Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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 with our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.

In May 2026, we announced a strategic repositioning pursuant to which we are now pursuing opportunities in artificial intelligence ("AI") infrastructure, next-generation semiconductor technologies, and ultra-low-power AI computing. Specifically, we are an AI semiconductor infrastructure company building nanomagnetic and spintronic computing for ultra-low-power AI, resilient edge, defense, and space. We are also focused on developing (i) a nanomagnetic matrix multiplier; (ii) Skyrmion Spintronic memory; and (iii) Swarm Stage AI. Additionally, we also continue to have preclinical and clinical assets that will developed under our wholly owned subsidiary, Hoth Therapeutics LLC, for (i) a topical formulation for treating side effects from drugs used for the treatment of cancer (HT-001); (ii) a treatment for mast-cell derived cancers and anaphylaxis (HT-KIT); (iii) a treatment for obesity, and obesity-related diseases and conditions (HT-VA); and (iv) a treatment for Alzheimer's Disease (HT-ALZ).

Results of Operations

Comparison of Our Results of Operations for the Three Months Ended June 30, 2026 and 2025

Operating Costs and Expenses

Research and Development Expenses

For the three months ended June 30, 2026, research and development expenses were approximately $1,955,000. Specifically, during the three months ended June 30, 2026, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $1,634,000 related to manufacturing and clinical activities; and (ii) HT-VA approximately $35,000 related to preclinical studies. In addition to the foregoing, we also incurred fees of approximately $29,000 payable to members of our scientific advisory board for services, $47,000 in licensing fees, and $210,000 of in-process research and development expenses in connection with the acquisition of software and other technologies.

For the three months ended June 30, 2025, research and development expenses were approximately $1,040,000. Specifically, during the three months ended June 30, 2025, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $652,000 related to manufacturing and clinical activities; and (ii) HT-KIT, approximately $351,000 related to manufacturing and preclinical activities. In addition to the foregoing, we also incurred fees of approximately $31,000 payable to members of our scientific advisory board for services.

We expect our research and development activities to continue to increase as we develop our existing product candidates and potentially acquire new product candidates, reflecting increasing costs associated with the following:

●

employee-related expenses, which include salaries and benefits, and rent expenses;

●

fees related to in-licensed products and technology;

●

expenses incurred under agreements with CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion of our technology and development activities;

●

the cost of acquiring and manufacturing materials; and

●

costs associated with development activities and regulatory approvals.

General and Administrative Expenses

For the three months ended June 30, 2026, general and administrative expenses amounted to approximately $1,879,000 as compared to $1,160,000 for the three months ended June 30, 2025, an increase of $719,000, or 62.0%. For the three months ended June 30, 2026 and 2025, general and administrative expenses consisted of the following (rounded to the nearest $1,000):

		Three Months Ended June 30,
		2026				2025
Compensation and related expenses		$	1,026,000			$	358,000
Professional and consulting expenses			700,000				581,000
Rent expense			6,000				13,000
Other general and administrative expenses			147,000				208,000
Total		$	1,879,000			$	1,160,000

During the three months ended June 30, 2026, the increase in general and administrative expenses of approximately $719,000 was primarily attributed to an increase in compensation and related expenses of $668,000 primarily attributable to an increase in stock-based compensation of approximately $625,000 in connection with the issuance of stock options during the three months ended June 30, 2026 as compared to none during the three months ended June 30, 2025, as well as an increase in other compensation and related expenses of $43,000 and an increase in professional and consulting expenses of approximately $119,000 which was primarily attributable to an increase in legal and consulting fees of approximately $51,000, an increase in accounting fees of approximately $45,000, and an increase in directors' fees of approximately $27,000 offset by a decrease in rent expense of $7,000 and a decrease in other general and administrative expenses of $61,000, primarily attributable to a decrease in travel expense.

We anticipate that our general and administrative expenses will continue to increase in future periods, reflecting continued and increasing costs associated with:

●

support for our research and development activities;

●

stock compensation granted to key employees and non-employees;

●

support of business development activities; and

●

increased professional fees and other costs associated with regulatory requirements that we are subject to.

Other Income

For the three months ended June 30, 2026 and 2025, other income was approximately $149 and $173, respectively, which resulted from interest income.

Net Loss

For the three months ended June 30, 2026 and 2025, we incurred a net loss of approximately $3,835,000, or $0.19 per common share (basic and diluted), and $2,199,000, or $0.17 per common share (basic and diluted), respectively.

Comparison of Our Results of Operations for the Six Months Ended June 30, 2026 and 2025

Operating Costs and Expenses

Research and Development Expenses

For the six months ended June 30, 2026, research and development expenses were approximately $3,474,000. Specifically, during the six months ended June 30, 2026, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $3,065,000 related to manufacturing and clinical activities; (ii) HT-KIT, approximately $12,000 related to manufacturing and preclinical activities; and (iii) HT-VA approximately $80,000 related to preclinical studies. In addition to the foregoing, we also incurred fees of approximately $60,000 payable to members of our scientific advisory board for services, $47,000 in licensing fees, and $210,000 of in-process research and development expenses in connection with the acquisition of software and other technologies.

For the six months ended June 30, 2025, research and development expenses were approximately $2,998,000. Specifically, during the six months ended June 30, 2025, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $1,110,000 related to manufacturing and clinical activities; (ii) HT-KIT, approximately $549,000 related to manufacturing and preclinical activities; and (iii) HT-ALZ, approximately $12,000 related to preclinical studies. In addition to the foregoing, we also incurred fees of approximately $69,000 payable to members of our scientific advisory board for services and recorded approximately $1,258,000 of in-process research and development expenses in connection with the acquisition of patent applications.

We expect our research and development activities to continue to increase as we develop our existing product candidates and potentially acquire new product candidates, reflecting increasing costs associated with the following:

●

employee-related expenses, which include salaries and benefits, and rent expenses;

●

fees related to in-licensed products and technology;

●

expenses incurred under agreements with CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion of our technology and development activities;

●

the cost of acquiring and manufacturing materials; and

●

costs associated with development activities and regulatory approvals.

General and Administrative Expenses

For the six months ended June 30, 2026, general and administrative expenses amounted to approximately $3,009,000 as compared to $2,677,000 for the six months ended June 30, 2025, an increase of $332,000, or 12.4%. For the six months ended June 30, 2026 and 2025, general and administrative expenses consisted of the following (rounded to the nearest $1,000):

		Six Months Ended June 30,
		2026				2025
Compensation and related expenses		$	1,420,000			$	1,008,000
Professional and consulting expenses			1,252,000				1,252,000
Rent expense			17,000				26,000
Other general and administrative expenses			320,000				391,000
Total		$	3,009,000			$	2,677,000

During the six months ended June 30, 2026, the increase in general and administrative expenses of approximately $332,000 was primarily attributed to an increase in compensation and related expenses of $412,000 primarily attributable to an increase in stock-based compensation of approximately $406,000 in connection with the issuance of stock options during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, and an increase in other compensation and related expenses of $6,000, offset by a decrease in rent expense of $9,000, and a decrease in other general and administrative expenses of $71,000, primarily attributable to a decrease in travel expense.

We anticipate that our general and administrative expenses will continue to increase in future periods, reflecting continued and increasing costs associated with:

●

support for our research and development activities;

●

stock compensation granted to key employees and non-employees;

●

support of business development activities; and

●

increased professional fees and other costs associated with regulatory requirements that we are subject to.

Other Income (Expenses), net

For the six months ended June 30, 2026, other expense, net was approximately $44,000, which resulted from the recording of a realized loss of crypto assets of $44,000.

For the six months ended June 30, 2025, other income, net was $354, which resulted from $354 of interest income.

Net Loss

For the six months ended June 30, 2026 and 2025, we incurred a net loss of approximately $6,527,000, or $0.36 per common share (basic and diluted), and $5,675,000, or $0.44 per common share (basic and diluted), respectively.

Liquidity and Capital Resources

Our unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Our ability to continue as a going concern is dependent on our ability to raise additional capital to fund our research and development ("R&D") activities and meet our obligations on a timely basis. To date we have funded our operations primarily through the sale of equity and debt securities. As of June 30, 2026, we had approximately $7,892,000 in cash and cash equivalents, working capital of approximately $7,197,000 and an accumulated deficit of approximately $79,406,000. Net cash used in operating activities was $6,019,000 and $5,161,000 for the six months ended June 30, 2026 and 2025, respectively. We incurred net losses of approximately $6,527,000 and $5,675,000 for the six months ended June 30, 2026 and 2025, respectively. We have incurred substantial operating losses since inception and expect to continue to incur significant operating losses for the foreseeable future as we continue to execute our longer-term business plans and development. We have not yet commercialized any products and have never generated any revenue from product sales. We believe that our existing cash as of June 30, 2026 will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the date that our unaudited condensed consolidated financial statements are available to be issued.

On November 8, 2024, we entered into an At The Market Offering Agreement (the "ATM Agreement") with H.C. Wainwright & Co., LLC ("Wainwright") under which we could offer and sell shares of our common stock through Wainwright. We have agreed to pay Wainwright a commission equal to 3.0% of the aggregate gross proceeds from the sales of shares of our stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright for certain specified expenses in connection with the ATM Agreement. The aggregate market value of the shares of common stock eligible for sale is currently $5,257,000. From November 8, 2024 through August 13, 2026, the Company sold 9,825,684 shares of common stock through the ATM Agreement which resulted in approximately $13.56 million in gross proceeds. During the three and six months ended June 30, 2026, we sold an aggregate of 3,436,991 and 4,193,178 shares of common stock for net proceeds of $5,145,579 and $5,847,063, respectively. Furthermore, from July 1 to August 13, 2026, pursuant to the ATM Agreement, we issued an aggregate of 1,712,947 shares of common stock for net proceeds of $1,938,593.

On April 1, 2026, we entered into a securities purchase agreement (the "Purchase Agreement") with certain institutional investors, pursuant to which we agreed to sell to such investors 2,857,144 shares of common stock at a purchase price of $0.70 per share. For each share of common stock purchased by the investors, in a private placement pursuant to the Purchase Agreement, we concurrently issued to such investors an unregistered warrant (each a "April Warrant" and, collectively, the "April Warrants") to purchase one share of common stock at an exercise price of $0.85 per share. The April Warrants are exercisable six months from the date of issuance (the "Initial Exercise Date") for a period of five years from the Initial Exercise Date. We received gross proceeds of approximately $2,000,000, and net proceeds of approximately $1,611,880, after deducting placement agent's fees and other offering expenses paid by us of $388,121. Additionally, in connection with the offering, we issued placement agent warrants to the designees of the placement agent, Wainwright, to purchase up to 142,857 shares of common stock (the "April Placement Agent Warrants"). The April Placement Agent Warrants are immediately exercisable at an exercise price of $0.875 per share and expire on April 1, 2031.

We have entered into certain license, sublicense, sponsored research and option agreements with third parties. Pursuant to such agreements, we may be required to make certain: (i) license maintenance fee payments; (ii) out-of-pocket expense payments, including, but not limited to, payments related to intellectual property and research related expenses; (iii) development and commercialization expense payments; (iv) annual and quarterly minimum payments; (v) diligence expense payments; and (vi) revenue interest payments. In addition, subject to the achievement of certain development and/or commercialization events, we may also be required to make certain: (i) minimum royalty payments, ranging from middle to high five figures, (ii) sales-based royalties and running royalties, ranging from low single digits to low double digits; and (iii) milestone payments, of up to approximately $29 million (if all milestones in all of our current agreements are achieved).

Additional funding will be necessary to fund our future business and development activities. We may obtain additional financing through sales of our equity and debt securities or entering into strategic partnership arrangements, or a combination of the foregoing. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all, particularly in light of the economic downturn. If we are unable to secure adequate additional funding as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.

Cash Flows from Operating Activities

For the six months ended June 30, 2026, net cash used in operating activities was approximately $6,019,000, which primarily resulted from a net loss of approximately $6,527,000, an increase in prepaid expenses and other current assets of approximately $149,000, a decrease in accounts payable and accrued expenses of approximately $64,000, offset by approximately $44,000 of realized loss on crypto assets and $677,000 in stock-based compensation and professional fees.

.

For the six months ended June 30, 2025, net cash used in operating activities was approximately $5,161,000, which primarily resulted from a net loss of approximately $5,675,000, an increase in prepaid expenses and other current assets of approximately $155,000 and a decrease in accounts payable and accrued expenses of approximately $460,000, offset by approximately $851,000 of non-cash research and development-acquired patent, and $275,000 in stock-based compensation and professional fees.

Cash Flows from Investing Activities

During the six months ended June 30, 2026, the Company received proceeds of approximately $147,000 from the sale of crypto assets.

The Company did not have any cash flows from investing activities for the six months ended June 30, 2025.

Cash Flows from Financing Activities

For the six months ended June 30, 2026, net cash provided by financing activities was approximately $7,516,000, which resulted from net proceeds from the issuance of common stock of approximately $5,847,000 and from net proceeds from the issuance of common stock and warrants of approximately $1,669,000.

For the six months ended June 30, 2025, net cash provided by financing activities was approximately $7,133,000, which primarily resulted from net proceeds from the issuance of common stock of approximately $1,508,000 and proceeds from the exercise of warrants of $5,625,000.

Our ultimate success is dependent on our ability to obtain additional financing and generate sufficient cash flow to meet our obligations on a timely basis. We will require significant amounts of capital to sustain operations, and we will need to make the investments we need to execute our longer-term business plan to support new technologies and help advance innovation. Absent generation of sufficient revenue from the execution of our long-term business plan, we will need to obtain debt or equity financing, especially if we experience downturns in our business that are more severe or longer than anticipated, or if we experience significant increases in expense levels resulting from being a publicly traded company or from operations. Such additional debt or equity financing may not be available to us on favorable terms, if at all.

We plan to pursue our plans with respect to the research and development of our technology products, as well as our pre-clinical products, which will require resources beyond those that we currently have, ultimately requiring additional capital from third-party sources. We currently do not expect to generate any revenue.

Critical Accounting Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:

●

it requires assumptions to be made that were uncertain at the time the estimate was made; and

●

changes in the estimate or different estimates that could have been selected could have a material impact on our results of operations or financial condition.

While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those estimates and the differences could be material.

See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for an additional discussion of our significant accounting policies.

Stock-based compensation

The Company accounts for stock-based payment awards exchanged for services at the estimated grant date fair value of the award. Stock options issued under the Company's long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company's stock at the date of grant and expire up to ten years from the date of grant. Options are generally issued fully vested. The Company accounts for forfeited awards as they occur.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment.

Expected Term - The expected term of options represents the period that the Company's stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.

Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

The Company grants restricted stock awards under its equity incentive plan. Restricted stock awards are granted to employees and non-employees. The restricted stock awards are measured based on the grant-date fair value. In general, the restricted stock awards vest over a service period of zero to three years. Stock-based compensation expense is generally recognized based on the straight-line basis over the requisite service period and forfeitures are accounted for as they occur.

The Company has issued warrants to non-employees. The warrants are measured based on the grant-date fair value. In general, the warrants vest over a term of zero to ten years. Stock-based compensation expense is generally recognized based on the straight-line basis over the vesting term.

Recently Issued Accounting Standards Not Yet Effective or Adopted

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including, but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), Narrow-Scope Improvements, to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in ASU 2025-11 result in a comprehensive list of interim disclosures that are required by GAAP. The amendments in ASU 2025-11 also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 and early adoption is permitted. The amendments in ASU 2025-11 can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the disclosure impact that ASU 2025-11 may have on its financial statement presentation and disclosures.