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Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2025
Accounting Policies [Abstract]  
Basis of presentation and Going Concern

Basis of presentation and Going Concern

 

The accompanying condensed consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). U.S GAAP contemplates the continuation of the Company as a going concern. Since inception, the Company had no revenues from product sales and incurred a net loss of $1,528,867 and $634,100 for the three months ended March 31, 2025 and 2024, respectively. Net cash used in operations for the three months ended March 31, 2025 and 2024 was $1,063,041 and $65,165, respectively. As of March 31, 2025, the Company had a working capital surplus and accumulated deficit of $1,721,604 and $27,550,996, respectively.

 

The Company plans to finance future operations with proceeds from equity securities, grant awards and strategic collaborations. However, there is no assurance that the Company will be able to affect transactions on commercially reasonable terms, if at all. In management’s opinion, these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of this report.

 
Business Segment

Business Segment

 

Business segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s chief operating decision maker (“CODM”) and relied upon when making decisions regarding resource allocation and assessing performance. When evaluating the Company’s financial performance, the CODM reviews total revenues, total expenses, and expenses by functional classification, using this information to make decisions on a company-wide basis. The Company views its operations and manages its business in one operating segment.

 
Use of Estimates

Use of Estimates

 

Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.

 

Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and other assumptions, which include both quantitative and qualitative assessments that it believes to be reasonable under the circumstances.

 

Significant estimates during the three months ended March 31, 2025 and 2024, respectively, include valuation of stock-based compensation, uncertain tax positions, and the valuation allowance on deferred tax assets.

 
Cash

Cash

 

The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. As of March 31, 2025 and December 31, 2024, 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 March 31, 2025 and December 31, 2024, the cash balances exceed the FDIC limit of $250,000 by $2,456,469 and $3,519,510, respectively.

 
Prepaid Contracts

Prepaid Contracts

 

Prepaid contracts represent service agreements which the Company will receive services over a period of time and are expensed as the services are received. The Company’s prepaid contracts are related to service agreements that span over three years, over which time the expense will be recognized. See further discussion in Note 6 - Stockholders’ Equity.

 
Research and Development

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 condensed consolidated financial statements as prepaid or accrued research and development expense, as the case may be.

 

 

JUPITER NEUROSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

 

Note 2 – Significant Accounting Policies, continued

 
Income Taxes

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 March 31, 2025 and December 31, 2024, the Company concluded that a full valuation allowance is necessary for the net deferred tax assets.

 
Earnings Per Share of Common Stock

Earnings Per Share of Common Stock

 

Basic earnings per share (“EPS”) 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 earnings per share includes the effect, if any, from the potential exercise or conversion of securities, which would result in the issuance of incremental shares of common stock, using the treasury method.

 

The following table summarizes outstanding instruments which were not included in the computation of diluted EPS as to do so would have been antidilutive:

 

   March 31,
2025		  

December 31,

2024

 
Common stock options   10,633,988    10,566,488 
Unvested restricted stock   -    1,626,037 
Warrants   1,359,375    1,359,375 
Total   11,993,363    13,551,900 

 
Stock-Based Compensation

Stock-Based Compensation

 

The Company recognizes expense related to the grant date 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.

 

 

JUPITER NEUROSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

 

Note 2 – Significant Accounting Policies, continued

 
Clinical Trial Expenses

Clinical Trial Expenses

 

In preparing financial statements, the Company estimates clinical trial-related expenses based on contracts with vendors, clinical sites, and consultants. Because payment timing often differs from service delivery, the Company records expenses according to actual service performance and trial progression, using discussions with internal staff and external providers. Estimates are periodically adjusted as actual results become known. Accurate accruals depend on timely reporting from third-party vendors, and differences between estimated and actual expenses, though not expected to be significant, may occur.

 
Fair Value of Financial Instruments and Fair Value Measurements

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).

 

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.

 

See Note 5 - Convertible Debt and Derivative Liability.

 

 

JUPITER NEUROSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

 

Note 2 – Significant Accounting Policies, continued

 
Derivative Instruments

Derivative Instruments

 

Derivative instruments are recognized on the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings.

 
Convertible Notes with Embedded Derivative Liabilities

Convertible Notes with Embedded Derivative Liabilities

 

The Company previously entered into convertible notes payable, some of which contained variable conversion options, whereby the outstanding principle and accrued interest could 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 evaluated all its financial instruments to determine if those contracts or any potential embedded components of those contracts qualified as derivatives to be separately accounted. There were no such liabilities at March 31, 2025 or December 31, 2024. See further discussion in Note 5 - Convertible Debt and Derivative Liability.

 
Leases

Leases

 

Operating lease right-of-use (“ROU”) assets represent 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 the commencement date. As most leases do not provide an implicit rate, the Company utilizes its incremental borrowing rate at lease inception in order to determine the present value of future minimum lease payments over the expected term of the lease after taking into account the likelihood of renewals and extensions. 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 accompanying condensed consolidated statements of operations.