideration includes a variable amount, the Company estimates the amount to which it expects to be entitled using either the expected value or the most likely amount method, depending on which better predicts the outcome. The estimated amount is included in the transaction price only to the extent it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty is resolved. The Company re-evaluates estimates and constraints at each reporting date and adjusts the transaction price accordingly, recording any changes on a cumulative catch-up basis.

Revenue is recognized when the Company satisfies a performance obligation, either at a point in time or over time. The amount of revenue recognized is based on the portion of the transaction price allocated to each performance obligation in accordance with its relative SSP. For obligations satisfied over time, revenue is recognized using an input or output method, depending on which most accurately depicts the transfer of control to the customer.

Product Sales, Net

Products are primarily sold to direct customers such as wholesalers and pharmacies. The Company’s contractual performance obligations are generally limited to the transfer of control of the product to the customer. For ZUNVEYL tablets provided to customers, revenue is recognized at the point in time when control of the goods transfers to the customer. The Company’s contracts typically stipulate F.O.B. (Free on Board) destination terms. Consequently, revenue is recognized when the drugs are delivered to the customer’s location or any destination designated by the customer for drop-shipment. This arrangement is not a consignment arrangement, and therefore, the Company recognizes revenue upon the delivery of goods to the customer. The Company’s payment terms to customers range from 30 to 68 days; payment terms differ by customer.

Revenue from the Company’s product sales is reduced for expected prompt pay discounts, chargebacks, product returns, recalls, rebates, and consideration payable to customers, collectively referred to as gross-to-net (GTN) adjustments. Estimates of GTN adjustments are based various factors such as historical experience, projected market conditions, production expiration dates, analogs and the specific terms of the Company’s agreements with payers and customers. Variable consideration is re-evaluated at least on a quarterly basis and typically monthly. The amount of variable consideration can vary from period to period due to fluctuations in GTN components.

Consideration payable to customers includes fees paid to distributors that are calculated as a percentage of monthly product sales based on the Wholesale Acquisition Cost (WAC). These fees are paid to distributor customers for services such as access to inventory and sales data to pharmacies, inventory management, accounts receivable administration, and return and chargeback administration. Fees paid to distributors for services that are integral activities within the distribution chain with the customer, specifically related to the Company’s sales of ZUNVEYL, are recognized as a reduction of revenue since these activities are not considered distinct from the Company’s promise to sell ZUNVEYL through the distribution channel to end customers. Fees paid to customers for services that transfer a distinct service to the Company, such as logistics services, are recorded as operating expenses.

Licensing Revenue

In licensing arrangements, the identification of performance obligations considers factors such as the partner’s capabilities and the availability of required expertise in the marketplace. The intended benefit of the contract is also considered in determining whether a promised good or service is separately identifiable. If a good or service is not distinct, it is combined with other promised goods or services until a distinct bundle is identified.

For arrangements that include development or regulatory milestone payments, the Company evaluates whether achieving the milestone is probable and recognizes revenue only if a significant reversal is not expected. Regulatory milestones that are outside the control of either party are generally excluded from the transaction price until achieved.

For licenses of intellectual property that include sales-based royalties or milestones, and when the license is the predominant item to which the royalties relate, the Company recognizes royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied, consistent with the sales-based royalty exception.

Accounts Receivable - The majority of the accounts receivable arise from product sales and primarily represent amounts due from our wholesale and other third-party distributors. The Company’s standard payment terms generally require payment within 30 to 68 days.

Accounts receivable, which are uncollateralized, are carried at their original cost less an allowance for credit losses that reflects the Company’s estimate of expected lifetime credit losses from these receivables. To estimate expected credit losses, the Company applies an expected rate of loss that is determined using historical credit loss information that is adjusted for expectations of future losses based on current and projected changes, if any, to the Company’s mix of customers, macroeconomic conditions, and industry-specific factors that may impact future collection rates. Past due accounts receivable balances are written off when the Company’s internal efforts have been unsuccessful in collecting the amount due. The Company’s allowance for doubtful accounts was $0 at December 31, 2025 and 2024.

Royalty Cost of Sales – The Company makes royalty payments to third parties under license or purchase agreements associated with the acquisition of intellectual property. These royalty payments are calculated as a percentage of the net product sales and licensing fees in the period the corresponding sales occur. Royalty expenses are recognized as incurred and recorded as a component of cost of sales in the consolidated statements of operations and comprehensive loss. During the years ended December 31, 2025 and 2024, the Company incurred royalty expenses of $1,030,028 and $0, respectively

Research and Development Costs– The Company expenses research and development costs as incurred*.* Advance payments for services that will be rendered for future research and development activities are deferred and capitalized as prepaid expenses until the related services are performed.

Advertising Costs – The Company expenses advertising costs when incurred. During the years ended December 31, 2025 and 2024, the Company incurred advertising expenses of $380,774 and $97,535, respectively, which are classified as selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

**Share-Based Compensation–**The Company measures the expense related to share-based awards at the fair value of those awards on the date of grant and recognizes this amount over the requisite service period of the individual grant, which is typically equal to the vesting period. If the requisite service is not rendered, the effect on share-based compensation expense is recognized in the period the award is forfeited.

The fair value of share-based awards is determined on the grant date using the Black-Scholes option pricing model. This model is affected by the Company’s share price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s expected share price volatility over the terms of the awards, and actual and projected employee share option exercise behaviors. The Company records share-based compensation expense for service-based options on an accelerated attributions method over the requisite service period.

For share options with performance conditions, the Company records compensation expense only when it is deemed probable that the performance condition will be met. The Company records share-based compensation expense for performance-based share options on an accelerated attribution method over the requisite service period.

Liability-Based Awards – Bonus right awards that include cash settlement features are accounted for as liability-based awards in accordance with ASC 718,Compensation – Share Based Compensation. The fair value of the bonus right awards is estimated using a Black-Scholes option-pricing model and is revalued on each reporting date based on the probability of the expected awards to vest. Changes in the estimated fair value of the bonus right awards are recognized within selling, general and administrative expense in the consolidated statements of operations and comprehensive loss. Key assumptions in the calculation of the fair value of the bonus right awards include expected volatility, the risk-free interest rate, expected life, and fair value per award.

At both December 31, 2025 and 2024, the Company had 758,300 and 851,467 outstanding stock options, respectively, with exercises prices denominated in CAD. Because the exercise prices of these options are denominated in a currency that is different than the one in which a substantial portion of the Company’s shares are traded, the CAD Options are considered to be indexed to a factor other than a market, performance, or service condition. As a result, the CAD Options are classified as liabilities and remeasured at fair value each reporting period with the corresponding change in fair value recorded as an increase or decrease in stock-based compensation expense within research and development and selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss

Grant Income and Expenses – All funds relating to government grants are recorded under the gross method of accounting for government grants whereby any income received is reported as grant income and the associated expenses are included in research and development expenses 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 are expensed as incurred with a corresponding amount of grant income recognized through a reduction of the deferred income balance. 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 years ending December 31, 2025 and 2024, the Company recorded grant income of $81,095 and $463,811, respectively, from the “R&D Grant” described in Note 3.

Income Taxes*–*The Company uses the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applied 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 tax rates is recognized in the period that include the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount for which realization is more likely than not.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than a 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense. To date, there have been no interest or penalties recorded in relation to unrecognized tax benefits.

Loss Per Share* –*Basic loss per share is computed by dividing net loss available to common stockholders by the weighted-average number of common stock outstanding during the reporting period. Diluted earnings per share includes the effect of potentially dilutive securities, including stock options, warrants, and convertible debentures, using the treasury stock method. Potentially dilutive securities are included in diluted earnings per share only to the extent they reduce earnings per share.

Fair Value Measurements– Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:

Level 1 – Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

Level 2 – Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

Level 3 – Financial instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the instrument.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. To the extent that a fair value measurement is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

The Company’s recurring fair value measurements include those related to warrant liabilities (see Note 9), bonus right liabilities (see Note 8), and CAD Option liabilities (see Note 9), all of which are considered to be Level 3 measurements due to the use of significant unobservable inputs, including expected volatility and expected term. These inputs are inherently uncertain and require significant judgment; accordingly, changes in these assumptions could have a material impact on the fair value measurement. In general, increases (decreases) in the expected volatility assumptions would result in higher (lower) fair value measurements, and increases (decreases) in the expected term assumptions would generally result in higher (lower) fair values.

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued liabilities, and deferred income are considered to be representative of their respective fair values because of the short-term nature of these accounts.

Recent Adopted Accounting Pronoucements

In December 2023, the Financial Accounting Stand (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09, effective December 31, 2025, in these consolidated financial statements. ASU 2023-09 only impacted the disclosures and did not impact the consolidated financial statements. See Note 8, Income Taxes, for disclosures related to the adoption of ASU 2023-09.

New Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disaggregation of certain costs in a separate note to the financial statements, such as the amounts of employee compensation, depreciation and intangible asset amortization, included in each relevant expense caption in annual and interim consolidated financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027 on a retrospective or prospective basis, with early adoption permitted. The Company is evaluating the effect that ASU 2024-03 will have on its financial statement disclosures.

The Company considers the applicability and potential impact of all recently issued accounting pronouncements; those not specifically identified in this disclosure are either not applicable to the Company or not expected to have a material effect on our financial condition or results of operations.

NOTE 3 – INVENTORY

Inventory consists of the following at December 31:

NOTE 4 – OTHER BALANCE SHEET COMPONENTS

Prepaid expenses and other current assets consisted of the following at December 31:

Accounts payable and accrued expenses consisted of the following at December 31:

NOTE 5 – INTANGIBLE ASSETS

The Company’s intangible assets consist entirely of license of intellectual property. Details related to the amounts of these licenses were as follows at December 31:

The weighted-average remaining useful life of intangible assets was 18.17 years and 5.17 years at December 31, 2025 and 2024, respectively. Amortization expense for the years ended December 31, 2025 and 2024 was $21,546 and $79,875, respectively. During the year ended December 31, 2024, the Company reported an impairment loss of $39,166 related to one of its licenses.

The following table outlines the estimated future annual amortization expense related to intangible assets as of December 31, 2025:

Change in Useful Life of Intangible Asset

The Company completed a review of the estimated useful life of its intangible asset after a patent application, related to the Memogain License, was granted in January 2025. The patent protection was extended to February 2044. Management determined that the estimated useful life of the license should be extended for an additional 14 years. Effective January 1, 2025, the Company extended the estimated remaining useful life of the license from 5 years to 19 years.

This change in estimate has been applied prospectively and, as a result of this change, amortization expense decreased by approximately $57,496 for the year ended December 31, 2025, compared to the prior amortization schedule.

NOTE 6 – PROMISSORY NOTE

In March 2015, the Company issued a promissory note of $1,400,000 to Neurodyn Life Sciences Inc (“NLS”), a related party through a common director, for the acquisition of the ALPHA-1062 Technology described in Note 16.

In March 2023, the Company and NLS agreed to an amendment to the promissory note pursuant to which the interest rate was increased from 2% to 5.5% and the maturity date was extended from December 31, 2022, to July 15, 2024, with interest-only payments due until maturity.

In April 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 15, 2024, to July 15, 2025. As required by the amendment, $300,000 of the outstanding principal balance was repaid prior to December 31, 2024, with the remaining principal balance due at maturity. During 2025, the remaining principal balance and accrued interest were repaid and the promissory note wasno longer outstanding at December 31, 2025.

NOTE 7 – CONVERTIBLE DEBENTURES AND CONVERSION FEATURE LIABILITY

The following table summarizes the activity for the convertible debentures and conversion feature liability as of and for the years ended December 31, 2025 and 2024:

On September 24, 2024, the Company entered into Securities Purchase Agreements (“SPAs”) with various third party lenders for the issuance of convertible debentures (“Debentures”) and warrants to purchase 430,805 common shares of the Company at an exercise price of $10.55 per share until September 24, 2029 (“Initial Debenture Warrants”) for $4,545,000. As described below, in November 2024 the Debentures automatically converted pursuant to their terms into 801,413 Common Shares.

Prior to their conversion, the Debentures accrued interest at 10% per annum and were due and payable on September 24, 2026 (“Maturity Date”). At any time prior to the Maturity Date, the holder had the option to convert their Debenture and any accrued interest into Common Shares at a price of $10.55 (“Conversion Price”). Upon the completion of a Qualified Offering, being an offering of the Company’s securities for at least $10 million in aggregate gross proceeds in coordination with the simultaneous uplisting of Common Shares onto a United States national securities exchange, the Debentures would automatically convert into the securities, including warrants, on the same terms as were applicable in the Qualified Offering at the lower of (i) the Conversion Price or (ii) the per security offering price in the Qualified Offering. If, prior to the Maturity Date or the completion of a Qualified Offering, the last trading price of the Common Shares exceeded 250% of the Conversion Price for 10 consecutive trading days, the Debentures and accrued interest would have automatically converted into Common Shares at the Conversion Price.

Upon the closing of a Qualified Offering, holders of the Initial Debenture Warrants were entitled to receive an additional 50% of warrants (“Additional Debenture Warrants”) with identical terms as the Initial Debenture Warrants. Refer to Note 9 for additional details related to the Initial and Additional Debenture Warrants.

On November 13, 2024, the Debentures automatically converted pursuant to their terms into 801,413 Common Shares at a conversion price of $5.75, this being the public offering price per share in the Company’s United States initial public offering. Also on this date, the Company issued the Additional Debenture Warrants exercisable into 215,421 Common Shares at an exercise price of $7.19 per share. In addition, the exercise price of the Initial Debenture Warrants was adjusted from $10.55 per share to $7.19 per share.

The Company determined that the conversion features embedded in the Debentures met the definition of a derivative that was required to be bifurcated from the Debentures. As a result, the Company recognized the embedded derivative as a conversion feature liability and recorded a corresponding debt discount related to the Debentures that was accreted to interest over the period the Debentures were outstanding. The conversion feature liability was initially measured at fair value and subsequently remeasured to fair value at the end of each reporting period, with any changes in fair value reported as a gain or loss on the consolidated statement of operations and comprehensive loss. During the year ended December 31, 2024, the Company recognized a loss on the revaluation of the conversion feature liability of $2,076,421. Additionally, the Company recognized debt issuance costs relating to the convertible features and warrants of $459,360 during the year ended December 31, 2024.

The initial fair value of the conversion feature liability was determined to be $6,598,475 using the Monte Carlo simulation model with the following assumptions:

NOTE 8 – OTHER LONG-TERM LIABILITIES

The Company adopted a bonus policy pursuant to which it may grant bonus rights payable in cash to certain eligible participants, including employees, officers, or consultants of the Company. These bonus rights are subject to certain vesting provisions and are remeasured each reporting date with the change in fair value recognized in selling, general and administrative expense in the consolidated statements of operations and comprehensive loss.

During 2022, certain executives of the Company were granted the ability to earn up to 370,448 bonus rights entitling them to a cash bonus equal to an amount by which the fair market value of one common stock (calculated as the 30-day Volume Weighted Average Price (“VWAP”) per common share) exceeds $39.50 multiplied by the number of bonus rights vested. The bonus rights will be earned in tranches based on the price of the Company’s common share exceeding certain thresholds. Initially, the earned bonus rights would vest and be payable on the earlier of a date of a change of control or April 15, 2024.

On April 16, 2024, the Company amended the vesting date of the bonus rights agreements to the earlier of April 28, 2027, the date of a change of control, or the date of the attainment of the business value threshold with respect to any tranche. Additionally, the grant price was reduced from $39.50 to $29.75. As of December 31, 2025 and 2024, a total of 95,071 bonus rights had been vested.

At December 31, 2025 and 2024, the Company recognized a bonus right liability of $47,181 and $102,783, respectively. Total compensation expense (recovery) for the bonus rights recognized within selling, general and administrative expenses for the years ended December 31, 2025 and 2024 was $(54,113) and $16,160, respectively. Total compensation expense (recovery) for the bonus rights recognized within research and development expenses for the years ended December 31, 2025, and 2024, was $(1,489) and $2,498, respectively. As of December 31, 2025, and 2024, there was $28,791 and $264,043, respectively, of unrecognized compensation expense related to the bonus right awards.

The bonus right awards are considered liability-based awards and are remeasured to fair value at each reporting date and on settlement date. The following weighted average assumptions were used in the Black-Scholes option-pricing model for the valuation of the bonus rights liability as of December 31:

As of December 31, 2025, and 2024,98,021 and 111,052 bonus right awards, respectively, were expected to vest.

NOTE 9 – STOCKHOLDERS’ EQUITY

Authorized Share Capital

The Company is authorized to issue the following share capital:

At the Market Offering

On August 22, 2025, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) as sales agent. Under the terms of the ATM Agreement, the Company will be entitled to sell, at its sole discretion and from time to time as it may choose, common stock in the capital of the Company (“Stock”) through Wainwright, with such sales having an aggregate gross sales value of up to $75.0 million (the “Offering”). The ATM Agreement will remain in full force and effect until the date that the ATM Agreement is terminated in accordance with the terms therein.

Subject to the terms and conditions of the Agreement, Wainwright will use its commercially reasonable efforts to sell the Stock from time to time, based upon the Company’s instructions. However, the Company has no obligation to sell any of the Stock, and may at any time suspend offers under the Agreement or terminate the Agreement. The Company has provided Wainwright with customary indemnification rights, and Wainwright will be entitled to a commission at a commission rate of up to 3.0% of the gross sales price of the Stock sold.

Through December 31, 2025, the Company has not issued Common Stock under the ATM Agreement.

Public Offering

On October 2, 2025, the Company completed a public offering of Common Stock by issuing 4,651,516 shares of Common Stock at a public offering price of $6.25 per share and 948,484 pre-funded warrants exercisable to Common Stock with an exercise price of $0.001 per share for total gross proceeds to the Company of $35 million. In connection with the issuance of the Common Stock for this offering, the Company incurred underwriting fees of $2,110,875 and legal and other advisory fees $95,096.

On October 17, 2025, the underwriter of the Company’s public offering exercised its over-allotment option in full to purchase an additional 840,000 shares of Common Stock at the public offering price of $6.25 per share for additional gross proceeds of $5.25 million. In connection with this issuance, the Company incurred $341,250 in underwriter fees.

The pre-funded warrants have an exercise price of $0.001 per common stock, subject to proportional adjustments in the event of share dividends and splits, pro rata distributions, subsequent rights offerings and similar events. The pre-funded warrants are exercisable at any time after their original issuance, subject to certain beneficial ownership limitations, and only terminate upon exercise.

Initial Public Offering in the United States

On November 13, 2024, the Company completed a public offering in the United States by issuing 8,695,653 Common Stock at an offering price of $5.75 per share for gross proceeds of $50,000,005. In connection with this offering, the Company incurred underwriting fees of $3,826,624, legal and other advisory fees of $1,374,814, and listing fees of $133,633. In addition, the Company issued warrants exercisable into 608,696 Common Stock (the “IPO Agent Warrants”) with an estimated fair value of $2,381,051.

On December 12, 2024, the underwriter of the Company’s public offering in the United States partially exercised its over-allotment option to purchase an additional 488,506 common shares at the public offering price of $5.75 per share for additional gross proceeds of $2,808,910.

Shares Issued for Services

In May 2023, the Company entered into a three-year consulting services agreement (the “Spartan Consulting Agreement”) with Spartan Capital Securities, LLC (“Spartan”) under which Spartan will provide advising and assisting on potential business development transactions, strategic introductions, assisting management with enhancing corporate and stockholder value, and capital raising advice. In January 2024, the Company paid a consulting fee of $320,000 and issued 582,331 Common Stock valued at $3,202,823 to Spartan and its assignees pursuant to the Spartan Consulting Agreement, of which $928,874 was recognized as share issuance costs and $2,273,949 was recognized as selling, general and administrative expenses.

Unit Offering

In January 2024, the Company completed an offering of 678,630 units at a price of $5.50 for total gross proceeds of $3,732,469 (the “2024 Unit Offering”). Each unit consisted ofone Common Stock andone warrant with each warrant entitling the holder to purchase an additional Common Stock of the Company at the initial pricing of $7.75 per share until January 2027 (the “2024 Unit Offering Investor Warrants”). In connection with the closing of 2024 Unit Offering, the Company paid cash commissions of $391,178, incurred legal fees of $14,575, and issued a warrants exercisable into 41,493 Common Shares (the “Unit Offering Agent Warrants”) with an estimated fair value of $582,245. Each Unit Agent Warrant is exercisable intoone Common Share of the Company at an exercise price of $7.75 and expires in January 2027. Collectively, the 2024 Unit Offering Investor Warrants and the Unit Offering Agent Warrants are referred to hereafter as the “2024 Unit Offering Warrants”).

Summary of Outstanding Warrants

The following table summarizes warrant activity during the years ended December 31, 2025 and 2024:

A summary of all warrants outstanding and exercisable as of December 31, 2025 is as follows:

CAD Warrants Liability

On August 31, 2023, the Company’s functional currency changed to the USD from the CAD; as such, the Company recorded a derivative liability on the warrants outstanding with CAD exercises prices (the “CAD Warrants”). This derivative liability is being remeasured to fair value at each reporting period and on settlement date.

As of December 31, 2025, and December 31, 2024, the fair value of the CAD Warrants derivative liability was $326,198 and $503,129, respectively. During the years ended December 31, 2025, and December 31, 2024, the Company recorded a $176,931 gain and a $340,179 loss, respectively, from the change in the fair value of the CAD Warrants.

The following weighted average assumptions were used in the Black-Scholes option-pricing model to remeasure the fair value of the CAD Warrants at December 31:

Debentures Warrants Liability

In connection with transactions described in Note 8 related to the Convertible Debentures, the Company issued Initial Debenture Warrants and Additional Debenture Warrants during 2024. The Initial Debenture Warrants were exercisable at a price of $10.55 per share until September 24, 2029. However, the exercise price of the Initial Debenture Warrants were subject to adjustment upon the completion of a Qualified Offering to the lower of (i) the existing Debenture Warrant exercise price, (ii) the exercise price of any common share purchase warrants issued in the Qualified Offering, or (iii) if no common share purchase warrants are issued in the Qualified Offering, the closing price of the common shares on the Canadian Securities Exchange (as converted into U.S. dollars) immediately prior to the pricing news release of the Qualified Offering. As a result of the Company’s November 2024 initial public offering in the United States, the exercise price of the Initial Debenture Warrants was adjusted to $7.19 per share.

The fundamental transaction clause in the underlying warrant agreements stipulates that the expected volatility is determined as the greater of 100% and the 30-day volatility, as calculated from the HVT function on Bloomberg. Because the volatility input is predetermined and fixed in the warrant agreements as “an expected volatility equal to the greater of 100% and the 30-day volatility from the “HVT” function on Bloomberg”, the Initial and Additional Debenture Warrants are not considered to be indexed to the Company’s stock and, as a result, fail the “fixed-for-fixed” condition (i.e., both the exercise price and the number of shares to be issued are not “fixed” at issuance ). Instead, the Initial and Additional Debenture Warrants are classified as liabilities that are remeasured to fair value each reporting period.

At December 31, 2025 and 2024, the fair value of the Initial and Additional Debenture Warrants liabilities totaled $2,419,456 and $2,646,843, respectively. During the years ended December 31, 2025 and 2024, the Company recognized a gain of $227,387 and a loss of $1,481,661, respectively, from the change in fair value of the Initial and Additional Debenture Warrants liabilities.

The following weighted average assumptions were used in a binomial lattice model to remeasure the fair value of the Initial and Additional Debenture Warrants as of December 31:

IPO Agent Warrants

Upon completion of its November 2024 initial public offering, the Company issued 608,696 IPO Agent Warrants and an additional 34,196 IPO Agent Warrants for the over-allotment. Each IPO Agent Warrant is exercisable into one Common Share of the Company at an exercise price of $7.18 per share and has a term of five years.

The terms of the IPO Agent Warrants include a fundamental transaction clause that stipulates that the expected volatility is determined as the greater of 100% and the 30-day volatility, as calculated from the HVT function on Bloomberg. Because the volatility input is predetermined and fixed in the warrant agreements as “an expected volatility equal to the greater of 100% and the 30-day volatility from the “HVT” function on Bloomberg”, the IPO Agent Warrants are not considered to be indexed to the Company’s stock and, as a result, fail the “fixed-for-fixed” condition (i.e., both the exercise price and the number of shares to be issued are not “fixed” at issuance ). Instead, the IPO Agent Warrants are classified as liabilities that are remeasured to fair value each reporting period.

During the year ended December 31, 2025,128,578 IPO Agent Warrants were exercised, which resulted in $903,245 of the warrant liability being reclassified to share capital. At December 31, 2025 at 2024, the estimated fair value of outstanding IPO Agent Warrants was $2,044,681 and $2,670,386, respectively. During the years ended December 31, 2025 and 2024, the Company recognized a loss of $277,540 and a loss of $179,293, respectively, from the change in fair value of the IPO Agent Warrants liability.

The following weighted average assumptions were used in the Black-Scholes option-pricing model for the revaluations of the IPO Agent Warrants as of December 31:

Equity Incentive Plans

The Company’s 2025 Stock and Incentive Plan (the “2025 Incentive Plan”) for its employees, officers, consultants, advisors and non-employee Directors was approved by the stockholders on June 19, 2025. The objective of the 2025 Incentive Plan is to provide equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, or other stock-based awards. The 2025 Incentive Plan authorizes grants of stock awards covering up to 2,000,000 Common Shares. All stock options are granted with an exercise price equal to the stock’s estimated fair market value at the date of grant, and generally have contractual terms often years and vest over three years. At December 31, 2025,1,946,800 Common Shares were available for issuance under the 2025 Incentive Plan.

The Company’s 2023 Share Option Plan (the “2023 Option Plan”) for its officers, directors, employees and consultants was approved by stockholders on June 27, 2023. Pursuant to the 2023 Option Plan, the Company may grant non-transferable share options totaling in aggregate up to 20% of the Company’s issued and outstanding Common Shares and Restricted Shares, exercisable for a period of up to ten years from the date of grant, and at an exercise price that will not be lower than the greater of the last closing price for the Common Shares as quoted on the CSE: (i) on the trading day prior to the date of grant; and (ii) the date of grant. All options granted pursuant to the 2023 Option Plan will be subject to such vesting requirements as may be imposed by the Board. In the event of a Change of Control, as defined in the 2023 Option Plan, all unvested options will vest immediately. No additional shares can be granted under this plan.

The 2022 Option Plan was previously adopted by the board and approved by stockholders on July 19, 2022, pursuant to which incentive share options were granted to certain directors, officers, employees and consultants (the “2022 Option Plan”). Under the 2022 Option Plan, the Company could grant non-transferable share options totaling in aggregate up to 10% of the Company’s issued and outstanding Common Shares, exercisable for a period of up to ten years from the date of grant, and at an exercise price which is not less than that permitted by the TSX-V. In connection with listing of the Common Shares on the CSE, the Company adopted the 2023 Option Plan and determined that the 2022 Option Plan be closed to new grants. The options outstanding under the 2022 Option Plan, issued prior to the adoption of the 2023 Option Plan (“2022 Options”) are not included in the maximum number of share options available for grant pursuant to the 2023 Option Plan and are not subject to the terms of the 2023 Option Plan; as such, the 2022 Options will continue to be governed by the 2022 Option Plan. No additional shares can be granted under this plan.

Stock Options

Equity-Classified Awards with Service-Based Vesting

The following table summarizes activity for equity-classified common stock options with service-based vesting conditions:

The following weighted average assumptions were used in the Black-Scholes option-pricing model for the valuation of equity-classified Common Share options issued during the years ended December 31:

The following table summarizes the allocation of share-based compensation expense related equity-classified to awards with service conditions during the years ended December 31:

Total share-based compensation cost not yet recognized related to equity-classified unvested stock options was $1,941,171 at December 31, 2025 and is expected to be recognized over a weighted-average period of 2.17 years. The total fair value of options that vested during the years ended December 31, 2025 and 2024 was $5.90 and $10.00, respectively.

Liability-Classified CAD Options

The following table summarizes activity for liability-classified CAD Options with service-based vesting conditions:

The following weighted average assumptions were used in the Black-Scholes option-pricing model to remeasure the fair value of liability-classified CAD Options as of the years ended December 31:

The following table summarizes the allocation of share-based compensation expense related liability-classified CAD options during the years ended December 31:

Total share-based compensation cost not yet recognized related to liability-classified unvested stock options was $152,891 at December 31, 2025 and is expected to be recognized over a weighted-average period of 1.9 years.

The following table presents the changes in the CAD Options liability for the years ended December 31, 2025 and 2024:

ACI Canada Legacy Performance Options

The Company retained ACI Canada’s share option plan whereby ACI Canada could grant share options to directors, officers, employees and consultants enabling them to acquire common shares. Options granted had a maximum term of ten years and the board of directors determined the vesting requirements. From time to time, the Company granted performance-based share options to management and consultants. These options vest based on the Company’s achievement of certain performance goals and operational metrics, as applicable, subject to continuous employment by each recipient.

The following table summarizes ACI Canada legacy performance option activity for the Company:

The following table summarizes the total amount of share-based compensation expense related to performance conditions for ACI Canada legacy performance options during the years ended December 31:

As of December 31, 2025, there was no unrecognized share-based compensation expense relating to service condition awards.

NOTE 10 – CMSI LICENSE AND COLLABORATION AGREEMENT

On January 8, 2025 (the “Effective Date”), the Company entered into a License, Collaboration and Distribution Agreement (the “CMSI License Agreement”) with CMSI International Development and Management Limited (“CMSI”), pursuant to which the Company granted CMSI an exclusive, transferable, sub-licensable, and royalty-bearing license to develop, register, manufacture, import, export, and commercialize ZUNVEYL (the “Product”) in the Asia-Pacific region (excluding Japan), Australia, and New Zealand (the “Territory”). ZUNVEYL is a next generation acetylcholinesterase inhibitor approved in the US for the treatment of mild-to-moderate Alzheimer’s disease.

Under the terms of the CMSI License Agreement, the Company received a one-time, non-refundable, non-creditable upfront payment of $3.0 million in January 2025 and is eligible to receive up to $11.0 million in development and regulatory milestone payments, as well as up to $30.0 million in sales milestone payments. In addition, CMSI is obligated to pay annual royalties of 9% on net sales within the defined royalty term.

The CMSI License Agreement remains in effect for an initial term of 20 years from the Effective Date and will automatically renew for additional five-year terms unless either party provides notice of non-renewal at leastsix months prior to the expiration of the then-current term.

The total transaction price at inception was determined to consist of the $3.0 million upfront payment. The Company identified two distinct performance obligations: (1) the license to the Company’s pharmaceutical intellectual property, and (2) certain regulatory, technical, and clinical assistance to be provided by the Company and the Joint Steering Committee, which includes representatives from both the Company and CMSI, through the expected commercialization of the Product.

The upfront payment of $3 million was allocated to the identified performance obligations based on their relative standalone selling prices (SSPs). The SSP for the license was determined using an adjusted market assessment approach, under which the Company applied its estimate of a market participant’s rate of return on similar licensing arrangements to calculate the present value of the net cash flows that may be received from CMSI. In estimating the net cash flows that may be received from CMSI, the Company considered both the likelihood and expected timing of future payments from development milestones, sales milestones, and royalties. The SSP for services was based on estimated costs plus the Company’s estimate of a reasonable profit margin for similar services

License of Intellectual Property

The license to the Company’s intellectual property represents a distinct performance obligation. The license was transferred to CMSI on the Effective Date to satisfy this performance obligation. The Company allocated $2,396,600 of the total transaction price to the license and recognized the corresponding revenue in 2025.

Regulatory, Technical, and Clinical Assistance

The Company’s promise to provide supporting services, whether directly or in participation with the Joint Steering Committee, to CMSI is expected to be primarily fulfilled during the early stages of the contract through commercialization of the Product. These services represent a distinct performance obligation and the $603,400 of transaction price allocated to these services is being recognized over time on a percentage of completion basis, using a measure of progress that compares the Company’s actual efforts expended to-date to its total estimated efforts. As of December 31, 2025, the Company had recognized $433,221 of revenue related to these services. The remaining $170,179 of transaction price allocated to this performance obligation is included in deferred revenue at December 31, 2025 and is expected to be fully recognized by December 31, 2027.

Development and Regulatory Milestone Payments

The potential development and regulatory milestone payments are contingent upon the occurrence of certain milestones as defined in the CMSI License Agreement. These payments have been fully constrained until the Company concludes that achievement of the milestone is probable and that recognition of revenue related to the milestone will not result in a significant reversal in amounts recognized in future periods. As such, they have been excluded from the transaction price. In future reporting periods, the Company will re-evaluate the probability of achievement of each milestone and any related constraint and, if necessary, adjust its estimate of the overall transaction price. As of December 31, 2025, the Company has not recognized any revenue associated with the development and regulatory milestones.

Sales Milestone Payments and Royalties

Any consideration related to sales milestones or royalties will be recognized if and when the related sales occur as such amounts are determined to relate predominantly to the license granted to CMSI. Accordingly, this consideration has been excluded from the transaction price. No allocation to performance obligations will be performed, as both the license and related assistance are expected to be satisfied by the time sales milestones and royalties are earned. No sales milestone or royalty revenue was recognized as of December 31, 2025.

Pass Through Costs

Included within licensing revenue is revenue from the sale of active pharmaceutical ingredient (“API”) and finished goods to CMSI in connection with the CMSI License Agreement. These API and finished goods sales support CMSI’s development and regulatory activities and are priced at cost plus a margin. The Company also includes certain pass through reimbursable costs within these revenue totals. These amounts are recognized on a gross basis. Revenue related to API sales and reimbursable costs is recognized upon API shipment or delivery, depending on the applicable shipping terms. During the year ended December 31, 2025, the Company recognized $598,430 in licensing revenue relating to the pass through costs.

As of December 31, 2025, $561,293 was due from CMSI for the CMSI License Agreement.

NOTE 11 – R&D GRANT

On June 5, 2023, the Company was awarded a $750,000 research and development grant from the Army Medical Research and Material Command for a pre-clinical study on the use of the ALPHA-1062 Intranasal to reduce blast mTBI (mild Traumatic Brain Injury) induced functional deficit and brain abnormalities (“R&D Grant”). The R&D Grant is issued in collaboration with the Seattle Institute of Biomedical and Clinical Research and endorsed by the Department of Defense. Funds received from the R&D grant are restricted and to be used solely as outlined in the grant. The R&D grant funding will expire for use on September 30, 2028.

Per the R&D Grant, budget expenses are expected to include cost to carry out the clinical trials including personnel costs, materials and supplies, animal housing, publications, and travel costs. The Company classifies any cash received from the R&D Grant that has not yet been used to pay ongoing R&D grant expenditures as restricted cash, as the proceeds from the grant are to be designated for the specified grant research.

Activity related to the R&D grant was as follows for the years ended December 31:

NOTE 12 – FOREIGN CURRENCY CONTRACTS

The Company has an obligation to make periodic royalty payments from its sale of products incorporating technology that has been licensed from Neurodyn Life Sciences Inc. (“NLS”). Because these payments will be made in EUR the Company is exposed to cash flow variability resulting from changes in USD/EUR exchange rates. Therefore, during September 2025, the Company entered into several foreign currency forward and foreign currency collar contracts that are intended to hedge its exposure to changes in the USD/EUR exchange rates on or about the dates certain of the Company’s forecasted royalty payments will be made.

The foreign currency forward and collar contracts are derivative instruments that must be accounted for at fair value. Each reporting period, the change in the fair value of each contract is recognized as a gain or loss classified as a component of Other income (expense) within the Company’s consolidated statements of operations.

At December 31, 2025 foreign currency forward contracts to purchase EUR 341,051 remained outstanding. These contracts will settle at various dates between May 2026 and August 2026. The fair value of the foreign currency forward contracts was immaterial at December 31, 2025.

At December 31, 2025 foreign currency collar contracts with a notional amount of EUR 3,458,251 remained outstanding. These contracts will settle at various dates between March 2026 and November 2027. The fair value of the foreign currency collar contracts was immaterial at December 31, 2025.

NOTE 13 – INCOME TAXES

During 2025, the Company adopted ASU 2023-09 – Income Taxes (Topic 740): Improvements to income tax disclosures prospectively, and the associated disclosure changes have been reflected below.

Information on a domestic and foreign basis prior to and after adoption of ASU 2023-09:

The Company’s consolidated effective income tax rate differs from the Canadian, or domestic, statutory federal tax rate. The effective tax rate is affected by recurring items in provincial, U.S. federal, state and other foreign jurisdictions, such as tax rates and the proportion of income earned in those jurisdictions. The effective tax rate is also affected by other items such as the impact of transactions that are taxable or deductible at lower inclusion rates, changes in net unrecognized tax benefits, changes in income tax laws, and other items.

Income tax expense and effective tax rate reconciliation after adoption of ASU 2023-09:

Income tax expense and effective tax rate reconciliation before adoption of ASU 2023-09:

The significant components of the Company’s deferred tax assets and liabilities are as follows at December 31:

There is no provision for income taxes because the Company has historically incurred operating losses and maintains a full valuation allowance. On an annual basis, the Company assesses the need to establish a valuation allowance for its deferred income tax assets, and if it is deemed more likely than not that its deferred income tax assets will not be realized, a valuation allowance is recorded. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income, of the necessary character, during the periods in which those temporary differences become deductible. Management considers the available carryback and carryforward periods, and projected future taxable income in making this assessment. Given the uncertainty of the amount and timing of future taxable income, if any, a valuation allowance has been recorded against the Company’s deferred tax assets because, in the judgement of management, these are not more likely than not to be realized.

At December 31, 2025, the Company had, for Canadian tax purposes, non-capital losses aggregating approximately $57 million. These losses are available to reduce taxable income earned by ACI and ACI Canada in future years and expire between 2035 and 2045. As of December 31, 2025, the Company had federal net operating loss carryforwards, or NOLs, available of $11 million before consideration of limitations under Section 382 of the Internal Revenue Code of 1986, or Section 382 of the Code, as further described below. The NOL will carryforward indefinitely and be available to offset up to 80% of future taxable income each year.

Utilization of the Company’s NOL and research and development credit carryforwards may be subject to substantial annual limitations in the event a cumulative ownership change has occurred, or that occur in the future, as required by Section 382 of the Code. An ownership change, as defined by the Code, occurs when certain stockholders or public groups acquire more than 50% of a company’s outstanding common stock through a single transaction or series of transactions spanning a three-year period. Such an ownership change may limit the amount of NOL and research and development credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The Company has not completed such an ownership change analysis pursuant to Section 382 of the Code. If ownership changes have occurred or occur in the future, the amount of remaining tax attribute carryforwards available to offset taxable income and income tax expense in future years may be restricted or eliminated. If eliminated, the related asset would be removed from deferred tax assets with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate.

The Company accounts for uncertainty in income taxes in accordance with ASC 740, Income Taxes. Under this guidance, the Company recognizes the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by the relevant taxing authorities.

The Company has evaluated its tax positions and concluded that there are no uncertain tax positions that require recognition or disclosure in the accompanying financial statements. Accordingly, no liability for unrecognized tax benefits has been recorded.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions, if any, in income tax expense. As of December 31, 2025, the Company has not recorded any amounts for interest or penalties.

The Company is subject to income taxes in the United States, federal and various state jurisdictions. We are also subject to taxation in Canada . The Company is subject to income tax examinations by taxing authorities for all fiscal years..

The Company does not anticipate that the total amount of unrecognized tax benefits will materially change within the next 12 months.

NOTE 14 – NET LOSS PER SHARE

Net loss per common stock has been computed on the basis of the weighted-average number of common stock outstanding during the years ended December 31, 2025, and 2024. Diluted loss per share is computed similarly to basic loss per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. We apply the treasury stock method in the calculation of diluted loss per share.

In years that liability-classified warrants and options are in the money, the Company determines whether such instruments are dilutive by calculating the effect on loss per share after considering both (a) the adjustment to the numerator that would result from reversing the impact of the change in fair value recorded to net loss during the period and (b) the adjustment to the denominator that would result from the incremental shares outstanding, using the treasury stock method, in an assumed exercise of these instruments at the beginning of the year.

The following table reconciles net loss and the weighted average shares outstanding for the basic calculation to the net loss and the weighted average shares outstanding for the diluted calculation for the years ended December 31:

The following potentially dilutive common shares related to outstanding securities for the years ended December 31, 2025 and 2024 were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive for the year:

NOTE 15 – RELATED PARTY TRANSACTIONS AND BALANCES

Related Party Note Receivable

Prior to January 1, 2024, the Company advanced $55,000 to Alpha Seven Therapeutics, Inc. (“Alpha Seven”) and accrued interest of $4,195. Alpha Seven is a related party through a common director and officers of the Company. During the year ended December 31, 2024, management determined the credit risk of the loan to Alpha Seven had increased significantly since initial recognition and the Company recorded a provision for credit losses for the outstanding principal balance of $55,000 and reversed all previously accrued interest. At December 31, 2025 and 2024, the amount of recognized principal and interest, net of reserves for credit losses, was $0.

NOTE 16 – COMMITMENTS AND CONTINGENCIES

ALPHA-1062 Technology

In March 2015, the Company entered into the Memogain Technology License Agreement (“License Agreement”) with NLS for the exclusive right and license to further develop and exploit the ALPHA-1062, formerly Memogain, Technology. The License Agreement set out the consideration as follows:

The expiration date is twenty years from the Commencement Date (March 15, 2035) or the expiration of the last patent obtained (existing patents extend through 2042) pursuant, whichever event shall last occur, unless earlier terminated pursuant to bankruptcy or insolvency of the licensee; court order against the licensee; or a winding up, liquidation or termination of the existence of the licensee occurs.

During the year ended December 31, 2025, the Company made Galantos Royalty Payments totaling $911,812. At December 31, 2025, accrued Galantos Royalty Payments that remain unpaid totaled $58,962..

On January 1, 2016, the Company assumed NLS’s obligations under a Royalty Agreement with Galantos Consulting dated August 31, 2013, which consist of cumulative total payments to Galantos Consulting of $2,348,000 (EUR 2,000,000), the cumulative total may be increased to $3,522,000 (EUR 3,000,000) subject to certain provisions, which is to be paid as follows (collectively the “Galantos Consulting Payments”):

The termination date is set as the date at which no further payments of any nature are due.

During the year ended December 31, 2025, the Company made Galantos Consulting Payments totaling $82,232. At December 31, 2025, accrued Galantos Consulting Payments that remain unpaid totaled $19,654.

Legal Proceedings

During the normal course of business, the Company may become involved in legal claims that may or may not be covered by insurance. Management does not believe that any such claims would have a material impact on the Company’s consolidated financial statements.

NOTE 17 – SEGMENT INFORMATION

Operating segments are defined as components of the Company for which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer (“CEO”) who views the Company’s operations and manages its business as asingle reportable operating segment, being the commercial manufacturing and sales of pharmaceutical treatments for neurological diseases in the geographical areas of Canada and the United States of America.

The CEO manages and allocates resources to the operations of the Company on an entity-wide basis. The Company’s measure of segment performance is operating loss. Managing and allocating resources on an entity-wide basis enables the CEO to assess the overall level of resources available and how to best deploy these resources across functions that are in line with the Company’s long-term company-wide strategic goals. Consistent with this decision-making process, the CEO uses financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources, and setting incentive targets. Operating expenses are used to monitor budget versus actual results. The CEO does not review assets in evaluating the results of the Company, and therefore, such information is not presented.

The following table summarizes the segment’s financial information including the Company’s significant segment expenses for the years ended December 31:

Revenues from customers are attributed to individual countries based on the location of the Company’s customer, which is generally determined by the customer’s bill-to address. The following table presents revenues from customers by geographic area for the years ended December 31:

The geographic location of the Company’s long-lived assets as of December 31 was as follows:

NOTE 18 – QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

As discussed in Note 2 of the notes to the consolidated financial statements, the Company identified an error related to the accounting for CAD Options, which were previously classified as equity awards but should have been accounted for as liability-classified awards measured at fair value. The Company will revise its previously reported quarterly financial information based on the summary presented below in its future filings with the SEC, as applicable, to correct for the identified error.

A summary of the corrections to the affected financial statement line items in these condensed consolidated financial statements for each quarterly period of the fiscal year ended December 31, 2025 is presented below.

Consolidated Balance Accounts

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

For the three months ended March 31, 2025

For the three months ended June 30, 2025

For the six months ended June 30, 2025

For the three months ended September 30, 2025

For the nine months ended September 30, 2025

Consolidated Statements of Cash Flows

NOTE 19 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through March 30, 2026, the date these financial statements were issued, for events that should be recorded or disclosed in the financial statements for the year ended December 31, 2025. The Company concluded that no other events have occurred that would require recognition or disclosure in the financial statements.