MIRA PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1. Description of business and summary of significant accounting policies:

Overview

MIRA Pharmaceuticals, Inc. (NASDAQ: MIRA) is a clinical-stage pharmaceutical development company advancing two neuroscience programs targeting neurologic and neuropsychiatric disorders. The company holds exclusive rights in the U.S., Canada, and Mexico for Ketamir-2 and MIRA-55, two novel drug candidates designed to address unmet medical needs in neuropathic and inflammatory pain, as well as neuropsychiatric and neurocognitive disorders.

The U.S. Drug Enforcement Administration (DEA)’s scientific review of Ketamir-2 and MIRA-55 concluded that it would not be considered a controlled substance or listed chemical under the Controlled Substances Act (CSA) and its governing regulations.

As used herein, the Company’s Common Stock, par value $0.0001 per share, is referred to as the “Common Stock” and the Company’s preferred stock, par value $0.0001 per share, is referred to as the “Preferred Stock”.

Operating updates

Planned Acquisition of SKNY Pharmaceuticals, Inc.

On March 19, 2025, we entered into a binding letter of intent (the “LOI”) with SKNY Pharmaceuticals, Inc. (“SKNY”), a privately held Delaware corporation, to acquire SKNY through a stock-for-stock merger (the “Merger”). SKNY is developing SKNY-1, a novel oral drug candidate targeting weight loss and smoking cessation—two of the leading causes of preventable death. If completed, the Merger will expand our development pipeline and therapeutic reach.

Under the LOI, SKNY agreed to provide a $5 million capital infusion in cash or cash equivalents, strengthening our balance sheet and supporting ongoing growth initiatives. SKNY holds exclusive rights in the United States, Canada, and Mexico to its drug candidates under license from Miralogx, a related party of the Company.

The Merger contemplates that each outstanding share of SKNY common stock will be exchanged for shares of our common stock. The final exchange ratio will be determined by an independent third-party valuation firm based on the relative values of both companies. Completion of the Merger is contingent upon that firm concluding that SKNY’s valuation is at least equal to or greater than that of MIRA.

Following the completion of the independent valuation process and a unanimous recommendation by our Board of Directors, we announced on May 8, 2025, our intent to proceed with the transaction. On July 29, 2025, we filed a preliminary proxy statement (PRE 14A) with the SEC. The shareholder vote to approve the Merger is scheduled to take place at our Annual Meeting on September 11, 2025.

Basis of presentation

The accompanying unaudited condensed financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Quarterly Report on Form 10-Q, and Regulation S-X. These financial statements do not include all information and notes required by GAAP for annual financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in our Form 10-K for the year ended December 31, 2024. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of interim financial information, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year. Additionally, certain prior period amounts have been reclassified to conform to current period presentation in the accompanying unaudited condensed consolidated financial statements.

Research and development expenses

Research and development costs are expensed in the period in which they are incurred and include the expenses paid to third parties, such as contract research organizations and consultants, who conduct research and development activities on behalf of the Company. Patent-related costs, including registration costs, documentation costs and other legal fees associated with the application, are expensed in the period in which they are incurred.

General and administrative expenses

General and administrative expenses are primarily comprised of personnel costs, marketing expenses, amortization, insurance expenses, professional services fees, travel and office expenses, and stock-based compensation

Use of estimates

The preparation of financial statements in accordance with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results may differ from such estimates and such differences could be material. Significant estimates during the reporting periods include stock-based compensation and the deferred tax asset valuation allowance.

Cash and cash equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents. The Company maintains cash and cash equivalent balances at two financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company’s account at these institutions is insured by the FDIC up to $250,000. On June 30, 2025, the Company had cash in excess of FDIC limits of approximately $0.5 million. Any material loss that the Company may experience in the future could have an adverse effect on its ability to pay its operational expenses or make other payments and may require the Company to move its cash to other high quality financial institutions. The Company deems these institutions to be of high caliber and, to date, has not experienced any losses related to these holdings.

Stock-based compensation

The Company accounts for stock-based compensation under the provisions of FASB ASC 718, “Compensation - Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, directors and consultants based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. The Company has elected to account for forfeiture of stock-based awards as they occur.

Fair value of financial instruments

The Company measures the fair value of financial instruments in accordance with GAAP which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company considers the carrying amount of deferred offering costs to approximate fair value due to short-term nature of this instrument. GAAP describes three levels of inputs that may be used to measure fair value:

Level 1 - quoted prices in active markets for identical assets or liabilities.

Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Level 3 - inputs that are unobservable (for example cash flow modeling inputs based on assumptions).

Earnings (loss) per Share

Earnings (loss) per share is computed in accordance with ASC Topic 260, “Earnings per Share” Basic weighted-average number of shares of common stock outstanding for the period ended June 30, 2025 and June 30, 2024 include the shares of the Company issued and outstanding during such period, on a weighted average basis. The basic weighted average number of shares of common stock outstanding excludes common stock equivalents such as stock options and warrants, while diluted weighted average number of shares outstanding includes such stock options and warrants. During the six months ended June 30, 2025 and 2024, outstanding aggregate stock options and warrants of 5,965,904 and 3,705,904 respectively, were not included in the computation of diluted earnings per share, because to do so would have had an antidilutive effect.

***Recent accounting pronouncements not yet adopted ***

In November 2024, the FASB issued ASU 2024-03,Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures(Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This new standard requires a company to expand its existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid. The standard will be effective beginning in fiscal year 2025, with early adoption permitted. The new standard is expected to be applied prospectively, but retrospective application is permitted. We are currently evaluating the impact of ASU 2023-09 on the financial statements and related disclosures. The Company does not expect the adoption of this new guidance to have a material impact on the consolidated financial statements.

Management has considered all other recent accounting pronouncements that are issued, but not effective, and it does not believe that they will have a significant impact on the Company’s results of operations or financial position.

Note 2. Going concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.

As of June 30, 2025, the Company had cash of approximately $0.7 million, and historically the Company has had no revenues. The Company has used approximately $2.4 million of cash in operations during the six months ended June 30, 2025, had a net loss of approximately $3.3 million in the six months ended June 30, 2025 and had stockholders’ equity of approximately $0.6 million at June 30, 2025.

Historically, the Company has been primarily engaged in developing Ketamir-2 and MIRA-55. During these activities, the Company sustained substantial losses. The Company’s ability to fund ongoing operations and future clinical trials required for FDA approval is dependent on the Company’s ability to obtain significant additional external funding in the near term. The Company maintains an effective shelf registration statement with the Securities and Exchange Commission (SEC) for the issuance of shares of common stock under various types of equity offerings, including the shares of common stock under our At The Market (ATM) equity program (Note 5).

As of the date of filing this Report, the Company will continue to generate losses and have insufficient cash and cash equivalents on hand to support its operations for at least the 12 months following the date the financial statements are issued. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. The Company is seeking to raise capital through additional debt and/or equity financings to fund our operations in the future. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail its operations. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 3. License agreement, related party:

MIRALOGX

On November 15, 2023, the Company and MIRALOGX, LLC, a Florida limited liability company (“MIRALOGX”) entered into an exclusive license agreement (the “License Agreement”) to develop and commercialize Ketamir-2, a drug product containing 2-(2- chlorophenyl)-2-(methylamino) cyclopentan-1-one as an active agent in the United States, Canada and Mexico (the “Territory”). The exclusive license in the License Agreement includes the right of the Company to sublicense the licensed intellectual property. The Company and MIRALOGX have the same founder, who is also our largest shareholder and thus MIRALOGX is considered a related party.

Pursuant to the terms of the License Agreement, and subject to the conditions set forth therein, the Company paid MIRALOGX a one-time, nonrefundable payment of $0.1 million upon the signing of the Agreement and will be obligated to pay quarterly royalty payments on sales of the Ketamir-2 in the Territory of 8% of net sales and 8% of other revenue (such as milestone or sublicense payments) from licensed products.

Also, in consideration of the License Agreement, the Company issued to MIRALOGX a Common Stock Purchase Warrant to purchase up to 700,000 shares of the Company’s common stock (the “MIRALOGX Warrant”). The MIRALOGX Warrant is exercisable, in whole or in part, any time prior to November 15, 2028 at a cash exercise price of $2.00 per share.

The Company and MIRALOGX have made customary representations and warranties in the License Agreement and have agreed to certain other customary covenants, including confidentiality, cooperation, and indemnity provisions. Either party may terminate the License Agreement for cause if the other party materially breaches or defaults in the performance of its obligations, and, if curable, such material breach remains uncured for 120 days. Unless earlier terminated, the License Agreement will continue in effect until the last to expire of the patent rights licensed pursuant to the License Agreement, unless earlier terminated.

Note 4. Related party transactions:

Due from related parties – Amounts due from MIRALOGX as of June 30, 2025 and December 31, 2024, which are presented as a related party receivable, in the accompanying condensed balance sheets, totaled $0.04 million. These aforementioned amounts are composed of accounts payable paid on behalf of a related party, specifically, research and development payables. There has been no related party activity since December 31, 2024.

License agreement - See Note 3.

Note 5. Stockholders’ equity:

Capital stock

The Company has the authority to issue 110,000,000 shares of capital stock, consisting of 100,000,000 shares of Common Stock and 10,000,000 shares of undesignated Preferred Stock, whose rights and privileges will be defined by the Board of Directors when a series of Preferred Stock is designated.

On August 12, 2024, the Company filed a shelf registration statement with the SEC to facilitate the issuance of our common stock and entered into an At The Market Offering Agreement (the “ATM Agreement”) with Rodman & Renshaw LLC, under which the Company may offer and sell shares of its Common Stock, with an aggregate offering amount sold of up to $19,268,571. On September 24, 2024, the Company filed a prospectus supplement to amend the shelf registration statement to update the maximum amount eligible to be sold under the ATM Agreement to $75 million.

For the six months ended June 30, 2025, under the ATM Agreement, the Company has sold and issued 324,288 shares of Common Stock at an average price per share of $1.13 and received net proceeds of approximately $0.3 million after deducting commissions and other fees of $0.02 million.

Stock-based compensation

The fair value of each option award is estimated on the grant date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected price volatility is based on the historical volatilities of a peer group as the Company does not have a multi-year trading history for its shares. Industry peers consist of several public companies in the biotech industry similar to the Company in size, stage of life cycle and product indications. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

Expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus contract term. The risk-free rate is based on the 5-year U.S. Treasury yield curve in effect at the time of grant. The Company recognizes forfeitures as they occur.

During the six months ended June 30, 2024, a total of 1,154,000 options to purchase Common Stock, with an aggregate fair market value of approximately $1.1 million were granted to the members of the Company’s Board of Directors, executive officers and consultants of the Company. The options have a term of 10 years from the grant date. These options vest over various terms ranging from immediate vesting upon grant to the one year anniversary of the grant date. These option vest as follows:(i) Board of Director and consultant options vested 50% at grant and the remaining vest at one-year anniversary of date of grant, and (ii) executive officer option grants vest 50% at 6 months from date of grant and at one-year anniversary of grant date.

During the six months ended June 30, 2025, a total of 75,000 options to purchase Common Stock, with an aggregate fair market value of approximately $87,000 for a weighted average fair value of $1.16 per option, were granted to the members of the Company’s Board of Directors, executive officers and consultants of the Company. The options have a term of 10 years from the grant date. These options vest over various terms ranging from immediate vesting upon grant to the one-year anniversary of the grant date.

The fair value of the options granted in 2025 was estimated on the grant date using the Black-Sholes valuation method and level 3 inputs based on assumptions for expected volatility, expected dividends, expected term and the risk-free interest rate which resulted in $0.09 million in value.

Key assumptions used to value options issued in the quarter are as follows:

On March 26, 2025, the compensation committee of the Company adopted the Company’s Executive Incentive Compensation Plan (the “EICP”) for Erez Aminov, its Chairman and Chief Executive Officer. Under the EICP, Mr. Aminov will be eligible for certain long-term awards of up to 500,000 performance-based restricted stock units of the Company’s common stock, par value $0.001 upon the Company achieving specified milestones based upon the Company reaching certain market capitalization values and the progress of the Company’s drug candidates. All awards under the EICP are subject to the approval of the Board and the Committee. Furthermore, the Board and the Committee, each in its sole discretion, generally retain the right to amend, supplement, supersede or cancel any awards under the EICP for any reason, and reserve the right to determine whether and when to pay out any bonus amounts pursuant to or outside of the EICP, regardless of the achievement of the performance targets. As the awards have not been granted officially through board approval, there is no grant date under ASC 718, and therefore no measurement date for the value of such awards and no expense has been recorded for the awards granted during the six months ended June 30, 2025.

The following is RSU activity during the six months ended June 30, 2025:

During the year ended December 31, 2024, a total of 500,000 restricted stock units (“RSU”), with an aggregate fair market value of approximately $0.6 million were granted to the Company’s Chief Executive Officer under the 2022 Omnibus Incentive Plan. These RSU’s vest as follows: (i) 50% on February 12, 2025 (ii) 50% at 6-month anniversary of the date of grant. The awards were fair valued using the closing price of the stock of $1.19 on December 6, 2024.

The Company recognized $1.4 million in stock compensation expense related to stock options and RSUs in 2025. This expense was recorded in General and Administrative expenses on the accompanying statement of operations and additional paid in capital on the accompanying balance sheet as of June 30, 2025.

Warrants

The Company has granted warrants to purchase shares of Common Stock. Warrants may be granted to affiliates in connection with certain agreements. Warrant activity for the six months ended June 30, 2025 and 2024 is summarized below:

Note 6. Segment Information

The Company operates in one reportable segment related to the development and commercialization of pharmaceuticals targeting neurologic and neuropsychiatric disorders. The Chief Operating Decision Maker for the Company is the CEO. The Company’s CEO reviews operating results on an aggregate basis and manages the Company’s operations as a whole for the purpose of evaluating financial performance and allocating resources. Accordingly, the Company has determined that it has a single reportable and operating segment structure. The CEO uses aggregate net loss to allocate resources in the annual budgeting and forecasting process and also uses that measure as a basis for evaluating financial performance regularly by comparing actual results with established budgets and forecasts.

The accounting policies of the Company’s single segment are the same as those described in the summary of significant accounting policies within Note 1 herein and in the 2024 Annual Report. The CEO assesses performance for the Company and decides how to allocate resources based on the aggregate net loss that is also reported on the income statement as net loss. The measure of segment assets is reported on the balance sheets as total assets.

The table below provides information about the Company’s revenue, significant segment expenses and other segment expenses.

Note 7. Subsequent Events

ATM Offering

On July 3, 2025, MIRA Pharmaceuticals, Inc. (the “Company”), sold a total of 1,540,741 shares of its common stock, par value $0.001, in block sales to an institutional investor, at an average price of $1.2981 share (a premium to the prior days close), through its at-the-market equity offering facility (the “Offering”). Gross proceeds from the Offering totaled approximately $2.0 million, prior to deducting fees and expenses. The trades for the Offering were facilitated through Rodman & Renshaw, via the StockBlock platform. The Offering did not include any warrants.

On July 1, 2025, under the ATM Agreement, the Company sold and issued 17,373 shares of common stock at an average price per share of $1.3121 and received net proceeds of approximately $0.2 million after deducting commissions and other fees of $570.

Exercise of Options

On July 15, 2025, Michelle Yanez, the Company’s former Chief Financial Officer, exercised options to purchase 126,061 shares of the Company’s common stock. The Company received $151,023 in net proceeds from this transaction.