| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 Basis
of Presentation The accompanying financial statements are presented
in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US
GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
The unaudited condensed consolidated financial statements include the accounts of INmune Bio Inc. and its subsidiaries. Intercompany transactions
and balances have been eliminated. In the opinion
of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results
for the interim periods. Risks and Uncertainties The Company is subject to risks and uncertainties
common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological
innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to
obtain additional financing to fund operations. Product candidates currently under development will require significant additional research
and development efforts, including extensive preclinical studies, clinical trials and regulatory approval prior to commercialization.
These efforts require significant amounts of additional resources, adequate personnel, infrastructure and extensive compliance and reporting. The Company’s product candidates are still
in development and, to date, none of the Company’s product candidates have been approved for sale. There can be no assurance that the Company’s
research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be
obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products
will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the
Company will generate any revenue from any of its products. The Company operates in an environment of rapid change in technology and substantial
competition from other pharmaceutical and biotechnology companies. The Company relies and expects to continue to
rely on a small number of vendors to manufacture supplies and materials for its use in the clinical trial programs. These programs could
be adversely affected by a significant interruption in these manufacturing services. Use of Estimates Preparing financial statements in conformity with
US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.
Actual results and outcomes may differ from management’s estimates and assumptions. Fair Value of Financial Instruments The Company measures certain assets and liabilities
in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following
three categories: Level 1: Quoted prices (unadjusted)
in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that
are based on inputs not quoted on active markets but corroborated by market data. Level 3: Unobservable inputs are
used when little or no market data is available. Assets and liabilities are classified based on
the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification
on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets
or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of
the fair value measurement hierarchy during the years presented. The carrying amounts of financial instruments
such as cash and cash equivalents, research and development tax credit receivable, other tax receivable, prepaid expenses, and accounts
payable and accrued liabilities approximate the related fair values due to the short-term maturities of these instruments. Cash and Cash Equivalents The Company
considers all short-term, highly liquid investments with an original maturity at the date of purchase of three months or less to be cash
equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation
limits. The Company maintains its cash deposits with major financial institutions. Research
and Development Tax Incentive Receivable The Company, through its wholly owned subsidiary
in Australia (“AUS”), participates in the Australian research and development tax incentive program, such that a percentage
of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected
as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is
reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration
can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information
at the time. The Company, through its wholly owned subsidiary
in the United Kingdom (“UK”), participates in the research and development program provided by the United Kingdom tax relief
program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government,
and such incentives are reflected as a reduction of research and development expense. The United Kingdom research and development tax
incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred
and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to
the Company based on available information at the time. Intangible Assets The Company capitalizes costs incurred in connection
with in-process research and development purchased from others if the asset has alternative uses and such uses are not restricted under
applicable license agreements; patent applications (principally legal fees), patent purchases, and trademarks related to its cell line
as intangible assets. Acquired in-process research and development costs that do not have alternative uses are expensed as incurred. When
the assets are determined to have a finite life (upon completion of the development of the in-process research and development for its
DN-TNF platform), the useful life will be determined and the in-process research and development intangible assets will be amortized. During the fourth quarter and if business factors
indicate more frequently, the Company performs an assessment of the qualitative factors affecting the fair value of our in-process research
and development. If the qualitative assessment suggests that impairment is more likely than not, a quantitative analysis is performed.
The quantitative analysis involves a comparison of the fair value of the in-process research and development with the carrying amount.
If the carrying amount of the in-process research and development exceeds its fair value, an impairment loss is recognized in an amount
equal to that excess. Basic and Diluted Loss per Share Basic loss per share is computed by dividing net
loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per
share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential
common shares if their effect is anti-dilutive. For all periods presented, there is no difference in the number of shares used to calculate
basic and diluted shares outstanding due to the Company’s net loss position. At March 31, 2024 and 2023, the Company had potentially
issuable shares as follows:
March 31,
2024 2023
Stock options 5,496,000 5,441,000
Warrants 45,386 74,074
Total 5,541,386 5,515,074 Revenue Recognition The Company recognizes revenue when the customer
obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange
for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC Topic 606: (1) identify
contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate
the transaction price to the performance obligations in the contract; and (5) recognize revenues when (or as) the Company satisfies the
performance obligations. The Company records the expenses related to revenue in research and development expense, in the periods such
expenses were incurred. The Company records deferred revenues when cash
payments are received or due in advance of performance, including amounts which are refundable. Stock-Based Compensation The Company
utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires
the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can
materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally
require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined
from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate
weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. The Company accounts for
forfeitures of stock options as they occur. Research and Development Research and development (“R&D”)
costs are expensed as incurred. Research and development credits are recorded by the Company as a reduction of research and development
costs. Major components of research and development costs include cash compensation, stock-based compensation, costs of preclinical studies,
clinical trials and related clinical manufacturing, costs of drug development, costs of materials and supplies, facilities cost, overhead
costs, regulatory and compliance costs, and fees paid to consultants and other entities that conduct certain research and development
activities on the Company’s behalf. The Company
recognizes grants as contra research and development expense in the consolidated statement of operations on a systematic basis over the
periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate. Income Taxes The Company follows the liability method of accounting
for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable
to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect
on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. Foreign Currency Translation The Company’s financial statements are presented
in the U.S. dollar (“$”), which is the Company’s reporting currency, while its functional currencies are the U.S. Dollar
for its U.S. based operations, British Pound (“GBP”) for its United Kingdom-based operations and Australian Dollars (“AUD”)
for its Australian-based operations. All assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’
equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the
period. The resulting translation adjustments are reported under other comprehensive income. Gains and losses resulting from the translations
of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss). Recent Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income
Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency
of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction.
The standard is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted. The
Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements. Subsequent Events The Company
evaluates events that have occurred after the balance sheet date of March 31, 2024, through the date which the financial statements are
issued. |
