Exhibit 99.1
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
NeuroSense Therapeutics Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of NeuroSense Therapeutics Ltd. and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1B to the consolidated financial statements, the Company’s recurring losses and its expectation to incur significant additional losses raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1B. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Change in Basis of Accounting
The Company’s annual consolidated financial statements for 2023 were previously prepared in conformity with International Financial Reporting Standards as issued by the IASB. As described in Note 1E to the consolidated financial statements, the Company elected to change the basis of accounting used in preparing its financial statements for it to be in conformity with U.S. generally accepted accounting principles. Consequently, the Company’s 2023 financial statements including prior years financial statements for 2022 and 2021, referred to above, are now being presented in accordance with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ Somekh Chaikin | |
| Somekh Chaikin | |
| Member Firm of KPMG International |
We have served as the Company’s auditor since 2020.
Tel-Aviv, Israel
June 17, 2024
F-2
NeuroSense Therapeutics Ltd.
Consolidated Balance Sheets
(U.S. dollars in thousands, except share and per share data)
| As of December 31, | ||||||||||
| Note | 2023 | 2022 | ||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalent | 3 | $ | $ | |||||||
| Short term deposits | 2F | |||||||||
| Other receivables | 4 | |||||||||
| Restricted deposits | ||||||||||
| Total current assets | ||||||||||
| Non-current assets: | ||||||||||
| Property and equipment, net | 5 | |||||||||
| Operating right of use assets | 6 | |||||||||
| Restricted deposit | ||||||||||
| Total non-current assets | ||||||||||
| Total assets | $ | $ | ||||||||
| Liabilities and shareholders’ equity | ||||||||||
| Current liabilities: | ||||||||||
| Trade payables | $ | $ | ||||||||
| Other payables | 7 | |||||||||
| Total current liabilities | ||||||||||
| Non-current liabilities: | ||||||||||
| Operating long-term lease liability | 6 | |||||||||
| Liability in respect of warrants | 8 | |||||||||
| Total liabilities | ||||||||||
| Shareholders’ equity: | 9,10 | |||||||||
| Authorized: | ||||||||||
| Share premium and capital reserve | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Total shareholders’ equity (deficit) | ( | ) | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
NeuroSense Therapeutics Ltd.
Consolidated Statements of Operations and Comprehensive Loss
(U.S. dollars in thousands, except share and per share data)
| For the year ended December 31 | ||||||||||||||
| Note | 2023 | 2022 | 2021 | |||||||||||
| Research and development expenses | 11 | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| General and administrative expenses | 12 | ( | ) | ( | ) | ( | ) | |||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ||||||||
| Financing income (expenses), net | 13 | ( | ) | |||||||||||
| Net loss and comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average number of ordinary shares used in computing basic net loss per share | ||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
NeuroSense Therapeutics Ltd.
Consolidated Statements of Changes in Shareholders’ Equity
(U.S. dollars in thousands, except share and per share data)
| Ordinary Shares | Share Premium and Capital | Accumulated | Total Shareholders’ Equity | |||||||||||||||||
| Number | Amount | Reserve | Deficit | (Deficit) | ||||||||||||||||
| Balance as of January 1, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Issuance of shares in respect of SAFE instruments | ||||||||||||||||||||
| Exercise of warrants and options | ||||||||||||||||||||
| Issuance of shares and tradable warrants, net | ||||||||||||||||||||
| Share based compensation | - | |||||||||||||||||||
| Net loss and comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Repurchase of options | - | ( | ) | ( | ) | |||||||||||||||
| Exercise of warrants and vested RSUs | ||||||||||||||||||||
| Share based compensation | - | |||||||||||||||||||
| Net loss and comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Issuance of shares and pre-funded warrants, net | ||||||||||||||||||||
| Exercise of pre-funded warrants, options and vested RSUs | ||||||||||||||||||||
| Share based compensation | - | |||||||||||||||||||
| Net loss and comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
NeuroSense Therapeutics Ltd.
Consolidated Statements of Cash Flows
(U.S. dollars in thousands, except share and per share data)
| For the year ended December 31 | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss for the year | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation | ||||||||||||
| Share based compensation | ||||||||||||
| Revaluation of liability in respect to warrants | ( | ) | ||||||||||
| Revaluation of SAFE instruments | ||||||||||||
| Loss from disposal of property and equipment | ||||||||||||
| Financing expenses (income), net | ( | ) | ||||||||||
| Changes in assets and liabilities: | ||||||||||||
| Decrease in operating right of use asset | ||||||||||||
| Decrease in operating lease liability | ( | ) | ( | ) | ||||||||
| Decrease (increase) in other current assets | ( | ) | ||||||||||
| Increase (decrease) in trade payables | ( | ) | ||||||||||
| Increase (decrease) in other payables | ||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from investing activities | ||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Redemption of (investment in) short-term deposits | ( | ) | ||||||||||
| Investment in restricted deposit, net | ( | ) | ( | ) | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities | ||||||||||||
| Issuance of SAFE instruments | ||||||||||||
| Payment in respect of cancellation of options | ( | ) | ||||||||||
| Exercise of warrants and options | ||||||||||||
| Issuance of shares, warrants and pre-funded warrants, net | ||||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effects of exchange rate changes on cash and cash equivalents | ( | ) | ||||||||||
| Increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents as at the beginning of the year | ||||||||||||
| Cash and cash equivalents as of the end of the year | $ | $ | $ | |||||||||
| Non-cash investing and financing activities: | ||||||||||||
| Recognition of right of use assets | $ | $ | $ | |||||||||
| Conversion of SAFE instruments | $ | $ | $ | |||||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Interest received | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 1 - General
| A. | NeuroSense Therapeutics Ltd. (“NeuroSense” or the “Company”) was incorporated in Israel on February 13, 2017. NeuroSense is a clinical-stage pharmaceutical company focused on discovering and developing treatments for patients suffering from debilitating neurodegenerative diseases. The Company’s lead product candidate, PrimeC, is a novel oral formulation of a fixed dose combination composed of a specific ratio and doses of two FDA-approved drugs. |
In addition to PrimeC, the Company has initiated research and development efforts in Alzheimer’s disease and Parkinson’s disease, with a similar strategy of combined products.
The Company’s ordinary shares and warrants began trading on the Nasdaq Capital Market on December 9, 2021 under the ticker symbols “NRSN” and “NRSNW,” respectively.
| B. | The Company currently has no products approved for sale and the Company’s operations have been funded primarily by its shareholders. To date, the Company has generated no sales or revenues, has incurred losses and expects to incur significant additional losses due to the continuing focus on the research, development, clinical activities of its product candidates, preclinical programs, business development, organizational structure and to advance the programs within the Company’s pipeline. Consequently, its operations are subject to all the risks inherent in the establishment of a pre-revenue business enterprise as well as those risks associated with a company engaged in the research and development of pharmaceutical compounds. |
Based on current expected level of operating expenditures, the Company’s cash resources as at December 31, 2023 and the cash received after the reporting period (see also Note 16) shall not be sufficient to fund the Company’s operations for a period of at least 12 months from the approval of these consolidated financial statements, assuming that the Company will continue its development plan in accordance with the original pipeline and without delaying or slowing down the progress of its plans. The Company will require additional cash to fund the execution of its mid and long-term development program. The Company anticipates raising additional funds through public or private sales of debt or equity securities, collaborative arrangements, or some combination thereof. Whilst management is progressing with its plans to secure external financing, these still require approval by third parties, and accordingly, there is no assurance that any such arrangement will be entered into or that financing will be available when needed in order to allow it to continue its operations, or if available, on terms favorable or acceptable to it.
In the event financing is not obtained, the Company may pursue cost cutting measures or may be required to delay, reduce the scope of, or eliminate any of its development programs or clinical trials, these events could have a material adverse effect on its business. These factors raise significant doubt about the Company ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
| C. | On October 3, 2022, the Company established a US based subsidiary, NeuroSense US Inc. (“US Subsidiary”). From establishment through December 31, 2023, the US Subsidiary had no activity. The subsidiary will perform research and development activity and engage in possible collaboration agreements. On July, 2023, the Company established a German based subsidiary, NeuroSense GmbH (“NeuroSense GmbH “). NeuroSense GmbH will perform research and development activity and engage in possible collaboration agreements. From establishment through December 31, 2023, NeuroSense GmbH had no activity. |
F-7
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 1 - General (cont.)
| D. | In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets, launched extensive rocket attacks and kidnapped many Israeli civilians and soldiers. Following the attack, Israel declared war against Hamas. In parallel, border clashes between Israel and the Hezbollah terrorist group on Israel’s northern border with Lebanon intensified and may escalate into a greater regional conflict. |
All of the Company’s clinical and pre-clinical research and development is currently being conducted outside of Israel, other than its 12-month open label-extension (“OLE”) study of the PARADIGM trial, partially conducted in Tel Aviv, and a Phase 2 trial for Alzheimer’s disease that we conduct in Haifa, Israel. The OLE has not been affected by the war, although the quality of the study may be adversely affected if as a result of the war patients are unable to visit the study center or the study coordinator is not able to conduct home visits and monitor the patients. In addition, in the event of a significant escalation of hostilities in northern Israel, there may be a delay in the planned Alzheimer trial. The Company may also elect to set up a site in Israel for a Phase 3 pivotal ALS trial of PrimeC, but this would be in addition to numerous other sites in Europe and the U.S., and as a result it does not expect the timeline or quality of this trial to be adversely affected by the war.
The Israel Defence Force (the “IDF”), the national military of Israel, is a conscripted military service, subject to certain exceptions. Since October 7, 2023, the IDF has called up several hundred thousand of its reserve forces to serve. Fourteen out of the Company’s current 16 employees are resident in Israel. Two of its non-management employees in Israel who do not perform critical functions have been called, and additional employees may be called, for service in the current or future wars or other armed conflicts with Hamas or other terrorist groups, and such persons may be absent for an extended period of time. As a result, its operations in Israel may be disrupted by such absences, which disruption may materially and adversely affect its business, prospects, financial condition and results of operations.
Although until approval of these financial statements, the impact of the war on the Company was negligible, it is currently not possible to predict the duration or severity of the ongoing conflict or its effects on the Company’s business, operations and financial conditions. The ongoing conflict is rapidly evolving and developing, and could disrupt its business and operations, and hamper its ability to raise additional funds or sell its securities, among others.
| E. |
After the Company issued its annual financial statements for 2023 in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, the Company elected to change the basis of accounting used in preparing its financial statements from IFRS to United States generally accepted accounting principles (“U.S. GAAP”). Consequently, the Company’s 2023 financial statements including prior years financial statements for 2022 and 2021 have been re-presented in accordance with U.S. GAAP.
In these financial statements, the Company has applied U.S. GAAP as issued by the Financial Accounting Standards Board, or FASB, on a fully retrospective basis. |
F-8
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 2 - Significant Accounting Policy
| A. | Basis of presentation |
The consolidated financial statements have been prepared in accordance accounting principles generally accepted in the United States of America (“US GAAP”).
| B. | Use of estimates in preparation of consolidated financial statements |
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions, including those related to fair value of financial instruments and share based compensation. The Company’s management believes that the estimates, judgment, and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of liabilities at the dates of the consolidated financial statements, and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.
| C. | Functional currency |
The functional currency of the Company and its subsidiaries, all of which are primarily direct and integral component of the Company’s
operation, is the U.S. dollar (“$” or “dollar”), as the dollar is primary currency of the economic environment
in which the Company and its subsidiaries have operated and expects to continue to operate in foreseeable future.
In accordance with ASC 830, “Foreign Currency Matters”, balances denominated in or linked to foreign currency are stated on the basis of the exchange rates prevailing at the applicable balance sheet date. For foreign currency transactions included in the consolidated statement of operations and comprehensive loss, the exchange rates applicable on the relevant transaction dates are used. Gains or losses arising from changes in the exchange rates used in the translation of such transactions are presented within financing income or expenses.
| D. | Principles of Consolidation |
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.
| E. | Cash and cash equivalents |
Cash and cash equivalents include highly liquid investments, including short-term bank deposits (with original maturity dates of up to three months from date of deposit) that are not restricted as to withdrawal or use.
| F. | Short-term deposits |
Short-term deposits in banking institutions for periods in excess of three months following the date of deposit. The deposits are presented in accordance with the terms of their deposit.
| G. | Restricted deposits |
Restricted deposits consist of deposits held in restricted deposit bank accounts including deposits held as collateral for guarantees to third parties, classified as current or non-current based on expected timing of the disbursement.
F-9
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 2 - Significant Accounting Policy (cont.)
| H. | Property and equipment |
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. When an asset is disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in the consolidated statements of operations and comprehensive loss.
The Company’s long-lived assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. To date, the Company has not incurred any impairment losses.
| % | ||
| Computers and peripherals and equipment | ||
| Office furniture and equipment | ||
| Leasehold improvements |
| I. | Research and Development |
Research and development costs are expensed as incurred.
| J. | Fair Value Measurements |
The Company measures and discloses fair value in accordance with the ASC 820, “Fair Value Measurements and Disclosures” which defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 - unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.
Level 2 - pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
Level 3 - pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Level 3 inputs are considered as the lowest priority within the fair value hierarchy. The valuation of certain financial instruments classified under fair value through profit or loss category falls under this category.
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
As of the reported periods, the fair values of the Company’s cash, cash equivalents, short-term bank deposits, current and non-current restricted deposits, other current assets, trade payables and other current liabilities approximated the carrying values of these instruments presented in the Company’s consolidated balance sheets because of their nature.
F-10
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 2 - Significant Accounting Policy (cont.)
| K. | Concentrations of credit risk |
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents as well as certain other current assets that do not amount to a significant amount. Cash and cash equivalents, which are primarily held in dollar and New Israeli Shekels (NIS), are deposited with major bank in Israel. Management believes that such financial institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments. The Company does not have any significant off-balance-sheet concentration of credit risk, such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
| L. | Leases |
The Company entered into non-cancelable lease agreements for offices for use in its operations, which are classified as operating leases (see below).
The Company applies ASC 842, “Leases” under which the Company determines if an arrangement is a lease at inception. The Company’s assessment is based on: (i) whether the contract involves the use of an identified asset, (ii) whether the Company obtains the right to substantially all of the economic benefits from the use of the asset throughout the period of use, and (iii) whether the Company has the right to direct the use of the asset.
Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: (i) the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (iii) the lease term is for a major part of the remaining useful life of the asset, (iv) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset, or (v) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of lease term. A lease is classified as an operating lease if it does not meet any one of these criteria. Since all the Company’s lease contracts for premises do not meet any of the criteria above, the Company concluded that all its lease contracts should be classified as operating leases.
Right of Use (“ROU”) assets and liabilities are recognized on the commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company’s leases do not provide an implicit rate, the Company uses its Incremental Borrowing Rate (“IBR”) based on the information available on the commencement date in determining the present value of lease payments. The Company’s IBR is estimated to approximate the interest rate for collateralized borrowing with similar terms and payments and in economic environments where the leased asset is located. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Moreover, the ROU asset may also include initial direct costs, which are incremental costs of a lease that would not have been incurred if the lease had not been obtained. The Company uses the long-lived assets impairment guidance in ASC 360-10, “Property, Plant, and Equipment - Overall”, to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize. Certain leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain that the Company will exercise that option. An option to terminate is considered unless it is reasonably certain that the Company will not exercise the option.
| M. | Commitment and contingencies |
The Company accounts for its contingent liabilities in accordance with ASC 450, Contingencies under which a provision is recorded when it is both probable that liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter.
F-11
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 2 - Significant Accounting Policy (cont.)
| N. | Employee benefit plans |
The Company’s liability for severance
pay to its Israeli employees is subject to Section 14 of the Israeli Severance Compensation Act, 1963 (“Section 14”), pursuant
to which all of the Company’s employees are entitled to monthly deposits by the Company, at a rate of
| O. | Deferred income taxes |
The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”. Accordingly, deferred income taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between the financial accounting and the tax bases of assets and liabilities under the applicable tax law. Deferred tax balances are computed using the enacted tax rates expected to be in effect when these differences reverse. Valuation allowance in respect of deferred tax assets is provided for, if necessary, to reduce deferred tax assets is amounts more likely than not to be realized.
The Company implements a two-step approach
to recognize and measure uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax
return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical
merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step
is to measure the tax benefit as the largest amount that is more than
Taxes which would apply in the event of disposal of investment in foreign subsidiaries have not been considered in computing the deferred taxes, since the intention of the Company is to hold and not to realize the investment.
| P. | Stock-based compensation |
The Company’s employees’ and directors’ share-based payment awards are classified as equity awards. The Company accounts for these awards using the grant-date fair value method. For employees, the fair value of share-based payment transactions is recognized as an expense over the requisite service period for each separately vesting tranche of the award as if the award is, in-substance, multiple awards. Forfeitures are recognized as they occur.
For nonemployees, compensation costs are recognized in the same period and in the same manner the Company would if it had paid cash for those goods or services.
| Q. | Basic and diluted net loss per share |
Basic net loss per share is computed
using the weighted average number of ordinary shares, pre-funded warrants to purchase ordinary shares for an exercise price of $
Diluted loss per share gives effect to all potentially dilutive common shares outstanding during the year using the treasury stock method with respect to options and non-vested RSUs granted under employee stock compensation plan and certain warrants granted through its Initial Public Offering (IPO) and using the if-converted method with respect to certain warrants granted through registered direct offering and accounted for as derivative liability. In computing diluted loss per share, the average share price for the period is used in determining the number of shares assumed to be purchased from the exercise of share options or warrants.
During the reported periods, all outstanding share options, warrants and non-vested RSUs have been excluded from the calculation of the diluted net loss per share as all such securities are anti-dilutive for all years presented.
F-12
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 2 - Significant Accounting Policy (cont.)
| R. | Share capital |
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of the shares are recognized as a deduction from equity.
| S. | Recently adopted accounting pronouncements |
| 1. | In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (“ASC 326”): Measurement of Credit Losses on Financial Instruments” to introduce a new model for recognizing credit losses on financial instruments based on estimated current expected credit losses, or CECL. Under the new standard, an entity is required to estimate CECL on trade receivables at inception, based on historical information, current conditions, and reasonable and supportable forecasts. The guidance is effective for the Company for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Early application is permitted. The Company adopted this guidance on January 1, 2023, and there was no material impact on the Company’s consolidated balance sheet and the consolidated statements of operations and comprehensive loss upon adoption. |
| 2. | In August 2020, the FASB issued ASU 2020-06 “Debt- Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This guidance simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Furthermore, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share. ASU 2020-06 is effective for the Company for annual periods beginning after December 15, 2023, and interim periods within those fiscal years. The Company plan to adopt this guidance on January 1, 2024, and there was no material impact on the Company’s consolidated balance sheet and the consolidated statements of operations and comprehensive loss upon adoption. |
| T. | Recently issued accounting pronouncements, not yet adopted |
As an emerging growth company, the Jumpstart Our Business Startup Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflect this election.
| 1. | In December 2023, the FASB issued ASU 2023-09 “Improvements to Income Tax Disclosures” which improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain amendments to improve income tax disclosures effectiveness. The guidance is effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on the consolidated financial statement disclosures. |
| 2. | In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures” which expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is effective for the Company’s annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements and related disclosures. |
F-13
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 3 - Cash and cash equivalent
| December 31, 2023 | December 31, 2022 | |||||||
| U.S. dollars in thousands | ||||||||
| Denominated in NIS | $ | $ | ||||||
| Denominated in USD | * | |||||||
| Denominated in EUR | ||||||||
| Denominated in GBP | ||||||||
| $ | $ | |||||||
| (*) |
Note 4 - Other receivables
| December 31, 2023 | December 31, 2022 | |||||||
| U.S. dollars in thousands | ||||||||
| Government agencies | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Other | ||||||||
| $ | $ | |||||||
F-14
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 5 - Property and equipment, net
| Computers and peripherals and equipment | Office furniture and equipment | Leasehold improvements | Total | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| Cost: | ||||||||||||||||
| Balance at January 1, 2023 | $ | | $ | | $ | | $ | | ||||||||
| Purchases during the year | ||||||||||||||||
| Balance at December 31, 2023 | ||||||||||||||||
| Accumulated depreciation: | ||||||||||||||||
| Balance at January 1, 2023 | ||||||||||||||||
| Depreciation during the year | ||||||||||||||||
| Balance at December 31, 2023 | ||||||||||||||||
| Depreciated cost at December 31, 2023 | $ | $ | $ | $ | ||||||||||||
Balance as of December 31, 2022:
| Computers and peripherals and equipment | Office furniture and equipment | Leasehold improvements | Total | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| Cost: | ||||||||||||||||
| Balance at January 1, 2022 | $ | | $ | | $ | $ | ||||||||||
| Purchases during the year | ||||||||||||||||
| Balance at December 31, 2022 | ||||||||||||||||
| Accumulated depreciation: | ||||||||||||||||
| Balance at January 1, 2022 | ||||||||||||||||
| Depreciation during the year | ||||||||||||||||
| Balance at December 31, 2022 | ||||||||||||||||
| Depreciated cost at December 31, 2022 | $ | $ | $ | $ | ||||||||||||
| * |
F-15
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 6 - Operating lease
The Company has lease agreements with respect
to offices. In December 2021, the Company entered into an office space lease agreement (which commenced on January 1, 2022). Monthly rent
payments including utilities amount to approximately $
| December 31, 2023 | ||||
| U.S. dollars in thousands | ||||
| Operating right of use asset | $ | |||
| Current operating lease liability | $ | |||
| Non-Current operating lease liability | $ | |||
| Total operating lease liability | $ | |||
| December 31, 2023 | ||||
| U.S. dollars in thousands | ||||
| Less than one year | $ | |||
| Two years | ||||
| Total operating lease payments | $ | |||
| Less: imputed interest | $ | ( | ) | |
| Present value of lease liabilities | $ | |||
Additional information on lease
| December 31, 2023 | ||||
| Lease term (years) | ||||
| Weighted average discount rate | % | |||
| For the year ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Lease payments | ||||||||||||
| $ | $ | $ | ||||||||||
F-16
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 7 - Other payables
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| U.S. dollars in thousands | ||||||||
| Employees and payroll accruals | $ | $ | ||||||
| Short term lease liability | ||||||||
| Accrued expenses | ||||||||
| $ | $ | |||||||
Note 8 - Liability in respect of warrants
As noted in Note 9Ah below, on June 22, 2023,
the Company entered into a registered direct offering under which, inter alia, the Company issued to institutional purchaser
| December 31, 2023 | ||||||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| Description | Fair value | Level 1 | Level 2 | Level 3 | ||||||||||||
| Liability in respect of warrants | $ | $ | $ | (*) | $ | |||||||||||
| (*) |
| December 31, 2023 | ||||
| Financial liabilities: | ||||
| Expected volatility (%) | ||||
| Share price (in $) | ||||
| Risk-free interest rate (%) | ||||
| Expected life (years) | ||||
| Dividend yield (%) | ||||
| 2023 | ||||
| U.S. dollars in thousands | ||||
| Balance as at January 1, 2023 | $ | |||
| Recognition of liability in respect to warrants at the initial date | ||||
| Revaluation of liability in respect to warrants | ( | ) | ||
| Balance as at December 31, 2023 | $ | |||
F-17
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 9 - Shareholders’ Equity
| A. |
| Number of shares December 31 | ||||||||||||||||
| Authorized 2023 | Issued and outstanding 2023 | Authorized 2022 | Issued and outstanding 2022 | |||||||||||||
| Ordinary shares of no par value | ||||||||||||||||
| a. | In February, May, June and July 2021, the Company entered into Simple Agreements for Future Equity (each, a “SAFE”) with four separate investors for aggregate proceeds of $
The Company accounted for the SAFE instrument as financial liability in accordance with ASC 480-10.
The Company recorded financial expenses in the amount of $ |
| b. | During 2018 and 2019, the Company entered into several Share Purchase Agreements (“SPAs”) with multiple investors pursuant to which the Company issued shares and warrants. Pursuant to the SPAs, the warrants had an exercise price of $ |
In August and September 2021 after
the said assignments, the Company received warrant exercise notices of
| c. | In May and October 2021, several option holders exercised their outstanding options to purchase |
| d. | In October 2021, several option holders, holding an aggregate amount of |
| e. | In December 2021, the Company closed its IPO in the United States and issued
In addition, the net proceeds from the exercise of underwriter’s option were $ |
| f. | In March 2022, the Company received an amount of $ |
F-18
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 9 - Shareholders’ Equity (cont.)
| A. | Share capital (cont.) |
| g. | On April 14, 2023, the Company entered into a sales agreement with Alliance Global Partners, pursuant to which the Company may offer and sell, from time to time, to or through the Alliance Global Partners as agent or principal, ordinary shares an at-the-market offering, having an aggregate offering price of up to $ |
| h. | On June 22, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company agreed to issue and sell, in a registered direct offering: (i) an aggregate of
| |
| i. | On June 23, 2023, one of the Company’s employees exercised |
| j. | During October 2023, |
| B. | Ordinary Shares Right |
Each ordinary share is entitled to
F-19
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 10 - Share Based Payment
On December 16, 2018, the Company’s board
of directors approved an employee share option plan (“ESOP”). According to the provisions of the ESOP, the exercise period,
exercise price and vesting conditions for each option grant will be determined by the board of directors. The number of shares reserved
for issuance is subject to an annual increase to be added as of the first day of the Company’s fiscal year, equal to
The expiration date of the options granted to
employees and directors is after
On October 31, 2021, the Company’s board of directors approved an amendment to the Company’s 2018 Employee Share Option Plan. The amendment determines that the total number of underlying shares reserved for future issuance under the plan and any modification thereof, shall be:
| ● |
| ● | An annual increase to be added as of the first day of the Company’s fiscal year, beginning in 2022 and occurring each year thereafter through 2032, equal to |
Following this amendment, the number of shares
reserved under this plan was
| 1. | In March 2021, the Company’s board of directors approved the grant of |
| ● |
| ● |
| ● |
The options are exercisable if the Company receives services from the service provider during the mentioned period.
The Company accounted the new grant as a modification to the existing grant.
| 2. | In July 2021, the Company granted |
| 3. | In August 2021, the Company’s board of directors approved the grant of |
F-20
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 10 - Share Based Payment (cont.)
| 4. | On October 31, 2021, the Company’s board of directors recommended that the shareholders approve, and on November 7, 2021 the Company’s shareholders approved the following awards to the Company’s current management and directors subject to an IPO: |
| ● |
| ● | ||
| ● |
| 5. | On October 31, 2021, the Company’s board of directors approved the grant of |
| 6. | On November 9, 2021, the Company’s board of directors approved the extension of the exercise period of options of two employees, which, pursuant to their original terms would have been expire if not exercised before the completion of the IPO. According to the grant letter, at the event of an IPO, all unvested options were fully vested, and accordingly, the remaining unrecognized expenses were recorded immediately upon such vesting. |
| 7. | On December 9, 2021, the underwriter (see Note 9Ae), partially exercised its right to purchase an additional
Furthermore, as part of the offering, the Company issued |
| 8. | On December 13, 2021, upon the completion of the Company’s IPO, |
| 9. | On January 10 and January 11, 2022, the Company’s entered into option settlement agreement (“Agreements”) with certain consultants of the Company. According to the Agreements, the Company exchanged |
| 10. | On January 25, 2022 and March 10, 2022, the Company’s board of directors and shareholders, respectively, approved the compensation of each of the Company’s external directors and a newly appointed director. Such compensation included the grant of |
| 11. | On January 25, 2022, the Company’s board of directors approved the grant of aggregate amount of |
F-21
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 10 - Share Based Payment (cont.)
| 12. | In March 2022, the Company’s board of directors approved the grant of aggregate amount of |
| 13. | In July and August 2022, the Company’s board of directors approved the grant of aggregate amount of |
| 14. | During 2022 the Company issued |
| 15. | On March 20, 2023, the Company’s board of directors, approved the following awards: |
| ● | Grant of |
| ● | A bonus for certain employees in the form of |
| ● | In addition to the grants in accordance with the 2022 bonus plan mentioned above, a raise of additional |
| ● | The grant of |
| 16. | On May 30, 2023, the Company granted |
| 17. | On August 15, 2023, the Company’s board of directors approved the grant of aggregate amount of |
The weighted average grant date fair value of
options granted during the years ended December 31, 2023, 2022 and 2021 was $
Stock-based compensation expenses recognized in profit and loss as an operating expense based on fair value of the option at the grant date by using Binominal option pricing model for employees and directors and Black and scholes pricing model for non-employees. The inputs for the valuation analysis of the share options include several assumptions of which the most significant are the fair market value of the underlying ordinary share, the expected share price volatility and the expected option term. Expected volatility was calculated based upon historical volatility of peer companies in the same industry on weekly basis. Expected option term represents the period that the Company’s share options are expected to be outstanding and is set as an exercise coefficient based on academic empirical papers. Risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. Expected dividend yield assumption is based on the Company’s historical experience and expectation of no future dividend payouts. The Company has historically not paid cash dividends and has no foreseeable plans to pay cash dividends in the future. Forfeitures are recognized as they occur.
F-22
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 10 - Share Based Payment (cont.)
| 2023 | 2022 | 2021 | ||||
| Expected volatility | ||||||
| Exercise price | ||||||
| Share price (1) | ||||||
| Risk-free interest rate | ||||||
| Dividend yield | ||||||
| Expected life (years) |
| 2023 | 2022 | 2021 | ||||
| Expected volatility | ||||||
| Exercise price | ||||||
| Share price (1) | ||||||
| Risk-free interest rate | ||||||
| Dividend yield | ||||||
| Expected life (years) |
| (1) |
| Expected volatility | % | |||
| Exercise price | $ | |||
| Share price | $ | |||
| Risk-free interest rate | % | |||
| Dividend yield | ||||
| Expected life |
F-23
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 10 - Share Based Payment (cont.)
| Number of | Weighted Average | Weighted average remaining | Intrinsic value | |||||||||||||
| Share Options | Exercise Price | contractual life (years) | U.S. dollars in thousands | |||||||||||||
| Options outstanding at January 1, 2023 | $ | $ | ||||||||||||||
| Granted | $ | |||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Forfeited | ( | ) | $ | |||||||||||||
| Options outstanding at December 31, 2023 | $ | $ | ||||||||||||||
| Exercisable at December 31, 2023 | $ | $ | ||||||||||||||
| Weighted average grant date fair value | ||||||||
| Number of RSUs | U.S. dollars in thousands | |||||||
| Outstanding at January 1, 2023 | $ | |||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Outstanding at December 31, 2023 | $ | |||||||
| For the year ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Share-based compensation expense - Research and development | $ | $ | $ | |||||||||
| Share-based compensation expense - General and administrative | ||||||||||||
| $ | $ | $ | ||||||||||
During 2021, in addition to the share-based compensation
expenses that have been recorded in profit and loss, share-based compensation in the amount of $
As of December 31, 2023, there was $
F-24
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 11 - Research and development expenses
| For the year ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Subcontractors and consultants | $ | $ | $ | |||||||||
| Share-based compensation | ||||||||||||
| Salaries and social benefits (*) | ||||||||||||
| Others | - | |||||||||||
| $ | $ | $ | ||||||||||
Note 12 - General and Administrative Expenses
| For the year ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Professional services | $ | $ | $ | |||||||||
| Share-based compensation | ||||||||||||
| Salaries and social benefits (*) | ||||||||||||
| Insurance | ||||||||||||
| Traveling abroad | ||||||||||||
| Others | ||||||||||||
| $ | $ | $ | ||||||||||
| (*) |
Note 13 - Financing Income (expenses), net
| For the year ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Finance Income: | ||||||||||||
| Revaluation of warrants | $ | $ | $ | |||||||||
| Deposit interest | ||||||||||||
| Exchange rates | ||||||||||||
| $ | $ | $ | ||||||||||
| Finance Expenses: | ||||||||||||
| Revaluation of SAFE instruments | $ | $ | $ | ( | ) | |||||||
| Issuance costs | ( | ) | ||||||||||
| Exchange rates | ( | ) | ( | ) | ||||||||
| Bank fees | ( | ) | ( | ) | ( | ) | ||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Total financing income, net | $ | $ | $ | ( | ) | |||||||
F-25
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 14 - Related Parties Balances and Transactions
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| U.S. dollars in thousands | ||||||||
| Other payables – Officers and Directors | $ | $ | ||||||
| $ | $ | |||||||
| For the year ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Salary fees(1) | $ | $ | $ | |||||||||
| Directors consultancy fees(2) | ||||||||||||
| Share based payment expense (refer to Note 10) | ||||||||||||
| $ | $ | $ | ||||||||||
| (1) Number of related parties | ||||||||||||
| (2) Number of directors | ||||||||||||
| 1. |
| 2. |
| ● | Compensation packages for the Company’s executive officers, consisting of (i) an annual base salary payable in cash and (ii) a target annual bonus based on a combination of Company performance and personal goals and (iii) share based compensation (refer to Note 10(4)). |
| ● | Compensation package for the chairman and other independent and external directors, consisting of (i) an annual retainer payable in cash, (ii) additional cash retainers for committee chairmanship and committee service, and (iii) share based compensation (refer to Note 10(4)). |
| ● | On May 10 and June 21, 2022, the Company’s board of directors and shareholders, respectively, approved a bonus plan for 2022 for the Company’s officers. The bonus plan defined specified millstones (in fields of clinic trail progress, business developments and raise of money) which their achievements entitled the officers with different percentages out of fix amount of bonus. As detailed in the plan, such bonuses (if entitled) will be paid in cash or, if the Company has less than $ |
| 3. | During March and May 2023, certain officers and directors were granted with options and RSUs, see also Note 10. |
F-26
NeuroSense Therapeutics Ltd.
Notes to the Consolidated Financial Statements
Note 15 - Income Taxes
| A. | Israeli taxation: |
The tax rate relevant to the Company
in the years 2023, 2022 and 2021 was
As of December 31, 2023, the Company
has net operating losses carryforward for Israeli income tax purposes of approximately $
The Company has final (considered final) tax assessments through the 2018 tax year.
| B. |
| For the year ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| U.S. dollars in thousands | ||||||||||||
| Net operating loss carryforward | $ | $ | $ | |||||||||
| Research and development credits | ||||||||||||
| Operating right of use asset | ( | ) | ( | ) | ||||||||
| Operating lease liability | ||||||||||||
| Vacation and convalescence accrual | ||||||||||||
| Net deferred tax asset before valuation allowance | ||||||||||||
| Valuation allowance | ( | ) | ( | ) | ( | ) | ||||||
| $ | $ | $ | ||||||||||
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized. Based on consideration of these factors, the Company recorded a full valuation allowance as of December 31, 2023 and 2022.
| C. | During the years ended December 31, 2023, 2022 and 2021, the main reconciling item between the statutory tax rate of the Company (as noted in Note 15A1) and the effective tax rate is mainly the recognition of valuation allowance in respect of deferred taxes relating to accumulated net operating losses carryforward and other temporary differences due to the uncertainty of the realization of such deferred taxes. |
Note 16 - Subsequent Events
Purchase Agreement
On April 10, 2024, the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”) with the institutional purchaser (the “Purchaser”),
pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Purchaser (i) an
aggregate of
F-27