TAO Synergies Inc.

Previous wording

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the audited financial statements contained in this report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Current wording

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the audited financial statements contained in this report, which we have prepared in accordance

Previous wording

We are a biopharmaceutical company with product candidates in pre-clinical and clinical development. We began operations in October 2012. We are principally focused on developing a product platform based upon a drug candidate called Bryostatin-1 for the treatment of Alzheimer’s disease, which is in the clinical testing stage. We are also evaluating Bryostatin-1 for other neurodegenerative or cognitive diseases and dysfunctions, such as Fragile X syndrome, MS, and Niemann-Pick Type C disease, which have undergone pre-clinical testing. On December 16, 2022, we announced that an extended confirmatory Phase 2 study of Bryostatin-1 in moderate to severe AD (Study #204) did not achieve statistical significance on the primary endpoint, which was change from baseline to Week 13 in the SIB total score assessment obtained after completion of the second seven-dose course of treatment (week 28 of trial). We are currently evaluating the data and determining next steps with the development of Bryostatin-1 for AD as well as for other potential indications.

Current wording

We are a biopharmaceutical company with product candidates in pre-clinical and clinical development. We began operations in October 2012. We are principally focused on developing a product platform based upon a drug candidate called Bryostatin-1 for the treatment of Alzheimer’s disease, which is in the clinical testing stage. We are also evaluating Bryostatin-1 for other neurodegenerative or cognitive diseases and dysfunctions, such as Fragile X syndrome, MS, and Niemann-Pick Type C disease, which have undergone pre-clinical testing.

Previous wording

On November 17, 2022, we entered into the November Purchase Agreement with the November Investors, pursuant to which we agreed to sell to the November Investors (i) an aggregate of 15,000 shares of Series B Preferred Stock and (ii) November Warrants to acquire up to an aggregate of 1,935,485 shares of Common Stock. We received total gross proceeds of approximately $15 million from the November 2022 Private Placement.

Current wording

On November 17, 2022, we entered into the November Purchase Agreement with the November Investors, pursuant to which we agreed to sell to the November Investors (i) an aggregate of 15,000 shares of Series B Preferred Stock and (ii) warrants to acquire up to an aggregate of 77,420 shares of Common Stock. We received total gross proceeds of approximately $15 million from the Series B Offering.

Previous wording

During the year ended December 31, 2023, we redeemed $9,000,000 of the Series B Preferred Stock and $1,022,149 of accrued dividends through a combination of cash through installment redemption and by issuing 14,647,688 shares of our Common Stock through installment conversions and proportionately relieved $7,366,968 of discount related to the redeemed Series B Preferred Stock. During the year ended December 31, 2023, we recognized a deemed dividend of $1,025,578 related to cash premiums and true-up conversion shares in excess of the pre-amortization installment amounts and issued 2,047,526 shares of our Common Stock in satisfaction of the deemed dividend.

Current wording

During the year ended December 31, 2023, we redeemed $9,000,000 of the Series B Preferred Stock and $1,022,149 of accrued dividends through a combination of cash through installment redemption and by issuing 585,908 shares of our Common Stock through installment conversions and proportionately relieved $7,366,968 of discount related to the redeemed Series B Preferred Stock. During the year ended December 31, 2023, we recognized a deemed dividend of $140,374 related to cash premiums and issued 81,901 shares of our Common Stock in satisfaction of the deemed dividend.

Previous wording

In connection with the November 2022 Private Placement, pursuant to an Engagement Letter, between the Company and Katalyst Securities LLC (the “November Placement Agent”), the Company paid the November Placement Agent (i) a cash fee equal to 7% of the gross proceeds from any sale of securities in the November 2022 Private Placement and (ii) warrants to purchase shares of Common Stock equal to 3% of the number of shares of common stock that the Preferred Shares are initially convertible into, with an exercise price of $7.75 per share and a five-year term.

Current wording

GP Nurmenkari Inc. acted as the placement agent (the “Series C Placement Agent”). In connection with the Series C Offering, pursuant to an engagement letter between the Company and the Series C Placement Agent, we agreed to pay the Series C Placement Agent (i) a cash fee equal to 7.0% of the gross proceeds from any sale of securities in the Series C Offering and (ii) warrants to purchase shares of Common Stock equal to 3.0% of the number of shares of Common Stock that the Series C Preferred Stock are initially convertible into, with an exercise price of $4.00 per share and a five-year term.

Previous wording

The holders of the Series B Preferred Stock are entitled to dividends of 7% per annum, compounded monthly, which are payable in cash or shares of Common Stock at our option, in accordance with the terms of the Certificate of Designations. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Certificate of Designations), the Series B Preferred Stock will accrue dividends at the rate of 15% per annum. Upon conversion or redemption, the holders of the Series B Preferred Stock are also entitled to receive a dividend make-whole payment. The holders of Series B Preferred Stock have no voting rights on account of the Series B Preferred Stock, other than with respect to certain matters affecting the rights of the Series B Preferred Stock.

Current wording

The holders of the Series C Preferred Stock are entitled to dividends of 5% per annum, compounded quarterly, which will be payable in cash. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Series C Certificate of Designations), the Series C Preferred Stock will accrue dividends at the rate of 15% per annum. The holders of Series C Preferred Stock are entitled to vote with holders of the Common Stock as a single class on all matters that holders of Common Stock are entitled to vote upon, with the number of votes per Series C Preferred Stock equal to the stated value of such Series C Preferred Stock divided by the “Minimum Price” (as defined in Rule 5635 of the Listing Rules of the Nasdaq Stock Market) immediately prior to the date of the Series C Purchase Agreement.

Previous wording

The Certificate of Designations includes certain Triggering Events (as defined in the Certificate of Designations), including, among other things, the failure to file and maintain an effective registration statement covering the sale of the holder’s securities registrable pursuant to the November Registration Rights Agreement (defined below) and our failure to pay any amounts due to the holders of the Series B Preferred Stock when due. In connection with a Triggering Event, each holder of Series B Preferred Stock will be able to require us to redeem in cash any or all of the holder’s Series B Preferred Stock at a premium set forth in the Certificate of Designations.

Current wording

The Series C Certificate of Designations includes certain Triggering Events (as defined in the Series C Certificate of Designations), including, among other things, the failure to file and maintain an effective registration statement covering the sale of the holder’s securities registrable pursuant to the Series C Registration Rights Agreement (defined below) and our failure to pay any amounts due to the holders of the Series C Preferred Stock when due. In connection with a Triggering Event, each holder of Series C Preferred Stock will be able to require us to redeem in cash any or all of the holder’s Series C Preferred Stock at a premium set forth in the Series C Certificate of Designations.

Previous wording

We are subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition and investment transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters.

Current wording

We are subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition and investment transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Series C Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters.

Previous wording

The November Warrants are exercisable for Warrant Shares immediately at an exercise price of $7.75 per share (the “Exercise Price”) and expire five years from the date of issuance. The Exercise Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Exercise Price (subject to certain exceptions).

Current wording

The Series C Warrants are exercisable immediately at the Series C Exercise Price and expire five years from the date of issuance. The Series C Exercise Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Series C Exercise Price (subject to certain exceptions). There is no established public trading market for the Series C Warrants and we do not intend to list the Series C Warrants on any national securities exchange or nationally recognized trading system.

Previous wording

In connection with the November Purchase Agreement, we and the November Investors entered into a Registration Rights Agreement (the “November Registration Rights Agreement”) on November 17, 2022. Under the terms of the November Registration Rights Agreement, we agreed to register 200% of the Preferred Shares, the Warrant Shares and the shares of common stock issuable as amortization payments as well as any shares of common stock paid as dividends. We filed a registration statement for the resale of such securities on December 16, 2022. We intend to file an additional registration statement to give effect to the amendment to the certificate of designations for the Series B Preferred Stock. We also agreed to other customary obligations regarding registration, including indemnification and maintenance of the effectiveness of the registration statement.

Current wording

In connection with the Series C Purchase Agreement, on September 10, 2024, we and the Series C Investors entered into a registration rights agreement, pursuant to which we were required to file a resale registration statement with the SEC to register for resale 200% of the Unregistered Conversion Shares and 200% of the Series C Warrant Shares. We filed a registration statement for the resale of such securities on October 10, 2024, which was declared effective by the SEC on October 21, 2024. We also agreed to other customary obligations regarding registration, including indemnification and maintenance of the effectiveness of the registration statement.

Previous wording

As of December 31, 2023, we have accrued a liability for installment payments owed to investors in either cash or shares of $3,395,945.

Current wording

As of December 31, 2024, we have accrued a liability for installment payments owed to investors in either cash or shares of $0.

Previous wording

On July 23, 2020, we entered into the 2020 Services Agreement with WCT. The 2020 Services Agreement relates to services for our Phase 2 clinical study assessing the safety, tolerability and long-term efficacy of Bryostatin-1 in the treatment of moderately severe AD subjects not receiving memantine treatment. On January 22, 2022, the Company executed a change order with WCT to accelerate trial subject recruitment totaling approximately $1.4 million. In addition, on February 10, 2022, the Company signed an additional agreement with a third-party vendor to assist with the increased trial recruitment retention totaling approximately $1.0 million which was subsequently canceled with no charges incurred by the Company. In addition, on September 11, 2023, the Company signed an additional agreement with WCT to assist with documenting the trial results totaling approximately $300,000. The updated total estimated budget for the services, including pass-through costs, is approximately $11.3 million. As previously disclosed, on January 22, 2020, we were granted a $2.7 million award from the NIH, which award is being used to support the 2020 Study, resulting in a current estimated net budgeted cost of the 2020 Study to us of $8.6 million. Of the $2.7 million grant, virtually all has been received as of February 22, 2022.

Current wording

On July 23, 2020, we entered into the 2020 Services Agreement with WCT. The 2020 Services Agreement relates to services for our Phase 2 clinical study assessing the safety, tolerability and long-term efficacy of Bryostatin-1 in the treatment of moderately severe AD subjects not receiving memantine treatment. On January 22, 2022, we executed a change order with WCT to accelerate trial subject recruitment totaling approximately $1.4 million. The updated total estimated budget for the services, including pass-through costs, is approximately $11.0 million. As previously disclosed, on January 22, 2020, we were granted a $2.7 million award from the NIH, which award is being used to support the 2020 Study, resulting in a current estimated net budgeted cost of the 2020 Study to us of $8.3 million. Of the $2.7 million grant, virtually all has been received as of February 22, 2022. The 2020 Study was completed in December 2023.

Previous wording

On December 16, 2022, we issued a press release announcing that an extended confirmatory Phase 2 study of Bryostatin-1 in moderate to severe AD (Study #204) did not achieve statistical significance on the primary endpoint, which was change from baseline to Week 13 in the SIB total score assessment obtained after completion of the second seven-dose course of treatment (week 28 of trial). On March 7, 2023, we announced results of our analysis of secondary endpoints and post hoc analysis from our Phase 2 study of Bryostatin-1. In the secondary endpoint analysis, changes from baseline at Weeks 9, 20, 24, 30, and 42 in the SIB (Severe Impairment Battery) total score were not statistically significant in the total patient population, and no pre-specified secondary endpoints were met with statistical significance in the low-to-moderately severe AD patient stratum. However, nearly all pre-specified secondary endpoints in the most advanced and severe AD (MMSE: 10-14) patient population, with baseline MMSE-2 (Mini-Mental State Examination, 2nd Edition) scores of 10-14, were achieved with statistical significance (p = <0.05, 2-tailed). Data also showed statistical significance in exploratory secondary endpoints for the MMSE-2 10-14 stratum, and post hoc analysis was positive.

Current wording

On December 16, 2022, we issued a press release announcing that an extended confirmatory Phase 2 study of Bryostatin-1 in moderate to severe AD (Study #204) did not achieve statistical significance on the primary endpoint, which was change from baseline to week 13 in the SIB total score assessment obtained after completion of the second seven-dose course of treatment (week 28 of trial). An average increase in the SIB total score of 1.4 points and 0.6 points was observed for the Bryostatin-1 and placebo groups, respectively, at week 28. On March 7, 2023, we announced the results of our analysis of secondary endpoints and post hoc analysis from our Phase 2 study of Bryostatin-1. In the secondary endpoint analysis, changes from baseline at Weeks 9, 20, 24, 30, and 42 in the SIB (Severe Impairment Battery) total score were not statistically significant in the total patient population, and no pre-specified secondary endpoints were met with statistical significance in the low-to-moderately severe AD patient stratum. However, nearly all pre-specified secondary endpoints in the most advanced and severe AD (MMSE: 10-14) patient population, with baseline MMSE-2 (Mini-Mental State Examination, 2nd Edition) scores of 10-14, were achieved with statistical significance (p = <0.05, 2-tailed). Data also showed statistical significance in exploratory secondary endpoints for the MMSE-2 10-14 stratum, and post hoc analysis was positive. We are continuing to determine next steps with the development of Bryostatin-1 for AD as well as for other potential indications, including in tandem with promising drug development platforms.

Previous wording

As of December 31, 2023, we incurred cumulative expenses of approximately $11.3 million associated with services provided by WCT and certain pass thru expenses incurred by WCT, which was offset by NIH reimbursements recognized of $2.7 million and, for the year ended December 31, 2022, we incurred expenses of approximately $10.1 million associated with services provided by WCT and certain pass thru expenses incurred by WCT.

Current wording

As of December 31, 2024, we incurred cumulative expenses of approximately $11.3 million associated with services provided by WCT and certain pass-through expenses incurred by WCT, which was offset by NIH reimbursements recognized of $2.7 million. No expenses were incurred for the year ended December 31, 2024. For the year ended December 31, 2023, we incurred expenses of approximately $560,000 million associated with services provided by WCT and certain pass-through expenses incurred by WCT.

Previous wording

The Company incurred approximately $1.6 million of cumulative expenses associated with the 2022 Study as of December 31, 2023. All of the expenses are reflected in the statement of comprehensive loss for the year ended December 31, 2023. As of December 31, 2023, $0 of WCT 2022 Study prepayments is included as a prepaid expense and other current assets in the Company’s balance sheet. In addition, approximately $22,000 is included in accounts payable and accrued expenses.

Current wording

The Company incurred cumulative expenses of approximately $1.6 million associated with the 2022 Study as of December 31, 2024. $0 of the expenses are reflected in the statement of comprehensive loss for the year ended December 31, 2024 and approximately $200,000 is reflected in the statement of comprehensive loss for the year ended December 31, 2023.

Previous wording

On February 23, 2022, the Company announced its collaboration with the Cleveland Clinic to pursue possible treatments for Multiple Sclerosis (“MS”), and on July 19, 2023, the Company announced that it had entered into an agreement with the Cleveland Clinic to conduct a Phase 1 trial of Bryostatin-1 in MS. The Cleveland Clinic will manage the clinical trial’s implementation, including the IND submission to the FDA which was filed during the fourth quarter of 2023 and future patient enrollment once the IND submission is approved. The total estimated costs associated with this collaboration are approximately $2.0 million. As of December 31, 2023, the Company has paid the Cleveland Clinic approximately $375,000.

Current wording

On February 23, 2022, we announced our collaboration with the Cleveland Clinic to pursue possible treatments for Multiple Sclerosis (“MS”), and on July 19, 2023, we announced that we had entered into an agreement with the Cleveland Clinic to conduct a Phase 1 trial of Bryostatin-1 in MS. Pursuant to the agreement, the Cleveland Clinic was obligated to manage the clinical trial’s implementation, including the IND submission to the FDA which was filed during the fourth quarter of 2023 and future patient enrollment upon approval of the IND submission. The total estimated costs associated with this collaboration are approximately $2.0 million. As of December 31, 2024, the Company has paid or incurred costs with the Cleveland Clinic of approximately $528,000.

Previous wording

Total operating expenses for the year ended December 31, 2023 were $8,313,854 as compared to $16,134,996 for the year ended December 31, 2022, a decrease of approximately 48.5%. The decrease in total operating expenses is due to the decrease in both research and development and general and administrative expenses.

Current wording

Total operating expenses for the year ended December 31, 2024 were $6,810,732 as compared to $8,313,854 for the year ended December 31, 2023, a decrease of approximately 18.1%. The decrease in total operating expenses is due to the decrease in both research and development and general and administrative expenses.

Previous wording

For the year ended December 31, 2023, we incurred $1,974,924 in research and development expenses as compared to $6,324,928 for the year ended December 31, 2022, a decrease of approximately 68.8%. These expenses were incurred pursuant to developing Byrostatin-1, specifically expenses relating to our ongoing Phase 2 clinical trial for AD. Of these expenses, for the year ended December 31, 2023, $1,440,207 was incurred principally relating to our current confirmatory clinical trial and related storage of drug product, $312,743 for clinical consulting services, $20,330 of amortization of prepaid licensing fees relating to the Stanford and Mount Sinai license agreements, $52,055 for development of alternative drug supply with Stanford University and $149,589 of non-cash stock options compensation expense, as compared to $5,422,142 for the year ended December 31, 2022 incurred principally relating to our confirmatory clinical trial and related storage of drug product, $327,908 for clinical consulting services, $29,999 of amortization of prepaid licensing fees relating to the Stanford and Mount Sinai license agreements, $69,608 for development of alternative drug supply with Stanford University and $475,271 of non-cash stock options compensation expense.

Current wording

For the year ended December 31, 2024, we incurred $1,598,722 in research and development expenses as compared to $1,974,924 for the year ended December 31, 2023, a decrease of approximately 19.0%. These expenses were incurred primarily in connection with developing the potential AD therapeutic product and the initiation of the MS trial with Cleveland Clinic. Of these expenses, for the year ended December 31, 2024, $900,655 was incurred principally relating to our current MS clinical trial and our storage of drug product, $634,713 for clinical consulting services, $29,669 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai Agreement, $33,685 for development of alternative drug supply with Stanford University; comparatively, for the year ended December 31, 2023, $1,440,207 was incurred principally relating to our confirmatory clinical trial and related storage of drug product, $312,743 for clinical consulting services, $20,330 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai Agreement, $52,055 for development of alternative drug supply with Stanford University and $149,589 of non-cash stock options compensation expense.

Previous wording

Our research and development expenses have been significantly reduced as our current Phase 2 clinical trial for AD was concluded by the end of 2023 and our Phase 2 dose ranging study was discontinued. Other development expenses might increase, as our resources permit, in order to advance our potential products, including our current, open label MS trial with the Cleveland Clinic. We are continuing to determine how to proceed with respect to our other current development programs for Bryostatin-1 with AD and other project considerations.

Current wording

Our research and development expenses have decreased as our Phase 2 clinical trial for AD was concluded by the end of 2023 and our Phase 2 dose ranging study was discontinued while we initiated our MS clinical trial. Other development expenses might increase, as our resources permit, in order to advance our potential products. We are continuing to determine how to proceed with respect to our other current development programs for Bryostatin-1.

Previous wording

We recognized total other income of $2,275,350 for the year ended December 31, 2023 as compared to total other income of $10,561,039 for the year ended December 31, 2022, which consisted, for 2023, of interest income on funds deposited in interest bearing money market accounts and changes in fair value of warrant liability and derivative liability. The increase in interest income of $1,313,911 is primarily attributable to the increase in money market interest income rates and increase in cash balances. The total decrease is primarily attributable to the decreases in fair value of warrant liability of $7,035,000 and derivative liability of $2,564,600 partially offset by the increase in interest income.

Current wording

We recognized total other losses of $5,957,817 for the year ended December 31, 2024 as compared to total other income of $2,275,350 for the year ended December 31, 2023, which consisted, for 2024 and 2023, of interest income on funds deposited in interest-bearing money market accounts and investments in short-term U.S. treasury bills and changes in fair value of warrant and derivative liabilities and offering costs. The decrease in interest income and unrealized gains on treasury bills totaling $373,065 for the year ended December 31, 2024 is primarily attributable to the decrease in cash balances over the period and lower interest rates. The total decreased income is primarily attributable to the loss on write off of available for debt security of $2,443,300, loss on write off of equity investment of $517,877, both due to the complete write-down of our Cannasoul investment, increase in change in fair value of warrant liability of $829,000, loss on issuance of Series C Preferred Stock of $3,812,625 million, warrant issuance costs of $618,375 and share of loss in equity investment and investment write-off totaling $562,402 partially offset by the change in fair value of derivative liability of $1,032,000.

Previous wording

We incurred losses of $6,038,504 and $5,573,957 for the years ended December 31, 2023 and 2022, respectively. The increased loss was primarily attributable to the decreases in both net research and development expenses associated with our ongoing Phase 2 confirmatory clinical trial and general and administrative expenses offset by changes in fair value of warrant and derivative liabilities and increase in interest income.

Current wording

We recognized losses of $12,768,549 and $6,038,504 for the year ended December 31, 2024 and 2023, respectively. The increased loss was primarily attributable to the increase in other loss partially offset by the decrease in research and development and general and administrative expenses.

Previous wording

Since inception, we have incurred negative cash flows from operations. As of December 31, 2023, we had working capital of $26,256,291 as compared to working capital of $37,272,851 as of December 31, 2022. The $11,016,560 decrease in working capital was primarily attributable to our cash amortization of our Series A Preferred Stock of approximately $0.6 million, cash used for strategic investment of $2.0 million and approximately $8.7 million from operating expenses.

Current wording

Since inception, we have incurred negative cash flows from operations. As of December 31, 2024, we had working capital of $16,706,587 as compared to working capital of $26,256,291 as of December 31, 2023. The $9,549,704 decrease in working capital was primarily attributable to approximately $6.9 million of operating expenses, redemptions of Series B Preferred Stock of approximately $8.8 million and redemption of Series C Preferred Stock of approximately $800,000 partially offset by net proceeds from Series C Preferred Stock offering of approximately $4.5 million, non-cash expenses of approximately $1.0 million and interest income of approximately $1.3 million.

Previous wording

We expect that our cash and cash equivalents of approximately $28.7 million as of December 31, 2023 will be sufficient to support our projected operating requirements for at least the next 12 months from the date of filing this Annual Report on Form 10-K, which would include the continuing development of Bryostatin-1, our novel drug candidate targeting the activation of PKC epsilon.

Current wording

We expect that our current cash and cash equivalents of approximately $15 million will be sufficient to support our projected operating requirements for at least the next 12 months from the date of this Annual Report on Form 10-K, which may include the continuing development of Bryostatin-1, our initiation and possible development of a therapeutic for MS and other possible therapeutics.

Previous wording

We expect to require additional capital in order to initiate, pursue and complete all potential AD clinical trials and obtain regulatory approval of one or more therapeutic candidates. However, additional future funding may not be available to us on acceptable terms, or at all. If we are unable to access additional funds when needed, we may not be able to initiate, pursue and complete all planned clinical trials or continue the development of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and operations. Any additional equity financing, if available, may not be available on favorable terms, would most likely be significantly dilutive to our current stockholders and debt financing, if available, and may involve restrictive covenants. If we are able to access funds through collaborative or licensing arrangements, we may be required to relinquish rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize on our own, on terms that are not favorable to us. Our ability to access capital when needed is not assured and, if not achieved on a timely basis, would likely materially harm our business and financial condition.

Current wording

We expect to require additional capital in order to initiate, pursue and complete all potential AD clinical trials and obtain regulatory approval of one or more therapeutic candidates. However, additional future funding may not be available to us on acceptable terms, or at all. If we are unable to access additional funds when needed, we may not be able to initiate, pursue and complete all planned clinical trials or continue the development of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and operations. Any additional equity financing, if available, may not be available on favorable terms, would most likely be significantly dilutive to our current stockholders and debt financing, if available, and may involve restrictive covenants. If we are able to access funds through collaborative or licensing arrangements, we may be required to relinquish rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize on our own, on terms that

Previous wording

We expect to continue to incur expenses, resulting in losses and negative cash flows from operations, over at least the next several years as we may continue to develop Bryostatin-1 and other therapeutic products. We anticipate that this development may include clinical trials in addition to our current ongoing clinical trial and additional research and development expenditures.

Current wording

We expect to continue to incur expenses, resulting in losses and negative cash flows from operations, over at least the next several years as we continue to develop AD and other therapeutic products. We anticipate that this development may include clinical trials in addition to our current ongoing clinical trial and additional research and development expenditures.

Previous wording

Cash used in operating activities was $5,173,209 for the year ended December 31, 2022, compared to $11,211,245 for the year ended December 31, 2022. The $6,038,036 decrease primarily resulted from the decrease in warrant liability and derivative liability of $9.6 million, the decrease in prepaid expenses of approximately $490,000, and the decreases in accounts payable and accrued expenses of approximately $480,000, partially offset by an increase in net loss of approximately $465,000, a decrease in non-cash stock-based compensation expenses of approximately $3.1 million, and a decrease in non-cash warrant issuance cost of approximately $0.9 million.

Current wording

Cash used in operating activities was $4,883,988 for the year ended December 31, 2024, compared to $5,173,209 for the year ended December 31, 2023. The $289,221 decrease primarily resulted from the increase in offering costs of approximately $4.4 million, losses from the write-off of the Cannasoul strategic investment of approximately $3.0 million, the decrease in prepaid expenses of approximately $0.3 million, and the changes in fair value of non-cash warrant and derivative liabilities totaling approximately $0.2 million partially offset by the increased net loss of approximately $6.7 million, and increase in accrued expenses of approximately $0.5 million and the decrease in non-cash stock-based compensation and consulting fees of approximately $1.0 million.

Previous wording

Net cash used in investing activities was $2,002,707 for the year ended December 31, 2023 compared to $7,414 for the year ended December 31, 2022. The cash used in investing activities for 2023 is primarily attributable to the Cannasoul Investment discussed above. For 2022, the entire use was for capital expenditures.

Current wording

Net cash used in investing activities was $1.0 million for the year ended December 31, 2024 compared to $2,002,707 for the year ended December 31, 2023. The cash used in investing activities for the year ended December 31, 2024 was for the purchase of available for sale debt securities versus capital expenditures for the year ended December 31, 2023.

Previous wording

Net Cash Provided by Financing Activities

Current wording

Net Cash Used in / Provided by Financing Activities