UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission file number:
(Exact Name of Registrant as Specified in its Charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class: | Trading Symbol | Name of each exchange on which registered: | ||
| The |
Indicate by checkmark whether the registrant (1) filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Indicate by check mark whether the Registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | |
| Smaller Reporting Company | Emerging Growth Company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:
ALPHA COGNITION INC.
FORM 10-Q
For the Quarter Ended September 30, 2024
INDEX
i
ALPHA COGNITION INC.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
PART I
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
ALPHA COGNITION INC.
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Related party note receivable, net | ||||||||
| Total current assets | ||||||||
| Other assets | ||||||||
| Equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Current portion of promissory note - related party | ||||||||
| Deferred income | ||||||||
| Total current liabilities | ||||||||
| Convertible debentures, net | ||||||||
| Conversion feature liability | ||||||||
| Warrant liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ deficiency | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficiency | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficiency | $ | $ | ||||||
The accompanying notes to the consolidated financial statements are an integral part of these statements.
1
ALPHA COGNITION INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net operating loss | ( |
) | ( |
) | ) | ( |
) | |||||||||
| Other income (expenses) | ||||||||||||||||
| Foreign exchange (loss) gain | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Interest income | ||||||||||||||||
| Grant income | ||||||||||||||||
| Interest expense | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Impairment of intangible assets | ( |
) | ||||||||||||||
| Change in fair value of conversion feature liability | |
|||||||||||||||
| Change in fair value of warrant liabilities | ( |
) | ( |
) | ( |
) | ||||||||||
| Provision for loan losses | ( |
) | ||||||||||||||
| Total other income (expenses) | ( |
) | |
( |
) | |||||||||||
| Net loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other comprehensive loss (income) | ||||||||||||||||
| Currency translation adjustment | ( |
) | ( |
) | ||||||||||||
| Comprehensive loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss per share, basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted-average shares used to compute net loss per share, basic and diluted | ||||||||||||||||
The accompanying notes to the consolidated financial statements are an integral part of these statements.
2
ALPHA COGNITION INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
(UNAUDITED)
For the Three and Nine Months Ended September 30, 2024 and 2023
For the three months ended September 30, 2024
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Class A | Additional | Other | ||||||||||||||||||||||||||||||||||||||
| Common Shares | Restricted Shares | Preferred Shares | Paid-In | Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Warrants exercised | - | - | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
For the three months ended September 30, 2023
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Class A | Additional | Other | ||||||||||||||||||||||||||||||||||||||
| Common Shares | Restricted Shares | Preferred Shares | Paid-In | Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Units issued for cash | - | - | ||||||||||||||||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | - | - | ( | ) | |||||||||||||||||||||||||||||||||
| Conversion of restricted shares to common shares | ( | ) | ( | ) | - | |||||||||||||||||||||||||||||||||||
| Expired share options | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Effect on change in functional currency | - | ( | ) | - | - | ( | ) | |||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Foreign exchange on translation | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
The accompanying notes to the consolidated financial statements are an integral part of these statements.
3
ALPHA COGNITION INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
(UNAUDITED)
For the Three and Nine Months Ended September 30, 2024 and 2023
For the nine months ended September 30, 2024
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Class A | Additional | Other | ||||||||||||||||||||||||||||||||||||||
| Common Shares | Restricted Shares | Preferred Shares | Paid-In | Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Units issued for cash | - | - | ||||||||||||||||||||||||||||||||||||||
| Shares issued for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Share issuance costs | ( | ) | - | - | ( | ) | ||||||||||||||||||||||||||||||||||
| Options exercised | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Warrants exercised | - | - | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Reallocation of derivative liability on re-pricing of warrants from CAD to USD exercise price | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
For the nine months ended September 30, 2023
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Class A | Additional | Other | ||||||||||||||||||||||||||||||||||||||
| Common Shares | Restricted Shares | Preferred Shares | Paid-In | Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Units issued for cash | - | - | ||||||||||||||||||||||||||||||||||||||
| Share issuance costs | ( | ) | - | - | ( | ) | ||||||||||||||||||||||||||||||||||
| Conversion of restricted shares to common shares | ( | ) | ( | ) | - | |||||||||||||||||||||||||||||||||||
| Options exercised | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Expired share options | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Expired warrants | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Effect on change in functional currency | - | ( | ) | - | - | ( | ) | |||||||||||||||||||||||||||||||||
| Foreign exchange on translation | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
The accompanying notes to the consolidated financial statements are an integral part of these statements.
4
ALPHA COGNITION INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows used in operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Accretion of discount on convertible debentures | ||||||||
| Accrued expenditures for government grant | ||||||||
| Accrued interest | ||||||||
| Accrue interest expense, convertible debentures | ||||||||
| Accrued interest income, related party | ( | ) | ||||||
| Change in fair value of conversion feature liability | ( | ) | ||||||
| Change in fair value of warrant liabilities | ||||||||
| Change in fair value of bonus rights liability | ( | ) | ||||||
| Debt issuance costs | ||||||||
| Provision for loan losses | ||||||||
| Impairment of intangible assets | ||||||||
| Share-based compensation | ||||||||
| Shares issued for services | ||||||||
| Changes in non-cash operating working capital items: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows provided by (used in) investing activities | - | - | ||||||
| Net cash provided by (used in) investing activities | ||||||||
| Cash flows provided by financing activities | ||||||||
| Units issued for cash | ||||||||
| Exercise of options | ||||||||
| Exercise of warrants | ||||||||
| Proceeds received from restricted government grant | ||||||||
| Amounts paid from restricted government grant funds | ( | ) | ||||||
| Issuance of related party note | ( | ) | ||||||
| Proceeds from issuance of convertible debentures | ||||||||
| Debt issuance costs | ( | ) | - | |||||
| Share issuance costs | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign exchange on cash | ( | ) | ||||||
| Change in cash and cash equivalents during the period | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Cash and cash equivalents consists of: | ||||||||
| Demand deposits | $ | $ | ||||||
| Restricted cash | ||||||||
| $ | $ | |||||||
The accompanying notes to the consolidated financial statements are an integral part of these statements.
5
ALPHA COGNITION INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Supplemental Disclosure | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental non-cash disclosures | ||||||||
| Reallocation of fair value of share options upon exercise | $ | $ | ||||||
| Reclassification of derivative liability for warrants priced with USD per change in functional currency | $ | $ | ||||||
| Reclassification of derivative liability for warrants priced with CAD per change in functional currency | $ | $ | ||||||
| Reclassification of derivative liability for warrants re-priced from CAD to USD exercise price | $ | $ | ||||||
| Common shares issued for share issuance costs | $ | $ | ||||||
| Warrants issued for share issuance costs | $ | $ | ||||||
| Common shares issued for services | $ | $ | ||||||
The accompanying notes to the consolidated financial statements are an integral part of these statements.
6
NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN
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 and Cognitive Impairment with Traumatic Brain Injury (“TBI”), for which there are limited or no treatment options. The registered and records office of the Company is 1200 – 750 West Pender Street, Vancouver, BC, V6C 2T8. . As of November 12, 2024, the Company’s common shares commenced trading on the NASDAQ stock exchange under the symbol “ACOG”. As of May 1, 2023, the Company’s common shares commenced trading on the Canadian Securities Exchange (“CSE”) under the symbol “ACOG”, previously the Company’s shares were traded on the TSX Venture Exchange (“TSX-V”) until April 28, 2023, when the Company had them delisted. The Company’s shares also traded on the Over-The-Counter Markets (“OTC”) under the trading symbol “ACOGF” until they were listed on the NASDAQ.
On July 29, 2024, the Company was granted approval by the U.S. Food and Drug Administration (FDA) for the commercialization of ZUNVEYL, previously known as ALPHA-1062, for the treatment of mild-to-moderate Alzheimer’s disease.
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.
On November 13, 2024, the Company completed a public offering of Common
Shares by issuing
Going Concern
These unaudited condensed interim consolidated
financial statements have been prepared with the assumption that the Company will be able to realize its assets and discharge its liabilities
in the normal course of business rather than through a process of forced liquidation. The Company has not generated revenues from its
operations to date and as of September 30, 2024, had working capital of $
7
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation – The conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules of the Securities and Exchange Commission (the “SEC”). The unaudited condensed interim consolidated financial statements as of September 30, 2024, have been derived from the Company’s audited consolidated financial statements for the fiscal year December 31, 2023 (“2023 Consolidated Financial Statements”). It is recommended that the unaudited condensed interim consolidated financial statements be read in conjunction with the 2023 Consolidated Financial Statements.
Principles of Consolidation – These unaudited condensed interim 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. Effective August 31, 2023, the functional currency of the Company was updated to the United States Dollar (“USD” or U.S. Dollar”) as management assessed that the currency of the primary economic environment in which the Company operates changed to USD on that date. The key factor influencing this decision was the change in the Company’s primary funding from Canadian dollars (“CAD”) to USD, whereas the functional currency of its subsidiaries was unchanged and remain in USD. Prior to USD the functional currency of the Company was CAD, and its subsidiaries was USD. Changes to the Company’s functional currency have been accounted for on a prospective basis from August 31, 2023. The determination of functional currency was made in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 830, Foreign Currency Matters.
The Company’s reporting currency is the USD. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s CAD operations are translated to USD at the exchange rate on the reporting date. The income and expenses are translated using average exchange rates. Foreign currency differences that arise on translation for consolidated purposes are recognized in other comprehensive loss on the consolidated statements of operations and comprehensive (loss) income.
All values presented are in USD unless otherwise denoted.
Use of Estimates and Assumptions – The preparation of these unaudited condensed interim consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the unaudited condensed interim consolidated financial statements and the reported amounts of expenses during the reporting period. 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 Risk –
The Company’s financial instruments subject to concentrations of credit risk consists primarily of cash and cash equivalents.
Cash is deposited with financial institutions with high credit quality which are typically in excess of insured limits. Additionally,
as of September 30, 2024, the Company had $
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 to be cash equivalents.
8
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
| Computer equipment | % | |||
| Other equipment | % |
Intangible Assets – The
Company accounts for intangible assets in accordance with FASB ASC 350, Intangibles – Goodwill and Other. 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,
as defined in Note 11. The licenses are carried at cost and amortized on a straight-line basis over their estimated useful life of
Leases – The Company accounts
for leases using FASB ASC 842, Leases. The Company has elected not to recognize right-of-use assets and lease liabilities for
short-term leases that have a lease term of
Impairment of Long-Lived and Non-Financial
Assets – The Company reviews long-lived assets, primarily comprised of equipment and definite life intangible assets,
for impairment whenever events or changes in circumstances indicate that the carrying amount 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 such assets
are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds
the projected discounted future net cash flows arising from the asset and whether any impairment indicators exist. The Company recorded
an impairment of intangible assets of $
Income Taxes – The Company uses the asset and liability method to account for income taxes in accordance with ASC 740, 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, tax loss and credit carry forwards.
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 expected to be realized.
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
Research and Development Costs – The Company expenses all research and development costs incurred in accordance with the Accounting Standard Codifications as promulgated by FASB ASC 730, Research and Development.
Advertising and Marketing Costs –
The Company expenses advertising and marketing costs when incurred. During the nine months ending September 30, 2024, and 2023, the Company
incurred advertising and marketing expenses of $
9
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Loss Per Share – Basic loss per share is computed by dividing net loss available to ordinary stockholders by the weighted-average number of common shares outstanding during the reporting period. If applicable, diluted income per share is computed similar to basic income per share except that the weighted average shares outstanding are increased to include potential common shares for the assumed conversion of convertible debentures and the exercise of share options and warrants, if dilutive. The number of potential common shares is calculated by assuming outstanding share options and warrants were exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the reporting periods. For the periods presented, this calculation proved to be anti-dilutive.
Share-Based Compensation – The Company accounts for share-based compensation in accordance with ASC 718, Compensation – Share-Based Compensation, which requires compensation cost for the grant-date fair value of share-based awards to be recognized over the requisite service period. The Company accounts for forfeitures when they occur. The fair value of share-based awards, granted or modified, is determined on the grant date (or modification or acquisition dates, if applicable) at fair value, 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 share options on an accelerated attributions method over the requisite service period. The Company records share-based compensation expense for performance-based share options on an accelerated attribution method over the requisite service period, and only if performance-based conditions are considered probable to be satisfied.
The fair value of options is determined using the Black-Scholes option pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.
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, until settlement. Changes in the estimated fair value of the bonus right awards are recognized within general and administrative expense in the unaudited condensed interim consolidated statement of operations and comprehensive loss over the vesting period. Key assumptions in the calculation of the fair value of the bonus right awards include expected volatility, risk-free interest rate, expected life, and fair value per award.
Segment Reporting – The Company
currently operates in researching and developing pharmaceutical treatments for neurological diseases industry. Based on the guidance
of ASC 280, Segment Reporting, the Company has
Convertible Debentures and Conversion Feature Liability – The Company’s debt instruments contain a host liability and an embedded conversion feature. The Company uses the guidance under FASB ASC Topic 815 Derivatives and Hedging (“ASC 815”) to determine if the embedded conversion feature must be bifurcated and separately accounted for as a derivative under ASC 815. It also determines whether any embedded conversion features requiring bifurcation qualify for any scope exceptions contained within ASC 815. Generally, contracts issued or held by a reporting entity that are both (i) indexed to its own shares, and (ii) classified in stockholders’ equity, would not be considered a derivative for the purposes of applying ASC 815. Any embedded conversion features that do not meet the scope exception noted above are classified as derivative liabilities, initially measured at fair value, and remeasured at fair value each reporting period with change in fair value recognized in the unaudited condensed interim consolidated statements of operations and comprehensive loss. Any embedded conversion features that meet the scope exception under ASC 815 are initially recorded at their relative fair value in paid-in-capital and are not remeasured at fair value in future periods.
Any embedded conversion features that do not meet the scope exception under ASC 815 are initially recorded at their fair value and the residual amount of the proceeds received is allocated to the convertible debentures. The host debt instrument is accounted for in accordance with guidance applicable to non-convertible debt under FASB ASC Topic 470 Debt (“ASC 470”) and is accreted to its face value over the term of the debt with accretion expense and periodic interest expense recorded in the consolidated statements of operations and comprehensive loss.
10
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company uses the Black-Scholes option pricing model to determine the fair value of the conversion feature liability, the warrant liability, share-based options, and stand-alone share purchase warrants issued as noted above. This model requires the input of subjective assumptions including the following:
Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. Treasury zero coupon bond issues in effect at the time of grant for periods corresponding with the expected term of option.
Dividend Yield – The Company has never paid dividends on its common shares and has no plans to pay dividends on its common shares. Therefore, the Company used an expected dividend yield of zero.
Expected Life – The Company’s expected term represents the period that the Company’s options granted are expected to be outstanding or the remaining contractual life of the conversion period and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).
Expected Volatility – The Company’s expected volatility was estimated based on the average volatility for comparable publicly traded biopharmaceutical companies over a period equal to the expected term of the awards.
Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings (loss) and equity.
Fair Value Measurements - FASB ASC 820 – Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements. In accordance with ASC 820, we have categorized our financial assets and liabilities based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Financial assets and liabilities recorded in the accompanying consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:
Level 1 – Financial instruments whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which we have the ability to access at the measurement date.
Level 2 – Financial instruments whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.
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.
The Company’s financial instruments consist of cash, restricted cash, related party note receivable, accounts payable, convertible debentures, conversion feature liability, warrant liabilities, other liabilities, and promissory note. The fair values of accounts payable, convertible debentures and promissory note approximate their carrying values either due to their current nature or current market rates for similar instruments.
Cash is measured at fair value on a recurring
basis using level 1 inputs. Other liabilities consisting of the bonus rights liability, conversion feature liability and warrant liabilities
are measured at fair value on a recurring basis using level 3 inputs. As of September 30, 2024, and December 31, 2023, the fair value
of the bonus rights liability was $
11
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)
Interest Rate Risk – Interest
rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest
rates. Financial assets and liabilities with variable interest rates expose the Company to interest rate cash flow risk. The Company does
not hold any financial liabilities with variable interest rates. Financial assets and liabilities with fixed interest rates expose the
Company to interest rate price risk. As of September 30, 2024, and December 31, 2023, the promissory note bears interest of
Currency Risk – Foreign currency
exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates.
The Company’s operations are carried out in Canada and the United States. As of September 30, 2024, and December 31, 2023, the
Company had net monetary liabilities of approximately $
These factors expose the Company to foreign currency
exchange rate risk, which could have an adverse effect on the profitability of the Company. A
Grant Accounting – All funds
relating to government grants are being recorded under the gross method of accounting for government grants whereby any income received
and associated expenses incurred will be reported as grant income and included in research and development expenses, respectively on
the statement of operations and comprehensive loss. When grant proceeds are initially received, they are recorded as deferred income
and restricted cash. Grant proceeds used to pay for study costs and are expensed as incurred, with a corresponding amount of grant revenue
recorded along with a reduction of the balance of the deferred income liability. The Company classifies the balance of cash received
from grants as restricted cash when the proceeds from the grant have been designated for use in specified research. During the six months
ending September 30, 2024 and 2023, the Company recorded grant income of $
Accounting Pronouncements Adopted in 2024 – In August 2020, FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. There was no material impact of this new guidance on the accompanying unaudited condensed interim consolidated financial statements.
NOTE 3 – R&D GRANT
On June 5, 2023, the Company was awarded a $
12
NOTE 3 – R&D GRANT (continued)
As of September 30, 2024, the Company has received
$
| ● | Specific Aim 1: Quantify the ability of ALPHA-1062 to reduce brain-wide tauopathy and pathology in blast-mTBI; |
| ● | Specific Aim 2: Characterize and quantify changes in the inter-cellular associations between disease-associated microglia and cells of the basal forebrain induced by repetitive blast-mTBI and altered by ALPHA-1062 treatment; and |
| ● | Specific Aim 3: Determine the efficacy of ALPHA-1062 to improve the adverse cognitive and behavioral outcomes consequent to repetitive blast-mTBI. |
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.
NOTE 4 – RELATED PARTY NOTE RECEIVABLE
On July 7, 2023, the Company entered into a loan
agreement with Alpha Seven Therapeutics, Inc., (“Alpha Seven”) a related party through a common director and officers of
the Company, to advance an amount up to $
| Principal | Interest | |||||||
| Balance as of December 31, 2022 | $ | $ | ||||||
| Loans advanced | ||||||||
| Interest accrued | ||||||||
| Balance as of December 31, 2023 | $ | $ | ||||||
| Interest accrued | ||||||||
| Provision for credit losses | ( | ) | ||||||
| Reversal of accrued interest | ( | ) | ||||||
| Balance as of September 30, 2024 | $ | $ | ||||||
13
NOTE 5 – BALANCE SHEET COMPONENTS
Prepaid Expenses and Other Current Assets
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Other receivables | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Prepaid legal expenses | ||||||||
| Prepaid expenses and other assets | $ | $ | ||||||
Other assets
Other assets include the long-term prepaid portion
of $
Equipment
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Equipment | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Equipment, net | $ | $ | ||||||
Depreciation expense for the three months ended
September 30, 2024 and 2023 was $
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Accounts payable | $ | $ | ||||||
| Other accrued liabilities | ||||||||
| Accrued payroll and bonuses | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
14
NOTE 6 – INTANGIBLE ASSETS
| September 30, 2024 | Gross Amount | Accumulated Amortization | Net Balance | Weighted Average Remaining Useful Life | ||||||||||||
| Licenses | $ | $ | $ | |||||||||||||
| December 31, 2023 | Gross Amount | Accumulated Amortization | Net Balance | Weighted Average Remaining Useful Life | ||||||||||||
| Licenses | $ | $ | $ | |||||||||||||
Amortization expense for the three months ended
September 30, 2024 and 2023, was $
| Year Ending December 31, | ||||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 7 – PROMISSORY NOTE
In March 2015, the Company issued a promissory
note of $
On March 6, 2023, the Company and NLS agreed
to an amendment to the promissory note pursuant to which the interest rate was increased from
As of September 30, 2024, and December 31, 2023,
the principal balance outstanding on the promissory note was $
Effective
April 1, 2024, the Company and NLS agreed to another amendment to the promissory note pursuant to which the interest rate was increased
from
15
NOTE 8 – CONVERTIBLE DEBENTURES AND CONVERSION FEATURE LIABILITY
| Convertible Debentures | Conversion Feature Liability | Warrant Liabilities | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Balance, December 31, 2023 | ||||||||||||||||
| Proceeds | ||||||||||||||||
| Allocation of proceeds to conversion feature liability | ( | ) | ||||||||||||||
| Allocation of proceeds to warranty liabilities | ( | ) | ||||||||||||||
| Accretion | ||||||||||||||||
| Accrued interest | ||||||||||||||||
| Debt issuance costs | ( | ) | ( | ) | ||||||||||||
| Revaluation of conversion feature liability | ( | ) | ( | ) | ||||||||||||
| Revaluation of warrant liabilities | ( | ) | ( | ) | ||||||||||||
| Balance, September 30, 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
The Debentures bear interest at
Upon closing of a Qualified Offering, each Debenture
Warrant holder will receive an additional
The holders of the Debenture Warrants may elect, if the Company does not have an effective registration statement registering or the prospectus contained therein is not available for the issuance of the Debenture Warrant shares to the holder, in lieu of exercising the Debenture Warrants for cash, a cashless exercise option to receive common shares equal to the fair value of the Debenture Warrants. The fair value is determined by multiplying the number of Debenture Warrants to be exercised by, the option of the Debenture Holder, (i) the previous day’s volume weighted average price (“VWAP”) of the common shares of the Company, (ii) the bid price of the common shares of the Company as of the time of the execution of the exercise notice, or (iii) the closing price of the common shares on the date of the exercise notice (“Elected Exercise Price”) less the exercise price with the difference divided by the Elected Exercise Price. On October 16, 2024, the Company’s registration statement restricting the Debenture Warrant holders ability to elect to cashless exercise their Debenture Warrants became effective.
If a Qualified Offering occurs or Debenture Warrant holder elects to exercise on a cashless basis, there will be variability in the number of shares issued per Debenture Warrant.
Each SPA also grants each lender a participation right up to September 24, 2025 whereby each lender will have the right to participate in up to 25% of any subsequent offering of the Company based on such lender’s pro rata portion of the SPAs.
The Company has determined that the conversion features meet the definition of a derivative in accordance with ASC 815 – Derivatives and hedging, and as a result has bifurcated the conversion features from the contract. As a result, the Company recorded the embedded derivative as a conversion feature liability on its consolidated balance sheets with a corresponding debt discount which is netted against the principal amount of the Debentures. The Company accretes the debt discount associated with the conversion feature liability to accretion expense over the term of the Debentures using the effective interest rate method. The conversion feature liability is initially measured at fair value and re-measured at the end of each reporting period with any changes in fair value reported on the consolidated statement of operations and comprehensive loss.
The Company incurred transaction costs of $
16
NOTE 8 – CONVERTIBLE DEBENTURES AND CONVERSION FEATURE LIABILITY (continued)
| Risk-free interest rate | ||
| Dividend yield | ||
| Expected life | ||
| Volatility | ||
| Probability of automatic conversion under qualified offering | ||
Probability of automatic conversion under accelerated offering | ||
| Probability of voluntary conversion |
| Risk-free interest rate | ||
| Dividend yield | ||
| Expected life | ||
| Volatility | ||
| Probability of automatic conversion under qualified offering | ||
Probability of automatic conversion under accelerated offering | ||
| Probability of voluntary conversion |
During the nine months ended September 30, 2024
and 2023, the Company recognized interest expense of $
During the nine months ended September 30, 2024
and 2023, the Company recognized accretion of the debt discount of $
As of September 30, 2024 and 2023, the principal
and accrued interest owing to lenders was $
During the nine months ended September 30, 2024 and 2023, the Company
recognized debt issuance costs relating to the convertible features and warrants of $
NOTE 9 – OTHER LONG-TERM LIABILITIES
The Company adopted a cash bonus policy pursuant to which it may grant bonus rights to certain eligible participants, which include employees, officers, or consultants of the Company, that are payable in cash. These bonus rights are subject to certain vesting provisions and are revalued at each reporting date with the change being included in management fees and salaries on the Company’s unaudited condensed interim consolidated statements of operations and comprehensive loss.
During the year ended December 31, 2022, Officers
of the Company were granted the ability to earn up to
On April 16, 2024, the Company amended the bonus
rights agreements to extend the vesting date from April 15, 2024, through the earlier of April 28, 2027, a change of control, or attainment
of the business value threshold with respect to any tranche. Additionally, the grant price was reduced from $
As of September 30, 2024, and December 31, 2023,
the Company recognized a bonus right liability of $
17
NOTE 9 – OTHER LONG-TERM LIABILITIES (continued)
In accordance with ASC 718, Share-Based Payments,
the bonus right awards are considered liability-based awards and are revalued at each reporting date.
| September 30, 2024 |
December 31, 2023 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected life (in years) | ||||||||
| Volatility | % | % | ||||||
| Weighted average fair value per bonus right | $ | $ | ||||||
The number of bonus right awards granted to each
executive is determined based on the business value of the Company at the earlier of (i) the date of a Change in Control or; (ii) the
Vesting Date, as defined in the Company’s Cash Bonus Policy. The Company estimates the expected number of bonus rights at the end
of each reporting period based upon the likelihood of achieving the Business Value threshold, as defined in each executive’s agreement.
As of September 30, 2024, and December 31, 2023,
NOTE 10 – STOCKHOLDERS’ DEFICIENCY
Authorized Share Capital
The Company is authorized to issue the following share capital:
| ● | Unlimited common voting shares without par value (“Common Share”) |
| ● | Unlimited Class A restricted voting shares without par value (“Restricted Share”) |
| ● | Unlimited Class B Preferred Series A voting shares without par value, convertible on a |
Issued Share Capital
During the nine months ended September 30, 2024, the Company issued the following shares:
| ● | Issued |
| ● | On January 19, 2024, the Company completed the fifth closing of the Q2 2023 PP by issuing |
| ● | Issued |
| ● | Issued |
| ● | Issued |
| ● | Issued |
During the year ended December 31, 2023, the Company issued the following shares:
| ● | Issued |
18
NOTE 10 – STOCKHOLDERS’ DEFICIENCY (continued)
Issued Share Capital (continued)
| ● | Issued |
| ● | On May 30, 2023, the Company announced a private placement offering to raise gross proceeds of $ |
| ○ | On August 31, 2023, the Company completed an initial closing of the Q2 2023 PP by issuing |
| ○ | On October 16, 2023, the Company completed the second closing of the Q2 2023 PP by issuing |
| ○ | On November 8, 2023, the Company completed the third closing of the Q2 2023 PP by issuing |
On December 4, 2023, the Company amended
the terms of the Q2 2023 PP. Each unit was amended to consist of one common share and one warrant. Each warrant will entitle the holder
to purchase an additional common share of the Company at $
| ○ | On December 22, 2023, the Company completed the fourth closing of the Q2 2023 PP by issuing |
19
NOTE 10 – STOCKHOLDERS’ DEFICIENCY (continued)
Issued Share Capital (continued)
| ● | All |
| ● |
Escrow Shares
As of September 30, 2024, and December 31, 2023,
the Company had and
Warrants
During the nine months ended September 30, 2024, the Company issued the following warrants:
| ● |
| ● |
| ● |
| Number of Warrants | Weighted Average Exercise Price (as converted) | Remaining Contractual Term (Years) | ||||||||||
| Balance, December 31, 2022 | $ | |||||||||||
| Issued | ||||||||||||
| Expired | ( | ) | ||||||||||
| Balance, December 31, 2023 | $ | |||||||||||
| Issued | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Expired | ( | ) | ||||||||||
| Balance, September 30, 2024 | $ | |||||||||||
20
NOTE 10 – STOCKHOLDERS’ DEFICIENCY (continued)
Warrants (continued)
| Warrants Outstanding | Exercise Price | Expiry Date | ||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
Warrants Liabilities
| a) | Prior to August 31, 2023, the Company’s functional currency was the CAD, as such, the Company recorded a warrant liability on the warrants outstanding with USD exercise prices. This derivative liability was being revalued at each reporting period. |
The Company revalued its derivative
liability upon the change in functional currency, which resulted in a loss on revaluation of $
Due to the change in functional currency
on August 31, 2023, the derivative liability was measured at fair value using the Black-Scholes Option Pricing Model with a valuation
date of August 31, 2023.
| Balance as of December 31, 2022 | $ | |||
| Revaluation of derivative liability | ||||
| Reclassification of derivative liability per change in functional currency | ( | ) | ||
| Balance as of December 31, 2023 | $ |
| Warrants Outstanding | Exercise Price | Expiry Date | ||||||
| $ | ||||||||
| $ | ||||||||
21
NOTE 10 – STOCKHOLDERS’ DEFICIENCY (continued)
Warrant Liabilities (continued)
| August 31, 2023 | ||||
| Risk-free interest rate | % | |||
| Dividend yield | ||||
| Expected life (in years) | ||||
| Volatility | % | |||
| Weighted average fair value per warrant | $ | |||
| b) | 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 previously issued CAD exercises prices. This derivative liability is being revalued at each reporting period. |
As of August 31, 2023, the Company
charged $
| Balance as of December 31, 2022 | $ | |||
| Reclassification of derivative liability per change in functional currency | ||||
| Revaluation of derivative liability | ||||
| Reclassification of derivative liability per change in exercise price | ( | ) | ||
| Balance as of December 31, 2023 | $ | |||
| Revaluation of derivative liability | ||||
| Reclassification of derivative liability per change in exercise price | ( | ) | ||
| Balance as of September 30, 2024 | $ |
| Warrants Outstanding | Exercise Price | Expiry Date | ||||||
| $ | ||||||||
| $ | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | ||||||||
| Expected life (in years) | ||||||||
| Volatility | % | % | ||||||
| Weighted average fair value per warrant | $ | | $ | |||||
| c) | On September 24, 2024, the Company entered into SPAs with various third party lenders for the issuance of Debentures and |
The Debenture Warrants are exercisable at a price
of $
22
NOTE 10 – STOCKHOLDERS’ DEFICIENCY (continued)
Warrant Liabilities (continued)
The holders of the Debenture Warrants may also elect, if the Company does not have an effective registration statement registering or the prospectus contained therein is not available for the issuance of the Debenture Warrant shares to the holder, in lieu of exercising the Debenture Warrants for cash, a cashless exercise option to receive common shares equal to the fair value of the Debenture Warrants. The fair value is determined by multiplying the number of Debenture Warrants to be exercised by, the option of the Debenture Holder, (i) the previous day’s volume weighted average price (“VWAP”) of the common shares of the Company, (ii) the bid price of the common shares of the Company as of the time of the execution of the exercise notice, or (iii) the closing price of the common shares on the date of the exercise notice (“Elected Exercise Price”) less the exercise price with the difference divided by the Elected Exercise Price.
If a Qualified Offering occurs or Debenture Warrant holder elects to exercise on a cashless basis, there will be variability in the number of shares issued per Debenture Warrant.
On initial recognition, the Company allocated $
The following weighted average assumptions were used in the Black-Scholes option-pricing model for the initial valuation and the revaluation for the Debenture Warrant priced in USD as of September 24, 2024 and September 30, 2024:
| September 30, 2024 | September 24, 2024 | |||||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | ||||||||
| Expected life (in years) | ||||||||
| Volatility | % | % | ||||||
Share Options
Common Share Options
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
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
The following weighted average assumptions were used in the Black-Scholes option-pricing model for the valuation of the Common Share options issued:
| September 30, 2024 | December 31, 2023 | |||||||
| Risk-free interest rate | | % | ||||||
| Expected life (in years) | ||||||||
| Volatility | % | |||||||
| Weighted average fair value per option | $ | |||||||
23
NOTE 10 – STOCKHOLDERS’ DEFICIENCY (continued)
Share Options (continued)
Common Share Options (continued)
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total share-based compensation | $ | $ | $ | $ | ||||||||||||
As of September 30, 2024, there was an unrecognized
share-based compensation expense relating to service conditions for common share options of $
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value(1) | |||||||||||||
| Balance, December 31, 2022 | ||||||||||||||||
| Granted | ||||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Exercised (2) | ( | ) | ||||||||||||||
| Balance, December 31, 2023 | $ | $ | ||||||||||||||
| Exercised (3) | ( | ) | ||||||||||||||
| Balance, September 30, 2024 | $ | $ | ||||||||||||||
| Options exercisable, September 30, 2024 | $ | $ | ||||||||||||||
| (1) |
| (2) |
| (3) |
| Options Outstanding | Options Exercisable | Exercise Price | Expiry Date | |||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| , | $ | |||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
24
NOTE 10 – STOCKHOLDERS’ DEFICIENCY (continued)
Share Options (continued)
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.
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total share-based compensation | $ | $ | $ | $ | ||||||||||||
As of September 30, 2024, and December 31, 2023, there was no unrecognized share-based compensation expense relating to service condition awards.
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value(1) | |||||||||||||
| Balance, December 31, 2022 | ||||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Balance, December 31, 2023 | $ | $ | ||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Balance, September 30, 2024 | ||||||||||||||||
| Options exercisable, September 30, 2024 | $ | $ | ||||||||||||||
| (1) | The aggregate intrinsic values were calculated as the difference between the exercise price of the options and the closing price of the Company’s common share. The calculation excludes options with an exercise price higher than the closing price of the Company’s shares on the reporting date |
| Options Outstanding | Options Exercisable | Exercise Price | Expiry Date | |||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
25
NOTE 11 – RELATED PARTY TRANSACTIONS AND BALANCES
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive officers and members of its Board of Directors.
In September 2018, the Company signed a management
agreement with CMI Cornerstone Management Corp. (“CMI”), a company controlled by Ken Cawkell, former CEO and a director of
the Company, which requires monthly payments of $
In September 2018, the Company signed a management
agreement with 9177 – 586 Quebec Inc., later assigned to 102388 P.E.I. Inc. (“PEI Inc.”), companies controlled by Denis
Kay, Chief Scientific Officer of the Company, which requires monthly payments of $
In February 2021, the Company signed a consulting
agreement with Michael McFadden, CEO of the Company, requiring an annual base compensation of $
| a) | Severance payments for a period of twelve months with the following terms: |
| i) | Months 1 through 6: |
| ii) | Months 7 through 9: |
| iii) | Months 10 through 12: |
| b) | Bonus severance equal to the average of bonuses paid of the two most recent full fiscal years prior to termination plus the bonus that would have been paid in the fiscal year of termination. |
Also included in the agreement is a provision for termination payment due to a change of control, the CEO will receive:
| a) | a cash payment equal to the annual base salary; |
| b) | a full bonus payable in cash immediately, irrespective of whether targets have been met; and |
| c) | continuation of healthcare benefits for twelve months from date of change of control event. |
In April 2022, Mr. McFadden was granted the ability
to earn up to
In May 2021, the Company hired Lauren D’Angelo
as the Company’s Chief Commercial Officer. In 2023 Ms. D’Angelo was promoted to Chief Operating Officer of the Company. The
employment agreement signed in May 2021 with Ms. D’Angelo requires an annual base compensation currently at $
| a) | a cash payment equal to the annual base salary; |
| b) | a full bonus payable in cash immediately, irrespective of whether targets have been met; and |
| c) | continuation of healthcare benefits for twelve months from date of change of control event. |
In May 2022, Ms. D’Angelo was granted the
ability to earn up to
26
NOTE 11 – RELATED PARTY TRANSACTIONS AND BALANCES (continued)
In November 2021, the Company signed an employment
agreement with Cedric O’Gorman, the Chief Medical Officer (“CMO”) of the Company, requiring an annual base compensation
of $
| a) | a cash payment equal to the annual base salary; |
| b) | a cash bonus equal to |
| c) | continuation of healthcare benefits for twelve months from date of change of control event. |
On January 1, 2023, Cedric O’Gorman resigned as the Chief Medical Officer of the Company.
In April 2022, the Company signed an employment
agreement with Donald Kalkofen, the Chief Financial Officer (“CFO”) of the Company, requiring an annual base compensation
of $
| a) | a cash payment equal to the annual base salary; |
| b) | a cash bonus equal to |
| c) | continuation of healthcare benefits for twelve months from date of change of control event. |
On October 1, 2024, Donald Kalkofen resigned as the Chief Financial Officer of the Company.
As of September 30, 2024, and December 31, 2023,
$
As of September 30, 2024, and December 31, 2023,
the Company owed NLS $
As of September 30, 2024, and December 31, 2023,
the Company had advanced Alpha Seven $
| For the nine months ended | ||||||||
September 30, 2024 | September 30, 2023 | |||||||
| Management fees and salaries in research and development | $ | $ | ||||||
| Management fees and salaries in general and administrative expenses | ||||||||
| Share-based compensation in research and development | ||||||||
| Share-based compensation in general and administrative Expenses | ||||||||
| Total related party transactions | $ | $ | ||||||
27
NOTE 12 – 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 Company assumed all of NLS’s obligations under the Memogain Asset Purchase Agreement which consisted of cumulative total payments to Galantos Pharma GmbH of $ |
| ○ |
| ○ |
| ○ |
| ● | Upon completion of the Galantos Royalty Payments, a royalty payment to NLS of |
| ● | The issuance of a promissory note of $ |
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.
No payments have been made to date related to the Galantos Royalty Payments.
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 $
| ● |
| ● |
| ● |
The termination date is set as the date at which no further payments of any nature are due.
No payments have been made to date relating to the Galantos Consulting Payments.
ALPHA-0602 Technology
In November 2020, the Company entered into a license agreement with NLS for the world-wide exclusive right to the Progranulin (“ALPHA-0602”) Technology. In accordance with the agreement, the Company will pay the following:
| ● | $ |
| ● | a royalty of |
| ● |
The ALPHA-0602 Technology license agreement shall
terminate
28
NOTE 12 – COMMITMENTS AND CONTINGENCIES (continued)
ALPHA-0602 Technology (continued)
The total amount payable to NLS under this agreement
shall not exceed $
During the nine months ended September 30, 2024, the Company decided to discontinue development of the ALPHA-602 technology.
Spartan Capital Securities, LLC Agreement
On May 30, 2023, the Company agreed to enter
into an ongoing consulting services agreement (the “Spartan Consulting Agreement”) for a three-year term with Spartan Capital
Securities, LLC (“Spartan”). The services include advising and assisting on potential business development transactions,
strategic introductions, assisting management with enhancing corporate and stockholder value, and capital raising advice. The Company
paid Spartan a consulting fee in the aggregate amount of $
On January 19, 2024, the Company paid the remaining
consulting fee of $
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 unaudited condensed interim consolidated financial statements.
NOTE 13 – CAPITAL DISCLOSURE AND MANAGEMENT
The Company defines its capital as all components of stockholders’ equity (deficiency). The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern.
The Company manages its capital structure to maximize its financial flexibility making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital. The Company is not subject to externally imposed capital requirements.
NOTE 14 – LIQUIDITY RISK
Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company’s ultimate success depends on the outcome of its research and development and collaboration activities. The Company expects to incur additional losses in the future and anticipates the need to raise additional capital to continue to execute its long-range business plan. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.
29
NOTE 14 – LIQUIDITY RISK (continued)
| ≤1 Year | >1 Year | Total | ||||||||||
| Accounts payable | $ | $ | $ | |||||||||
| Promissory note | ||||||||||||
| $ | $ | $ | ||||||||||
| ≤1 Year | >1 Year | Total | ||||||||||
| Accounts payable | $ | $ | $ | |||||||||
| Promissory note | ||||||||||||
| $ | $ | $ | ||||||||||
NOTE 15 – SEGMENTED INFORMATION
The Company currently operates in a single reportable
operating segment, being the researching and developing pharmaceutical treatments for neurological diseases in the geographical areas
of Canada and the United States of America.
| As of September 30, 2024 | ||||||||||||
| Canada | United States | Total | ||||||||||
| Non-current assets other than financial instruments | $ | $ | $ | |||||||||
| As of December 31, 2023 | ||||||||||||
| Canada | United States | Total | ||||||||||
| Non-current assets other than financial instruments | $ | $ | $ | |||||||||
30
NOTE 16 – NET LOSS PER SHARE
Net loss per common share has been computed on the basis of the weighted-average number of common shares outstanding during the nine months ended September 30, 2024, and 2023. Since the Company was in a loss position for the nine months ended September 30, 2024, and 2023, basic net loss per share was the same as diluted net loss per share for the period presented.
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Numerator | ||||||||||||||||
| Net loss – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator | ||||||||||||||||
| Weighted average shares used to compute net loss per share, basic and diluted | ||||||||||||||||
| Net loss per share – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| For the nine months ended | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Warrants | ||||||||
| Common Share options | ||||||||
| ACI Canada legacy performance options | ||||||||
| Convertible Debentures | ||||||||
| Total anti-dilutive features | ||||||||
NOTE 17 – SUBSEQUENT EVENTS
| a) | Subsequent to September 30, 2024, the Company granted |
| b) | On November 13, 2024, the Company completed a public offering of Common
Shares by issuing |
| c) | On November 13, 2024, as a result of the completion of the public offering, the Company’s convertible notes automatically converted pursuant to their terms into |
31
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements for the three and nine months ended September 30,2024, and the related notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States. This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors. See section heading “Special Note Regarding Forward-Looking Statements.”
Overview
The Company is a biopharmaceutical company dedicated to developing treatments for patients suffering from neurodegenerative diseases, such as Alzheimer’s disease (“Alzheimer’s disease” or “AD”), for which there are limited or no treatment options. On July 26, 2024, the Company received approval by the FDA of the Company’s New Drug Application (the “NDA”) for ZUNVEYL® (benzgalantamine) previously known as ALPHA-1062 (“ZUNVEYL” or “ALPHA-1062”) oral tablet formulation for the treatment of mild-to-moderate Alzheimer’s disease. The Company will now focus on the development of commercial manufacturing and commercial sales of ZUNVEYL oral tablet formulation. The Company’s commercial development program for ZUNVEYL is primarily focused on building a long-term care commercial team that can focus on providing key points of differentiation, exploiting key issues with existing AChEI treatments, and franchising potential additional indications and new products. The company will target the largest volume nursing homes specializing in Alzheimer’s Disease, leveraging an account-based sales team with demonstrated success in LTC, positioning ZUNVEYL with Medicare payors, and developing strategic and clinical partnerships with consultant pharmacists and long-term care pharmacies. The company’s anticipated launch is in Q1 2025. Alpha Cognition has set the Wholesale Acquisition Cost (WAC) for its latest therapeutic product at $649 per month. This pricing reflects the company’s commitment to balancing patient access with the value of innovative healthcare solutions. By establishing a competitive WAC price, Alpha Cognition aims to enhance affordability and ensure patients can benefit from our advanced treatment options. Patients' out-of-pocket cost for treatment with ZUNVEYL will depend on their length of treatment and their insurance. The Company has three additional pre-clinical development programs: ZUNVEYL in combination with memantine for the treatment of moderate-to-severe Alzheimer’s disease, ALPHA-1062 sublingual formulation, ALPHA-1062 intranasal (“ALPHA-1062IN”) formulation for the treatment of cognitive impairment with mild traumatic brain injury (mTBI; otherwise known as concussion) and ALPHA-0602, ALPHA-0702 & ALPHA-0802, also referred to as ‘Progranulin’ and ‘Progranulin GEM’s’, for the treatment of neurodegenerative diseases including amyotrophic lateral sclerosis, otherwise known as ALS or Lou Gehrig’s disease and spinal muscular atrophy (SMA).
ZUNVEYL, is a patented new innovative product being developed as a next generation acetylcholinesterase inhibitor for the treatment of Alzheimer’s disease, with expected minimal gastrointestinal side effects. ZUNVEYL’s active metabolite is differentiated from donepezil and rivastigmine in that it binds neuronal nicotinic receptors, most notably the alpha-7 subtype, which is known to have a positive effect on cognition. ZUNVEYL is in pre-clinical development in combination with memantine to treat moderate to severe Alzheimer’s disease, in pre-clinical development with sublingual formulation for patients suffering from dysphagia, and ALPHA-1062IN is intended to be out-licensed for pre-clinical development to study an intranasal formulation for cognitive impairment with mTBI.
Our other pre-clinical stage assets include ALPHA-0602, ALPHA-0702 & ALPHA-0802 (Progranulin and Progranulin GEM’s), which are expressed in several cell types in the central nervous system and in peripheral tissues, promotes cell survival, regulates certain inflammatory processes, and play a significant role in regulating lysosomal function and microglial responses to disease. Its intended use for the treatment of neurodegenerative diseases has been patented by the Company and ALPHA-0602 has been granted an Orphan Drug Designation for the treatment of ALS by the FDA. Orphan Drug Designation was provided for ALPHA-0602 by the Office of Orphan Drug Products, FDA on February 2020 based on the Federal Food Drug, and Cosmetic Act, whereby the ALPHA-0602 met the criteria designated in Section 526 of such Act. For a further description see the section entitled “Business — Government Regulation — Orphan Drug Designation”. The Orphan Drug Designation allows for exclusivity provisions provided the drug is approved first for indication: treatment of amyotrophic lateral sclerosis ALPHA-0702 and ALPHA-0802 are Granulin Epithelin Motifs, (“GEMs”), derived from full length progranulin which have therapeutic potential across multiple neurodegenerative diseases. GEMs have been shown to be important in regulating cell growth, survival, repair, and inflammation. ALPHA-0702 and ALPHA-0802 are designed to deliver this with potentially lower toxicity, and greater therapeutic effect. As the assets are pre-clinical assets and do not add material value to the Company, the Company will not develop these assets further and instead will seek to out-license the assets to interested third parties. Given the early stage of discussion with third parties, the Company cannot assess value to a license agreement.
The Company is the parent company of Alpha Cognition Canada Inc. (“Alpha Canada” or “ACI Canada”) which is the parent company of Alpha Cognition USA Inc. (“ACI USA”). As of May 1, 2023, the Company’s common shares commenced trading on the CSE under the symbol “ACOG”, previously the Company’s shares were traded on the TSX-V until April 28, 2023, when the Company had them delisted. As of November 12, 2024, the Company’s common shares commenced trading on The Nasdaq Capital Market under the symbol “ACOG”, previously the Company’s common shares were quoted for trading on the OTCQB under the trading symbol “ACOGF”.
32
The Company has not generated revenues from its operations to date and as of September 30, 2024, and had a deficit of $70,626,302 (December 31, 2023 – $61,648,173) which has been primarily financed by equity. The Company had $3,666,389 in cash and cash equivalents, including restricted cash, and $3,005,836 in current liabilities (of which $107,010 is payable from the Company’s available restricted cash balance) as of September 30, 2024. The Company’s continuing operations, as intended, are highly dependent upon its ability to obtain additional funding and eventually generate cash flows. Management is of the opinion that it does not have sufficient working capital to fully meet the Company’s liabilities and commitments as outlined and planned in the following discussion. Management is of the opinion it will need to raise additional capital to cover upcoming planned Research and Development (“R&D”), commercialization of ZUNVEYL and operating costs. Possible sources of such capital may come from private placements and public offerings of the Company’s common shares and funds received from the exercise of warrants and share options. Additionally, the Company will also consider funding that may arise through partnership activities, including royalties, and debt. There is a risk that additional financing will not be available on a timely basis, on terms acceptable, or at all to the Company. These factors indicate the existence of a material uncertainty which causes significant doubt in the ability of the Company to continue as a going concern.
The Company is also contemplating raising capital by pursuing both dilutive and non-dilutive strategic sources of capital to fully execute its commercialization and operating plans following receipt of the NDA approval for ZUNVEYL from the FDA. Any additional capital is expected to further support our planned costs to begin commercial activities including launching U.S. sales of ZUNVEYL in AD
Components of our Results of Operations
Research and development
Research and development expenses represent costs incurred to conduct research, such as the discovery and development of our product candidates. We recognize all research and development costs as they are incurred unless there is an alternative future use in other research and development projects or otherwise.
Research and development expenses consists primarily of the following:
| ● | costs related to production of clinical supplies and non-clinical materials, including fees paid to contract manufacturers. |
| ● | employee-related expenses, which include salaries, benefits, and stock-based compensation. |
| ● | other expenses including travel and consulting services. |
General and administrative expenses
General and administrative expenses costs consist of personnel costs, other outside professional services including legal, human resources, audit and accounting services, consulting and pre-commercialization expenses, including selling and marketing costs as well attendance to various conferences. Personnel costs consist of salaries, benefits, and share-based compensation. We expect to continue to incur expenses to support our continued operations as a public company, including expenses related to existing and future compliance with rules and regulations of the stock exchanges on which our securities are now traded, insurance expenses, investor relations, audit fees, professional services and general overhead and administrative costs.
Foreign exchange gain (loss)
The foreign exchange gain (loss) amount consists of changes in the value of the Canadian Dollar compared to the U.S. Dollar throughout the year.
33
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, until settlement. Changes in the estimated fair value of the bonus right awards are recognized within general and administrative expense in the consolidated statement of operations and comprehensive loss over the vesting period. Key assumptions in the calculation of the fair value of the bonus right awards include expected volatility, risk-free interest rate, expected life, and fair value per award.
Share Based Compensation
Share-based compensation cost is recorded for all option grants and awards of non-vested stock based on the grant date fair value of the award using the Black-Scholes option-pricing model and is recognized over the service period required for the award. We estimate the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.
Expected Term — The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.
Expected Volatility — The Company computes stock price volatility over expected terms based on its historical common stock trading prices.
Risk-Free Interest Rate — The Company bases the risk-free interest rate on the implied yield available on United States Treasury zero-coupon issues with an equivalent remaining term.
Expected Dividend — The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.
Interest income
Interest income consists of interest earned on our cash and cash equivalents.
Grant revenue
The Company received grant revenue from the Army Medical Research and Material Command on June 5, 2023, for a pre-clinical study on the use of the ALPHA-1062 Intranasal to reduce blast of mTBI induced functional deficit and brain abnormalities. All funds relating to government grants are being recorded under the gross method of accounting for government grants whereby any income received and associated expenses incurred will be reported as grant income and included in research and development expenses, respectively on the statement of operations and comprehensive loss. When grant proceeds are initially received, they are recorded as deferred income and restricted cash. Grant proceeds used to pay for study costs and are expensed as incurred, with a corresponding amount of grant revenue recorded along with a reduction of the balance of the deferred income liability. The Company classifies the balance of cash received from grants as restricted cash, when the proceeds from the grant have been designated for use in specified research. During the three months ended September 30, 2024 and September 30, 2023, the Company recorded grant income of $61,122 and $32,757, respectively and during the nine months ended September 30, 2024, and September 30, 2023, the Company recorded grant income of $333,462 and $32,757, respectively, from its R&D Grant in the consolidated statements of operations and comprehensive loss.
Interest expense
Interest expense relates primarily to the interest paid on the Neurodyn Life Sciences Inc. (“NLS”) promissory note. Effective April 1, 2024, the Company and NLS agreed to another amendment to the promissory note pursuant to which the interest rate was increased from 5.5% to 7% and the maturity date was extended from July 2024 to July 2025. Additionally, $300,000 will be due on December 31, 2024, with the remaining principal balance due at maturity.
34
Change in fair value of derivatives
The change in the fair value of warrant liability consists of the Company’s revaluation of their liability classified warrants that have an exercise price in USD. The Company uses the Black-Scholes Option Pricing Model to determine the fair value of the warrant liability at the end of each reporting period. This model requires the input of subjective assumptions including expected share price volatility, risk-free interest rate, and term of the warrant. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings (loss) and equity.
Currency translation adjustment
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s CAD operations are translated to USD at the exchange rate on the reporting date. The income and expenses are translated using average exchange rates. Foreign currency differences that arise on translation for consolidated purposes are recognized in other comprehensive loss on the consolidated statement of operations and comprehensive loss.
Results of Operations
Comparison of the Three Months ended September 30, 2024 and 2023
| For the Three Months Ended September 30, | Dollar | Percentage | ||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | $ | 996,029 | $ | 1,429,716 | $ | (433,686 | ) | (30 | )% | |||||||
| General and administrative expenses | 1,491,755 | 1,336,197 | 155,558 | 12 | ||||||||||||
| Total operating expenses | 2,487,784 | 2,765,913 | (278,129 | ) | (10 | ) | ||||||||||
| Net operating loss | 2,487,784 | ) | (2,765,913 | ) | 278,129 | (10 | ) | |||||||||
| Other income (expense) | ||||||||||||||||
| Foreign exchange (loss) gain | (8,217 | ) | (13,301 | ) | 5,084 | (38 | ) | |||||||||
| Interest income | 1,916 | 2,172 | (796 | ) | (29 | ) | ||||||||||
| Grant income | 61,122 | 32,757 | 28,365 | 87 | ||||||||||||
| Interest expense | (18,679 | ) | (9,607 | ) | (9,072 | ) | 94 | |||||||||
| Change in fair value of conversion feature liability | 174,930 | - | 174,930 | 100 | ||||||||||||
| Change in fair value of warrant liabilities | 416,806 | (515,771 | ) | 932,577 | (181 | ) | ||||||||||
| Total other income (expense) | 627,878 | (503,210 | ) | 1,131,088 | (225 | ) | ||||||||||
| Net loss | (1,859,906 | ) | (3,269,123 | ) | 1,409,217 | (43 | ) | |||||||||
| Other comprehensive loss | ||||||||||||||||
| Currency translation adjustment | - | (11,232 | ) | 11,232 | (100 | ) | ||||||||||
| Comprehensive loss | $ | (1,859,906 | ) | $ | (3,280,355 | ) | $ | 1,397,985 | (43 | ) | ||||||
| Net loss per share, basic and diluted | $ | (0.31 | ) | $ | (0.84 | ) | $ | 0.53 | (63 | ) | ||||||
| Weighted-average shares used to compute net loss per share, basic and diluted | 6,030,259 | 3,880,433 | 2,149,826 | 55 | % | |||||||||||
35
Comparison of the Nine months ended September 30, 2024 and 2023
| For the Nine Months Ended September 30, | Dollar | Percentage | ||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | $ | 2,879,945 | $ | 3,773,880 | $ | (893,935 | ) | (24 | )% | |||||||
| General and administrative expenses | 6,440,568 | 3,744,162 | 2,696,406 | 72 | ||||||||||||
| Total operating expenses | 9,320,513 | 7,518,042 | 1,802,471 | 24 | ||||||||||||
| Net operating loss | (9,320,513 | ) | (7,518,042 | ) | (1,802,471 | ) | 24 | |||||||||
| Other income (expense) | ||||||||||||||||
| Foreign exchange (loss) gain | (29,708 | ) | (3,584 | ) | (26,124 | ) | 729 | |||||||||
| Interest income | 16,146 | 5,059 | 11,087 | 219 | ||||||||||||
| Grant income | 333,462 | 32,757 | 300,705 | 918 | ||||||||||||
| Interest expense | (42,153 | ) | (14,017 | ) | (28,136 | ) | 201 | |||||||||
| Impairment of intangible assets | (39,166 | ) | - | (39,166 | ) | 100 | ||||||||||
| Change in fair value of conversion feature liability | 174,930 | - | 174,930 | 100 | ||||||||||||
| Change in fair value of warrant liability | (16,127 | ) | (532,429 | ) | 516,302 | (97 | ) | |||||||||
| Provision for loan losses | (55,000 | ) | - | (55,000 | ) | 100 | ||||||||||
| Total other income (expense) | 342,384 | (512,214 | ) | 854,598 | (167 | ) | ||||||||||
| Net loss | (8,978,129 | ) | (8,030,256 | ) | (947,873 | ) | 12 | |||||||||
| Other comprehensive loss (income) | ||||||||||||||||
| Currency translation adjustment | - | (19,573 | ) | 19,573 | (100 | ) | ||||||||||
| Comprehensive loss | $ | (8,978,129 | ) | $ | (8,049,829 | ) | $ | (967,446 | ) | 12 | ||||||
| Net loss per share, basic and diluted | $ | (1.51 | ) | $ | (2.23 | ) | $ | 0.72 | (32 | ) | ||||||
| Weighted-average shares used to compute net loss per share, basic and diluted | 5,928,460 | 3,599,266 | 2,329,194 | 65 | % | |||||||||||
Research and development expenses
Comparison of Research and Development for the Three Months ended September 30, 2024 and 2023
Research and development expenses decreased by $433,687, or 30%, from $1,429,716 for the three months ended September 30, 2023, to $996,029 for the three months ended September 30, 2024. Research and development costs decreased primarily due to lower product development costs and consulting fees for ALPHA-1062 in AD, offset by grant expenses of $61,122 which were incurred in 2024 following the receipt of the DOD grant in June 2023, and increased management fees and salaries. The Company’s research and development expenses are summarized below:
| For the three months ended September 30, | Dollar | Percentage | ||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| Product development | $ | 504,309 | $ | 1,083,172 | $ | (578,863 | ) | (53 | )% | |||||||
| Management fees and salaries | 286,038 | 203,375 | 82,663 | 41 | ||||||||||||
| Share-based compensation | 50,882 | 173,023 | (122,141 | ) | (71 | ) | ||||||||||
| R&D grant expenses | 61,122 | 32,757 | 28,365 | 87 | ||||||||||||
| Consulting fees | 3,190 | (82,337 | ) | 85,527 | (104 | ) | ||||||||||
| Subcontractors | 90,488 | 19,726 | 70,762 | 359 | ||||||||||||
| $ | 996,029 | $ | 1,429,716 | (433,687 | ) | (30 | )% | |||||||||
36
Comparison of Research and Development for the Nine months ended September 30, 2024 and 2023
Research and development expenses decreased by $893,935, or 24%, from $3,773,880 for the nine months ended September 30, 2023, to $2,879,945 for the nine months ended September 30, 2024. Research and development costs decreased primarily due to lower product development costs including clinical trial costs and consulting fees for ALPHA-1062 in AD following the submission of the NDA filed in September of 2023, offset by grant expenses of $333,462 which were incurred in 2024 following the receipt of the DOD grant in June 2023 and increased management fees and salaries. The Company’s research and development expenses are summarized below:
| For the nine months ended September 30, | Dollar | Percentage | ||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| Product development | $ | 1,266,070 | $ | 2,609,142 | $ | (1,343,072 | ) | (51 | )% | |||||||
| Management fees and salaries | 689,698 | 486,760 | 202,938 | 42 | ||||||||||||
| Share-based compensation | 320,427 | 421,766 | (101,339 | ) | (24 | ) | ||||||||||
| R&D grant expenses | 333,462 | 32,757 | 300,705 | 918 | ||||||||||||
| Consulting fees | 10,500 | 59,810 | (49,310 | ) | (82 | ) | ||||||||||
| Subcontractors | 259,788 | 163,645 | 96,143 | 59 | ||||||||||||
| $ | 2,879,945 | $ | 3,773,880 | $ | (893,935 | ) | (24 | )% | ||||||||
General and administrative expenses
General and administrative expenses costs consist of personnel costs, consulting fees, other outside professional services including legal, human resources, audit and accounting services, and pre-commercialization expenses, including selling and marketing costs as well attendance to various conferences. Personnel costs consist of salaries, benefits, and share-based compensation. We expect to continue to incur expenses to support our continued operations as a public company, including expenses related to existing and future compliance with rules and regulations of the stock exchanges on which our securities are traded, insurance expenses, investor relations, audit fees, professional services and general overhead and administrative costs.
Comparison of General and Administrative Expenses for the Three Months ended September 30, 2024 and 2023
General and administrative expenses increased by $155,558 or 12%, from $1,336,197 for the three months ended September 30, 2023, to $1,491,755, for the three months ended September 30, 2024. Consulting fees, financing fees, registrar and filing fees, investor relations and other general and administrative costs were primarily higher in the three months ended September 30, 2024, in support of the Company’s US IPO filing and general business operating support. Share-based compensation was lower primarily due to fluctuations in the Company stock price and accounting for equity awards that were issued after September 30, 2023. The following table depicts the fluctuation in the general and administrative accounts:
| For the three months ended September 30, | Dollar | Percentage | ||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| General and Administrative Expenses: | ||||||||||||||||
| Accretion expenses | $ | 85,476 | $ | (20,931 | ) | $ | 106,407 | (508 | )% | |||||||
| Amortization expense | 19,761 | 20,594 | (833 | ) | (4 | ) | ||||||||||
| Consulting fees | 223,874 | 101,141 | 122,733 | 121 | ||||||||||||
| Depreciation | 236 | 525 | (289 | ) | (55 | ) | ||||||||||
| Financing fees | 354,791 | - | 354,791 | 100 | ||||||||||||
| Investor relations | 46,397 | 5,538 | 40,859 | 738 | ||||||||||||
| Management fees and salaries | 291,765 | 388,771 | (97,006 | ) | (25 | ) | ||||||||||
| Marketing | 6,623 | 8,299 | (1,676 | ) | (20 | ) | ||||||||||
| Other general and administrative | 116,596 | 65,488 | 51,108 | 78 | ||||||||||||
| Professional fees | 152,274 | 225,567 | (73,293 | ) | (32 | ) | ||||||||||
| Registrar and filing fees | 51,103 | 13,014 | 38,089 | 293 | ||||||||||||
| Share-based compensation | 142,859 | 524,050 | (381,191 | ) | (73 | ) | ||||||||||
| Subcontractor | - | 4,141 | (4,141 | ) | (100 | ) | ||||||||||
| $ | 1,491,755 | $ | 1,336,197 | $ | 155,558, | 12 | % | |||||||||
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Comparison of General and Administrative Expenses for the Nine months ended September 30, 2024 and 2023
General and administrative expenses increased by $2,696,406 or 72%, from $3,744,162 for the nine months ended September 30, 2023, to $6,440,568, for the nine months ended September 30, 2024, primarily due to the increase in expenses related to consulting fees, financing fees, professional fees, investor relations and registrar and filing fees. Consulting fees during the nine months ended September 30, 2024, included $2,273,949 relating to the issuance of 582,331 Common Shares pursuant to the Spartan Consulting Agreement. Management fees and salaries, professional fees, registrar and filing fees, investor relations were primarily higher in the nine months ended September 30, 2024, in support of the Company’s NDA filing for ALPHA-1062, the US IPO filing and general business operating support. Share-based compensation was lower primarily due to fluctuations in the Company stock price and accounting for equity awards that were issued after September 30, 2023. The following table depicts the fluctuation in the general and administrative accounts:
| For the Nine months ended September 30, | Dollar | Percentage | ||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| General and Administrative Expenses: | ||||||||||||||||
| Accretion expenses | $ | 123,231 | $ | 42,980 | $ | 80,251 | 187 | % | ||||||||
| Amortization expense | 60,115 | 61,782 | (1,667 | ) | (3 | ) | ||||||||||
| Consulting fees | 2,567,319 | 125,226 | 2,442,093 | 1,950 | ||||||||||||
| Depreciation | 710 | 1,577 | (867 | ) | (55 | ) | ||||||||||
| Financing fees | 354,791 | - | 354,791 | 100 | ||||||||||||
| Investor relations | 146,249 | 9,605 | 136,644 | 1,423 | ||||||||||||
| Management fees and salaries | 1,077,093 | 1,035,465 | 41,628 | 4 | ||||||||||||
| Marketing | 11,874 | 16,099 | (4,225 | ) | (26 | ) | ||||||||||
| Other general and administrative | 297,563 | 202,159 | 95,404 | 47 | ||||||||||||
| Professional fees | 1,013,681 | 714,443 | 299,238 | 42 | ||||||||||||
| Registrar and filing fees | 181,440 | 45,030 | 136,410 | 303 | ||||||||||||
| Share-based compensation | 596,726 | 1,477,663 | (880,937 | ) | (60 | ) | ||||||||||
| Subcontractor | - | 12,133 | (12,133 | ) | (100 | ) | ||||||||||
| Travel and related | 9,776 | - | 9,776 | 100 | ||||||||||||
| $ | 6,440,568 | $ | 3,744,162 | $ | 2,696,406 | 72 | % | |||||||||
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Foreign Exchange (Loss) Gain
The foreign exchange (loss) gain amount consists of changes in the value of the Canadian Dollar compared to the U.S. Dollar throughout the year.
The foreign exchange gain (loss) changes by $5,086, or 38%, from a loss of $13,301 for the three months ended September 30, 2023, to a loss of $8,217 for the three months ended September 30, 2024. The foreign exchange loss increased by $26,124, or 729%, from a loss of $3,584 as of September 30, 2023, to a loss of $29,708 as of September 30, 2024, due primarily to the fluctuations in exchange rate between the Canadian Dollar and the U.S. Dollar. This variance is largely due to the Company changing its functional currency from the CAD to the USD on August 31, 2023, therefore having less transactions needing to be denominated in a foreign currency. The change in mix and balance of the Company’s assets and liabilities over the periods also impacted the changes in foreign currency exchange (loss) gain.
Interest Income
Interest income consists of interest earned on the Company’s cash.
Interest income decreased $796, or 29%, from $2,172 for the three months ended September 30, 2023, to $1,916 for the three months ended September 30, 2024. Interest income increased $11,087, or 219%, from $5,059 for the nine months ended September 30, 2023, to $16,146 for the nine months ended September 30, 2024.
Grant Income
The Company received grant revenue from the Army Medical Research and Material Command on June 5, 2023, for a pre-clinical study on the use of the ALPHA-1062 Intranasal to reduce blast of mTBI induced functional deficit and brain abnormalities. During the three months ended September 30, 2024 and 2023, the Company recorded grant income of $61,122 and $32,757, respectively. During the nine months ended September 30, 2024 and 2023, the Company recorded grant income of $333,462 and $32,757, respectively.
Interest Expense
Interest expense increased $9,072, or 94%, from $9,607 for the three months ended September 30, 2023, to $18,679 for the three months ended September 30, 2024. Interest expense increased $28,136, or 201%, from $14,017 for the nine months ended September 30, 2023, to $42,153 for the nine months ended September 30, 2024, following the increase in interest rates on the NLS note which occurred in 2023. Interest expense relates primarily to the interest paid on the NLS promissory note and the accrued interest for the convertible debentures.
Impairment of Intangible Assets
During the three and nine months ended September 30, 2024, the Company recorded an impairment of intangible assets of $0 and $39,166, respectively, from the impairment of the ALPHA-0602 license as the Company decided to discontinue development of the ALPHA-602 technology, no impairments were reported in the comparable 2023 periods.
Change in Fair Value of Derivatives
The Company uses the Black-Scholes Option Pricing Model to determine the fair value of stock options, standalone share purchase warrants issued and derivative liability. This model requires the input of subjective assumptions including expected share price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings (loss) and equity reserves.
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The gain of $416,806 for the three months ended September 30, 2024 for the fair value of the warrant liabilities was a net change of $932,577, or 181%, compared to a loss of $515,771 for the three months ended September 30, 2023. The loss of $16,127 for the nine months ended September 30, 2024 for the fair value of the warrant liabilities was a net change of $516,302, or 97%, compared to a loss of $532,429 for the nine months ended September 30, 2023. The change was primarily due to the fluctuation in the Company’s stock price as well as the volatility of the financial markets, coupled with the addition of new warrants issued during the first quarter of 2023 which were priced differently that the Company’s functional currency at the time of issuance and new warrants issued during the third quarter of 2024 which have a variable exercise price.
Provision for Loan Losses
The Company recorded a provision for loan losses of $55,000 relating to its loan to Alpha Seven during the nine months ended September 30, 2024, following a delay in Alpha Seven’s initial capital raise and therefore potential inability to repay the loan when due.
Currency Translation Adjustment
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s CAD operations were translated to USD at the exchange rate on the reporting date. The income and expenses were translated using average exchange rates. Foreign currency differences that arise on translation for consolidated purposes are recognized in other comprehensive loss on the consolidated statement of operations and comprehensive loss.
For the three months ended September 30, 2024, the currency translation adjustments recorded increased $11,232, or 100%, from a loss of $11,232 to $nil. The currency translation adjustment was $(19,573) for September 30, 2023, compared to $nil for the nine months ended September 30, 2024. The change is due to the Company changing its functional currency from the CAD to the USD on August 31, 2023, resulting in no currency translation adjustment being required after August 31, 2023.
Liquidity and Capital Resources
Sources of Liquidity
The Company does not have operating revenue to finance its existing obligations and therefore must continue to rely on external financing to generate capital to maintain its capacity to meet working capital requirements. The Company has relied on debt and equity raises to finance its operating activities since incorporation. 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.
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Future Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue the commercialization of ZUNVEYL, following the FDA’s approval in July 2024 and potentially seek to discover and develop additional product candidates, conduct our ongoing and planned clinical trials and preclinical studies, continue our R&D activities, utilize third parties to manufacture ZUNVEYL, hire additional personnel, expand and protect our intellectual property, and incur additional costs associated with being a public company.
Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses, and prepaid expenses. The timing and amount of our funding requirements will depend on many factors, including:
| ● | the initiation, type, number, scope, progress, expansions, results, costs and timing of clinical trials and preclinical studies of ZUNVEYL and any future product candidates we may choose to pursue, including the costs of modification to clinical development plans based on feedback that we may receive from regulatory authorities and any third-party products used as combination agents in our clinical trials; |
| ● | the costs, timing and outcome of regulatory meetings and reviews of ZUNVEYL or any future product candidates, including requirements of regulatory authorities in any additional jurisdictions in which we may seek approval for ZUNVEYL and any future product candidates; |
| ● | the costs of obtaining, maintaining, enforcing and protecting our patents and other intellectual property and proprietary rights; |
| ● | our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal control over financial reporting; |
| ● | the costs associated with hiring additional personnel and consultants as our business grows, including additional executive officers and clinical development, regulatory, CMC quality and commercial personnel; |
| ● | the costs and timing of establishing or securing sales and marketing capabilities of any future product candidate approval; |
| ● | our ability to achieve sufficient market acceptance, coverage, and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; |
| ● | our ability and strategic decision to develop future product candidates other than ZUNVEYL, and the timing of such development, if any; |
| ● | patients’ willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payors; |
| ● | the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and |
| ● | costs associated with any products or technologies that we may in-license or acquire. |
Based upon our current operating plan, we estimate that our existing cash, cash equivalents and marketable securities as of the date of this filing, will be sufficient to fund our projected base ongoing operating expenses, the initial costs to prepare for commercialization of ZUNVEYL in AD, planned CMC costs, ongoing operating costs and capital expenditures through at least the next 24 months. We expect to look to raise additional capital to continue to further advance our commercialization plans and ongoing operating costs. However, we have based our estimates on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. In addition, we could utilize our available capital resources sooner than we expected. The Company is also contemplating raising additional capital by pursuing both dilutive and non-dilutive strategic sources of capital; to fully execute its commercial and operating plans following receipt of the NDA approval for ZUNVEYL from the FDA. Any additional capital would further support our planned costs to begin commercial activities including launching U.S. sales of ZUNVEYL in AD.
We have no other committed sources of capital. Until such time, if
ever, we can generate substantial product revenue, we expect to finance our operations through equity offerings, debt financings, or other
capital sources, including current or potential future collaborations, licenses, royalties and other similar arrangements. We do not know
what the terms of these future financings will be and whether they will be acceptable to the us or not and, therefore, we may be unable
to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. To the extent we raise additional
capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities
may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity
financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such
as incurring additional debt, making acquisitions, engaging in acquisition, merger or collaboration transactions, selling or licensing
our assets, making capital expenditures, redeeming our stock, making certain investments or declaring dividends. If we raise additional
funds through collaborations or license agreements with third parties, we may have to relinquish valuable rights to our technologies,
future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are
unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate
our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise
prefer to develop and market ourselves, or even cease operations.
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Financing Activities
Recent capital raising activities
During the third quarter of 2022 the Company initiated cost cutting measures to extend its cash runway and reduce ongoing cash burn. The Company streamlined R&D programs and has prioritized spend towards the NDA filing and development of ALPHA-1062 in AD. The Company has reduced headcount and other operating costs related to the ZUNVEYL NDA file and other development costs. The Company has lowered its near-term operating burn until additional capital can be secured. If we are unable to raise adequate funds, we may have to further delay or reduce the scope of or eliminate some or all of our current research and development. Any of these actions could have a material adverse effect on our business, results of operations or financial condition.
During the first quarter of 2023 the Company completed the brokered private placement by issuing 949,906 units at a price of CAD$6.38 for total proceeds of $4,506,055 (CAD$6,055,650) with each unit consisting of one Common share and one warrant exercisable at a price of CAD$9.75 per warrant for a term of 5 years from the closing date (“Q1 2023 PP”).
In March 2023, the Company entered into an amendment of the Promissory Note and License Agreement with the NLS promissory note holders to extend the maturity of the $1.2M outstanding promissory note to July 15, 2024, the previous maturity date of the promissory note was December 31, 2022. The parties also agreed to increase the Promissory Note interest rate from 2% annually to a market rate of 5.5% annually. (see Note 7 of the accompanying audited financial statements).
On May 30, 2023, the Company announced a best-efforts private placement offering of up to $6,500,000 of units at the initial pricing of $5.50 per unit (“Q2 2023 PP”). Each unit consists of one common share and one-half of a warrant. Each whole warrant will entitle the holder to purchase an additional common share of the Company at the initial pricing of $7.75 per share for a period of three years from the closing date. The aggregate proceeds may be increased by 30% to accommodate any overallotment. The Company also announced that it entered into an Investment Banking Agreement (“IBA”) with Spartan Securities LLC (“Spartan”) pursuant to which Spartan will act as agent on a best-efforts basis in connection with the Q2 2023 PP. In accordance with the Q2 2023 PP, the Company has agreed to pay Spartan cash commissions of 10% of the gross proceeds, issue Spartan finder’s warrants equal to 10% of the number of the warrants issued to investors, in each case excluding investors on the Company’s president’s list and pay Spartan a non-accountable expense fee equal to 5% of the gross proceeds of the Q2 2023 PP excluding the president’s list.
The Q2 2023 PP capital raising are summarized below for each closing date.
The Following table summarizes the Q2 2023 PP closing activity:
| Date Issued | Tranche | # Units Issued at $5.50 per share | Gross Proceeds | # of Warrants issued at $7.75 per Warrant | Cash Commissions Paid(2) | Agent Warrants Issued(1) | Warrant Expiry date | |||||||||||||||||
| August 31, 2023 | Tranche 1 | 244,562 | $ | 1,345,093 | 122,284 | $ | 180,051 | 10,912 | August 31, 2026 | |||||||||||||||
| October 16, 2023 | Tranche 2 | 63,873 | $ | 351,303 | 31,937 | $ | 51,600 | 3,127 | October 16, 2026 | |||||||||||||||
| November 8, 2023 | Tranche 3 | 183,636 | $ | 1,009,999 | 91,818 | $ | 151,500 | 9,182 | November 8, 2026 | |||||||||||||||
| December 22, 2023 | Tranche 4 | 365,661 | $ | 2,011,137 | 365,659 | $ | 238,515 | 28,911 | December 22, 2026 | |||||||||||||||
| January 19, 2024 | Tranche 5 | 678,630 | $ | 3,732,469 | 678,626 | $ | 342,320 | 41,493 | January 19, 2027 | |||||||||||||||
| Totals | 1,536,362 | $ | 8,450,000 | 1,290,324 | $ | 963,986 | 93,625 | |||||||||||||||||
| (1) | Each warrant is exercisable at $0.31 per warrant. |
| (2) | On November 8, 2023, the Company also paid a consulting fee of US$160,000 pursuant to the Spartan Consulting Agreement. In January 2024 the Company also paid a consulting fee of US$320,000 and issued 582,331 common shares to Spartan pursuant to a consulting agreement. The Company also paid to certain finders aggregate cash commission of US$48,858, being 6% of the gross proceeds raised under the offering from investors introduced to the Company by such finders. |
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On September 24, 2024, the Company announced the closing of a $4.545 million bridge financing through the issuance of convertible notes and warrants led by existing investors and select new investors comprised of institutional funds and high-net-worth accredited investors.
| ● | The notes are convertible into common shares of the Company at a conversion price of $10.55 per share. The notes were set to mature on September 24, 2026, had an aggregate face value of $4.545 million and bears interest at a rate of 10% per annum paid in common shares of the Company at the conversion price, subject to certain limitations. The notes were subject to mandatory conversion into common shares of the Company in conjunction with the closing of an offering of securities of the Company for at least $10 million in aggregate gross proceeds in coordination with the simultaneous uplisting of the common shares of the Company onto a United States national securities exchange (a “Qualified Offering”). Such conversion was completed into the securities offered in such Qualified Offering at the lower of (i) the conversion price in effect at such time and (ii) the offering price of the securities in the Qualified Offering. The notes were unsecured and rank senior to the Company’s other indebtedness. |
| ● | The notes were sold along with warrants to purchase common shares of the Company at an exercise price of $10.55 for a five-year term. Each investor received warrants sufficient to purchase such number of common shares equal to the principal amount of notes such investor purchased divided by the conversion price of the notes. Each investor will receive an additional 50% of warrants with identical terms upon the closing of a Qualified Offering, as described above. The exercise price of the warrants is subject to adjustment upon the completion of a Qualified Offering to the lower of (i) the then existing 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. |
On November 13, 2024, the Company completed a public offering of common shares by issuing 8,695,653 common shares at a public offering price of $5.75 per share for gross proceeds of approximately $50 million. In connection with the US public offering, the Company’s Common Shares began trading on The Nasdaq Capital Market on November 12, 2024.
The completion of the public offering of common shares was a “Qualified Offering” under the Company’s convertible notes, which automatically converted into 801,413 common shares at closing of the public offering at a price of $5.75 per share, being the public offering price in the Qualified Offering. The amount converted consisted of the converted principal amount of convertible notes and interest through November 13, 2024.
Additionally, as a result of the closing of the Qualified Offering, the Company issued an additional 215,418 warrants exercisable to acquire 215,418 Common Shares with an exercise price of $7.19 per share and the exercise price of the Company’s existing 430,835 warrants issued in connection with the offering of the convertible notes was repriced from $10.55 per share to $7.19 per share.
The following table includes our cash flow data for the periods indicated:
Cash Flows
The following table provides information regarding our cash flows for the years ended September 30, 2024, and 2023:
| For the nine months ended September 30, | Dollar | Percentage | ||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| Consolidated Statement of Cash Flows Data | ||||||||||||||||
| Cash used in operating activities | $ | (5,451,927 | ) | $ | (6,769,171 | ) | $ | 1,317,244 | (19 | )% | ||||||
| Cash provided by investing activities | $ | - | $ | - | $ | - | - | % | ||||||||
| Net cash provided by financing activities | $ | 7,730,753 | $ | 5,613,412 | $ | 2,117,341 | 38 | % | ||||||||
| Share-based compensation | $ | 917,153 | $ | 1,899,429 | $ | (982,276 | ) | (52 | )% | |||||||
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Cash used in operating activities
Cash used in operating activities decreased by $1,317,244 to $5,451,927 for the nine months ended September 30, 2024, from $6,769,171 for the comparative period. The change in cash flows from operating activities represents the effect on cash flows from net losses adjusted for items not affecting cash, principally amortization and depreciation, accrued expenditures for government grant, share-based compensation, impairment of intangible assets, provision for loan losses, shares issued for services, and the changes in the value of conversion feature liability, warrant liabilities, and bonus rights liability, in addition to net changes in non-cash balances related to working capital items.
Cash provided by/(used in) investing activities
There were no investing activities that occurred during the nine months ended September 30, 2024, or 2023.
Cash provided by financing activities
Cash provided by financing activities for the nine months ended September 30, 2024, increased by $2,117,341 compared to the comparative period. During the nine months ended September 30, 2024, financing activities primarily consisted of raising proceeds of $3,732,469 from units issued for cash, raising proceeds of $4,545,000 from the issuance of convertible debentures, and receiving $373,825 in government grant proceeds offset by $357,228 of related grant expenses. The funds raised under financing activities were offset by share issuance costs of $405,753 and debt issuance costs of $459,360. During the nine months ended September 30, 2023, financing activities primarily consisted of raising proceeds of $5,851,148 from units issued for cash offset by share issuance costs of $394,736.
Contractual Obligations and Other Commitments
In the normal course of business, we enter into agreements with contract service providers to assist in the performance of R&D and clinical and commercial manufacturing activities. We currently have two license agreements, ALPHA-1062 technology and ALPHA-602 technology, which are outlined below. We expect to enter into additional clinical development, contract research, clinical and commercial manufacturing, supplier, and collaborative research agreements in the future, which may require upfront payments and long-term commitments of capital resources.
See “Note 11 – Commitments and Contingencies” of the accompanying financial statements for a discussion of our contractual obligations and long-term commitments.
Contingencies
The Company did not have any contingencies as of September 30, 2024, or the date of this report.
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Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Use of Estimates and Assumptions
The preparation of these consolidated financial statements in conformity with US GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including valuing equity securities in share-based payment arrangements, estimating the fair value of financial instruments recorded as a warrant liability, useful lives of depreciable assets and definite lived intangible assets, and whether impairment charges may apply, and the determination of whether an asset constitutes a business a business combination or asset acquisition. Management bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. Actual results could differ materially from these estimates under different assumptions or conditions.
Functional Currency
The functional currency of an entity is the currency of the primary economic environment in which the entity operates. Effective August 31, 2023, the functional currency of the Company was updated to the United States Dollar (“USD” or U.S. Dollar”) as management assessed that the currency of the primary economic environment in which the Company operates changed to USD on that date. The key factor influencing this decision was the change in the Company’s primary funding from Canadian dollars (“CAD”) to USD, whereas the functional currency of its subsidiaries was unchanged and remain in USD. Prior to USD the functional currency of the Company was CAD, and its subsidiaries was USD. Changes to the Company’s functional currency have been accounted for on a prospective basis from August 31, 2023. The determination of functional currency was made in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 830, Foreign Currency Matters.
The Company’s reporting currency is the USD. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’s CAD operations are translated to USD at the exchange rate on the reporting date. The income and expenses are translated using average exchange rates. Foreign currency differences that arise on translation for consolidated purposes are recognized in other comprehensive loss on the consolidated statements of operations and comprehensive (loss) income.
Grant Accounting
All funds relating to government grants are being recorded under the gross method of accounting for government grants whereby any income received and associated expenses incurred will be reported as grant income and included in research and development expenses, respectively on the statement of comprehensive loss. When grant proceeds are initially received, they are recorded as deferred income and restricted cash. Grant proceeds are then used to pay for study costs and are expensed, the Company will also record a corresponding amount to grant revenue and reduce the balance of the deferred income liability.
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-1062IN (Intranasal) to reduce blast mTBI (mild Traumatic Brain Injury) induced functional deficit and brain abnormalities (‘R&D Grant”). The grant funds are to be used on the following project “Assessment of Functional Recovery and Reduced Tauopathy Following ALPHA-1062 Administration in a Repetitive Blast TBI Model in Rodents.” 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. The award funding is to subsidized the costs for research and development with the following specific Aims:
| ● | Specific Aim 1: Quantify the ability of ALPHA-1062 to reduce brain-wide tauopathy and pathology in blast-mTBI; |
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| ● | Specific Aim 2: Characterize and quantify changes in the inter-cellular associations between disease-associated microglia and cells of the basal forebrain induced by repetitive blast-mTBI and altered by ALPHA-1062 treatment; Specific Aim 3: Determine the efficacy of ALPHA-1062 to improve the adverse cognitive and behavioral outcomes consequent to repetitive blast-mTBI. |
Per the R&G 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.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1 — defined as observable inputs such as quoted prices for identical instruments in active markets; |
| ● | Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable; |
| ● | Level 3 — inputs that are unobservable. |
The Company’s financial instruments consist of cash, restricted cash, prepaid and other current assets, notes receivable, accounts payable and accrued liabilities, warrant liability, promissory note, and other liabilities.
Share Based Compensation
Share-based compensation cost is recorded for all option grants and awards of non-vested stock based on the grant date fair value of the award using the Black-Scholes option-pricing model and is recognized over the service period required for the award. We estimate the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.
Expected Term — The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.
Expected Volatility — The Company computes stock price volatility over expected terms based on its historical common stock trading prices.
Risk-Free Interest Rate — The Company bases the risk-free interest rate on the implied yield available on U. S. Treasury zero-coupon issues with an equivalent remaining term.
Expected Dividend — The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.
Liability-Based Awards
Bonus right awards that include cash settlement features are accounted for as liability-based awards in accordance with ASC 718, Compensation — Stock 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, until settlement. Changes in the estimated fair value of the bonus right awards are recognized within general and administrative expense on the consolidated statement of operations and comprehensive income. Key assumptions in the calculation of the fair value of the bonus right awards include expected volatility, risk-free interest rate, expected life, and fair value per award.
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Research and Development Costs
Research and development costs are expensed as incurred unless there is an alternate future use in other research and development projects or otherwise. Research and development costs include salaries and benefits, share-based compensation expense, management fees and salaries, research costs, travel costs and other consulting services. We expect our research and development expenses will increase as we progress our product candidates into later stage clinical trials, add to the number of ongoing clinical trials, advance our discovery research projects into the pre-clinical stage, continue our early-stage research, and prepare for the commercialization of our product candidates. The process of conducting research, identifying potential product candidates, and conducting pre-clinical and clinical trials necessary to obtain regulatory approval and commencing pre-commercialization activities is costly and time intensive. We may never succeed in achieving marketing approval for our product candidates regardless of our costs and efforts. The probability of success of our product candidates may be affected by numerous factors, including pre-clinical data, clinical data, competition, manufacturing capability, our cost of goods to be sold, our ability to receive, and the timing of, regulatory approvals, market conditions, and our ability to successfully commercialize our products if they are approved for marketing. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates. Our research and development programs are subject to change from time to time as we evaluate our priorities and available resources.
Going concern
We continue to assess the ability to continue as a going concern, which involves management judgement and analysis of resources and prospects. The Company has reported negative cash flow from operating activities since inception and expects to experience negative operating cash flows for the foreseeable future. The Company has not generated revenues from its operations to date and as of September 30, 2024, had a deficit of $70,626,302 (December 31, 2023 - $61,648,173) which has been primarily financed by equity. The Company had $3,773,399 in cash and restricted cash and $3,005,836 in current liabilities (of which $56,233 is payable from the Company’s available restricted cash balance) as of September 30, 2024. The Company’s continuing operations, as intended, are highly dependent upon its ability to obtain additional funding and generate cash flows. Based upon our current operating plan and our closing of our public offering of common shares for approximately $46.42 million in net proceeds on November 13, 2024, we estimate that our existing cash, cash equivalents and marketable securities as of the date of this filing would be sufficient to fund our projected base ongoing operating expenses, the initial costs to prepare for commercialization of ZUNVEYL in AD, planned CMC costs, ongoing operating costs and capital expenditures through at least the next 12 months. However, we may look to raise additional capital to continue to further advance our commercialization plans and ongoing operating costs through a debt financing in the next 12 months. We have based our estimates on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. In addition, we could utilize our available capital resources sooner than we expected. The Company is also contemplating raising additional capital by pursuing both dilutive and non-dilutive strategic sources of capital; to fully execute its commercial and operating plans following receipt of the NDA approval for ZUNVEYL from the FDA. Any additional capital would further support our planned costs to begin commercial activities including launching U.S. sales of ZUNVEYL in AD.
The Company has maintained the cost cutting measures it initiated in the third quarter of 2022 to extend its cash runway and reduce ongoing cash burn. The Company focus has been to streamline R&D programs and has prioritized spend towards the NDA filing and development of ALPHA-1062 in AD. The Company reduced headcount and other operating costs to focus spending on the ALPHA-1062 NDA file and other related development costs. The Company expects to continue to operate under the lower operating burn until further additional capital can be secured. If we are unable to raise adequate funds, we may have to further delay or reduce the scope of or eliminate some or all of our operating and commercialization plans and product development. Any of these actions could have a material adverse effect on our business, results of operations or financial condition.
Income taxes
In assessing the probability of realizing income tax assets, management makes estimates related to expectation of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified.
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Impairment of intangible assets
The application of the Company’s accounting policy for intangible assets requires judgment in determining whether it is likely that future economic benefits will flow to the Company and whether any impairment indicators exist, which may be based on assumptions about future events or circumstances. Estimates and assumptions may change if new information becomes available. If, after expenditures are capitalized, information becomes available suggesting that the recovery of expenditures is unlikely, the amount capitalized is written off in profit or loss in the period the new information becomes available.
Useful lives of intangible assets
Amortization is recorded on a straight-line basis based upon management’s estimate of the useful life and residual value. The estimates are reviewed at least annually and are updated if expectations change as a result of technical obsolescence or legal and other limits to use.
Valuation of debt modification
The Company calculated the debt modification using the net present value of cash flows approach. This approach requires the input of subjective assumptions including the Company’s borrowing rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings (loss).
Recent Accounting Pronouncements Not Yet Adopted
In August 2020, FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU 2020-06 is effective for the Company for the fiscal year beginning after December 15, 2023. There was no material impact of this new guidance on the accompanying unaudited condensed interim consolidated financial statements.
Emerging Growth Company Status and Smaller Reporting Company Status
We are an emerging growth company, as defined in the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards. We have elected to avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that we either (i) irrevocably elect to opt out of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. We will continue to remain an emerging growth company until the earliest of the following: (1) the last day of the fiscal year following the fifth anniversary of the date of the effectiveness of the Registration Statement on Form S-1 of which this prospectus form a part; (2) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion; (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
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We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
At the end of the period covered by this quarterly report on Form 10-Q for the nine months ended September 30, 2024, an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO and the CFO have concluded that as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective in ensuring that: (i) information required to be disclosed by us in reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the nine months ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not currently a party to any material legal proceedings. However, from time to time, we may become involved in other litigation or legal proceedings relating to claims arising from the ordinary course of business.
ITEM 1A. RISK FACTORS.
There have been no material changes from the risk factors set forth under the heading “Risk Factors” in our Registration Statement on Form S-1, as filed with the SEC on July 30, 2024, which risk factors are incorporated herein by reference. The risks described in our Registration Statement on Form S-1 and as otherwise herein are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, cash flows, and/or future results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the three months ended September 30, 2024, all unregistered sale of equity securities by the Company have been reported in the Company’s current reports on Form 8-K.
In July 2024, the Company issued 14,000 common shares upon the exercise of 14,000 warrants at a price of $10.00 per common share for total proceeds of $140,000. The common shares were issued to the warrant holder upon cash payment of the warrant exercise price. The common shares were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506(b) of Regulation D thereunder based, in part, on the representations of the warrant holder.
Repurchase of Equity Securities
During the three months ended September 30, 2024, the Company did not repurchase any of its equity securities.
Use of Proceeds
On November 13, 2024, the Company closed its first public offering of securities under the Securities Act of 1933, as amended (the “Securities Act”). The Company is required to report its use of proceeds pursuant to its Registration Statement on Form S-1 (333-280196). Following the closing of the public offering (including the exercise of the underwriters’ over-allotment option), the Company received approximately $46.42 million in net proceeds (or $5.75 per common share sold in the public offering), which funds were wired into the Company’s operating bank account.
As of the date hereof, we have used an aggregate total of approximately $502,000 of the net proceeds of the offering to Spartan Capital pursuant to a consulting agreement between the Company and Spartan.
As of the date hereof, the Company reasonably estimates that it has $45,918,000 in net proceeds remaining in its operating accounts.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURE.
Not applicable.
ITEM 5. OTHER INFORMATION.
(a) None.
(b) None.
(c) During the quarter ended September 30, 2024,
none of our directors or officers
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ITEM 6. EXHIBITS.
The following exhibits are filed as part of this report:
| * | Filed herewith |
| ** | Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request |
| (1) | Submitted electronically herewith. Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Income (Loss) for the three and nine months ended September 30, 2024 and 2023, (ii) Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023, (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023, and (iv) Notes to Condensed Consolidated Financial Statements. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ALPHA COGNITION INC. (Registrant) | ||
| Dated: November 14, 2024 | By: | /s/ Michael McFadden |
| Michael McFadden, | ||
| Chief Executive Officer | ||
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