UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2024

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

For the transition period from __________ to __________

JUPITER NEUROSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Commission File Number: 001-41265

Delaware

47-4828381

(State or other jurisdiction

or incorporation or organization)

(I.R.S. Employer

Identification No.)

1001 North US HWY 1, Suite 504

Jupiter, Florida 33477

(Address of Principal Executive Offices) (Zip Code)

(561) 406-6154

(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value		JUNS		Nasdaq Capital Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to 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

As of December 23, 2024, the Company has 33,103,860 shares of common stock issued and outstanding.

Table of Contents

PART I—FINANCIAL INFORMATION		F-1
Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15
PART II—OTHER INFORMATION		16
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosure	16
Item 5.	Other Information	16
Item 6.	Exhibits	16
SIGNATURES		17
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy, development plans, planned preclinical studies and clinical trials, future results of clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this report include, but are not limited to, statements about:

	●	the ability of our preclinical studies and planned clinical trials to demonstrate safety and efficacy of our product candidate JOTROL, and other positive results;

	●	the timing, progress and results of preclinical studies and clinical trials for JOTROL and other product candidates we may develop, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the studies or trials will become available, and our research and development programs;

	●	the timing, scope and likelihood of regulatory filings and approvals, including timing of INDs and final FDA approval of JOTROL and any other future product candidates;

	●	the timing, scope or likelihood of foreign regulatory filings and approvals;

	●	our ability to develop and advance our current product candidate JOTROL and programs into, and successfully complete, clinical studies;

	●	our manufacturing, commercialization, and marketing capabilities and strategy;

	●	our plans relating to commercializing our product candidates, if approved, including the geographic areas of focus and sales strategy;

	●	the need to hire additional personnel and our ability to attract and retain such personnel;

	●	the size of the market opportunity for our product candidate JOTROL, including our estimates of the number of patients who suffer from the diseases we are targeting;

	●	our expectations regarding the approval and use of our product candidate JOTROL in combination with other drugs;

	●	our competitive position and the success of competing therapies that are or may become available;

	●	our estimates of the number of patients that we will enroll in our clinical trials;

	●	the beneficial characteristics, and the potential safety, efficacy and therapeutic effects of our product candidate JOTROL;

	●	our ability to obtain and maintain regulatory approval of our product candidate JOTROL;

	●	our plans relating to the further development of our product candidate JOTROL, including additional indications we may pursue;

	●	existing regulations and regulatory developments in the United States, Europe and other jurisdictions;

	●	our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering JOTROL and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;

	●	our continued reliance on third parties to conduct additional preclinical studies and planned clinical trials of our product candidate JOTROL, and for the manufacture of our product candidate JOTROL for preclinical studies and clinical trials;

	●	our relationships with patient advocacy groups, key opinion leaders, regulators, the research community and payors;

	●	our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidate JOTROL;

	●	the pricing and reimbursement of JOTROL and other product candidates we may develop, if approved;

	●	the rate and degree of market acceptance and clinical utility of JOTROL and other product candidates we may develop;

	●	our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

	●	our financial performance;

	●	the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements;

	●	the impact of laws and regulations;

	●	our expectations regarding the period during which we will qualify as an emerging growth company under The Jumpstart Our Business Startups Act of 2012 and a smaller reporting company under the Securities Exchange Act of 1934, as amended;

	●	our anticipated use of our existing resources and the proceeds from our initial public offering; and

	●	the price of our common stock could be subject to rapid and substantial volatility. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In addition, if the trading volumes of our common stock are low, persons buying or selling in relatively small quantities may easily influence prices of our common stock. This low volume of trades could also cause the price of our common stock to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our common stock may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, 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. 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 or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

JUPITER NEUROSCIENCES, INC.

BALANCE SHEETS


	September 30, 2024			December 31, 2023
	(unaudited)
Assets
Current Assets:
Cash	$	253		$	28,478
Other current assets		261			261
Total current assets		514			28,739

Operating lease right of use asset, net		81,249			116,070
Other asset		3,783			3,783
Total assets	$	85,546		$	148,592

Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable and accrued expenses	$	663,569		$	546,014
Accrued compensation		2,003,176			1,562,041
Accrued interest		198,475			88,000
Current portion of operating lease liability		49,609			48,213
Note payable		1,377,778			-
Convertible notes payable, net of discount of $0		527,650			1,638,760
Note payable, related party		253,812			383,479
Note payable		253,812			383,479
Derivative liability		606,787			1,505,398
Total current liabilities		5,680,856			5,771,905

Convertible notes payable, net of discount of $28,275 and $43,288		121,725			106,712
Operating lease liability, net of current portion		33,961			71,329
Total liabilities		5,836,542			5,949,946

Commitments and Contingencies (Note 8)		-			-

Stockholders’ Deficit:
Series A preferred stock, par value $0.0001; 5,000,000 shares authorized, nil shares issued and outstanding		-			-
Common stock, par value $0.0001; 125,000,000 shares authorized; 30,126,413 and 26,526,405 issued and outstanding		3,012			2,652
Additional paid in capital		18,815,494			17,778,498
Receivables for sale of common stock		(75,000	)		-
Accumulated deficit		(24,494,502	)		(23,582,504	)
Total stockholders’ deficit		(5,750,996	)		(5,801,354	)
Total liabilities and stockholders’ deficit	$	85,546		$	148,592

The accompanying notes are an integral part of these unaudited financial statements

F-1

JUPITER NEUROSCIENCES, INC.

STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023

Federal contract revenue	$	-		$	-		$	-		$	-

Expenses:
Research and development		91,911			239,458			291,655			710,063
General and administrative		401,636			1,202,669			1,341,271			2,625,066
Total operating expenses		493,547			1,442,127			1,632,926			3,335,129

Operating loss		(493,547	)		(1,442,127	)		(1,632,926	)		(3,335,129	)

Other Income (Expenses):
Interest income		23			161			138			44,811
(Loss) gain on change in fair value of derivative liability		9,885			(34,086	)		(53,257	)		(15,458	)
Interest expense		(107,382	)		(80,610	)		(217,821	)		(160,322	)
Gain (Loss) on extinguishment of debt		-			(217,527	)		951,868			(887,946	)
Gain on forgiveness of accrued compensation		-			-			40,000			-
Total other income (expenses), net		(97,474	)		(332,062	)		720,928			(1,018,915	)

Net loss	$	(591,021	)	$	(1,774,189	)	$	(911,998	)	$	(4,354,044	)

Net loss per common share:
Basic	$	(0.02	)	$	(0.07	)	$	(0.03	)	$	(0.16	)
Diluted	$	(0.02	)	$	(0.07	)	$	(0.03	)	$	(0.16	)

Weighted average number of common stock outstanding:
Basic		31,065,688			26,402,153			27,829,820			26,396,183
Diluted		31,065,688			26,402,153			27,829,820			26,396,183

The accompanying notes are an integral part of these unaudited financial statements

F-2

JUPITER NEUROSCIENCES, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Unaudited)

	Shares		Amount		in Capital			Stock			Deficit			Deficit
	Common Stock				Additional Paid			Receivables for Sale of Common			Accumulated			Total Stockholders’
	Shares		Amount		in Capital			Stock			Deficit			Deficit
December 31, 2023		26,526,405	$	2,652	$	17,778,498		$	-		$	(23,582,504	)	$	(5,801,354	)
Stock-based compensation		-		-		355,317			-			-			355,317
Issuance of restricted stock units for forgiveness of accrued salary		-		-		10,000			-			-			10,000
Issuance of stock options for forgiveness of accrued salary						50,000			-			-			50,000
Net operating loss		-		-		-			-			(634,100	)		(634,100	)
March 31, 2024		26,526,405	$	2,652	$	18,193,815		$	-		$	(24,216,604	)	$	(6,020,137	)
Stock-based compensation		-		-		276,983			-			-			276,983
Restricted stock issued for consulting agreements		3,487,500		349		(349	)		-			-			-
Sale of common stock, net of receivables of $75,000		112,500		11		149,989			(75,000	)		-			75,000
Reconciling shares due to forward stock split		8		-		-			-			-			-
Net operating income		-		-		-			-			313,123			313,123
June 30, 2024		30,126,413	$	3,012	$	18,620,438		$	(75,000	)	$	(23,903,481	)	$	(5,355,031	)
Stock-based compensation		-		-		195,056			-			-			195,056
Net operating loss		-		-		-			-			(591,021	)		(591,021	)
September 30, 2024		30,126,413	$	3,012	$	18,815,494		$	(75,000	)	$	(24,494,502	)	$	(5,750,996	)

	Shares		Amount		in Capital		Deficit			Deficit
	Common Stock				Additional Paid		Accumulated			Total Stockholders’
	Shares		Amount		in Capital		Deficit			Deficit
December 31, 2022		26,371,519	$	2,637	$	11,652,094	$	(18,798,815	)	$	(7,144,084	)
Stock-based compensation		-		-		381,501		-			381,501
Purchase of common stock		18,750		2		24,998		-			25,000
Net operating loss		-		-		-		(1,747,250	)		(1,747,250	)
March 31, 2023		26,390,269	$	2,639	$	12,058,593	$	(20,546,065	)	$	(8,484,833	)
Stock-based compensation		-		-		350,862		-			350,862
Purchase of common stock		22,500		2		29,998		-			30,000
Net operating loss		-		-		-		(832,605	)		(832,605	)
June 30, 2023		26,412,769	$	2,641	$	12,439,453	$	(21,378,670	)	$	(8,936,576	)
Balance		26,412,769	$	2,641	$	12,439,453	$	(21,378,670	)	$	(8,936,576	)
Stock-based compensation		-		-		253,013		-			253,013
Issuance of restricted stock for forgiveness of accrued salary		-		-		1,866,445		-			1,866,445
Stock issued for amendment to convertible note						2,323,181					2,323,181
Net operating loss		-		-		-		(1,774,189	)		(1,774,189	)
Net operating income (loss)		-		-		-		(1,774,189	)		(1,774,189	)
September 30, 2023		26,412,769	$	2,641	$	16,882,092	$	(23,152,859	)	$	(6,268,126	)
Balance		26,412,769	$	2,641	$	16,882,092	$	(23,152,859	)	$	(6,268,126	)

The accompanying notes are an integral part of these unaudited financial statements

F-3

JUPITER NEUROSCIENCES, INC.

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Unaudited)

	September 30, 2024			September 30, 2023
Cash Flows from Operating Activities:
Net Loss	$	(911,998	)	$	(4,354,044	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on change in fair value of derivative liability		53,257			15,458
Amortization of debt discounts		15,013			11,671
(Gain) Loss on extinguishment of debt		(951,868	)		887,946
Gain on forgiveness of accrued compensation		(40,000	)		-
Stock based compensation		827,357			985,376
Changes in operating assets and liabilities:
Decrease in other current assets		25,000			4,971
(Decrease) increase in operating lease right of use asset		(1,151	)		199
Increase in accounts payable and accrued expenses		117,555			203,939
Increase in accrued compensation		541,135			1,898,095
Increase in accrued interest		110,475			26,573
Net cash used in operating activities		(215,225	)		(319,816	)

Cash Flows from Financing Activities:
Proceeds from note payable, related parties		137,000			260,000
Proceeds from sale of common stock		50,000			55,000
Net cash provided by financing activities		187,000			315,000

Net Change in Cash		(28,225	)		(4,816	)

Beginning of period		28,478			64,431
End of period	$	253		$	59,615

Supplemental disclosure of cash flow information:
Cash paid for interest	$	56,891		$	28,128
Cash paid for income taxes	$	-		$	-

Schedule of Non-Cash Investing and Financing Activities:
Convertible note issued as a settlement of a previously accrued liability	$	-		$	150,000
Restricted stock issued for forgiveness of salary	$	10,000		$	1,866,445
Stock options issued for forgiveness of salary	$	50,000		$	2,323,181
Note payable, related party assigned to Note payable	$	266,667		$	-
Receivables from Sale of Common Stock	$	75,000		$	-

The accompanying notes are an integral part of these unaudited financial statements

F-4

Jupiter Neurosciences, Inc.

Notes to Financial Statements

September 30, 2024

Note 1 – Organization and Description of Business

Jupiter Neurosciences, Inc. (the “Company”) is a clinical stage research and development pharmaceutical company located in Jupiter, Florida. The Company incorporated in Delaware in January 2016. The Company has developed a unique resveratrol platform product primarily targeting treatment of neuro-inflammation. The product candidate, called JOTROL, has many potential indications of use for rare diseases, which of we primarily are targeting Mucopolysaccharidoses Type 1, Friedreich’s Ataxia, and MELAS. In the larger disease areas, we are primarily targeting Parkinson’s Disease and Mild Cognitive Impairment/early Alzheimer’s disease

On August 30, 2021, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the State of Delaware to change its name from Jupiter Orphan Therapeutics, Inc. to Jupiter Neurosciences, Inc.

JOTROL has the potential to deliver a therapeutically effective dose of resveratrol in the blood stream, using a unique patented micellar formulation, without causing gastrointestinal side effects. We expect JOTROL, based on the results of our Phase I study, will resolve the major obstacle of resveratrol’s poor bioavailability, which has been documented in various scientific articles describing previously conducted human trials with resveratrol as well as preclinical trial results in mice and rats

The Company’s activities and operations include a project funded by the U.S. National Institute on Aging, an institute of the U.S. National Institutes of Health (“NIH”): Safety and Pharmacokinetics of JOTROL for Alzheimer’s Disease, Federal Award Identification Number R44AG067907-01A1 (the “Award”). The project encompassed a Phase 1 dose finding pharmacokinetics (“PK”) study which was completed before December 31, 2021. The award end date was May 31, 2022. This Phase 1 PK study will be homogeneous for all indications where JOTROL will be used in Phase II and Phase III clinical trials.

On January 9, 2020, the Company effected a three-for-one (3:1) forward stock split whereby the Company (i) increased the number of authorized shares of common stock, $0.0001 par value per share, to 25,000,000 from 5,000,000 and (ii) increased by a ratio of three-for-one (3:1) the number of retroactively issued and outstanding shares of common stock. Proportional adjustments for the forward stock split were made to the Company’s outstanding stock options, warrants and equity incentive plans.

On November 11, 2021, the Company increased the number of authorized shares of common stock, $0.0001 par value per share, to 45,000,000 from 25,000,000.

On January 25, 2022, the Company effected a one-for-two (1:2) reverse stock split whereby the Company (i) decreased the number of issued and outstanding shares of common stock, $0.0001 per share, from 13,076,608 to 6,538,304 and (ii) decreased by a ratio of one-for two (1:2) the number of retroactively issued and outstanding shares of common stock. Proportional adjustments for the reverse stock split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the financial statements to reflect the reverse stock split.

On June 14, 2024, the Company increased the number of authorized shares of common stock, $0.0001 par value per share, to 125,000,000 from 45,000,000.

On June 14, 2024, the Company effected a fifteen-for-four (15:4) forward stock split whereby the Company (i) increased the number of issued and outstanding shares of common stock, $0.0001 par value per share, from 8,033,706 to 30,126,413 and (ii) increased by a ratio of fifteen-for-four (15:4) the number of retroactively issued and outstanding shares of common stock. Proportional adjustments for the forward stock split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the financial statements to reflect the forward stock split.

F-5

Jupiter Neurosciences, Inc.

Notes to Financial Statements

September 30, 2024

Note 2 – Significant Accounting Policies

Basis of presentation

The accompanying unaudited interim condensed financial statements reflect all adjustments (which are normal and recurring) that are necessary for a fair presentation of the financial position of the Company and its results of operations and cash flows for the periods presented. The unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2023, included in the Company’s registration Statement filed with the SEC on September 13, 2024.

The results disclosed in the statements of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year 2024.

The financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). For the nine months ended September 30, 2024 and 2023, the Company had no revenues from product sales and incurred a net loss of $911,998 and $4,354,044, respectively. Net cash used in operations for nine months ended September 30, 2024 and 2023 was $215,225 and $319,816, respectively. As of September 30, 2024, the Company had a working capital deficit and accumulated deficit of $5,680,342 and $24,494,502, respectively.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates.

Federal Contract Revenue

The Company recognizes federal contract revenue from the NIH Award in the period in which the allowable research and development expenses are incurred, and receivables associated with this revenue are included within federal contract revenue receivable on our balance sheets. This revenue is not within the scope of Accounting Standards Codification (ASC) 606 – Revenue from contracts with customers.

Federal Contract Receivable

Federal contract receivable represents amounts due to us under the NIH Award for valid expenditures expected to be reimbursed to us under the terms of the NIH contract.

Cash

The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. As of September 30, 2024 and December 31, 2023, the Company invested a portion of cash balances in a high yield savings account, which are included as cash equivalents on the balance sheets. As of September 30, 2024 and December 31, 2023, the cash balances did not exceed the FDIC limit of $250,000.

Other Current Assets and Prepaid Expenses

Other current assets and prepaid expenses generally represent payments made for goods or services to be received within one year and are expensed as the related benefit is received.

F-6

Jupiter Neurosciences, Inc.

Notes to Financial Statements

September 30, 2024

Note 2 – Significant Accounting Policies, continued

Research and Development

Research and development costs are expensed as incurred. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as subject enrollment, monitoring visits, clinical site activations, or information provided to us by our vendors with respect to their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be. Total research and development costs for the three months ended September 30, 2024, and 2023 were $91,911 and $239,458, respectively. Total research and development costs for the nine months ended September 30, 2024, and 2023 were $291,655 and $710,063, respectively.

Income Taxes

The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities and the expected benefits of net operating loss carryforwards. The impact of changes in tax rates and laws on deferred taxes, if any, applied during the years in which temporary differences are expected to be settled, is reflected in the financial statements in the period of enactment. The measurement of deferred tax assets is reduced, if necessary, if, based on weight of the evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. As of September 30, 2024 and December 31, 2023, the Company concluded that a full valuation allowance is necessary for the net deferred tax assets. The Company had no material amounts recorded for uncertain tax positions, interest or penalties in the accompanying financial statements. The Company is subject to taxation in the U.S. Our tax years for 2021 and forward are subject to examination by tax authorities. The Company is not currently under examination by any tax authority.

Loss Per Share of Common Stock

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock, convertible notes payable, warrants, stock options, and unvested restricted stock, which would result in the issuance of incremental shares of common stock, as calculated using the treasury method. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation.

As of September 30, 2024, there were 1,359,375 warrants outstanding, 1,626,037 restricted stock units and 10,633,988 stock options and 13 convertible notes payable, which are convertible into restricted fully-paid and non-assessable shares of the Company’s common stock or units of common stock and warrants to purchase common stock, if units are offered in the Initial Public Offering equal to the indebtedness divided by 70% of the offering price paid per share of at which the IPO is made. Such securities are considered dilutive securities which were excluded from the computation since the effect is anti-dilutive.

As of December 31, 2023, there were 1,359,375 warrants outstanding, 1,618,537 restricted stock units, and 10,336,882 stock options and 14 convertible notes payable, which are convertible into restricted fully-paid and non-assessable shares of the Company’s common stock or units of common stock and warrants to purchase common stock, if units are offered in the Initial Public Offering equal to the indebtedness divided by 70% of the offering price paid per share of at which the IPO is made.

F-7

Jupiter Neurosciences, Inc.

Notes to Financial Statements

September 30, 2024

Note 2 – Significant Accounting Policies, continued

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 718, Compensation—Stock Compensation, or ASC 718, which requires the recognition of expense related to the fair value of stock-based awards in the statements of operations. For stock options issued to employees, non-employees and members of our board of directors, the Company estimates the grant-date fair value of options using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates, and, for grants prior to our initial public offering, the value of the common stock. For awards subject to time-based vesting, the Company recognized stock-based compensation expense, on a straight-line basis over the requisite service period, which is generally the vesting term of the award.

Clinical Trial Expenses

As part of the process of preparing our financial statements, the Company is required to estimate expenses resulting from obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company’s objective is to reflect the appropriate trial expenses in the financial statements by matching those expenses with the period in which services are performed and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. The Company determines accrual estimates based on estimates of services received and efforts expended that take into account discussion with applicable personnel and outside service providers as to the progress or state of consummation of trials. During the course of a clinical trial, the Company adjusts the clinical expense recognition if actual results differ from its estimates. The Company makes estimates of the accrued expenses as of each balance sheet date based on the facts and circumstances known at that time. The clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors. Although the Company does not expect the estimates to be materially different from amounts actually incurred, understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low for any particular period.

Fair Value of Financial Instruments and Fair Value Measurements

The Company measures its financial assets and liabilities in accordance with US GAAP. For certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, net of discount, and loans payable also approximate fair value because current interest rates available for debt with similar terms and maturities are substantially the same.

The Company follows accounting guidance for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost).

F-8

Jupiter Neurosciences, Inc.

Notes to Financial Statements

September 30, 2024

Note 2 – Significant Accounting Policies, continued

Fair Value of Financial Instruments and Fair Value Measurements, continued

The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into six broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs, other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at each reporting period for each fair value hierarchy level:

	Derivative Liability 09/30/2024		Derivative Liability 12/31/2023
Level I	$	-	$	-
Level II	$	-	$	-
Level III	$	606,787	$	1,505,398
Total	$	606,787	$	1,505,398

Also see Note 5 - Convertible Debt and Derivative Liability.

Derivative Instruments

ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”), establishes accounting and reporting standards for derivative instruments and for hedging activities by requiring that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings. On the date of conversion or payoff of debt, the Company records the fair value of the conversion shares, removes the fair value of the related derivative liability, removes any discounts and records a net gain or loss on debt extinguishment. On January 1, 2020 the Company adopted ASU 2017-11 under which down-round Features in Financial Instruments will no longer cause derivative treatment. The Company applies the modified prospective method of adoption. There were no cumulative effects on adoption.

F-9

Jupiter Neurosciences, Inc.

Notes to Financial Statements

September 30, 2024

Note 2 – Significant Accounting Policies, continued

Convertible Notes with Embedded Derivative Liabilities

The Company has entered into convertible notes, some of which contain variable conversion options, whereby the outstanding principle and accrued interest may be converted, by the holder, into shares of common stock at a fixed discount to the price of the common stock at or around the time of conversion upon certain trigger events. The Company evaluates all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815-10 – Derivative and Hedging – Contract in Entity’s Own Equity. This accounting treatment requires that the carrying amount of any derivatives be recorded at fair value at issuance and marked-to-market at each balance sheet date. In the event that the fair value is recorded as a liability, as is the case with the Company, the change in the fair value during the period is recorded as either other income or expense. Upon conversion, exercise or repayment, the respective derivative liability is marked to fair value at the conversion, repayment, or exercise date and then the related fair value amount is reclassified to other income or expense as part of gain or loss on debt extinguishment.

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606.

Operating lease ROU assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in general and administrative expenses in the statements of operations.

Recent Accounting Pronouncements

The Company has reviewed the FASB issued ASU accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of the Company’s financial management.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exceptions. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company’s adoption of this standard did not have a material impact on the Company’s financial statements.

All other newly issued accounting pronouncements that are not yet effective have been deemed immaterial or nonapplicable.

F-10

Jupiter Neurosciences, Inc.

Notes to Financial Statements

September 30, 2024

Note 3 – Related Party Transactions

During the nine months ended September 30, 2024, the Company’s CEO loaned the Company an additional $137,000. The loans are due on demand and accrue interest at 3% per year.

The Company’s Chief Executive Officer (CEO) has loaned the Company working capital since inception. The balance of the loans to the CEO as of September 30, 2024 and December 31, 2023 was $228,812 and $358,479, respectively. The loan is due on demand and accrues interest at 3% per year. Accrued interest relating to the loan was $17,644 and $11,308 as of September 30, 2024 and December 31, 2023, respectively, and is included in accrued interest on the accompanying balance sheets.

During the year ended December 31, 2023, an employee loaned the Company $25,000. The balance of the loan as of September 30, 2024 and December 31, 2023, was $25,000. The loan is due on demand and accrues interest at 3% per year. Accrued interest related to the loan was $1,288 and $723 as of September 30, 2024 and December 31, 2023, respectively, and is included in accrued interest on the accompanying balance sheet.

Accrued compensation includes partially accrued salaries to executives since inception. Since inception, executive salaries have been paid in cash when the Company’s cash flow has permitted such payment. During 2020, the Company began consistently paying salaries at 50% of the salaries reflected in the respective employment agreements. As of September 2021, the Company began paying full salaries. Throughout 2022, the Company returned to paying partial salaries and by November 2022 the Company stopped paying salaries 100% in an effort to conserve cash.

On September 29, 2023, various employees and board members agreed to forgive accrued compensation in the amount of $4,189,626. In exchange of the forgiveness the Company issued an aggregate of 2,353,661 stock options with an exercise price of $1.33 and an aggregate of 1,399,834 restricted stock units with a grant date value of $1.33 in exchange for the aggregate forgiveness of compensation in the amount of $4,189,626. Additionally, the Company agreed to a bonus of $513,013 for the employees and a bonus of $70,200 to the board members, to be paid upon the occurrence of a successful IPO in exchange for the forgiveness of the afore-mentioned accrued compensation.

On December 18, 2023, various employees and board members agreed to amend the accrued compensation debt forgiveness dated September 29, 2023. Pursuant to the amendment the cash bonuses of $513,013 for the employees and a bonus of $70,200 to the board members agreed to on September 29, 2023, were forgiven, and no cash will be paid upon a successful IPO. In addition, the options issued in connection with the forgiveness dated September 29, 2023, have been amended to vest fully on the effective date of the new amendment. In addition, the restricted stock unit issued in connection with the forgiveness dated September 29, 2023, were terminated and replaced with 1,399,834 restricted stock units that vest upon the earlier occurrence of the initial public offering or a change of control of the Company. In exchange for the forgiveness of the accrued bonuses the Company issued an aggregate of 289,294 stock options with an exercise price of $1.33 and an aggregate of 218,703 restricted stock units with a grant date value of $1.33 in exchange for the aggregate forgiveness of compensation in the amount of $583,213.

On March 15, 2024, a former executive agreed to forgive $100,000 of accrued compensation in exchange for 49,605 options to purchase common stock and 7,500 restricted stock units, The options to purchase common stock have a strike price of $1.33. The option had a grant date fair value of $50,000. The Company recorded a gain on the forgiveness of accrued compensation in the amount of $40,000.

F-11

Jupiter Neurosciences, Inc.

Notes to Financial Statements

September 30, 2024

Note 3 – Related Party Transactions, continued

On April 29, 2024, the Company, the Holder of the Note II and the CEO entered into an amendment in which the CEO agrees to exchange 685,867 shares issued to the Holder in exchange for his related party notes that accrued interest at 3% that are due from the Company in an aggregate principal amount of $266,667 and the Holder agreed to forfeit all rights to all additional future shares from the Company that would of become due upon a qualified offering as well as the conversion option. Therefore, the principal amount of the note was increased to $1,377,778 and the exchange debt follows the requirements of Note II. See Note 5 – Convertible Debt and Derivative liability – Senior Secured Note – Formerly known as the Convertible Debt I for more details.

Note 4 – Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

	September 30, 2024		December 31, 2023
Accounts payable	$	205,795	$	189,495
Professional fees		219,927		174,053
License fee		206,250		150,000
Credit cards		31,597		32,466
Total accounts payable and accrued expenses	$	663,569	$	546,014

As of September 30, 2024 and December 31, 2023, $153,900 and $67,750, respectively, was due to a Company wholly owned by the Company’s Chief Financial Officer, who also is an option holder. The amount is included in accrued compensation on the Company’s balance sheets.

Accrued compensation of $2,003,176 and $1,562,041 as of September 30, 2024 and December 31, 2023, respectively, includes accrued salaries and health benefits to executives since inception and board fees. Since inception, executive salaries have been paid in cash when the Company’s cash flow has permitted such payment. During 2020, the Company began consistently paying salaries at 50% of the salaries reflected in the respective employment agreements. As of September 1, 2021, the Company began paying full salaries. Throughout 2022, the Company returned to paying partial salaries and by November 2022 the Company stopped paying salaries 100% in an effort to conserve cash. Starting the fourth quarter of 2023 the Company’s executives agreed to reduce their salaries with 80% until an initial public offering. See Note 3 – Related Party Transactions for details related to forgiveness of accrued compensation.

Note 5 – Convertible Debt and Derivative Liability

Convertible Debt I

Between August and December 2021, the Company executed twelve convertible promissory notes (“Notes I”) for $527,650 in proceeds with a maturity date of July 31, 2022, and interest rate of 1%. The Notes I will automatically convert into equity securities on the first business day following effectiveness of an initial public offering of common stock with the Securities and Exchange Commission (“IPO”). Upon IPO, the outstanding principle of the Notes I and all unpaid accrued interest will automatically convert into a number of restricted fully paid and non-assessable shares of common stock, or units of common stock and warrants to purchase common stock if units are offered to the public in the IPO, equal to the indebtedness divided by 70% of the offering price paid per share at which the IPO is made. For the avoidance of doubt, in the event the IPO is not declared effective prior to the maturity date, none of the indebtedness shall convert or be convertible into shares of Common Stock.

F-12

Jupiter Neurosciences, Inc.

Notes to Financial Statements

September 30, 2024

Note 5 – Convertible Debt and Derivative Liability, continued

Convertible Debt I, continued

At the time of execution, the Company recorded a debt discount of $257,650 based on the fair value of the embedded conversion feature of Notes I, which was amortized into interest expense over term of Notes I, each with a maturity date of July 31, 2022. On August 6, 2022, the Notes I were amended to extend the maturity date to January 31, 2023, and increase the interest rate to 5%. All other terms remain the same as previously stated in Notes I. The impact of the amendment is prospective and increased accrued interest by $23,072 and is included in accrued interest on the accompanying balance sheet. On February 2, 2023, the Notes I were amended to extend the maturity date to December 31, 2023. During January 31, 2024, the Company and all Note I holders agreed to amend and extend the maturity date of their notes to December 31, 2024. The holders waived any default under the original notes prior to the amendment date. With the amendments the applicable interest rate to Notes I increased to 10% effective from January 1, 2024. The amendments were accounted for as a modification and not an extinguishment of debt, therefore there was no gain recorded in the statement of operations.

See Note 9 – Subsequent events – Convertible Debt I for the subsequent conversion of the Note I upon the closing of the offering.

Senior Secured Note – Formerly Known as the Convertible Debt I

The Note - On April 11, 2022, the Company entered into a securities purchase agreement with an accredited investor (the “Holder”). Pursuant to the terms of the securities purchase agreement, the Company received aggregate gross proceeds of $1,000,000, less loan origination costs of $22,667, and issued a (i) 10% original issue discount senior secured convertible note (the “Note II”) in the principal amount of $1,111,111 and (ii) 514,403 shares of common stock.

The Company will have the right at any time to redeem in cash all or a portion of Note II at 120% (or 125% on or after the first six months from the closing) of the principal amount thereof plus any unpaid accrued interest to the date of repayment.

Pursuant to the terms of the securities purchase agreement, the Company received aggregate gross proceeds of $1,000,000, less loan origination costs of $22,667, and issued a (i) 10% original issue discount senior secured convertible note (the “Note II”) in the principle amount of $1,111,111 and (ii) 514,403 shares of common stock.

Upon an Event of Default (as defined therein) interest shall accrue at 1 1/2% per month and the 125% of principal and interest through maturity shall be due and payable. At the Holder’s option the Holder shall be entitled to be paid in cash or after the Qualified Offering (as defined in the Purchase Agreement) common stock with the conversion price of the common stock equal to a 30% discount to the lowest closing price of the common stock for the 20 prior trading days.

On October 10, 2022, Note II was amended to postpone the commencement o

SEC Form 10-Q filed by Jupiter Neurosciences Inc.