SEC Form 10-Q filed by Alpha Cognition Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
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ALPHA COGNITION INC.
FORM 10-Q
For the Quarter Ended September 30, 2025
INDEX
i
PART I
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
ALPHA COGNITION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2025 (Unaudited) | 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Other assets | ||||||||
| Equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Current portion of promissory note - related party | ||||||||
| Current deferred income | ||||||||
| Total current liabilities | ||||||||
| Deferred income | ||||||||
| Warrant liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
1
ALPHA COGNITION INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | ||||||||||||||||
| Product, net | $ | $ | $ | $ | ||||||||||||
| Licensing | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of product sales, excluding amortization of intangible asset | ||||||||||||||||
| Cost of licensing revenue | ||||||||||||||||
| Amortization of intangible asset | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss before other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest income (expense), net | ( | ) | ( | ) | ||||||||||||
| Grant income | ||||||||||||||||
| Gain (loss) of warrant liabilities | ( | ) | ||||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expenses) | ||||||||||||||||
| Net loss and comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding, basic | ||||||||||||||||
| Net loss per share, basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Adjusted net loss, diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding, diluted | ||||||||||||||||
| Net loss per share, diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
2
ALPHA COGNITION INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
(UNAUDITED)
For the Three and Nine Months Ended September 30, 2025 and 2024
For the three months ended September 30, 2025
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Paid-In | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Options exercised | ( | ) | ||||||||||||||||||||||||||||||
| Warrants exercised | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
For the three months ended September 30, 2024
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Paid-In | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | |||||||||||||||||||||
| Warrants exercised | - | |||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
3
ALPHA COGNITION INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
(UNAUDITED)
For the Three and Nine Months Ended September 30, 2025 and 2024
For the nine months ended September 30, 2025
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Paid-In | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Options exercised | - | ( | ) | |||||||||||||||||||||||||||||
| Warrants exercised | - | |||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | |
|
||||||||||||||||||||||||||||
| Net loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | |
$ | ( |
) | $ | ( |
) | $ | |
||||||||||||||||||||
For the nine months ended September 30, 2024
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Paid-In | Comprehensive | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Units issued for cash | ||||||||||||||||||||||||||||||||
| Shares issued for services | ||||||||||||||||||||||||||||||||
| Share issuance costs | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Options exercised | ( | ) | ||||||||||||||||||||||||||||||
| Warrants exercised | - | |||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Reallocation of derivative liability on re-pricing of warrants from CAD to USD exercise price | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
4
ALPHA COGNITION INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows used in operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Accretion of discount on convertible debentures | ||||||||
| Accrued expenditures for government grant | ||||||||
| Accrued interest | ||||||||
| Loss (gain) on warrant liabilities | ( | ) | ||||||
| Change in fair value of bonus rights liability | ( | ) | ||||||
| Debt issuance costs | ||||||||
| Provision for loan losses | ||||||||
| Impairment of intangible assets | ||||||||
| Loss on disposal of equipment | ||||||||
| Share-based compensation | ||||||||
| Shares issued for services | ||||||||
| Changes in non-cash operating working capital items: | ||||||||
| Accounts receivable, net | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
| Deferred income | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows used in investing activities | ||||||||
| Acquisition of equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows provided by (used in) financing activities | ||||||||
| Units issued for cash | ||||||||
| Exercise of options | ||||||||
| Exercise of warrants | ||||||||
| Repayment of promissory notes | ( | ) | ||||||
| Proceeds received from restricted government grant | ||||||||
| Amounts paid from restricted government grant funds | ( | ) | ( | ) | ||||
| Proceeds from the issuance of convertible debentures | ||||||||
| Debt issuance costs | ( | ) | ||||||
| Share issuance costs | ( | ) | ||||||
| Net cash provided by (used in) financing activities | ||||||||
| Change in cash, cash equivalents, and restricted cash during the period | ( | ) | ||||||
| Cash, cash equivalents, and restricted cash beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash end of period | $ | $ | ||||||
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
5
ALPHA COGNITION INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Supplemental Disclosure | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental non-cash disclosures | ||||||||
| Reclassification of derivative liability for warrants exercised | $ | $ | ||||||
| Reclassification of derivative liability for warrants re-priced from CAD to USD exercise price | $ | $ | ||||||
| Common shares issued for share issuance costs | $ | $ | ||||||
| Warrants issued for share issuance costs | $ | $ | ||||||
| Common shares issued for services | $ | $ | ||||||
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
6
NOTE 1 – NATURE OF OPERATIONS
Alpha Cognition Inc. (“ACI” or the “Company”) is a commercial stage, biopharmaceutical company dedicated to developing treatments for patients suffering from neurodegenerative diseases, such as Alzheimer’s Disease and Cognitive Impairment with Traumatic Brain Injury (“TBI”), for which there are limited or no treatment options. The registered and records office of the Company is 1200 – 750 West Pender Street, Vancouver, BC, V6C 2T8.
On July 29, 2024, the Company was granted approval by the U.S. Food and Drug Administration (“FDA”) for the commercialization of ZUNVEYL, previously known as ALPHA-1062, for the treatment of mild-to-moderate Alzheimer’s disease.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation – The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America and are consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December 31, 2024.
The interim condensed consolidated financial statements are unaudited and have been prepared on the same basis as the audited annual financial statements and, in management’s opinion, include all adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of September 30, 2025 and its results of operations and statements of equity for the three and nine months ended September 30, 2025 and 2024 and cash flows for the nine months ended September 30, 2025 and 2024. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the full fiscal year or any other period.
Liquidity - The Company does not have sufficient operating revenue to finance its existing obligations and has relied on external financing, such as debt and equity raises, to generate capital to maintain its capacity to meet working capital requirements. The Company has relied on debt and equity raises to finance its operating activities since incorporation. The Company has successfully raised funds that exceed the Company’s working capital requirements for the next 12 months from the date of issuance of these condensed consolidated financial statements. The Company expects to continue to rely on debt and the issuance of shares, and possibly other non-dilutive financing options to finance its ongoing operations and plans for commercialization of ZUNVEYL. However, there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company.
Use of Estimates and Assumptions – The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and disclosure of contingent liabilities as of the date of the unaudited condensed interim consolidated financial statements and the reported amounts of expenses during the reporting period. The Company’s most significant estimates relate to the fair value of its warrant liabilities, bonus rights liability, and stock option grants, and its estimates of the standalone selling prices of certain performance obligations. On an ongoing basis, management evaluates its estimates, to ensure that those estimates effectively reflect changes in the Company’s business and new information as it becomes available. Management bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. Actual results could differ materially from these estimates under different assumptions or conditions.
7
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company applies the following five-step revenue recognition model in accordance with ASC Topic 606, Revenue from Contracts with Customers, to determine revenue:
| i) | identify the contract with a customer; |
| ii) | identify the performance obligations in the contract; |
| iii) | determine the transaction price; |
| iv) | allocate the transaction price to the performance obligations in the contract; and |
| v) | recognize revenue when (or as) the Company satisfies a performance obligation. |
At contract inception, the Company identifies the goods or services promised in the contract and assesses whether each is distinct for the purpose of identifying performance obligations. A promised good or service is distinct if (1) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer; and (2) the Company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.
Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company evaluates whether such options provide a material right to the customer. If so, they are treated as separate performance obligations.
The transaction price is then determined and allocated to the identified performance obligations in proportion to their standalone selling prices (“SSP”). SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Judgment is required in estimating SSP, and the Company considers market conditions, entity-specific factors, and estimated costs in making this determination.
If the consideration includes a variable amount, the Company estimates the amount to which it expects to be entitled using either the expected value or the most likely amount method, depending on which better predicts the outcome. The estimated amount is included in the transaction price only to the extent it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty is resolved. The Company re-evaluates estimates and constraints at each reporting date and adjusts the transaction price accordingly, recording any changes on a cumulative catch-up basis.
Revenue is recognized when the Company satisfies a performance obligation, either at a point in time or over time. The amount of revenue recognized is based on the portion of the transaction price allocated to each performance obligation in accordance with its relative SSP. For obligations satisfied over time, revenue is recognized using an input or output method, depending on which most accurately depicts the transfer of control to the customer.
8
Product Sales, Net
Products are primarily sold to direct customers such as wholesalers
and pharmacies. The Company’s contractual performance obligations are generally limited to the transfer of control of the product
to the customer. For Zunveyl tablets provided to customers, revenue is recognized at the point in time when control of the goods transfers
to the customer. The Company’s contracts typically stipulate F.O.B. (Free on Board) destination terms. Consequently, revenue is
recognized when the drugs are delivered to the customer’s location or any destination designated by the customer for drop-shipment.
This arrangement is not a consignment arrangement, and therefore, the Company recognizes revenue upon the delivery of goods to the customer.
The Company’s payment terms to customers range from
Revenue from the Company’s product sales is reduced for expected prompt pay discounts, chargebacks, product returns, recalls, rebates, and consideration payable to customers, collectively referred to as gross-to-net (GTN) adjustments. Estimates of GTN adjustments are based various factors such as historical experience, projected market conditions, production expiration dates, analogs and the specific terms of the Company’s agreements with payers and customers.
Consideration payable to customers comprises of distributor fees. These service fees for distribution services are calculated as a percentage of monthly product sales based on the Wholesale Acquisition Cost (WAC). These fees are paid to customers for services such as access to inventory and sales data to pharmacies, inventory management, accounts receivable administration, and return and chargeback administration. Fees paid to customers for services that are integral activities within the distribution chain with the customer, specifically related to the Company’s sales of Zunveyl, are recognized as a reduction of revenue since these activities are not considered distinct from the Company’s promise to sell Zunveyl through the distribution channel to end customers. Fees paid to customers for services that transfer a distinct service to the Company, such as logistics services, are recorded as operating expenses.
Variable consideration is re-evaluated at least on a quarterly basis and typically monthly. The amount of variable consideration can vary from period to period due to fluctuations in GTN components.
Licensing Revenue
In licensing arrangements, the Company considers factors such as the collaboration partner’s capabilities and the availability of required expertise in the marketplace. The intended benefit of the contract is also considered in determining whether a promised good or service is separately identifiable. If a good or service is not distinct, it is combined with other promised goods or services until a distinct bundle is identified.
For arrangements that include development or regulatory milestone payments, the Company evaluates whether achieving the milestone is probable and recognizes revenue only if a significant reversal is not expected. Regulatory milestones that are outside the control of either party are generally excluded from the transaction price until achieved.
For licenses of intellectual property that include sales-based royalties or milestones, and when the license is the predominant item to which the royalties relate, the Company recognizes royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied, consistent with the sales-based royalty exception.
Accounts Receivable - The majority of our accounts receivable arise from product sales and primarily represent amounts due from our wholesale and other third-party distributors standard payment terms that generally require payment within 30 to 96 days.
We provide reserves against accounts receivable for estimated losses that may result from a customer’s inability to pay. Amounts determined to be uncollectible are charged or written-off against the reserve.
Royalty Cost of Sales – The Company makes royalty payments to third parties under license or purchase agreements associated with the acquisition of intellectual property. These royalty payments are calculated as a percentage of the net product sales and licensing fee in the period the corresponding sales occur. Royalty expenses are recognized as incurred and recorded as a component of cost of sales in the consolidated statements of operations and comprehensive loss.
9
Fair Value Measurements - FASB ASC 820 – Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements. In accordance with ASC 820, we have categorized our financial assets and liabilities based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Financial assets and liabilities recorded in the accompanying consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:
Level 1 – Financial instruments whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which we have the ability to access at the measurement date.
Level 2 – Financial instruments whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.
Level 3 – Financial instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the instrument.
The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable, promissory note, and other long-term liabilities. The fair values of accounts receivable, other current assets, accounts payable, and promissory note approximate their carrying values either due to their current nature or current market rates for similar instruments.
Cash is measured at fair value on a recurring basis using level 1 inputs.
Other long-term liabilities consisting of the bonus rights liability and warrant liabilities are measured at fair value on a recurring
basis using level 3 inputs. As of September 30, 2025 and December 31, 2024, the fair value of the bonus rights liability was $
New Accounting Pronouncements
In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements in Income Tax Disclosures, which is to enhance the transparency and decision usefulness of income tax disclosures. This amendment requires public companies to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Additionally, under the amendment entities are required to disclose the amount of income taxes paid disaggregated by federal, state and foreign taxes, as well as disaggregated by material individual jurisdictions. Finally, the amendment requires entities to disclose income from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state and foreign. The new rules are effective for annual periods beginning after December 15, 2024. We will adopt this standard on a prospective basis as allowed by the standard. The adoption of this standard is not expected to have a material impact on our financial statements.
In November 2024, FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Reporting Comprehensive Income – Expense Disaggregation Disclosures. This standard requires disclosure in the notes to the financial statements, at each interim and annual reporting period, of specified information about certain costs and expense including purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption. This standard also requires a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated, as well as disclosure of the total amount of selling expenses, and, in annual reporting periods, an entity’s definition of selling expenses. These new rules are effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the potential impact that this new standard will have on our consolidated financial statements and related disclosures.
10
NOTE 3 – R&D GRANT
On June 5, 2023, the Company was awarded a $
Per the R&D Grant, budget expenses are expected to include cost to carry out the clinical trials including personnel costs, materials and supplies, animal housing, publications, and travel costs. The Company classifies any cash received from the R&D Grant that has not yet been used to pay ongoing R&D grant expenditures as restricted cash, as the proceeds from the grant are to be designated for the specified grant research.
Activity related to the R&D grant was as follows for the three and nine months ended September 30, 2025, and 2024:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| Cash received | $ | $ | $ | $ | ||||||||||||
| Grant income recognized | ||||||||||||||||
As of September 30, 2025, and December 31, 2024, the Company’s condensed consolidated balance sheet accounts included the following related to the R&D Grant:
| September 30, 2025 | December 31, 2024 | |||||||
| Restricted cash | $ | $ | ||||||
| Deferred income (other current asset) | $ | $ | ( | ) | ||||
NOTE 4 – INVENTORY
Inventory consists of the following:
| September 30, 2025 | December 31, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Work in progress | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
NOTE 5 – BALANCE SHEET COMPONENTS
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Other receivables | $ | $ | ||||||
| Prepaid insurance and other expenses | ||||||||
| Prepaid FDA user fees | ||||||||
| Prepaid legal expenses | ||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
11
Accounts payable and accrued liabilities
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued inventory costs | ||||||||
| Other accrued liabilities | ||||||||
| Accrued payroll and bonuses | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
NOTE 6 – INTANGIBLE ASSETS
Intangible assets consisted of the following:
| September 30, 2025 | Gross Amount | Accumulated Amortization | Net Balance | Weighted Average Remaining Useful Life | ||||||||||||
| Licenses | $ | $ | $ | |||||||||||||
| December 31, 2024 | Gross Amount | Accumulated Amortization | Net Balance | Weighted Average Remaining Useful Life | ||||||||||||
| Licenses | $ | $ | $ | |||||||||||||
On January 25, 2025, the Company was granted a
new patent titled “Coated Tablets for pH-Dependent Release of Benzgalantamine” from the United States Patent and Trademark
Office (USPTO) until 2044. As a result of the granted patent, management reviewed the estimated useful life of the license related to
this patent, and determined the remaining useful life should be extended from
Change in Useful Life of Intangible Asset
The Company completed a review of the estimated useful life of its
intangible asset after a patent application, related to the Memogain License, was granted in January 2025. The patent protection was extended
to February 2044. Management determined that the estimated useful life of the license should be extended for an additional
This change in estimates has been applied prospectively
in accordance with ASC 250, Accounting Changes and Error Corrections. As a result of this change, amortization expense decreased by approximately
$
Amortization for the three months ended September 2025 and 2024, was
$
12
The following table outlines the estimated future annual amortization expense related to intangible assets as of September 30, 2025:
| Year Ending December 31, | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 7 – STOCKHOLDERS’ EQUITY
At the Market Offering
On August 22, 2025, the Company entered into an
At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) as sales
agent. Under the terms of the ATM Agreement, the Company will be entitled to sell, at its sole discretion and from time to time as it
may choose, common shares in the capital of the Company (“Shares”) through Wainwright, with such sales having an aggregate
gross sales value of up to US$
Subject to the terms and conditions of the Agreement,
Wainwright will use its commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions.
However, the Company has no obligation to sell any of the Shares, and may at any time suspend offers under the Agreement or terminate
the Agreement. The Company has provided Wainwright with customary indemnification rights, and Wainwright will be entitled to a commission
at a commission rate of up to
Warrants
During the nine months ended September 30, 2025, the Company did not issue any warrants.
The schedule of activity for the warrants is as follows:
| Number of Warrants | Weighted Average Exercise Price (as converted) | Remaining Contractual Term (Years) | ||||||||||
| Balance, December 31, 2024 | $ | |||||||||||
| Exercised | ( | ) | ||||||||||
| Balance, September 30, 2025 | $ | |||||||||||
13
A summary of the warrants outstanding and exercisable as of September 30, 2025, is as follows:
| Warrants Outstanding | Exercise Price | Expiry Date | ||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | | ) | ||||||
| $ | | ) | ||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
| $ | ||||||||
CAD Warrants Liability
On August 31, 2023, the Company’s functional currency changed to the USD from the CAD; as such, the Company recorded a derivative liability on the warrants outstanding with CAD exercises prices (the “CAD Warrants”). This derivative liability is being revalued at each reporting period.
As of September 30, 2025, and December 31, 2024,
the Company revalued the CAD Warrant derivative liability to $
A summary of the CAD Warrants outstanding and exercisable as of September 30, 2025, is as follows:
| Warrants Outstanding | Exercise Price | Expiry Date | ||||||
| $ | ) | |||||||
| $ | ) | |||||||
The following weighted average assumptions were used in the Black-Scholes option-pricing model for the re-valuations as of September 30, 2025, and December 31, 2024:
| September 30, 2025 | December 31, 2024 | |||||||
| Market price of public stock | $ | $ | ||||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | ||||||||
| Expected life (in years) | ||||||||
| Volatility | % | % | ||||||
| Weighted average fair value per warrant | $ | $ | ||||||
Debentures Warrants Liability
On September 24, 2024, the Company entered into
Securities Purchase Agreements with various third-party lenders for the issuance of convertible debentures and
14
The fundamental transaction clause in the warrant agreement stipulates that the expected volatility is determined as the greater of 100% and the 30-day volatility, as calculated from the HVT function on Bloomberg. Under ASC 815 (Derivatives and Hedging), an instrument must be classified as equity if it passes the “fixed-for-fixed” indexation test, meaning both the exercise price and the number of shares to be issued must be fixed at issuance. In this case, the volatility input is predetermined and fixed in the agreement “an expected volatility equal to the greater of 100% and the 30-day volatility from the “HVT” function on Bloomberg”, and is therefore not indexed to the Company’s stock. As a result, the Initial and Additional Debenture Warrants fail the “fixed-for-fixed” test and are classified as derivative liabilities in accordance with ASC 815.
As of September 30, 2025, the Company revalued the Initial and Additional
Debenture Warrants derivative liabilities to $ (December 31, 2024 - $
A summary of the Initial and Additional Debenture Warrants issued and outstanding as of September 30, 2025, is as follows:
| Warrants Outstanding | Exercise Price | Expiry Date | ||||||
| $ | ||||||||
| $ | ||||||||
The following weighted average assumptions were used in the binomial lattice model for the revaluation for the Initial and Additional Debenture Warrant as of September 30, 2025, and December 31, 2024:
| September 30, 2025 | December 31, 2024 | |||||||
| Market price of public stock | $ | | $ | | ||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | ||||||||
| Expected life (in years) | ||||||||
| Volatility | % | % | ||||||
| Weighted average fair value per warrant | $ | $ | ||||||
Agent Warrants
Upon completion of the public offering, the Company
issued
During the nine months ended September 30, 2025,
A summary of the Agent Warrants issued and outstanding as of September 30, 2025, is as follows:
| Warrants Outstanding | Exercise Price | Expiry Date | ||||||
| $ | ||||||||
15
The following weighted average assumptions were used in the Black-Scholes option-pricing model for the revaluations of the Agent Warrants as of September 30, 2025, and December 31, 2024:
| September 30, 2025 | December 31, 2024 | |||||||
| Market price of public stock | $ | $ | ||||||
| Risk-free interest rate | % | % | ||||||
| Dividend yield | ||||||||
| Expected life (in years) | ||||||||
| Volatility | % | % | ||||||
| Weighted average fair value per warrant | $ | $ | ||||||
Equity Incentive Plan
The Company’s 2025 Stock and Incentive Plan (the “2025
Incentive Plan”) for its employees, officers, consultants, advisors and non-employee Directors was approved by the stockholders
on June 19, 2025. The 2025 Incentive Plan is to provide equity-based compensation in the form of stock options, stock appreciation rights,
restricted stock, restricted stock units, dividend equivalents, or other stock-based awards. The total number of Common Stock reserved
under the 2025 Incentive Plan is
Stock Options
Common Stock Options
Common stock option activity is as follows:
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value(1) | |||||||||||||
| Balance, December 31, 2024 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Cancelled | ( | ) | ||||||||||||||
| Balance, September 30, 2025 | ||||||||||||||||
| Options exercisable, September 30, 2025 | $ | $ | ||||||||||||||
| (1) |
The following weighted average assumptions were used in the Black-Scholes option-pricing model for the valuation of the Common Share options issued:
| September 30, 2025 | December 31, 2024 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected life (in years) | ||||||||
| Volatility | % | % | ||||||
| Weighted average fair value per option | $ | $ | ||||||
16
The following table summarizes the total amount of share-based compensation expense related to service conditions for Common Stock options during the three and nine months ended September 30, 2025, and 2024:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative (1) | ||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | ||||||||||||
| (1) |
During the three months ended September 30, 2025 and 2024, stock-based
compensation expense relating to the ACI Canada Legacy Performance options was $ and $
NOTE 8 – CMS LICENSE AND COLLABORATION AGREEMENT
On January 8, 2025 (the “Effective Date”), the Company entered into a License, Collaboration and Distribution Agreement (the “CMS License Agreement”) with CMS International Development and Management Limited (“CMS”), pursuant to which the Company granted CMS an exclusive, transferable, sub-licensable, and royalty-bearing license to develop, register, manufacture, import, export, and commercialize ZUNVEYL (the “Product”) in the Asia-Pacific region (excluding Japan), Australia, and New Zealand (the “Territory”). ZUNVEYL is a next generation acetylcholinesterase inhibitor approved in the US for the treatment of mild-to-moderate Alzheimer’s disease.
Under the terms of the CMS License Agreement,
the Company received a one-time, non-refundable, non-creditable upfront payment of $
The CMS License Agreement remains in effect for
an initial term of
The total transaction price at inception was determined
to consist of the $
License of Intellectual Property
The license to the Company’s intellectual property represents
a distinct performance obligation. The license was transferred to CMS on the Effective Date to satisfy this performance obligation. The
Company allocated $
Regulatory, Technical, and Clinical Assistance
The Company’s promise to provide supporting services, whether
directly or in participation with the Joint Steering Committee, to CMS is expected to be primarily fulfilled during the early stages of
the contract through commercialization of the Product. These services represent a distinct performance obligation and will be recognized
over time as the services are rendered. Based on estimated effort and project timelines, $
17
Development and Regulatory Milestone Payments
The potential development and regulatory milestone payments are contingent upon the occurrence of certain milestones as defined in the CMS License Agreement. These payments have been fully constrained until the Company concludes that achievement of the milestone is probable and that recognition of revenue related to the milestone will not result in a significant reversal in amounts recognized in future periods. As such, they have been excluded from the transaction price. At the end of each subsequent reporting period, the Company will re-evaluate the probability of achievement of each milestone and any related constraint and, if necessary, adjust its estimate of the overall transaction price. The updated transaction price will be allocated to the two identified performance obligations based on estimated SSP. As of September 30, 2025, the Company has not recognized any revenue associated with the development and regulatory milestones.
Sales Milestone Payments and Royalties
Any consideration related to sales milestones or royalties will be recognized if and when the related sales occur as such amounts are determined to relate predominantly to the license granted to CMS. Accordingly, this consideration has been excluded from the transaction price. No allocation to performance obligations will be performed, as both the license and related assistance are expected to be satisfied by the time sales milestones and royalties are earned. No sales milestone or royalty revenue was recognized as of September 30, 2025.
Pass Through Costs
Included within licensing revenue is revenue from
the sale of active pharmaceutical ingredient (“API”) and finished goods to CMS in connection with the CMS License Agreement.
These API and finished goods sales support CMS’s development and regulatory activities and are priced at cost plus a margin. The
Company also includes certain pass through reimbursable costs within these revenue totals. These amounts are recognized on a gross basis.
Revenue related to API sales and reimbursable costs is recognized upon API shipment or delivery, depending on the applicable shipping
terms. As of September 30, 2025, the Company has recorded $
As of September 30, 2025, $
NOTE 9 – FOREIGN CURRENCY CONTRACTS
The Company has an obligation to make periodic royalty payments from its sale of products incorporating technology that has been licensed from Neurodyn Life Sciences Inc. (“NLS”). Because these payments will be made in EUR the Company is exposed to cash flow variability resulting from changes in USD/EUR exchange rates. Therefore, during September 2025, the Company entered into several foreign currency forward and foreign currency collar contracts that are intended to hedge its exposure to changes in the USD/EUR exchange rates on or about the dates certain of the Company’s forecasted royalty payments will be made.
The foreign currency forward and collar contracts are derivative instruments that must be accounted for at fair value. Each reporting period, the change in the fair value of each contract is recognized as a gain or loss classified as a component of “Other income (expense)” within the Company’s consolidated statement of operations.
At September 30, 2025 foreign currency forward
contracts to purchase EUR
At September 30, 2025 foreign currency collar
contracts with a notional amount of EUR
NOTE 10 – RELATED PARTY TRANSACTIONS AND BALANCES
In April 2022, Mr. McFadden was granted the ability
to earn up to
18
In May 2022, Ms. D’Angelo was granted the
ability to earn up to
As of September 30, 2025, and December 31,
2024, $
As of September 30, 2025, and December 31, 2024,
the Company owed NLS $ and $
NOTE 11 – NET LOSS PER SHARE
Net loss per common share has been computed on the basis of the weighted-average number of common shares outstanding during the three and nine months ended September 30, 2025, and 2024. Diluted loss per share is computed similarly to basic loss per share, except that it includes the potential dilution that could occur if dilutive securities were exercised. We apply the treasury stock method in the calculation of diluted loss per share.
In quarterly and year-to-date periods that liability-classified warrants are in the money, the Company determines whether such instruments are dilutive by calculating the effect on loss per share after considering both (a) the adjustment to the numerator that would result from reversing the impact of the change in fair value recorded to net loss during the period and (b) the adjustment to the denominator that would result from the incremental shares outstanding, using the treasury stock method, in an assumed exercise of these instruments at the beginning of the period.
The following table reconciles net loss and the weighted average shares outstanding for the basic calculation to the net loss and the weighted average shares outstanding for the diluted calculation for the periods indicated:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| Numerator, diluted: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Adjustment for gain in fair value of warrant liabilities | ( | ) | ( | ) | - | |||||||||||
| Adjusted numerator, diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator, diluted: | ||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Dilutive effect of common stock warrants | ||||||||||||||||
| Weighted average dilutive common shares | ||||||||||||||||
| Net loss per share, diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The following potentially dilutive common shares related to outstanding securities for the three and nine months ended September 30, 2025, and 2024 were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive for the period:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| Warrants | ||||||||||||||||
| Common Stock options | ||||||||||||||||
| ACI Canada legacy performance options | ||||||||||||||||
| Convertible debentures | ||||||||||||||||
| Total anti-dilutive features | ||||||||||||||||
NOTE 12 – SUBSEQUENT EVENTS
| a) | On October 2, 2025, the Company completed a public offering of Common Stock by issuing |
| b) | On October 17, 2025, the underwriter of the Company’s public offering exercised its over-allotment option in full to purchase an additional |
19
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and the accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, as previously filed with the Commission. This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors. See section heading “Special Note Regarding Forward-Looking Statements.”
Overview
The Company is a commercial stage biopharmaceutical company dedicated to developing treatments for patients suffering from neurodegenerative diseases, such as Alzheimer’s disease (“Alzheimer’s disease” or “AD”), for which there are limited or no treatment options. The Company focuses on the commercial manufacturing and commercial sales of ZUNVEYL oral tablet formulation. The Company’s commercial program for ZUNVEYL is primarily focused on its long-term care commercial team that can focus on providing key points of differentiation, exploiting key issues with existing AChEI treatments, and franchising potential additional indications and new products.
The Company launched ZUNVEYL on March 17, 2025, and targets the largest volume nursing homes specializing in Alzheimer’s disease, leveraging an account-based sales team with demonstrated success in LTC, positioning ZUNVEYL with Medicare payors, and developing strategic and clinical partnerships with consultant pharmacists and long-term care pharmacies. Alpha Cognition has set the Wholesale Acquisition Cost (WAC) for its therapeutic product at $820 per month. This pricing reflects the company’s commitment to balancing patient access with the value of innovative healthcare solutions. By establishing a competitive WAC price, Alpha Cognition aims to enhance affordability and ensure patients can benefit from our advanced treatment options. Patients’ out-of-pocket cost for treatment with ZUNVEYL will depend on their length of treatment and their insurance. The Company has three additional pre-clinical development programs: (1) ZUNVEYL in combination with memantine for the treatment of moderate-to-severe Alzheimer’s disease,(2) ALPHA-1062 sublingual oral tablet (“ALPHA-1062IN”) formulation for the treatment of cognitive impairment with mild traumatic brain injury (mTBI; otherwise known as concussion) and (3) ALPHA-0602, ALPHA-0702 & ALPHA-0802, also referred to as ‘Progranulin’ and ‘Progranulin GEM’s’, for the treatment of neurodegenerative diseases including amyotrophic lateral sclerosis, otherwise known as ALS or Lou Gehrig’s disease and spinal muscular atrophy (SMA).
ZUNVEYL, is a patented new innovative product being positioned as a next generation acetylcholinesterase inhibitor for the treatment of Alzheimer’s disease, with expected minimal gastrointestinal side effects. ZUNVEYL’s active metabolite is differentiated from donepezil and rivastigmine in that it binds neuronal nicotinic receptors, most notably the alpha-7 subtype, which is known to have a positive effect on cognition. ZUNVEYL is in pre-clinical development in combination with memantine to treat moderate to severe Alzheimer’s disease, in pre-clinical development with sublingual formulation for patients suffering from dysphagia, and is in pre-clinical development for cognitive impairment with mTBI.
Our other pre-clinical stage assets include ALPHA-0602, ALPHA-0702 & ALPHA-0802 (Progranulin and Progranulin GEM’s), which are expressed in several cell types in the central nervous system and in peripheral tissues, promotes cell survival, regulates certain inflammatory processes, and play a significant role in regulating lysosomal function and microglial responses to disease. Its intended use for the treatment of neurodegenerative diseases has been patented by the Company and ALPHA-0602 has been granted an Orphan Drug Designation for the treatment of ALS by the FDA. Orphan Drug Designation was provided for ALPHA-0602 by the Office of Orphan Drug Products, FDA on February 2020 based on the Federal Food Drug, and Cosmetic Act, whereby the ALPHA-0602 met the criteria designated in Section 526 of such Act. For a further description see the section entitled “Business — Government Regulation — Orphan Drug Designation”. The Orphan Drug Designation allows for exclusivity provisions provided the drug is approved first for indication: treatment of amyotrophic lateral sclerosis ALPHA-0702 and ALPHA-0802 are Granulin Epithelin Motifs, (“GEMs”), derived from full length progranulin which have therapeutic potential across multiple neurodegenerative diseases. GEMs have been shown to be important in regulating cell growth, survival, repair, and inflammation. ALPHA-0702 and ALPHA-0802 are designed to deliver this with potentially lower toxicity, and greater therapeutic effect. As the assets are pre-clinical assets and do not add material value to the Company, the Company will not develop these assets further and instead will seek to out-license the assets to interested third parties. Given the early stage of discussion with third parties, the Company cannot assess value to a license agreement.
20
The Company is the parent company of Alpha Cognition Canada Inc. (“Alpha Canada” or “ACI Canada”) which is the parent company of Alpha Cognition USA Inc. (“ACI USA”). As of May 1, 2023, the Company’s Common Shares commenced trading on the CSE under the symbol “ACOG”, previously the Company’s shares were traded on the TSX-V until April 28, 2023, when the Company had them delisted. As of November 12, 2024, the Company’s Common Shares commenced trading on The Nasdaq Capital Market under the symbol “ACOG”. The Company’s shares were voluntarily delisted from the CSE on December 17, 2024.
Operations
As of September 30, 2025, the Company had an accumulated deficit of $90,098,607 which has been primarily financed by equity. The Company had $35,457,299 in cash and cash equivalents, including restricted cash, and $6,830,223 in current liabilities (of which $44,464 is payable from the Company’s available restricted cash balance) as of September 30, 2025. The Company’s continuing operations, as intended, are highly dependent upon its ability to obtain additional funding and eventually generate cash flows. Management is of the opinion that it does have sufficient working capital to fully meet the Company’s liabilities and commitments as outlined and planned in the following discussion. Management is of the opinion it will need to raise additional capital to cover upcoming planned Research and Development (“R&D”), commercialization of ZUNVEYL and operating costs. Possible sources of such capital may come from private placements and public offerings of the Company’s Common Stock and funds received from the exercise of warrants and stock options. Additionally, the Company will also consider funding that may arise through partnership activities, including royalties, and debt. There is a risk that additional financing will not be available on a timely basis, on terms acceptable, or at all to the Company.
The Company is also contemplating raising capital by pursuing both dilutive and non-dilutive strategic sources of capital to fully execute its commercialization and operating plans following receipt of the NDA approval for ZUNVEYL from the FDA. Any additional capital is expected to further support our planned costs to begin commercial activities including launching U.S. sales of ZUNVEYL in AD.
Reverse Stock Split
On November 5, 2024, we completed a reverse stock split of our Common Shares with a stock split ratio of 1-for-25 (“Reverse Stock Split”).
Except as otherwise indicated, all references to our Common Shares, share data, per share data and related information depict the effect of the Reverse Stock Split as if it had occurred at the beginning of the earliest period presented. The Reverse Stock Split combined each twenty five shares of our outstanding shares of Common Stock into one common share, without any change in the par value per share which will remain no par value, and the Reverse Stock Split correspondingly adjusted, among other things, the number of Common Stock issuable upon exercise of outstanding options and warrants and the exercise price of such options and warrants and shares issuable upon conversion of preferred stock and other convertible securities. No fractional shares were or will be issued in connection with the Reverse Stock Split, and any fractional shares resulting from the Reverse Stock Split were rounded to the nearest whole share.
Components of our Results of Operations
Research and development
Research and development expenses represent costs incurred to conduct research, such as the discovery and development of our product candidates. We recognize all research and development costs as they are incurred unless there is an alternative future use in other research and development projects or otherwise.
Research and development expenses consists primarily of the following:
| ● | costs related to production of clinical supplies and non-clinical materials, including fees paid to contract manufacturers. |
| ● | employee-related expenses, which include salaries, benefits, and stock-based compensation. |
| ● | other expenses including travel and consulting services. |
21
General and administrative expenses
General and administrative expenses costs consist of personnel costs, other outside professional services including legal, human resources, audit and accounting services, consulting and pre-commercialization expenses, including selling and marketing costs as well attendance to various conferences. Personnel costs consist of salaries, benefits, and stock-based compensation. We expect to continue to incur expenses to support our continued operations as a public company, including expenses related to existing and future compliance with rules and regulations of the stock exchanges on which our securities are now traded, insurance expenses, investor relations, audit fees, professional services and general overhead and administrative costs.
Foreign exchange gain (loss)
The foreign exchange gain (loss) amount consists of changes in the value of the Canadian Dollar or Euro compared to the U.S. Dollar throughout the year.
Results of Operations
Comparison of the Three Months ended September 30, 2025 and 2024
| For the Three Months Ended September 30, | Dollar | Percentage | ||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Revenue | ||||||||||||||||
| Product sales, net | $ | 2,334,222 | $ | - | $ | 2,334,222 | 100 | % | ||||||||
| Licensing | 506,636 | - | 506,636 | 100 | ||||||||||||
| Total revenue | 2,840,858 | - | 2,840,858 | 100 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of product sales, excluding amortization of intangible asset | 162,777 | - | 162,777 | 100 | ||||||||||||
| License royalty cost of sales | 465,284 | - | 465,284 | 100 | ||||||||||||
| Amortization of intangible assets | 5,387 | 19,761 | (14,374 | ) | (73 | ) | ||||||||||
| Research and development | 573,592 | 996,029 | (422,437 | ) | (42 | ) | ||||||||||
| Selling, general and administrative expenses | 6,945,804 | 1,471,994 | 5,473,810 | 372 | ||||||||||||
| Total operating expenses | 8,152,844 | 2,487,784 | 5,665,060 | 228 | ||||||||||||
| Loss before other income (expenses) | (5,311,986 | ) | (2,487,784 | ) | (2,824,202 | ) | 114 | |||||||||
| Other income (expense) | ||||||||||||||||
| Interest income (expense), net | 377,671 | (16,763 | ) | 394,434 | (2,353 | ) | ||||||||||
| Grant income | 10,000 | 61,122 | (51,122 | ) | (84 | ) | ||||||||||
| Gain (loss) on warrant liabilities | 3,671,758 | 591,736 | 3,080,022 | 521 | ||||||||||||
| Other expenses | (65,517 | ) | (8,217 | ) | (57,300 | ) | 697 | |||||||||
| Total other income (expense) | 3,993,912 | 627,878 | 3,366,034 | 536 | ||||||||||||
| Net loss and comprehensive loss | $ | (1,318,074 | ) | $ | (1,859,906 | ) | 541,832 | (29 | ) | |||||||
| Net loss per share, basic | $ | (0.08 | ) | $ | (0.31 | ) | $ | 0.23 | (77 | ) | ||||||
| Weighted-average outstanding shares, basic | 16,144,120 | 6,030,259 | 10,113,861 | 168 | % | |||||||||||
| Adjusted net loss, diluted | $ | (4,985,664 | ) | $ | (1,859,606 | ) | $ | (3,126,058 | ) | 168 | ||||||
| Weighted-average outstanding shares, diluted | 16,413,023 | 6,030,259 | 10,382,764 | 172 | ||||||||||||
| Net loss per share, diluted | $ | (0.30 | ) | $ | (0.31 | ) | $ | 0.01 | 1 | |||||||
22
Comparison of the Nine Months ended September 30, 2025 and 2024
| For the Nine Months Ended September 30, | Dollar | Percentage | ||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Revenue | ||||||||||||||||
| Product sales, net | $ | 4,257,562 | $ | - | $ | 4,257,562 | 100 | % | ||||||||
| Licensing | 3,169,637 | - | 3,169,637 | 100 | ||||||||||||
| Total revenue | 7,427,199 | - | 7,427,199 | 100 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of product sales, excluding amortization of intangible asset | 294,672 | - | 294,672 | 100 | ||||||||||||
| License royalty cost of sales | 1,368,402 | - | 1,368,402 | 100 | ||||||||||||
| Amortization of intangible assets | 16,160 | 60,115 | (43,955 | ) | (73 | ) | ||||||||||
| Research and development | 1,298,223 | 2,879,945 | (1,581,722 | ) | (55 | ) | ||||||||||
| Selling, general and administrative expenses | 19,185,161 | 6,380,453 | 12,804,708 | 201 | ||||||||||||
| Total operating expenses | 22,162,618 | 9,320,513 | 12,842,105 | 138 | ||||||||||||
| Loss before other income (expenses) | (14,735,419 | ) | (9,320,513 | ) | (5,414,906 | ) | 58 | |||||||||
| Other income (expense) | ||||||||||||||||
| Interest income (expense), net | 1,265,210 | (26,007 | ) | 1,291,217 | 4,965 | |||||||||||
| Grant income | 81,095 | 333,462 | (252,367 | ) | (76 | ) | ||||||||||
| Gain (loss) on warrant liabilities | (352,451 | ) | 158,803 | (511,254 | ) | (322 | ) | |||||||||
| Other expenses | (72,004 | ) | (123,874 | ) | 51,870 | (42 | ) | |||||||||
| Total other income (expense) | 921,850 | 342,384 | 579,466 | 169 | ||||||||||||
| Net loss and comprehensive loss | $ | (13,813,569 | ) | $ | (8,978,129 | ) | $ | (4,835,440 | ) | 54 | ||||||
| Net loss per share, basic | $ | (0.86 | ) | $ | (1.51 | ) | $ | 0.65 | (43 | ) | ||||||
| Weighted-average shares used to compute net loss per share, basic | 16,051,354 | 5,928,460 | 10,122,894 | 171 | % | |||||||||||
| Adjusted net loss, diluted | $ | (14,045,89 | 0) | $ | (8,978,129 | ) | (5,067,761 | ) | 56 | |||||||
| Weighted-average outstanding shares, diluted | 16,086,664 | 5,928,460 | 10,158,204 | 171 | ||||||||||||
| Net loss per share, diluted | $ | (0.87 | ) | $ | (1.51 | ) | 0.64 | (42 | ) | |||||||
Research and development expenses
Comparison of Research and Development for the Three Months ended September 30, 2025 and 2024
Research and development expenses decreased by $422,437, or 42%, from $996,029 for the three months ended September 30, 2024, to $573,592 for the three months ended September 30, 2025. The decrease is primarily due to lower product development costs of approximately $89,000, and less time allocated to management and employees, which resulted in lower management fees and salaries, share-based compensation and employee costs of approximately $321,000. The Company reduced time in research and development after the FDA approval in July 2024.
Comparison of Research and Development for the Nine Months ended September 30, 2025 and 2024
Research and development expenses decreased by $1,581,722, or 55%, from $2,879,945 for the nine months ended September 30, 2024, to $1,298,223 for the nine months ended September 30, 2025. The decrease is primarily due to lower product development costs of approximately $513,000, and less time allocated to management and employees, which resulted in lower management fees and salaries, share-based compensation and employee costs of approximately $923,000. The Company reduced time in research and development after the FDA approval in July 2024.
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General and administrative expenses
Comparison of General and Administrative Expenses for the Three Months ended September 30, 2025 and 2024
General and administrative expenses increased by $5,473,810 or 372%, from $1,471,994 for the three months ended September 30, 2024, to $6,945,8044, for the three months ended September 30, 2025. Commercial operations, consulting fees, management fees and salaries, employee costs and other general and administrative costs increased by approximately $4,850,000, in support of the Company’s expansion in commercial operations and launch of ZUNVEYL. Share-based compensation increased by approximately $904,000 primarily due to the grant options issued during the three months ended September 30, 2025.
Comparison of General and Administrative Expenses for the Nine Months ended September 30, 2025 and 2024
General and administrative expenses increased by $12,804,708 or 201%, from $6,380,453 for the nine months ended September 30, 2024, to $19,185,161, for the nine months ended September 30, 2025. Commercial operations, management fees and salaries, employee costs, marketing and other general and administrative costs increased by approximately $11,640,000, in support of the Company’s expansion in commercial operations and launch of ZUNVEYL. Share-based compensation increased by approximately $3,280,000 primarily due to the grant options issued during the nine months ended September 30, 2025. Consulting fees and financing costs have decreased by approximately $1,575,000 and $478,000, respectively, due to reduction in services for raising capital.
Interest Income (Expense), net
Interest income (expense), net consists of interest earned and interest charges on the Company’s cash and cash equivalents.
Interest income (expense), net had a net change of $394,434 or 2,353% from interest expense of $16,763 for the three months ended September 30, 2024, to interest income, net of $377,671 for the three months ended September 30, 2025. Interest income (expense), net had a net change of $1,291,217 or 4,965% from interest expense of $26,007 for the nine months ended September 30, 2024, to interest income, net of $1,265,210 for the nine months ended September 30, 2025.
Change in Fair Value of Warrant Liabilities
The Company uses the Black-Scholes Option Pricing Model to determine the fair value of stock options and standalone share purchase warrants issued. This model requires the input of subjective assumptions including expected share price, volatility, and interest rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings (loss) and equity reserves.
The gain of $3,671,758 for the three months ended September 30, 2025, for the fair value of the warrant liabilities was a net change of $3,080,022, or 521%, compared to a gain of $591,736 for the three months ended September 30, 2024. The loss of $352,451 for the nine months ended September 30, 2025, for the fair value of the warrant liabilities was a net change of $511,254, or 322%, compared to a gain of $158,803 for the nine months ended September 30, 2024. The change was primarily due to the fluctuation in the Company’s stock price to the comparative period and the reallocation of the derivative for the 128,578 warrants exercised in the three months ended September 30, 2025.
Liquidity and Capital Resources
Sources of Liquidity
The Company does not have sufficient operating revenue to finance its existing obligations and has relied on external financing, such as debt and equity raises, to generate capital to maintain its capacity to meet working capital requirements. The Company has relied on debt and equity raises to finance its operating activities since incorporation. The Company has successfully raised funds that exceed the Company’s working capital requirements for the next 12 months from the date of issuance of these condensed consolidated financial statements. The Company expects to continue to rely on debt and the issuance of shares, and possibly other non-dilutive financing options to finance its ongoing operations and plans for commercialization of ZUNVEYL. However, there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company.
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Future Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue the commercialization of ZUNVEYL, following the FDA’s approval in July 2024 and potentially seek to discover and develop additional product candidates, conduct our ongoing and planned clinical trials and preclinical studies, continue our R&D activities, utilize third parties to manufacture ZUNVEYL, hire additional personnel, expand and protect our intellectual property, and incur additional costs associated with being a public company.
Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses, and prepaid expenses. The timing and amount of our funding requirements will depend on many factors, including:
| ● | the initiation, type, number, scope, progress, expansions, results, costs and timing of clinical trials and preclinical studies of ZUNVEYL and any future product candidates we may choose to pursue, including the costs of modification to clinical development plans based on feedback that we may receive from regulatory authorities and any third-party products used as combination agents in our clinical trials; |
| ● | the costs, timing and outcome of regulatory meetings and reviews of ZUNVEYL or any future product candidates, including requirements of regulatory authorities in any additional jurisdictions in which we may seek approval for ZUNVEYL and any future product candidates; |
| ● | the costs of obtaining, maintaining, enforcing and protecting our patents and other intellectual property and proprietary rights; |
| ● | our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal control over financial reporting; |
| ● | the costs associated with hiring additional personnel and consultants as our business grows, including additional executive officers and clinical development, regulatory, CMC quality and commercial personnel; |
| ● | the costs and timing of establishing or securing sales and marketing capabilities of any future product candidate approval; |
| ● | our ability to achieve sufficient market acceptance, coverage, and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products; |
| ● | our ability and strategic decision to develop future product candidates other than ZUNVEYL, and the timing of such development, if any; |
| ● | patients’ willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payors; |
| ● | the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and |
| ● | costs associated with any products or technologies that we may in-license or acquire. |
Based upon our current operating plan, we estimate that our existing cash and cash equivalents as of the date of this filing, will be sufficient to fund our projected base ongoing operating expenses, commercialization costs of ZUNVEYL in AD, ongoing CMC costs, pre-clinical formulation and study R&D work, and ongoing operating costs and capital expenditures through at least the next 24 months. We may choose to raise additional capital to continue to further advance our commercialization plans and ongoing operating costs. However, we may have based our estimates on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. In addition, we could utilize our available capital resources sooner than we expected. The Company may also contemplate raising additional capital by pursuing both dilutive and non-dilutive strategic sources of capital to fully execute its commercial, R&D, and operating plans for ZUNVEYL. Any additional capital would further support our R&D and commercial activities related to U.S. sales of ZUNVEYL in AD.
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In August 2025, the Company entered into an ATM agreement with H.C. Wainright & Co., LLC as the sales agent. The Company currently has not utilized it, until such time, we can generate substantial product revenue, we expect to finance our operations other capital sources, including current or potential future collaborations, licenses, royalties and other similar arrangements. We do not know what the terms of these future financings will be and whether they will be acceptable to the us or not and, therefore, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. To the extent we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions, engaging in acquisition, merger or collaboration transactions, selling or licensing our assets, making capital expenditures, redeeming our stock, making certain investments or declaring dividends. If we raise additional funds through collaborations or license agreements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, or even cease operations.
Recent capital raising activities
On September 24, 2024, the Company announced the closing of a $4.545 million bridge financing through the issuance of convertible notes and warrants led by existing investors and select new investors comprised of institutional funds and high-net-worth accredited investors.
| ● | The notes are convertible into common shares of the Company at a conversion price of $10.55 per share. The notes were set to mature on September 24, 2026, had an aggregate face value of $4.545 million and bears interest at a rate of 10% per annum paid in common shares of the Company at the conversion price, subject to certain limitations. The notes were subject to mandatory conversion into common shares of the Company in conjunction with the closing of an offering of securities of the Company for at least $10 million in aggregate gross proceeds in coordination with the simultaneous uplisting of the common shares of the Company onto a United States national securities exchange (a “Qualified Offering”). Such conversion was completed into the securities offered in such Qualified Offering at the lower of (i) the conversion price in effect at such time and (ii) the offering price of the securities in the Qualified Offering. The notes were unsecured and rank senior to the Company’s other indebtedness. |
| ● | The notes were sold along with warrants to purchase common shares of the Company at an exercise price of $10.55 for a five-year term. Each investor received warrants sufficient to purchase such number of common shares equal to the principal amount of notes such investor purchased divided by the conversion price of the notes. Each investor will receive an additional 50% of warrants with identical terms upon the closing of a Qualified Offering, as described above. The exercise price of the warrants is subject to adjustment upon the completion of a Qualified Offering to the lower of (i) the then existing exercise price, (ii) the exercise price of any common share purchase warrants issued in the Qualified Offering or (iii) if no common share purchase warrants are issued in the Qualified Offering, the closing price of the common shares on the Canadian Securities Exchange (as converted into U.S. dollars) immediately prior to the pricing news release of the Qualified Offering. |
On November 13, 2024, the Company completed a public offering of common shares by issuing 8,695,653 common shares at a public offering price of $5.75 per share for gross proceeds of approximately $50 million. In connection with the US public offering, the Company’s Common Shares began trading on The Nasdaq Capital Market on November 12, 2024.
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The completion of the public offering of common shares was a “Qualified Offering” under the Company’s convertible notes, which automatically converted into 801,413 common shares at closing of the public offering at a price of $5.75 per share, being the public offering price in the Qualified Offering. The amount converted consisted of the converted principal amount of convertible notes and interest through November 13, 2024.
Additionally, as a result of the closing of the Qualified Offering, the Company issued an additional 215,421 warrants exercisable to acquire 215,421 Common Shares with an exercise price of $7.19 per share and the exercise price of the Company’s existing 430,835 warrants issued in connection with the offering of the convertible notes was repriced from $10.55 per share to $7.19 per share.
On December 12, 2024, the underwriter of the Company’s underwritten U.S. public offering partially exercised its over-allotment option to purchase an additional 488,506 common shares at the public offering price of $5.75 per share for additional gross proceeds of $2.8 million.
On October 2, 2025, the Company completed a public offering of Common Shares by issuing 4,651,516 Common Shares at a public offering price of $6.25 per share and 948,484 pre-funded warrants exercisable to Common Stock with an exercise price of $0.001 per share for total gross proceeds of approximately $35 million. In connection with this offering, the Company incurred underwriting fees of approximately $2.11 million.
On October 17, 2025, the underwriter of the Company’s public offering exercised its over-allotment option in full to purchase an additional 840,000 Common Shares at the public offering price of $6.25 per share for additional gross proceeds of approximately $5.25 million.
Financing Activities
Cash Flows
The following table provides information regarding our cash flows for the nine months ended September 30, 2025, and 2024:
| For the Nine Months Ended September 30, | Dollar | Percentage | ||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Consolidated Statement of Cash Flows Data | ||||||||||||||||
| Cash used in operating activities | $ | (13,473,949 | ) | $ | (5,451,927 | ) | $ | (8,022,022 | ) | 147 | % | |||||
| Cash used in investing activities | $ | (145,966 | ) | $ | - | $ | (145,996 | ) | 100 | % | ||||||
| Net cash provided by (used in) financing activities | $ | 513,132 | $ | 7,730,753 | $ | (7,217,621 | ) | (93 | )% | |||||||
Cash used in operating activities
Cash used in operating activities increased by $8,022,022 to $13,473,949 for the nine months ended September 30, 2025, from $5,451,927 for the comparative period. Net loss increased by $5,047,869 when compared to the comparative period. The increase was primarily related to the increase employee costs increased by approximately $8.3 million, non-cash share-based compensation increased by approximately $3.2 million and commercial and marketing costs increased by approximately $992,000. These increases are due to the hiring additional personnel and commercial activity to promote our product, ZUNVEYL, which received FDA approval in July 2024.
Cash used in investing activities
Cash used in investing activities increased by $145,966 to $145,966 for the nine months ended September 30, 2025, from $nil compared to the comparative period. During the nine months ended September 30, 2025, investing activities consisted of acquiring equipment due expansion of commercial activity.
Cash provided by used in financing activities
Cash provided by financing activities for the nine months ended September 30, 2025, decreased by $7,217,621 compared to the comparative period. During the nine months ended September 30, 2025, financing activities primarily consisted of proceeds of $1,384,066 from the exercise of options and warrants, principal repayment of the promissory note of $911,463 and receiving $174,675 in government grant proceeds offset by $134,146 of related grant expenses. During the nine months ended September 30, 2024, financing activities primarily consisted of raising proceeds of $3,732,469 from units issued for cash, proceeds $4,545,000 from the issuance of convertible debentures offset by issuance costs of $459,360, proceeds of $160,000 from the exercise of warrants and receiving $290,825 in government grant proceeds offset by $205,917 of related expenses.
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Contractual Obligations and Other Commitments
In the normal course of business, we enter into agreements with contract service providers to assist in the performance of R&D and clinical and commercial manufacturing activities. We currently have two license agreements, ALPHA-1062 technology and ALPHA-602 technology, which are outlined below. We expect to enter into additional clinical development, contract research, clinical and commercial manufacturing, supplier, and collaborative research agreements in the future, which may require upfront payments and long-term commitments of capital resources.
See “Note 13 – Commitments and Contingencies” of the financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our contractual obligations and long-term commitments.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Use of Estimates and Assumptions
There have been no significant changes to our critical accounting estimates since December 31, 2024. For a description of our critical accounting estimates and significant judgments used in the preparation of our condensed consolidated financial statements, refer to Note 2 to our Condensed Consolidated Financial Statements included in this Quarterly Report, as well as Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report and Note 2 to our audited Consolidated Financial Statements contained in our 2024 Annual Report.
Emerging Growth Company Status and Smaller Reporting Company Status
We are an emerging growth company, as defined in the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards. We have elected to avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that we either (i) irrevocably elect to opt out of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. We will continue to remain an emerging growth company until the earliest of the following: (1) December 31, 2029; (2) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion; (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting Common Shares held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting Common Shares held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
At the end of the period covered by this quarterly report on Form 10-Q for the nine months ended September 30, 2025, an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO and the CFO have concluded that as of the end of the period covered by this quarterly report, our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by us in reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
Management determined that disclosure controls and procedures were not effective as of end of the period covered by this quarterly report due to a material weakness in internal control over financial reporting as described below. Notwithstanding this material weakness described below, management has concluded that our financial statements included in this quarterly report on Form 10-Q are fairly stated in all material respects in accordance with GAAP for each of the periods presented therein.
Changes in Internal Control over Financial Reporting
Management has identified a material weakness in internal control over financial reporting in connection with the review of our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2025. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting such that it is reasonably possible that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified is a result of certain control deficiencies related to the precision of our review over the initial valuation and subsequent remeasurement of the non-cash warrant liability recognized as a part of the conversion of our debt financing in November 2024.
We plan to remediate this material weakness by enhancing our system of internal controls, including those involving the third-party valuation specialist. Although we are committed to continuing to improve our internal control processes and intend to remediate our material weakness, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.
During the nine months ended September 30, 2025, the Company implemented enhanced month-end review procedures as part of its ongoing efforts to strengthen internal control over financial reporting. These enhancements include additional management review controls over account reconciliations, variance analyses, and journal entry approvals at month-end. This will improve the timeliness and accuracy of financial information and to ensure that potential errors are identified and addressed promptly.
Other than the implementation of these month-end review procedures, there were no changes in the Company’s internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not currently a party to any material legal proceedings. However, from time to time, we may become involved in other litigation or legal proceedings relating to claims arising from the ordinary course of business.
ITEM 1A. RISK FACTORS.
Except as set forth below, there have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 31, 2025.
Recently announced changes to U.S. trade policy, including recently announced tariffs, could adversely affect our business.
On April 2, 2025, the U.S. administration issued Executive Order 14257, which imposed a 10% “baseline” tariff for nearly all U.S. trading partners, and additional individualized country specific “reciprocal tariffs”. In response to adverse global market reactions, the U.S. administration suspended the country specific tariff increases to allow time for negotiations with trading partners. Except for countries that reached trade deals with the United States, the reciprocal tariffs resumed in August 2025. As of November 2025, significant tariffs and trade sanctions between the United States and China remain in place. As a consequence of the increased tariffs, concerns have been expressed regarding inflationary pressures, depression in worldwide economic activity, lower economic growth, disruptions in supply chains and trade relationships and contraction of customer demand. This has created significant economic uncertainty and political tensions, with resulting downward pressures on domestic and international financial markets.
It is difficult to know at this time if overall we will benefit from these developments or will be negatively affected by them.
We are monitoring and evaluating any potential impacts that increased tariffs and other trade restrictions may have on our business, and considering ways in which we may offset these impacts. There is no assurance, however, that we will be successful in mitigating the effects on us of increased trade regulation in the current environment.
Failure to remediate a material weakness in internal control over financial reporting could result in material misstatements in our consolidated financial statements.
Our management has identified a material weakness in our internal control over financial reporting. The material weakness identified is a result of certain control deficiencies related to the precision of our review over the initial valuation and subsequent remeasurement of the non-cash warrant liability recognized as a part of the conversion of our debt financing in November 2024.
If this remaining material weakness, which management concluded is still present as of the date of these financial statements, is not remediated, or if we identify further material weaknesses in our internal control over financial reporting, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our consolidated financial statements in future periods and a failure to meet our reporting and financial obligations on a timely basis.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Unregistered Sales of Equity Securities
None.
Repurchase of Equity Securities
During the nine months ended September 30, 2025, the Company did not repurchase any of its equity securities.
Use of Proceeds
On November 13, 2024, the Company completed a public offering of common shares by issuing 8,695,653 common shares at a public offering price of $5.75 per share for gross proceeds of approximately $50 million and net proceeds, after deducting discounts and commissions and estimated offering expenses payable by us, of approximately $46.15 million. The initial public offering was completed pursuant to the Company’s registration statement on Form S-1 (333-280196) which was brought effective by the SEC on November 8, 2024, registering 8,695,653 common shares and pre-funded warrants to purchase up to 8,695,653 common shares to gross aggregated proceeds of $50 million. No pre-funded warrants were sold in the offering. Titan Partners Group acted as the managing underwriter for the offering. In connection with the offering, the Company paid Titan Partners Group an underwriting discount of approximately $3 million and a non-accountable expense allowance of $500,000. We also paid Spartan Capital Partners, LLC an investment banking fee of $500,000. We paid an aggregate total of approximately $350,000 in other expenses, including expense reimbursement to Titan Partners Group, legal and accounting fees, transfer agent fees and printing costs.
Consistent with the Company’s described use of proceeds in its registration statement, to date the Company has spent approximately $10.0 million of its net proceeds to begin our efforts toward our commercialization and launch of ZUNVEYL formerly known as ALPHA-1062 in Alzheimer’s disease; approximately $1.86 million for continued commercial CMC activities (chemistry, manufacturing, and controls); approximately $0.91 million on repayment of outstanding loan and approximately $6.13 million for working capital and general corporate purposes. As of September 30, 2025, the Company has approximately $27.25 million of the net proceeds remaining in the bank.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
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ITEM 4. MINE SAFETY DISCLOSURE.
Not applicable.
ITEM 5. OTHER INFORMATION.
(a) None.
(b) None.
(c) During the quarter ended September 30, 2025,
none of our directors or officers
ITEM 6. EXHIBITS.
The following exhibits are filed as part of this report:
| * | Filed herewith |
| (1) | Submitted electronically herewith. Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2025 and 2024, (ii) Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024, (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024, and (iv) Notes to Condensed Consolidated Financial Statements. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ALPHA COGNITION INC. (Registrant) | ||
| Dated: November 13, 2025 | By: | /s/ Michael McFadden |
| Michael McFadden, | ||
| Chief Executive Officer | ||
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