Medicus Pharma Ltd.: Form 10-Q - Filed by newsfilecorp.com

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number: 001-42408

MEDICUS PHARMA LTD.

(Exact Name of Registrant as Specified in Its Charter)

Ontario, Canada		98-1778211
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

300 Conshohocken State Rd., Suite 200 W. Conshohocken, PA		19428
(Address of principal executive offices)		(Zip Code)

(610) 636-0184

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, no par value	MDCX	The Nasdaq Capital Market

Warrants, each exercisable for one common share at an exercise price of $4.64 per share	MDCXW	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2of the Exchange Act).
Yes ☐ No ☒

As of May 8, 2025, there were 13,494,861 common shares, no par value, issued and outstanding.

MEDICUS PHARMA LTD.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2025

TABLE OF CONTENTS

		Page
Part I.	Financial Information	1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2025 and 2024 (Unaudited)	2
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2025 and 2024 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 (Unaudited)	4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures Regarding Market Risk	23
Item 4.	Controls and Procedures	24
Part II.	Other Information	25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
Part III.	Signatures	27

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that involve substantial risks and uncertainties. All statements, other than statements of historical facts contained in this Quarterly Report on Form 10-Q regarding our strategy, future operations, future financial position, projected costs, prospects, plans, and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "would," or the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties, and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated.

The forward-looking statements in this Quarterly Report on Form 10-Q and those contained in (i) our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission ("SEC") on March 28, 2025 (the "2024 Annual Report") include, among other things, statements about:

our financial results, including our ability to generate earnings and achieve and sustain profitability, which may vary significantly from forecasts and from period to period;
the progress, timing and completion of our research, development and preclinical studies and clinical trials for our products and product candidates;
our ability to market, commercialize, achieve market acceptance for and sell our products and product candidates;
our ability to develop, manage and maintain our direct sales and marketing organizations;
our estimates regarding anticipated operating losses, future revenues, capital requirements and our needs for additional financing;
market risks regarding consolidation in the healthcare industry;
the willingness of healthcare providers to purchase our products if coverage, reimbursement and pricing from third party payors for procedures using our products significantly declines;
our ability to adequately protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
the fact that product quality issues or product defects may harm our business;
any product liability claims; and
the regulatory, legal and certain operating risks that our operations subject us to.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors" in Part I, Item 1A in the 2024 Annual Report and Part II, Item 1A of this Quarterly Report on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

PART I - FINANCIAL INFORMATION

Item 1. Interim Financial Statements.

MEDICUS PHARMA LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2025			December 31, 2024
		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,982,430		$	4,164,323
Prepaid expenses and other current assets		1,105,345			1,213,984
Total current assets		5,087,775			5,378,307
Operating lease right-of-use assets		245,091			268,571
Deferred issuance costs		325,000			-
Total assets	$	5,657,866		$	5,646,878

Liabilities and Shareholder's equity
Current liabilities:
Accounts payable	$	2,035,364		$	1,284,612
Accrued expenses and other current liabilities		1,062,040			762,835
Related party payable		118,215			142,459
Operating lease liability, current		120,296			116,323
Total current liabilities		3,335,915			2,306,229
Operating lease liability, non-current		174,397			205,945
Total liabilities		3,510,312			2,512,174

Commitments and contingencies (Note 10)

Shareholders' equity
Common shares, no par value; unlimited shares authorized; 13,417,561 and 11,816,721 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		32,908,702			30,518,195
Additional paid-in capital		3,245,163			1,520,412
Accumulated deficit		(34,006,311	)		(28,903,903	)
Total shareholders' equity		2,147,554			3,134,704
Total liabilities and shareholders' equity	$	5,657,866		$	5,646,878

The accompanying notes are an integral part of the unaudited condensed financial statements.

MEDICUS PHARMA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

		Three months ended March 31,
		2025			2024
Operating expenses:
General and administrative	$	3,120,060		$	1,385,981
Research and development		2,006,214			321,377
Total operating expenses		5,126,274			1,707,358
Loss from operations		(5,126,274	)		(1,707,358	)

Other income
Finance income		23,866			-
Total other income		23,866			-
Net loss and comprehensive loss for the year	$	(5,102,408	)	$	(1,707,358	)

Net loss per share attributable to common shareholders - basic and diluted	$	(0.42	)	$	(0.21	)

Weighted average number of common shares outstanding - basic and diluted		12,240,437			8,076,673

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

MEDICUS PHARMA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)

	Common shares				Additional		Accumulated
	Shares		Amount		paid-in capital		deficit			Total
Balance as of December 31, 2024	11,816,721	$	30,518,195	$	1,520,412	$	(28,903,903	)	$	3,134,704
Issuance of common shares and warrants in connection with Regulation A, net of issuance costs of $483,020	1,490,000		2,076,507		1,612,474		-			3,688,981
Issuance of common shares in connection with SEPA offering costs	105,840		300,000		-		-			300,000
Issuance of common shares upon exercise of stock warrants	5,000		14,000		-		-			14,000
Stock-based compensation	-		-		112,277		-			112,277
Net loss and comprehensive loss for the period	-		-		-		(5,102,408	)		(5,102,408	)
Balance as of March 31, 2025	13,417,561	$	32,908,702	$	3,245,163	$	(34,006,311	)	$	2,147,554

	Common shares				Additional		Accumulated
	Shares		Amount		paid-in capital		deficit			Total
Balance as of December 31, 2023	8,076,673	$	18,761,250	$	98,585	$	(17,748,387	)	$	1,111,448
Stock-based compensation	-		-		35,953		-			35,953
Net loss and comprehensive loss for the period	-		-		-		(1,707,358	)		(1,707,358	)
Balance as of March 31, 2024	8,076,673	$	18,761,250	$	134,538	$	(19,455,745	)	$	(559,957	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

MEDICUS PHARMA LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		Three months ended March 31,
		2025			2024
Cash flows from operating activities:
Net loss for the period	$	(5,102,408	)	$	(1,707,358	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		112,277			35,953
Change in operating lease right-of-use assets		23,480			30,945
Changes in operating assets and liabilities:
Prepaid expenses		122,639			61,643
Accounts payable		655,634			364,275
Accrued expenses and other current liabilities		299,203			(9,657	)
Operating lease liability		(27,575	)		-
Related party payable		(24,244	)		47,266
Net cash used in operating activities		(3,940,994	)		(1,176,933	)
Cash flows from financing activities:
Net proceeds from issuance of common shares and warrants in connection with Regulation A		3,784,101			-
Cash paid for financing costs in connection with SEPA		(25,000	)		-
Net cash provided by financing activities		3,759,101			-
Net decrease in cash and cash equivalents during the period		(181,893	)		(1,176,933	)
Cash and cash equivalents, beginning of the year		4,164,323			1,719,338
Cash and cash equivalents, end of the year	$	3,982,430		$	542,405

Supplemental disclosure of non-cash investing and financing activities
Right-of-use assets obtained in exchange for lease liabilities	$	-		$	356,805
Receivable for proceeds of warrant exercises	$	14,000		$	-
Issuance costs included in accounts payable	$	95,120		$	-
Deferred issuance costs on issued shares related to SEPA agreement	$	300,000		$

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

MEDICUS PHARMA LTD.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Description of business

Medicus Pharma Ltd. (the "Company" or "Medicus Pharma"), formerly Interactive Capital Partners Corporation ("Interactive"), is a clinical stage, multi-strategy holding company focused on investing in and accelerating novel life sciences and bio-technology companies through FDA approved clinical trials.

The Company is a public limited Company originally incorporated pursuant to the provisions of the Business Corporations Act (Ontario) on April 30, 2008, as a private company named Interactive Capital Partners Corporation, with nominal assets and liabilities. The Company's registered office is located at 100 King Street West, Suite 3400, One First Canadian Place, Toronto, Ontario, Canada.

Liquidity and Going Concern

The Company has incurred significant operating losses and cash outflows from operating activities since its inception. The Company incurred net losses of $5,102,408 and $1,707,358 for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, the Company had an accumulated deficit of $34,006,311. Since inception, the Company has funded its operations primarily through equity and debt financings.

On February 10, 2025, the Company announced that it had entered into the SEPA (as defined below). Subject to the satisfaction of certain conditions, Yorkville (as defined below) has committed to purchase the Company's common shares up to an aggregate gross sales price of $15,000,000 during the 36 months following the date of the SEPA. See Note 6 for further details.

On March 10, 2025, the Company closed its Tier II Regulation A offering for gross proceeds of approximately $4,200,000. The Company issued 1,490,000 units at a price of $2.80 per unit. Each unit consists of one common share of the Company and one warrant to purchase one common share.

The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. In addition to accessing public markets through the exercise of outstanding warrants, additional Regulation A financings and the SEPA, management believes that the Company has access to additional capital resources through public and/or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, if the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays or entirely prevent the Company's continued efforts to commercialize its current or future products, which are critical to the realization of its business plan and the future operations of the Company. This uncertainty, along with the Company's history of losses, indicates that there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

Reverse Share Split

On June 25, 2024, the Company's shareholders approved an amendment to the Company's articles of incorporation to provide for the share consolidation, or reverse share split, of the Company's issued and outstanding common shares at such a consolidation ratio to be determined by the Board of Directors of the Company in its sole discretion, to permit the Company to satisfy all conditions and necessary regulatory approvals to list the common shares on a U.S. national securities exchange as the Board of Directors of the Company may determine in its sole direction (the "Share Consolidation"). The Board of Directors of the Company approved the Share Consolidation on October 15, 2024, and the Share Consolidation was completed by the Company on October 28, 2024, at the ratio of 1-for-2.

After the completion of the Share Consolidation, the number of the Company's issued and outstanding common shares decreased from 21,693,560 to 10,846,721. The par value of the Company's common shares remains unchanged at $0 per share after the Share Consolidation.

Share and per share data presented in these consolidated financial statements for all periods presented has been adjusted for the Share Consolidation.

2. Summary of significant accounting policies

Basis of presentation and consolidation

The accompanying unaudited condensed consolidated financial statements included herein have been prepared in conformity with generally accepted accounting principles in the United States ("GAAP") and under the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim reporting. The accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, that are necessary to present fairly the Company's financial position, results of operations, and cash flows. The condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosures of the Company normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted under the SEC's rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto for the year ended December 31, 2024, included in the Company's Annual Report on Form 10-K filed with the SEC on March 28, 2025 (the "2024 Annual Report"). These financial statements include the financial statements of the Company and its wholly-owned subsidiaries, SkinJect, Inc. and Medicus Pharma Inc. All intercompany balances and transactions have been eliminated on consolidation. The functional currency of the Company and its wholly-owned subsidiaries is the United States dollar.

Use of estimates

The preparation of these condensed consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of income and expenses during the reporting period. Such estimates include the valuation of stock-based awards, the incremental borrowing rate used to discount the Company's operating lease liabilities, and the valuation allowance relating to the Company's deferred tax assets, all of which are management's best estimates. Estimates are based on historical experience, where applicable, and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in estimates in future years could be significant. Management believes that the estimates utilized in preparing the financial statements are reasonable, however, actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents include cash held at financial institutions and short-term investments in highly liquid marketable securities, having an original maturity of three months or less. The Company holds money market accounts with maturities of three months or less. These money market accounts are included in cash and cash equivalents on the accompanying consolidated balance sheets.

Research and development

All research and development costs are expensed as incurred. Research and development costs consist primarily of salaries, employee benefits, costs associated with preclinical studies and clinical trials (including amounts paid to clinical research organizations and other professional services). Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

The Company records accruals for estimated research and development costs, comprising payments for work performed by third party contractors, laboratories, participating clinical trial sites, and others. Some of these contractors bill monthly based on actual services performed, while others bill periodically based upon achieving certain contractual milestones. For the latter, the Company accrues the expenses as goods or services are used or rendered. Clinical trial site costs related to patient enrollment are accrued as patients enter and progress through the trial. Upfront costs, such as costs associated with setting up clinical trial sites for participation in the trials, are expensed immediately once incurred as research and development expenses.

Stock-based compensation

The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company records the expense for stock-based compensation awards subject to vesting over the requisite service period. The Company estimates the fair value of stock option grants and shares purchasable under the Company's Equity Incentive Plan (the "Plan") using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. The Company accounts for forfeitures as they occur. All stock-based compensation costs are recorded in the statements of operations and comprehensive loss based upon the underlying employees or non-employee's roles within the Company.

Net loss per share

Basic net loss per share is calculated by dividing net loss by the weighted average number of shares outstanding during the period. Diluted net loss per share is calculated by dividing net loss by the sum of the weighted average number of shares outstanding and all additional shares that would have been outstanding if potentially dilutive shares had been exercised at the beginning of the period.

Income Taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes, which provides for deferred taxes using an asset and liability approach. Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. For the three months ended March 31, 2025 and 2024, the Company recorded zero income tax expense. No tax benefit has been recorded in relation to the pre-tax loss for the three months ended March 31, 2025 and 2024, due to a full valuation allowance to offset any deferred tax asset related to net operating loss carry forwards attributable to the losses.

Fair value of financial instruments

Financial instruments, including cash and cash equivalents and accounts payable are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The fair value of lease obligations approximates their carrying amounts as a market rate of interest is attached to their repayment. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The Company uses three levels of inputs that may be used to measure fair value:

Level 1-Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the reporting date.

Level 2- Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3-Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions. The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity.

Concentration of credit risk

Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company's cash and cash equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company maintains its cash equivalents in money market funds that invest in U.S. Treasury and agency securities.

Foreign currency transactions

Foreign exchange transaction gains and losses are included in general and administrative expense in the Company's consolidated statement of operations and comprehensive loss.

Operating segments

Operating segments are identified as components of an entity about which separate discrete financial information is available for evaluation by the chief operating decision-maker ("CODM") in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment.

Recently adopted accounting pronouncements

In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" to expand the disclosures required by public entities for reportable segments, thereby responding to stakeholders' requests for more detailed information about expenses within each reportable segment. The expanded disclosures now require public entities to disclose significant expenses for reportable segments in both interim and in annual reporting periods, while entities with only a single reportable segment must now provide all segment disclosures required both in ASC 280 and under the amendments in ASU 2023-07. ASU 2023-07 is effective for interim periods beginning January 1, 2025. See Note 11 for enhanced segment reporting disclosures.

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The disclosures will be implemented as required for the year-ended December 31, 2025. The Company is currently evaluating the impact of adopting this guidance.

Recently issued accounting pronouncements

In November 2024, the FASB issued ASU 2024-03 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures" to provide greater transparency about the components of specific expense categories in the income statements. The effective dates of ASU 2024-03 were subsequently clarified by ASU 2025-01. ASU 2025-01 is effective for our annual period beginning January 1, 2027, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

In November 2024, the FASB issued ASU 2024-04 "Debt-Debt with Conversion and Other Options (Subtopic 470-20: Induced Conversions of Convertible Debt Instruments", to improve consistency and relevance of accounting for induced conversions of convertible debt instruments and it addresses scenarios involving convertible debt instruments and cash conversion features and those not currently convertible. ASU 2024-04 is effective for our annual period beginning January 1, 2026, with early adoption permitted for entities that adopted the amendment in ASU 2020-06. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

There were no other significant updates to the recently issued accounting standards which may be applicable to the Company. Although there are several other new accounting pronouncements issued or proposed by the FASB, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results.

3. Balance sheet components

Prepaid expenses and other current assets include the following:

		March 31, 2025		December 31, 2024
		(Unaudited)
Insurance	$	408,938	$	583,561
Contract research organizations		355,810		455,810
Professional services		250,109		144,643
Prepaid services		76,488		29,970
Receivable for proceeds of warrant exercises		14,000		-
	$	1,105,345	$	1,213,984

Accrued expenses and other current liabilities include the following:

		March 31, 2025		December 31, 2024
		(Unaudited)
Accrued legal fees	$	553,835	$	495,016
Accrued compensation and benefits		89,701		140,989
Accrued other		418,504		126,830
	$	1,062,040	$	762,835

4. Leases

As of March 31, 2025, the Company had one operating lease for its corporate office that commenced in 2024, for which the Company recorded a right-of-use asset and lease liability as of the commencement date. The Company's lease does not contain a purchase option. Where the Company's lease contains an option to extend the lease term, the extended lease term is only included in the measurement of the lease when it is reasonably certain to remain in the lease beyond the non-cancellable term. The Company's lease also contains variable lease costs, which pertain to common area maintenance and other operating charges, that are expensed as incurred.

Balance sheet information related to the Company's lease is presented below:

		Three Months Ended March 31,		Year Ended December 31,
		2025		2024
Operating lease
Operating lease right-of-use assets	$	245,091	$	268,571
Operating lease liabilities - current		120,296		116,323
Operating lease liabilities - non-current		174,397		205,945

Other information related to leases is presented below:

		Three Months Ended March 31,		Three Months Ended March 31,
		2025		2024
Lease cost
Operating lease cost	$	30,945	$	30,945
Other information
Operating cash flows used in operating leases		35,040		-
Remaining lease term (in years)		2.17		3.17
Discount rate		10%		10%

As of March 31, 2025, the annual future minimum lease payments of the Company's operating lease liabilities were as follows:

2025	$	143,314
2026		147,613
2027		37,174
Total future minimum lease payments, undiscounted		328,101
Present value discount		(33,408	)
Total lease liability	$	294,693

5. Share capital

Authorized

The Company has authorized an unlimited number of common shares participating, voting and without par value. Each holder of common shares is entitled to one vote for each share owned on all matters voted upon by shareholders.

On October 28, 2024, the Company completed a reverse share split at the ratio of 1-for-2, resulting in 3,952,366 common shares after conversion.

Conversion of promissory notes

On May 3, 2024, the Company issued convertible notes in the principal amount of $5,172,500. The convertible notes accrued interest at the rate of 10% per annum, payable in-kind semi-annually in arrears in the form of either cash or common shares of the Company, at the election of the holder, and had a maturity date of December 31, 2025.

Prior to January 1, 2025, the convertible notes would automatically convert to common shares in the event that the Company completed an initial public offering in the United States, at a conversion price equal to the greater of (i) a 20% discount to the initial public offering price and (ii) $4.00; or if there had been a change of control, at a conversion price of $4.00 per common share. On or after January 1, 2025, conversion would be at the option of the holder at a conversion price of $4.00 per common share. The Company had the option to redeem all or any portion of the convertible notes at a price equal to 100% of the outstanding principal plus accrued and unpaid interest up to but not including the date of redemption. In the event of a change of control, the Company would offer to repurchase the convertible notes at a price equal to 101% of the principal plus accrued and unpaid interest up to but not including the date of repurchase. The Company elected to account for the convertible notes in their entirety at fair value through profit and loss.

Subsequently, the note holders were given the option to convert at a conversion price of $4.00 per share prior to July 31, 2024. On June 28, 2024, all of the holders of the convertible notes elected to convert to common shares. The Company paid cash interest of $40,563 and accrued interest of $38,462 was converted, along with the principal amount of $5,172,500, into 1,308,798 common shares.

Private placement

On June 28, 2024, the Company issued 1,461,250 common shares as part of a private placement for total proceeds of $5,845,000 at $4.00 per common share. The company incurred finders' fees of $375,000, which were recognized in equity as deduction from the gross proceeds received.

Regulation A Offering

On March 10, 2025, the Company closed its Tier II Regulation A offering with gross proceeds of $4,200,000. The Company issued 1,490,000 units at a price of $2.80 per unit. Each unit consisted of one common share of the Company and one warrant to purchase one common share (the "Regulation A Warrants"). The Regulation A Warrants have an exercise price of $2.80 per share and will expire 5 years from the date of issuance. The Company incurred total issuance costs of $483,020, including legal fees and placement fees incurred directly related to the issuance. The issuance costs incurred were recognized as a reduction in equity and allocated based on the relative fair values of the Regulation A Warrants and common shares on a standalone basis. The fair values of the common shares was based on the Company's stock price on the day of issuance of $3.40 and the fair value of the Regulation A Warrants was $2.64 per warrant. The Regulation A Warrants were recognized in additional paid-in capital as they met the criteria for equity classification.

The fair value of the Regulation A Warrants was estimated using the Black-Scholes model with the following assumptions:

		Issue Date March 10, 2025
Valuation date share price	$	3.40
Exercise price	$	2.80
Dividend yield		-
Risk-free interest rate		3.98%
Expected warrant life		5.00 years
Expected volatility		97.81%

As of March 31, 2025, 5,000 of the 1,490,000 Regulation A Warrants have been exercised. The Company recorded a receivable of $14,000 related to the warrant exercises which is included in prepaid expenses and other currents on the Company’s condensed consolidated balance sheet as of March 31, 2025.

Initial Public Offering

On November 14, 2024, the Company completed the sale of 970,000 Units, with each Unit (the "Unit") consisting of one common share and one warrant (the "Public Warrants") to purchase one common share at the price of $4.125 per Unit. In addition, the underwriters exercised an option to purchase 145,500 Public Warrants (the 'Overallotment Warrants") at a price of $0.01 per warrant.

Total gross proceeds from the IPO were $4,002,705, including the proceeds from the Overallotment Warrants. The Company incurred total issuance costs of $2,218,014, including underwriter fees, and legal and other professional fees incurred directly related to the issuance.

The incremental costs directly associated with the issuance were recognized as a deduction in equity and allocated based on the relative fair values of the Public Warrants and common shares on a standalone basis.

The fair value of the common shares was based on the Company's stock price on the day of issuance of $2.65 and the fair value of the Public Warrants was $1.7419 per warrant. The Public Warrants were recognized in additional paid-in capital as they met the criteria for equity classification.

The fair value of the Public Warrants was estimated using the Black-Scholes option pricing model with the following inputs:

		2024
Valuation date share price	$	2.65
Exercise price	$	4.64
Expected dividend yield		-
Risk-free interest rate		4.32%
Expected term (in years)		5 years
Expected volatility		95%

The number of Public Warrants outstanding as of March 31, 2025:

Public Warrants outstanding
Expiry date		Exercise price	Number outstanding
November 15, 2029	$	4.64	1,115,500
March 10, 2030	$	2.80	1,485,000

Standby Equity Purchase Agreement

On February 10, 2025, the Company also announced that it had entered into a Standby Equity Purchase Agreement (the "SEPA") with YA II PN, Ltd. ("Yorkville"). Pursuant to the SEPA and subject to the satisfaction of certain conditions, Yorkville has committed to purchase the Company's common shares, no par value, in increments (each purchase, an "Advance") up to an aggregate gross sales price of up to $15,000,000 during the 36 months following the date of the SEPA (such shares, the "Shares"). The Shares will be sold at the Company's option pursuant to the SEPA at 97% of the Market Price (as defined pursuant to the SEPA) and purchases are subject to certain limitations set forth in the SEPA. As consideration for Yorkville's commitment to purchase the common shares pursuant to the SEPA, the Company paid Yorkville a structuring fee in the amount of $25,000 and issued to Yorkville 105,840 common shares with a stock price of $2.83 at issuance. These costs together are classified as deferred issuance costs on the accompanying condensed consolidated balance sheet and will be recorded as a reduction of common shares when a financing under the SEPA occurs. As of March 31, 2025, there have been no sales made under the SEPA.

6. Stock-based compensation

At March 31, 2025 the Company had in place a stock option plan for employee, non-employee directors, and consultants of the Company ("the Plan"). The Plan provides both for the direct award or sale of shares and for the grant of options to purchase shares. Under the plan the total number of shares available for options cannot exceed 10% of the Company's issued and outstanding common shares at the time of any grant. The Company is authorized to issue options to employees, non-employee directors and consultants under the plan.

On June 25, 2024, the Board of Directors approved the acceleration of vesting for all outstanding share options to June 25, 2024, resulting in the Company recognizing the remaining expense for all share options outstanding and unvested as of that date.

The following table summarizes option transactions for the Plan:

Number of
options

Weighted
average
exercise price
C$

Weighted
average
remaining
contractual life
(years)

Aggregate
intrinsic value
C$

Outstanding at December 31, 2024

1,185,000

2.06

4.18

1.89

Outstanding at March 31, 2025

1,185,000

2.06

3.94

1.66

Exercisable at March 31, 2025

927,500

1.46

3.59

2.26

Unvested at March 31, 2025

257,500

3.68

4.69

0.04

As of March 31, 2025 there were $455,175 of unrecognized stock-based compensation cost related to share options outstanding, which is expected to be recognized over a weighted-average period of 2.00.

For the three months ended March 31, 2025 and 2024, stock-based compensation expense was $112,277 and $35,953, respectively. Stock-based compensation expense has been reported in the Company's condensed consolidated statements of operations and comprehensive loss within the line items 'general and administrative' and 'research and development' expenses.

7. Net loss per share

Basic and diluted net loss per share attributable to ordinary shareholders was calculated as follows:

		Three months ended March 31,
		2025			2024
Net loss attributable to shareholders	$	(5,102,408	)	$	(1,707,358	)
Weighted average number of common shares outstanding during the year		12,240,437			8,076,673
Basic and diluted net loss per share attributable to shareholders	$	(0.42	)	$	(0.21	)

The Company's potentially dilutive securities for the three months ended March 31, 2025 and 2024, include stock options, warrants, and notes payable. The Company excluded the potential ordinary shares outstanding at each period end from the computation of diluted net loss per share attributable to ordinary shareholders for the three months ended March 31, 2025 and 2024 because including them would have had an anti-dilutive effect.

8. Related party transactions

On October 18, 2023, the Company signed an agreement with RBx Capital, LP (“RBx”), a family office controlled by the Company’s Executive Chairman and CEO, that provides for certain managerial positions to be filled from within RBx. RBx is responsible for the payment and provision of all wages, bonuses, and benefits for these positions. Reimbursable salaries paid to RBx pursuant to this agreement are $125,000 per month. In December 2024, reimbursable salaries were changed to $100,000 per month. Reimbursable salaries paid to RBx were both $300,000 during the three months ended March 31, 2025 and 2024, respectively. Additional expenses of $40,865 and $213,216 were incurred by RBx on behalf of the Company during the three months ended March 31, 2025 and 2024, respectively. The total amount of accounts payable to RBx was $118,215 and $142,459 as of March 31, 2025 and December 31, 2024, respectively.

9. Fair value measurements

The accounting guidance for fair value establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, or which require the reporting entity to develop its own assumptions

The following table presents information about the Company's financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

		March 31, 2025
		Level 1		Level 2		Level 3		Total
		Level 1		Level 2		Level 3		Total
Current assets:
Money market funds	$	2,587,501	$	-	$	-	$	2,587,501
Total assets measured at fair value	$	2,587,501	$	-	$	-	$	2,587,501

		December 31, 2024
		Level 1		Level 2		Level 3		Total
Current assets:
Money market funds	$	4,164,323	$	-	$	-	$	4,164,323
Total assets measured at fair value	$	4,164,323	$	-	$	-	$	4,164,323

The Company's cash equivalents are classified as Level 1. The fair value of the Company's cash and cash equivalents is determined based on market pricing that is both objective and publicly available.

The Company did not reclassify any investments between levels in the fair value hierarchy during the periods presented.

As of March 31, 2025 and December 31, 2024, the carrying amounts of the Company's other financial instruments, which include cash, accounts payable, and accrued expenses, approximate fair values because of their short-term maturities.

10. Commitment and contingencies

Commitments

As of March 31, 2025, the Company had no long-term commitments.

Contingencies

In the ordinary course of business, from time to time, the Company may be involved in various claims related to operations, rights, commercial, employment or other claims. Although such matters cannot be predicted with certainty, management does not consider the Company's exposure to such claims to be material to these consolidated financial statements.

11. Segment reporting

The Company manages the business activities on a consolidated basis and operates as one reportable segment that constitutes all of the consolidated entity, which is the business of advancing the clinical development program of the Company's product, while opportunistically identifying, evaluating, and acquiring accretive assets, properties or businesses. The Company's CODM is its Chief Executive Officer. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM uses consolidated net loss to measure segment loss, allocate resources and assess performance. The significant segment expense categories (general and administrative and research and development) are consistent with those presented on the face of the statements of operations and comprehensive loss. Other segment items are finance (income) expense which are consistent with those presented on the face of the statements of operations and comprehensive loss. Additionally, the CODM reviews cash forecast models to determine where the Company will invest in planned research and development activities.

12. Subsequent Events

On April 26, 2025, the Company signed a binding Letter of Intent to acquire Antev Ltd., a UK-based late clinical-stage drug development company. The deal is expected to close in June 2025. Per the terms of the agreement, the Company will acquire all issued and outstanding shares of Antev Ltd., on a fully diluted basis, in exchange for 2,666,600 (or approximately 19% in aggregate) of the Company's issued and outstanding common shares. Antev Ltd. shareholders will be entitled to receive up to $65 million in additional contingent consideration. No assurances can be made that the parties will successfully negotiate and enter into a definitive agreement, or that the proposed transactions will be consummated on the terms or timeframe currently contemplated, or at all.

On May 2, 2025, the Company entered into a securities purchase agreement (the "Purchase Agreement") with Yorkville in connection with the issuance and sale by the Company of debentures (the "Debentures") issuable in an aggregate principal amount of up to $5,000,000 (the "Subscription Amount"). Yorkville purchased and the Company issued $1,250,000 in aggregate principal amount of Debentures upon the signing of the Purchase Agreement, for net proceeds to the company of $1,125,000. An additional $3,750,000 is available to the Company in accordance with the Purchase Agreement at the Company's election and upon the achievement of certain triggers. The Debenture is guaranteed by each of the Company's subsidiaries pursuant to a global guaranty agreement. Interest will accrue on the outstanding principal amount of each Debenture at an annual rate of 8.00%, subject to a potential increase to 18.00% per annum upon the occurrence of certain events of default. The Debentures will mature on February 2, 2026.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This Item and other sections of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that impact our business. In particular, we encourage you to review the risks and uncertainties described in "Risk Factors" in Part I, Item 1A in the 2024 Annual Report and Part II, Item 1A of this Quarterly Report on Form 10-Q. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this Quarterly Report on Form 10-Q. These forward-looking statements are made as of the date of this Form 10-Q, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law. All amounts are expressed in United States dollars unless otherwise stated.

Company Overview

The Company is a clinical stage, multi-strategy holding company focused on investing in and accelerating novel life sciences and bio-technology companies through FDA approved clinical trials. Utilizing a thesis driven collaborative process, the Company attempts to acquire and advance clinical stage assets through clinical development and commercialization. The Company looks into opportunities across all therapeutics areas where an unmet need exists for improved patient safety and efficacy. The Company is actively exploring to expand its drug development pipeline through qualified and accretive acquisitions and partnerships.

The Company has two wholly owned subsidiaries, Medicus Pharma Inc., a company incorporated in the state of Delaware on October 12, 2023, and SkinJect, Inc. ("SkinJect").

SkinJect is focused on the development of a novel drug delivery system using dissolvable microneedle arrays ("MNAs") for the treatment of certain skin cancers. To that end, the Company licensed certain technology co-developed by the University of Pittsburgh and Carnegie Mellon University. The Company established and validated fabrication processes relative to the MNAs, completed pre-clinical testing and secured approval to proceed with clinical trials activity from the Food and Drug Administration.

The Company then completed a dose escalation study ("'SKNJCT-001") that assessed the safety of MNA patch in patients with BCC. There were no serious adverse events nor any demonstrated alterations in any clinical measurements during the trial. The conclusion of the study was that MNA patch was well tolerated with no evidence of dose limiting toxicity.

The Company had initiated a clinical study ("SKNJCT-002") aimed at evaluating clinical efficacy. The first part involved the enrollment of 15 healthy volunteers and was designed to study the penetration of placebo-containing Dynamic Mechanical Allodynia ("DMA") patches at five different anatomic locations. After the first seven health volunteers were enrolled, due to the variability of array application observed by the investigator, SkinJect made the decision to pause the trial. The study was never resumed, and it was ultimately closed without further enrollment. There were no adverse events reported in the enrolled subjects.

In January 2024, the Company submitted the clinical design for a randomized, double-blinded, placebo-controlled ("P-MNA"), multi-center study ("SKNJCT-003") enrolling up to 60 subjects presenting with nodular type BCC of the skin. The FDA responded in March 2024 and requested additional clinical information. A final protocol was submitted to the FDA in July 2024, which included the information requested by the FDA, along with updated CMC, stability and sterility data. On July 31, 2024, the FDA responded to the latest submission and requested certain additional information and clarification. The Company has responded to the FDA on August 2, 2024. On December 2 13, 2024, the Company announced that the phase 2 clinical study (SKNJCT-003) was underway in nine clinical sites in the United States and that it had already randomized more than 35% of the 60 patients expected to be enrolled in the study. As of the date of this MD&A, the Company has activated nine clinical sites in the United States and has randomized more than 50% of the 90 patients expected to be enrolled in the study.

The Share Consolidation

On June 25, 2024, the Company's shareholders approved an amendment to the Company's articles of incorporation to provide for the Share Consolidation, or reverse stock split, of the Company's issued and outstanding common shares at such a consolidation ratio to be determined by the Company's board of directors in its sole discretion, to permit the Company to satisfy all conditions and necessary regulatory approvals to list the common shares on a U.S. national securities exchange as the Company's board of directors may determine in its sole direction. Our board of directors approved the Share Consolidation on October 15, 2024, and the Share Consolidation was completed by the Company on October 28, 2024, at the ratio of 1-for-2.

Initial Public Offering

On November 14, 2024, the Company completed the sale of 970,000 Units, with each Unit consisting of one common share and one warrant ("Public Warrant") to purchase one common share at the price of $4.125 per Unit. In addition, the underwriters exercised an option to purchase 145,500 Public Warrants (the "Overallotment Warrants") at a price of $0.01 per warrant.

Total gross proceeds from the IPO were $4,002,705, including the proceeds from the Overallotment Warrants. The Company incurred total issuance costs of $2,128,014, including underwriter fees, and legal and other professional fees incurred directly related to the issuance.

Regulation A Offering

On March 10, 2025, the Company completed an offering of 1,490,000 units at $2.80 per unit pursuant to Tier II of Regulation A under the Securities Act, with each unit consisting of one common share and one warrant ("Regulation A Warrant") to purchase one common share. The Regulation A Warrants have an exercise price of $2.80 and expire on March 10, 2030. The aggregate gross proceeds to the Company from the Offering were $4,172,000. As of March 31, 2025, 5,000 of the 1,490,000 Regulation A Warrants have been exercised for cash, for proceeds to the Company of $14,000 (the "Regulation A financing").

Results of Operations

The following table outlines our statements of loss and comprehensive loss for the three months ended March 31, 2025 and 2024:

	Three months ended March 31,
	2025		2024
	$		$		Change
General and administrative	3,120,060		1,385,981		1,734,079
Research and development	2,006,214		321,377		1,684,837
Total operating expenses	5,126,274		1,707,358		3,418,916
Loss from operations	(5,126,274	)	(1,707,358	)	(3,418,916	)
Other income :
Finance income, net	23,866		-		23,866
Total other income	23,866		-		23,866
Net loss and comprehensive loss	(5,102,408	)	(1,707,738	)	(3,395,050	)
Net loss per common share (basic and diluted)	(0.42	)	(0.21	)

General and administrative

General and administrative expenses for the three months ended March 31, 2025 and 2024 are comprised of:

	Three months ended March 31,
	2025	2024
	$	$	Change
Professional fees	1,360,680	438,302	922,378
Consulting fees	284,946	455,814	(170,868	)
Salaries, wages and benefits	357,517	201,016	156,501
General office, insurance and administration expenditures	539,696	177,810	361,886
Business development and investor relations	464,944	77,086	387,858
Stock-based compensation	112,277	35,953	76,324
	3,120,060	1,385,981	1,734,079

Professional fees increased by $922,378 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. The increase was primarily due to increases in legal and accounting fees related to the Company's operations. Professional fees include fees incurred for legal and accounting services that fluctuate from period to period based on the nature of the transactions the Company undertakes. The primary reason for the increase is due to increased regulatory requirements following the Company's initial public offering and transition to U.S. domestic issuer status.

Consulting fees decreased by $170,968 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. Consulting fees include fees paid to individuals and professional firms who provide advisory services to the Company and fluctuate from period to period based on the nature of the transactions the Company undertakes. The primary reason for the increase is due to decreased business activity in the current year compared to the prior year when the Company was focused on completing the initial public offering.

Salaries, wages and benefits increased by $156,501 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. The increase was primarily due to an increase in headcount from the previous year.

General office, insurance and administration expenditures increased by $361,886 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. The increase was primarily due to the Company now incurring more significant insurance related expenses and general office related expenditures in support of expanded operations.

Business development and investor relations expenses increased by $387,858 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. Business development and investor relations expenses for the three months ended March 31, 2025, were primarily incurred as a result of increased marketing efforts in the current year as a result of the Company being a listed public entity on the Nasdaq.

Stock-based compensation increased by $76,324 for the three months ended March 31, 2025, compared to the equivalent period in the prior year. Stock-based compensation changes based on the variability in the number of options granted, vesting periods of the options and the grant date fair value. During the three months ended March 31, 2025, the stock-based compensation expense relates to the vesting of share options granted during the second half of 2024.

There is an expected increase in general and administrative expenses associated with being a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with applicable securities law requirements; additional director and officer insurance costs; and investor and public relations costs.

Research and development ("R&D")

Research and development ("R&D") costs include costs incurred under agreements with third-party contract research organizations, contract manufacturing organizations and other third parties that conduct preclinical and clinical activities on our behalf and manufacture our product candidates, and other costs associated with our R&D programs, including laboratory materials and supplies.

R&D expenses increased by $1,684,837 for the three months ended March 31, 2025, compared to the equivalent periods in the prior year. This increase is primarily due to costs incurred related to SKNJCT-003 which had minimal activity during the three months ended March 31, 2024.

As of March 20, 2025, the Company has commenced activating its clinical trial sites and has randomized more than 50% of the 60 patients expected to be enrolled in the study. Subsequent to March 31, 2025, the Company announced on April 21, 2025 that the Institutional Review Board approved the increase in the number of patients in the study from 60 to 90, that the clinical study will expand from the nine clinical sites in the United States to include an additional site in the United States and two clinical trial sites in Europe and that the Company has randomized more than 45 participants in the study.

We expect our R&D expenses to increase substantially for the foreseeable future as we continue with the SKNJCT-003 study and trials.

The principal risks related to the Company's future performance are that the trials are unsuccessful, the Company does not receive FDA approval to proceed with the next stage of its research and development, or the Company is unsuccessful in obtaining future funding needed to continue its research and development. These are customary risks for a development stage pharmaceutical Company and are less acute than for a Company with a less advanced product. Nevertheless, there can be no assurance that the Company will be able to complete its trials of the MNA, that the trials will be successful, or that the product will ultimately reach commercialization.

Other income:

Finance income, net, was $23,866 and $0 for the three months ending March 31, 2025 and 2024, respectively. Finance income for the three months ended March 31, 2025 relates to interest income earned on short-term money market investments.

Liquidity and Capital Resources

We are a clinical stage development company and we currently do not earn any revenues from our preclinical programs and are therefore considered to be in the R&D stage. As required, the Company will continue to finance its operations through the sale of equity or pursue non-dilutive funding sources available to the Company in the future. The continuation of our R&D activities is dependent on our ability to obtain financing.

The financial statements and this Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A") have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.

The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. In addition to the SEPA (as defined below), management believes that the Company has access to additional capital resources through public and/or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, if the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays or entirely prevent the Company's continued efforts to commercialize its current or future products, which are critical to the realization of its business plan and the future operations of the Company. This uncertainty, along with the Company's history of losses, indicates that there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The financial statements and this MD&A do not include any adjustments to the amounts and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

As of March 31, 2025, the Company had cash and cash equivalents of $3,982,430 compared to cash and cash equivalents of $4,164,323 as of December 31, 2024. During the three months ended March 31, 2025, the Company received net proceeds of $3,784,101 from the issuance of common shares and warrants in connection with the Regulation A Offering. As of March 31, 2025, the Company has an accumulated deficit of $34,006,311 and net loss and comprehensive loss of $5,102,408 for the three months ended March 31, 2025. For the three months ended March 31, 2024 the Company had net loss and comprehensive loss of $1,707,358. The Company has a working capital surplus of $1,751,860 as of March 31, 2025.

On March 10, 2025, the Company closed the Regulation A Offering of 1,490,000 Regulation A Offering Units, with each Regulation A Offering Units consisting of one common share and one Regulation A Warrant. Total gross proceeds from the Regulation A Offering were $4,172,000. As of March 31, 2025, 5,000 of the 1,490,000 Regulation A Warrants have been exercised for cash, for proceeds to the Company of $14,000.

The Company does not expect to generate positive cash flow from operations for the foreseeable future due to additional R&D expenses, including expenses related to drug discovery, preclinical testing, clinical trials, chemistry, manufacturing and controls and operating expenses associated with supporting these activities. It is expected that negative cash flow from operations will continue until such time, if ever, that we receive regulatory approval to commercialize any of our products under development and/or we receive royalty or milestone revenue from any such products that exceeds our expenses.

Standby Equity Purchase Agreement

The Company has entered into a Standby Equity Purchase Agreement dated February 10, 2025 (the "SEPA") with YA II PN, LTD (the "Investor"), an investment fund managed by Yorkville Advisors Global, LP. Pursuant to the SEPA, the Company has the option, at its sole discretion, to sell up to $15,000,000 of the Company's common shares to the Investor at any time during the 36-months following the date of the SEPA.

The Investor's obligation to purchase the common shares is subject to a number of conditions, including that the Company file a registration statement with the SEC registering the resale of the common shares issuable thereunder, and that the registration statement is declared effective by the SEC.

The total number of common shares issuable under the terms of the SEPA is limited to a number equivalent to 19.99% of the outstanding common shares, as of the date of the SEPA unless certain pricing conditions are met, which could have the effect of limiting the total proceeds made available to the Company under the SEPA. The issuance of common shares under the SEPA is subject to further limitations, including that the common shares beneficially owned by the Investor and its affiliates at any one time will not exceed 4.99% of the then-outstanding common shares.

Common shares issued and sold to the Investor under the SEPA will be priced at 97% of the market price (as defined in the SEPA) of the common shares during a specified three-day pricing period. The Company reserves the right to set a minimum acceptable price for the common share issuances.

Cash flows

	For the three months ended March 31
	2025		2024
	$		$		Change
Cash used in operating activities	(3,940,994	)	(1,176,933	)	(2,764,061	)
Cash provided by financing activities	3,759,101		-		3,759,101
Net change in cash during the period	(181,893	)	(1,176,933	)	995,040
Cash, beginning of the period	4,164,323		1,719,338		2,444,985
Cash, end of the period	3,982,430		542,405		3,440,025

Cash flows used in operating activities

Cash flows used in operating activities for the three months ended March 31, 2025 were $3,940,994 compared to cash flows used in operating activities of $1,176,933 for the three months ended March 31, 2024. The increase is primarily due to increased spending on research and development activities for our SKNJCT-003 study and trials and increased general and administrative expenses related to our recent initial public offering and resulting U.S. reporting obligations.

Cash flows provided by financing activities

Cash flows provide by financing activities for the three months ended March 31, 2025, were $3,759,101 due to proceeds from issuance of common shares and warrants, net of offering costs from the Regulation A Offering. The Company did not have any financing activities for the three months ended March 31, 2024.

Contractual Obligations

We have no significant contractual arrangements other than those noted in our financial statements.

Off-Balance Sheet Arrangements

As of March 31, 2025, we have not entered into any off-balance sheet arrangements.

Critical Accounting Policies

Critical Accounting Policies and Estimates

We periodically review our financial reporting and disclosure practices and accounting policies to ensure that they provide accurate and transparent information relative to the current economic and business environment. As part of this process, we have reviewed our selection, application and communication of critical accounting policies and financial disclosures. Management has discussed the development and selection of the critical accounting policies with our audit committee, and our audit committee has reviewed the disclosure relating to critical accounting policies in this MD&A.

Significant accounting judgments and estimates

Management's assessment of our ability to continue as a going concern involves making a judgment, at a particular point in time, about inherently uncertain future outcomes and events or conditions. Please see the "Liquidity and Capital Resources" section in this document for a discussion of the factors considered by management in arriving at its assessment.

Other important accounting policies and estimates made by management are the assumptions used in determining the valuation of stock-based compensation.

Research and development

Stock-based compensation

The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company records the expense for stock-based compensation awards subject to vesting over the requisite service period using an estimate of the number of options that will eventually vest. The Company estimates the fair value of stock option grants and shares purchasable under the Company's Equity Incentive Plan (the "Plan") using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. The Company accounts for forfeitures as they occur. All stock-based compensation costs are recorded in the statements of operations and comprehensive loss based upon the underlying employees or non-employee's roles within the Company.

Updated share information

As of March 31, 2025, we had 13,417,561 Common Shares issued and outstanding. In addition, there were 1,185,000 Common Shares issuable upon the exercise of outstanding stock and 2,603,260 Common Shares issuable upon the exercise of two outstanding classes of warrants.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our "Certifying Officers"), the effectiveness of our disclosure controls and procedures as of March 31, 2025, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of March 31, 2025, our disclosure controls and procedures were not effective, because of certain material weaknesses in our internal control over financial reporting which were identified during the quarter ended March 31, 2025, as further described below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

During the quarter ended March 31, 2025, in connection with the preparation of our consolidated financial statements for the years ended December 31, 2024 and 2023, we identified the following material weaknesses in our internal control over financial reporting: (i) lack of degree of precision in the review of materials used to record transactions in accordance with US GAAP, and (ii) lack of formalized or documented policies related to the overall information technology ("IT") system environment, including IT security and cybersecurity, centrally managed security patches and antivirus/malware protection, and user access.

Management is committed to implementing changes to our internal control over financial reporting to ensure that the control deficiencies that contributed to the material weaknesses are remediated. To address our material weaknesses, we plan to implement measures to improve our internal control over financial reporting to remediate any control deficiencies. These measures include (i) designing and implementing procedures to improve the precision and quality in the review of materials used in financial reporting, and (ii) designing and implementing policies related to our overall IT system environment.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding in the 12 months preceding the date hereof.

Item 1A. Risk Factors

Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q include the risk factors described in the Company's 2024 Annual Report . Any of these risk factors could result in a significant or material adverse effect on the Company's business, financial condition and/or results of operations. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in the 2024 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

As previously disclosed, on February 10, 2025, the Company entered into the SEPA with Yorkville. As consideration for Yorkville's commitment to purchase the common shares pursuant the SEPA, the Company paid Yorkville a structuring fee in the amount of $25,000 and issued to Yorkville 105,840 common shares, which common shares were issued pursuant to the exemption provided by Section 4(a)(2) of the Securities Act.

As previously disclosed, on March 10, 2025, the Company completed an offering of 1,490,000 units, each unit consisting of one common share and one warrant to purchase one common share at an exercise price of $2.80 with an expiration date of March 10, 2030 (each a "Regulation A Warrant") pursuant to Tier II of Regulation A under the Securities Act ("Regulation A"). The Company issued 5,000 common shares upon the exercise of 5,000 Regulation A Warrants during the period covered by this Form 10-Q, pursuant to Regulation A. There has been no material change in the use of proceeds described in the final offering circular filed with the SEC on March 7, 2025.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

No.		Description of Exhibit

10.1		Standby Equity Purchase Agreement, dated as of February 10, 2025, by and between Medicus Pharma Ltd. and YA II PN, LTD. (incorporated by reference from Exhibit 1.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on February 11, 2025)
10.2		Common Share Purchase Warrant (incorporated by reference from Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the SEC on March 11, 2025)
10.3		Warrant Agency Agreement, dated as of March 10, 2025, by and between Medicus Pharma Ltd. and Odyssey Transfer and Trust Company, as warrant agent (incorporated by reference from Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed with the SEC on March 11, 2025)
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*	Filed herewith.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MEDICUS PHARMA LTD.

Date: May 12, 2025	By:	/s/ Raza Bokhari
	Name:	Raza Bokhari
	Title:	Executive Chairman and Chief Executive Officer
		(Principal Executive Officer)

Date: May 12, 2025	By:	/ James Quinlan
	Name:	James Quinlan
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

SEC Form 10-Q filed by Medicus Pharma Ltd.