Celcuity Inc. (CELC)

ITEM 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations

You should read the following discussion and analysis
of our financial condition and results of operations together in conjunction with our financial statements and the related notes included
elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual
Report, including information with respect to our plans and strategy for our business and expected financial results, includes forward-looking
statements that involve risks and uncertainties. You should review the “Risk Factors” discussed in Item 1A of Part I of this
Annual Report.

OVERVIEW

Celcuity is a
clinical-stage biotechnology company focused on the development of targeted therapies for the treatment of multiple solid tumor
indications. The Company’s lead therapeutic candidate is gedatolisib, a potent, well-tolerated, small molecule reversible
inhibitor, administered intravenously, that selectively targets all Class I isoforms of phosphatidylinositol-3-kinase
(“PI3K”) and the two mechanistic targets of rapamycin (“mTOR”) sub-complexes, mTORC1 and mTORC2. Its
mechanism of action and pharmacokinetic properties are differentiated from other currently approved and investigational therapies
that target PI3K or mTOR alone or together. A Phase 3 clinical trial, VIKTORIA-1, evaluating gedatolisib in combination with
fulvestrant with or without palbociclib in patients with HR+/HER2- advanced breast cancer is currently enrolling patients. Site
selection activities are completed and activation activities for a Phase 3 clinical trial, VIKTORIA-2, evaluating gedatolisib in
combination with a CDK4/6 inhibitor and fulvestrant as first-line treatment for patients with endocrine treatment resistant
HR+/HER2- advanced breast cancer has commenced, and the first patient is expected to be dosed in the second quarter of 2025. A Phase
1b/2 clinical trial, CELC-G-201, evaluating gedatolisib in combination with darolutamide in patients with mCRPC, is currently
underway.

In April 2021, we obtained exclusive global development
and commercialization rights to gedatolisib under a license agreement with Pfizer Inc. We believe gedatolisib’s unique mechanism
of action, differentiated chemical structure, favorable pharmacokinetic properties, and intravenous route of administration offer distinct
advantages over currently approved and investigational therapies that target PI3K, AKT, or mTOR alone or together.

Gedatolisib is a pan-class I isoform PI3K inhibitor with low
nanomolar potency for the p110α, p110β, p110γ, and p110δ isoforms and mTORC1 and mTORC2 complexes. Each PI3K isoform
and mTOR complex is known to preferentially affect different signal transduction events that involve tumor cell survival, depending upon
the aberrations associated with the linked pathway. When a therapy only inhibits a single Class I isoform (e.g., alpelisib, a PI3K-α
inhibitor) or only one mTOR kinase complex (e.g., everolimus, an mTORC1 inhibitor), numerous feedforward and feedback loops between the
PI3K isoforms and mTOR complexes cross-activate the uninhibited sub-units. This, in turn, induces compensatory resistance that reduces
the efficacy of isoform specific PI3K or single mTOR kinase complex inhibitors. Inhibiting all four PI3K isoforms and both mTOR complexes,
as gedatolisib does, thus prevents the confounding effect of isoform interaction that may occur with isoform-specific PI3K inhibitors
and the confounding interaction between PI3K isoforms and mTOR.

Gedatolisib is administered intravenously on a four-week cycle
of three weeks-on, one week-off, in contrast to the orally administered pan-PI3K or dual PI3K/mTOR inhibitors that are no longer being
clinically developed. Oral pan-PI3K or PI3K/mTOR inhibitors have repeatably been found to induce significant side effects that were not
well tolerated by patients. This typically leads to a high proportion of patients requiring dose reductions or treatment discontinuation.
The challenging toxicity profile of these drug candidates ultimately played a significant role in the decisions to halt their development,
despite showing promising efficacy. By contrast, gedatolisib stabilizes at lower concentration levels in plasma compared to orally administered
PI3K inhibitors, resulting in less toxicity, while maintaining concentrations sufficient to inhibit PI3K/mTOR signaling.

Isoform-specific PI3K inhibitors administered orally were developed
to reduce toxicities in patients. While the range of toxicities associated with isoform-specific inhibitors is narrower than oral pan-PI3K
or PI3K/mTOR inhibitors, administering them orally on a continuous basis still leads to challenging toxicities. The experience with an
FDA approved oral p110-α specific inhibitor, PIQRAY, illustrates the challenge. In its Phase 3 pivotal trial, PIQRAY was found to
induce a Grade 3 or 4 adverse event (“AE”) related to hyperglycemia in 39% of patients evaluated. In addition, 26% of patients
discontinued alpelisib due to treatment related AEs. By contrast, in the 103-patient dose expansion portion of the Phase 1b clinical trial
with gedatolisib, only 7% of patients experienced Grade 3 or 4 hyperglycemia and less than 9% discontinued treatment.

As of December 31, 2024, 492 patients with solid tumors
have received gedatolisib in eight clinical trials sponsored by Pfizer. Of the 492 patients, 129 were treated with gedatolisib as a single
agent in three clinical trials. The remaining 363 patients received gedatolisib in combination with other anti-cancer agents in five clinical
trials. Additional patients received gedatolisib in combination with other anti-cancer agents in nine investigator sponsored clinical
trials.

A Phase 1b trial (B2151009) evaluating patients with
HR+/HER2- metastatic breast cancer was initiated in 2016 and subsequently enrolled 138 patients. Four patients from this study continue
to receive study treatment, as of December 31, 2024, each of whom have received study treatment for more than five years. The B2151009
clinical trial was an open label, multiple arm Phase 1b clinical trial that evaluated gedatolisib in combination with palbociclib (CDK4/6
inhibitor) and fulvestrant or letrozole in patients with HR+/HER2- advanced breast cancer. Thirty-five patients were enrolled in two dose
escalation arms to evaluate the safety and tolerability and to determine the maximum tolerated dose (“MTD”) of gedatolisib
when used in combination with the standard doses of palbociclib and endocrine therapy (letrozole or fulvestrant). The MTD was determined
to be 180 mg administered intravenously once weekly. A total of 103 patients were subsequently enrolled in one of four expansion arms
(A, B, C, and D).

High objective overall response
rates (“ORR”) were observed in all four expansion arms and were comparable in each arm for PIK3CA wild type (“WT”)
and PIK3CA mutant (“MT”) patients. In patients who received prior hormonal therapy alone or in combination with a CDK4/6 inhibitor
(Arms B, C, and D), the ORR (including unconfirmed partial responses) ranged from 36% to 77%. In patients who were treatment naïve
in the advanced setting (Arm A), the ORR was 85%. Each arm achieved its primary endpoint target, which was reporting higher ORR in the
study arm than the ORR from either the PALOMA-2 study (ORR=55%) that evaluated palbociclib plus letrozole for Arm A or the PALOMA-3 study
(ORR=25%) that evaluated palbociclib plus fulvestrant for Arms B, C, and D. For all patients enrolled in the expansion portion of the
study who had evaluable tumors, the ORR observed was 63%.

Median progression-free survival
(PFS) was 12.9 months for patients who received a prior CDK4/6 inhibitor and were treated in the study with the Phase 3 dosing schedule
(Arm D). For all treatment naïve patients who received gedatolisib combined with palbociclib plus letrozole in Expansion Arm A and
Escalation Arm A (N=41), median PFS was 48.6 months and ORR was 79%. These results compare favorably to published data for current first-line
standard-of-care treatments for patients with HR+/HER2-advanced breast cancer.

Gedatolisib combined with palbociclib and endocrine
therapy demonstrated a favorable safety profile with manageable toxicity. The majority of treatment emergent adverse events were Grade
1 and 2. The most frequently observed adverse events included stomatitis/mucosal inflammation, the majority of which were Grade 1 and
2. The most common Grade 4 AEs were neutropenia and neutrophil count decrease, which were assessed as related to treatment with palbociclib.
No Grade 5 events were reported in this study.

We are currently enrolling patients in a Phase 3,
open-label, randomized clinical trial,VIKTORIA-1, to evaluate the efficacy and safety of two regimens in adults with HR+/HER2- advanced
breast cancer whose disease has progressed after prior CDK4/6 therapy in combination with an aromatase inhibitor: 1) gedatolisib in combination
with palbociclib and fulvestrant; and 2) gedatolisib in combination with fulvestrant. Over two hundred clinical sites in North America,
Europe, Latin America, and Asia-Pacific are participating in the study. The first patient was dosed in this trial in December 2022.

The VIKTORA-1 Phase 3 clinical trial will enable separate
evaluation of subjects according to their PIK3CA status. Subjects who meet eligibility criteria and are PIK3CA WT will be randomly assigned
(1:1:1) to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm A), gedatolisib and fulvestrant (Arm B), or fulvestrant
(Arm C). The WT enrollment target was achieved in the fourth quarter of 2024. Subjects who meet eligibility criteria and are PIK3CA MT
will be randomly assigned (3:3:1) to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm D), alpelisib and fulvestrant
(Arm E), or gedatolisib and fulvestrant (Arm F). Topline data from Arms A, B and C of this clinical trial are expected in Q2 2025.

We received approval from the FDA in mid-2023 to proceed
with the clinical development of gedatolisib in combination with Nubeqa® (darolutamide), an approved androgen receptor inhibitor,
for the treatment of patients with metastatic castration resistant prostate cancer (“mCRPC”). We have since initiated a Phase
1b/2 study, CELC-G-201, that is enrolling patients with mCRPC who progressed after treatment with an androgen receptor inhibitor. The
first patient was dosed in this trial in February 2024.

In the Phase 1b portion of the clinical trial, Celcuity
expects approximately 36 participants will be randomly assigned to receive 600 mg darolutamide combined with either 120 mg gedatolisib
in Arm 1 or 180 mg gedatolisib in Arm 2. An additional 12 participants will then be enrolled in the Phase 2 portion of the study at the
recommended phase 2 dose (“RP2D”) level to enable evaluation of 30 participants treated with the RP2D of gedatolisib.

The primary objectives of the Phase 1b portion of
the trial include assessment of the safety and tolerability of gedatolisib in combination with darolutamide and determination of the recommended
Phase 2 dose of gedatolisib. The primary objective of the Phase 2 portion of the trial is to assess the radiographic progression-free
survival at six months of patients who received the RP2D. Initial preliminary data for the Phase 1b dose escalation portion of the trial
is expected to be available by the end of the second quarter of 2025.

A Phase 3, open-label, randomized clinical trial to
evaluate the efficacy and safety of gedatolisib plus a CDK4/6 inhibitor and fulvestrant as first-line treatment for patients with HR+/HER2-
advanced breast cancer that is endocrine treatment resistant (“VIKTORIA-2”) is currently activating clinical trial sites.
For the CDK4/6 inhibitor, investigators may choose either ribociclib or palbociclib. This multi-center, international trial is expected
to enroll approximately 12–36 evaluable subjects in the safety run-in portion of the study to evaluate the safety of gedatolisib
when combined with ribociclib and fulvestrant. In the Phase 3 portion of the study, approximately 638 subjects will be randomized and
assigned to Cohort 1 (PIK3CA WT) or Cohort 2 (PIK3CA MT) based on their PIK3CA status. Subjects in each cohort will be randomized on
a 1:1 basis to either Arm A (gedatolisib with fulvestrant and ribociclib or palbociclib) or Arm B (fulvestrant and ribociclib or palbociclib).
It is expected that approximately 200 clinical sites across North America, Europe, Latin America, and Asia-Pacific will participate. The first
patient is expected to be dosed in the second quarter of 2025.

Recent Developments

The VIKTORIA-1 Phase 3 clinical trial evaluating
gedatolisib in combination with fulvestrant with and without palbociclib in adults with HR+, HER2- advanced breast cancer who have received
prior treatment with a CDK4/6 inhibitor is 100% enrolled for the PIK3CA wild-type cohort. We expect to provide topline data in
Q2 2025.

The
VIKTORIA-2 Phase 3 open-label randomized study evaluating the efficacy and safety of gedatolisib in combination with fulvestrant plus
a CDK4/6 inhibitor, either ribociclib or palbociclib, in comparison to fulvestrant plus a CDK4/6 inhibitor as a first-line treatment
for patients with HR+/HER2- advanced breast cancer who are endocrine therapy resistant remains on track to enroll its first patient in
Q2 2025.

In
December 2024, Celcuity presented overall survival data from a Phase 1b trial, which evaluated gedatolisib in combination with palbociclib
and either letrozole or fulvestrant, in patients with HR+, HER2- advanced or metastatic breast cancer during a poster session at the
2024 San Antonio Breast Cancer Symposium (SABCS). Median overall survival was 77.3 months among patients with HR+, HER2- advanced breast
cancer who were treatment-naïve in the advanced setting and 33.9 months among patients previously treated with a CDK4/6 inhibitor.

We have not generated any revenue from sales to date,
and we continue to incur significant research and development and other expenses related to our ongoing operations. As a result, we are
not and have never been profitable and have incurred losses in each period since we began operations in 2012. For the years ended December
31, 2024 and 2023, we reported a net loss of approximately $111.8 million and $63.8 million, respectively. As of December 31,
2024, our cash and cash equivalents and short-term investments were approximately $235.1 million, and we had an accumulated deficit of approximately
$271.9 million.

RESULTS OF OPERATIONS

Components of Operating Results

Revenue

To date, we have not generated any revenue. With the
execution of the Pfizer license agreement in April 2021, whereby we acquired exclusive world-wide licensing rights to develop and commercialize
gedatolisib, we initiated a Phase 3 clinical trial, VIKTORIA-1, in 2022 to support potential regulatory approval to market gedatolisib.
In August 2023, we initiated a Phase 1b/2 clinical trial, CELC-G-201, and we have initiated a second Phase 3 clinical trial, VIKTORIA-2,
with dosing of the first patient planned in Q2 2025 to support submission to the FDA seeking approval for this indication for gedatolisib.
If we obtain regulatory approvals to market gedatolisib, we expect to generate revenue from sales of the drug for the treatment of breast
cancer patients.

Research and Development

Since our inception, we have primarily focused on
research and development of gedatolisib, a PI3K/mTOR targeted therapy, and our CELsignia platform and corresponding tests. Research and
development expenses primarily include:

Internal and external research and development costs
are expensed as they are incurred. As we continue development of gedatolisib and manage studies and clinical trials, including the VIKTORIA-1
Phase 3 clinical trial, the CELC-G-201 Phase 1b/2 clinical trial, and the VIKTORIA-2 Phase 3 clinical trial, the proportion of research
and development expenses allocated to external spending will grow at a faster rate than expenses allocated to internal expenses.

General and Administrative

General and administrative expenses consist primarily
of salaries, benefits and stock-based compensation related to our executive, finance and support functions. Other general and administrative
expenses include professional fees for auditing, tax, and legal services associated with being a public company, director and officer
insurance, investor relations and travel expenses for our general and administrative personnel.

Sales and Marketing

Expenses and costs related to the initiation and operation
of our medical and marketing teams, supply chain and distribution network are being incurred in anticipation of the commercialization
of our first drug candidate, gedatolisib. These expenses consist primarily of employee-related expenses,
professional and consulting fees related to these functions and operations, software costs, and the acquisition of data required
to support our market analysis for our drug product. We would expect to begin to incur sales force,
sales support staff and marketing expenses closer to a potential FDA approval date.

Interest Expense

Interest expense is primarily due to a Loan Agreement.

Interest Income

Interest income consists of interest income earned
on our cash, cash equivalents and investment balances.

Results of Operations

Comparison of the Years Ended December 31, 2024 and 2023

Research and Development

For the year ended December 31, 2024, our research
and development expenses were approximately $104.2 million, representing an increase of approximately $43.6 million, or 72%, compared
to 2023. Of the $43.6 million increase in research and development expense, $30.7 million was primarily related to costs supporting ongoing
activities for the VIKTORIA-1 and CELC-G-201 trials and the commencement of the VIKTORIA-2 Phase 3 pivotal trial. The remaining $12.9
million was related to increased employee and consulting expenses, of which $0.1 million was in the form of non-cash stock-based compensation.

Conducting a significant amount of research and development
is central to our business model. We plan to increase our research and development expenses for the foreseeable future as we seek to develop
gedatolisib and manage the VIKTORIA-1 Phase 3 clinical trial, the CELC-G-201 Phase 1b/2 clinical trial, and the VIKTORIA-2 Phase 3 clinical
trial.

General and Administrative

For the year ended December 31, 2024, our total general
and administrative expenses were $9.1 million, representing an increase of approximately $3.4 million, or 61%, compared to 2023. Employee
related expenses accounted for $2.6 million of the $3.4 million increase. The remaining $0.8 million of the increase resulted from professional
fees, expanding infrastructure and other administrative expenses.

We anticipate that our general
and administrative expenses will increase in future periods, reflecting both increased costs in connection with the potential future commercialization
of gedatolisib, an expanding infrastructure, and increased professional fees associated with public company regulatory developments and
requirements, and other compliance matters.

Interest Expense

For the year ended December 31, 2024, interest expense
was $10.3 million and represents an increase of $5.0 million compared to 2023. The increase is due primarily to the increased debt balance
in 2024 compared to 2023 due to the incremental $61.7 million funding of Term Loan C in May 2024. The $10.3 million of interest expense
includes $2.7 million of non-cash interest expense.

Interest Income

For the year ended December 31,
2024, interest income was $11.8 million and represents an increase of $4.0 million compared to 2023. The increase was primarily the result
of closing on additional equity and debt financing activities in May 2024, leading to higher cash, cash equivalents and short-term investment
balances.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have incurred losses and cumulative
negative cash flows from operations. Through December 31, 2024, we have funded our operations primarily through private placements and
registered offerings of our equity securities and unsecured convertible notes, and borrowings under loan agreements. From inception through
December 31, 2024, we raised an aggregate of approximately $369.0 million of net proceeds through sales of our securities, and as of December
31, 2024 had $100.0 million of borrowings under loan agreements, not including payable-in-kind interest. In March 2024, an investor exercised
1,739,080 warrants at an exercise price of $8.05, which generated approximately $14 million in cash. In March 2025, an investor exercised 695,650 warrants at an exercise price of $8.05, which generated approximately $5.6 million in cash.
The warrants exercised in March 2024 and 2025 were issued pursuant
to a private placement that closed on December 9, 2022. As of December 31, 2024, our cash and cash equivalents and short-term investments
were approximately $22.5 million and $212.6 million, respectively, and we had an accumulated deficit of approximately $271.9 million.

Open Market Sale Agreement℠. On February
4, 2022, we entered into an Open Market Sale AgreementSM with Jefferies LLC, as agent, pursuant to which we may offer and sell,
from time to time, through Jefferies, shares of our common stock having an aggregate offering price of up to $50.0 million, which amount
was subsequently increased to $125.0 million on December 6, 2024. On October 12, 2022, pursuant to this agreement, the Company sold 500,000
shares of common stock in a single transaction at a price of $10.35 per share generating gross proceeds of $5.2 million ($4.8 million
net of commissions and offering expenses). On December 1, 2023, pursuant to this agreement, the Company sold 1,034,500 shares of common
stock in a single transaction at a price of $14.50 per share, generating gross proceeds of $15.0 million ($14.4 million net of commissions
and offering expenses). In April 2024 and May 2024, pursuant to this agreement, the Company sold 285,714 and 149,700 shares of common
stock, respectively, at an average selling price of $17.55 per share, generating gross proceeds of $7.6 million before deducting commissions
and other offering expenses of $0.3 million. At December 31, 2024, $125.0 million of common stock remains available for sale under the
Jefferies agreement.

Private Placement. On December 9, 2022, we
issued 6,182,574 shares of common stock, 1,120,873 shares of Series A Preferred Stock and warrants exercisable for 6,956,450 shares of
common stock to certain institutional and other accredited investors pursuant to a securities purchase agreement entered into on May 15,
2022. Pursuant to the securities purchase agreement, the closing (funding) of the private placement occurred following dosage of the first
patient in the Company’s Phase 3 study, VIKTORIA-1. Investors purchased shares of common stock and Series A Preferred Stock at a
price of $5.75 per share (on an as converted to common stock basis), with forty percent (40%) warrant coverage (on an as converted to
common stock basis) and customary resale registration rights. The warrants have an exercise price of $8.05 per share. The private placement
generated gross proceeds of approximately $100.0 million before deducting placement agent fees and other offering expenses of $4.3 million.

Pre-funded Warrants.
On October 18, 2023, the Company entered into a securities purchase agreement to sell pre-funded warrants at a price of $8.70 per warrant,
to purchase up to 5,747,787 shares of the Company’s common stock in a private placement. The closing of the private placement occurred
on October 20, 2023, and resulted in gross proceeds of approximately $50.0 million, before deducting offering expenses of approximately
$0.1 million.

Equity Offering. On May 30, 2024, the Company
entered into an underwriting agreement with Leerink Partners LLC, TD Securities (USA) LLC and Stifel, Nicolaus & Company, Incorporated
as representatives of the several underwriters relating to the issuance and sale of 3,871,000 shares of common stock, at a price to the
public of $15.50, generating gross proceeds of approximately $60.0 million. The offering closed on May 31, 2024 and resulted in net proceeds
to the Company of approximately $56.3 million after deducting underwriting discounts and other offering expenses payable by the Company.
The Company intends to use the net proceeds from the offering for working capital and general corporate purposes, which may include research
and development expenditures, clinical trial expenditures, expansion of business development activities and other general corporate purposes.

Loan Agreement. On May 30, 2024, the Company
entered into an Amended and Restated Loan and Security Agreement (the “A&R Loan Agreement”) with Innovatus Life Sciences
Lending Fund I, LP, a Delaware limited partnership (“Innovatus”), as collateral agent, and the Lenders including Innovatus
in its capacity as a Lender and Oxford Finance LLC (“Oxford”), pursuant to which Innovatus and Oxford, as Lenders, have agreed
to make certain term loans (“Term Loans”) to the Company in the aggregate principal amount of up to $180 million. The A&R
Loan Agreement amends and restates, in its entirety, that certain Loan and Security Agreement, dated April 8, 2021, as amended, between
the Company and Innovatus, as collateral agent, and the Lenders named therein (the “Prior Loan Agreement”).

Funding of the first $100 million under the A&R
Loan Agreement occurred on May 30, 2024, including tranche payments of $16.8 million (the “Term A Loan”) and $21.5 million
(the “Term B Loan”) reflecting repayment of the principal amount of loans under the Prior Loan Agreement plus accrued payment-in-kind
interest, in addition to $61.7 million of new borrowings (the “Term C Loan”). The Company will be eligible to draw on a fourth
tranche of $30 million (the “Term D Loan”) and fifth tranche of $50 million (the “Term E Loan”), in each case
upon achievement of certain clinical trial milestones and satisfaction of certain financial covenants determined on a pro forma as-funded
basis. The Lenders may, in their sole discretion upon the Company’s request, make additional term loans to the Company of $45 million
(the “Term F Loan”). Funding of these additional tranches is also subject to other customary conditions and limits on when
the Company can request funding for such tranches. Costs associated with the new borrowings were approximately $2.4 million.

Pursuant to the A&R Loan Agreement, the Company
is entitled to make interest-only payments for thirty-six months, or up to forty-eight months if certain conditions are met. The Term
Loans will mature on May 1, 2029 and will bear interest at a rate equal to the sum of (a) the greater of (i) the Prime Rate (as defined
in the A&R Loan Agreement) or (ii) 7.75%, plus (b) 2.85%, provided that 1.0% of such interest will be payable in-kind by adding an
amount equal to such 1.0% of the outstanding principal amount to the then outstanding principal balance on a monthly basis through May
31, 2027. The A&R Loan Agreement is secured by all assets of the Company. Proceeds will be used for working capital purposes and to
fund the Company’s general business requirements, including the Phase 3 VIKTORIA-2 clinical trial. The A&R Loan Agreement contains
customary representations and warranties and covenants, subject to customary carve-outs, and includes financial covenants related to liquidity
and other financial measures. Innovatus has the right, at its election and until August 9, 2025, to convert up to 20% of the outstanding
principal of the Term A Loan into shares of the Company’s common stock at a price per share of $10.00 (the “Conversion Right”).
Innovatus will continue to have the right to exercise a previously disclosed warrant granted to it under the Prior Loan Agreement to purchase
26,042 shares of common stock at a price per share of $14.40 through April 8, 2031.

The A&R Loan Agreement contains a Final Fee, which
is equal to 4.5% of the initial funding of the agreement and is due on the earliest to occur of (a) the Maturity Date, (b) the acceleration
of any Term Loan, and (c) the prepayment of the Term Loans. There is also a contingent non-utilization fee for both the Term D and Term
E loans. If the Company achieves the Term D Milestone and (i) fails to draw the full amount of the Term D Loan during the Term D Draw
Period and (ii) fails to notify Collateral Agent, at any time before the date that is four weeks after the Company’s achievement
of the Term D Milestone, of the Company’s intent not to draw the full amount of the Term D Loan, a non-utilization fee of $900,000,
with respect to the Term D Loan shall become due and payable on the earliest of (i) the termination of the Term D Draw Period, (ii) the
Maturity Date, (iii) the acceleration of any Term Loan, and (iv) the prepayment in whole of the Term Loans. If the Company achieves the
Term E Milestone and (i) fails to draw the full amount of the Term E Loan during the Term E Draw Period and (ii) fails to notify Collateral
Agent, at any time before the date that is four weeks after the Company’s achievement of the Term E Milestone, of the Company’s
intent not to draw the full amount of the Term E Loan, a non-utilization fee of $1,500,000, with respect to the Term E Loan shall become
due and payable on the earliest of (i) the termination of the Term E Draw Period, (ii) the Maturity Date, (iii) the acceleration of any
Term Loan, and (iv) the prepayment in whole of the Term Loans. After the 18-month anniversary of the Effective Date, the Company shall
have the option to prepay all, but not less than all, of the Term Loans advanced by the Lenders under the A&R Loan Agreement, provided
the Company (i) provides written notice to Collateral Agent of its election to prepay the Term Loans at least seven Business Days prior
to such prepayment, and (ii) pays to Lenders on the date of such prepayment, payable to each Lender in accordance with its respective
Pro Rata Share, an amount equal to the sum of (A) all outstanding principal of the Term Loans plus accrued and unpaid interest thereon
through the prepayment date, (B) the Final Fee, (C) the Prepayment Fee, plus (D) all other outstanding Obligations that are due and payable,
including, without limitation, Lenders’ Expenses and interest at the Default Rate with respect to any past due amounts. At May 30,
2024, the Company recognized the Final Fee of $4.5 million as additional debt principal and a corresponding debt discount to be amortized
over the life of the loan.

In connection with the funding of each of the Term
C Loan, the Term D Loan, the Term E Loan and the Term F Loan, the Company agreed to issue to Innovatus and Oxford warrants to purchase
that number of shares of the Company’s common stock equal to 2.5% of the principal amount of the applicable Term Loan divided by
the exercise price, which shall, with respect to the Term C Loan, be equal to the lower of (i) the volume weighted average closing price
of the Company’s common stock for the five-trading day period ending on the last trading day immediately preceding the execution
of the A&R Loan Agreement or (ii) the closing price on the last trading day immediately preceding the execution of the A&R Loan
Agreement. Accordingly, on May 30, 2024, the Company issued 103,876 warrants with an exercise price of $14.84 per share. The relative
fair value of the warrants was approximately $1.2 million. For the additional Term Loans, the exercise price will be based on the lower
of (i) the exercise price for the Warrants issued pursuant to the Term C Loan or (ii) the volume weighted average closing price of the
Company’s common stock for the five-trading day period ending on the last trading day immediately preceding the applicable Term
Loan funding. The Warrants may be exercised on a cashless basis and are exercisable through the tenth anniversary of the applicable funding
date. The number of shares of common stock for which each Warrant is exercisable and the associated exercise price are subject to certain
proportional adjustments as set forth in such Warrant.

We expect that our research and development and general
and administrative expenses will increase as we continue to develop gedatolisib, manage the VIKTORIA-1 Phase 3 clinical trial, the CELC-G-201
Phase 1b/2 trial, and the VIKTORIA-2 Phase 3 trial, conduct other studies and clinical trials, and pursue other business development activities.
We would also expect to incur sales and marketing expenses as we commercialize gedatolisib. We expect to use cash on hand, together with
the funds to be received under the debt and equity financings described above, to fund our research and development expenses, clinical
trial costs, capital expenditures, working capital, sales and marketing expenses, and general corporate expenses.

Based on our current business plan, we believe that
our current cash, cash equivalents and short-term investments together with available borrowings under the Innovatus Loan Agreement will
provide sufficient cash to finance our clinical development program activities through 2026.

Our expectations as to how long our current capital
resources will be sufficient to fund our operations are based on assumptions that may not be accurate, and we could use our current capital
resources sooner than we currently expect. In addition, we may seek to raise additional capital to finance capital expenditures and operating
expenses over the next several years as we launch our integrated therapeutic and companion diagnostic strategy and expand our infrastructure,
commercial operations and research and development activities, and to take advantage of financing or other opportunities that we believe
to be in the best interests of the Company and our stockholders. Additional capital may be raised through the sale of common or preferred
equity or convertible debt securities, entry into debt facilities or other third-party funding arrangements. The sale of equity and convertible
debt securities may result in dilution to our stockholders and those securities may have rights senior to those of our common shares.
Agreements entered into in connection with such capital raising activities could contain covenants that would restrict our operations
or require us to relinquish certain rights. Additional capital may not be available on reasonable terms, or at all.

Cash Flows

The following table sets forth the primary sources
and uses of cash for the years ended December 31:

Operating Activities

Net cash used in operating activities was approximately
$83.5 million for the year ended December 31, 2024 and consisted primarily of a net loss of approximately $111.8 million, partially
offset by working capital changes of $18.3 million and non-cash expense items of approximately $10.0 million. Non-cash expense items of
approximately $10.0 million primarily consisting of $7.0 million of stock-based compensation expense, net non-cash interest income and
expense of $2.8 million, and depreciation expense of $0.1 million. The approximately $18.3 million of working capital changes was primarily
due to increases in accrued expenses and accounts payable, and a decrease in other current assets.

Net cash used in operating activities
was approximately $53.8 million for the year ended December 31, 2023 and consisted primarily of a net loss of approximately $63.8 million,
partially offset by working capital changes of $3.9 million and non-cash expense items of approximately $6.1 million. Non-cash expense
items of approximately $6.1 million primarily consisted of $4.9 million of stock-based compensation expense, non-cash interest expense
of $2.1 million and depreciation expense of $0.1 million, partially offset by $1.0 million of accrued interest income. The approximately
$3.9 million of working capital changes was primarily due to increases in accounts payable and accrued expenses, offset by an increase
in other current assets.

Investing Activities

Net cash used in investing activities for the year
ended December 31, 2024 was approximately $63.1 million and consisted of approximately $62.8 million of net purchases of short-term investments
in government securities (U.S. Treasury Bills and U.S. government securities) and approximately $0.3 million in purchases of property
and equipment.

Net cash used in investing activities for the year
ended December 31, 2023 was approximately $5.0 million and consisted of approximately $4.9 million of net purchases of short-term investments
in government securities (U.S. Treasury Bills and U.S. government securities) and approximately $0.1 million in purchases of property
and equipment.

Financing Activities

Net cash provided by financing
activities for the year ended December 31, 2024 was approximately $138.4 million and primarily consisted of net proceeds of approximately
$59.2 million from incremental debt financing, $56.3 million from an equity offering and $7.3 million from an at-the market offering.
The remaining $15.6 million consisted of proceeds from the exercise of common stock warrants, the exercise of employee stock options and
employee stock purchases, slightly offset by payments for a secondary registration statement costs.

Net cash provided by financing activities for the
year ended December 31, 2023 was approximately $64.9 million and primarily consisted of net proceeds from a pre-funded warrant offering
and at-the-market offering, collectively totaling $64.4 million. The remaining $0.5 million was the result of proceeds from the exercise
of employee stock options, the exercise of warrants, and proceeds from employee stock purchases, slightly offset by payments for secondary
registration statement and debt issuance costs.

RECENT ACCOUNTING PRONOUNCEMENTS

From time-to-time new accounting pronouncements are
issued by the Financial Accounting Standards Board or other standard setting bodies and adopted by us as of the specified effective date.
Unless otherwise discussed in Note 2 to our financial statements included elsewhere in this Annual Report, we believe that the impact
of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations
upon adoption.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Our management’s discussion and analysis of
financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States, or Generally Accepted Accounted Principles (“U.S. GAAP”). The preparation
of these financial statements requires us 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, as well as the reported expenses during
the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these
estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable
under the circumstances; the results of which form the basis for making judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become
known. Actual results may differ materially from these estimates.

Our significant accounting policies are more fully
described in Note 2 to our financial statements included elsewhere in this Annual Report. Of our significant accounting policies, we believe
that the following are the most critical:

Stock-Based Compensation

Our stock-based compensation
consists of common stock options and restricted stock issued to certain employees and non-employees and our Employee Stock Purchase Plan
(“ESPP”). We recognize compensation expense based on an estimated grant date fair value using the Black-Scholes option-pricing
method for equity-based awards and the Monte Carlo simulation model for the performance-based awards. We have elected to account for forfeitures
as they occur.

The inputs for the Black-Scholes valuation model require
management’s significant assumptions. Prior to our IPO, the price per share of common stock was determined by our board based on
recent prices of common stock sold in private offerings. Subsequent to the IPO, the price per share of common stock is determined by using
the closing market price on the Nasdaq Capital Market on the grant date. The risk-free interest rates are based on the rate for U.S. Treasury
securities at the date of grant with maturity dates approximately equal to the expected life at the grant date. The expected life was
based on the simplified method in accordance with SEC Staff Accounting Bulletin Nos. 107 and 110. The expected volatility was estimated
based on historical volatility information of peer companies that are publicly available in combination with our calculated volatility
since being publicly traded.

All assumptions used to calculate the grant date fair
value of non-employee options are generally consistent with the assumptions used for options granted to employees. In the event we terminate
any of our consulting agreements, the unvested options issued in connection with such agreements would also be cancelled.

For grants of restricted stock, we record compensation
expense based on the quoted fair value of the shares on the grant date over the requisite service period. Compensation expense for ESPP
rights is recorded in line with each respective offering period.

Clinical Trial Costs

The Company records prepaid assets or accrued expenses
for prepaid or estimated clinical trial costs conducted by third-party service providers, which includes the conduct of preclinical studies
and clinical trials. These costs can be a significant component of the Company’s research and development expenses. The
Company primarily relies on a compilation of progress reports from third-party service providers, including the respective invoicing,
to record actual expenses, along with determining changes to prepaid assets and accrued liabilities. To date, the Company believes utilization
of third-party reports most accurately reflects expenses incurred. With the ongoing VIKTORIA-1 Phase 3 trial and the CELC-G-201 Phase
1b/2 trial, and the commencement of the VIKTORIA-2 Phase 3 trial site activation and patient enrollment,
the Company’s estimated expenses in future periods and the actual services performed may vary from these estimates, and these
estimates may become more significant. Changes in these estimates that result in material changes to the Company’s prepaid assets
or accrued expenses could materially affect the Company’s results of operations.

ITEM
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You
should read the following discussion and analysis of our financial condition and results of operations together in conjunction with our
financial statements and the related notes included elsewhere in this Annual Report. Some of the information contained in this discussion
and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business
and expected financial results, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk
Factors” discussed in Item 1A of Part I of this Annual Report.

OVERVIEW

Celcuity
is a clinical-stage biotechnology company focused on the development of targeted therapies for oncology. The Company’s
lead therapeutic candidate is gedatolisib, a pan-PI3K/mTOR inhibitor. Its mechanism of action and pharmacokinetic properties are
highly differentiated from other currently approved and investigational therapies that target PI3K or mTOR alone or together. The
Company initiated VIKTORIA-1, a Phase 3 study evaluating gedatolisib in patients with HR+/HER2- advanced breast cancer in 2022 and
is currently enrolling patients. In addition to the Phase 3 study, the Company recently announced that it received U.S. Food and
Drug Administration (“FDA”)
clearance for its Investigational New Drug (IND) submission for the clinical development of gedatolisib in combination with
Nubeqa® (darolutamide), for the treatment of patients with metastatic castration resistant prostate cancer (mCRPC). The Company
initiated a Phase 1b/2 study, CELC-G-201, in the first quarter of 2024 and is currently enrolling patients. Its CELsignia companion
diagnostic platform is uniquely able to analyze live patient tumor cells to identify new groups of cancer patients likely to benefit
from already approved targeted therapies.

Gedatolisib,
is a potent, well-tolerated, small molecule reversible dual inhibitor, administered intravenously, that selectively targets all Class
I isoforms of PI3K and mammalian target of rapamycin (mTOR). In April 2021, we obtained exclusive global development and commercialization
rights to gedatolisib under a license agreement with Pfizer, Inc. We believe gedatolisib’s unique mechanism of action, differentiated
chemical structure, favorable pharmacokinetic properties, and intravenous formulation offer distinct advantages over currently approved
and investigational therapies that target PI3K or mTOR alone or together.

49

As
of December 31, 2023, 492 patients with solid tumors have received gedatolisib in eight clinical trials sponsored by Pfizer. Of the 492
patients, 129 were treated with gedatolisib as a single agent in three clinical trials. The remaining 363 patients received gedatolisib
in combination with other anti-cancer agents in five clinical trials. Additional patients received gedatolisib in combination with other
anti-cancer agents in nine investigator sponsored clinical trials.

A
Phase 1b trial (B2151009) evaluating patients with ER+/HER2- metastatic breast cancer was initiated in 2016 and subsequently enrolled
138 patients. Five patients from this study continue to receive study treatment, as of December 31, 2023, each of which have received
study treatment for more than five years. The B2151009 clinical trial was an open label, multiple arm Phase 1b study that evaluated gedatolisib
in combination with palbociclib (CDK4/6 inhibitor) and fulvestrant or letrozole in patients with HR+/HER2- advanced breast cancer. Thirty-five
patients were enrolled in two dose escalation arms to evaluate the safety and tolerability and to determine the maximum tolerated dose
(MTD) of gedatolisib when used in combination with the standard doses of palbociclib and endocrine therapy (letrozole or fulvestrant).
The MTD was determined to be 180 mg administered intravenously once weekly. A total of 103 patients were subsequently enrolled in one
of four expansion arms (A, B, C, D).

High
objective overall response rates (ORR) were observed in all four expansion arms and were comparable in each arm for PIK3CA WT and
PIK3CA MT patients. As of the data cut-off date, March 16, 2023, for treatment- naïve patients in Escalation Arm A and
Expansion Arm A(n=41), median progression free survival (mPFS) was 48.6 months, median duration of response (mDOR) was 46.9 months,
and ORR was 79%.respectively. This data compares favorably to published data for current first-line standard-of-care treatments for
patients with HR+/HER2-advanced breast cancer. In patients who received prior hormonal therapy alone or in combination with a CDK4/6
inhibitor (Arms B, C, and D), ORR (including unconfirmed partial responses) ranged from 36% to 77%. Each arm achieved its primary
endpoint target, which was reporting higher ORR in the study arm than ORR from either the PALOMA-2 (ORR=55%) study that evaluated
palbociclib plus letrozole for Arm A or the PALOMA-3 study (ORR=25%) that evaluated palbociclib plus fulvestrant for Arms B, C, and
D. For all enrolled patients, a clinical benefit rate (CBR) of ≥79% was observed. Median progression-free survival (PFS) was 12.9
months for patients who received a prior CDK4/6 inhibitor and were treated in the study with the Phase 3 dosing schedule (Arm
D).

Gedatolisib
combined with palbociclib and endocrine therapy demonstrated a favorable safety profile with manageable toxicity. The majority of treatment
emergent adverse events were Grade 1 and 2. The most frequently observed adverse events included stomatitis/mucosal inflammation, the
majority of which were Grade 1 and 2. The most common Grade 4 AEs were neutropenia and neutrophil count decrease, which were assessed
as related to treatment with palbociclib. No grade 5 events were reported in this study.

We are currently enrolling patients in a Phase 3, open-label, randomized
clinical trial (VIKTORIA-1) to evaluate the efficacy and safety of two regimens in adults with HR+/HER2- advanced breast cancer whose
disease has progressed after prior CDK4/6 therapy in combination with an aromatase inhibitor: 1) gedatolisib in combination with palbociclib
and fulvestrant; and 2) gedatolisib in combination with fulvestrant. Approximately two hundred clinical sites in North America, Europe,
South America, Asia, and Australia have been selected to participate in the study. The first clinical site was activated in the third
quarter of 2022, and the first patient was dosed in December 2022.

The
VIKTORIA-1 Phase 3 clinical trial will enable separate evaluation of subjects according to their PIK3CA status. Subjects who meet
eligibility criteria and are PIK3CA WT will be randomly assigned (1:1:1) to receive a regimen of either gedatolisib, palbociclib,
and fulvestrant (Arm A), gedatolisib and fulvestrant (Arm B), or fulvestrant (Arm C). Subjects who meet eligibility criteria and are
PIK3CA MT will be randomly assigned (3:3:1) to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm D), or
alpelisib and fulvestrant (Arm E), or gedatolisib and fulvestrant (Arm F).

We
received approval from the US FDA in mid-2023 to proceed with the clinical development of gedatolisib in combination with
Nubeqa® (darolutamide), an approved androgen receptor inhibitor, for the treatment of patients with mCRPC. We have since
initiated a Phase 1b/2 study (CELC-G-201) that will enroll up to 54 participants with mCRPC who progressed after treatment with an
androgen receptor inhibitor. We dosed our first patient in this trial in February 2024.

In the Phase 1b portion of the study, Celcuity expects that 36 participants
will be randomly assigned to receive 600 mg darolutamide combined with either 120 mg gedatolisib in Arm 1 or 180 mg gedatolisib in Arm
2. An additional 12 participants will then be enrolled in the Phase 2 portion of the study at the recommended phase 2 dose (RP2D) level
to enable evaluation of 30 participants treated with the RP2D of gedatolisib.

The primary objectives of the Phase 1b portion of the trial include
assessment of the safety and tolerability of gedatolisib in combination with darolutamide and determination of the recommended Phase 2
dose of gedatolisib. The primary objective of the Phase 2 portion of the trial is to assess the radiographic progression-free survival
(rPFS) at six months of patients who received the RP2D.

Our
proprietary CELsignia diagnostic platform is the only commercially ready technology we are aware of that uses a patient’s living
tumor cells to identify the specific abnormal cellular process driving a patient’s cancer and the targeted therapy that best treats
it. This enables us to identify patients whose tumors may respond to a targeted therapy, even though they lack a previously associated
molecular mutation. By identifying cancer patients whose tumors lack an associated genetic mutation but have abnormal cellular activity
a matching targeted therapeutic is designed to inhibit, CELsignia CDx can expand the markets for a number of already approved targeted
therapies. Our current CDx identifies breast and ovarian cancer patients whose tumors have cancer drivers potentially responsive to treatment
with human epidermal growth factor receptor 2-negative (HER2), mesenchymal-epithelial transition factor (c-MET), or phosphatidylinositol
3-kinases (PI3K) targeted therapeutics. While U.S. Food and Drug Administration (“FDA”) approval or clearance is not currently
required for CELsignia tests offered as a stand-alone laboratory developed test, if we are partnered with a drug company to launch a
CELsignia test as a companion diagnostic for a new drug indication, we would be required to obtain premarket approval, or PMA, in conjunction
with the pharmaceutical company seeking a new drug approval for the matching therapy.

50

We
are supporting the advancement of new potential indications for three different targeted therapies, controlled by other pharmaceutical
companies, that would rely on a CELsignia CDx to select patients. Three Phase 2 trials are underway to evaluate the efficacy and safety
of these therapies in CELsignia selected patients. These patients are not currently eligible to receive these drugs and are not identifiable
with a molecular test.

Supporting
the development of a potential first-in-class targeted therapy for breast cancer, like gedatolisib, with our CELsignia platform is a
natural extension of our strategy to use our CELsignia CDx to enable new indications for other companies’ targeted therapies. By
combining companion diagnostics designed to enable proprietary new drug indications with targeted therapies that treat signaling dysregulation
our CDx identifies, we believe we are uniquely positioned to improve the standard-of-care for many early and late-stage breast cancer
patients. Our goal is to play a key role in the multiple treatment approaches required to treat breast cancer patients at various stages
of their disease. With each program, we are:

Recent
Developments

On
February 22, 2024, the Company announced that the first patient has been dosed in its Phase 1b/2 study (CELC-G-201) evaluating gedatolisib
in combination with Nubeqa® (darolutamide), an approved androgen receptor inhibitor, for the treatment of patients with mCRPC.

In December 2023, Celcuity presented data from nonclinical studies
evaluating gedatolisib and other PI3K/AKT/mTOR (PAM) inhibitors in breast cancer cell lines during a poster session at the 2023 San Antonio
Breast Cancer Symposium (SABCS). In a panel of breast cancer cell lines, gedatolisib was found to be more cytotoxic and at least 300-fold
more potent, on average, compared to the single node PAM inhibitors.

On
December 1, 2023, pursuant to an Open Market Sale AgreementSM with Jefferies LLC, as agent, the Company sold 1,034,500 shares
of common stock in a single transaction at a price of $14.50 per share, generating gross proceeds of $15 million before deducting commissions
and other offering expenses of $0.6 million.

On
October 18, 2023, the Company entered into a securities purchase agreement to sell pre-funded warrants at a price of $8.70 per warrant,
to purchase up to 5,747,787 shares of the Company’s common stock in a private placement. The closing of the private placement occurred
on October 20, 2023 and resulted in gross proceeds of approximately $50 million, before deducting offering expenses of approximately
$0.1 million. Each Warrant to purchase one share has a purchase price of $8.699 per share, and an exercise price of $0.001 per share
for the Common Stock issuable upon exercise of the Warrant (for aggregate consideration equating to $8.70 per share). The Company expects
to use the net proceeds to advance clinical development of gedatolisib and for general corporate purposes. The Company has entered into
a Registration Rights Agreement in connection with the private placement, pursuant to which it has agreed to register for resale the
shares issuable upon exercise or exchange of the Warrants.

51

We
have not generated any revenue from sales to date, and we continue to incur significant research and development and other expenses related
to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since we began
operations in 2012. For the years ended December 31, 2023 and 2022, we reported a net loss of approximately $63.8 million and
$40.4 million, respectively. As of December 31, 2023, our cash and cash equivalents and short-term investments were approximately $180.6
million, and we had an accumulated deficit of approximately $160.1 million.

RESULTS
OF OPERATIONS

Components
of Operating Results

Revenue

To
date, we have not generated any revenue. With the execution of the Pfizer license agreement in April 2021, whereby we acquired
exclusive world-wide licensing rights to develop and commercialize gedatolisib, we initiated a Phase 3 clinical trial, VIKTORIA-1,
in 2022 to support potential regulatory approval to market gedatolisib. In August 2023, we announced plans to proceed with the
clinical development of gedatolisib in combination with Nubeqa® (darolutamide), an approved androgen receptor
inhibitor, for the treatment of patients with mCRPC. If we obtain regulatory approvals to market gedatolisib, we expect to generate
revenue from sales of the drug for the treatment of breast cancer patients. Additionally, we will seek to generate revenue from
partnership agreements with pharmaceutical companies to provide companion diagnostics for such pharmaceutical partners’
existing or investigational targeted therapies. If a new drug indication is received that requires use of our companion diagnostic
to identify eligible patients, we expect to generate revenues from sales of tests to treating physicians.

Research
and Development

Since
our inception, we have primarily focused on research and development of gedatolisib, a PI3K/mTOR targeted therapy, and our CELsignia platform
and corresponding tests. Research and development expenses primarily include:

Internal
and external research and development costs are expensed as they are incurred. As we continue to develop gedatolisib and manage
studies and clinical trials, including the VIKTORIA-1 Phase 3 trial, the CELC-G-201 Phase 1b/2 trial, and other clinical trials to
evaluate the efficacy of targeted therapies in cancer patients selected with one of our CELsignia tests, the proportion of research
and development expenses allocated to external spending will grow at a faster rate than expenses allocated to internal
expenses.

General
and Administrative

General
and administrative expenses consist primarily of salaries, benefits and stock-based compensation related to our executive, finance and
support functions. Other general and administrative expenses include professional fees for auditing, tax, and legal services associated
with being a public company, director and officer insurance, investor relations and travel expenses for our general and administrative
personnel.

Sales
and Marketing

Sales
and marketing expenses consist primarily of professional and consulting fees related to these functions. To date, we have incurred
immaterial sales and marketing expenses as we continue to focus primarily on developing our first drug, gedatolisib, managing the
VIKTORIA-1 Phase 3 and CELC-G-201 Phase 1b/2 trials, and developing our CELsignia platform and corresponding CELsignia tests. We
would expect to begin to incur increased sales and marketing expenses in anticipation of the commercialization of our first drug,
gedatolisib, and CELsignia tests. These increased expenses are expected to include employee-related and consulting costs.

Interest
Expense

Interest
expense is primarily due to a Loan Agreement and finance lease obligations.

Interest
Income

Interest
income consists of interest income earned on our cash, cash equivalents and investment balances.

52

Results
of Operations

Comparison
of the Years Ended December 31, 2023 and 2022

Research
and Development

For
the year ended December 31, 2023, our research and development expenses were approximately $60.6 million, representing an increase
of approximately $25.3 million, or 72%, compared to the same period in 2022. Of the $25.3 million increase in research and
development expense, $2.4 million was related to increased employee and consulting expenses. The remaining $22.9 million increase of research and development costs are primarily related
to costs supporting activities for the VIKTORIA-1 pivotal trial.

Conducting
a significant amount of research and development is central to our business model. We plan to increase our research and development
expenses for the foreseeable future as we seek to develop gedatolisib, manage the VIKTORIA-1 Phase 3 and the CELC-G-201 Phase 1b/2 trials, discover new
cancer sub-types, and develop and validate additional CELsignia tests to diagnose such sub-types. We also expect to incur increased
expenses to support companion diagnostic business development activities with pharmaceutical companies as we develop additional
CELsignia tests and manage the clinical trials for gedatolisib.

General
and Administrative

For
the year ended December 31, 2023, our total general and administrative expenses were $5.6 million, representing an increase of
approximately $1.5 million, or 37%, compared to the same period in 2022. The increase primarily resulted from a $1.1 million
increase in employee and consulting expenses. In
addition, other general and administrative expenses increased $0.4 million primarily due to professional fees and other expenses
associated with being a public company.

We
anticipate that our general and administrative expenses will increase in future periods, reflecting both increased costs in connection
with the potential future commercialization of gedatolisib and CELsignia tests, an expanding infrastructure, and increased professional
fees associated with public company regulatory developments and other compliance matters.

53

Interest
Expense

For
the year ended December 31, 2023, interest expense was $5.3 million and represents an increase of $3.2 million compared to the same
period in 2022. The increase is due to the Loan Agreement that was executed in April 2021, amended in August 2022, and includes $2.1
million of non-cash interest expense. The increase in interest expense is primarily due to the incremental $20 million funding of
Term Loan B in December 2022.

Interest
Income

For
the year ended December 31, 2023, interest income was $7.8 million and represents an increase of $6.7 million compared to the same period
in 2022. The increase was primarily the result of higher market interest rates and the closing of additional financing activities, leading
to higher cash, cash equivalents and short-term investment balances.

LIQUIDITY
AND CAPITAL RESOURCES

Since
our inception, we have incurred losses and cumulative negative cash flows from operations. Through December 31, 2023, we have funded
our operations primarily through private placements and registered offerings of our equity securities and unsecured convertible notes,
and borrowings under loan agreements. From inception through December 31, 2023, we raised an aggregate of approximately $288.0 million
of net proceeds through sales of our securities, and as of December 31, 2023 had $35.0 million of borrowings under loan agreements. In March 2024, an investor exercised 1,739,080 warrants at an exercise price of $8.05, which generated approximately $14 million in cash.
The warrants were issued pursuant to a private placement that closed and was funded on December 9, 2022. As
of December 31, 2023, our cash and cash equivalents and short-term investments were approximately $30.7 million and $149.9 million, respectively,
and we had an accumulated deficit of approximately $160.1 million.

Open
Market Sale OfferingSM. On February 4, 2022, we entered into an Open Market Sale AgreementSM with Jefferies
LLC, as agent, pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate
offering price of up to $50,000,000. Pursuant to the Open Market Sale AgreementSM with Jefferies LLC, as agent, on December
1, 2023, the Company sold 1,034,500 shares of common stock in a single transaction at a price of $14.50 per share, generating gross proceeds
of $15 million ($14.4 million net of commissions and offering expenses). At December 31, 2023, $29.8 million of common stock remains
available for sale under the Jefferies agreement.

Pre-funded
Warrants On October 18, 2023, the Company entered into a securities purchase agreement to sell pre-funded warrants at a price of
$8.70 per warrant, to purchase up to 5,747,787 shares of the Company’s common stock in a private placement. The closing of the
private placement occurred on October 20, 2023, and resulted in gross proceeds of approximately $50 million, before deducting offering
expenses of approximately $0.1 million.

Private
Placement. On December 9, 2022, we issued 6,182,574 shares of common stock, 1,120,873 shares of Series A Preferred Stock and warrants
exercisable for 6,956,450 shares of common stock to certain institutional and other accredited investors pursuant to a securities purchase
agreement entered into on May 15, 2022. Pursuant to the securities purchase agreement, the closing (funding) of the private placement
occurred following dosage of the first patient in the Company’s Phase 3 study, VIKTORIA-1. Investors purchased shares of common
stock and Series A Preferred Stock at a price of $5.75 per share (on an as converted to common stock basis), with forty percent (40%)
warrant coverage (on an as converted to common stock basis) and customary resale registration rights. The warrants have an exercise price
of $8.05 per share. The private placement generated gross proceeds of approximately $100 million before deducting placement agent fees
and other offering expenses of $4.3 million.

Open
Market Sale AgreementSM. On October 12, 2022, pursuant to our Open Market Sale AgreementSM with Jefferies
LLC as agent, the Company sold 500,000 shares of common stock in a single transaction at a price of $10.35 per share, generating
gross proceeds of $5.2 million ($4.8 million net of commissions and offering expenses).

Innovatus
Loan Agreement. On April 8, 2021, we entered into a Loan Agreement with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”),
under which Innovatus agreed to loan up to $25 million in three tranches consisting of (i) a $15.0 million non-contingent Term A loan
that was funded on April 8, 2021, (ii) a $5 million Term B loan with a deadline of March 31, 2022, and (iii) a $5 million Term C loan
to be funded upon our request, subject to our ability to achieve certain milestones, no later than March 31, 2023. On August 9, 2022,
the Company amended the Loan Agreement with Innovatus to provide for up to $75 million in term loans. As of December 31, 2023, term loans
totaling $35 million are outstanding under the Loan Agreement, including the initial Term A loan of $15 million which was funded on April
8, 2021, and a $20 million Term B loan which was funded on December 22, 2022 following the closing of the $100 million private placement
described above. Additionally, the Company will be able to draw on two additional tranches of $10
million and one additional tranche of $20 million upon achievement of certain clinical trial milestones and satisfaction of certain financial
covenants determined on a pro forma as-funded basis. Funding of these additional tranches is also subject to other customary conditions
and limits on when the Company can request funding for such tranches.

54

We
expect that our research and development and general and administrative expenses will increase as we continue to develop
gedatolisib, manage the VIKTORIA-1 Phase 3 and CELC-G-201 Phase 1b/2 trials, conduct research related to the discovery of new cancer
sub-types, conduct other studies and clinical trials, and pursue other business development activities. We would also expect to
incur sales and marketing expenses as we commercialize gedatolisib and our CELsignia tests. We expect to use cash on hand, which
includes funds received under the debt and equity financings described above, to fund our research and development expenses,
clinical trial costs, capital expenditures, working capital, sales and marketing expenses, and general corporate
expenses.

Based
on our current business plan, we believe that our current cash, cash equivalents and short-term investments together with available borrowings
under the Innovatus Loan Agreement will provide sufficient cash to finance our operations and pay obligations when due through at least
2025.

Our
expectations as to how long our current capital resources will be sufficient to fund our operations are based on assumptions that may
not be accurate, and we could use our current capital resources sooner than we currently expect. In addition, we may seek to raise additional
capital to finance capital expenditures and operating expenses over the next several years as we launch our integrated therapeutic and
companion diagnostic strategy and expand our infrastructure, commercial operations and research and development activities, and to take
advantage of financing or other opportunities that we believe to be in the best interests of the Company and our stockholders. Additional
capital may be raised through the sale of common or preferred equity or convertible debt securities, entry into debt facilities or other
third-party funding arrangements. The sale of equity and convertible debt securities may result in dilution to our stockholders and those
securities may have rights senior to those of our common shares. Agreements entered into in connection with such capital raising activities
could contain covenants that would restrict our operations or require us to relinquish certain rights. Additional capital may not be
available on reasonable terms, or not at all.

Cash
Flows

The
following table sets forth the primary sources and uses of cash for the years ended December 31:

Operating
Activities

Net
cash used in operating activities was approximately $53.8 million for the year ended December 31, 2023 and consisted primarily of a net
loss of approximately $63.8 million, offset by working capital changes of $3.9 million and non-cash expense items of approximately
$6.1 million. Non-cash expense items of approximately $6.1 million primarily consisted of $4.9 million of stock-based compensation expense,
non-cash interest expense of $2.1 million and depreciation expense of $0.1 million, offset by $1.0 accrued interest income. The approximately
$3.9 million of working capital changes was primarily due to increases in accounts payable and accrued expenses, offset by an increase
in other current assets.

Net
cash used in operating activities was approximately $36.0 million for the year ended December 31, 2022 and consisted primarily of a net
loss of approximately $40.4 million and working capital changes of $1.2 million, offset by non-cash expense items of approximately
$5.6 million. Non-cash expense items of approximately $5.6 million primarily consisted of $4.6 million of stock-based compensation expense,
non-cash interest expense of $0.9 million and depreciation expense of $0.2 million. The approximately $1.2 million of working capital
changes was primarily due to an increase in other current assets, somewhat offset by increases in accounts payable and accrued expenses.

Investing
Activities

Net
cash used in investing activities for the year ended December 31, 2023 was approximately $5.0 million and consisted of approximately
$4.9 million of net purchases of short-term investments in government securities (U.S. Treasury Bills and U.S. government agency securities)
and approximately $0.1 million in purchases of property and equipment.

Net
cash used in investing activities for the year ended December 31, 2022 was approximately $144.0 million and consisted of approximately
$143.9 million of short-term investments in government securities (U.S. Treasury Bills and U.S. government agency securities) and approximately
$0.1 million in purchases of property and equipment.

55

Financing
Activities

Net
cash provided by financing activities for the year ended December 31, 2023 was approximately $64.9 million. The $64.9 million primarily
consisted of net proceeds from a pre-funded warrants offering and ATM offering, collectively totaling $64.4 million. The remaining $0.5
million was the result of proceeds from the exercise of employee stock options, the exercise of warrants, and proceeds from employee
stock purchases, slightly offset by payments for secondary registration and debt issuance costs.

Net
cash provided by financing activities for the year ended December 31, 2022 was approximately $120.3 million. The $120.3 million primarily
consisted of net proceeds from a private placement offering and ATM offering, collectively totaling $100.5 million, and $19.5 million
from net proceeds related to the closing of a Loan Agreement. The remaining $0.3 million was the result of proceeds from the exercise
of employee stock options and proceeds from employee stock purchases.

RECENT
ACCOUNTING PRONOUNCEMENTS

From
time-to-time new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting
bodies and adopted by us as of the specified effective date. Unless otherwise discussed in Note 2 to our financial statements included
elsewhere in this Annual Report, we believe that the impact of recently issued standards that are not yet effective will not have a material
impact on our financial position or results of operations upon adoption.

CRITICAL
ACCOUNTING POLICIES AND USE OF ESTIMATES

Our
management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States, or Generally Accepted Accounted
Principles (“U.S. GAAP”). The preparation of these financial statements requires us 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, as well as the reported expenses during the reporting periods. These items are monitored and analyzed by us for changes in
facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience
and on various other factors that we believe are reasonable under the circumstances; the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected
in reported results for the period in which they become known. Actual results may differ materially from these estimates.

Our
significant accounting policies are more fully described in Note 2 to our financial statements included elsewhere in this Annual Report.
Of our significant accounting policies, we believe that the following are the most critical:

Stock-Based
Compensation

Our
stock-based compensation consists of common stock options and restricted stock issued to certain employees and nonemployees and our Employee
Stock Purchase Plan (“ESPP”). We recognize compensation expense based on an estimated grant date fair value using the Black-Scholes
option-pricing method. We have elected to account for forfeitures as they occur.

The
inputs for the Black-Scholes valuation model require management’s significant assumptions. Prior to our IPO, the price per share
of common stock was determined by our board based on recent prices of common stock sold in private offerings. Subsequent to the IPO,
the price per share of common stock is determined by using the closing market price on the Nasdaq Capital Market on the grant date. The
risk-free interest rates are based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal
to the expected life at the grant date. The expected life was based on the simplified method in accordance with SEC Staff Accounting
Bulletin Nos. 107 and 110. The expected volatility was estimated based on historical volatility information of peer companies that are
publicly available in combination with our calculated volatility since being publicly traded.

All
assumptions used to calculate the grant date fair value of nonemployee options are generally consistent with the assumptions used for
options granted to employees. In the event we terminate any of our consulting agreements, the unvested options issued in connection with
such agreements would also be cancelled.

For
grants of restricted stock, we record compensation expense based on the quoted fair value of the shares on the grant date over the requisite
service period. Compensation expense for ESPP rights is recorded in line with each respective offering period.

Clinical
Trial Costs

The
Company records prepaid assets or accrued expenses for prepaid or estimated clinical trial costs conducted by third-party service
providers, which includes the conduct of preclinical studies and clinical trials. These costs can be a significant component of the
Company’s research and development expenses. The Company primarily relies on a compilation of progress reports from
third-party service providers, including the respective invoicing, to record actual expenses, along with determining changes to
prepaid assets and accrued liabilities. To date, the Company believes utilization of third-party reports most accurately reflects
expenses incurred. As the current VIKTORIA-1 Phase 3 and CELC-G-201 Phase 1b/2 trials ramp up site activation and patient
enrollment, the Company’s estimated expenses in future periods and the actual services performed may vary from these
estimates, and these estimates may become more significant. Changes in these estimates that result in material changes to the
Company’s prepaid assets or accrued expenses could materially affect the Company’s results of operations.

ITEM
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You
should read the following discussion and analysis of our financial condition and results of operations together in conjunction with our
financial statements and the related notes included elsewhere in this Annual Report. Some of the information contained in this discussion
and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business
and expected financial results, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk
Factors” discussed in Item 1A of Part I of this Annual Report.

OVERVIEW

Celcuity
is a clinical-stage biotechnology company focused on development of targeted therapies for treatment of multiple solid tumor indications.
The Company’s lead therapeutic candidate is gedatolisib, a pan-PI3K/mTOR inhibitor. Its mechanism of action and pharmacokinetic
properties are highly differentiated from other currently approved and investigational therapies that target PI3K or mTOR alone or together.
The Company initiated VIKTORIA-1, a Phase 3 study evaluating gedatolisib in patients with HR+/HER2- advanced breast cancer in 2022 and
is currently enrolling patients. Its CELsignia companion diagnostic platform is uniquely able to analyze live patient tumor cells to
identify new groups of cancer patients likely to benefit from already approved targeted therapies.

Gedatolisib,
is a potent, well-tolerated, small molecule reversible dual inhibitor, administered intravenously, that selectively targets all Class I isoforms of PI3K and mammalian target of rapamycin (mTOR). In April 2021, we obtained exclusive global
development and commercialization rights to gedatolisib under a license agreement with Pfizer, Inc. We believe gedatolisib’s
unique mechanism of action, differentiated chemical structure, favorable pharmacokinetic properties, and intravenous formulation
offer distinct advantages over currently approved and investigational therapies that target PI3K or mTOR alone or
together.

Gedatolisib
is a pan-class I isoform PI3K inhibitor with low nanomolar potency for the p110α, p110β, p110γ, and p110δ isoforms
and mTORC1 and mTORC2 complexes. Each PI3K isoform and mTOR complex is known to preferentially affect different signal transduction events
that involve tumor cell survival, depending upon the aberrations associated with the linked pathway. When a therapy only inhibits a single
Class I isoforms (e.g., alpelisib, a PI3K-α inhibitor ) or only one mTOR kinase complex (e.g., everolimus, an mTORC1 inhibitor),
numerous feedforward and feedback loops between the PI3K isoforms and mTOR complexes cross-activates the uninhibited sub-units. This,
in turn, induces compensatory resistance that reduces the efficacy of isoform specific PI3K or single mTOR kinase complex inhibitors.
Inhibiting all four PI3K isoforms and both mTOR complexes, as gedatolisib does, thus prevents the confounding effect of isoform interaction
that may occur with isoform-specific PI3K inhibitors and the confounding interaction between PI3K isoforms and mTOR.

Gedatolisib
is administered intravenously (IV) on a four-week cycle of three weeks-on, one week-off, in contrast to the orally administered pan-PI3K
or dual PI3K/mTOR inhibitors that are no longer being clinically developed. Oral pan-PI3K or PI3K/mTOR inhibitors have repeatably been
found to induce significant side effects that were not well tolerated by patients. This typically leads to a high proportion of patients
requiring dose reductions or treatment discontinuation. The challenging toxicity profile of these drug candidates ultimately played a
significant role in the decisions to halt their development, despite showing promising efficacy. By contrast, gedatolisib stabilizes
at lower concentration levels in plasma compared to orally administered PI3K inhibitors, resulting in less toxicity, while maintaining
concentrations sufficient to inhibit PI3K/mTOR signaling.

Isoform-specific
PI3K inhibitors administered orally were developed to reduce toxicities in patients. While the range of toxicities associated with isoform-specific
inhibitors is narrower than oral pan-PI3K or PI3K/mTOR inhibitors, administering them orally on a continuous basis still leads to challenging
toxicities. The experience with an FDA approved oral p110-α specific inhibitor, Piqray, illustrates the challenge. In its Phase
3 pivotal trial Piqray was found to induce a Grade 3 or 4 adverse event (AE) related to hyperglycemia in 39% of patients evaluated. In
addition, 26% of patients discontinued alpelisib due to treatment related adverse events. By contrast, in the 103-patient dose expansion
portion of the Phase 1b clinical trial with gedatolisib, only 7% of patients experienced Grade 3 or 4 hyperglycemia and less than 10%
discontinued treatment.

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As
of December 31, 2022, 492 patients with solid tumors have received gedatolisib in eight clinical trials sponsored by Pfizer. Of the 492
patients, 129 were treated with gedatolisib as a single agent in three clinical trials. The remaining 363 patients received gedatolisib
in combination with other anti-cancer agents in five clinical trials. Additional patients received gedatolisib in combination with other
anti-cancer agents in nine investigator sponsored clinical trials.

A
Phase 1b trial (B2151009) evaluating patients with ER+/HER2- metastatic breast cancer was initiated in 2016 and subsequently enrolled
138 patients. Seven patients from this study continue to receive study treatment, as of December 31, 2022, each of which have received
study treatment for more than four years. The B2151009 clinical trial was an open label, multiple arm Phase 1b study that evaluated
gedatolisib in combination with palbociclib (CDK4/6 inhibitor) and fulvestrant or letrozole in patients with HR+/HER2- advanced breast
cancer. Thirty-five patients were enrolled in two dose escalation arms to evaluate the safety and tolerability and to determine the maximum
tolerated dose (MTD) of gedatolisib when used in combination with the standard doses of palbociclib and endocrine therapy (letrozole
or fulvestrant). The MTD was determined to be 180 mg administered intravenously once weekly. A total of 103 patients were subsequently
enrolled in one of four expansion arms (A, B, C, D).

High
objective overall response rates were observed in all four expansion arms and were comparable in each arm for PIK3CA WT and PIK3CA MT
patients. In treatment-naïve patients (Arm A), ORR was 85%. In patients who received prior hormonal therapy alone or in combination
with a CDK4/6 inhibitor (Arms B, C, and D), ORR ranged from 36% to 77%. Each arm achieved its primary endpoint target, which was reporting
higher ORR in the study arm than ORR from either the PALOMA-2 (ORR=55%) study that evaluated palbociclib plus letrozole for Arm A or
the PALOMA-3 study (ORR=25%) that evaluated palbociclib plus fulvestrant for Arms B, C, and D. For all enrolled patients, a clinical
benefit rate (CBR) of ≥79% was observed. Median progression-free survival (PFS) was 12.9 months for patients who received a prior CDK4/6 inhibitor and were treated with the Phase 3 dosing
schedule (Arm D). For the Arm A patients that were treatment naive in the advanced setting, median PFS had not yet been reached.

Gedatolisib
combined with palbociclib and endocrine therapy demonstrated a favorable safety profile with manageable toxicity. The majority of treatment
emergent adverse events were Grade 1 and 2. The most frequently observed adverse events included stomatitis/mucosal inflammation, the
majority of which were Grade 1 and 2. The most common Grade 4 AEs were neutropenia and neutrophil count decrease, which were assessed
as related to treatment with palbociclib. No grade 5 events were reported in this study.

We
activated VIKTORIA-1, a Phase 3, open-label, randomized clinical trial to evaluate the efficacy and safety of two regimens in adults
with HR+/HER2- advanced breast cancer whose disease has progressed after prior CDK4/6 therapy in combination with an aromatase inhibitor:
1) gedatolisib in combination with palbociclib and fulvestrant: and 2) gedatolisib in combination with fulvestrant. Two hundred clinical
sites in North America, Europe, South America, Asia, and Australia have been selected to participate in the study. The first clinical
site was activated in the third quarter. The first dosage of a patient in the trial occurred in December 2022.

The
clinical trial will enable separate evaluation of subjects according to their PIK3CA status. Subjects who meet eligibility criteria and
are PIK3CA WT will be randomly assigned (1:1:1) to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm A), gedatolisib
and fulvestrant (Arm B), or fulvestrant (Arm C). Subjects who meet eligibility criteria and are PIK3CA MT will be randomly assigned (3:3:1)
to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm D), alpelisib and fulvestrant (Arm E), or gedatolisib and
fulvestrant (Arm F).

Our
proprietary CELsignia diagnostic platform is the only commercially ready technology we are aware of that uses a patient’s living
tumor cells to identify the specific abnormal cellular process driving a patient’s cancer and the targeted therapy that best treats
it. This enables us to identify patients whose tumors may respond to a targeted therapy, even though they lack a previously associated
molecular mutation. By identifying cancer patients whose tumors lack an associated genetic mutation but have abnormal cellular activity
a matching targeted therapeutic is designed to inhibit, CELsignia CDx can expand the markets for a number of already approved targeted
therapies. Our current CDx identifies breast and ovarian cancer patients whose tumors have cancer drivers potentially responsive to treatment
with human epidermal growth factor receptor 2-negative (HER2), mesenchymal-epithelial transition factor (c-MET), or phosphatidylinositol
3-kinases (PI3K) targeted therapeutics. While U.S. Food and Drug Administration (“FDA”) approval or clearance is not currently
required for CELsignia tests offered as a stand-alone laboratory developed test, if we are partnered with a drug company to launch a
CELsignia test as a companion diagnostic for a new drug indication, we would be required to obtain premarket approval, or PMA, in conjunction
with the pharmaceutical company seeking a new drug approval for the matching therapy.

We
are supporting the advancement of new potential indications for four different targeted therapies, controlled by other pharmaceutical
companies, that would rely on a CELsignia CDx to select patients. Four Phase 2 trials are underway to evaluate the efficacy and safety
of these therapies in CELsignia selected patients. These patients are not currently eligible to receive these drugs and are not identifiable
with a molecular test.

60

Supporting
the development of a potential first-in-class targeted therapy for breast cancer, like gedatolisib, with our CELsignia platform is a
natural extension of our strategy to use our CELsignia CDx to enable new indications for other companies’ targeted therapies. By
combining companion diagnostics designed to enable proprietary new drug indications with targeted therapies that treat signaling dysregulation
our CDx identifies, we believe we are uniquely positioned to improve the standard-of-care for many early and late-stage breast cancer
patients. Our goal is to play a key role in the multiple treatment approaches required to treat breast cancer patients at various stages
of their disease. With each program, we are:

Recent
Developments

On
December 22, 2022, Celcuity closed on a $20.0 million term loan (the “Term B Loan”) with an affiliate of Innovatus Capital
Partners, LLC (“Innovatus”), pursuant to a Loan and Security Agreement, dated April 8, 2021 (the “Loan Agreement”),
as amended by that First Amendment to Loan and Security Agreement, dated August 9, 2022 (the “Amendment and collectively with the
Loan Agreement, the “Amended Loan Agreement”). The Company became eligible to draw down the Term B Loan upon the closing
of the Company’s previously disclosed $100 million private placement on December 9, 2022. As previously disclosed, the Amended
Loan Agreement may provide the Company with up to $75.0 million through funding of up to five term loans. Funding of the first $15.0
million term loan occurred on April 8, 2021 in connection with entering into the original Loan Agreement. As of December 31, 2022, term
loans totaling $35 million are outstanding under the Amended Loan Agreement. Celcuity will be able to draw on two additional tranches
of $10 million each and one additional tranche of $20 million upon achievement of certain clinical trial milestones and satisfaction
of certain financial covenants determined on a pro forma as-funded basis. Funding of these additional tranches is also subject to other
customary conditions and limits on when the Company can request funding for such tranches. Celcuity is entitled to make interest only
payments for the 48-month period from the original agreement date or for the 60-month period from the original agreement date if certain
conditions are met. The loans will mature on April 8, 2027, the sixth anniversary of the initial funding date. Innovatus has the right
to convert outstanding principal into shares of Celcuity common stock until the third anniversary of the loan amendment date, with such
amount limited to an aggregate of up to $6.6 million assuming all tranches are funded. The loan is secured by all of Celcuity’s
assets.

On
December 9, 2022, Celcuity closed on a private placement of common stock and preferred stock, resulting in gross proceeds of approximately
$100 million, before deducting placement agent fees and other expenses. Celcuity issued 6,182,574 shares of common stock, 1,120,873 shares
of Series A Preferred Stock and warrants exercisable for 6,956,450 shares of common stock to certain institutional and other accredited
investors pursuant to a securities purchase agreement entered into on May 15, 2022. Pursuant to the securities purchase agreement, the
closing (funding) of the private placement followed dosage of the first patient in Celcuity’s Phase 3 clinical trial, VIKTORIA-1,
evaluating gedatolisib, Celcuity’s lead therapeutic candidate. Investors purchased shares of common stock and Series A Preferred
Stock at a price of $5.75 per share (on an as converted to common stock basis), with forty percent (40%) warrant coverage (on an as converted
to common stock basis) and customary resale registration rights. The warrants have an exercise price of $8.05 per share.

On
December 7, 2022, Celcuity announced that the first patient was dosed in it Phase 3 VIKTORIA-1 clinical trial. Operational activities
continue to focus on facilitating activation of sites and enrolling patients. The clinical trial protocol was updated to include an additional
study arm (Arm F) to evaluate gedatolisib plus fulvestrant in 50 patients who have PIK3CA mutations. This update was made in response
to a recommendation from the European Medicines Agency (EMA) that the study arms for PIK3CA mutated patients mirror the same study arms
for PIK3CA non-mutated patients. No changes were made to the primary endpoints. VIKTORIA-1 will evaluate the safety and efficacy of gedatolisib
in combination with fulvestrant with or without palbociclib in adults with HR+/HER2- advanced breast cancer whose disease progressed
while receiving prior CDK4/6 therapy. Further details about the study are available at ClinicalTrials.gov.

61

We
have not generated any revenue from sales to date, and we continue to incur significant research and development and other expenses related
to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since we began
operations in 2012. For the years ended December 31, 2022 and 2021, we reported a net loss of approximately $40.4 million and
$29.6 million, respectively. As of December 31, 2022, our cash and cash equivalents and short-term investments were approximately $168.6
million, and we had an accumulated deficit of approximately $96.3 million.

Impact
of COVID-19 on our Business

Although
we have largely returned to normal operations in our facility, the COVID-19 pandemic continues and its effect on our operations and financial
condition will depend in large part on future developments which cannot be reasonably estimated at this time. Future developments include
the duration, scope and severity of the pandemic, the emergence of new virus variants that are more contagious or harmful than prior
variants, actions taken by governmental authorities, suppliers, clinical trial sites, and other business partners to contain or mitigate
the pandemic’s impact, and the potential adverse effects on the suppliers, labor market and general economic activity.

As
we continue to advance our clinical trial collaborations, we remain in close contact with our current clinical sponsors, and principal
investigators, as well as prospective pharmaceutical company and clinical collaborators, to monitor the impact of COVID-19 on our trial
enrollment timelines and collaboration discussions. We experienced delays in the enrollment of patients in our ongoing CELsignia Phase
2 clinical trials and now expect interim results from FACT-1 and FACT-2 to be delayed until the second half of 2023. We could experience
further delays in clinical trials and collaborations with pharmaceutical companies and sponsors if new variants emerge or if the spread
of COVID-19 once again accelerates. Due to the inherent uncertainty associated with the COVID-19 pandemic, we are unable to predict the
impact the pandemic may have on our clinical trial work and overall financial condition.

RESULTS
OF OPERATIONS

Components
of Operating Results

Revenue

To
date, we have not generated any revenue. With the execution of the Pfizer license agreement in April 2021, whereby we acquired exclusive
world-wide licensing rights to develop and commercialize gedatolisib, we initiated a Phase 3 clinical trial, VIKTORIA-1, in 2022 to support
potential regulatory approval to market gedatolisib. If we obtain regulatory approvals to market gedatolisib, we expect to generate revenue
from sales of the drug for the treatment of breast cancer patients. Additionally, we will seek to generate revenue from partnership agreements
with pharmaceutical companies to provide companion diagnostics for such pharmaceutical partners’ existing or investigational targeted
therapies. If a new drug indication is received that requires use of our companion diagnostic to identify eligible patients, we expect
to generate revenues from sales of tests to treating physicians.

Research
and Development

Since
our inception, we have primarily focused on research and development of gedatolisib, a PI3K/mTOR targeted therapy and our CELsignia platform
and corresponding tests. Research and development expenses primarily include:

62

Internal
and external research and development costs are expensed as they are incurred. As we continue development of gedatolisib, manage the
VIKTORIA-1 Phase 3 trial and other clinical trials to evaluate the efficacy of targeted therapies in cancer patients selected with one
of our CELsignia tests, the proportion of research and development expenses allocated to external spending will grow at a faster rate
than expenses allocated to internal expenses.

General
and Administrative

General
and administrative expenses consist primarily of salaries, benefits and stock-based compensation related to our executive, finance and
support functions. Other general and administrative expenses include professional fees for auditing, tax, and legal services associated
with being a public company, director and officer insurance, investor relations and travel expenses for our general and administrative
personnel.

Sales
and Marketing

Sales
and marketing expenses consist primarily of professional and consulting fees related to these functions. To date, we have incurred
immaterial sales and marketing expenses as we continue to focus primarily on the development of our first drug, gedatolisib,
managing the VIKTORIA-1 Phase 3 trial, and development of our CELsignia platform and corresponding CELsignia tests. We would expect
to begin to incur increased sales and marketing expenses in anticipation of the commercialization of our first drug, gedatolisib,
and CELsignia tests. These increased expenses are expected to include payroll-related costs as we add employees in the commercial
departments, costs related to the initiation and operation of our sales and distribution network and marketing related
costs.

Interest
Expense

Interest
expense is primarily due to a Loan Agreement and finance lease obligations.

Interest
Income

Interest
income consists of interest income earned on our cash, cash equivalents and investment balances.

63

Results
of Operations

Comparison
of the Years Ended December 31, 2022 and 2021

Research
and Development

For
the year ended December 31, 2022, our research and development expenses were approximately $35.3 million, representing an increase of
approximately $9.5 million, or 37%, compared to the same period in 2021. Included in the $9.5 million increase is a $10 million reduction
in gedatolisib licensing related expenses offset by increases of $19.5 million in other research and development expenses. In the 2021
period, research and development expenses included a $10.0 million upfront license fee related to the execution of the Pfizer license
agreement while there were no licensing agreement expenses for gedatolisib in 2022. Of the $19.5 million increase in research and development
expense, $4.9 million was related to increased employee and consulting expenses, of which $0.9 million was in the form of non-cash stock-based
compensation. The remaining $14.6 million increase of research and development costs is related to costs for existing clinical trials
and for activities supporting the initiation of the VIKTORIA-1 pivotal trial.

Conducting
a significant amount of research and development is central to our business model. We plan to increase our research and development expenses
for the foreseeable future as we seek to develop gedatolisib, manage the VIKTORIA-1 Phase 3 trial, discover new cancer sub-types, and
develop and validate additional CELsignia tests to diagnose such sub-types. We also expect to incur increased expenses to support companion
diagnostic business development activities with pharmaceutical companies as we develop additional CELsignia tests and manage a clinical
trial for gedatolisib.

64

General
and Administrative

For
the year ended December 31, 2022, our total general and administrative expenses were $4.1 million, representing an increase of approximately
$1.5 million, or 58%, compared to the same period in 2021. The increase primarily resulted from a $1.3 million increase in compensation
related expenses, including approximately $1.1 million of non-cash stock-based compensation. In addition, other general and administrative
expenses increased $0.2 million primarily due to professional fees associated with being a public company and director and officer insurance.

We
anticipate that our general and administrative expenses will increase in future periods, reflecting both increased costs in connection
with the potential future commercialization of gedatolisib and CELsignia tests, an expanding infrastructure, and increased professional
fees associated with being a public company.

Interest
Expense

For
the year ended December 31, 2022, interest expense was $2.1 million and represents an increase of $0.8 million compared to the same
period in 2021. The Loan Agreement that was executed in April 2021 amended in August 2022, and includes $0.9 million of non-cash
interest expense. The increase primarily reflects the loan being in place for the full year in 2022, while only a portion of the year in
2021.

Interest
Income

For
the year ended December 31, 2022, interest income increased approximately $1.1 million compared to the same period in 2021. The
increase was primarily the result of higher market interest rates and the closing of additional financing activities, leading to
higher cash, cash equivalents and short-term investment balances.

LIQUIDITY
AND CAPITAL RESOURCES

Since
our inception, we have incurred losses and cumulative negative cash flows from operations. Through December 31, 2022, we have funded
our operations primarily through private placements and registered offerings of our equity securities and unsecured convertible notes,
and borrowings under loan agreements. From inception through December 31, 2022, we raised an aggregate of approximately $223.7 million
of net proceeds through sales of our securities, and as of December 31, 2022 had $35.0 million of borrowings under loan agreements. As
of December 31, 2022, our cash and cash equivalents and short-term investments were approximately $24.6 million and $144.0 million, respectively,
and we had an accumulated deficit of approximately $96.3 million.

Private
Placement. On December 9, 2022, we issued 6,182,574 shares of common stock, 1,120,873 shares of Series A Preferred Stock and warrants
exercisable for 6,956,450 shares of common stock to certain institutional and other accredited investors pursuant to a securities purchase
agreement entered into on May 15, 2022. Pursuant to the securities purchase agreement, the closing (funding) of the private placement
occurred following dosage of the first patient in the Company’s Phase 3 study, VIKTORIA-1. Investors purchased shares of common
stock and Series A Preferred Stock at a price of $5.75 per share (on an as converted to common stock basis), with forty percent (40%)
warrant coverage (on an as converted to common stock basis) and customary resale registration rights. The warrants have an exercise price
of $8.05 per share. The private placement generated gross proceeds of approximately $100 million before deducting placement agent fees
and other offering expenses of $4.3 million.

Open
Market Sale AgreementSM. On February 4, 2022, we entered into an Open Market Sale AgreementSM with Jefferies
LLC, as agent, pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate
offering price of up to $50,000,000. On October 12, 2022, pursuant to this agreement, the Company sold 500,000 shares of common stock
in a single transaction at a price of $10.35 per share, generating gross proceeds of $5.2 million ($4.8 million net of commissions and
offering expenses). At December 31, 2022, $44.8 million of common stock remains available for sale under the Jefferies agreement.

Innovatus
Loan Agreement. On April 8, 2021, we entered into a Loan Agreement with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”),
under which Innovatus agreed to loan up to $25 million in three tranches consisting of (i) a $15.0 million non-contingent Term A loan
that was funded on April 8, 2021, (ii) a $5 million Term B loan with a deadline of March 31, 2022, and (iii) a $5 million Term C loan
to be funded upon our request, subject to our ability to achieve certain milestones, no later than March 31, 2023. On August 9, 2022,
the Company amended the Loan Agreement with Innovatus to provide for up to $75 million in term loans. As of December 31, 2022, term loans
totaling $35 million are outstanding under the Loan Agreement, including the initial Term A loan of $15 million which was funded on April
8, 2021, and a $20 million Term B loan which was funded on December 22, 2022 following the closing of the $100 million private placement
described above. Additionally, the Company will be able to draw on two additional tranches of $10 million and one additional tranche
of $20 million upon achievement of certain clinical trial milestones and satisfaction of certain financial covenants determined on a
pro forma as-funded basis. Funding of these additional tranches is also subject to other customary conditions and limits on when the
Company can request funding for such tranches.

65

We
expect that our research and development and general and administrative expenses will increase as we continue to develop gedatolisib,
manage the VIKTORIA-1 Phase 3 trial, conduct research related to the discovery of new cancer sub-types, conduct clinical trials, and
pursue other business development activities. We would also expect to incur sales and marketing expenses as we commercialize gedatolisib
and our CELsignia tests. We expect to use cash on hand to fund our research and development expenses, clinical trial costs, capital expenditures,
working capital, sales and marketing expenses, and general corporate expenses.

Based
on our current business plan, we believe that our current cash, cash equivalents and short-term investments together with available borrowings
under the Innovatus Loan Agreement will provide sufficient cash to finance our operations and pay obligations when due through at least
2025.

Our
expectations as to how long our current capital resources will be sufficient to fund our operations are based on assumptions that may
not be accurate, and we could use our current capital resources sooner than we currently expect. In addition, we may seek to raise additional
capital to finance capital expenditures and operating expenses over the next several years as we launch our integrated therapeutic and
companion diagnostic strategy and expand our infrastructure, commercial operations and research and development activities, and to take
advantage of financing or other opportunities that we believe to be in the best interests of the Company and our stockholders. Additional
capital may be raised through the sale of common or preferred equity or convertible debt securities, entry into debt facilities or other
third-party funding arrangements. The sale of equity and convertible debt securities may result in dilution to our stockholders and those
securities may have rights senior to those of our common shares. Agreements entered into in connection with such capital raising activities
could contain covenants that would restrict our operations or require us to relinquish certain rights. Additional capital may not be
available on reasonable terms, or not at all.

Cash
Flows

The
following table sets forth the primary sources and uses of cash for the years ended December 31:

Operating
Activities

Net
cash used in operating activities was approximately $36.0 million for the year ended December 31, 2022 and consisted primarily of a net
loss of approximately $40.4 million and working capital changes of $1.2 million, offset by non-cash expense items of approximately
$5.6 million. Non-cash expense items of approximately $5.6 million primarily consisted of $4.6 million of stock-based compensation expense,
non-cash interest expense of $0.9 million and depreciation expense of $0.2 million. The approximately $1.2 million of working capital
changes was primarily due to an increase in prepaid assets, somewhat offset by increases in accounts payable and accrued expenses.

Net
cash used in operating activities was approximately $20.3 million for the year ended December 31, 2021 and consisted primarily of a net
loss of approximately $29.6 million, adjusted for non-cash items of approximately $8.5 million and working capital changes of
approximately $0.8 million. Non-cash expense items of approximately $8.5 million consisted of $5.0 million for issuance of common stock
related to a license agreement, stock-based compensation expense of approximately $2.6 million, non-cash interest expense of $0.6 million
and depreciation of approximately $0.3 million. The working capital change of approximately $0.8 million was primarily due to
an increase in accounts payable, slightly offset by an increase in prepaid assets.

66

Investing
Activities

Net
cash used in investing activities for the year ended December 31, 2022 was approximately $144.0 million and consisted of approximately
$143.9 million of short-term investments in government securities (U.S. Treasury Bills and U.S. government agency securities) and approximately
$0.1 million in purchases of property and equipment.

Net
cash used in investing activities for the year ended December 31, 2021 was approximately $0.1 million and consisted of purchases of property
and equipment.

Financing
Activities

Net
cash provided by financing activities for the year ended December 31, 2022 was approximately $120.3 million. The $120.3 million primarily
consisted of net proceeds from a private placement offering and ATM offering totaling $100.5 million and $19.5 million from net proceeds
related to the closing of a Loan Agreement. The remaining $0.3 million was the result of proceeds from the exercise of employee stock
options and proceeds from employee stock purchases.

Net
cash provided by financing activities for the year ended December 31, 2021 was approximately $93.0 million. The $93.0 million primarily
consisted of net proceeds from the sale of shares of our common stock through two follow-on offerings totaling $78.5 million and $14.4
million from net proceeds related to the closing of a Loan Agreement. The remaining $0.1 million was the result of proceeds from the
exercise of common stock warrants and employee stock options and proceeds from employee stock purchases.

RECENT
ACCOUNTING PRONOUNCEMENTS

From
time-to-time new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting
bodies and adopted by us as of the specified effective date. Unless otherwise discussed in Note 2 to our financial statements included
elsewhere in this Annual Report, we believe that the impact of recently issued standards that are not yet effective will not have a material
impact on our financial position or results of operations upon adoption.

CRITICAL
ACCOUNTING POLICIES AND USE OF ESTIMATES

Our
management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States, or Generally Accepted Accounted
Principles (“U.S. GAAP”). The preparation of these financial statements requires us 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, as well as the reported expenses during the reporting periods. These items are monitored and analyzed by us for changes in
facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience
and on various other factors that we believe are reasonable under the circumstances; the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected
in reported results for the period in which they become known. Actual results may differ materially from these estimates.

Our
significant accounting policies are more fully described in Note 2 to our financial statements included elsewhere in this Annual Report.
Of our significant accounting policies, we believe that the following are the most critical:

Stock-Based
Compensation

Our
stock-based compensation consists of common stock options and restricted stock issued to certain employees and nonemployees and our Employee
Stock Purchase Plan (“ESPP”). We recognize compensation expense based on an estimated grant date fair value using the Black-Scholes
option-pricing method. We have elected to account for forfeitures as they occur.

The
inputs for the Black-Scholes valuation model require management’s significant assumptions. Prior to our IPO, the price per share
of common stock was determined by our board based on recent prices of common stock sold in private offerings. Subsequent to the IPO,
the price per share of common stock is determined by using the closing market price on the Nasdaq Capital Market on the grant date. The
risk-free interest rates are based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal
to the expected life at the grant date. The expected life was based on the simplified method in accordance with SEC Staff Accounting
Bulletin Nos. 107 and 110. The expected volatility was estimated based on historical volatility information of peer companies that are
publicly available in combination with our calculated volatility since being publicly traded.

All
assumptions used to calculate the grant date fair value of nonemployee options are generally consistent with the assumptions used for
options granted to employees. In the event we terminate any of our consulting agreements, the unvested options issued in connection with
such agreements would also be cancelled.

For
grants of restricted stock, we record compensation expense based on the quoted fair value of the shares on the grant date over the requisite
service period. Compensation expense for ESPP rights is recorded in line with each respective offering period.

Clinical
Trial Costs

The
Company records prepaid assets or accrued expenses for prepaid or estimated clinical trial costs conducted by third-party service providers,
which includes the conduct of preclinical studies and clinical trials. These costs can be a significant component of the Company’s
research and development expenses. The Company primarily relies on a compilation of progress reports from third-party service providers,
including the respective invoicing, to record actual expenses, along with determining changes to prepaid assets and accrued liabilities.
To date, the company believes utilization of third-party reports most accurately reflects expenses. As the current VIKTORIA-1 Phase 3
trial ramps up site activation and patient enrollment, the Company may need to estimate expenses in future periods and actual services
performed may vary from these estimates. Changes in these estimates that result in material changes to the Company’s prepaid assets
or accrued expenses could materially affect the Company’s results of operations.

ITEM
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You
should read the following discussion and analysis of our financial condition and results of operations together in conjunction with our
financial statements and the related notes included elsewhere in this Annual Report. Some of the information contained in this discussion
and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business
and expected financial results, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk
Factors” discussed in Item 1A of Part I of this Annual Report.

OVERVIEW

We
are a clinical-stage biotechnology company seeking to extend the lives of cancer patients by pursing an integrated therapeutic (Rx) and
companion diagnostic (CDx) strategy. Our therapeutic efforts are focused on developing potential first-in-class or best-in-class molecularly
targeted therapies that address the same cancer driver a CELsignia companion diagnostic can identify. CELsignia is uniquely able to analyze
live patient tumor cells to identify new groups of cancer patients likely to benefit from targeted therapies. This enables a CELsignia
CDx to support advancement of new indications for already approved targeted therapies. We believe this integrated Rx and CDx strategy
will maximize the impact our drug development efforts have on the treatment landscape for cancer patients.

The
first drug candidate we are developing internally is gedatolisib, a potent, well-tolerated, small molecule dual inhibitor, administered
intravenously, that selectively targets all class I isoforms of PI3K and mammalian target of rapamycin (mTOR). In April 2021,
we obtained exclusive global development and commercialization rights to gedatolisib under a license agreement with Pfizer, Inc. We believe
gedatolisib’s unique mechanism of action, favorable pharmacokinetic properties, and intravenous formulation offer distinct advantages
over currently approved and investigational therapies that target PI3K or mTOR alone or together.

Gedatolisib
is a pan-class I isoform PI3K inhibitor with low nanomolar potency for the p110α, p110β, p110γ, and p110δ isoforms.
Each isoform is known to preferentially affect different signal transduction events that involve tumor cell survival, depending upon
the aberrations associated with the linked pathway. When a therapy only inhibits a single class I isoforms (e.g., alpelisib,
a PI3K-α inhibitor ) or only one mTOR kinase complex (e.g., everolimus, an mTORC1 inhibitor), numerous feedforward and feedback
loops between the PI3K isoforms and mTOR cross-activates the uninhibited sub-units. This, in turn, induces compensatory resistance that
reduces the efficacy of isoform specific PI3K or single mTOR kinase complex inhibitors. Inhibiting all four PI3K isoforms and both mTOR
complexes, as gedatolisib does, thus prevents the confounding effect of isoform interaction that may occur with isoform-specific PI3K
inhibitors and the confounding interaction between PI3K isoforms and mTOR.

Gedatolisib
is administered intravenously (IV) on a four-week cycle of three weeks-on, one week-off, in contrast to the orally administered pan-PI3K
or dual PI3K/mTOR inhibitors that are no longer being clinically developed. Oral pan-PI3K or PI3K/mTOR inhibitors have repeatably been
found to induce significant side effects that were not well tolerated by patients. This typically leads to a high proportion of patients
requiring dose reductions or treatment discontinuation. The challenging toxicity profile of these drug candidates ultimately played a
significant role in the decisions to halt their development, despite showing promising efficacy. By contrast, gedatolisib stabilizes
at lower concentration levels in plasma compared to orally administered PI3K inhibitors, resulting in less toxicity, while maintaining
concentrations sufficient to inhibit PI3K/mTOR signaling.

Isoform-specific
PI3K inhibitors administered orally were developed to reduce toxicities in patients. While the range of toxicities associated with isoform-specific
inhibitors is narrower than oral pan-PI3K or PI3K/mTOR inhibitors, administering them orally on a continuous basis still leads to challenging
toxicities. The experience with an FDA approved oral p110-α specific inhibitor, Piqray, illustrates the challenge. In its Phase
3 pivotal trial Piqray was found to induce a Grade 3 or 4 adverse event (AE) related to hyperglycemia in 39% of patients evaluated. In
addition, 26% of patients discontinued alpelisib due to treatment related adverse events. By contrast, in the 103-patient dose expansion
portion of the Phase 1b clinical trial with gedatolisib, only 7% of patients experienced Grade 3 or 4 hyperglycemia and less than 10%
discontinued treatment.

As
of December 31, 2021, 492 patients with solid tumors have received gedatolisib in eight clinical trials sponsored by Pfizer. Of the 492
patients, 129 were treated with gedatolisib as a single agent in three clinical trials. The remaining 363 patients received gedatolisib
in combination with other anti-cancer agents in five clinical trials. Additional patients received gedatolisib in combination with other
anti-cancer agents in nine investigator sponsored clinical trials.

53

A
Phase 1b trial (B2151009) evaluating patients with HR+/HER2- metastatic breast cancer was initiated in 2016 and subsequently
enrolled 138 patients. Twelve patients from this study continue to receive study treatment, as of December 31, 2021, ten of whom
have received study treatment for more than three years. The B2151009 clinical was an open label, multiple arm Phase 1b study that
evaluated gedatolisib in combination with palbociclib (CDK4/6 inhibitor) and fulvestrant or letrozole in patients with HR+/HER2-
advanced breast cancer. Thirty-five patients were enrolled in two dose escalation arms to evaluate the safety and tolerability and
to determine the maximum tolerated dose (MTD) of gedatolisib when used in combination with the standard doses of palbociclib and
endocrine therapy (letrozole or fulvestrant). The MTD was determined to be 180 mg administered intravenously once weekly. A total of
103 patients were subsequently enrolled in one of four expansion arms (A, B, C, D).

High
objective overall response rates were observed in all four expansion arms and were comparable in each arm for PIK3CA WT and PIK3CA MT
patients. In treatment-naïve patients (Arm A), ORR was 85%. In patients who received prior hormonal therapy alone or in combination
with a CDK4/6 inhibitor (Arms B, C, and D), ORR ranged from 32% to 77%. Each arm achieved its primary endpoint target, which was reporting
higher ORR in the study arm than ORR from either the PALOMA-2 (ORR=55%) study that evaluated palbociclib plus letrozole for Arm A or
the PALOMA-3 study (ORR=25%) that evaluated palbociclib plus fulvestrant for Arms B, C, and D. For all enrolled patients, a clinical
benefit rate (CBR) of ≥79% was observed. Median progression-free survival (PFS) was 31.1 months for patients receiving first-line
treatment (Arm A) and 12.9 months for patients who received a prior CDK4/6 inhibitor and were treated in the study with the Phase 3 dosing
schedule (Arm D).

Gedatolisib
combined with palbociclib and endocrine therapy demonstrated a favorable safety profile with manageable toxicity. The majority of treatment
emergent adverse events were Grade 1 and 2. The most frequently observed adverse events included stomatitis/mucosal inflammation, the
majority of which were Grade 1 and 2. The most common Grade 4 AEs were neutropenia and neutrophil count decrease, which were assessed
as related to treatment with palbociclib. No grade 5 events were reported in this study.

We are preparing to initiate VIKTORIA-1, a Phase 3, open-label, randomized clinical trial to evaluate the efficacy and safety of two regimens in adults
with HR+/HER2- advanced breast cancer whose disease has progressed after prior CDK4/6 therapy in combination with an aromatase
inhibitor: 1) gedatolisib in combination with palbociclib and fulvestrant; and 2) gedatolisib in combination with fulvestrant. We
expect to initiate the VIKTORIA-1 study in the first half of 2022.

The clinical trial will
enable separate evaluation of subjects according to their PIK3CA status. Subjects who meet eligibility criteria and are PIK3CA WT will
be randomly assigned (1:1:1) to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm A), gedatolisib
and fulvestrant (Arm B), or fulvestrant (Arm C). Subjects who meet eligibility criteria and are PIK3CA MT will be randomly assigned (1:1)
to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm D) or alpelisib and fulvestrant (Arm E).

On
January 13, 2022, gedatolisib was granted Fast Track designation for the treatment of patients with ER+/HER2- metastatic breast cancer
after progression on CDK4/6 therapy. Fast Track designation is granted by the FDA for products that are intended for the treatment of
serious or life-threatening disease or conditions and which demonstrate the potential to address an unmet medical need. The designation
offers the opportunity for frequent interactions with the FDA to discuss the drug’s development plan and to ensure collection of
appropriate data needed to support drug approval, as well as eligibility for rolling submission of a New Drug Application.

Our
proprietary CELsignia diagnostic platform is the only commercially ready technology we are aware of that uses a patient’s living
tumor cells to identify the specific abnormal cellular process driving a patient’s cancer and the targeted therapy that best treats
it. This enables us to identify patients whose tumors may respond to a targeted therapy, even though they lack a previously associated
molecular mutation. By identifying cancer patients whose tumors lack an associated genetic mutation but have abnormal cellular activity
a matching targeted therapeutic is designed to inhibit, CELsignia CDx can expand the markets for a number of already approved targeted
therapies. Our current CDx identifies breast and ovarian cancer patients whose tumors have cancer drivers potentially responsive to treatment
with human epidermal growth factor receptor 2-negative (HER2), mesenchymal-epithelial transition factor (c-MET), or phosphatidylinositol
3-kinases (PI3K) targeted therapeutics. While U.S. Food and Drug Administration (“FDA”) approval or clearance is not currently
required for CELsignia tests offered as a stand-alone laboratory developed test, if we are partnered with a drug company to launch a
CELsignia test as a companion diagnostic for a new drug indication, we would be required to obtain premarket approval, or PMA, in conjunction
with the pharmaceutical company seeking a new drug approval for the matching therapy.

54

We
are supporting the advancement of new potential indications for four different targeted therapies, controlled by other pharmaceutical
companies, that would rely on a CELsignia CDx to select patients. Five Phase 2 trials are underway to evaluate the efficacy and safety
of these therapies in CELsignia selected patients. These patients are not currently eligible to receive these drugs and are not identifiable
with a molecular test.

Supporting
the development of a potential first-in-class targeted therapy for breast cancer, like gedatolisib, with our CELsignia platform is a
natural extension of our strategy to use our CELsignia CDx to enable new indications for other companies’ targeted therapies. By
combining companion diagnostics designed to enable proprietary new drug indications with targeted therapies that treat signaling dysregulation
our CDx identifies, we believe we are uniquely positioned to improve the standard-of-care for many early and late-stage breast cancer
patients. Our goal is to play a key role in the multiple treatment approaches required to treat breast cancer patients at various stages
of their disease. With each program, we are:

We
have not generated any revenue from sales to date, and we continue to incur significant research and development and other expenses related
to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since we began
operations in 2012. For the years ended December 31, 2021 and 2020, we reported a net loss of approximately $29.6 million and
$9.5 million, respectively. As of December 31, 2021, our cash and cash equivalents were approximately $84.3 million, and we had an accumulated
deficit of approximately $55.9 million.

Impact
of COVID-19 on our Business

A
novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by
the World Health Organization. The impact of the COVID-19 pandemic on our business is discussed in further detail below:

Health
and Safety

To
help protect the health and safety of our employees, suppliers and collaborators, we took proactive, aggressive action from the earliest
signs of the outbreak. We enacted rigorous safety measures in our laboratory and administrative offices, including implementing social
distancing protocols, allowing working from home for those employees that do not need to be physically present in a lab to perform their
work, suspending travel, implementing temperature checks at the entrances to our facilities, extensively and frequently disinfecting
our workspaces and providing masks to those employees who must be physically present. We expect to continue with these measures until
the COVID-19 pandemic is contained and we may take further actions as government authorities require or recommend or as we determine
to be in the best interests of our employees, suppliers, and collaborators.

Clinical
Trials and Collaborations

As
a result of the COVID-19 pandemic, governmental authorities have implemented and are continuing to implement numerous and constantly
evolving measures to try to contain the virus, such as travel bans and restrictions, limits on gatherings, quarantines, shelter-in-place
orders, and business shutdowns. As we continue to advance our clinical trial collaborations, we are in close contact with our current
clinical sponsors, and principal investigators, as well as prospective pharmaceutical company and clinical collaborators, to assess the
impact of COVID-19 on our trial enrollment timelines and collaboration discussions. In light of the COVID-19 pandemic, the focus of healthcare
providers and hospitals on fighting the virus, and consistent with the FDA’s updated industry guidance for conducting clinical
trials issued on March 18, 2020, we are experiencing delays in the enrollment of patients in our ongoing clinical trials. We now expect
interim results from the FACT-1 and FACT-2 trials to be delayed until the first half of 2023 and final results approximately nine months
later. As the impact of COVID-19 on our industry becomes clearer, we may need to reassess the timing of our anticipated clinical milestones.
Prospective clinical trial collaborations with pharmaceutical companies and sponsors may also be delayed but the impact on the timing
of finalizing agreements is not yet known.

Research
and Development

While
our facility currently remains operational, the evolving measures to try to contain the virus have impacted and may further impact our
workforce and operations, as well as those of our vendors and suppliers. Our laboratory remains operational as of this date, but, in
response to the COVID-19 pandemic, we have implemented protective policies that reduce the number of research and development staff operating
in our laboratory at any one time. While governmental measures may be modified or extended, we expect that our research and development
and clinical laboratory will remain operational. However, in light of the focus of healthcare providers and hospitals on fighting the
virus, several of the clinical sites that provide us tumor tissue for research have halted this service, reducing the number of new tumor
tissue specimens we would typically expect to receive. These various constraints may slow or diminish our research and development activities.
In addition, cancer research-related industry meetings, such as the American Association for Cancer Research (AACR), were delayed for
several months. Our submissions to present research results at these meetings were accepted, but the release of the results was postponed
in conjunction with the delayed meeting schedules.

Liquidity

Although
there is uncertainty related to the anticipated impact of the recent COVID-19 outbreak on our future results, we believe our existing
balance of cash and cash equivalents will be sufficient to meet our cash needs arising in the ordinary course of business for at least
the next twelve months. We continue to monitor the rapidly evolving situation and guidance from federal, state and local public health
authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside
our control requiring us to adjust our operating plan. In addition, see Item 1A of Part I of this Annual Report for additional information
on risks associated with pandemics in general and COVID-19 specifically and how those risks may impact our business and operations.

55

RESULTS
OF OPERATIONS

Components
of Operating Results

Revenue

To
date, we have not generated any revenue. Initially, our ability to generate revenue will depend primarily upon our ability to obtain
partnership agreements with pharmaceutical companies to provide companion diagnostics for such pharmaceutical partners’ existing
or investigational targeted therapies. We expect these partnerships to generate significant revenue from the sale of tests to identify
patients eligible for clinical trials, from milestone payments, and, potentially, from royalties on the incremental drug revenues our
tests enable. Once a new drug indication is received that requires use of our companion diagnostic to identify eligible patients, we
expect to generate revenues from sales of tests to treating physicians. With the execution of the Pfizer license agreement in April 2021,
whereby we acquired exclusive world-wide licensing rights to develop and commercialize gedatolisib, we expect to conduct clinical trials
to support potential regulatory approval to market gedatolisib. If we obtain regulatory approvals to market gedatolisib, we expect to
generate revenue from sales of the drug for the treatment of breast cancer patients.

Research
and Development

Since
our inception, we have primarily focused on research and development of our CELsignia platform, development and validation of our CELsignia
tests, and research related to the discovery of new cancer sub-types. Beginning in April 2021, we are also focusing on development of
gedatolisib, a PI3K/mTOR targeted therapy. Research and development expenses primarily include:

Internal
and external research and development costs are expensed as they are incurred. As we initiate a Phase 3 clinical trial for gedatolisib
and continue to expand clinical trials to evaluate efficacy of targeted therapies in cancer patients selected with one of our CELsignia
tests, the proportion of research and development expenses allocated to external spending will grow at a faster rate than expenses allocated
to internal expenses.

General
and Administrative

General
and administrative expenses consist primarily of salaries, benefits and stock-based compensation related to our executive, finance and
support functions. Other general and administrative expenses include professional fees for auditing, tax, and legal services associated
with being a public company, director and officer insurance and travel expenses for our general and administrative personnel.

Sales
and Marketing

Sales
and marketing expenses consist primarily of professional and consulting fees related to these functions. To date, we have incurred immaterial
sales and marketing expenses as we continue to focus primarily on the development of our first drug, gedatolisib, development of our
CELsignia platform and corresponding CELsignia tests. We expect to begin to incur increased selling and marketing expenses in anticipation
of regulatory approval to market gedatolisib and the commercialization of our first CELsignia tests. These increased expenses are expected
to include payroll-related costs as we add employees in the commercial departments, costs related to the initiation and operation of
our sales and distribution network and marketing related costs.

Interest
Expense

Interest
expense is primarily due to a loan agreement and finance lease obligations.

Interest
Income

Interest
income consists of interest income earned on our cash and cash equivalents.

56

Results
of Operations

Comparison
of the Years Ended December 31, 2021 and 2020

Research
and Development

For
the year ended December 31, 2021, our research and development expenses were approximately $25.8 million, representing an increase of
approximately $18.1 million, or 235%, compared to the same period in 2020. The increase primarily resulted from a $10.0 million upfront
license fee related to the execution of the Pfizer license agreement, which included $5.0 million of non-cash expense for the issuance
of common stock. The remaining $8.1 million increase primarily resulted from expenses related to the support and development of gedatolisib.
Employee related expenses, including consulting fees, accounted for a $3.4 million increase. The increase of $3.4 million included an
increase of $0.6 million in non-cash stock-based compensation. The remaining increase of $4.7 million is related to clinical trials,
costs associated with the transfer of the gedatolisib-related activities from Pfizer to Celcuity and patent legal fees.

Conducting
a significant amount of research and development is central to our business model. We plan to increase our research and development expenses
for the foreseeable future as we seek to develop gedatolisib, discover new cancer sub-types, and develop and validate additional CELsignia
tests to diagnose such sub-types. We also expect to incur increased expenses to support companion diagnostic business development activities
with pharmaceutical companies as we develop additional CELsignia tests and initiate a clinical trial for gedatolisib.

General
and Administrative

For
the year ended December 31, 2021, our total general and administrative expenses were $2.6 million, representing an increase of approximately
$0.7 million, or 39%, compared to the same period in 2020. The increase primarily resulted from a $0.4 million increase in compensation
related expenses, including approximately $0.3 million of non-cash stock-based compensation. In addition, other general and administrative
expenses increased $0.3 million primarily due to professional fees associated with being a public company and director and officer insurance.

We
anticipate that our general and administrative expenses will increase in future periods, reflecting both increased costs in connection
with the potential future commercialization of gedatolisib and CELsignia tests, an expanding infrastructure, and increased professional
fees associated with being a public company.

Interest
Expense

For
the year ended December 31, 2021, interest expense was $1.3 million and represents an increase of $1.3 million compared to the same period
in 2020. The increase is due to the loan agreement that was executed in April 2021 and includes $0.6 million of non-cash interest expense.

Interest
Income

For
the year ended December 31, 2021, interest income decreased approximately $0.1 million compared to the same period in 2020. The decrease
was primarily the result of lower market interest rates.

57

LIQUIDITY
AND CAPITAL RESOURCES

Since
our inception, we have incurred losses and cumulative negative cash flows from operations. Through December 31, 2021, we raised capital
of approximately $13.7 million and $7.5 million through private placements of common equity and unsecured convertible notes, respectively.
On September 22, 2017, we closed on the IPO of our common stock, which generated approximately $23.3 million of additional cash after
taking into account underwriting discounts and commissions and offering expenses. On June 5, 2020, we entered into an At Market Issuance
Sales Agreement with B. Riley, FBR, Inc (the “ATM Agreement”). The ATM Agreement allowed us to sell shares of common stock
up to an aggregate offering price of $10.0 million. Through December 31, 2021, we generated approximately $0.1 million of additional
cash through sales pursuant to the ATM Agreement, after taking into account commissions and offering expenses. On February 26, 2021,
we completed a follow-on offering of our common stock, which generated approximately $25.8 million of additional cash after taking into
account underwriting discounts and offering expenses. In conjunction with the follow-on offering, the ATM Agreement was terminated. On
April 8, 2021, we entered into a loan agreement with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”), whereby Innovatus
agreed to loan up to $25 million in three tranches consisting of (i) a $15.0 million non-contingent term A loan that was funded on April
8, 2021, (ii) a $5 million term B loan to be funded upon our request no later than March 31, 2022, and (iii) a $5 million term C loan
to be funded upon our request no later than March 31, 2023. Funding of the term B and C loan is subject to our ability to achieve certain
milestones. Net proceeds generated from the loan agreement were $14.4 million. On July 1, 2021, we completed a follow-on offering of
our common stock, which generated approximately $52.8 million of additional cash after taking into account underwriting discounts of
and offering expenses.

Cash
from these capital raising activities has been our primary source of funds for our operations since inception. As of December 31, 2021,
our cash and cash equivalents were approximately $84.3 million, and we had an accumulated deficit of approximately $55.9 million.

In
February of 2022, we entered into an Open Market Sale AgreementSM with Jefferies LLC, as agent (“Jefferies”),
pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate offering
price of up to $50,000,000. We will pay Jefferies a commission equal to 3.0% of the aggregate gross proceeds from each sale of such shares.
To date, we have not yet made any sales under this arrangement.

We
expect that our research and development and general and administrative expenses will increase as we continue development of gedatolisib,
development and validation of our CELsignia platform and additional CELsignia tests, conduct research related to the discovery of new
cancer sub-types, conduct clinical trials, and pursue other business development activities. We will also start to incur sales and marketing
expenses as we commercialize our CELsignia tests and gedatolisib. We expect to use cash on hand to fund our research and development
expenses, capital expenditures, working capital, sales and marketing expenses, and general corporate expenses, as well as for the increased
costs associated with being a public company.

Based
on our current business plan, we believe that our current cash on hand will provide sufficient cash to finance operations and pay obligations
when due for at least the next twelve months.

We
may seek to raise additional capital to expand our business, pursue strategic investments, and take advantage of financing or other opportunities
that we believe to be in the best interests of the Company and our stockholders. Additional capital may be raised through the sale of
common or preferred equity or convertible debt securities, entry into debt facilities or other third-party funding arrangements. The
sale of equity and convertible debt securities may result in dilution to our stockholders and those securities may have rights senior
to those of our common shares. Agreements entered into in connection with such capital raising activities could contain covenants that
would restrict our operations or require us to relinquish certain rights. Additional capital may not be available on reasonable terms,
or at all.

Cash
Flows

The
following table sets forth the primary sources and uses of cash for the years ended December 31:

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Operating
Activities

Net
cash used in operating activities was approximately $20.3 million for the year ended December 31, 2021 and consisted primarily of a net
loss of approximately $29.6 million, offset by non-cash expense items of approximately $8.5 million and working capital changes
of $0.8 million. Non-cash expense items of approximately $8.5 million primarily consisted of $5.0 million for issuance of common stock
related to a license agreement, $2.6 million of stock-based compensation expense, non-cash interest expense of $0.6 million and depreciation
expense of $0.3 million. The approximately $0.8 million of working capital changes was primarily due to an increase in accounts payable,
slightly offset by an increase in prepaid assets.

Net
cash used in operating activities was approximately $7.1 million for the year ended December 31, 2020 and consisted primarily of a net
loss of approximately $9.5 million, adjusted for non-cash items of approximately $2.2 million and working capital changes of approximately
$0.2 million. Non-cash expense items of approximately $2.2 million consisted of stock-based compensation expense of approximately $1.8
million and of depreciation of approximately $0.4 million. The working capital change was primarily due to approximately $0.2
million in accrued expenses.

Investing
Activities

Net
cash used in investing activities for the years ended December 31, 2021 and December 31, 2020 were flat at approximately $0.1 million
and consisted of purchases of property and equipment.

Financing
Activities

Net
cash provided by financing activities for the year ended December 31, 2021 was approximately $93.0 million. The $93.0 million primarily
consisted of net proceeds from the sale of shares of our common stock through two follow-on offerings totaling $78.5 million and $14.4
million from net proceeds related to the closing of a loan agreement. The remaining $0.1 million was the result of proceeds from the
exercise of common stock warrants and employee stock options and proceeds from employee stock purchases.

Net
cash provided by financing activities for the year ended December 31, 2020 was approximately $0.1 million and primarily reflects net
proceeds from the sale of shares of our common stock through the ATM Agreement and employee stock purchases.

RECENT
ACCOUNTING PRONOUNCEMENTS

From
time-to-time new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting
bodies and adopted by us as of the specified effective date. Unless otherwise discussed in Note 2 to our financial statements included
elsewhere in this Annual Report, we believe that the impact of recently issued standards that are not yet effective will not have a material
impact on our financial position or results of operations upon adoption.

CRITICAL
ACCOUNTING POLICIES AND USE OF ESTIMATES

Our
management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States, or Generally Accepted Accounted
Principles (“U.S. GAAP”). The preparation of these financial statements requires us 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, as well as the reported expenses during the reporting periods. These items are monitored and analyzed by us for changes in
facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience
and on various other factors that we believe are reasonable under the circumstances; the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected
in reported results for the period in which they become known. Actual results may differ materially from these estimates.

Our
significant accounting policies are more fully described in Note 2 to our financial statements included elsewhere in this Annual Report.
Of our significant accounting policies, we believe that the following are the most critical:

Stock-Based
Compensation

Our
stock-based compensation consists of common stock options and restricted stock issued to certain employees and nonemployees and our Employee
Stock Purchase Plan (“ESPP”). We recognize compensation expense based on an estimated grant date fair value using the Black-Scholes
option-pricing method. We have elected to account for forfeitures as they occur.

The
inputs for the Black-Scholes valuation model require management’s significant assumptions. Prior to our IPO, the price per share
of common stock was determined by our board based on recent prices of common stock sold in private offerings. Subsequent to the IPO,
the price per share of common stock is determined by using the closing market price on the Nasdaq Capital Market on the grant date. The
risk-free interest rates are based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal
to the expected life at the grant date. The expected life was based on the simplified method in accordance with SEC Staff Accounting
Bulletin Nos. 107 and 110. The expected volatility was estimated based on historical volatility information of peer companies that are
publicly available in combination with our calculated volatility since being publicly traded.

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All
assumptions used to calculate the grant date fair value of nonemployee options are generally consistent with the assumptions used for
options granted to employees. In the event we terminate any of our consulting agreements, the unvested options issued in connection with
such agreements would also be cancelled.

For
grants of restricted stock, we record compensation expense based on the quoted fair value of the shares on the grant date over the requisite
service period. Compensation expense for ESPP rights is recorded in line with each respective offering period.

Clinical
Trial Costs

The
Company records prepaid assets or accrued expenses for prepaid or estimated clinical trial costs conducted by third-party service providers,
which includes the conduct of preclinical studies and clinical trials. These costs can be a significant component of the Company’s
research and development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in
accordance with service agreements with its third-party service providers. The Company makes significant judgments and estimates in determining
the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its prepaid assets or accrued
expenses. The Company has not experienced any material differences between accrued costs and actual costs incurred. However, the status
and timing of actual services performed, number of patients enrolled, and the rate of patient enrollments may vary from the Company’s
estimates, resulting in an adjustment to expense in future periods. Changes in these estimates that result in material changes to the
Company’s prepaid assets or accrued expenses could materially affect the Company’s results of operations.