KTTA 10-K & 10-Q changes, risk factors and insider trading

Our future operating results could differ materially from the results described in this annual report due to the risks and uncertainties described below. You should consider carefully the following information about risks in evaluating our business. If any of the following risks actually occur, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impairaffect our businessbusiness, financial condition, results of operations inand future growth prospects. If any of these circumstances, risks actually materialize, the market price of our securities would likely decline. In addition, we cannot assure investors that our assumptions and expectations will prove to be correct. Important factors could cause our actual results to differ materially from those indicated or implied by forward-looking statements. See “ForwardCautionary LookingNote Regarding Forward-Looking Statements” for a discussion of some of the forward-looking statements that are qualified by these risk factors. Factors that could cause or contribute to such differences include those factors discussed below.

Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development, especiallyclinical preclinical stage pharmaceutical companies such as ours.development. Potential investors should carefully consider the risks and uncertainties that a company with a limited operating history will face. In particular, potential investors should consider that we cannot assure you that we will be able to, among other things:

We are a clinical-stage biotechnology company with a limited operating history and have incurred losses since our formation. We incurred net losses of approximately $13.9$20.4 million and $16.0$13.9 million for the years ended December 31, 20242025, and 2023,2024, respectively. As of December 31, 2024,2025, we had an accumulated deficit of approximately $49.6$70.0 million. We have not commercialized any product candidates and have never generated revenue from the commercialization of any product. To date, we have devoted most of our financial resources to research and development, including our preclinical and clinical work, general and administrative expenses, as well as to intellectual property.

We expect to incur significant additional operating losses for the next several years, at least, as we advance our product candidates through preclinical and non-clinical development, complete clinical trials, seek regulatory approval and commercialization, if any our product candidates are approved. The costs of advancing product candidates into each clinical phase tend to increase substantially over the duration of the clinical development process. Therefore, the total costs to advance any of our product candidates to marketing approval in even a single jurisdiction will be substantial. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to begin generating revenue from the commercialization of any products or achieve or maintain profitability. Our expenses will also increase substantially if and as we:

Furthermore, our ability to successfully develop, commercialize and license any product candidates and generate product revenue is subject to substantial additional risks and uncertainties, as described below under “–Risks Related to Development, Clinical Testing, Manufacturing, Regulatory Approval and Commercialization.” As a result, we expect to continue to incur net losses and negative cash flows for the foreseeable future. These net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital. The amount of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues. If we are unable to develop and commercialize one or more product candidates, either alone or through collaborations, or if revenues from any product that receives marketing approval are insufficient, we will not achieve profitability. Even if we do achieve profitability, we may not be able to sustain profitability or meet outside expectations for our profitability. If we are unable to achieve or sustain profitability or to meet outside expectations for our profitability, the value of our Common Stock and Warrants will be materially and adversely affected.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, was signed into law to address the COVID-19 crisis. The CARES Act is an approximately $2 trillion emergency economic stimulus package that includes numerous U.S. federal income tax provisions, including the modification of: (i) net operating loss rules (as discussed below), (ii) the alternative minimum tax refund and (iii) business interest deduction limitations under Section 163(j) of the U.S. Internal Revenue Code of 1986, as amended, or the Code.

The Tax Cuts and Jobs Act (“TCJA”) (P.L. 115-97) modified the section 174 rules and beginning in 2022, taxpayers may no longer currently deduct R&Dresearch and development expenditures but instead must amortize specified R&Dresearch and development expenditures ratably over five years (or 15 years for foreign expenditures).

On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law and, among other things, imposed a 1% U.S. federal excise tax on certain stock repurchases by by publicly traded companies. The 1% excise tax generally applies to any acquisition by the publicly traded company (or certain of its affiliates) of stock of the publicly traded corporation in exchange for money or other property (other than stock of the company itself), subject subject to a de minimis exception. Thus, the excise tax could apply to certain transactions that are not traditional stock repurchases.

Regulatory guidance under the TCJA, the CARES Act, the IRA, the OBBBA, and such additional legislation is and continues to be forthcoming.forthcoming, and such guidance could ultimately increase or lessen the impact of these laws on our business and financial condition.

While some of these U.S. federal income tax changes may adversely affect us in one or more reporting periods and prospectively, other changes may be beneficial on a going-forward basis. In addition, it is uncertain if and to what extent various states will conform to the TCJA, the CARES Act, and the IRA, the OBBBA, and additional tax legislation. We continue to work with our tax advisors and auditors to determine the full impact of the TCJA, the CARES Act, the IRA and the IRA OBBBA on us. We urge our investors to consult with their legal and tax advisors with respect to boththe TCJATCJA, the CARES Act, the IRA and the CARES ActOBBBA and the potential tax consequences of investing in our Common Stock and Warrants.

As of December 31, 2024,2025, we had approximately $34.6$11.0 million of federal and $18.4$34.6 million of state net operating loss carryforwards (“NOLs”), available to offset future taxable income. Under current law, our federal NOLs generated in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80% of its taxable income annually for tax years beginning after December 31, 2020. Under Sections 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change,” generally defined as a greater than 50% change by value in its equity ownership over a three-year period is subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes such as research tax credits to offset future taxable income. We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in other ownership changes. If it is determined that we have in the past experienced other ownership changes, or if we undergo one or more ownership changes as a result of future transactions in our stock, which may be outside our control, then our ability to utilize NOLs and other pre-change tax attributes could be further limited by Sections 382 and 383 of the Code, and certain of our NOLs and other pre-change tax attributes may expire unused. As a result, if or when we earn net taxable income, our ability to use our pre-change NOLs or other tax attributes to offset such taxable income or otherwise reduce any liability for income taxes may be subject to limitations, which could adversely affect our future cash flows. Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes.

The global credit and financial markets are currently experiencing, and have from time-to-time experiencedexperienced, extreme volatility and disruptions, including severely diminished liquidity and credit availability, rising interest and inflation rates, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the ongoing conflict between Russia and Ukraine, the ongoing conflictconflicts betweenin Israelthe andMiddle Hamas,East, terrorism or other geopolitical events. Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability.

We could also encounter delays if a clinical trial is suspended or terminated by us, the IRBs or IECs of the institutions in which such trials are being conducted, the Data Safety Monitoring Board (“DSMB”) for such trial or the FDA or other regulatory authorities. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Furthermore, we rely on CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials and, while we have agreements governing their committed activities, we have limited influence over their actual performance, as described below in “–Risks Related to Our Dependence on Third PartiesParties.”.

We have determined and may in the future determine to abandon the development of one or more of our product candidates, or we may change the prioritization of the development of certain product candidates, or we may select or acquire and prioritize the development of new product candidates. Our choice and prioritization of product candidates for for development have been and will in the future be influenced by a variety of factors, including but not limited to:

Approval may be delayed or denied because we cannot satisfy the FDA’s Chemistry, Manufacturing and Control Requirements.

Formulation and manufacturing of biologic products such as ours is complex and expensive. Our BLAs must include information about the chemistry and physical characteristics of our products, and we must demonstrate that we have a reliable process for manufacturing the products in commercial quantities in accordance with the FDA’s current Good Manufacturing Practices (“ cGMP”) requirements. The manufacturing process must consistently produce quality batches of the biologic, and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final product. In addition, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate the effectiveness of the packaging and that the compound does not undergo unacceptable deterioration over its shelf life. If we are unable to successfully complete any of these complex steps, approval of our biologic may be delayed or denied.

Our planned clinical trials are expected to be expensive, time consuming, and subject to uncertainty. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. We are currently conducting the FIH Phase 1 DoseAdvanced EscalationCancer Study at four clinical sites in the U.S. and three sites in Eastern Europe.Europe and expect to complete the FIH Phase 1 Advanced Cancer Study in 2028. We are currently conducting the Phase 1/1b Adult NF1 Trial at five clinical sites in the U.S., Australia and South Korea and expect to complete the Phase 1/1b Adult NF1 Trial in 2028. We cannot be sure that submission of an IND or, in the case of the European Medicines Agency (the “EMA”),EMA, a clinical trial application (a “CTA”),CTA, will result in the FDA or EMA allowing future clinical trials to begin in a timely manner, if at all. Moreover, even if additional trials begin, issues may arise that could suspend or terminate such clinical trials, which may also be true for our current clinical trials. A failure of one or more clinical trials can occur at any stage of testing, and our current or future clinical trials may not be successful. Events that may prevent successful or timely initiation or completion of clinical trials include:

Any inability to successfully initiate or complete current or future clinical trials could result in additional costs to us or impair our ability to generate revenue. In addition, if we make manufacturing or formulation changes to our product candidates, we may be required to or we may elect to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical trial delays could also shorten any periods during which our products have patent protection and may allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the data safety monitoring board for such trial or by the FDA, EMA or any other regulatory authority, or if the IRBs or IECs of the institutions in which such trials are being conducted suspend or terminate the participation of their clinical investigators and sites subject to their review. Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA, EMA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

We may conduct certain of our clinical trials for our product candidates outside of the U.S. which, among other risks, exposes us to the possibility that the FDA and other comparable foreign regulatory authorities may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business.

We are currently conducting clinical trials in Bulgaria, Romania, Australia and South Korea and we may continue to conduct future clinical trials outside of the United States. Where data from foreign clinical trials are intended to serve as the basis for marketing approval in the the U.S., the FDA will not approve the application on the basis of foreign data alone unless those data are applicable to the U.S. population population and U.S. medical practice. Therefore, later stage clinical trials designed to determine that our product candidates are safe and effective for the purposes of FDA approval will be conducted in part in the U.S. For studies that are conducted only at sites outside of the U.S. and not subject to an IND, the FDA requires the clinical trial to have been conducted in accordance with GCPs and the FDA must be able to validate the data from the clinical trial through an on-site inspection if it deems such inspection necessary. For such studies not subject to an IND, the FDA generally does not provide advance comment on the clinical protocols for the studies, and therefore there is an additional potential risk that the FDA could determine that the study design or protocol for a non-U.S. clinical trial was inadequate, which could require us to conduct additional clinical trials. There can be no assurance the FDA will accept data from clinical trials conducted outside of the United States. If the FDA does not accept data from our clinical trials of our product candidates conducted outside of the United States, it would likely result in the need for additional clinical trials, which would be costly and time consuming and delay or permanently halt our development of our product candidates.

In order to obtain FDA or other regulatory authority approval to market a new biological product we must demonstrate proof of safety, purity, and potency, and efficacy in humans. To meet these requirements, we we will have to conduct adequate and well-controlled clinical trials. Before we can commence clinical trials for a product candidate, we we must complete extensive preclinical testing and studies that support our planned INDs in the United States. We cannot be certain of the timely completion or outcome of our preclinical testing and studies and cannot predict if the FDA will accept our proposed clinical programs or if the outcome of our preclinical testing and studies will ultimately support the further development of our programs. As a result, we cannot be sure that we will be able to submit INDs or similar applications for our preclinical programs on the timelines we expect, if at all, and we cannot be sure that submission of INDs or similar applications will result in the FDA or other regulatory authorities allowing clinical trials to begin.

Moreover, because standards standards for pre-clinicalpreclinical assessment are evolving and may change rapidly, even if we reach an agreement with the FDA on a pre-IND proposal, the FDA may not accept the IND submission as presented, in which case patient enrollment would be placed on partial or complete hold and treatment of enrolled patients could be discontinued while the product candidate is re-evaluated. Even if clinical trials do begin for our preclinical programs, our clinical trials or development efforts may not be successful.

Pursuant to the AlloMek Agreement, the AlloMek Sellers have a right to repurchase certain assets and specified intellectual property from us in the event of a change of control and if we fail to meet certain obligations regarding development and commercialization.

Pursuant to the AlloMek Agreement, the AlloMek Sellers have a right to repurchase certain specified assets and intellectual property that we purchased from the AlloMek Sellers pursuant to the AlloMek Agreement. This right is triggered if (1) we undergo a change of control, and (2) if we fail to meet our obligations regarding the development and commercialization of PAS-004 (formerly CIP-137401) (the “Drug”), including actions such as winding up, liquidating, or exiting the biotechnology business. If these conditions are met, we must offer to sell the Drug and all related intellectual property back to the theAlloMek Sellers at a specified price. The exercise of this repurchase right could result in the loss of key assets upon which a substantial portion of our business and strategy is based.

We also rely on our contract manufacturers to purchase from third-party suppliers the materials necessary to produce our product candidates for our anticipated clinical trials. We do not have any control over the process or timing of the acquisition of raw materials by our contract manufacturers. Moreover, we currently do not have agreements in place for the commercial production of these raw materials. Any significant delay in the supply of a product candidate or the raw material components thereof for an ongoing clinical trial, including as a result of public health crises, such as the COVID-19 pandemic or theongoing conflict between Russia and Ukraine and the conflictongoing betweenconflicts Israelin andthe Hamas,Middle East, increased U.S. trade tariffs and trade disputes with other countries and any resulting trade warswars, could considerably delay completion of that clinical trial, product candidate testing, and potential regulatory approval of that product candidate.

In addition, we currently rely on foreign CROs and CMOs, including WuXi, and will likely continue to rely on foreign CROs and CMOs in the future. There has been increased governmental focus in the United States on the role of Chinese companies in the life sciences industry. ThisFor focus has included U.S. legislative proposals, such as the proposed BIOSECURE Act, which has been passed by the U.S. House of Representatives and is pending before the U.S. Senate. If enacted,example, the BIOSECURE Act would,was amongrecently otherenacted, things,which prohibitprohibits U.S. federal agencies from entering into or renewing anya contract with any entitycompany that uses biotechnology equipment or services produced or provided by a “biotechnology company of concern” in the performance of that contract. It would also prohibit loans or grant funding from U.S. federal agencies to entities that use any biotechnology equipment or services produced or provided by a “biotechnology company of concern” to perform that contract within the government. Although the proposed Act has not been enacted and thus is subject to change through the legislative process, a versionperformance of the government grant or loan. The BIOSECURE Act passed byrestricts the U.S. Houseability of Representativespharmaceutical companies definesthat enter into contracts with or receive funding from U.S. federal agencies from purchasing services or equipment from certain Chinese biotechnology companies. The BIOSECURE Act does not specifically name WuXi Biologics and WuXi AppTec as “biotechnology companies of concern.” However, the BIOSECURE Act provides a mechanism for Chinese companies to be designated as a “biotechnology company of concern” toin includethe future, and it is possible that WuXi Biologics and /or WuXi AppTec.AppTec Ifcould adopted,receive that designation in the future, which means we could be potentially restricted from pursuing U.S. federal government business or government reimbursement for our products in the future if we continue to use WuXi Biologics, WuXi AppTec or other suppliers or partners identified as “biotechnology companies of concern.” In addition to the BIOSECURE ActAct, any additional executive action, legislative action, or potential sanctions with China could causematerially us to seek to exit some or all ofimpact our arrangementswork with WuXi (or any other China-based service provider determined to be “biotechnology companies of concern”) and accelerate the transition of these services to alternative companies or continue to engage redundant suppliers for theWuXi. U.S. market.executive Additionally,agencies have the legislation could adversely impact WuXi’s operations or financial position which, in turn, could impact its ability to performdesignate underentities ourand agreementsindividuals on various governmental prohibited and restricted parties lists. Depending on the designation, potential consequences can range from a comprehensive prohibition on all transactions or dealings with it.designated parties, or a limited prohibition on certain types of activities, such as exports and financing activities, with designated parties. Our reliance on Chinese-based contract research organizations, such as WuXi, may also cause us to face additional risks due to geopolitical tensions between the U.S. and China and related legal and regulatory restrictions and requirements, including measures directly affecting WuXi.

In addition, these entities or materials sourced from these entities may be subject to other U.S. legislation, sanctions, investigations, regulationsregulations, trade restrictions restrictions, tariffs, regulatory actions, or ex-U.S. legislation, regulatory actions or requirements that could increase the cost or reduce the supply of material available to us, delay or prevent the procurement or supply of such material, delay or impact the availability of our product candidates, delay or impact clinical trials, availability of commercial supply or have an adverse effect on our ability to secure significant commitments from governments to purchase our potential therapies. Any of the foregoing outcomes could adversely affect our financial condition and business prospects.

Furthermore, the biopharmaceutical industry in China is strictly regulated by the Chinese government. Changes to Chinese regulations or government policies affecting biopharmaceutical companies are unpredictable and may have a material adverse effect on our collaborators in China which could have an adverse effect on our business, financial condition, results of operations and prospects. Evolving changes in China’s public health, economic, political, and social conditions and the uncertainty around China’s relationship with other governments, such as the United States and the UK, U.K., could also negatively impact our ability to manufacture our product candidates for our planned clinical trials or have an adverse effect on our ability to secure government funding, which could adversely affect our financial condition and cause us to delay our clinical development programs.

The U.S. government has recently made statements and taken certain actions that has led and may continue to lead to potential changes to U.S. and international trade policies, including imposing several rounds of tariffs and export control restrictions affecting certain products manufactured in China. In March 2018, the first Trump administration announced the imposition of tariffs on steel and aluminum entering the United States and in June 2018, the first Trump administration announced further tariffs targeting goods imported from China. Recently both China and the United States have each imposed tariffs indicating the potential for further trade barriers, including the U.S. Commerce Department adding numerous Chinese entities to its “unverified list,” which requires U.S. exporters to go through more procedures before exporting goods to such entities. Furthermore,Further, with rising international trade tensions and sanctions following the change of administrations, our business may be adversely affected following new or increased tariffs implemented during the second Trump administrationadministration. Throughout 2025, the United States announced planstariffs toon implementall foreign goods and individualized higher reciprocal tariffs on goods imported from certain countries. Tariffs could result in increased global clinical trial costs as a result of international transportation of clinical drug supplies, as well as the costs of materials and products imported into the U.S. Tariffs, trade restrictions or increase tariffs, particularly on products manufactured in China, Canada and Mexico. Any retaliatory tariffs from Mexico are expected to besanctions imposed onby the U.S. goods. It is unknown whether and to what extent new tariffs, export controls, or other newcountries could lawsincrease the prices of our and our collaboration partners’ drug products, if any, affect our and our collaboration partners’ ability to commercialize such drug products, if any, or regulationscreate willadverse betax adopted,consequences in the U.S. or other countries. As a result, changes in international trade policy, changes in trade agreements and the effectimposition thatof any such actions would have on usnew or increased tariffs or sanctions, including any retaliatory measures, by the U.S. or other countries could materially adversely affect our industry.results of operations and financial condition.

Further, our primary manufacturer and supplier, WuXi, is located in China and the subject of increased U.S. government scrutiny. Trade tensions and conflicts between the United States and China have been escalating in recent years and, as such, we are exposed to the possibility of product supply disruption and increased costs and expenses in the event of changes to the laws, rules, regulations and policies of the governments of the United States or China, or due to geopolitical unrest and unstable economic conditions. Certain Chinese biotechnology companies may become subject to trade restrictions, sanctions, other regulatory requirements or proposed legislation by the U.S. government, which could restrict or even prohibit our ability to work with such entities, thereby potentially disrupting their supply of material to us. If theseany billssuch become law,laws or similar lawsregulations are passed, they would have the potential to severely restrict the ability of companies to contract with certain Chinese biotechnology companies of concern without losing the ability to contract with, or otherwise received funding from, the U.S. government. Such disruptions could have adverse effects on the development of our product candidates and our business operations.

Any unfavorable government policies on international trade, such as export controls, capital controls or tariffs, may increase the cost of manufacturing our product candidates and platform materials, affect the demand for our drug products (if and once approved), the competitive position of our product candidates, and import or export of raw materials and finished product candidate candidates used in our and our collaborators’ preclinical studies and clinical trials, particularly with respect to any product candidates and materials that we import from China, including pursuant to our manufacturing service arrangements with WuXi. If any new tariffs, export controls, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if either the U.S. or Chinese government takes retaliatory trade actions due to the recent trade tension, such changes could have an adverse effect on our business, financial condition and results of operations.

The priceprices of our Common Stock and Warrants may be volatile, and you could lose all or part of your investment.

The market priceprices of our Common Stock and Warrants are highly volatile and for the year ended December 31, 2024,2025, the market price of our Common Stock ranged from $2.54 $0.29 to $8.75$3.12 per share and the market price of our Warrants ranged from less than $0.01 to $0.05.$0.06 per Warrant. The recent fluctuations in our trading price and future trading in our Common Stock and Warrants may be subject to wide fluctuations in response to a variety of factors, including the following:

These and other market and industry factors may cause the market priceprices and demand for our Common Stock and Warrants to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their shares of Common Stock or Warrants and may otherwise negatively affect the liquidity of our Common Stock and Warrants. In addition, the stock market in general, and Nasdaq Capital Markets and emerging growth companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. In the past, when the market price of a security has been volatile, holders of that security have instituted securities class action litigation against the company that issued the security. If any of our stockholders brought a lawsuit against us, we could incur substantial costs by defending the lawsuit. Such a lawsuit could also divert the time and attention of our management.

We could be negatively affected as a result of the actions of activists or hostile shareholders.stockholders.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading priceprices of our Common Stock and Warrants.

We are required to disclose changes made in our internal controls and procedures on a quarterly basis and our management is required to assess the effectiveness of these controls annually. However, for as long as we are an emerging growth company, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which which we are deemed to be a large accelerated filer under the rules of the SEC. An independent assessment of the effectiveness of our internal internal controls over financial reporting could detect problems that our management’s assessment might not. Undetected material weaknesses weaknesses in our internal controls over financial reporting could lead to restatements of our financial statements and require us to incur the expense of remediation.

During the year ended December 31, 2023, we identified a material weakness in our financial reporting related to certain tax disclosures in Note 10 of our financial statements. statements for such year. As of the date hereof, after designing and conducting procedures designed to remediate the material weakness, and testing such procedures, we have concluded that these controls are operating effectively, and the prior material weakness has been remediated.

We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering.

By disclosing information in this Annual Report on Form 10-K and in future filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If those claims are successful, our business could be seriously harmed. Even if the claims do not result in litigation or are resolved in our favor, the time and resources needed to resolve them could divert our management’s resources and seriously harm our business.

The market priceprices of our Common Stock and Warrants may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

Our second amended and restated certificate of incorporationincorporation, as amended (“Certificate of Incorporation”), and our second amended and restated bylaws (“Bylaws”) contain provisions that could depress the market price of our securities by acting to discourage, delay or prevent a change in control of our Company or changes in our management that the stockholders of our Company may deem advantageous. These provisions, among other things:

Exchange rate fluctuations may materially affect our results of operations and financial conditions.condition.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our audited consolidated financial statements for the fiscal years ended December 31, 20242025 and December 31, 20232024 and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition and results of operations. In particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position and the operating results of our business during the year ended December 31, 2024,2025, as compared to the fiscal year ended December 31, 2023.2024. This discussion should be read in conjunction with our consolidated financial statements for the fiscal years ended December 31, 20242025 and December 31, 20232024 and related notes included elsewhere in this Annual Report on Form 10-K. These historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains numerous forward-looking statements, all of which are based on our current expectations (as described in the section entitled “Cautionary Note Regarding Forward-Looking Statements”), and could be affected by the uncertainties and risks described throughout this filing, particularly in “Item 1A. Risk Factors.”

Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to Pasithea Therapeutics Corp. and its subsidiaries, Pasithea Therapeutics Limited (UKU.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, Pasithea Clinics Inc., Alpha-5 Integrin, LLC, AlloMek Therapeutics, LLC and Pasithea MacroMEK Pty Ltd. Pasithea Therapeutics Limited (UKU.K.), islegally dissolved as of January 2, 2024, was a private limited Company,company, registered in the United Kingdom (UKU.K.). Pasithea Clinics Inc.Inc., islegally dissolved as of September 3, 2025, was incorporated in Delaware,Delaware. Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, a private limited Company,company, registered in Portugal, and Alpha-5 Integrin, LLC and AlloMek Therapeutics, LLC, are both Delaware limited liability companies. Pasithea MacroMEK Pty Ltd is registered in Australia. The operations of Pasithea Therapeutics Limited (U.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, and Pasithea Clinics Inc. have been discontinued.

We are a clinical-stage biotechnology company focused on the discovery, research and development of innovative treatments for RASopathies, MAPK pathway-driven tumors, and other diseases, including central nervous system (CNS) disorders and other diseases, including RASopathies.disorders.

Our primary operations (the “Therapeutics” segment) are focused on developing our lead product candidate, PAS-004, a next-generation macrocyclic mitogen-activated protein kinase, or MEK inhibitor that we believe may address the limitations and liabilities associated with existing drugs targeting a similar mechanism of action. In December 2023, the U.S. Food and Drug Administration (the “FDA”) cleared our Investigational New Drug application (the “IND”) for PAS-004 and we received a study may proceed letter from the FDA for our Phase 1 multicenter, open-label, dose escalation trial of PAS-004 in patients with MAPK pathway-driven advanced tumors with a documented RAS, NF1 or RAF mutation or patients who have failed BRAF/MEK inhibition (the “FIH Phase 1 DoseAdvanced EscalationCancer Study”). We are currently conducting the FIH Phase 1 DoseAdvanced EscalationCancer Study at four clinical sites in the United States and three additional sites in Eastern Europe. OurWe clinicalhave completed the initial eight cohorts through development45 mg capsule and have not reached the maximum tolerated dose. We plan forto PAS-004file isa protocol amendment to advancecontinue PAS-004dose intoescalation ain the FIH Phase 1/1b clinicalAdvanced Cancer Study using our tablet formulation of PAS-004 in an effort to continue to explore the safety, PK, and early signals of efficacy at higher dose levels of PAS-004. Simultaneously, a pilot food effect assessment is planned in a subset of patients who agree to participate in this optional component of the study. As such, we expect to complete the trial in adult NF1-PN patients followed by pediatric NF1-PN patients and ultimately complete registrational clinical trials in these patient populations, which are the initial indications that the Company plans to seek marketing approval of PAS-004 for.2028.

Additionally, we have twoone programsprogram, that arePAS-001, in the discovery stage, which we believe addressaddresses limitations in the treatment paradigm of the indications we plan to address with these programs, which are currently amyotrophic lateral sclerosis (“ALS”) for PAS-003 and schizophrenia for PAS-001.schizophrenia. During the year ended December 31, 2023,2025, we determined to cease further development of our PAS-002PAS-003 program for multipleALS sclerosis due to several factors including the significant capital, resources and time required to develop the program, and the current and projected availability of effective treatment options for MS patients, among others.program.

On December 28, 2023, we filed a Certificate of Amendment to our Second Amended and Restated Certificate of Incorporation reflecting a one-for-20one-for-twenty (1:20) Reverse Reverse Stock Split of our issued and outstanding shares of Common Stock which became effective at 12:01 a.m. Eastern Time on January 2, 2024. As a result of the Reverse Stock Split, every 20 shares of Common Stock issued and outstanding were converted into one share of Common Stock, with a corresponding reduction in the number of authorized shares of Common Stock from 495,000,000 shares to 100,000,000.100,000,000 shares (which was subsequently increased to 500,000,000 authorized shares of Common Stock on January 28, 2026 after we filed another Certificate of Amendment to our Second Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to increase such number of authorized shares of Common Stock). The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in the Company’s equity, except to the extent that the Reverse Stock Split resulted in some stockholders owning a fractional share. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who were otherwise entitled to receive a fractional share instead received a cash payment (without interest) equal to such fraction multiplied by the average of the closing sales prices of Common Stock on The Nasdaq Capital Market for the five consecutive trading days immediately preceding the effective date of the Reverse Stock Split (with such average closing sales prices adjusted to give effect to the Reverse Stock Split). All outstanding securities entitling their holders to purchase shares of Common Stock or acquire shares of Common Stock, including stock options, convertible debt and warrants, were adjusted as a result of the Reverse Stock Split, as required by the terms of those securities.

The accompanying consolidated financial statements reflect the Reverse Stock Split. All share and per share information datapresented herein that relates relate to our Common Stock prior to the effective date hasof the Reverse Stock Split have been retroactively restated to reflect the Reverse Stock Split.

General and administrative expenses decreasedincreased by approximately $827,000, $5,825,000, or 10.5%,82.6%, for the year ended December 31, 20242025, compared to the year ended December 31, 2023. 2024. The decreaseincrease was primarily driven by (i) an aincrease decreasein impairment expense of $530,000intangible assets and goodwill totaling approximately $4,163,000, (ii) an increase of approximately $1,652,000 in professionalpersonnel fees,costs, (iii) an increase in office expenses of whichapproximately $313,000, (iv) an increase in accounting and business development expenses of approximately $271,000$144,000, was(v) relatedan toincrease in public company and corporate communicationscommunication expenses,costs of approximately $127,000$136,000, (vi) wasan relatedincrease toin businessconsulting development,costs andof approximately $132,000 was$77,000, relatedoffset to personnel, office expenses or other professional feesby (iivii) a decrease in stock-based compensation expense of approximately $328,000, (viii) a decrease in legal feesexpenses of approximately $461,000,$264,000, (iiiix) a decrease in accountinginsurance costs of approximately $62,000 and (x) a decrease in board fees of approximately $57,000, offset by (iv) an increase of approximately $147,000 in stock compensation expenses, and (v) an increase of approximately $74,000 in consulting fees.$6,000.

We expect general and administrative expenses to decrease slightly in fiscal year 20252026 as compared to fiscal year 20242025 primarily due to reduceda legaldecrease andin impairment expenses offset by a ramp up in operational activity, public company and corporate communications expenses.expenses, and non-cash stock-based compensation.

Research and development expenses for the years ended December 31, 2024 and 2023 relatesrelate to activities primarily focused on the development of PAS-004, PAS-003PAS-004 and PAS-001.PAS-001 for the year ended December 31, 2025, and PAS-004, PAS-003, and PAS-001 for the year ended December 31, 2024.

We expect research and development expenses to increase in fiscal year 20252026 as compared to fiscal year 20242025 primarily due to (i) an increase in clinical researchtrial forand PAS-004regulatory expenses related to theour ongoing FIH Phase 1 Dose Escalation Study and the upcoming phase 1/1b clinical trialtrials offor PAS-004 in adult NF1-PN patients, andPAS-004, (ii) an increase in manufacturingCMC costs related to thePAS-004 drug product and drug supply for our clinical trials, offsetas bywell decreasesas the development of a liquid formation of PAS-004, (iii) the initiation of non-clinical absorption, distribution, metabolism and excretion (“ADME”) studies, non-clinical developmental and reproductive toxicology studies, and clinical human ADME studies, (iv) an increase in pre-clinicalpreclinical research for PAS-004 and thePAS-001, reductionand (v) an increase in workforcepersonnel costs related to theanticipated closurenew ofworkforce hires to support our research laboratory.and development activities.

Working capital decreased increased by $7.8$45.2 million betweenfrom December 31, 2024 and2024, to December 31, 20232025, due primarily to net cash provided by financing activities of $63.5 million which was partially offset by cash used to fund operations for the year ended December 31, 2024.operations.

As of December 31, 2024,2025, we had approximately $6.9$55.2 million in operating bank accounts and money market funds, with working capital of approximately $6.2$51.5 million. We are dependent on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute our development plans and continue operations. Subsequent toDuring the consummationyear ofended December 31, 2025, we completed two separate significant capital raises, the InitialMay Public2025 Offering, our liquidity was and continuesDecember to2025 beofferings, satisfiedwhich throughresulted thein net proceeds of approximately $59.6 million in the aggregate. Additionally, during the year ended December 31, 2025, we received (i) net proceeds of approximately $2.1 million from the Initialsale Publicof Offering,shares of theCommon privateStock placementsunder wean consummated“at-the-market” in(“ATM”) November 2021offering program, and September(ii) 2024net and the receiptproceeds of cashapproximately upon$2.2 million from the prior exercise of our outstanding warrants. BasedSuch onATM theoffering foregoing,program management believesis thatno longer active and we will not havemake sufficientany workingadditional capital to meet our needs through twelve months from the issuance datesales of theshares of financial statementsCommon includedStock inunder thissuch annualATM report,offering without raising additional capital.program.

InDuring Septemberthe year ended December 31, 2024, we entered into a securities purchase agreement with an institutional investor for the issuance and sale incompleted a private placement (the “September 2024 Private Placement”) of (i) pre-funded warrants (the “September Pre-Funded Warrants”) to purchase up to 1,219,513 shares of our Common Stock, at an exercise price of $0.001 per share, (ii) Series A warrants (the “Series A Warrants”) to purchase up to 1,219,513 shares of Common Stock, at an exercise price of $3.85 per share, and (iii) Series B warrants (the “Series B Warrants” and together with the Series A Warrants, the “September 2024 Warrants” ) to purchase up to 1,219,513 shares of Common Stock with an exercise price of $3.85 per share. The combined purchase price per September Pre-Funded Warrant and accompanying September 2024 Warrants was $4.099. The net proceeds to us from the September 2024 Private Placement were approximately $4.5 million, after deducting placement agent fees and estimated offering expenses.

We believe that our current available cash and cash equivalents will be sufficient to meet our working capital needs for at least the next twelve months and beyond. However, we will need significant additional funds to meet operational needs and capital requirements for clinical trials, other research and development expenditures, and business development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.

See Note 12 – Commitments and Contingencies in the Notes to the Consolidatedconsolidated Financialfinancial Statementsstatements in Item 8 of this Annual Report on Form 10-K for a summary of our contractual obligations.

We did not have any off-balance sheet arrangements as of December 31, 2025, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Exchange Act.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statementstatements and the reported amounts of revenues and expenses during the reporting period.

You should read the following discussion and analysis of financial condition and operating results together with our financial statements and the related notes thereto and other financial information included elsewhere in this quarterly report on Form 10-Q, as well as our audited consolidated financial statements and related notes thereto as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed on March 30, 2026. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth in the section of this report captioned “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q as well as the risk factors set forth in the section titled “Risk Factors” included in our most recent Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. For convenience of presentation some of the numbers have been rounded in the text below.

Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to Pasithea Therapeutics Corp. and its subsidiaries, Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, Pasithea Clinics Inc., Alpha-5 Integrin, LLC, AlloMek Therapeutics, LLC and Pasithea MacroMEK Pty Ltd. Pasithea Clinics Inc., legally dissolved as of September 3, 2025, was incorporated in Delaware. Pasithea Therapeutics Portugal, Sociedade Unipessoal LdaLda, is a private limited company registered in Portugal. Alpha-5 Integrin, LLC and AlloMek Therapeutics, LLCLLC, are both Delaware limited liability companies. Pasithea MacroMEK Pty Ltd is registered in Australia. The operations of Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, and Pasithea Clinics Inc. have been discontinued.

In May 2025, we initiated oura Phase 1/1b multicenter, open-label, dose escalation trial of PAS-004 in adult patients with neurofibromatosis type 1 (“NF1”) with symptomatic and inoperable, incompletely resected, or recurrent plexiform neurofibromas (“PN”). Wethat areis currentlybeing conducting the trial at a total of five sites in the United States, Australia, and South Korea.

TheOur initial planned indication we plan to seekfor FDA marketing and other regulatory approval for PAS-004 is the treatment of symptomatic PNsand inoperable NF1-PN in both adult and pediatric patientspatients, withand NF1.it As such, we aimaims to conduct a pediatric Phase 1 trial for pediatric NF1-PN patients and ultimately complete registrational clinical trials in both adult and pediatric NF1-PN populations.

Additionally, we have one program, PAS-001, in the discovery stage, which we believe addresses limitations in thefor treatment paradigm forof schizophrenia. During the year ended December 31, 2025, we determined to cease further development of our PAS-003 program for ALS due to several factors including the significant capital, resources and time required to develop the program.

Comparison of the Three and Six Months Ended March 31,June 30, 2026, and 2025

Our financial results for the three and six months ended March 31,June 30, 2026, and 2025 are summarized as follows:

General and administrative expenses decreased increased by approximately $16,000,$349,000, or 0.8%,9.7%, for the threesix months ended MarchJune 31,30, 2026,2026 compared to the threesix months ended MarchJune 31, 30, 2025. The decreaseincrease was primarily driven by increases in (i) a decrease in income tax expensespersonnel and taxboard creditsexpenses of approximately $165,000,$285,000, (ii) a decreasenon-cash instock-based expense of approximately $278,000, (iii) accounting and business development of approximately $87,000, and (iv), public company expenses of approximately $24,000,$68,000. These increases were partially offset by decreases in (iiii) a decrease in legal expenses of approximately $154,000,$292,000, (ii) office and other expenses of $55,000 (iii) insurance expenses of approximately $14,000, and (iv) anon-cash decrease in insurance costsamortization of approximately $22,000 and (v) a decrease in board fees of approximately $40,000, offset by (vi) an increase of approximately $240,000 in personnel costs, (vii) an increase in office expenses of approximately $49,000, (viii) an increase in stock-based compensation expense for employees and consultants of approximately $42,000, and (ix) an increase in public company and corporate communication costs of approximately $62,000.$8,000.

We expect general and administrative expenses to continue to decrease slightly in fiscal year 2026 as compared to fiscal year 2025 primarily due to a decrease in impairment expenses offset by a ramp up in operational activity, public company and corporate communications expenses, and non-cash stock-based compensation.

Research and development expenses relate to activities primarily focused on the development of PAS-004 for the three and six months ended MarchJune 31,30, 2026 and 2025.

Research and development expenses increased by approximately $1,212,000,$1,537,000, or 70.1%,71.5%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increase was primarily due to (i) an increase in clinical trial and regulatory expenses of approximately $472,000,$299,000, (ii) an increase in chemistry, manufacturing and controls (“CMC”) expenses of approximately $507,000,$877,000, (iii) an increase in preclinical research expense of approximately $130,000, and (iv) an increase in non-clinical research and development expense of approximately $109,000,$199,000, (iv) an increase in preclinical research expense of approximately $144,000 and (v) non-cash stock expense of approximately $33,000. These increases were partially offset by (vi) a decrease in other expenses of approximately $5,000.$15,000.

We expect research and development expenses to continue to increase in fiscal year 2026 as compared to fiscal year 2025 primarily due to (i) an increase in clinical trial and regulatory expenses related to our ongoing clinical trials for PAS-004, (ii) an increase in CMC costs related to PAS-004 drug product and drug supply for our clinical trials, as well as the development of a liquid formation of PAS-004, (iii) the initiation ofongoing non-clinical absorption, distribution, metabolism and excretion (“ADME”) studies, and non-clinical developmental and reproductive toxicology studies, and (iv) the initiation of clinical human ADME studies, (ivv) an increase in preclinical research for PAS-004, and (vvi) an increase in personnel costs related to anticipated new workforce hires to support our research and development activities.

For the three months ended MarchJune 31,30, 2026, other income, net increased by approximately $1,890,000,$344,000, or 1,616.4%,363.8%, as compared to the three months ended MarchJune 31,30, 2025. The increase during the three months ended March 31,June 30, 2026, was primarily driven by (i) an increase in interest and dividends, net of approximately $356,000, (ii) a decrease in other income of approximately $19,000, (iii) an approximate $1,465,000$29,000 increase in the change of the fair value of warrant liabilities duringliabilities, theoffset three months ended March 31, 2026,by (ii) an increase in interest and dividends, net of approximately $403,000, (iiiiv) a decrease increase in foreign currency gain of approximately $9,000, (iv) an increase in other income of approximately $24,000, and (v) an increase in realized foreign currency translation loss from dissolution of subsidiaries of approximately $7,000 due to the fact that it did not exist this quarter.$59,000.

Working capital decreased by approximately $245,000 $5,078,000 from December 31, 2025, to MarchJune 31,30, 2026, due primarily to net cash used to fund operations for the threesix months ended MarchJune 31,30, 2026, offset by the December 2025 Placement Agents Warrant liabilities reclassified to equity.

Cash, cash equivalents and restricted cash decreased by approximately $4.8 $9.5 million for the threesix months ended MarchJune 31,30, 2026, compared to aan decreaseincrease of approximately $1.6$0.3 million for the threesix months ended March 31,June 30, 2025. The decrease for the threesix months ended MarchJune 31,30, 2026, was primarily attributable to cash used to fund operationsoperations, and an increase in prepaid expenses.expenses and a decrease in other current assets and accounts payable and accrued liabilities. The decreaseincrease in cash and cash equivalents for the threesix months ended MarchJune 31,30, 2025,2025 was primarily attributable to cash usedprovided by financing activities related to fund operationsproceeds which was partially offset byfrom at-the-market sales of common stock of approximately$2.0 $1.7million, proceeds from the issuance of common stock through a May 2025 Public Offering of $4.2 million and proceeds from the exercise of warrants of $1.3 million, which was partially offset by payments on director and officer insurance of $0.3 million.

As of MarchJune 31,30, 2026, we had approximately $50.4 $45.7 million in operating bank accounts and money market funds, with working capital of approximately $51.2$46.4 million. We are dependent on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute our development plans and continue operations.

We did not have any off-balance sheet arrangements as of MarchJune 31, 30, 2026, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Exchange Act.

Our critical accounting estimates, which include (1) stock-based compensation and (2) fair value measurements, are more fully described in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed on March 30, 2026. During the threesix months ended MarchJune 31,30, 2026, there were no material changes to our critical accounting policies and estimates from those described in our most recent Annual Report on Form 10-K.