Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2025 and in other reports we file with the Securities and Exchange Commission (the "SEC"), particularly those under "Risk Factors." Dollars in tabular format are presented in thousands, except per share data, or as otherwise indicated.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "can," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "seek," "estimate," "continue," "plan," "point to," "project," "predict," "could," "intend," "target," "potential" and other similar words and expressions of the future.

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

●	our ability to complete one or more strategic transactions that will maximize our assets or otherwise provide value to stockholders;
●	our ability to raise capital when needed;
●	our ability to maintain or protect the validity of our patents and other intellectual property;
●	our ability to regain and maintain compliance with the continued listing requirements of the NYSE American LLC (the "NYSE American"); and
●	the factors listed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, elsewhere in this report and other reports that we file with the SEC.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward- looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

Overview

We are a clinical-stage biopharmaceutical company focused on delivering groundbreaking therapies using our lipid nanocrystal (LNC) platform delivery technology (LNC Platform).

Key elements of our strategy now include:

●	Securing one or more partners to monetize the value of MAT2203 in the short term and raise additional non-dilutive capital through the licensing or sale of our lead LNC Platform product candidate. A partnership, whether through a license, sale or other transaction, would likely seek to advance MAT2203 into Phase 3 development as quickly as possible, which could position a partner to commercialize MAT2203 upon approval.
●	Conserving our cash resources while identifying and evaluating other strategic options for the Company, which could include the in-license of one or more assets or seeking a merger partner for the Company.

For the three month periods ended March 31, 2026 and 2025, our net loss was $1,921 and $1,656, respectively. We have incurred losses for each period from our inception and expect to incur additional losses for the foreseeable future. We will seek to fund our operations through public or private equity offerings, debt financing, government or other third-party funding, collaborations and licensing arrangements. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy and continue as a going concern. We will need to generate significant revenues to achieve profitability, and we may never do so.

Financial Operations Overview

Research and Development Expenses

Research and development expenses consist of costs incurred for the development of product candidate MAT2203 and advancement of our LNC platform, which include:

●	the cost of acquiring, developing, and manufacturing pre-clinical and human clinical trial materials;
●	costs for consultants and contractors associated with Chemistry and Manufacturing Controls (CMC), pre-clinical and clinical activities and regulatory operations;
●	expenses incurred under agreements with contract research organizations, or CROs, including the NIH, that conduct our pre-clinical or clinical trials; and
●	employee-related expenses, including salaries and stock-based compensation expense for those employees involved in the research and development process.

Research and development activities are central to our business model. We expect our research and development expenses to increase over time because product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage human trials. However, during the first quarter of 2026, our research and development expenses were lower than in 2025, and we expect them to remain lower during the remainder of 2026 until such time, if at all, as we are able to secure additional funding to support initiation of our Phase 3 registration trial for MAT2203 and advancement of our LNC platform delivery technology.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2026 and 2025 were $1,936 and $1,861, respectively. General and administrative expenses consist principally of salaries and related costs for personnel in executive and finance functions. Other general and administrative expenses include facility costs, insurance, investor relations expenses, professional fees for legal, patent review, consulting and accounting/audit services. We anticipate that our general and administrative expenses during 2026 will increase slightly compared to expenses incurred during 2025 as the corporate strategy continues to evolve.

Change in fair value of warrant liability

On February 13, 2025, the Company closed a private placement investment with certain investors in which the investors received shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the "Preferred Stock"), and warrants to purchase shares the Company's common stock (the "2025 Warrants"). The 2025 Warrants were classified as a liability upon issuance with the fair value estimated using a Monte Carlo simulation model. Future changes in fair value will be recognized in other income/(expense), net at each reporting period until the 2025 Warrants are either exercised or expired.

A gain of $294 was recognized for the three months ended March 31, 2025, representing the change in fair value of the warrant liability between the issuance date of February 13, 2025 and March 31, 2025. There was no warrant liability at March 31, 2026.

Other income/(expense), net

Other income/(expense), net for the three months ended March 31, 2026 and 2025 were $15 and ($4), respectively. Other income/(expense), net increased compared to the prior period was primarily due to decreased investment income related to decreased cash and cash equivalent balances and the employee retention credit payment received in the prior year partially offset by the equity transaction fees incurred during the three months ended March 31, 2025.

Application of Critical Accounting Policies and Accounting Estimates

A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operations and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

For a description of our significant accounting policies, refer to "Note 3 - Summary of Significant Accounting Policies" in our 2025 Form 10-K. Of these policies, the following are considered critical to an understanding of our Unaudited Condensed Consolidated Financial Statements as they require the application of the most difficult, subjective and complex judgments: (i) Other intangible assets, and (ii) Warrants.

Recent Accounting Pronouncements

Refer to "Note 3 - Summary of Significant Accounting Policies" in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements and their expected impact on our financial positions and results of operations.

Current Operating Trends

Our current R&D efforts are focused on advancing our lead LNC product candidate, MAT2203. We believe that significant investment in product development is a competitive necessity, and we are seeking to monetize our assets whether through a partnership, sale or other transaction to assist us in continuing to make these investments to be in a position to realize the potential of our product candidates and proprietary technologies.

We expect that most of our R&D expenses in the near-term, if any, will be incurred in support of MAT2203 and positioning that drug for a partnership with a well-funded and experienced third party biotech or pharmaceutical company.

Results of Operations

Comparison of the three months ended March 31, 2026 to the three months ended March 31, 2025

The following tables summarize our revenues and operating expenses for the periods presented:

		Three Months Ended March 31,
		2026				2025
Expenses:
Research and development		$	-			$	85
General and administrative			1,936				1,861
Operating Expenses		$	1,936			$	1,946

Research and Development expenses. Research and Development (R&D) expense for the three months ended March 31, 2026 and 2025 was $0 and $85, respectively. The decrease in R&D expenses as compared to 2025 was primarily attributable to the decrease in consulting costs related to the pause of our MAT2203 development program and in headcount costs resulting from our reduction in force.

General and Administrative expenses. General and Administrative (G&A) expenses for the three months ended March 31, 2026 and 2025 were $1,936 and $1,861, respectively. The increase in G&A expenses was primarily attributable to increased legal and consulting fees partially offset by lower stock based compensation expense and decreased headcount.

Liquidity and capital resources

Sources of Liquidity

We have funded our operations since inception primarily through private placements of our preferred stock and our common stock and common stock warrants. As of March 31, 2026, we have raised a total of $170,336 in gross proceeds and $156,594, net proceeds, from sales of our equity securities.

As of March 31, 2026, we had cash and cash equivalents, excluding restricted cash, totaling $2,398.

2025 Private Placement

On February 13, 2025, we entered into a securities purchase agreement (the "February 2025 Agreement") with a certain group of investors (the "February 2025 Investors"), pursuant to which we agreed to issue and sell, in a private placement, an aggregate of 3,300 shares of Preferred Stock, initially convertible into up to 5,631,404 shares of our common stock, with a stated value of $1,000 per share, and 2025 Warrants to purchase up to an aggregate of 200% of the shares of common stock into which the shares of Preferred Stock are initially convertible, or 11,262,808 shares of common stock, for an offering price of $1,000 per share of Preferred Stock and accompanying 2025 Warrants.

Pursuant to the February 2025 Agreement, on February 13, 2025, we issued and sold in an initial closing 1,650 shares of Preferred Stock, initially convertible into up to 2,815,702 shares of common stock, and accompanying 2025 Warrants, initially exercisable for up to 5,631,404 shares of common stock, for gross proceeds of $1.65 million. On April 4, 2025, we obtained stockholder approval for the issuance of the Preferred Stock and 2025 Warrants, as required by the rules and regulations of NYSE American, including Section 713 of the NYSE American Company Guide, and issued and sold, in a second closing, an additional 1,650 shares of Preferred Stock, initially convertible into up to 2,815,702 shares of common stock, and accompanying 2025 Warrants, initially exercisable for up to 5,631,404 shares of common stock, for gross proceeds of $1.65 million.

2024 Registered Direct Offering

On April 5, 2024, the Company closed a registered direct offering of 666,667 shares of its common stock and warrants to purchase up to an aggregate of 666,667 additional shares of common stock, at a combined purchase price of $15.00 per share and accompanying warrant. The Company generated gross proceeds of approximately $10,000 and net proceeds of approximately $9,179, after deducting underwriting discounts and commissions and other offering expenses.

On August 15, 2025, we entered into Warrant Exchange Agreements (the "Exchange Agreements") with certain holders (the "Exchanging Holders") of April 2024 Warrants to purchase an aggregate of 466,666 shares of common stock. Pursuant to the Exchange Agreements, on August 15, 2025, the Company issued to the Exchanging Holders one share of common stock for each April 2024 Warrant, for an aggregate of 466,666 shares of common stock.

2020 At-The-Market Sales Agreement

On July 2, 2020, we entered into an At-The-Market Sales Agreement (the "Sales Agreement") with BTIG, LLC ("BTIG"), pursuant to which we may offer and sell, from time to time, through BTIG, as sales agent and/or principal, shares of our common stock having an aggregate offering price of up to $50 million, subject to certain limitations on the amount of common stock that may be offered and sold by us set forth in the Sales Agreement. BTIG will be paid a 3% commission on the gross proceeds from each sale. We may terminate the Sales Agreement at any time; BTIG may terminate the Sales Agreement in certain limited circumstances. The Company did not sell any shares under the sales agreement during the three months ended March 31, 2026 and 2025. As of March 31, 2026, the Sales Agreement's available capacity is $44,191. However, such capacity is limited by the restrictions imposed by General Instruction I.B.6 to Form S-3, which limits the amount we can raise through primary public offerings of securities in any twelve-month period using Form S-3 to an aggregate of one-third of our public float.

Cash Flows

The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for each of the periods set forth below:

		Three Months Ended March 31,
		2026				2025
Cash used in operating activities		$	(1,601	)		$	(2,007	)
Cash provided by (used in) investing activities			-				-
Cash provided by financing activities			-				1,647
Net decrease in cash and cash equivalents and restricted cash		$	(1,601	)		$	(360	)

Operating Activities

Net cash used in operating activities was $1,601 and $2,007 for the three month periods ended March 31, 2026 and 2025, respectively. Net losses of $1,921 and $1,656 for the three month periods ended March 31, 2026 and 2025, respectively, were partially offset by working capital adjustments due to the timing of receipts and payments in the ordinary course of business, adjustments for non-cash stock based compensation expense and change in fair value of the warrant liability.

Investing Activities

Net cash provided by investing (used in) activities was $0 for each of the three month periods ended March 31, 2026 and 2025.

Financing Activities

Net cash provided by financing activities was $0 and $1,647 for the three month periods ended March 31, 2026 and 2025, respectively. The decrease in cash provided by financing activities is primarily due to the net proceeds from the sale of our preferred stock of $1,648 during the three months ended March 31, 2025.

Funding Requirements and Other Liquidity Matters

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:

●	conduct further preclinical and clinical studies of MAT2203, our lead product candidate, even if such studies are primarily financed with non-dilutive funding;
●	seek to discover and develop additional product candidates;
●	seek regulatory approvals for any product candidates that successfully complete clinical trials;
●	require the manufacture of larger quantities of product candidates for clinical development and potentially commercialization;
●	maintain, expand and protect our intellectual property portfolio;
●	hire additional clinical, quality control and scientific personnel; and
●	add operational, financial and management information systems and personnel, including personnel to support our product development and/or planned future commercialization efforts and personnel and infrastructure necessary to help us comply with our obligations as a public company.

We do not believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditures requirements for a period of at least the next twelve months from the filing date of this Quarterly Report. As a result, substantial doubt exists about the Company's ability to continue as a going concern.

Until such time, if ever, that we can generate revenues sufficient to achieve profitability, we expect to finance our cash needs through a combination of private and public equity offerings, debt financings, government or other third-party funding, collaborations, and licensing arrangements. To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interest of our stockholders may be materially diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, that could adversely impact our ability to conduct our business. Securing additional financing could require a substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management's ability to secure one or more partners to monetize the value of MAT2203 or future product candidates.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as global supply chain disruptions, global trade disputes and/or political instability. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks. Additionally, rising inflation rates may affect us by increasing operating expenses, such as employee-related costs and clinical trial expenses, negatively impacting our results of operations.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets.