ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s
Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our
audited consolidated financial statements for the fiscal years ended December 31, 2025 and December 31, 2024 and highlight certain other
information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial
condition and results of operations. In particular, the discussion is intended to provide an analysis of significant trends and material
changes in our financial position and the operating results of our business during the year ended December 31, 2025, as compared to the
fiscal year ended December 31, 2024. This discussion should be read in conjunction with our consolidated financial statements for the
fiscal years ended December 31, 2025 and December 31, 2024 and related notes included elsewhere in this Annual Report on Form 10-K. These
historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial
Condition and Results of Operations contains numerous forward-looking statements, all of which are based on our current expectations (as
described in the section entitled “Cautionary Note Regarding Forward-Looking Statements”), and could be affected by the uncertainties
and risks described throughout this filing, particularly in “Item 1A. Risk Factors.”
Throughout this report,
the terms “our,” “we,” “us,” and the “Company” refer to Pasithea Therapeutics Corp. and
its subsidiaries, Pasithea Therapeutics Limited (U.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, Pasithea Clinics Inc.,
Alpha-5 Integrin, LLC, AlloMek Therapeutics, LLC and Pasithea MacroMEK Pty Ltd. Pasithea Therapeutics Limited (U.K.), legally dissolved
as of January 2, 2024, was a private limited company, registered in the United Kingdom (U.K.). Pasithea Clinics Inc., legally dissolved
as of September 3, 2025, was incorporated in Delaware. Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, a private limited company,
registered in Portugal, and Alpha-5 Integrin, LLC and AlloMek Therapeutics, LLC, are both Delaware limited liability companies. Pasithea
MacroMEK Pty Ltd is registered in Australia. The operations of Pasithea Therapeutics Limited (U.K.), Pasithea Therapeutics Portugal, Sociedade
Unipessoal Lda, and Pasithea Clinics Inc. have been discontinued.
Overview
We are a clinical-stage biotechnology
company focused on the discovery, research and development of innovative treatments for RASopathies, MAPK pathway-driven tumors, and other
diseases, including central nervous system (CNS) disorders.
Our primary operations (the “Therapeutics” segment) are
focused on developing our lead product candidate, PAS-004, a next-generation macrocyclic mitogen-activated protein kinase, or MEK inhibitor
that we believe may address the limitations and liabilities associated with existing drugs targeting a similar mechanism of action. In
December 2023, the U.S. Food and Drug Administration (the “FDA”) cleared our Investigational New Drug application (the “IND”)
for PAS-004 and we received a study may proceed letter from the FDA for our Phase 1 multicenter, open-label, dose escalation trial of
PAS-004 in patients with MAPK pathway-driven advanced tumors with a documented RAS, NF1 or RAF mutation or patients who have failed BRAF/MEK
inhibition (the “FIH Phase 1 Advanced Cancer Study”). We are currently conducting the FIH Phase 1 Advanced Cancer Study at
four clinical sites in the United States and three additional sites in Eastern Europe. We have completed the initial eight cohorts through
45 mg capsule and have not reached the maximum tolerated dose. We plan to file a protocol amendment to continue dose escalation in the
FIH Phase 1 Advanced Cancer Study using our tablet formulation of PAS-004 in an effort to continue to explore the safety, PK, and early
signals of efficacy at higher dose levels of PAS-004. Simultaneously, a pilot food effect assessment is planned in a subset of patients
who agree to participate in this optional component of the study. As such, we expect to complete the trial in 2028.
In May 2025, we initiated our Phase 1/1b multicenter, open-label, dose
escalation trial of PAS-004 in adult patients with neurofibromatosis type 1 (“NF1”) with symptomatic and inoperable, incompletely
resected, or recurrent plexiform neurofibromas (“PN”). We are currently conducting the trial at a total of five sites in the
United States, Australia, and South Korea.
55
The initial indication we
plan to seek FDA marketing approval for PAS-004 is the treatment of symptomatic PNs in both adult and pediatric patients with NF1. As
such, we aim to conduct a Phase 1 trial for pediatric NF1-PN patients and ultimately complete registrational clinical trials in both adult
and pediatric NF1-PN populations.
Additionally, we have one
program, PAS-001, in the discovery stage, which we believe addresses limitations in the treatment paradigm for schizophrenia. During the
year ended December 31, 2025, we determined to cease further development of our PAS-003 program for ALS due to several factors including
the significant capital, resources and time required to develop the program.
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 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.
We expect to continue to incur
significant expenses and operating losses for the foreseeable future as we advance our product candidates through all stages of development
and clinical trials and, ultimately, seek regulatory approval. In addition, if we obtain marketing approval for any of our product candidates,
we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. We expect
our expenses and capital requirements will increase significantly in connection with our ongoing activities as we:
● maintain, expand and protect our intellectual property portfolio;
● hire additional clinical, scientific and commercial personnel;
● acquire or in-license or invent other product candidates or technologies.
Impact of Inflation
We have recently experienced higher costs across our business as a
result of inflation, including higher costs related to employee compensation and outside services. Although we anticipate a decline in
the rate of inflation in 2026, we expect inflation to continue to have a negative impact throughout 2026, and it is uncertain whether
we will be able to offset the impact of inflationary pressures in the near term.
Reverse Stock Split
On December 28, 2023, we filed
a Certificate of Amendment to our Second Amended and Restated Certificate of Incorporation reflecting a one-for-twenty (1:20) Reverse
Stock Split of our issued and outstanding shares of Common Stock which became effective at 12:01 a.m. Eastern Time on January 2, 2024.
As a result of the Reverse Stock Split, every 20 shares of Common Stock issued and outstanding were converted into one share of Common
Stock, with a corresponding reduction in the number of authorized shares of Common Stock from 495,000,000 shares to 100,000,000 shares
(which was subsequently increased to 500,000,000 authorized shares of Common Stock on January 28, 2026 after we filed another Certificate
of Amendment to our Second Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of
Delaware to increase such number of authorized shares of Common Stock). The Reverse Stock Split affected all stockholders uniformly and
did not alter any stockholder’s percentage interest in the Company’s equity, except to the extent that the Reverse Stock Split
resulted in some stockholders owning a fractional share. No fractional shares were issued in connection with the Reverse Stock Split.
Stockholders who were otherwise entitled to receive a fractional share instead received a cash payment (without interest) equal to such
fraction multiplied by the average of the closing sales prices of Common Stock on The Nasdaq Capital Market for the five consecutive trading
days immediately preceding the effective date of the Reverse Stock Split (with such average closing sales prices adjusted to give effect
to the Reverse Stock Split). All outstanding securities entitling their holders to purchase shares of Common Stock or acquire shares of
Common Stock, including stock options, convertible debt and warrants, were adjusted as a result of the Reverse Stock Split, as required
by the terms of those securities.
The accompanying consolidated
financial statements reflect the Reverse Stock Split. All share and per share information presented herein that relate to our Common
Stock prior to the effective date of the Reverse Stock Split have been retroactively restated to reflect the Reverse Stock Split.
56
Results of Operations
Years Ended December 31, 2025, and 2024
Our financial results for
the years ended December 31, 2025, and 2024 are summarized as follows:
For the Twelve Months Ended December 31,
General and Administrative
General and administrative expenses increased by approximately $5,825,000,
or 82.6%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily driven by (i)
an increase in impairment expense of intangible assets and goodwill totaling approximately $4,163,000, (ii) an increase of approximately
$1,652,000 in personnel costs, (iii) an increase in office expenses of approximately $313,000, (iv) an increase in accounting and business
development expenses of approximately $144,000, (v) an increase in public company and corporate communication costs of approximately $136,000,
(vi) an increase in consulting costs of approximately $77,000, offset by (vii) a decrease in stock-based compensation expense of approximately
$328,000, (viii) a decrease in legal expenses of approximately $264,000, (ix) a decrease in insurance costs of approximately $62,000 and
(x) a decrease in board fees of approximately $6,000.
We expect general and administrative
expenses to decrease in fiscal year 2026 as compared to fiscal year 2025 primarily due to a decrease in impairment expenses offset by
a ramp up in operational activity, public company and corporate communications expenses, and non-cash stock-based compensation.
Research and Development
Research and development expenses
relate to activities primarily focused on the development of PAS-004 and PAS-001 for the year ended December 31, 2025, and PAS-004, PAS-003,
and PAS-001 for the year ended December 31, 2024.
Research and development expenses increased by approximately $783,000,
or 10.9%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily due to (i) an
increase in clinical trial and regulatory expenses of approximately $2,397,000, (ii) an increase in CMC expenses of approximately $564,000,
offset by (iii) a decrease in preclinical research expense of approximately $1,811,000, (iv) a decrease in stock-based compensation expense
of approximately $148,000, (v) a decrease in consulting expense of approximately $140,000 and (vi) a decrease in other expenses of approximately
$79,000.
We expect research and development
expenses to increase in fiscal year 2026 as compared to fiscal year 2025 primarily due to (i) an increase in clinical trial and regulatory
expenses related to our ongoing clinical trials for PAS-004, (ii) an increase in CMC costs related to PAS-004 drug product and drug supply
for our clinical trials, as well as the development of a liquid formation of PAS-004, (iii) the initiation of non-clinical absorption,
distribution, metabolism and excretion (“ADME”) studies, non-clinical developmental and reproductive toxicology studies, and
clinical human ADME studies, (iv) an increase in preclinical research for PAS-004 and PAS-001, and (v) an increase in personnel costs
related to anticipated new workforce hires to support our research and development activities.
Other Income, Net
For the year ended December
31, 2025, other income, net increased by approximately $84,000, or 24.4%, as compared to the year ended December 31, 2024. The increase
was primarily driven by (i) an approximate $193,000 increase in the fair value of our Initial Public Offering (“IPO”) warrant
liabilities during the year ended December 31, 2025, (ii) a decrease in interest and dividends, net of approximately $96,000, (iii) an
increase in foreign currency gain of approximately $30,000, (iv) an decrease in loss on change in fair value of derivative warrant liability
of approximately $417,000, (v) an increase in other income of approximately $381,000, which included recognition of a research and development
tax credit of approximately $337,000, and (vi) a decrease in realized foreign currency translation loss from dissolution of subsidiaries
of approximately $7,000 during the year ended December 31, 2025.
57
Working Capital
As of December 31,
Working capital increased by $45.2 million from December 31, 2024,
to December 31, 2025, due primarily to net cash provided by financing activities of $63.5 million which was partially offset by cash used
to fund operations.
Liquidity and Capital Resources
For the Twelve Months Ended December 31,
Net cash provided by investing activities 11,000 -
Effect of foreign currency translation on cash 18,766 (2,519 )
Cash, cash equivalents and
restricted cash increased by approximately $48.3 million for the year ended December 31, 2025. The increase was primarily attributable
to net cash provided by financing activities of $63.5 million which was partially offset by cash used to fund operations.
Liquidity & Capital Resources Outlook
As of December 31, 2025, we
had approximately $55.2 million in operating bank accounts and money market funds, with working capital of approximately $51.5 million.
We are dependent on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to
execute our development plans and continue operations. During the year ended December 31, 2025, we completed two separate significant
capital raises, the May 2025 and December 2025 offerings, which resulted in net proceeds of approximately $59.6 million in the aggregate.
Additionally, during the year ended December 31, 2025, we received (i) net proceeds of approximately $2.1 million from the sale of shares
of Common Stock under an “at-the-market” (“ATM”) offering program, and (ii) net proceeds of approximately $2.2
million from the exercise of warrants. Such ATM offering program is no longer active and we will not make any additional sales of shares
of Common Stock under such ATM offering program.
During the year ended December
31, 2024, we completed a private placement (the “September 2024 Private Placement”) of (i) pre-funded warrants (the “September
Pre-Funded Warrants”) to purchase up to 1,219,513 shares of our Common Stock, at an exercise price of $0.001 per share, (ii) Series
A warrants (the “Series A Warrants”) to purchase up to 1,219,513 shares of Common Stock, at an exercise price of $3.85 per
share, and (iii) Series B warrants (the “Series B Warrants” and together with the Series A Warrants, the “September
2024 Warrants”) to purchase up to 1,219,513 shares of Common Stock with an exercise price of $3.85 per share. The combined purchase
price per September Pre-Funded Warrant and accompanying September 2024 Warrants was $4.099. The net proceeds to us from the September
2024 Private Placement were approximately $4.5 million, after deducting placement agent fees and estimated offering expenses.
Our primary use of cash is to fund operating expenses, primarily general
and administrative and research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we
pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.
58
Because of the numerous risks
and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the
exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited
to:
● expenses needed to attract and retain skilled personnel;
We believe that our current
available cash and cash equivalents will be sufficient to meet our working capital needs for at least the next twelve months and beyond.
However, we will need significant additional funds to meet operational needs and capital requirements for clinical trials, other research
and development expenditures, and business development activities. We currently have no credit facility or committed sources of capital.
Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are
unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical
studies.
Contractual Obligations
See Note 12 – Commitments
and Contingencies in the Notes to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for a summary
of our contractual obligations.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31,
2025, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Exchange Act.
59
Critical Accounting Estimates
The preparation of financial
statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the Company’s 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.
Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate,
could change in the near term due to one or more future confirming events.
We believe that the following
critical accounting estimates are particularly subject to management’s judgment and could materially affect our financial condition
and results of operations:
Management also regularly
makes estimates related to the recoverability of long-lived assets; the fair values and useful lives of intangible assets acquired in
business combinations; the potential impairment of goodwill; and income taxes. The Company bases its estimates on historical experience
and on various assumptions that are believed to be reasonable, the results of which form the basis for the amounts recorded in the consolidated
financial statements. As appropriate, the Company obtains reports from third-party valuation experts to inform and support estimates related
to fair value measurements.
For additional information
on critical accounting estimates, see Note 2 to the consolidated financial statements, “Summary of Significant Accounting Policies
and New Accounting Standards,” in Part II, Item 8, of this Annual Report on Form 10-K.
New Accounting Standards
For discussion of new accounting
standards, see Note 2 to the consolidated financial statements, “Summary of Significant Accounting Policies and New Accounting
Standards,” in Part II, Item 8, of this Annual Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not applicable. As a smaller reporting company,
we are not required to provide the information required by this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for
by Item 8 is included following the “Index to Financial Statements” on page F-1 contained in this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
60
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls
and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the
Exchange Act), that are designed to ensure that information required to be disclosed in our reports under 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 our management, including our principal executive officer and principal financial officer, as appropriate,
to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management was required
to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure
controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter
how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.
Under the supervision and
with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we are required to perform
an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Exchange Act, as of December
31, 2025.
Management has completed such
an evaluation and has concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information
required to be disclosed by us in reports we file or submit under the Exchange Act is appropriate to allow timely decisions regarding
required disclosures.
Management’s Annual Report on Internal
Control Over Financial Reporting
Our management, under the
supervision of the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal
control over financial reporting for our company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and
principal financial officers and effected by the Board, management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes
those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of our company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company’s assets that
could have a material effect on the financial statements.
Our management, with the participation
of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting
as of December 31, 2025. In making this evaluation, our management used the criteria set forth in the Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, management concluded that our internal control
over financial reporting was effective at a reasonable assurance level as of December 31, 2025, based on those criteria.
Changes in Internal Control Over Financial
Reporting
There was no change in our
internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter
ended December 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
This Annual Report on Form
10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for nonaccelerated
filers and emerging growth companies from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act.
ITEM 9B. OTHER INFORMATION
(a) None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS
Not applicable.
61
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers, Non-Executive Employees
and Directors
The following table sets forth
the name, age as of March 24, 2026, and current position of the individuals who serve as directors and executive officers of the Company.
The following also includes certain information regarding the individual experience, qualifications, attributes and skills of our directors
and executive officers as well as brief statements of those aspects of our directors’ backgrounds that led us to conclude that they
are qualified to serve as directors.
Name Age Position
Executive Officers
Dr. Tiago Reis Marques 49 Chief Executive Officer and Director
Daniel Schneiderman 48 Chief Financial Officer
Non-Employee Directors
Prof. Lawrence Steinman 78 Executive Chairman and Co-Founder
Simon Dumesnil (1)(2)(3) 49 Director
Dr. Emer Leahy (1)(2)(3) 60 Director
Alfred Novak (1)(2)(3) 78 Director
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Nominating and Corporate Governance Committee.
Executive Officers
Each executive officer serves
at the discretion of our Board and holds office until his or her successor is duly elected and qualified or until his or her earlier resignation
or removal.
Dr. Tiago Reis Marques
(Chief Executive Officer and Director) has served as our Chief Executive Officer and member of our Board since August 2020. Dr. Marques
is also a senior clinical fellow at Imperial College London and a lecturer at the Institute of Psychiatry, Psychology and Neuroscience
(IoPPN) at King’s College London. The IoPPN is renowned globally, being ranked second in the world for psychology and psychiatry
by US News and Best Global Universities and is home to one of the largest centers for neuroscience research worldwide. Dr. Marques also
practices as a psychiatrist at Maudsley Hospital. His research is primarily focused on the mechanism of action of psychiatric medications
and novel treatment targets. During his career, he has obtained multiple awards for his research. Dr. Marques has authored or co-authored
over 100 scientific publications in peer-reviewed journals within the fields of psychiatry and neuroscience, has an h-index exceeding
45 and over 10,000 citations, and has co-authored international treatment guidelines and written book chapters, including the seminal,
“Neurobiology of Mental Illness.” We believe that Dr. Marques’s extensive medical and scientific background coupled
with his significant research and development achievements and clinical experience, makes him qualified to serve as our Chief Executive
Officer and a member of our Board.
62
Daniel Schneiderman (Chief
Financial Officer) is an experienced finance executive with over 24 years of experience in the areas of capital markets and finance
operations. Mr. Schneiderman has served as our Chief Financial Officer since October 11, 2022, and as a consultant to the Company from
July 1, 2022, through October 10, 2022. Prior to joining the Company, from January 2020 through February 2022 Mr. Schneiderman served
as Chief Financial Officer of First Wave BioPharma, Inc. (Nasdaq: FWBI), a clinical stage biopharmaceutical company specializing in the
development of targeted, non-systemic therapies for gastrointestinal (GI) diseases. Prior to joining First Wave, from November 2018 through
December 2019, Mr. Schneiderman served as Chief Financial Officer of Biophytis SA, (ENXTPA: ALBPS; Nasdaq: BPTS) and its U.S. subsidiary,
Biophytis, Inc., a European-based, clinical-stage biotechnology company focused on the development of drug candidates for age-related
diseases, with a primary focus on neuromuscular diseases. From February 2012 through August 2018, Mr. Schneiderman served as Vice President
of Finance, Controller and Secretary of MetaStat, Inc. (OTCQB: MTST), a publicly traded biotechnology company with a focus on Rx/Dx precision
medicine solutions to treat patients with aggressive (metastatic) cancer. From 2008 through February 2012, Mr. Schneiderman was Vice
President of Investment Banking at Burnham Hill Partners LLC, a boutique investment bank providing capital raising, advisory and merchant
banking services primarily in the healthcare and biotechnology industries. From 2004 through 2008, Mr. Schneiderman served in various
roles and increasing responsibilities, including as Vice President of Investment Banking at Burnham Hill Partners, a division of Pali
Capital, Inc. Previously, Mr. Schneiderman worked at H.C. Wainwright & Co., Inc. in 2004 as an investment banking analyst. Mr. Schneiderman
holds a bachelor’s degree in economics from Tulane University.
Non-Employee Directors
Prof. Lawrence Steinman
has served on our Board since August 2020. Prior to joining Pasithea, he served on the Board of Centocor from 1989 to 1998, the Board
of Neurocrine Biosciences from 1997 to 2005, the Board of Atreca from 2010 to 2019, the Board of BioAtla from 2016 to the present, and
the Board of Tolerion from 2013 to 2021. He is currently the George A. Zimmermann Endowed Chair in the Neurology Department at Stanford
University and previously served as the Chair of the Interdepartmental Program in Immunology at Stanford University Medical School from
2003 to 2011. He is an elected member of the National Academy of Medicine and the National Academy of Sciences. He also founded the Steinman
Laboratory at Stanford University, which is dedicated to understanding the pathogenesis of autoimmune diseases, particularly multiple
sclerosis and neuromyelitis optica. He received the Frederic Sasse Award from the Free University of Berlin in 1994, the Sen. Jacob Javits
Award from the U.S. Congress in 1988 and 2002, the John Dystel Prize in 2004 from the National MS Society in the U.S., the Charcot Prize
for Lifetime Achievement in Multiple Sclerosis Research in 2011 from the International Federation of MS Societies and the Anthony Cerami
Award in Translational Medicine by the Feinstein Institute of Molecular Medicine in 2015. He also received an honorary Ph.D. at the Hasselt
University in 2008 and from the University of Buenos Aires in 2022. He received his BA (physics) from Dartmouth College in 1968 and his
MD from Harvard University in 1973. He also completed a fellowship in chemical immunology at the Weizmann Institute (1974 - 1977) and
was an intern and resident at Stanford University Medical School (1973-1974; 1977-1980). We believe that Prof. Steinman is qualified to
serve on our Board due to his extensive background in medicine and his experience as a board member in the life sciences industry.
Simon Dumesnil has
served on our Board since April 2021. He is currently a Managing Partner and Director of Dunraven Capital Partners Limited, an investment
management advisory company incorporated in the U.K. that focuses on investments in Eastern European corporate distressed credits and
structured products. From 2013 to 2018, Mr. Dumesnil served as Managing Director and Head of the Structured Financing Group Americas at
UBS Securities LLC. In this role, he was responsible for managing the structured financing trading book in the USA and LATAM, overseeing
a portfolio of financing positions across various fixed income products including corporate syndicated and middle-market loans, corporate
bonds, real estate loans, and CMBS/RMBS/CLO/ABS, as well as LATAM Sovereign. Prior to this, Mr. Dumesnil was the Managing Director and
Co-Head of the Private-Side Structuring Group EMEA at UBS AG from 2010 to 2013. In these roles, he was responsible for arranging structured
solution transactions and acquisitions for the Financial Institutions Group (FIG) and Special Situation Group (SSG) and co-headed the
illiquid financing business. From 2009 to 2010, Mr. Dumesnil served as the Chief Investment Officer at Bluestone Capital Management, where
he managed investments in distressed assets across Europe. Between 2008 and 2009, Mr. Dumesnil was a Director at Lehman Brothers Holding
Inc., where he was responsible for restructuring and unwinding Lehman Brothers Special Financing Inc.’s derivative book post-bankruptcy.
From 2003 to 2008, Mr. Dumesnil was a Director at Lehman Brothers International (Europe). Mr. Dumesnil holds a Master of Science in Banking
and International Finance from Cass Business School and a Bachelor in Business and Administration from École des Hautes Études
Commerciales (HEC). Throughout his career, Mr. Dumesnil has advised on and underwritten corporate risk related to companies across various
industries and jurisdictions. He possesses extensive knowledge in corporate restructuring and capital structure optimization for companies
at different stages of their business life cycle. His experience as Chief Investment Officer during the launch and growth phases of a
financial services and technology company provides valuable insights for our Company. We believe that Mr. Dumesnil is qualified to serve
on our Board due to his extensive management and investment experience, as well as his expertise in corporate restructuring and capital
structure optimization.
63
Dr. Emer Leahy has
served on our Board since June 2021. Dr. Leahy received her Ph.D. in neuropharmacology from University College Dublin, Ireland in 1990,
and her MBA from Columbia University in 2000. She has been with PsychoGenics Inc., a preclinical CNS service company, since 1999 and is
currently serving as its chief executive officer and is responsible for compensation recommendations companywide. Prior to her appointment
as the chief executive officer, where she is responsible for compensation recommendations companywide. Prior to her appointment as chief
executive officer, she was the vice president of business development. Dr. Leahy is also the chief executive officer of PGI Drug Discovery
LLC, a company engaged in psychiatric drug discovery with five partnered clinical programs including one in Phase III. Additionally, Dr.
Leahy served as a member of both the compensation committee and the audit committee of Bright Minds Biosciences Inc. (NASDAQ: DRUG), a
biotech company, until April 2022. Since 2016, Dr. Leahy has served as a member of the board of directors of Intensity Therapeutics, Inc.
With more than 30 years of experience in drug discovery, clinical development and business development for pharmaceutical and biotechnology
companies, Dr. Leahy possesses extensive knowledge of technology assessment, licensing, mergers and acquisitions, and strategic planning.
She is also an Adjunct Associate Professor of Neuroscience at Mount Sinai School of Medicine. Dr. Leahy has also served on the Emerging
Companies Section Governing Board for the Board of the Biotechnology Industry Organization, the Business Review Board for the Alzheimer’s
Drug Discovery Foundation, and the Scientific Advisory Board of the International Rett Syndrome Foundation. She also currently serves
on the Board of PsychoGenics Inc, the Board of Intensity Therapeutics, and is the Chair of the Board of Trustees of BioNJ. We believe
that Dr. Leahy is qualified to serve on our Board due to her extensive pharmaceutical, biotechnology and business background, which provides
valuable insights and expertise to the Company.
Alfred Novak has been
a member of our Board since September 2022, bringing financial acumen and expertise in the pharmaceutical and medical device industries.
He has held leadership positions as a Chief Executive Officer and Chief Financial Officer of public and private companies and has served
on several boards of directors. Between October 2007 and June 2022, Mr. Novak served as a director, Audit Committee Chair, and Compensation
Committee member of LivaNova Plc (NASDAQ: LIVN) (and its predecessor company, Cyberonics, Inc.), a publicly held, medical device company.
Mr. Novak was actively involved in several acquisitions, disposals and start-up companies during his career. Mr. Novak has an MBA from
the Wharton School of the University of Pennsylvania with a concentration in Healthcare and Finance. He holds a BS from the United States
Merchant Marine Academy. We believe Mr. Novak is qualified to serve on our Board due to his extensive experience as a Chief Executive
Officer, in financial management, strategic planning, international operations, product development, regulatory process and commercialization
in the pharmaceutical and medical device industries.
Scientific Advisory Board
Rebecca Brown, M.D., Ph.D.
Dr. Rebecca Brown is a board-certified adult neuro-oncologist
who specializes in Neurofibromatosis (NF) and Schwannomatosis (SWN) genetic nerve tumor predisposition syndromes. She earned her Ph.D.
from The University of Texas at Austin (UT Austin) in Neuroscience studying the molecular genomics and behavioral outcomes of endocrine-disrupting
pollutants on females across multiple generations. Dr. Brown completed a post-doctoral fellowship at the Center for Strategic and Innovative
Technologies at UT Austin in human performance research and then earned her M.D. from UT Southwestern in 2013. She completed her intern
year at East Tennessee State University in 2014 and her neurology residency at Mount Sinai Hospital in NYC in 2017. She specialized in
neuro-oncology during a fellowship at Memorial Sloan Kettering Cancer Center (MSKCC) completed in 2019. She worked as an instructor at
MSKCC for 18 months prior to accepting a position as Assistant Professor and Director of the all-ages NF and SWN Clinic at The Mount Sinai
Health System in January 2021. In November 2024, Dr. Brown joined the University of Alabama (UAB) Department of Neurology as an associate
professor and is the Director of the adult NF and SWN clinic at UAB. Dr. Brown has experience on both sides of the bench in NF laboratory
research involving the RAS-RAF-MEK-ERK (MAPK) pathway, including genome editing, cell culture, xenografts, and clinical trials. Her particular
interest is in developing treatments for NF1-associated dermal tumors called cutaneous neurofibromas.
64
Luca Rastelli, Ph.D.
Dr. Rastelli is the Chief
Scientific Officer of Deepcure, an emerging biotech that uses AI-driven discovery to create better molecules and faster cures for every
disease-relevant protein target. Dr. Rastelli brings more than 25 years of oncology drug discovery and development experience, as well
as business development experience ranging from startups to large pharmaceutical companies. Most recently, Dr. Rastelli was Chief Scientific
Officer at Jubilant Therapeutics where he led all aspects of R&D for the company and was instrumental in bringing 2 compounds to the
clinic. Previously Dr. Rastelli was Chief Scientific Officer at Kleo Pharmaceuticals where he led the team that brough a CD38 targeting
compound based on Kleo’s novel ARM technology to the clinic for multiple myeloma. At BioXcel Therapeutics he was Vice President,
Oncology at where he helped bring the company to a successful IPO and he led a project focused on Neurofibromatosis type 2. Dr. Rastelli
has held multiple preclinical and clinical project leadership positions at Boston Scientifics, CuraGen, Sopherion and EMD Serono (Merck
Serono). Dr. Rastelli led the initial development of c-MET inhibitor TEPMETKO, approved for the treatment of METex14 positive NSCLC patients.
Dr. Rastelli was also part of the initial development of the immuno-oncology antibody BAVENCIO, a PDL-1 inhibitor approved for several
type of cancers. Dr. Rastelli received the American Brain Tumor Association’s 25th Anniversary Translational grant for his work
on Medulloblastoma tumors at the Department of Neuro-Oncology, MD Anderson Cancer Center. Dr. Rastelli is a named inventor on more than
10 issued patents and holds a Ph.D. in Molecular Biology from the University of Geneva.
James Lee Ph.D.
Dr. Lee is a Clinician Scientist Group Leader at
the Francis Crick Institute (London, UK) and an Honorary Consultant Gastroenterologist at the Royal Free Hospital. Dr. Lee is a clinician-scientist
with a longstanding focus on better understanding the biology of immune-mediated disease, and the translation of that knowledge for patient
benefit. He has clinical expertise in inflammatory bowel disease (IBD) and is also an active member of the UK and International IBD Genetics
Consortia. Dr. Lee completed medical training at the University of Oxford (2004) and undertook his Ph.D. at the University of Cambridge
as part of the inaugural Wellcome Trust Clinical PhD Programme (2008-2011). Following his Ph.D. in Ken Smith’s lab, Dr. Lee
completed clinical training in gastroenterology as a clinical lecturer (University of Cambridge), before being awarded a Wellcome
Trust Intermediate Clinical Fellowship in 2015. Dr. Lee spent 2 years of this award at Harvard University before returning to the University
of Cambridge in 2018 to establish a research group at the newly-opened Cambridge Institute for Therapeutic Immunology and Infectious Disease.
He joined the Francis Crick Institute as a Clinician Scientist Group Leader in 2021. Dr Lee has published over 50 research papers, including
first / senior author papers in Cell, Nature Genetics, Journal of Clinical Investigation, Gut and EMBO
Molecular Medicine, and co-authored papers in journals including Nature, Cell, Nature Immunology and Journal
of Experimental Medicine. In 2014, Dr. Lee was named as the inaugural “Young Gastroenterologist of the Year - Clinical
and Translational Science” by the British Society of Gastroenterology and has since been awarded the Julia Bodmer Award (European
Federation of Immunogenetics, 2017), the Sir Francis Avery-Jones Medal (British Society of Gastroenterology, 2018), and the United European
Gastroenterology Society Rising Star Award (2018). He is an editorial board member at Gut and Research Awards Panel member
for Crohn’s and Colitis UK.
Daniel R. Weinberger, M.D.
Dr. Weinberger is Director
and CEO of the Lieber Institute for Brain Development at the Johns Hopkins Medical Center and Professor of Psychiatry, Neurology, Neuroscience
and Human Genetics at the Johns Hopkins School of Medicine. He was formally Director of the Genes, Cognition, and Psychosis Program of
the Intramural Research Program, National Institute of Mental Health, National Institutes of Health in Bethesda, Maryland. He attended
college at the Johns Hopkins University and medical school at the University of Pennsylvanian and did residencies in psychiatry at Harvard
Medical School and in neurology at George Washington University. He is board certified in both psychiatry and neurology. Dr. Weinberger’s
research has focused on brain and genetic mechanisms involved in the pathogenesis and treatment of neuropsychiatric disorders, especially
schizophrenia. He was instrumental in focusing research on the role of abnormal brain development as a risk factor for schizophrenia.
He has identified a number of specific neural and molecular mechanisms of genetic risk for schizophrenia, and genetic effects that account
for variation in specific human cognitive functions and in human temperament. His recent work has focused on genetic and epigenetic regulation
of expression in human brain of genes associated with developmental brain disorders. In 2003, Science magazine highlighted the
genetic research of his lab as the second biggest scientific breakthrough of the year, second to the origins of the cosmos. He is the
recipient of many honors and awards, including the Sarnat International Prize of the National Academy of Medicine, The International Neuroscience
Prize of the Gertrud Reemtsma Foundation of the Max Planck Society, the NIH Directors Award, The Roche-Nature Medicine Neuroscience Award,
The William K. Warren Medical Research Institute Award, the Adolf Meyer Prize of the American Psychiatric Association, the Foundation’s
Fund Prize from the American Psychiatric Association, and the Lieber Prize of the Brain and Behavior Research Foundation. He is past president
of the Society of Biological Psychiatry, past President of the American College of Neuropsychopharmacology and has been elected to the
National Academy of Medicine of the National Academy of Sciences.
65
Board Composition
Our Board currently consists of five members. Under our Second Amended
and Restated Bylaws (the “Bylaws”), the number of directors who shall constitute the Board shall equal not less than one or
more than ten, as the Board may determine by resolution from time to time.
Board Elections
In accordance with the terms of our Second Amended and Restated Certificate
of Incorporation, as amended (the “Certificate of Incorporation”), and Bylaws, our Board is divided into three classes; Class I,
Class II and Class III, with each class serving staggered three-year terms. Upon the expiration of the term of a class of directors,
directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in
which their term expires. Our directors are divided among the three classes as follows:
We expect that any additional
directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as
possible, each class will consist of one-third of the total number of directors. The division of our Board into three classes
with staggered three-year terms may delay or prevent a change of our management or a change in control.
Our Certificate of Incorporation
and Bylaws provide that the authorized number of directors may be changed only by resolution of our Board. Our Certificate of Incorporation
and Bylaws also provide that our directors may be removed only for cause, and that any vacancy on our Board, including a vacancy resulting
from an enlargement of our Board, may be filled only by vote of a majority of our directors then in office, even if less than a quorum,
or by a sole remaining director.
Board Leadership Structure
The positions of our Chairman
of the Board and Chief Executive Officer are separated. Separating these positions allows our Chief Executive Officer to focus on our
day-to-day business, while allowing the Chairman of the Board to lead our Board in its fundamental role of providing advice to and independent
oversight of management. Our Board recognizes the time, effort and energy that the Chief Executive Officer must devote to his position
in the current business environment, as well as the commitment required to serve as our Chairman, particularly as our Board’s oversight
responsibilities continue to grow. Our Board also believes that this structure ensures a greater role for the independent directors in
the oversight of our Company and active participation of the independent directors in setting agendas and establishing priorities and
procedures for the work of our Board. Our Board believes its administration of its risk oversight function has not affected its leadership
structure.
Our corporate governance guidelines
provide that, if the Chairman of the Board is a member of management or does not otherwise qualify as independent, the independent directors
of the Board may elect a lead director. The lead director’s responsibilities include, but are not limited to: presiding over all
meetings of the Board at which the chairman is not present, including any executive sessions of the independent directors; approving Board
meeting schedules and agendas; and acting as the liaison between the independent directors and the Chief Executive Officer and Chairman
of the Board. Our corporate governance guidelines further provide the flexibility for our Board to modify our leadership structure in
the future as it deems appropriate.
66
Role of the Board in Risk Oversight
One of the key functions of our Board is informed oversight of our
risk management process. Our Board does not have a standing risk management committee but rather administers this oversight function directly
through our Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective
areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure and our audit committee
(“Audit Committee”) has the responsibility to consider and discuss our major financial risk exposures and the steps our management
has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and
management is undertaken. Our Audit Committee also monitors compliance with legal and regulatory requirements. Our nominating and corporate
governance committee (“Nominating and Corporate Governance Committee”) monitors the effectiveness of our corporate governance
practices, including whether they are successful in preventing illegal or improper liability-creating conduct. Our compensation committee
(“Compensation Committee”) assesses and monitors whether any of our compensation policies and programs has the potential to
encourage excessive risk-taking. While each committee is responsible for evaluating certain risks and overseeing the management of such
risks, our entire Board is regularly informed through committee reports about such risks.
Board Committees
We currently have three committees of the Board and have adopted charters
for such committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The composition
and responsibilities of each committee are described below. Members serve on these committees until their resignation or until otherwise
determined by our Board. Each committee’s charter is available under the Governance section of our website at www.pasithea.com.
The reference to our website address does not constitute incorporation by reference of the information contained at or available through
our website, and you should not consider it to be a part of this Annual Report on Form 10-K.
Audit Committee. The Audit Committee’s responsibilities
include:
● discussing our risk management policies;
● reviewing and approving or ratifying any related person transactions; and
● preparing the Audit Committee report required by SEC rules.
The members of our Audit Committee
are Simon Dumesnil (chairperson), Dr. Emer Leahy and Alfred Novak. All members of our Audit Committee meet the requirements for financial
literacy under the applicable rules and regulations of the SEC and Nasdaq. Our Board has determined that Simon Dumesnil is an audit committee
financial expert as defined under the applicable rules of the SEC and has the requisite financial sophistication as defined under the
applicable rules and regulations of Nasdaq. Under the rules of the SEC, members of the Audit Committee must also meet heightened independence
standards. Our Board has determined that Simon Dumesnil (chairperson), Dr. Emer Leahy and Alfred Novak are independent within the meaning
of the rules and regulations of Nasdaq and Rule 10A-3 under the Exchange Act.
The Audit Committee operates
under a written charter that satisfies the applicable standards of the SEC and Nasdaq.
67
Compensation Committee. The Compensation
Committee’s responsibilities include:
● overseeing and administering our cash and equity incentive plans;
The members of our Compensation
Committee are Dr. Emer Leahy (chairperson), Alfred Novak and Simon Dumesnil. Each of the members of our Compensation Committee is independent
under the applicable rules and regulations of Nasdaq and is a “non-employee director” as defined in Rule 16b-3 promulgated
under the Exchange Act. The Compensation Committee operates under a written charter that satisfies the applicable standards of the SEC
and Nasdaq.
Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee’s responsibilities include:
● identifying individuals qualified to become Board members;
● overseeing a periodic evaluation of our Board.
The members of our Nominating
and Corporate Governance Committee are Alfred Novak (chairperson), Dr. Emer Leahy and Simon Dumesnil. Each of the members of our Nominating
and Corporate Governance Committee is an independent director under the applicable rules and regulations of Nasdaq relating to Nominating
and Corporate Governance Committee independence. The Nominating and Corporate Governance Committee operates under a written charter that
satisfies the applicable standards of the SEC and Nasdaq.
Director Independence
Our Board has determined that Simon Dumesnil, Dr. Emer Leahy and Alfred
Novak are all “independent” as that term is defined under the rules of The Nasdaq Stock Market LLC, or the Nasdaq rules. Our
Board has determined that due to Dr. Tiago Reis Marques’ employment as an executive officer of the Company, he currently has a relationship
that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, such that he is not
“independent” as that term is defined under the Nasdaq rules. Our Board has also determined that beginning as of June
21, 2022, due to the Company’s transaction with Alpha-5, Prof. Lawrence Steinman has a relationship that would interfere with the
exercise of independent judgment in carrying out the responsibilities of a director, such that he is not “independent” as
that term is defined under the Nasdaq rules.
Compensation Committee Interlocks and Insider
Participation
No member of our Compensation
Committee is a current or former officer or employee. None of our executive officers served as a director or a member of a Compensation
Committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served as a director
or member of our Compensation Committee during the last completed fiscal year.
68
Corporate Code of Conduct and Ethics
Our Board has adopted a written code of business conduct and ethics
that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions. Copies of our corporate code of conduct and ethics are available,
without charge, upon request in writing to Pasithea Therapeutics Corp., 1111 Lincoln Road, Suite 500, Miami Beach, FL 33139, Attn: Secretary
and are posted on the investor relations section of our website, which is located at www.pasithea.com. The inclusion of our website
address in this Annual Report on Form 10-K does not include or incorporate by reference the information on our website into this Annual
Report on Form 10-K. We also intend to disclose any amendments to the Corporate Code of Conduct and Ethics, or any waivers of its requirements,
on our website.
Insider Trading Policies
We have adopted an insider trading policy that governs the purchase,
sale, and/or other transactions of our securities by our directors, officers and employees. A copy of our insider trading policy is filed
as Exhibit 19.1 to this Annual Report on Form 10-K. In addition, with regard to the Company’s trading in its own securities, it
is our policy to comply with the federal securities laws and the applicable exchange listing requirements in all respects.
ITEM 11. EXECUTIVE COMPENSATION
As an emerging growth
company under the JOBS Act, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting
companies,” which require compensation disclosure for our principal executive officer and the two most highly compensated executive
officers (other than our principal executive officer) serving as executive officers at the end of our most recently completed fiscal
year (collectively, our “Named Executive Officers”). This section describes the executive compensation program in place for
our Named Executive Officers during the years ended December 31, 2025 and December 31, 2024, who are the individuals who served as our
principal executive officer and two most highly compensated executive officers.
This section discusses the
material components of the executive compensation program for our executive officers who are named in the “Summary Compensation
Table” below and the non-employee members of our Board.
Summary Compensation Table