UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended ~~September 30,~~March 31, ~~2023~~2024

☐	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: 001-40874

Cingulate Inc.

(Exact name of registrant as specified in its charter)

Delaware		86-3825535
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1901 W. 47^th Place Kansas City, KS		66205
(Address of principal executive offices)		(Zip Code)

(913) 942-2300

(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 exchange on which registered

Common Stock, par value $0.0001 per share

CING

The Nasdaq Stock Market LLC

(Nasdaq Capital Market)

Warrants, exercisable for one share of common stock

CINGW

The Nasdaq Stock Market LLC

(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 and posted 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, a non-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-2 of 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No No☒ ☒

As of ~~November 10, 2023,~~May 3, 2024, ~~18,740,006~~6,046,479 shares of the registrant’s common stock, $0.0001 par value, were issued and outstanding.

Cingulate Inc.

Form 10-Q for the Quarter Ended ~~September 30, 2023~~March 31, 2024

TABLE OF CONTENTS

		Page
	PART I
Item 1	Financial Statements	4
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1917
Item 3	Quantitative and Qualitative Disclosures About Market Risk	3126
Item 4	Controls and Procedures	3126

	PART II
Item 1	Legal Proceedings	3227
Item 1A	Risk Factors	3227
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 5	Other Information	27
Item 6	Exhibits	3427

Signatures		3528

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “estimate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions intended to identify statements about the future. These statements speak only as of the date of filing this report with the Securities and Exchange Commission (the “SEC”) and 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. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements include, without limitation, statements about the following:

	●	our ability to regain and maintain compliance with the continued listing requirements of The Nasdaq ~~Capital Market;~~Stock Market LLC (“Nasdaq”);

	●	our lack of operating history and need for additional capital;

	●	our plans to develop and commercialize our product candidates;

	●	the timing of our planned clinical trials for CTx-1301, CTx-1302, and CTx-2103;

	●	the timing of our New Drug Application ~~(NDA)~~(“NDA”) submissions for CTx-1301, CTx-1302, and CTx-2103;

	●	the timing of and our ability to obtain and maintain regulatory approvals for CTx-1301, CTx-1302, CTx-2103, or any other future product candidate;

	●	the clinical utility of our product candidates;

	●	our commercialization, marketing and manufacturing capabilities and strategy;

	●	our ability to identify strategic partnerships;

	●	our expected use of cash;
	●	our competitive position and projections relating to our competitors or our industry;
	●	our ability to identify, recruit, and retain key personnel;

	●	the impact of laws and regulations;

	●	our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”);

	●	our plans to identify additional product candidates with significant commercial potential that are consistent with our commercial objectives;

	●	the identified material weaknesses in our ~~plans to identify additional product candidates with significant commercial potential that are consistent with our commercial objectives;~~internal control over financial reporting; and

	●	our estimates regarding future revenue and expenses.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. You should refer to the “Risk Factors” section of ~~this report, our other SEC filings and~~ our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022,~~2023, filed with the SEC on ~~March 10, 2023,~~April 1, 2024, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. We.We operate in an evolving environment and new risk factors and uncertainties may emerge from time to time. It is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. You should review the factors and risks and other information we describe in the reports we will file from time to time with the SEC.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Cingulate Inc.

Consolidated Balance Sheets (unaudited)

	September 30,			December 31,			March 31,			December 31,
	2023			2022			2024			2023
ASSETS

Current assets:
Cash and cash equivalents	$	1,986,313		$	5,356,276		$	1,113,830		$	52,416
Miscellaneous receivables		5,836			234,432			2,247			14,622
Prepaid expenses and other current assets		910,286			2,278,944			1,610,765			511,556
Total current assets		2,902,435			7,869,652			2,726,842			578,594

Property and equipment, net		2,531,330			2,904,787			2,463,874			2,545,965
Operating lease right-of-use assets		436,493			630,618			303,799			366,877

Total assets		5,870,258			11,405,057			5,494,515			3,491,436

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable		1,670,436			762,357			737,949			5,199,105
Accrued expenses		692,008			894,635			1,117,638			1,651,519
Note payable		3,000,000			5,000,000			-			3,000,000
Finance lease liability, current		16,805			16,053			17,326			17,057
Operating lease liability, current		353,183			339,755			372,338			358,085
Total current liabilities		5,732,432			7,012,800			2,245,251			10,225,766

Long-term liabilities:
Finance lease liability, net of current		8,792			21,487			-			4,436
Operating lease liability, net of current		225,368			488,748			33,145			130,663
Total long-term liabilities		234,160			510,235			33,145			135,099
Total liabilities		5,966,592			7,523,035			2,278,396			10,360,865

Stockholders’ Equity
Common Stock, $0.0001 par value; 240,000,000 shares authorized and 17,378,798 and 11,309,412 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		1,738			1,131
Preferred Stock, $0.0001 par value; 10,000,000 shares authorized and 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022		-			-
Common Stock, $0.0001 par value; 240,000,000 shares authorized and 5,010,470 and 1,167,521 shares issued and outstanding as of March 31, 2024 and December 31, 2023								502			118
Preferred Stock, $0.0001 par value; 10,000,000 shares authorized and 0 shares issued and outstanding as of March 31, 2024 and December 31, 20223								-			-
Additional Paid-in-Capital		85,910,674			73,289,387			99,131,537			86,073,896
Accumulated deficit		(86,008,746	)		(69,408,496	)		(95,915,920	)		(92,943,443	)
Total stockholders’ equity		(96,334	)		3,882,022			3,216,119			(6,869,429	)

Total liabilities and stockholders’ equity	$	5,870,258		$	11,405,057		$	5,494,515		$	3,491,436

See notes to consolidated financial statements.

Cingulate Inc.

Consolidated Statements of Operations and Comprehensive Loss (unaudited)

	2023			2022			2023			2022			2024			2023
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2023			2022			2023			2022			2024			2023
Operating expenses:
Research and development	$	3,923,852		$	2,123,114		$	10,508,395		$	7,063,626		$	1,806,985		$	2,128,616
General and administrative		1,825,822			1,845,248			5,453,643			5,963,067			1,141,232			1,721,379
Operating loss		(5,749,674	)		(3,968,362	)		(15,962,038	)		(13,026,693	)		(2,948,217	)		(3,849,995	)

Interest and other income (expense), net		(229,380	)		(58,885	)		(638,212	)		(44,512	)		(24,260	)		(154,892	)
Loss before income taxes		(5,979,054	)		(4,027,247	)		(16,600,250	)		(13,071,205	)		(2,972,477	)		(4,004,887	)
Income tax benefit (expense)		-			-			-			-			-			-

Net loss		(5,979,054	)		(4,027,247	)		(16,600,250	)		(13,071,205	)
Other comprehensive income (loss):
Change in unrealized loss on short-term investments		-			3,249			-			(166	)
Comprehensive loss	$	(5,979,054	)	$	(4,023,998	)	$	(16,600,250	)	$	(13,071,371	)
Net loss and comprehensive loss													$	(2,972,477	)	$	(4,004,887	)

Net loss per share of common stock, basic and diluted	$	(0.30	)	$	(0.36	)	$	(1.16	)	$	(1.16	)	$	(0.60	)	$	(7.08	)

Weighted average number of shares used in computing net loss per share of common stock, basic and diluted		19,766,654			11,309,412			14,287,942			11,309,412			4,945,507			565,471

See notes to consolidated financial statements.

Cingulate Inc.

Consolidated Statements of Stockholders’ Equity (unaudited)

	Shares		Amount		Paid-in-Capital		Deficit			Income			Equity												Accumulated
	Common Stock				Additional		Accumulated			Accumulated Other Comprehensive			Stockholders’			Common Stock				Additional Paid-in-		Accumulated			Other Comprehensive		Stockholders’
	Shares		Amount		Paid-in-Capital		Deficit			Income			Equity			Shares		Amount		Capital		Deficit			Income		Equity

Balance January 1, 2022		11,309,412		1,131	$	72,574,510	$	(51,732,264	)	$	165		$	20,843,542
Activity for the three months to March 31, 2022:
Balance January 1, 2023																	11,309,412		1,131	$	73,289,387	$	(69,408,496	)	$	-	$	3,882,022
Activity for the three months to March 31, 2023:
Unrealized losses on available for sale investments		-		-		-		-			(2,948	)		(2,948	)		-		-		-		-			-		-
Stock-based compensation expense		-		-		181,518		-			-			181,518			-		-		204,479		-			-		204,479
Net loss		-		-		-		(5,003,511	)		-			(5,003,511	)		-		-		-		(4,004,887	)		-		(4,004,887	)
Balance March 31, 2022		11,309,412	$	1,131	$	72,756,028	$	(56,735,775	)	$	(2,783	)	$	16,018,601
Activity for the three months to June 30, 2022:
Unrealized losses on available for sale investments		-		-		-		-			(466	)		(466	)
Balance March 31, 2023																	11,309,412	$	1,131	$	73,493,866	$	(73,413,383	)	$	-	$	81,614

Balance January 1, 2024																	1,167,520		118	$	86,073,896	$	(92,943,443	)	$	-	$	(6,869,429	)
Balance																	1,167,520		118	$	86,073,896	$	(92,943,443	)	$	-	$	(6,869,429	)
Activity for the three months to March 31, 2024:
Issuance of common stock in connection with At the Market Offering and Purchase Agreement, net of fees																	283,800		28		3,115,256		-			-		3,115,284
Issuance of common stock in public offering, net of fees																	3,552,000		355		6,432,537		-			-		6,432,892
Issuance of pre-funded warrants in connection with the conversion of related party note payable																	-		-		2,734,739		-			-		2,734,739
Capital contribution in connection with conversion of related party note payable																	-				586,511		-			-		586,511
Issuance of restricted common stock																	7,150		1		24,023		-			-		24,024
Stock-based compensation expense		-		-		207,186		-			-			207,186			-		-		164,575		-			-		164,575
Net loss		-		-		-		(4,040,447	)		-			(4,040,447	)		-		-		-		(2,972,477	)		-		(2,972,477	)
Balance June 30, 2022		11,309,412	$	1,131	$	72,963,214	$	(60,776,222	)	$	(3,249	)	$	12,184,874
Activity for the three months to September 30, 2022:
Unrealized losses on available for sale investments		-		-		-		-			3,249			3,249
Stock-based compensation expense		-		-		205,656		-			-			205,656
Net loss		-		-		-		(4,027,247	)		-			(4,027,247	)
Balance September 30, 2022		11,309,412	$	1,131	$	73,168,870	$	(64,803,469	)	$	-		$	8,366,532

Balance January 1, 2023		11,309,412		1,131	$	73,289,387	$	(69,408,496	)	$	-		$	3,882,022
Activity for the three months to March 31, 2023:
Stock-based compensation expense		-		-		204,479		-			-			204,479
Net loss		-		-		-		(4,004,887	)		-			(4,004,887	)
Balance March 31, 2023		11,309,412	$	1,131	$	73,493,866	$	(73,413,383	)	$	-		$	81,614
Activity for the three months to June 30, 2023:
Issuance of common stock in connection with At the Market Offering and Purchase Agreement, net of fees		747,376		75		218,723								218,798
Stock-based compensation expense		-		-		217,376		-			-			217,376
Net loss		-		-		-		(6,616,309	)		-			(6,616,309	)
Balance June 30, 2023		12,056,788	$	1,206	$	73,929,965	$	(80,029,692	)	$	-		$	(6,098,521	)
Balance March 31, 2024																	5,010,470	$	502	$	99,131,537	$	(95,915,920	)	$	-	$	3,216,119
Balance		12,056,788	$	1,206	$	73,929,965	$	(80,029,692	)	$	-		$	(6,098,521	)		5,010,470	$	502	$	99,131,537	$	(95,915,920	)	$	-	$	3,216,119
Activity for the three months to September 30, 2023:
Issuance of common stock in connection with At the Market Offering and Purchase Agreement, net of fees		1,778,855		178	$	1,621,761								1,621,939
Issuance of common stock in connection with private placement with WFIA		1,823,155		182	$	999,818								1,000,000
Issuance of common stock and pre-funded warrants sold for cash in public offering, net of fees		1,720,000		172		3,310,379								3,310,551
Issuance of pre-funded warrants in connection with the conversion of related party note payable		-		-		3,949,765								3,949,765
Capital contribution in connection with conversion of related party note payable						1,862,735								1,862,735
Stock-based compensation expense		-		-		236,251		-			-			236,251
Net loss		-		-		-		(5,979,054	)		-			(5,979,054	)
Balance September 30, 2023		17,378,798	$	1,738	$	85,910,674	$	(86,008,746	)	$	-		$	(96,334	)
Balance		17,378,798	$	1,738	$	85,910,674	$	(86,008,746	)	$	-		$	(96,334	)

See notes to consolidated financial ~~statements~~statements.

Cingulate Inc.

Consolidated Statements of Cash Flows (unaudited)

	2023			2022
	Nine Months Ended September 30,						Three Months Ended March 31,
	2023			2022			2024			2023
Operating activities:
Net loss	$	(16,600,250	)	$	(13,071,205	)	$	(2,972,477	)	$	(4,004,887	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		410,593			304,287			163,600			100,629
Stock-based compensation		658,106			594,360			164,575			204,479
Changes in operating assets and liabilities:
Miscellaneous receivables		228,596			642,899			12,375			202,479
Prepaid expenses and other current assets		1,368,658			(293,140	)		(1,099,209	)		296,252
Operating lease right-of-use assets		194,125			167,828			63,078			62,359
Trade accounts payable and accrued expenses		1,517,952			197,462			(4,995,037	)		(358,777	)
Other current liabilities		13,428			31,147
Operating lease liabilities		(263,380	)		(249,952	)
Current portion of operating lease liability								14,253			4,271
Long-term portion of operating lease liability								(97,518	)		(83,266	)
Net cash used in operating activities		(12,472,172	)		(11,676,314	)		(8,746,360	)		(3,576,461	)

Investing activities:
Purchase of property and equipment		(37,136	)		(10,400	)		(81,508	)		(37,135	)
Proceeds from sale of short-term investments		-			933
Other		-			(165	)
Net cash used in investing activities		(37,136	)		(9,632	)		(81,508	)		(37,135	)

Financing Activities:
Proceeds from issuance of common stock and pre-funded common stock purchase warrants, net of fees		6,151,288			-
Proceeds from note payable		3,000,000			5,000,000
Proceeds from the issuance of common stock and pre-funded common stock purchase warrants, net of fees								9,893,450			-
Principal payments on finance lease obligations		(11,943	)		(11,229	)		(4,167	)		(3,920	)
Net cash provided by financing activities		9,139,345			4,988,771
Net cash provided by (used in) financing activities								9,889,283			(3,920	)

Cash and cash equivalents:
Net decrease in cash and cash equivalents		(3,369,963	)		(6,697,175	)
Net increase (decrease) in cash and cash equivalents								1,061,415			(3,617,516	)
Cash and cash equivalents at beginning of year		5,356,276			16,492,745			52,415			5,356,276
Cash and cash equivalents at end of period	$	1,986,313		$	9,795,570

Cash and cash equivalents at end of year							$	1,113,830		$	1,738,760
Non-cash activities
Property and equipment accrued but not yet paid at end of period							$	160,800		$	-
Cash payments:
Interest paid	$	10,266		$	10,291		$	308		$	555

See notes to consolidated financial statements

CINGULATE INC.

Notes to Consolidated Financial Statements ~~(unaudited)~~

(1)Nature of the Business and Liquidity

Organization

Cingulate Inc. (Cingulate, or the Company), a Delaware corporation, is a biopharmaceutical company focused on the development of products utilizing its drug delivery platform technology that enables the formulation and manufacture of once-daily tablets of multi-dose therapies, with an initial focus on the treatment of Attention Deficit/Hyperactivity Disorder (ADHD). The Company is developing two proprietary, first-line stimulant medications, CTx-1301 (dexmethylphenidate) and CTx-1302 (dextroamphetamine), for the treatment of ADHD intended for all patient segments: children, adolescents, and adults. CTx-1301 and CTx-1302 utilize a flexible core tableting technology with target product profile designed to deliver a rapid onset and last the entire active day with a controlled descent of plasma drug level and have favorable tolerability. The Company ~~completed its first~~has closed enrollment of Phase 3 clinical ~~trial~~trials for CTx-1301 ~~with two additional Phase 3 trials in process.~~and plans to submit a New Drug Application (NDA) for CTx-1301in the first half of 2025. In addition, the Company has a third product to treat anxiety, CTx-2103, in a formulation stage.

On November 14, 2012, Cingulate Therapeutics LLC (CTx), a Delaware limited liability company, was formed. On May 10, 2021, Cingulate Inc. (Cingulate, or the Company), a Delaware corporation and wholly-owned subsidiary of CTx, was formed to serve as a holding company, in anticipation of the Company becoming publicly traded. Through a Reorganization Merger which occurred in the third quarter of 2021, Cingulate effectively acquired CTx and all outstanding units of CTx were converted into shares of Cingulate common stock. CTx remains the entity through which the Company conducts operations.

The consolidated financial statements and notes for the three-month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ represent the full consolidation of Cingulate and its subsidiaries, including CTx and all references to the Company represent this full consolidation.

Liquidity

The Company has incurred losses and negative cash flows from operations since inception. As a pre-revenue entity, the Company is dependent on the ability to raise capital to support operations until such time as the product candidates under development are ~~U.S~~U.S. Food and Drug Administration (FDA) approved, manufactured, commercially available to the marketplace and produce revenues. The Company’s initial public offering, which was completed in December 2021, provided approximately $20.4 million in net proceeds. ~~In addition, the Company received~~Since that time, net proceeds offrom capital sources have totalled $~~5.0~~27 million, ~~from~~including a ~~promissory~~related party note ~~in August 2022 and an additional $3.0~~ ~~million when the promissory note was amended and restated in May 2023, a portion of which~~that was subsequently converted to equity as ~~further~~ described in Note ~~7. The Company has utilized its At-the-Market~~7, utilization of the At the Market Agreement with H.C. Wainwright and Purchase Agreement with Lincoln Park Capital LLC, ~~in 2023, providing~~ a ~~total~~private placement, and public offerings including the February 2024 Offering with gross proceeds of ~~approximately~~ $~~2.1~~7.5 million, in net proceeds through September 30, 2023. Additional capital raised in the third quarter of 2023 included the issuance and sale of common stock and pre-funded common stock warrants in connection with a public offering, which provided approximately $~~3.3~~ ~~million in net proceeds and the issuance and sale of common stock in connection with a $~~1 ~~million private placement,~~ as further described in Note 9. However, the Company will need additional funding for operations and development. Management is evaluating various strategies to obtain additional funding, which may include additional offerings of equity, issuance of debt, or other capital sources, including potential collaborations with other companies or other strategic transactions. Successful implementation of these plans involves both the Company’s efforts and factors that are outside its control, such as market factors and FDA approval of product candidates. The Company can give no assurance that its plans will be effectively implemented in such a way that they will sufficiently alleviate or mitigate the conditions and events noted above, which results in 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 consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.

(2)Summary of Significant Accounting Policies

(a) Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The consolidated financial statements include the accounts of Cingulate and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

~~(b)~~~~Unaudited Interim Financial Information~~

The accompanying consolidated balance sheet as of September 30, 2023, the consolidated statements of operations and comprehensive loss for the three and nine-month periods ended September 30, 2023 and 2022, the consolidated statements of stockholders’ equity for the three and nine-month periods ended September 30, 2023 and 2022, the consolidated statements of cash flows for the nine-month periods ended September 30, 2023 and 2022, and the related interim disclosures are unaudited. These unaudited consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2022.

(b)

Unaudited Interim Financial Information

The accompanying consolidated balance sheet as of March 31, 2024, and the consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the three-month periods ended March 31, 2024 and 2023, and the related interim disclosures are unaudited. These unaudited consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying consolidated financial statements should be read in conjunction with the Company’s 2023 audited consolidated financial statements and the notes thereto.

(c) Concentration of Credit Risk

The Company maintains cash equivalent deposits, which at various times throughout the fiscal year exceeded the amounts insured by the Federal Deposit Insurance Corporation limit of $250,000 (without regard to reconciling items). Management monitors the soundness of these financial institutions and does not believe the Company is subject to any material credit risk relative to the uninsured portion of the deposits.

(d) ~~Miscellaneous Receivables~~

Miscellaneous receivables as of December 31, 2022, primarily consisted of employee retention tax credits for payroll costs incurred in 2020 and research and development tax credits. The Company analogized to IAS 20, ~~Accounting for Government Grants and Disclosure of Government Assistance~~, in accounting for these receivables. As of December 31, 2022, the Company determined that there was no allowance necessary relating to these receivables. As of September 30, 2023, all employee retention tax credits and research and development tax credits had been collected.

~~(e)~~Impairment of Long-lived Assets

The Company assesses the carrying value of its long-lived assets, including property and equipment, as well as lease right of use (ROU) assets, when events or circumstances indicate that the carrying value of such assets may not be recoverable. These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans, or changes in anticipated future cash flows. If an impairment indicator is present, the Company evaluates recoverability by a comparison of the carrying amount of the assets to future undiscounted cash flows expected to be generated by the assets. If the sum of the expected future cash flows is less than the carrying amount, the Company would recognize an impairment loss. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value of the long-lived asset groups. No impairment was recognized during the ~~three or nine-month~~three-month periods ended ~~September 30, 2023~~March 31, 2024 or ~~2022.~~2023.

~~(f)~~(e) Stock-Based Compensation

The Company measures employee and director stock-based compensation expense for all stock-based awards based on their grant date fair value using the Black-Scholes option-pricing model. For stock-based awards with service conditions, stock-based compensation expense is recognized over the requisite service period using the straight-line method. Forfeitures are recognized as they occur. See additional information in Note ~~11.~~10.

(3)Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:

Schedule of Prepaid Expenses and Other Current Assets

March 31, December 31,
2024 2023
Research and development $ 1,367,638 $ 183,452
Insurance 119,420 31,302
Active pharmaceutical ingredients 42,731 97,324
Deferred capital raise costs - 178,780
Dues and subscriptions 60,278 -
Other 20,698 20,698
Total prepaid expenses and other current assets $ 1,610,765 $ 511,556

September 30, December 31,
2023 2022
Research and development $ 413,431 $ 1,377,391
Insurance 339,676 472,152
Active pharmaceutical ingredients 77,422 209,156
Deferred capital raise costs - 100,339
Professional fees 20,775 61,524
Dues and subscriptions 38,284 37,684
Other 20,698 20,698
Total prepaid expenses $ 910,286 $ 2,278,944
(4) Property and Equipment

Property and equipment, net consisted of the following at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:
Schedule of Property and Equipment

Estimated Estimated
Useful Life September 30, December 31, Useful Life March 31, December 31,
(in years) 2023 2022 (in years) 2024 2023
Equipment 2-7 $ 4,342,832 $ 2,565,997 2-7 $ 4,341,005 $ 4,321,816
Furniture and fixtures 7 145,754 145,754 7 145,754 145,754
Computer equipment 5 41,898 41,898 5 41,897 41,897
Leasehold improvements 5 471,505 471,505 5 471,505 471,505
Construction-in-process- equipment - - 1,739,699 - 270,297 207,976
Property and equipment, gross 5,001,989 4,964,853 5,270,458 5,188,948
Less: accumulated depreciation (2,470,659 ) (2,060,066 ) (2,806,584 ) (2,642,983 )
Property and equipment, net $ 2,531,330 $ 2,904,787 $ 2,463,874 $ 2,545,965

Depreciation expense was $163,600 and $100,629, respectively, for the ~~nine months~~three-month periods ended ~~September 30, 2023 was $410,593~~March 31, 2024 and ~~for the nine months ended September 30, 2022 was $304,287. Depreciation expense for the three months ended September 30, 2023 was $154,663~~ ~~and for the three months ended September 30, 2022 was $101,429~~.2023.

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(5)Accrued Expenses

Accrued expenses consisted of the following at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:
Schedule of Accrued Expenses
March 31, December 31,
2024 2023
Employee compensation $ - $ 593,022
Interest - 290,000
Professional fees 183,812 213,922
Research and development 582,887 155,220
CIP- Equipment 155,800 155,800
State franchise taxes 120,570 120,570
Insurance - 56,088
Other 74,569 66,897
Total accrued expenses $ 1,117,638 $ 1,651,519

September 30, December 31,
2023 2022
Interest $ 157,339 $ 292,339
Research and development 253,524 -
Professional fees 15,000 314,446
Employee bonuses 175,625 175,625
Active pharmaceutical ingredients 62,393 -
Other 28,127 112,225
Accrued expenses $ 692,008 $ 894,635

(6)Contingencies

The Company may, from time to time, be subject to legal proceedings and claims arising in the ordinary course of business and otherwise. A substantial legal liability against us could have an adverse effect on our business, financial condition and results of operations.

The Company records legal costs associated with loss contingencies as incurred and establishes reserves when those matters present material loss contingencies that management determines to be both probable and reasonably estimable in accordance with ASC 450, Contingencies. If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other amount within that range, then that amount is accrued. If no amount within the range can be identified as a better estimate than any other amount, we accrue the minimum amount in the range. These amounts are not reduced by amounts that may be recovered under insurance or claims against third parties, but undiscounted receivables from insurers or other third parties may be accrued separately if recovery is considered probable. Management’s judgment is required related to loss contingencies because the outcomes are difficult to predict, and the ultimate resolution may differ from our current analysis. The Company revises accruals in light of new information. While it is not possible to predict the outcome of loss contingencies with certainty, management is of the opinion that adequate provision for potential losses associated with any such matters has been made in the ~~consolidated~~ financial statements. No accruals for loss contingencies were recorded in the consolidated balance sheets as of March 31, 2024 or 2023.

(7)Related Party Note Payable
In August 2022, the Company received $5.0 million of debt financing from Werth Family Investment Associates LLC (WFIA). Peter Werth, manager of WFIA, is a member of the Company’s Board of Directors. The promissory note, dated August 9, ~~2023, is~~2022, was unsecured with interest accruing at ~~15%~~15% per annum. In May 2023, the Company received an additional $3.0 million of debt financing from WFIA by amending and restating the note to increase the principal amount to $8.0 million. All other terms of the note remained the same.

On September 8, 2023, the Company and CTx entered into a ~~Note Conversion Agreement (Note Conversion Agreement)~~note conversion agreement with WFIA, pursuant to which WFIA agreed to convert the original principal amount of $5.0 million under the note plus all accrued interest on the original principal, or $5,812,500, by issuing pre-funded warrants ~~(WFIA Pre-Funded Warrants)~~ to purchase ~~6,838,235~~341,912 shares of the Company’s common stock at a conversion price per ~~WFIA Pre-Funded Warrant~~pre-funded warrant of $~~0.85~~17.00. The closing price of the Company’s common stock on Nasdaq on September 8, 2023, was $~~0.5776~~11.55 per share. The ~~WFIA Pre-Funded Warrants have~~pre-funded warrants had no expiration date and ~~are~~were exercisable immediately at an exercise price of $~~0.0001~~0.002 per share, to the extent that after giving effect to such exercise, WFIA and its affiliates would beneficially own, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), no more than 19.99% of the outstanding shares of common stock of the Company.

On January 25, 2024, the Company and CTx entered into another note conversion agreement with WFIA, pursuant to which WFIA agreed to convert the remaining principal amount of the note payable of $3.0 million plus all accrued interest, or $3,287,500 by issuing pre-funded warrants to purchase 687,043 shares of the Company’s common stock at a conversion price per pre-funded warrant of $4.785. The closing price of the Company’s common stock on Nasdaq on January 24, 2024, was $4.35 per share. The pre-funded warrants had no expiration date and were exercisable immediately at an exercise price of $0.0001 per share, to the extent that after giving effect to such exercise, WFIA and its affiliates would beneficially own, for purposes of Section 13(d) of the Exchange Act, no more than 19.99% of the outstanding shares of common stock of the Company. In March of 2024, the Company issued to WFIA an additional pre-funded warrant to purchase 7,053 shares of common stock as a result of an error in the interest calculation, on the same form and at the same conversion price as the January pre-funded warrants.
WFIA exercised all of its pre-funded warrants in April 2024.
The Company considered ASC 470-60, Troubled Debt Restructurings by Debtors, in accounting for ~~this~~the debt ~~conversion.~~conversions. The difference between the fair value of the pre-funded warrants issued and the carrying value of the debt and accrued interest settled in ~~the~~each transaction was recognized as a capital contribution ~~of $1,862,735~~in the Statement of Stockholders’ ~~Equity.~~
~~The remaining outstanding principal~~Equity based on the related party nature of the note of $3.0 million and all accrued and unpaid interest are due and payable on August 8, 2025, or 120 days following written demand made by WFIA during the first five business days of a calendar quarter. ~~WFIA has not demanded payment on the note. The Company may prepay the note, in whole or in part, without premium or penalty; provided, that no amount repaid may be reborrowed.~~counterparty.

11

~~As of September 30, 2023 and December 31, 2022, $3.0~~ ~~million and $5.0~~ ~~million, respectively, of principal were outstanding on the note.~~
During the three months ended ~~September 30,~~March 31, 2024 and 2023, the Company recognized $~~237,500~~31,250 and $187,500, respectively, of interest expense relating to ~~the~~this note. ~~During the nine months ended September 30, 2023, the Company recognized $677,500~~ ~~of interest expense relating to the note. All interest expense relating to the note is included in accrued expenses on the consolidated balance sheet.~~

(8)Stockholders’ Equity

The Company has authorized 240,000,000 shares of $0.0001 par value common stock and 10,000,000 shares of $0.0001 par value preferred stock at ~~September 30, 2023,~~March 31, 2024 and December 31, ~~2022,~~2023, of which ~~17,378,798~~5,010,470 and ~~11,309,412~~1,167,521 shares of common stock were issued and outstanding, ~~as of September 30, 2023 and December 31, 2022,~~ respectively. The Company has not issued any shares of preferred stock.

The holders of common stock are entitled to one vote for each share of common stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after the payment or provision for payment of all debts and liabilities of the Company, the holders of common stock shall be entitled to share in the remaining assets of the Company available for distribution, if any. Holders of the shares of common stock are entitled to dividends when, as and if declared by the Board of Directors.

Reverse Stock Split
On November 30, 2023, the Company completed a one-for-twenty reverse stock split (Reverse Stock Split), which reduced the number of shares of the Company’s common stock that were issued and outstanding immediately prior to the effectiveness of the Reverse Stock Split. The number of shares of the Company’s authorized common stock was not affected by the Reverse Stock Split and the par value of the Company’s common stock remained unchanged at $0.0001 per share. No fractional shares were issued in connection with the Reverse Stock Split. Except where disclosed, all amounts related to number of shares and per share amounts have been retrospectively restated in these financial statements.
(9)Sale of Securities
~~Private Placement~~At the Market Offering

~~On August 11,~~In January 2023, the Company entered into the At-the-Market Agreement (ATM Agreement) with H.C. Wainwright & Co., LLC (HCW) pursuant to which the Company could issue and sell, from time to time, shares of the Company’s common stock having an aggregate offering price of up to $4.97 million in at-the-market offerings sales. HCW acts as sales agent and is paid a ~~Securities Purchase Agreement with WFIA and issued, in a private placement priced~~3% commission on each sale under the ATM Agreement. The Company’s common stock is sold at prevailing market prices at the ~~market under Nasdaq rules,~~ time of the sale, and, as a result, prices will vary.
~~1,823,155~~
In January 2024, the Company sold 283,800 shares of ~~its~~ common stock ~~at a purchase price per share~~under the ATM Agreement, for net proceeds of $~~0.5485~~3,115,303~~, resulting in gross proceeds to~~. On March 18, 2024, the Company increased the maximum aggregate offering price of ~~approximately~~ ~~$1.0~~ ~~million. Peter Werth, a member~~the shares of the Company’s ~~Board~~common stock issuable under the ATM Agreement from $4.97 million to $8.47 million and filed a prospectus supplement for an aggregate of ~~Directors, is~~$3.5 million. In connection with the ~~manager~~filing of ~~WFIA.~~the prospectus supplement, on March 17, 2024, the Company received a waiver from the purchaser in the February 2024 Offering (the February 2024 Offering) under the securities purchase agreement, dated February 2, 2024, by and between the Company and such purchaser. In consideration of the waiver set forth therein, the Company agreed to lower the exercise price of the Series A Warrants to purchase up to an aggregate of 346,261 shares of common stock and Series B Warrants to purchase up to an aggregate of 173,131 shares of common stock to $1.13, which warrants were previously issued by the Company to such purchaser on September 13, 2023 and to extend the exercise term of the Series A Warrants to March 17, 2029 and the term of the Series B Warrants to March 17, 2026. The modifications to the warrants had no impact on the consolidated financial statements.
Conversion of Related Party Note
The Company issued pre-funded warrants to purchase 694,096 shares of the Company’s common stock pursuant to a note conversion agreement with WFIA, dated January 25, 2024, to convert the remaining principal amount of the note payable to WFIA, as described in Note 7.
12
In April 2024, WFIA exercised all of its pre-funded warrants, including pre-funded warrants it received in September 2023, as described in Note 7.

Public Offering

On ~~September 11, 2023,~~February 2, 2024, the Company ~~entered into~~completed a ~~Securities Purchase Agreement with an institutional investor (September 2023~~public offering (the February 2024 Offering) pursuant to which the Company issued ~~1,720,000~~1,375,000 shares of its common stock ~~at a combined price of $0.5776~~ ~~per share~~ and accompanying Series A and Series B warrants at a combined price of $2.00 per share, and pre-funded warrants ~~(Pre-Funded Warrants)~~ to purchase up to an aggregate of ~~5,205,208~~2,375,000 shares of its common stock and accompanying Series A and Series B warrants at a combined purchase price of $~~0.5775~~1.999 per ~~Pre-Funded Warrant, and accompanying Series A and Series B warrants,~~pre-funded warrant, which represents the public offering price for the common stock less the $0.0001 per share exercise price per share for each ~~Pre-Funded Warrant.~~ pre-funded warrant. The ~~September 2023 Offering closed on September 13, 2023. The Pre-Funded Warrants are~~pre-funded warrants were exercisable at any time after the date of issuance and have no expiration date. The ~~holder~~holders of ~~Pre-Funded Warrants~~pre-Funded warrants may not exercise the warrants if the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise. Each share of common stock and each pre-funded warrant were sold along with one Series A and 0.5 Series B warrants. The ~~September 2023~~February 2024 Offering resulted in gross proceeds to the Company of $~~3,999,480~~7.5 million before deducting $~~688,929~~750,950 of placement agent fees and other offering expenses. ~~See Note 10 for a description~~As of ~~Series A and Series B warrants issued in the September 2023 Offering.~~March 31, 2024, 2,177,000
~~Conversion of Related Party Note~~
~~On September 8, 2023, the Company issued WFIA Pre-Funded Warrants to purchase~~ ~~6,838,235~~ ~~shares~~ of the ~~Company’s common stock as part of the Note Conversion Agreement, as described in Note 7.~~ ~~The WFIA Pre-Funded Warrants have no expiration date and are exercisable immediately at an exercise price of $0.0001~~ per share, to the extent that after giving effect to such exercise, WFIA and its affiliates would beneficially own, for purposes of Section 13(d) of the Exchange Act, no more than 19.99% of the outstanding shares of common stock of the Company.
12
~~Purchase Agreement with Lincoln Park~~
In April 2023, the Company entered into a purchase agreement (LP Purchase Agreement) and a registration rights agreement (Registration Rights Agreement) with Lincoln Park Capital Fund, LLC (Lincoln Park). Pursuant to the terms of the LP Purchase Agreement, Lincoln Park has agreed to purchase from the Company up to $12 million of the Company’s common stock subject to certain limitations and satisfaction of the conditions set forth in the LP Purchase Agreement. Pursuant to the terms of the Registration Rights Agreement, the Company filed with the SEC a registration statement to register for resale under the Securities Act ~~4.5~~ ~~million shares of common stock that have been or may be issued to Lincoln Park under the LP Purchase Agreement.~~
~~Pursuant to the terms of the LP Purchase Agreement, at the time the Company signed the LP Purchase Agreement and the Registration Rights Agreement, the Company issued~~ ~~368,023~~ ~~shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of common stock under the LP Purchase Agreement. The commitment shares were valued at $400,409~~ ~~and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost of capital to be raised under the LP Purchase Agreement.~~
~~During the quarter ended September 30, 2023, the Company sold~~ ~~240,000~~ ~~shares of common stock under the LP Purchase Agreement, for net proceeds of $196,167. During the nine months ended September 30, 2023, the Company sold~~ ~~510,000~~ ~~shares of common stock under the LP Purchase Agreement, for net proceeds of $450,427~~.
~~At the Market Offering~~
In January 2023, the Company entered into an At The Market Offering Agreement (ATM Agreement) with H.C. Wainwright & Co., LLC (HCW) pursuant to which the Company may issue and sell, from time to time, shares of the Company’s common stock having an aggregate offering price of up to $~~4.97~~ ~~million in at-the-market offerings sales. HCW will act as sales agent and will be paid a~~ 3% commission on each sale under the ATM Agreement. The Company’s common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. During the quarter ended September 30, 2023, the Company sold ~~1,538,855~~ ~~shares of common stock under the ATM Agreement, for net proceeds of $1,595,429. During the nine months ended September 30, 2023, the Company sold~~ ~~1,648,208~~ ~~shares of common stock under the ATM agreement, for net proceeds of $1,696,407~~.
~~(10)~~ ~~Common Stock Purchase Warrants~~
~~In addition to the~~ ~~6,925,208~~ ~~shares of common stock and Pre-Funded Warrants issued in the September 2023 Offering, the Company issued Series A~~pre-funded warrants ~~to purchase up to~~ ~~6,925,208~~ ~~shares of common stock and Series B warrants to purchase up to~~ ~~3,462,604~~ ~~shares of common stock. The Series A and Series B warrants have an exercise price of $0.5776~~ ~~per share and are exercisable on the effective date of stockholder approval of the shares issuable pursuant to the warrants. The Series A warrants have a~~ ~~five-year term and the Series B warrants have a~~ ~~two-year term from the initial exercise date.~~
~~The Company evaluated the Pre-Funded Warrants for liability or equity classification in accordance with the provisions of ASC Topic 480,~~ ~~Distinguishing Liabilities from Equity~~~~, and ASC Topic 815,~~ ~~Derivatives and Hedging~~~~, and determined that equity treatment was appropriate. The Company valued the Pre-Funded Warrants to purchase~~ ~~5,205,208~~ ~~shares of common stock based on their issuance date fair value of $3,006,008. As of September 30, 2023, none of the Pre-Funded Warrants~~ had been exercised.

~~In connection with the September 2023 Offering, the Company issued placement agent warrants to purchase up to~~(10) ~~346,260~~ ~~shares of common stock. The placement agent warrants have an exercise price of $0.722~~ ~~per share. These warrants have a~~ ~~five-year term ending September 11, 2028.~~
~~The Series A, Series B and placement agent warrants issued in the September 2023 Offering were valued using a Black-Scholes model with a risk-free rate of~~ ~~4.5~~%-~~5.3%, the respective terms of~~ ~~five~~ ~~and~~ ~~two years, and a volatility of~~ ~~1.29~~-~~1.32~~. The estimated volatility of the Company’s common stock at the date of measurement is based on an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company does not have sufficient trading history for its common stock. The risk-free rate is based on the expected term of the warrants based on the constant maturity of U.S. Treasury securities with similar maturities as of the date of grant. The expected term has been estimated using the contractual term of the warrants.
13
~~The following table summarizes the Company’s outstanding common stock purchase warrants as of September 30, 2023:~~
~~Schedule of Warrants and Rights Outstanding~~
Issuance Date Issuance Date
Number of Exercise Fair Value Fair Value
Warrants Price per Warrant Total
December 2021 Initial Public Offering 4,791,665 $ 6.00 $ 4.77 $ 22,856,242
December 2021 Underwriter Warrants 208,333 $ 7.50 $ 4.64 966,665
September 2023 WFIA Pre-funded Warrants 6,838,235 $ 0.0001 $ 0.85 5,812,500
September 2023 Public Offering Pre-funded Warrants 5,205,208 $ 0.0001 $ 0.5775 3,006,008
September 2023 Public Offering Series A Warrants 6,925,208 $ 0.58 $ 0.540 3,739,612
September 2023 Public Offering Series B Warrants 3,462,604 $ 0.58 $ 0.420 1,454,294
September 2023 Placement Agent Warrants 346,260 $ 0.72 $ 0.530 183,518
Balance- September 30, 2023 27,777,513 $ 38,018,839
~~The Company has accounted for these warrants as equity-classified instruments under ASU 2020-06,~~ ~~Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,~~ as they are indexed to the Company’s common stock, and they meet all other conditions as defined in ASU 2020-06 for equity classification. The gross proceeds of the September 2023 public offering was allocated to the common stock/pre-funded warrants and common stock purchase warrants using the relative fair value method shown as follows. Fair value of the warrants was recorded to Additional Paid-in-Capital on the Company’s balance sheet.
~~Fair Value of the Warrants to Additional Paid in Capital~~
Percent
Fair of Total Amount
Value Fair Value Allocated

Common Stock and Pre-Funded Warrants $ 3,999,480 42.7 % $ 1,707,778
Series A, B and Placement Agent Warrants 5,377,424 57.3 % 2,291,702
Total $ 9,376,904 100 % $ 3,999,480
~~(11)~~ Stock-Based Compensation
In September 2021, the Company’s board of directors and stockholders adopted the 2021 Equity Incentive Plan ~~(2021~~(the 2021 Plan), which provides for the grant of incentive stock options and non-qualified stock options to purchase shares of the Company’s common stock, stock appreciation rights, restricted stock units, restricted or unrestricted shares of common stock, performance shares, performance units, incentive bonus awards, other stock-based awards and other cash-based awards. No awards may be made under the 2021 Plan on or after September 24, 2031, but the 2021 Plan will continue thereafter while previously granted awards remain outstanding.

The maximum number of shares of common stock available for issuance in connection with options and other awards granted under the 2021 Plan is ~~2,786,310~~256,926 and as of ~~September 30, 2023,~~March 31, 2024, ~~1,333,565~~15,169 shares of common stock were available for issuance under the 2021 Plan. The number of shares of common stock available for issuance under the 2021 Plan will automatically increase on January 1st of each year until the expiration of the 2021 Plan, in an amount equal to 5% percent of the total number of shares of our common stock outstanding on December 31st of the preceding calendar year, on a fully diluted basis, unless the board of directors takes action prior thereto to provide that there will not be an increase in the share reserve for such year or that the increase in the share reserve for such year will be of a lesser number of shares of common stock than would otherwise occur. The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, repurchased or are otherwise terminated by the Company under the 2021 Plan will be added back to the shares of common stock available for issuance under the 2021 Plan.

14
The Company recorded stock-based compensation expense of $~~658,105~~164,575 ~~during the nine months ended September 30, 2023~~ and $~~594,363~~ ~~during the nine months ended September 30, 2022. The Company recorded stock-based compensation expense of $236,251~~204,479 during the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and $205,656~~ ~~during the three months ended September 30, 2022, all relating to options issued during 2021, 2022 and 2023.~~respectively. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, there was $~~2,133,614~~1,327,356 and $~~2,637,895~~1,278,981, respectively, of unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2021 Plan, which is expected to be recognized over the next one to four years.

13
A summary of option activity under the Plan during the ~~three~~three-month periods ending March 31, 2024 and ~~nine months ended September 30,~~ 2023, is as follows:
Summary of Option Activity
Weighted-Average Aggregate
Weighted-Average Remaining Contractual Intrinsic Weighted-Average
Shares Exercise Price Term (years) Value Weighted-Average Remaining Contractual
Aggregate
Intrinsic

Shares Exercise Price Term (years) Value
Outstanding at January 1, 2023 861,019 43,051
Granted 384,500 $ 1.75 9.92 19,225 $ 35.00 9.93 -
Exercised - -
Forfeitures or expirations (5,615 ) (281 )
Outstanding at March 31, 2023 1,239,904 $ 3.16 9.01 61,995
Vested and expected to vest at March 31, 2023 61,995
Exercisable at March 31, 2023 14,312

Outstanding at January 1, 2024 57,300
Granted 127,758 $ 0.96 9.98 191,834 $ 1.18 9.93
Exercised - -
Forfeitures or expirations (17,983 ) (7,488 )
Outstanding at June 30, 2023 1,349,679 $ 3.16 9.01
Granted 104,066 $ 0.61 9.89
Exercised -
Forfeitures or expirations (1,000 )
Outstanding at September 30, 2023 1,452,745 $ 2.99 8.84 $ 10,607

Vested and expected to vest at September 30, 2023 1,452,745

Exercisable at September 30, 2023 336,310
Outstanding at March 31, 2024 241,646
Vested and expected to vest at March 31, 2024 241,646
Exercisable at March 31, 2024 23,402

The Company’s stock options issued qualify for equity accounting treatment under ASC 718, Compensation- Stock Compensation, and are measured at fair value as of their grant date accordingly. The fair value of the options were estimated using a Black-Scholes model. The assumptions that the Company used to estimate the grant-date fair value of stock options granted to employees during the ~~nine-month period~~three-month periods ending ~~September 30,~~March 31, 2024 and 2023 were as follows, shown on a weighted average basis:
Schedule of Fair Value Assumption
~~Risk-free interest rate~~ ~~4.073~~ %
~~Expected term (in years)~~ ~~5.9~~
~~Expected volatility~~ ~~1.27~~
~~Expected dividend yield~~ 0 %
March 31, March 31,
2024 2023
Risk-free interest rate 3.980 % 3.662 %
Expected term (in years) 5.55 6
Expected volatility 1.56 1.13
Expected dividend yield 0 % 0 %

Risk-Free Interest Rate: The Company based the risk-free interest rate over the expected term of the options based on the constant maturity of U.S. Treasury securities with similar maturities as of the date of grant.

Expected Term: The expected term represents the period that the options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting dates and the end of the contractual term.)

Expected Volatility: The Company uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company does not have sufficient trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding volatility of its own stock price becomes available.

15
Expected Dividend Yield: The Company has not paid and does not anticipate paying any dividends in the near future. Therefore, the expected dividend yield was zero.

The grant-date fair value of options granted during the three months ended ~~September 30, 2023,~~March 31, 2024 ranged from $~~0.51~~0.81 to $~~0.64~~1.53, and the grant date fair value of the options granted during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 ranged from ~~ranged from~~ $~~0.51~~22.40 to $~~1.53~~23.20.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock. The fair value per share of common stock was $~~0.71~~1.10 as of ~~September 30, 2023,~~March 31, 2024, and $~~1.00~~19.70 as of ~~December~~March 31, ~~2022,~~2023, based upon the closing price of our common stock on the Nasdaq Capital Market on those ~~dates.~~dates or the last trading date prior to those dates if those dates were not a trading date.
14
(11)Common Stock Purchase Warrants
For each of the 3,750,000 shares of common stock and pre-funded warrants issued in the February 2024 Offering, the Company issued Series A warrants to purchase up to 3,750,000 shares of common stock and Series B warrants to purchase up to 1,875,000 shares of common stock. The Series A and Series B warrants have an exercise price of $2.00 per share and became exercisable on the effective date of stockholder approval of the shares issuable pursuant to the warrants. The Series A warrants have a five-year term and the Series B warrants have a two-year term from the initial exercise date of February 5, 2024.

The Company evaluated the warrants for liability or equity classification in accordance with the provisions of ASC Topic 480, Distinguishing Liabilities from Equity, and ASC Topic 815, Derivatives and Hedging, and determined that equity treatment was appropriate. The Company valued the pre-funded warrants to purchase 2,375,000 shares of common stock based on their issuance date fair value of $2.00. As of March 31, 2024, 2,177,000 of the pre-funded warrants relating to the February 2024 Offering had been exercised.
In connection with the February 2024 Offering, the Company issued placement agent warrants to purchase up to 150,000 shares of common stock. The placement agent warrants have an exercise price of $2.50 per share. These warrants have a five-year term ending February 2, 2029.
The Series A, Series B and placement agent warrants issued in the February 2024 Offering were valued using a Black-Scholes model with a risk-free rate of 4.0%-5.0%, the respective terms of five and two years, and a volatility of 1.56-1.83. The estimated volatility of the Company’s common stock at the date of measurement is based on an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company does not have sufficient trading history for its common stock. The risk-free rate is based on the expected term of the warrants based on the constant maturity of U.S. Treasury securities with similar maturities as of the date of grant. The expected term has been estimated using the contractual term of the warrants.
The following table summarizes the Company’s outstanding common stock purchase warrants as of March 31, 2024:
Schedule of Warrants and Rights Outstanding
Issuance Date Issuance Date
Number of Exercise Fair Value Fair Value
Warrants Price per Warrant Total
December 2021 Initial Public Offering 239,584 $ 120.00 $ 95.40 $ 22,856,314
December 2021 Underwriter Warrants 10,418 $ 150.00 $ 92.79 966,686
September 2023 WFIA Pre-funded Warrants 341,912 $ 0.002 $ 11.55 3,949,084
September 2023 Public Offering Series A Warrants 346,261 $ 11.55 $ 10.82 3,746,544
September 2023 Public Offering Series B Warrants 173,131 $ 11.55 $ 8.42 1,457,763
September 2023 Placement Agent Warrants 17,316 $ 14.40 $ 10.63 184,069
January 2024 WFIA Pre-funded Warrants 694,086 $ 0.0001 $ 4.35 3,019,274
February 2024 Public Offering Series A Warrants 3,750,000 $ 2.00 $ 1.17 4,387,500
February 2024 Public Offering Series B Warrants 1,875,000 $ 2.00 $ 0.99 1,856,250
February 2024 Placement Agent Warrants 150,000 $ 2.50 $ 1.15 172,500
February 2024 Pre-funded warrants 198,000 $ 0.0001 $ 2.00 396,000
Balance- March 31, 2024 7,795,708 $ 42,991,984
In April 2024, WFIA exercised all of its pre-funded warrants, including pre-funded warrants it received in September 2023, as described in Note 7.
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The Company has accounted for these warrants as equity-classified instruments under ASC Subtopic 815-40, Derivatives and Hedging; Contracts in Entity’s Own Equity, as they are indexed to the Company’s common stock, and they meet all other conditions for equity classification. The gross proceeds of the February 2024 Offering was allocated to the common stock and common stock purchase warrants using the relative fair value method shown as follows. Fair value of the warrants was recorded to Additional Paid-in-Capital on the Company’s balance sheet.
Fair Value of the Warrants to Additional Paid in Capital
Percent
Fair of Total Amount
Value Fair Value Allocated
Common Stock $ 2,750,000 19.76 % $ 1,482,000
Pre-Funded Warrants 4,750,000 34.13 % 2,559,750
Series A, B and Placement Agent Warrants 6,416,250 46.11 % 3,458,250
Total $ 13,916,250 100.00 % $ 7,500,000
(12)Income Taxes
Cingulate Inc. is taxed as a C corporation under the Internal Revenue Code. Cingulate Inc. records deferred income taxes to reflect the impact of temporary differences between the recorded amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. CTx is a wholly-owned disregarded entity of Cingulate Inc., and all of the activity for CTx, along with its wholly-owned subsidiary Cingulate Works Inc., is included in the calculation of the current and deferred tax assets and liabilities for Cingulate Inc. No deferred income tax benefit or expense was recorded for the three-month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022 or the nine-month periods ended September 30, 2023 and 2022,~~ for federal or state income taxes.

Income tax expense differed from the expected expense computed by applying the U.S. Federal income tax rate as follows:
Schedule of Effective Income Tax Rate Reconciliation
2024 2023
Three Months Ended March 31,
Three Months Ended
September 30, 2023 Three Months Ended
September 30, 2022 Nine Months Ended
September 30, 2023 Nine Months Ended
September 30, 2022 2024 2023
Federal income tax benefit at statutory rate $ (1,255,601 ) $ (845,722 ) $ (3,486,052 ) $ (2,733,779 ) $ (588,266 ) $ (841,026 )
State income tax benefit (330,642 ) (222,707 ) (917,994 ) (719,896 ) (154,910 ) (221,470 )
Permanent differences 6,154 3,157 14,457 11,920 3,654 3,669
Change in valuation allowance 2,218,188 1,132,895 5,089,875 3,572,189 770,439 1,090,836
Prior period adjustment to actual (620,630 ) - (620,630 ) -
Other (17,469 ) (67,623 ) (79,656 ) (130,434 ) (30,917 ) (32,009 )
Total income tax expense $ - $ - $ - $ - $ - $ -

Evaluating the need for, and amount of, a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence on a jurisdiction-by-jurisdiction basis. Such judgments require the Company to interpret existing tax law and other published guidance as applied to its circumstances. As part of this assessment, the Company considers both positive and negative evidence about its profitability and tax situation. A valuation allowance is provided if, based on available evidence, it is more likely than not that all or some portion of a deferred tax asset will not be realized. The Company determined that it was more likely than not that it would not realize its deferred tax assets, based on historical levels of income and future forecasts of taxable income, among other items. The Company recorded a valuation allowance of its net deferred tax assets totaling $~~10,988,821~~13,373,133 as of ~~September 30, 2023,~~March 31, 2024 and $~~5,580,595~~12,631,033 at December 31, ~~2022,~~2023, the current year portion which was recorded as a component of income tax expense on the accompanying consolidated statements of operations and other comprehensive loss.

The Company files income tax returns in the U.S. federal and various state jurisdictions. The ~~Company is~~Companies are not subject to U.S. federal and state income tax examinations by tax authorities for years before 2018.

The Company follows the provisions of FASB ASC 740, Income Taxes, to evaluate uncertain tax positions. This topic prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has not identified any material uncertain tax positions requiring recognition in the consolidated financial statements as of ~~September 30, 2023~~March 31, 2024 or December 31, ~~2022.~~2023.

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~~Schedule of Deferred Tax Assets and Liabilities~~
September 30, 2023 December 31, 2022
Deferred income tax assets:
Current:
Research and development costs $ 723,577 $ 343,087
Other 59,126 59,018
Non-current:
Net operating losses 5,862,906 3,381,215
Research and development costs 3,645,038 1,762,716
Research and development tax credit 756,122 -
Unvested stock options 405,739 204,380
Patents 99,118 92,417
Right-of-use assets 45,265 63,563
Gross deferred income tax assets 11,596,891 5,906,396
Less: valuation allowance (10,988,821 ) (5,580,595 )
Net deferred income tax asset 608,070 325,801

Deferred income tax liabilities:
Current:
Accrual to cash - (11,228 )
Non-current
Property and equipment (608,070 ) (314,573 )
Gross deferred income tax liabilities (608,070 ) (325,801 )

Net deferred tax asset (liability) $ - $ -
~~(13)~~ ~~Net Loss Per Share~~
Basic net loss per share is calculated by dividing net loss attributable to common shareholders by the weighted-average number of common shares and pre-funded warrants outstanding during the period. The pre-funded warrants are included in the calculation of the weighted-average number of shares outstanding because their exercise requires only nominal consideration for the delivery of shares. The following table sets forth the computation of the basic and diluted net loss per share for the three and nine months ended September 30, 2023 and 2022:
~~Schedule of Net Loss Per Share Basic and Diluted~~

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022
Numerator:
Net loss $ (5,979,054 ) $ (4,027,247 ) $ (16,600,250 ) $ (13,071,205 )
Denominator:
Weighted average shares outstanding 19,766,654 11,309,412 14,287,942 11,309,412
Net loss per share, basic and diluted $ (0.30 ) $ (0.36 ) $ (1.16 ) $ (1.16 )
Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows for the three and nine-month periods ended September 30, 2023 and September 30, 2022:
~~Schedule of Potentially Dilutive Securities~~

September 30, 2023 September 30, 2022
Stock options issued under the 2021 Equity Incentive Plan 1,452,745 883,801
Common stock purchase warrants outstanding 15,734,070 4,999,998
Total 17,186,815 5,883,799
Antidilutive securities 17,186,815 5,883,799
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~~(14)~~ ~~License Agreement~~
CTx has a licensing agreement with a company related to the patents and licensed know-how for use in the development of CTx-1301, CTx-1302, and CTx-2103. Payments are to be made upon the occurrence of the following milestone events:
● $~~250,000~~ ~~Milestone payment upon dosing of first patient in a Phase 3 Clinical Trial for each product in the field, payable on a per product basis.~~
● $~~250,000~~ ~~Milestone payment upon licensee filing of new drug application for each product in the field, payable on a per product basis.~~
● $~~250,000~~ ~~Milestone payment for CTx-1301 and CTx-1302 and $500,000~~ ~~Milestone payment for CTx-2103 upon receipt of first marketing approval from the FDA, payable on a per product basis.~~
● $~~250,000~~ ~~Milestone payment for CTx-2103 upon receipt of first marketing approval from the EMA (European Medicines Agency)~~
~~As of December 31, 2022, the $250,000~~ milestone for CTx-1301 relating to the dosing of first patient in a Phase 3 Clinical Trial was accrued as management deemed the milestone probable of occurring. In early 2023, the Company paid this amount as the first patient in a CTx-1301 Phase 3 Clinical Trial was dosed. The Company has not recorded any expense relating to the other milestones for any other product as it has not deemed them probable of occurring as of September 30, 2023.
~~(15)~~ ~~Related Party Transactions~~
~~The general counsel of the Company is a partner with a law firm providing office facilities space that is leased by the Company. Rental expense incurred by the Company to the law firm was $27,000~~ ~~for both the nine months ended September 30, 2023 and 2022 and $9,000~~ for both the three months ended September 30, 2023 and 2022, which approximates fair value. As of September 30, 2023 and December 31, 2022, the Company had no outstanding amounts payable under this lease.
~~A member of the Company’s Board of Directors, Peter Werth, is the manager of WFIA, the entity which provided $8.0~~ ~~million in debt financing to the Company, $5.0~~ ~~million of which was converted to equity in September 2023, as described in Note 7. The remaining principal balance of $3.0~~ ~~million was outstanding as of September 30, 2023 and the initial principal balance of $5.0~~ ~~million was outstanding as of December 31, 2022. Interest expense of $237,500~~ ~~and $104,838~~ ~~was recognized during the three months ended September 30, 2023 and September 30, 2022, respectively. Interest expense of $677,500~~ ~~and $104,838~~ ~~was recognized during the nine months ended September 30, 2023 and September 30, 2022, respectively. $157,339~~ ~~and $292,339~~ ~~of accrued interest relating to this note was outstanding as of September 30, 2023 and December 31, 2022.~~
~~On August 11, 2023, the Company entered into a Securities Purchase Agreement with WFIA and issued, in a private placement priced at the market under Nasdaq rules,~~ ~~1,823,155~~ ~~shares of its common stock at a purchase price per share of $0.5485, resulting in gross proceeds to the Company of approximately $1.0~~ ~~million.~~
~~(16)~~ ~~Subsequent Events~~
~~Management evaluated events that occurred subsequent to September 30, 2023, through November 13, 2023, which is the date the interim financial statements were issued.~~
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
ITEM 7. 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 the consolidated financial statements and related notes included elsewhere in this report. Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 (Form 10-K) and in this report, as well as disclosures in this report and our other reports filed with the Securities and Exchange Commission (SEC), for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a biopharmaceutical company using our proprietary Precision Timed Release^TM (PTR^TM) drug delivery platform technology to build and advance a pipeline of next-generation pharmaceutical products designed to improve the lives of patients suffering from frequently diagnosed conditions characterized by burdensome daily dosing regimens and suboptimal treatment outcomes. We are initially ~~focused~~focusing our efforts on the treatment of Attention Deficit/Hyperactivity Disorder (ADHD)~~; however, we have expanded our pipeline to include a product candidate for the treatment of anxiety.~~. Our PTR platform incorporates a proprietary Erosion Barrier Layer (EBL)designed to allow for the release of drug substance at specific, pre-defined time intervals, unlocking the potential for once-daily, multi-dose tablets. We believe there remains a significant, unmet need within the current treatment paradigm for true once-daily ADHD stimulant medications with lasting duration and a superior side effect profile to better serve the needs of patients throughout their entire active-day.

Since inception in 2012, our operations have focused on developing our product candidates, organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting clinical trials. We do not have any product candidates approved for sale and have not generated any revenue. We have funded our operations through public and private capital raised. Cumulative capital raised from these sources, including debt financing, was approximately ~~$79.0~~$91.3 million as of ~~September 30, 2023.~~March 31, 2024.

We have incurred significant losses since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net losses were ~~$6.0~~$3.0 million and $4.0 million for the ~~three-month periods~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $16.6 million and $13.1 million for the nine-month periods ended September 30, 2023 and 2022,~~ respectively. See “Results of Operations” below for an explanation of the fluctuations in our net losses. As of ~~September 30, 2023,~~March 31, 2024, we had an accumulated deficit of ~~$86.0~~$95.9 million.

We expect to continue to incur significant expenses and increasing operating losses in the near term. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

● seek regulatory approval for CTx-1301;

● continue research and development activities for our existing and new product candidates, primarily for CTx-1301;

● ~~manufacture supplies for our development studies and clinical trials,~~continue manufacturing activities, primarily ~~for~~relating to CTx-1301;

● seek licensing partners and/or outsource commercial infrastructure to support sales and marketing for CTx-1301; and

● operate as a public company.

Our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings, or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.

1917

Clinical, Manufacturing and Business Update

CTx-1301: We have designed our clinical program for CTx-1301 (dexmethylphenidate), our lead investigational product candidate for the treatment of ADHD, based on U.S. Food and Drug Administration (FDA) feedback regarding our CTx-1301 initial Pediatric Study Plan (iPSP), and longstanding guidance on the streamlined approval pathway under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act. We continue to be in discussions with the FDA regarding our obligations under the Pediatric Research Equity Act (PREA) regarding the data required to assess the safety and efficacy of CTx-1301, and the outcome of these discussions could result in changes to the timing, structure and cost of our clinical study plan.
The pivotal Phase 3 fixed-dose pediatric and adolescent safety and efficacy study commenced in late July 2023 and a Phase 3 pediatric dose-optimization onset and duration study commenced in early August 2023, with results expected in the first half of 2024.

We ~~completed a~~initiated two CTx-1301 Phase 3 ~~adult dose-optimization~~clinical studies in pediatric and adolescent patients- a fixed dose study ~~in June 2023, which assessed efficacy~~ and ~~safety, along with~~a dose-optimized onset and duration ~~of CTx-1301~~study in ~~21 adults (age range: 18-55 years old) with ADHD in an adult~~a laboratory classroom ~~setting. Top-line results~~setting in the third quarter of 2023. Based upon recent written communication with the FDA that further conduct of these pediatric and adolescent studies is not required for the submission of an NDA, we have closed enrollment on both Phase 3 ~~adult study were included in our Quarterly Report on Form 10-Q for the period ended June 30, 2023 and detailed trial results were presented on September 8, 2023 at the 36~~^th ~~Annual Psych Congress in Nashville, Tennessee and included in our Current Report on Form 8-K filed with the SEC on September 11, 2023.~~
~~In order to meet the pharmacology requirement for the CTx-1301 New Drug Application (NDA) submission,~~trials. Per FDA guidance, however, we ~~completed~~will conduct a Phase 1 food effect study ~~in October of 2022, which demonstrated that CTx-1301 can~~utilizing CTx-1301’s highest dosage strength, 50-mg. Appropriate data will be ~~taken with or without food.~~
~~Assuming we receive positive clinical results from our Phase 3 trials, we expect to submit~~included in the NDA, remaining on track for ~~CTx-1301 in the second half of 2024 under the Section 505(b)(2) pathway.~~a 1H 2025 submission.
Societal CDMO, Inc. (Societal), a contract development and manufacturing organization (CDMO) dedicated to solving complex formulation and manufacturing challenges primarily in small molecule therapeutic development, will manufacture all clinical, registration, and commercial batches of our lead ADHD candidate, CTx-1301. In April 2023, we successfully completed the transfer of our proprietary PTR™ manufacturing processes for our lead candidate, CTx-1301 (dexmethylphenidate), to Societal, which has produced a scalable supply of CTx-1301 for our Phase 3 trials in the manufacturing suite within Societal’s Gainesville, GA facility that is outfitted with equipment supplied by us.
In March 2023, we announced a joint commercialization agreement with Indegene, a comprehensive life sciences commercialization company, to provide commercial support for our lead candidate CTx-1301 (dexmethylphenidate). The agreement spans cross-functional services through an omnichannel marketing approach uniquely designed to successfully manage pre-commercial support during our Phase 3 clinical trials and to effectively commercialize CTx-1301 nationwide following potential FDA approval.
CTx-2103: We have embarked on a program to develop CTx-2103 (buspirone), for the treatment of anxiety, which is one of the most common mental health ~~concern~~concerns in the ~~U.S.~~United States. We completed a formulation study in which the pharmacokinetics were evaluated for this trimodal tablet providing three precisely timed doses of buspirone versus one immediate release dose. In addition, scintigraphic imaging visualized transit of the tablets through the gastrointestinal tract to confirm both the site and onset of release, which will then be correlated with pharmacokinetic data to establish the full release profile of the CTx-2103 formulation. Based on the pharmacokinetic profile seen in the data, CTx-2103 achieved a triple release of buspirone. These results provided the critical information required to allow us to request a Pre-IND meeting with the FDA to discuss the design of our clinical and regulatory program for ~~CTx-2103. Based on feedback~~CTx-2103 which occurred in the fourth quarter of 2023. We received input from the FDA regarding the regulatory pathway for CTx-2103, and the design of clinical studies for filing of an IND. Based on this FDA feedback, we ~~will work towards an IND filing in~~believe that we can seek and win approval of CTx-2103 under the ~~first half of 2024.~~505(b)(2) pathway, which typically requires less time and resources than the 505(b)(1) full NDA pathway.

CTx-1302: We plan to initiate ~~a Phase 1/2 bioavailability study in ADHD patients~~the clinical plan for CTx-1302 (dextroamphetamine), our second investigational asset for the treatment of ADHD, ~~in the second half of 2024 and, if the results from this study are successful, subsequently initiate pivotal Phase 3 clinical trials in all patient segments in 2025.~~as soon as 2025, pending additional capital resources.

20
~~PTR~~^TM~~Platform:~~We ~~continue~~are actively seeking a strategic pharmaceutical partnership under which we would license CTx-1301 in the United States, internationally, or both. In March 2023, we entered into a joint commercialization agreement (the “Commercialization Agreement”) with Indegene, Inc. (“Indegene”). Should we be unable to ~~evaluate opportunities to out-license our PTR platform~~identify an appropriate pharmaceutical partnership, if we receive FDA approval for CTx-1301, Indegene would provide commercialization services for CTx-1301, including marketing, sales, market access and ~~to license our product candidates outside of the U.S. In addition, we are evaluating opportunities to expand our relationship with BDD Pharma Limited.~~distribution, on a fee for service basis.

Securities Issuances

ATM Agreement

We entered into an At The Market Offering Agreement ~~(ATM~~(the ATM Agreement) with H.C. Wainwright ~~& Co.~~&Co., LLC (HCW), as sales agent, in January 2023 as amended in May 2023, pursuant to which we may offer and sell, from time to time through HCW, shares of our common stock for aggregate proceeds of up to ~~$4.97~~$ 8.47 million (upon the terms and subject to the conditions and limitations set forth in the ATM Agreement). ~~During~~In the three months ended ~~September 30, 2023,~~March 31, 2024, we sold ~~1,538,855~~283,800 shares of common stock ~~pursuant to~~under the ATM Agreement, for net proceeds of ~~$1,595,429~~$3,115,303, after deducting ~~$49,502~~$97,512 of compensation to HCW and other administration fees. ~~During~~
On March 18, 2024, we increased the ~~nine months ended September 30, 2023,~~maximum aggregate offering price of the shares of our common stock issuable under the ATM Agreement from $4.97 million to $8.47 million and filed a prospectus supplement for an aggregate of $3.5 million. In connection with the filing of the prospectus supplement, on March 17, 2024, we ~~sold 1,648,208~~received a waiver from the purchaser in the February 2024 Offering (as defined below). In consideration of the waiver, we agreed to lower the exercise price of the Series A warrants to purchase up to an aggregate of 346,261 shares of common stock ~~pursuant~~and Series B warrants to ~~the ATM Agreement, for net proceeds~~purchase up to an aggregate of ~~$1,696,407 after deducting $59,898 of compensation to HCW and other administration fees. Subsequent to September 30, 2023, we did not sell any~~173,131 shares of common stock ~~pursuant~~ to $1.13, which warrants were previously issued by us to such purchaser on September 13, 2023 in connection with our public offering that closed on September 13, 2023, and to extend the ~~ATM Agreement.~~exercise term of the Series A warrants to March 17, 2029 and the term of the Series B warrants to March 17, 2026.

Equity Line of Credit

In April 2023, we entered into a purchase agreement (Lincoln Park Agreement) with Lincoln Park Capital Fund LLC (Lincoln Park). Pursuant to the Lincoln Park Agreement, Lincoln Park has agreed to purchase from us up to an aggregate of $12.0 million of common stock (upon the terms and subject to the conditions and limitations set forth in the Lincoln Park Agreement) from time to time and at our sole discretion over the 36-month term of the Lincoln Park Agreement. During the three months ended September 30, 2023, we sold 240,000 shares of common stock pursuant to the Lincoln Park Agreement, for net proceeds of $196,167. During the nine months ended September 30, 2023, we sold 510,000 shares of common stock pursuant to the Lincoln Park Agreement, for net proceeds of $450,427. Subsequent to September 30, 2023, weWe did not sell any shares of common stock pursuant to the Lincoln Park ~~Agreement.~~Agreement during the first quarter of 2024.

~~Private Placement~~
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On August 11, 2023, we entered into a Securities Purchase Agreement with Werth Family Investment Associates LLC (WFIA) and issued, in a private placement priced at the market under Nasdaq rules, 1,823,155 shares of our common stock at a purchase price per share of $0.5485, resulting in gross proceeds to us of approximately $1.0 million (WFIA Private Placement).
Debt Conversion

In August 2022, Cingulate Therapeutics LLC (CTx), a wholly-owned subsidiary of Cingulate Inc., issued a Promissory Note (Original Note) to ~~WFIA~~Werth Family Investment Associates LLC (WFIA) with a principal amount of $5.0 million ~~(Original~~(the “Original Principal ~~Amount)~~Amount”), and in May 2023, CTx issued an Amended and Restated Promissory Note ~~(WFIA Note)~~(the “WFIA Note”) increasing the principal amount under the Original Note by $3.0 million to $8.0 million ~~(2023~~(the “2023 WFIA Debt ~~Financing)~~Financing”).

On September 8, 2023, Cingulate Inc. and CTx entered into a ~~Note Conversion Agreement (Note Conversion Agreement)~~note conversion agreement with WFIA, pursuant to which WFIA agreed to convert the Original Principal Amount under the WFIA Note plus all accrued interest thereon, or $5,812,500, into pre-funded warrants ~~(WFIA~~(the “September WFIA Pre-Funded ~~Warrants)~~Warrants”) to purchase ~~6,838,235~~341,912 shares of our common stock at a conversion price per September WFIA Pre-Funded Warrant of ~~$0.85.~~$17.00. The closing price of our common stock on Nasdaq on September 8, 2023 was ~~$0.5776~~$11.55 per share. The September WFIA Pre-Funded Warrants ~~have~~had no expiration date and ~~are~~were exercisable immediately at an exercise price of $0.002 per share, to the extent that after giving effect to such exercise, WFIA and its affiliates would beneficially own, for purposes of Section 13(d) of the Exchange Act, no more than 19.99% of the outstanding shares of our common stock.
On January 25, 2024, Cingulate Inc. and CTx entered into a note conversion agreement with WFIA, pursuant to which WFIA agreed to convert the remaining $3.0 million of principal under the WFIA Note plus all accrued interest thereon, or $3,287,500, into pre-funded warrants (the “January WFIA Pre-Funded Warrants”) to purchase 687,043 shares of our common stock, at a conversion price per January WFIA Pre-Funded Warrant of $4.785. The closing price of our common stock on Nasdaq on January 24, 2024 was $4.35 per share. The January WFIA Pre-Funded Warrants had no expiration date and were exercisable immediately at an exercise price of $0.0001 per share, to the extent that after giving effect to such exercise, WFIA and its affiliates would beneficially own, for purposes of Section 13(d) of the ~~Securities~~ Exchange Act, ~~of 1934, as amended (Exchange Act),~~ no more than 19.99% of the outstanding shares of our common stock. In March of 2024, we issued to WFIA an additional pre-funded warrant to purchase 7,053 shares of common stock as a result of an error in the interest calculation, on the same form and at the same conversion price as the January WFIA Pre-Funded Warrants.

~~The~~ WFIA ~~Note is unsecured with interest accruing at 15% per annum. Outstanding principal and~~exercised all ~~accrued and unpaid interest is due and payable on August 8, 2025 unless accelerated due to an event~~ of default. WFIA has the right during the first five business days of each calendar quarter to demand payment of all outstanding principal and interest 120 days following notice to us. To date, we have not received a demand notice from WFIA. We may prepay the WFIA Note,its pre-funded warrants in whole or in part, without premium or penalty; provided, that no amount repaid may be reborrowed. As of September 30, 2023, there was $3.0 million of principal and accrued interest on the WFIA Note was $0.2 million. See “Liquidity and Capital Resources” below.April 2024.

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Public Offering

On ~~September 11, 2023,~~February 2, 2024, we entered into agreements, including a Securities Purchase Agreement, with ~~an institutional investor,~~investors, pursuant to which we issued ~~1,720,000~~1,375,000 shares of our common stock, pre-funded warrants to purchase up to an aggregate of ~~5,205,208~~2,375,000 shares of our common stock, Series A warrants to purchase up to ~~6,925,208~~3,750,000 shares of our common stock and Series B warrants to purchase up to ~~3,462,604~~1,875,000 shares of our common stock ~~(September 2023 Offering)~~(the “February 2024 Offering”). The ~~September 2023~~February 2024 Offering closed on ~~September 13, 2023.~~February 6, 2024. The combined purchase price per share of common stock and accompanying Series A and Series B warrants was ~~$0.5776~~$2.00. The combined purchase price per pre-funded warrant and accompanying Series A and Series B warrants was ~~$0.5775,~~$1.9999, which represents the public offering price per share of common stock and accompanying warrants less the $0.0001 per share exercise price for each pre-funded warrant. The pre-funded warrants are exercisable at any time after the date of issuance and have no expiration date. The holder of pre-funded warrants may not exercise the warrants if the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise. The Series A warrants have an exercise price of ~~$0.5776~~$2.00 per share, ~~are~~were exercisable ~~beginning on November 3, 2023, the effective date of stockholder approval of the issuance of the shares issuable upon exercise of the warrants,~~immediately, and will expire five years after the ~~initial exercise~~issuance date, and the Series B warrants have an exercise price of ~~$0.5776~~$2.00 per share, ~~are~~were exercisable ~~beginning on November 3, 2023, the effective date of stockholder approval of the issuance of the shares issuable upon exercise of the warrants~~immediately, and will expire two years after the ~~initial exercise~~issuance date. We received gross proceeds of approximately ~~$4.0~~$7.5 million, before ~~deducing the~~deducting $750,950 of placement agent’s fees and other offering expenses, pursuant to the ~~September 2023~~February 2024 Offering. As of March 31, 2024, 2,177,000 of the pre-funded warrants issued in the February 2024 Offering had been exercised.

Components of Operating Results

Revenue

Since inception, we have not generated any revenue and do not expect to generate any revenue from the sale of products in the near future. If our development efforts for our product candidates are successful and result in regulatory approval, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from collaboration of license agreements.

Operating Expenses

Research and Development Expenses

Research and development expenses consist of costs incurred in the discovery and development of our product candidates, and primarily include:

● expenses incurred under third party agreements with contract research organizations (CROs), and investigative sites, that conducted or will conduct our clinical trials and a portion of our pre-clinical activities;
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● costs of raw materials, as well as manufacturing cost of our materials used in clinical trials and other development testing;

● expenses, including salaries and benefits of employees engaged in research and development activities;

● costs of manufacturing equipment, depreciation and other allocated expenses; and

● fees paid for contracted regulatory services as well as fees paid to regulatory authorities including the FDA for review and approval of our product candidates.

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We expense ~~all~~ research and development costs as ~~incurred, other than manufacturing equipment used in research and development which is capitalized and amortized over its estimated useful life.~~incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated financial statements as prepaid or accrued costs.

Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase for the foreseeable future as we continue clinical development for our product ~~candidates.~~candidates, as well as adding additional PTR product candidates to our pipeline. As products enter later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Historically, our research and development costs have primarily related to the development of CTx-1301. As we advance CTx-1301, CTx-1302, and CTx-2103, as well as identify any other potential product candidates, we will continue to allocate our direct external research and development costs to the products. We expect to fund our research and development expenses from our current cash and cash equivalents and any future equity or debt financings, or other capital sources.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for our employees in administrative, executive and finance functions. General and administrative expenses also include professional fees for legal, accounting, audit, tax and consulting services, insurance, office, and travel expenses.

We expect that our general and administrative expenses will increase in the future as we increase our general and administrative headcount to support our growing operations including the potential commercialization of our product candidates. We have experienced, and will continue to experience, increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax compliance services; director and officer insurance; and investor and public relations costs.

Interest and other income (expense), net

Interest and other income (expense), net consists of interest expense on our related party notes payable and interest earned on our cash and cash equivalents, including money market funds. The primary objective of our investment policy is liquidity and capital preservation.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during a reporting period. Actual results could differ from estimates.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements, we believe the following accounting policies are those most critical to the judgements and estimates used in the preparation of our consolidated financial statements. These policies relate to research and development costs and stock-based compensation. A discussion of these policies can be found in the “Critical Accounting Policies and Significant Judgments and Estimates” section of our Form 10-K.
There have been no changes in our application of critical accounting policies since December 31, ~~2022.~~2023.

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Results of Operations

Comparison of the three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and September 30, 2022:~~

The following table summarizes our results of operations for the three months ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022:~~2023:

Three Months ended % Three Months Ended %
September 30, Increase Increase March 31, Increase Increase
(in thousands) 2023 2022 (Decrease) (Decrease) 2024 2023 (Decrease) (Decrease)
Operating Expenses:
Research and development $ 3,924 $ 2,123 $ 1,801 84.8 % $ 1,807 $ 2,129 $ (322 ) (15.1 )%
General and administrative 1,826 1,845 (19 ) -1.0 % 1,117 1,721 (604 ) (35.1 )%
Loss from operations (5,750 ) (3,968 ) 1,782 (44.9 %)
Operating Loss (2,924 ) (3,850 ) (926 ) 24.1 %
Interest and other income (expense), net (229 ) (59 ) (170 ) NM (24 ) (155 ) (131 ) 84.5 %
Net Loss $ (5,979 ) $ (4,027 ) $ 1,612 (40.0 %) $ (2,948 ) $ (4,005 ) $ (1,057 ) 26.4 %
Research and development expenses

The following table summarizes our research and development (R&D) expenses for the three months ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022:~~2023:

Three Months ended % Three Months Ended %
September 30, Increase Increase March 31, Increase Increase
(in thousands) 2023 2022 (Decrease) (Decrease) 2024 2023 (Decrease) (Decrease)
Clinical operations $ 2,346 $ 581 $ 1,765 303.8 % $ 1,077 $ 868 $ 209 24.1 %
Drug manufacturing and formulation 817 673 144 21.4 % 341 599 (258 ) (43.1 )%
Personnel expenses 644 860 (216 ) (25.1 %) 306 635 (329 ) (51.8 )%
Regulatory costs 117 9 108 NM 83 27 56 207.4 %
Total research and development expenses $ 3,924 $ 2,123 $ 1,801 84.8 % $ 1,807 $ 2,129 $ (322 ) (15.1 )%

R&D expenses were ~~$3.9~~$1.8 million for the three months ended ~~September 30, 2023, an increase~~March 31, 2024, a decrease of ~~$1.8~~$0.3 million or ~~84.8%,~~15.1% from the three months ended ~~September 30, 2022.~~March 31, 2023. This change was ~~primarily~~ the result of increased clinical activity in the three months ended March 31, 2024 as compared to the same period in ~~2022.~~2023, offset by decreased manufacturing activity and personnel expenses in the three months ended March 31, 2024 as compared to the same period in 2023. During the ~~third~~first quarter of ~~2023,~~2024, we ~~initiated~~incurred significant costs relating to two Phase 3 studies for CTx-1301, ~~the pediatric dose optimization onset and duration study and~~ the fixed dose pediatric and adolescent safety and efficacy study and the pediatric dose optimization and duration study. In ~~addition,~~ the ~~Phase 3 adult dose-optimization study~~first quarter of 2023, we incurred costs for ~~CTx-1301 was completed~~the manufacturing of clinical supply for these two studies. The decrease in ~~June 2023.~~personnel costs is the result of lower headcount and the cost containment measures, which we implemented in late 2023 in order to conserve cash, which included salary reductions ranging from 5-55% for all employees.
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General and administrative expenses

The following table summarizes our general and administrative (G&A) expenses for the three months ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022:~~2023:

General and Administrative expenses
Three Months ended % Three Months Ended %
September 30, Increase Increase March 31, Increase Increase
(in thousands) 2023 2022 (Decrease) (Decrease) 2024 2023 (Decrease) (Decrease)
Personnel expenses $ 672 $ 595 $ 77 12.9 % $ 413 $ 668 $ (255 ) (38.2 )%
Legal and professional fees 511 373 138 37.0 % 292 398 (106 ) (26.6 )%
Occupancy 144 109 35 32.1 % 101 130 (29 ) (22.3 )%
Insurance 398 669 (271 ) (40.5 %) 241 392 (151 ) (38.5 )%
Other 101 99 2 (2.0 %) 70 133 (63 ) (47.4 )%
Total general and administrative expenses $ 1,826 $ 1,845 $ (19 ) (1.0 %) $ 1,117 $ 1,721 $ (604 ) (35.1 )%

Total G&A expenses were $1.1 million for the three months ended ~~September 30, 2023 were flat compared to~~March 31, 2024, a decrease of $0.6 million or 33.7% from the three months ended ~~September 30, 2022,~~March 31, 2023. This is primarily the result of a decrease in ~~insurance costs,~~personnel expenses and insurance. The decrease in personnel expenses is the result of lower headcount and the cost containment measures which we implemented in late 2023 in order to conserve cash, which included salary reductions ranging from 5-55% for all employees. In addition, there was ~~related to~~ a ~~decline~~decrease in the annual directors’ and officers’ insurance ~~policy~~ premium ~~that was renewed in December of 2022, offset by an increase in legal fees relating~~from 2023 to ~~capital raise activities during the third quarter of 2023.~~2024.

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Interest and other income (expense), net

The following table summarizes interest and other income (expense), net for the three months ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022:~~2023:

Interest and other income (expense):
Three Months ended % Three Months Ended %
September 30, Increase Increase March 31, Increase Increase
(in thousands) 2023 2022 (Decrease) (Decrease) 2024 2023 (Decrease) (Decrease)
Interest and other income (expense), net $ (229 ) $ (59 ) $ (171 ) (289.8 %) $ (24 ) $ (155 ) $ (131 ) 84.5 %

Total interest and other income (expense), net infor the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~primarily related~~relates to interest incurred on ~~the $8.0 million of principal under the WFIA Note, of which $5.0 million of principal was converted to equity in early September 2023.~~
Total interest and other income (expense), net in the three months ended September 30, 2022 primarily related to interest on the initial $5.0 million of principal under the WFIA Note, dated August 2022, offset by interest earned during the period.
~~Comparison of the nine months ended September 30, 2023 and September 30, 2022:~~
~~The following table summarizes our results of operations for the nine months ended September 30, 2023 and September 30, 2022:~~
Nine Months ended %
September 30, Increase Increase
(in thousands) 2023 2022 (Decrease) (Decrease)
Operating Expenses:
Research and development $ 10,508 $ 7,064 $ 3,444 48.8 %
General and administrative 5,454 5,963 (509 ) (8.5 %)
Loss from operations (15,962 ) (13,027 ) 2,935 (22.5 %)
Interest and other income (expense), net (638 ) (44 ) 594 NM
Net Loss $ (16,600 ) $ (13,071 ) $ 3,529 (27.0 %)
~~Research and development expenses~~
~~The following table summarizes our R&D expenses for the nine months ended September 30, 2023 and September 30, 2022:~~
Nine Months ended %
September 30, Increase Increase
(in thousands) 2023 2022 (Decrease) (Decrease)
Clinical operations $ 5,071 $ 2,082 $ 2,989 143.6 %
Drug manufacturing and formulation 3,254 2,827 427 15.1 %
Personnel expenses 1,902 2,097 (195 ) (9.3 %)
Regulatory costs 281 58 223 384.5 %
Total research and development expenses $ 10,508 $ 7,064 $ 3,444 48.8 %
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R&D expenses were $10.5 million for the nine months ended September 30, 2023, an increase of $3.4 million, or 48.8%, from the nine months ended September 30, 2022. The increase was primarily the result of a significant increase in clinical activity as compared to the same period in 2022. We initiated the Phase 3 adult dose-optimization study for CTx-1301 in late 2022 and completed it in June 2023. Additionally, we incurred expenses in connection with the pivotal Phase 3 fixed-dose pediatric and adolescent safety and efficacy study and the Phase 3 pediatric dose-optimization onset and duration study, both for CTx-1301, which were initiated during the third quarter of 2023. Manufacturing activity also increased in 2023, as we completed the manufacturing of clinical supply for the CTx-1301 Phase 3 studies.
~~General and administrative expenses~~
~~The following table summarizes our general and administrative (G&A) expenses for the nine months ended September 30, 2023 and September 30, 2022:~~
Nine Months ended %
September 30, Increase Increase
(in thousands) 2023 2022 (Decrease) (Decrease)
Personnel expenses $ 2,023 $ 1,803 $ 220 12.2 %
Legal and professional fees 1,495 1,422 73 5.1 %
Occupancy 396 353 43 12.2 %
Insurance 1,173 2,013 (840 ) (41.7 %)
Other 367 372 (5 ) (1.3 %)
Total general and administrative expenses $ 5,454 $ 5,963 $ (509 ) (8.5 %)
Total G&A expenses were $5.4 million for the nine months ended September 30, 2023, a decrease of $0.5 million, or 8.5%, from the nine months ended September 30, 2022. This change was primarily the result of a decrease in insurance costs of $0.8 million related to a decline in the annual directors’ and officers’ insurance policy premium that was renewed in December of 2022, offset by an increase in personnel expenses resulting from the addition of clinical personnel and annual compensation increases.
~~Interest and other income (expense), net~~
~~The following table summarizes interest and other income (expense), net for the nine months ended September 30, 2023 and September 30, 2022:~~
Nine Months ended %
September 30, Increase Increase
(in thousands) 2023 2022 (Decrease) (Decrease)
Interest and other income (expense), net $ (638 ) $ (44 ) $ (594 ) NM
Total interest and other income (expense), net in the nine months ended September 30, 2023 primarily related to interest on the initial $5.0 million of principal under the WFIA Note, dated August 2022, which was subsequently increased to $8.0 million in May 2023, and decreased by $5.0 million due to a conversion to equity in early September 2023,outstanding notes payable, offset by interest earned on invested balances. The decrease is the result of the conversion to equity of the related party note payable to WFIA in two transactions, which occurred in August 2023 and January 2024.

Total interest and other income (expense), net in the nine months ended September 30, 2022 primarily related to interest on the initial $5.0 million of principal under the WFIA Note, dated August 2022, offset by interest earned during the period.
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Cash Flows
Nine Months ended Three Months Ended
September 30, March 31,
2023 2022 2024 2023
Net cash (used in) operating activities $ (12,472 ) $ (11,676 ) $ - $ (3,576 )
Net cash (used in) investing activities (37 ) (10 ) - (37 )
Net cash provided by financing activities 9,139 4,989
Net decrease in cash and cash equivalents $ (3,370 ) $ (6,697 )
Net cash (used in) financing activities - (4 )
Net increase (decrease) in cash and cash equivalents $ - $ (3,617 )
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Cash Flows from Operating Activities

Net cash used in operating activities was ~~$12.5~~$8.7 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2024. Cash used in operating activities was primarily due to the use of funds in our operations to develop our product candidates resulting in a net loss of $3.0 million, prior to the effects of two noncash items, stock-based compensation expense of $0.2 million and depreciation expense of $0.2 million. Changes in operating assets and liabilities included an increase in prepaid expenses and other current assets of $1.1 million primarily due to a deposit made to Societal CDMO, Inc., our contract manufacturing organization (CMO), for registration batch activity for CTx-1301. In addition, there was a decrease in trade accounts payable and accrued expenses of $5.0 million due to the payment of vendor balances with the cash proceeds from the issuance of common stock pursuant to our ATM Agreement in January 2024 and the issuance of equity in the February 2024 Offering.
Net cash used in operating activities was $3.6 million for the three months ended March 31, 2023. Cash used in operating activities was primarily due to the use of funds in our operations to develop our product candidates resulting in a net loss of ~~$16.6~~$4.0 million, prior to the effects of two noncash items, stock-based compensation expense of ~~$0.7~~$0.2 million and depreciation expense of ~~$0.4~~$0.1 million. Changes in operating assets and liabilities included a decrease in miscellaneous receivables of $0.2 million primarily due to collection of an amount recoverable on an insurance claim which had been recorded as a receivable as of December 31, 2022, a decrease of prepaid expenses and other current assets of ~~$1.4~~$0.3 million primarily due to the utilization of ~~deposits~~a deposit made to our ~~contract~~CMO for the build out of our new manufacturing ~~organization~~suite, and ~~contract research organizations, an increase~~a decrease in trade accounts payable and accrued expenses of ~~$1.5~~$0.4 million due to ~~increased clinical~~the payment of certain professional fees and ~~manufacturing expenses resulting from increased development activity, an increase in interest~~franchise taxes which had been accrued ~~for to the WFIA Note, and an increase in legal fees payable relating to legal activity incurred primarily in connection with capital raise activities.~~
~~Net cash used in operating activities was $11.7 million for the nine months ended September 30, 2022. Cash used in operating activities was primarily due to the use~~as of ~~funds in our operations to develop our product candidates resulting in a net loss~~December 31, 2022, as well as general timing variances of $12.8 million, prior to the effects of two noncash items, stock-based compensation expense of $0.6 million and depreciation of $0.3 million. Changes in operating assets and liabilities included a decrease in miscellaneous receivables resulting from the receipt in early 2022 of a significant portion of the payroll and research and development tax credits owed to us, and an increase in prepaid expenses and other current assets relating to prepaid amounts on clinical development activity.trade payables.

Cash Flows from Investing Activities

Net cash used in investing activities for both the ~~nine-month periods~~three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and September 30, 2022~~ was primarily related to the purchase of equipment to support our research and development.

Cash Flows from Financing Activities
Net cash provided by financing activities for the ~~nine months~~three-month period ended ~~September 30, 2023~~March 31, 2024 was ~~primarily~~ related to ~~gross proceeds of approximately $4.0 million from~~ the ~~September 2023 Offering, gross proceeds of approximately $1.0 million from the WFIA Private Placement and~~cash proceeds from the issuance ~~of shares~~ of common stock pursuant to the ~~Lincoln Park~~ATM Agreement in January 2024 and the ~~ATM Agreement. In addition, we received $3.0 million from~~issuance of in the ~~2023 WFIA Debt Financing.~~February 2024 Offering.
Net cash ~~provided by~~used in financing activities infor the ~~nine months~~three-month period ended ~~September 30, 2022~~March 31, 2023 was ~~primarily~~ related to ~~the proceeds~~principal payments on ~~the $5.0 million WFIA Note received in August 2022.~~finance lease obligations.

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Liquidity and Capital Resources

Sources of Liquidity

Since our inception in 2012 through ~~September 30, 2023,~~March 31, 2024, we have not generated any revenue and have incurred significant operating losses and negative cash flow from our operations. ~~Based on our current operating plan, we expect our cash and cash equivalents will be sufficient to fund our development and operating expenditures through mid-November 2023.~~

~~During~~In the ~~three months ended September 30, 2023,~~first quarter of 2024, we sold ~~1,538,855~~283,800 shares of common stock ~~pursuant to~~under the ATM Agreement, for net proceeds of ~~$1,595,429~~$3,115,303, after deducting ~~$49,502~~$97,512 of compensation to HCW and other administration fees. ~~During~~On March 18, 2024, we increased the ~~nine months ended September 30, 2023, we sold 1,648,208~~maximum aggregate offering price of the shares of our common stock ~~pursuant to~~issuable under the ATM Agreement from $4.97 million to $8.47 million and filed a prospectus supplement for ~~net proceeds~~an aggregate of ~~$1,696,407 after deducting $59,898 of compensation to HCW and other administration fees. Subsequent to September 30, 2023, we did not sell any shares of common stock pursuant to the ATM Agreement.~~$3.5 million.

During the three months ended September 30, 2023, we sold 240,000 shares of common stock pursuant to the Lincoln Park Agreement, for net proceeds of $196,167. During the nine months ended September 30, 2023, we sold 510,000 shares of common stock pursuant to the Lincoln Park Agreement, for net proceeds of $450,427. Subsequent to September 30, 2023, we did not sell any shares of common stock pursuant to the Lincoln Park Agreement.
~~On August 11, 2023,~~In February 2024, we received gross proceeds of approximately ~~$1.0 million pursuant to the WFIA Private Placement.~~
~~On September 13, 2023, we received gross proceeds of approximately $4.0~~$7.5 million, before deducting ~~the~~$750,950 of placement agent’s fees and other offering expenses ~~pursuant to~~in the ~~September 2023~~February 2024 Offering.

~~Management is also evaluating additional strategies to obtain funding, which may include additional offerings~~As of ~~equity, issuance~~March 31, 2024, we had cash and cash equivalents of ~~debt, or other~~$1.1 million. We believe our cash will satisfy our capital ~~sources, including potential collaborations with other companies or other strategic transactions.~~
needs through late in the second quarter of 2024 under our current business plan. In addition, in order to achieve the filing of our NDA for CTx-1301 in the ~~second~~first half of ~~2024~~2025 for potential FDA approval, we believe that we will need approximately ~~$30~~$11-13 million of ~~capital.~~additional capital, which is an increase of approximately $2 million from the previously disclosed amount. This increase is related to the addition of a 50mg Fast Fed study for CTx-1301 (see “Overview - Clinical, Manufacturing and Business Update” above). We will also need additional capital to advance our other programs and commercialization efforts. However, it is difficult to predict our spending for our product candidates prior to obtaining FDA approval. Moreover, changing circumstances may cause us to expend cash significantly faster than we currently anticipate, and we may need to spend more cash than currently expected because of circumstances beyond our control.

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Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity while producing a modest return on investment. Accordingly, our cash equivalents are invested primarily in money market funds which are currently providing only a minimal return given the current interest rate environment.

We expect to continue to incur substantial additional operating losses for at least the next several years as we continue to develop our product candidates and seek marketing approval and, subject to obtaining such approval, the eventual commercialization of our product candidates. If we obtain marketing approval for our product candidates, we will incur significant sales, marketing and outsourced manufacturing expenses. In addition, we expect to incur additional expenses to add operational, financial and information systems and personnel, including personnel to support our planned product commercialization efforts. We also expect to incur significant costs to comply with corporate governance, internal controls and similar requirements applicable to us as a public company.

Our future use of operating cash and capital requirements will depend on many forward-looking factors, including the following:

● the cost and timing of manufacturing the clinical supply of our product candidates;

● the initiation, progress, timing, costs and results of clinical trials for our product candidates;

● the clinical development plans we establish for each product candidate;
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● the number and characteristics of product candidates that we develop or may in-license;

● the terms of any collaboration or license agreements we may choose to execute;

● the outcome, timing and cost of meeting regulatory requirements established by the FDA or other comparable foreign regulatory authorities;
● the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

● the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us;

● the cost and timing of the implementation of commercial scale manufacturing activities; and

● the cost and timing of outsourcing our commercialization efforts, including, sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products.

To continue to grow our business over the longer term, we plan to commit substantial resources to research and development, including clinical trials of our product candidates, and other operations and potential product acquisitions and in-licensing. We have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our plan to acquire or in-license and develop additional products and product candidates to augment our internal development pipeline. Strategic transaction opportunities that we may pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both. In addition, we may pursue development, acquisition or in-licensing of approved or development products in new or existing therapeutic areas or continue the expansion of our existing operations. Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations, or for general corporate purposes. Strategic transactions may require us to raise additional capital through one or more public or private debt or equity financings or could be structured as a collaboration or partnering arrangement. We ~~have no arrangements, agreements,~~are actively seeking a strategic pharmaceutical partnership under which we would license CTx-1301 in the United States, internationally, or ~~understandings in place at the present time to enter into any acquisition, licensing or similar strategic business transaction.~~both. In March 2023, we entered into a Joint Commercialization Agreement with Indegene, Inc.~~, which will~~ (Indegene). Should we be unable to identify an appropriate pharmaceutical partnership, if we receive FDA approval for CTx-1301, Indegene would provide ~~us with~~ commercialization services for CTx-1301, ~~upon approval from the FDA,~~ including marketing, sales, market access and distribution, on a fee for service basis.

24
If we raise additional funds by issuing equity securities, ~~or if our debt is converted to equity,~~ our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences that are not favorable to us or our existing stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.

Contractual Obligations

The following summarizes our contractual obligations as of ~~September 30, 2023~~March 31, 2024 that will affect our future liquidity.

We entered into a patent and know-how licensing agreement with BDD Pharma Limited in August 2018. See “Item 1. Business – Material Agreements” section of our ~~Annual Report on~~ Form 10-K ~~for the fiscal year ended December 31, 2022, filed with the SEC on March 10, 2023~~ for a description of this agreement. We are required to pay BDD Pharma certain amounts in connection with clinical trial and regulatory milestones. The first milestone payment of $250,000 was paid in February 2023 upon dosing of the first patient in the Phase 3 adult onset and duration study for CTx-1301. Additional payments will become due upon completion of certain milestones as defined in the agreement.

29
We ~~have~~ entered into agreements ~~with CROs~~ for ~~the pivotal~~two CTx-1301 Phase 3 ~~fixed-dose~~clinical studies in pediatric and adolescent ~~safety~~patients- a fixed dose study and ~~efficacy study for CTx-1301, which commenced in late July 2023, and the Phase 3 pediatric dose-optimization,~~a dose-optimized onset and duration study ~~which commenced~~ in ~~early August 2023. We have entered into agreements with~~ a CDMO and other third parties for manufacture of the registration batches for CTx-1301 which will be needed for submission of the NDA. We have also entered into a joint commercialization agreement with Indegene, Inc., pursuant to which Indegene will provide commercialization services for CTx-1301, upon approvallaboratory classroom setting. Based on guidance received from the FDA ~~including marketing, sales, market access~~regarding our clinical program for CTx-1301, we completed enrollment in these two studies and ~~distribution, on a fee for service basis. These contracts do not contain any minimum purchase commitments and~~no further conduct of these studies is required. We are cancelable by us upon prior written notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, upevaluating the final costs to the date of cancellation and in some cases, wind-down costs and restoration costs. The exact amount of such obligations is dependent on the timing of termination and the terms of the related agreement and are not known.be incurred.

Going Concern

Since inception we have been engaged in organizational activities, including raising capital and research and development activities. We have not generated revenues and have not yet achieved profitable operations, nor have we ever generated positive cash flow from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. We are subject to those risks associated with any pre-clinical stage pharmaceutical company that has substantial expenditures for research and development. There can be no assurance that our research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable. In addition, we operate in an environment of rapid technological change that is largely dependent on the services of our employees and consultants. Further, our future operations are dependent on the success of our efforts to raise additional capital. These uncertainties raise substantial doubt about our ability to continue as a going concern for one year after the issuance date of our financial statements. The accompanying consolidated financial statements have been prepared on a going concern basis. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the company to continue as a going concern, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business. We have incurred a net loss for the three months ended March 31, 2024 and ~~nine-month periods ending September 30,~~ 2023 ~~and 2022~~ and had accumulated losses of ~~$86.0~~$95.9 million since inception to ~~September 30, 2023.~~March 31, 2024. We anticipate incurring additional losses until such time, if ever, that we can generate significant revenue from our product candidates currently in development. Our sources of capital have included private capital raises in various classes of units of CTx prior to the Reorganization Merger, the issuance of equity securities in connection with our initial public offering (IPO), public offerings, including the February 2024 Offering, sales of common stock under our ATM Agreement ~~the~~and Lincoln Park Agreement, a private placement with WFIA and the WFIA ~~debt financings, the WFIA Private Placement and the September 2023 Offering.~~Debt Financing which was subsequently converted to equity. Additional ~~financings~~capital will be needed by us to fund our operations, ~~and~~ to complete development of and ~~commercialize~~to commercially develop our product candidates. ~~See “Liquidity and Capital Resources” above for details relating to these agreements which we have entered into in 2023 as potential sources of additional capital.~~ There is no assurance that such ~~financing~~capital will be available when needed or on acceptable terms.
25

JOBS Act

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” As an “emerging growth company,” we are electing to take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for emerging growth companies.
30

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply until the fifth anniversary of the completion of our IPO or until we no longer meet the requirements for being an “emerging growth company,” whichever occurs first.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Our Disclosure Controls

We maintain a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of ~~September 30, 2023,~~March 31, 2024, have concluded that our disclosure controls and procedures were effective as of ~~September 30,~~March 31, 2024.
As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 1, 2024, management previously identified a material weakness in our internal controls over financial reporting related to the lack of independent members of our board of directors as of December 31, 2023. Specifically, our board of directors did not have sufficient members who are independent of management allowing them to be objective in their oversight of the development and performance of internal control. Effective February 12, 2024, our board of directors fixed the number of directors constituting the board at five directors and appointed Bryan Lawrence as a Class III director to serve until our 2024 annual meeting of stockholders, and each of Jeffrey S. Ervin, and John A. Roberts, as a Class II director to serve until our 2026 annual meeting of stockholders. Based on management’s evaluation, this material weakness was remediated as of March 31, 2024, as a result of the appointment of such directors.

Evaluation of Changes in Internal Control over Financial Reporting

~~There~~Except as part of our remediation of the material weakness described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended ~~September 30, 2023~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

26 31

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

See Part I, Item 1, Notes to Consolidated Financial Statements, Note 6 – Contingencies, of this report.

Item 1A. Risk Factors.

Our business is subject to substantial risks and uncertainties. Investing in our securities involves a high degree of risk. You should carefully consider the risk factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, filed with the SEC on ~~March 10, 2023,~~April 1, 2024, together with the information contained elsewhere in this report, including Part I, Item 1 “Financial Statements” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in our other SEC filings in evaluating our business. These risks and uncertainties could materially and adversely affect our business, financial condition, results of operations, prospects for growth, and the value of an investment in our securities.

~~Except~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On February 1, 2024, the Company issued 7,150 shares of common stock at a value of $3.36 per share to a consultant. Such issuance was exempt from registration under 4(a)(2) of the Securities Act of 1933, as ~~set forth below, there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 10, 2023.~~amended.

If we fail to regain compliance with the continued listing requirements of Nasdaq, our common stock and/or warrants may be delisted and the price of our common stock and/or warrants and our ability to access the capital markets could be negatively impacted.Item 5. Other Information
Our common stock and warrants are currently listed for trading on Nasdaq. On May 16, 2023, we received a notice from Nasdaq stating that we no longer comply with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing. We submitted a plan of compliance to Nasdaq on June 30, 2023. On July 28, 2023, Nasdaq notified us that that it granted an extension until November 13, 2023 to regain compliance with the minimum stockholders’ equity requirement, conditioned upon achievement of certain milestones included in the plan of compliance previously submitted to Nasdaq, including a plan to raise additional capital. If we fail to evidence compliance upon filing our periodic report for the quarter ending September 30, 2023 by November 13, 2023, we may be subject to delisting. If Nasdaq determines to delist our securities, we will have the right to appeal to a Nasdaq hearings panel. There can be no assurance that we will be able to regain compliance with the applicable Nasdaq listing requirements.

In ~~addition, on July 28, 2023, we received notice from Nasdaq indicating that we are not~~the first quarter of 2024, no director or officer (as defined in ~~compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq. We were provided a compliance period of 180 calendar days from the date~~Exchange Act Rule 16a-1(f)) of the ~~notice,~~Company adopted or ~~until January 24, 2024, to regain compliance with~~terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement for the minimum closing bid requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A). We may be eligible for an additional 180 calendar day compliance period. There can be no assurance that we will regain compliance withpurchase or sale of securities of the ~~minimum closing bid requirement during~~Company, within the ~~180-day compliance period, secure a second period~~meaning of ~~180 days to regain compliance or maintain compliance with the other Nasdaq listing requirements.~~Item 408 of Regulation S-K.

32
We will continue to monitor the closing bid price of our common stock and may, if appropriate, consider available options, including implementation of a reverse stock split of our common stock, to regain compliance with the minimum closing bid requirement. If we seek to implement a reverse stock split in order to remain listed on Nasdaq, the announcement or implementation of such a reverse stock split could negatively affect the price of our common stock and/or warrants.
We must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum stockholders’ equity of $2.5 million and a minimum closing bid price of $1.00 per share or risk delisting, which could have a material adverse effect on our business. If our common stock and warrants are delisted from Nasdaq, it could materially reduce the liquidity of our common stock and warrants and result in a corresponding material reduction in the price of our common stock and warrants as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. If our common stock and warrants are delisted, it could be more difficult to buy or sell our common stock and warrants or to obtain accurate quotations, and the price of our common stock and warrants could suffer a material decline. Delisting could also impair our ability to raise capital on acceptable terms, if at all.
~~Future sales of our common stock, warrants, or securities convertible into our common stock may depress our stock price.~~
The price of our common stock or warrants could decline as a result of sales of a large number of shares of our common stock or warrants or the perception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
In addition, in the future, we may issue additional shares of common stock, warrants or other equity or debt securities convertible into common stock in connection with a financing, acquisition, litigation settlement, employee arrangements or otherwise. We may also issue additional shares of common stock to satisfy our outstanding promissory note in favor of Werth Family Investment Associates LLC, an entity controlled by Peter Werth, a member of our Board of Directors. Any such issuances could result in substantial dilution to our existing stockholders and could cause the price of our common stock or warrants to decline.
33
Item 6. Exhibits

Incorporated by Reference
Exhibit
Number
Exhibit Description Form Exhibit Filing Date
3.1 Amended and Restated Certificate of Incorporation of Cingulate Inc. 10-K 3.1 3/28/2022
3.2 Amended and Restated Bylaws of Cingulate Inc. 10-K 3.2 3/28/2022
4.1 Form of Pre-Funded Warrant 8-K 4.1 9/11/2023
4.2 Form of Pre-Funded Warrant S-1 4.5 8/29/2023
4.3 Form of Series A Warrant S-1 4.6 8/29/2023
4.4 Form of Series B Warrant S-1 4.7 8/29/2023
4.5 Form of Placement Agent Warrant S-1 4.8 8/29/2023
10.1 Securities Purchase Agreement, dated August 11, 2023, by and between the Company and Werth Family Investment Associates LLC 8-K 10.1 8/14/2023
10.2 Note Conversion Agreement, dated September 8, 2023, by and between the Company, Cingulate Therapeutics, LLC and Werth Family Investment Associates LLC 8-K 10.1 9/11/2023
10.3 Form of Securities Purchase Agreement S-1 10.24 9/7/2023
31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, 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*

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
101.CAL* Inline XBRL Extension Calculation Linkbase
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase
104* Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
Incorporated by Reference
Exhibit
Number
Exhibit Description Form Exhibit Filing Date
3.1 Amended and Restated Certificate of Incorporation of Cingulate Inc., as amended to date S-1 3.1 1/12/2024
3.2 Amended and Restated Bylaws of Cingulate Inc. 10-K 3.2 3/28/2022
4.1 Form of January 2024 WFIA Pre-Funded Warrant 8-K 4.1 1/29/2024
4.2 Form of February 2024 Pre-Funded Warrant 8-K 4.1 2/7/2024
4.3 Form of February 2024 Series A Warrant 8-K 4.2 2/7/2024
4.4 Form of February 2024 Series B Warrant 8-K 4.3 2/7/2024
4.5 Form of February 2024 Placement Agent Warrant 8-K 4.4 2/7/2024
4.6 Form of March 2024 WFIA Pre-Funded Warrant 10-K 4.16 4/1/2024
10.1

Employment Agreement, dated January 25, 2024, between Cingulate Therapeutics LLC, and Jennifer L. Callahan

8-K

10.2

1/29/2024
10.2 Amendment to Employment Agreement, effective January 1, 2024, between Cingulate Therapeutics, LLC and Matthew N. Brams S-1 10.26 1/12/2024
10.3

Note Conversion Agreement, dated January 25, 2024, by and between the Company, Cingulate Therapeutics, LLC and Werth Family Investment Associates LLC

8-K

10.1

1/29/2024
10.4 Form of February 2024 Securities Purchase Agreement 8-K 10.1 2/7/2024
31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, 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*

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
101.CAL* Inline XBRL Extension Calculation Linkbase
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase
104* Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* Filed Herewith

** Furnished Herewith

27 34

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.

CINGULATE INC.

Date: ~~November 13, 2023~~May 8, 2024 By: /s/ Shane J. Schaffer
Shane J. Schaffer
Chairman and Chief Executive Officer
(Principal Executive Officer)

Date: ~~November 13, 2023~~May 8, 2024 By:
/s/ ~~Louis G. Van Horn~~Jennifer L. Callahan
~~Louis G. Van Horn~~Jennifer L. Callahan
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

35 28


	Estimated								Estimated
	Useful Life		September 30,			December 31,			Useful Life		March 31,			December 31,
	(in years)		2023			2022			(in years)		2024			2023
Equipment		2-7	$	4,342,832		$	2,565,997			2-7	$	4,341,005		$	4,321,816
Furniture and fixtures		7		145,754			145,754			7		145,754			145,754
Computer equipment		5		41,898			41,898			5		41,897			41,897
Leasehold improvements		5		471,505			471,505			5		471,505			471,505
Construction-in-process- equipment		-		-			1,739,699			-		270,297			207,976
Property and equipment, gross				5,001,989			4,964,853					5,270,458			5,188,948
Less: accumulated depreciation				(2,470,659	)		(2,060,066	)				(2,806,584	)		(2,642,983	)
Property and equipment, net			$	2,531,330		$	2,904,787				$	2,463,874		$	2,545,965

					Issuance Date		Issuance Date
	Number of		Exercise		Fair Value		Fair Value
	Warrants		Price		per Warrant		Total
December 2021 Initial Public Offering		4,791,665	$	6.00	$	4.77	$	22,856,242
December 2021 Underwriter Warrants		208,333	$	7.50	$	4.64		966,665
September 2023 WFIA Pre-funded Warrants		6,838,235	$	0.0001	$	0.85		5,812,500
September 2023 Public Offering Pre-funded Warrants		5,205,208	$	0.0001	$	0.5775		3,006,008
September 2023 Public Offering Series A Warrants		6,925,208	$	0.58	$	0.540		3,739,612
September 2023 Public Offering Series B Warrants		3,462,604	$	0.58	$	0.420		1,454,294
September 2023 Placement Agent Warrants		346,260	$	0.72	$	0.530		183,518
Balance- September 30, 2023		27,777,513					$	38,018,839

			Percent
	Fair		of Total			Amount
	Value		Fair Value			Allocated

Common Stock and Pre-Funded Warrants	$	3,999,480		42.7	%	$	1,707,778
Series A, B and Placement Agent Warrants		5,377,424		57.3	%		2,291,702
Total	$	9,376,904		100	%	$	3,999,480

						Weighted-Average		Aggregate
				Weighted-Average		Remaining Contractual		Intrinsic							Weighted-Average
	Shares			Exercise Price		Term (years)		Value					Weighted-Average		Remaining Contractual		Aggregate Intrinsic
										Shares			Exercise Price		Term (years)		Value
Outstanding at January 1, 2023		861,019									43,051
Granted		384,500		$	1.75		9.92				19,225		$	35.00		9.93		-
Exercised		-									-
Forfeitures or expirations		(5,615	)								(281	)
Outstanding at March 31, 2023		1,239,904		$	3.16		9.01				61,995
Vested and expected to vest at March 31, 2023											61,995
Exercisable at March 31, 2023											14,312

Outstanding at January 1, 2024											57,300
Granted		127,758		$	0.96		9.98				191,834		$	1.18		9.93
Exercised		-									-
Forfeitures or expirations		(17,983	)								(7,488	)
Outstanding at June 30, 2023		1,349,679		$	3.16		9.01
Granted		104,066		$	0.61		9.89
Exercised		-
Forfeitures or expirations		(1,000	)
Outstanding at September 30, 2023		1,452,745		$	2.99		8.84	$	10,607

Vested and expected to vest at September 30, 2023		1,452,745

Exercisable at September 30, 2023		336,310
Outstanding at March 31, 2024											241,646
Vested and expected to vest at March 31, 2024											241,646
Exercisable at March 31, 2024											23,402


~~Risk-free interest rate~~	~~4.073~~	%
~~Expected term (in years)~~	~~5.9~~
~~Expected volatility~~	~~1.27~~
~~Expected dividend yield~~	0	%

	September 30, 2023			December 31, 2022
Deferred income tax assets:
Current:
Research and development costs	$	723,577		$	343,087
Other		59,126			59,018
Non-current:
Net operating losses		5,862,906			3,381,215
Research and development costs		3,645,038			1,762,716
Research and development tax credit		756,122			-
Unvested stock options		405,739			204,380
Patents		99,118			92,417
Right-of-use assets		45,265			63,563
Gross deferred income tax assets		11,596,891			5,906,396
Less: valuation allowance		(10,988,821	)		(5,580,595	)
Net deferred income tax asset		608,070			325,801

Deferred income tax liabilities:
Current:
Accrual to cash		-			(11,228	)
Non-current
Property and equipment		(608,070	)		(314,573	)
Gross deferred income tax liabilities		(608,070	)		(325,801	)

Net deferred tax asset (liability)	$	-		$	-


	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022			Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
Numerator:
Net loss	$	(5,979,054	)	$	(4,027,247	)	$	(16,600,250	)	$	(13,071,205	)
Denominator:
Weighted average shares outstanding		19,766,654			11,309,412			14,287,942			11,309,412
Net loss per share, basic and diluted	$	(0.30	)	$	(0.36	)	$	(1.16	)	$	(1.16	)


	September 30, 2023		September 30, 2022
Stock options issued under the 2021 Equity Incentive Plan		1,452,745		883,801
Common stock purchase warrants outstanding		15,734,070		4,999,998
Total		17,186,815		5,883,799
Antidilutive securities		17,186,815		5,883,799

	●	$~~250,000~~ ~~Milestone payment upon dosing of first patient in a Phase 3 Clinical Trial for each product in the field, payable on a per product basis.~~
	●	$~~250,000~~ ~~Milestone payment upon licensee filing of new drug application for each product in the field, payable on a per product basis.~~
	●	$~~250,000~~ ~~Milestone payment for CTx-1301 and CTx-1302 and $500,000~~ ~~Milestone payment for CTx-2103 upon receipt of first marketing approval from the FDA, payable on a per product basis.~~
	●	$~~250,000~~ ~~Milestone payment for CTx-2103 upon receipt of first marketing approval from the EMA (European Medicines Agency)~~

	●	seek regulatory approval for CTx-1301;

	●	continue research and development activities for our existing and new product candidates, primarily for CTx-1301;

	●	~~manufacture supplies for our development studies and clinical trials,~~continue manufacturing activities, primarily ~~for~~relating to CTx-1301;

	●	seek licensing partners and/or outsource commercial infrastructure to support sales and marketing for CTx-1301; and

	●	operate as a public company.

	●	costs of raw materials, as well as manufacturing cost of our materials used in clinical trials and other development testing;

	●	expenses, including salaries and benefits of employees engaged in research and development activities;

	●	costs of manufacturing equipment, depreciation and other allocated expenses; and

	●	fees paid for contracted regulatory services as well as fees paid to regulatory authorities including the FDA for review and approval of our product candidates.

	Three Months ended									%			Three Months Ended									%
	September 30,						Increase			Increase			March 31,						Increase			Increase
(in thousands)	2023			2022			(Decrease)			(Decrease)			2024			2023			(Decrease)			(Decrease)
Operating Expenses:
Research and development	$	3,924		$	2,123		$	1,801			84.8	%	$	1,807		$	2,129		$	(322	)		(15.1	)%
General and administrative		1,826			1,845			(19	)		-1.0	%		1,117			1,721			(604	)		(35.1	)%
Loss from operations		(5,750	)		(3,968	)		1,782			(44.9	%)
Operating Loss														(2,924	)		(3,850	)		(926	)		24.1	%
Interest and other income (expense), net		(229	)		(59	)		(170	)		NM			(24	)		(155	)		(131	)		84.5	%
Net Loss	$	(5,979	)	$	(4,027	)	$	1,612			(40.0	%)	$	(2,948	)	$	(4,005	)	$	(1,057	)		26.4	%

General and Administrative expenses
	Three Months ended							%			Three Months Ended							%
	September 30,				Increase			Increase			March 31,				Increase			Increase
(in thousands)	2023		2022		(Decrease)			(Decrease)			2024		2023		(Decrease)			(Decrease)
Personnel expenses	$	672	$	595	$	77			12.9	%	$	413	$	668	$	(255	)		(38.2	)%
Legal and professional fees		511		373		138			37.0	%		292		398		(106	)		(26.6	)%
Occupancy		144		109		35			32.1	%		101		130		(29	)		(22.3	)%
Insurance		398		669		(271	)		(40.5	%)		241		392		(151	)		(38.5	)%
Other		101		99		2			(2.0	%)		70		133		(63	)		(47.4	)%
Total general and administrative expenses	$	1,826	$	1,845	$	(19	)		(1.0	%)	$	1,117	$	1,721	$	(604	)		(35.1	)%

Interest and other income (expense):
	Three Months ended									%			Three Months Ended									%
	September 30,						Increase			Increase			March 31,						Increase			Increase
(in thousands)	2023			2022			(Decrease)			(Decrease)			2024			2023			(Decrease)			(Decrease)
Interest and other income (expense), net	$	(229	)	$	(59	)	$	(171	)		(289.8	%)	$	(24	)	$	(155	)	$	(131	)		84.5	%

	Nine Months ended									%
	September 30,						Increase			Increase
(in thousands)	2023			2022			(Decrease)			(Decrease)
Operating Expenses:
Research and development	$	10,508		$	7,064		$	3,444			48.8	%
General and administrative		5,454			5,963			(509	)		(8.5	%)
Loss from operations		(15,962	)		(13,027	)		2,935			(22.5	%)
Interest and other income (expense), net		(638	)		(44	)		594			NM
Net Loss	$	(16,600	)	$	(13,071	)	$	3,529			(27.0	%)

	●	the cost and timing of manufacturing the clinical supply of our product candidates;

	●	the initiation, progress, timing, costs and results of clinical trials for our product candidates;

	●	the clinical development plans we establish for each product candidate;

	●	the number and characteristics of product candidates that we develop or may in-license;

	●	the terms of any collaboration or license agreements we may choose to execute;

	●	the outcome, timing and cost of meeting regulatory requirements established by the FDA or other comparable foreign regulatory authorities;

	●	the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

	●	the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us;

	●	the cost and timing of the implementation of commercial scale manufacturing activities; and

	●	the cost and timing of outsourcing our commercialization efforts, including, sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products.

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation of Cingulate Inc.	10-K	3.1	3/28/2022
3.2	Amended and Restated Bylaws of Cingulate Inc.	10-K	3.2	3/28/2022
4.1	Form of Pre-Funded Warrant	8-K	4.1	9/11/2023
4.2	Form of Pre-Funded Warrant	S-1	4.5	8/29/2023
4.3	Form of Series A Warrant	S-1	4.6	8/29/2023
4.4	Form of Series B Warrant	S-1	4.7	8/29/2023
4.5	Form of Placement Agent Warrant	S-1	4.8	8/29/2023
10.1	Securities Purchase Agreement, dated August 11, 2023, by and between the Company and Werth Family Investment Associates LLC	8-K	10.1	8/14/2023
10.2	Note Conversion Agreement, dated September 8, 2023, by and between the Company, Cingulate Therapeutics, LLC and Werth Family Investment Associates LLC	8-K	10.1	9/11/2023
10.3	Form of Securities Purchase Agreement	S-1	10.24	9/7/2023
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, 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*	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
101.CAL*	Inline XBRL Extension Calculation Linkbase
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase
104*	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation of Cingulate Inc., as amended to date	S-1	3.1	1/12/2024
3.2	Amended and Restated Bylaws of Cingulate Inc.	10-K	3.2	3/28/2022
4.1	Form of January 2024 WFIA Pre-Funded Warrant	8-K	4.1	1/29/2024
4.2	Form of February 2024 Pre-Funded Warrant	8-K	4.1	2/7/2024
4.3	Form of February 2024 Series A Warrant	8-K	4.2	2/7/2024
4.4	Form of February 2024 Series B Warrant	8-K	4.3	2/7/2024
4.5	Form of February 2024 Placement Agent Warrant	8-K	4.4	2/7/2024
4.6	Form of March 2024 WFIA Pre-Funded Warrant	10-K	4.16	4/1/2024
10.1	Employment Agreement, dated January 25, 2024, between Cingulate Therapeutics LLC, and Jennifer L. Callahan	8-K	10.2	1/29/2024
10.2	Amendment to Employment Agreement, effective January 1, 2024, between Cingulate Therapeutics, LLC and Matthew N. Brams	S-1	10.26	1/12/2024
10.3	Note Conversion Agreement, dated January 25, 2024, by and between the Company, Cingulate Therapeutics, LLC and Werth Family Investment Associates LLC	8-K	10.1	1/29/2024
10.4	Form of February 2024 Securities Purchase Agreement	8-K	10.1	2/7/2024
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, 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*	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
101.CAL*	Inline XBRL Extension Calculation Linkbase
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase
104*	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

	CINGULATE INC.

Date: ~~November 13, 2023~~May 8, 2024	By:	/s/ Shane J. Schaffer
		Shane J. Schaffer
		Chairman and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~November 13, 2023~~May 8, 2024	By:	/s/ ~~Louis G. Van Horn~~Jennifer L. Callahan
		~~Louis G. Van Horn~~Jennifer L. Callahan
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)