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

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Unless the context indicates otherwise, in this Quarterly Report, the terms "Indaptus," "the Company," "we," "us" and "our" refer to Indaptus Therapeutics, Inc. (formerly Intec Parent, Inc., the successor of Intec Pharma Ltd. following the domestication merger) and, where appropriate, its consolidated subsidiaries following the domestication merger and the reverse merger described in our previous periodic reports. References to "Intec Israel" refer to Intec Pharma Ltd., the predecessor of Indaptus prior to the domestication merger, and references to "Decoy" refer to Decoy Biosystems, Inc., the entity acquired by Indaptus in connection with the reverse merger.

You should read the following discussion and analysis of our financial condition and results of operations along with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission ("SEC") on March 17, 2026 (the "2025 Annual Report on Form 10-K"). The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. Please also see the "Cautionary Note Regarding Forward-Looking Statements" section in the forepart of this Quarterly Report.

All information in this Quarterly Report relating to shares or price per share reflects the 1-for-28 reverse stock split effective June 27, 2025.

Overview

We are a clinical-stage biotechnology company that has historically focused on developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy platform. During the second quarter of 2026, we also began evaluating our strategic alternatives, including a potential Post-Investment Transaction, involving an investment in or acquisition of an operating business, while continuing to evaluate our existing therapeutic assets and related research initiatives.

During the second quarter of 2026, we discontinued further enrollment in our combination study, there are no participants remaining in any active Decoy20 clinical study, and we substantially reduced activities related to the further development of Decoy20 while we evaluate strategic alternatives for our business and therapeutic assets.

In April 2026, the Company appointed Joe Z. Tsien as a scientific consultant to support the Company's ongoing evaluation of certain research and data-related initiatives involving sleep-related biological signals, neurophysiological activity patterns, immune-therapeutic response pathways and functional physiological assessment methods. We continue to evaluate how these additional research capabilities may contribute to our longer-term scientific and strategic objectives.

During the second quarter of 2026, we also started a research collaboration with Kunming University of Science and Technology in the areas of neurological research and sleep, which we are evaluating as a complementary research initiative while we continue to evaluate the Company's Decoy platform and Decoy20 assets from a scientific and strategic perspective, including the existing data, mechanism of action, potential applications, and possible licensing, partnership or other strategic opportunities.

Impact of Macroeconomic Conditions on our Operations

Economic developments such as inflation and interest rates have negatively affected the global financial markets and may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity. The ultimate impact of current economic conditions is highly uncertain and subject to change. While it is unknown how long these conditions will last and what the complete financial effect will be to us, capital raise efforts and additional development of our technologies may be negatively affected. In addition, our business operations expose us to risks associated with public health crises and epidemics/pandemics.

Components of Operating Results

Research and Development Expenses

Research and development expenses account for a significant portion of our operating expenses. Research and development expenses consist primarily of fees paid to contract research organizations, or CROs, and contract manufacturing organizations, or CMOs, as well as compensation expenses for certain employees involved in the planning, managing, and analyzing the work of the CROs and CMOs and materials used for research and development activities. We expense research and development costs as incurred.

We accrue expenses for manufacturing, preclinical studies and clinical trial activities performed by third parties based on estimates of services received and efforts expended pursuant to agreements with CROs, CMOs, and other outside service providers. We determine these estimates based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. In the event advance payments are made to a CRO, CMO, or outside service provider, we record the payments as a prepaid asset, which will be amortized or expensed as the contracted services are performed. However, actual costs and timing of these activities are highly uncertain, subject to risks and may change depending upon a number of factors, including our clinical development plan.

Currently, we have discontinued further clinical development of Decoy20 and there are no participants remaining in the study. We do not have any current plans to initiate a new clinical trial. As a result, we expect our research and development expenses to decrease in the short term.

Our expenditures on future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of preclinical studies and clinical trials and development of product candidates will depend on a variety of factors, including:

●	the timing and receipt of regulatory approvals;
●	the scope, rate of progress and expenses of preclinical studies and clinical trials and other research and development activities;
●	potential safety monitoring and other studies requested by regulatory agencies; and
●	significant and changing government regulation.

The process of conducting the necessary clinical research to obtain FDA and other regulatory approval is costly and time consuming and the successful development of product candidates is highly uncertain. As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates.

General and Administrative Expenses

General and administrative expenses include compensation, employee benefits, and stock-based compensation, finance administration and human resources, facility costs, professional service fees, and other general overhead costs to support our operations.

With the discontinuation and winding down of the clinical development of Decoy20, we expect our general and administrative expenses to decrease in the short term, however, this may be offset by additional costs related to any Post-Investment Transaction.

General and administrative expenses also include additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the Nasdaq Capital Market and the SEC, additional director and officer insurance expenses, investor relations activities, and other administrative and professional services.

Other Income (Expense), Net

Other income (expense), net includes interest earned on deposits and investments and other items of income, expense, gain and loss that are incidental to the core operations of the Company.

Results of Operations

For the three months ended June 30, 2026 compared to the three months ended June 30, 2025

The following table sets forth our results of operations for the three months ended June 30, 2026 and 2025 and the relative dollar and percentage change between the two periods.

		Three Months Ended June 30,								Change
		2026				2025				$				%
Operating expenses:
Research and development		$	363,127			$	2,167,114			$	(1,803,987	)			-83	%
General and administrative			1,445,739				2,289,649				(843,910	)			-37	%
Total operating expenses			1,808,866				4,456,763				(2,647,897	)			-59	%
Loss from operations			(1,808,866	)			(4,456,763	)			2,647,897				59	%
Other income (expense), net			14,003				(772,156	)			786,159				-102	%
Net loss		$	(1,794,863	)		$	(5,228,919	)		$	3,434,056				66	%
Net loss available to common shareholders per share of common stock, basic and diluted		$	(0.02	)		$	(9.09	)		$	9.08				100	%
Weighted average number of shares used in calculating net loss per share, basic and diluted			116,131,213				574,923				115,633,419				20,099	%

Research and Development Expenses

Our research and development expenses for the three months ended June 30, 2026 and 2025 were $0.4 million and $2.2 million, respectively, a decrease of $1.8 million or 83%, primarily attributable to a decrease in clinical costs related to our Phase 1 study of Decoy20 as well as a decrease in payroll and related expenses due to reductions to headcount and base salaries.

General and Administrative Expenses

Our general and administrative expenses for the three months ended June 30, 2026 and 2025 were $1.4 million and $2.3 million, respectively, representing a decrease of $0.8 million or 37%. The decrease was primarily attributable to a decrease in certain expenses related to the transition of management as well as a decrease in payroll and related expenses due to reductions to headcount and base salaries.

Other Income (Expense), net

The change in our other income (expense), net between three months ended June 30, 2026 and 2025 was approximately $0.8 million and consists primarily of the change in the fair value of outstanding convertible promissory notes during the three months ended June 30, 2025 with no similar charges during the three months ended June 30, 2026.

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025

The following table sets forth our results of operations for the six months ended June 30, 2026 and 2025 and the relative dollar and percentage change between the two periods.

		For the Six Months Ended								Change
		2026				2025				$				%
Operating expenses:
Research and development		$	854,261			$	4,977,954			$	(4,123,693	)			-83	%
General and administrative			3,114,193				4,051,368				(937,175	)			-23	%
Total operating expenses			3,968,454				9,029,322				(5,060,868	)			-56	%
Loss from operations			(3,968,454	)			(9,029,322	)			5,060,868				56	%
Other income (expense), net			(367,479	)			(732,027	)			364,548				-50	%
Net loss		$	(4,335,933	)		$	(9,761,349	)		$	5,425,416				56	%
Net loss available to common shareholders per share of common stock, basic and diluted		$	(0.07	)		$	(18.09	)		$	18.02				100	%
Weighted average number of shares used in calculating net loss per share, basic and diluted			64,112,185				539,538				63,572,647				11,783	%

Research and Development Expenses

Our research and development expenses for the six months ended June 30, 2026 and 2025 were $0.9 million and $5.0 million, respectively, a decrease of $4.1 million or 83%, primarily attributable to a decrease in clinical costs related to our Phase 1 study of Decoy20 as well as a decrease in payroll and related expenses due to reductions to headcount and base salaries.

General and Administrative Expenses

Our general and administrative expenses for the six months ended June 30, 2026 and 2025 were $3.1 million and $4.1 million, respectively, representing a decrease of $0.9 million or 23%. The decrease was primarily attributable to a decrease in certain expenses related to the transition of management as well as a decrease in payroll and related expenses due to reductions to headcount and base salaries.

Other Income (Expense), net

The change in our other income (expense), net between the six months ended June 30, 2026 and 2025 was approximately $0.4 million and consists primarily of the change in the fair value of outstanding convertible promissory notes during the six months ended June 30, 2025 offset by the warrant repricing in February 2026.

Liquidity and Capital Resources

We do not currently have any approved products and have never generated any revenue from product sales. Since our inception, we have funded our operations primarily through public and private offerings of our equity securities.

In June 2022, we entered into the ATM Agreement with H.C. Wainwright & Co. ("Wainwright"), which was amended on September 1, 2022, pursuant to which we may offer and sell, from time to time through Wainwright, shares of our common stock for aggregate gross proceeds of up to $6.3 million. The issuances and sales of common stock by us under the ATM Agreement were being made pursuant to "shelf" registration statements on Form S-3 filed with the SEC on September 1, 2022 and declared effective on September 9, 2022 and most recently on August 13, 2025 and declared effective on August 20, 2025. As of the date of this Quarterly Report, we have sold 525,428 shares of our common stock for aggregate gross proceeds of approximately $2.7 million.

In January 2025, we completed a private placement (the "January 2025 Financing") for the sale and issuance of an aggregate of: (i) 75,335 shares of our common stock and (ii) warrants to purchase 75,335 shares of common stock. The shares and warrants were sold on a combined basis for consideration of $29.82 for one share and one warrant for aggregate gross proceeds of approximately $2.25 million.

In February 2025, we entered into the SEPA with Yorkville, pursuant to which we have the right, but not the obligation, to sell up to $20.0 million of our common stock during a 36 month period, subject to the restrictions and satisfaction of the conditions in the SEPA. Upon execution of the SEPA, we issued to Yorkville 10,927 commitment shares. As of March 16, 2026, we sold and issued 89,902 shares of common stock under the SEPA for aggregate net proceeds of approximately $1.74 million, after deducting offering expenses in the amount of approximately $0.1 million. Effective March 11, 2026, we terminated the SEPA with Yorkville, and the SEPA is no longer in effect.

In June 2025, we completed a private placement (the "June 2025 Financing") of convertible notes to certain investors, including our then Chief Executive Officer, which automatically converted in July 2025 into 501,566 shares of our common stock and pre-funded warrants to purchase 190,795 shares of our common stock at a conversion price of $8.302 per share. In connection with the offering, we also issued to the investors warrants to purchase 1,384,722 shares of our common stock, exercisable at $8.302 per share and expiring on July 27, 2030. The total gross proceeds were approximately $5.7 million and placement agent fees and other offering expenses were approximately $0.8 million. As of the date hereof, all pre-funded warrants have been exercised into an aggregate of 190,795 shares of common stock.

On December 22, 2025, the Company entered into the Purchase Agreement with Mr. Lazar, pursuant to which he agreed to purchase from the Company series of Preferred Stock at a purchase price of $6.00 per share of Preferred Stock for aggregate gross proceeds of $6.0 million, subject to the terms and conditions thereunder. The offering closed on December 23, 2025. The shares of convertible preferred stock issued in December 2025 were converted into 111,000,000 shares of common stock in March 2026.

On June 17, 2026, the Company entered into the Private Placement pursuant to which the Company agreed to issue and sell an aggregate of 20,000,000 shares of its common stock at a purchase price of $0.60 per share. The aggregate gross proceeds to the Company from the Private Placement were approximately $12.0 million before deducting offering expenses payable by the Company. The Private Placement was conducted directly by the Company, and no commissions or other compensation were paid in connection with it.

We believe that our cash and cash equivalents of approximately $7.6 million as of June 30, 2026, together with approximately $4.0 million held in certificates of deposit that are available for withdrawal will provide us with sufficient liquidity to fund our operating expenses and capital expenditure requirements through the second quarter of 2027. During this period, we may also seek to further strengthen our capital position through additional equity financings to further support our operational goals or maintain strategic flexibility. Accordingly, we believe that our cash resources are adequate for our anticipated near-term operating needs.

These expectations are based on management's current assumptions, which involve risks and uncertainties, and actual resource requirements may differ materially. If our liquidity needs exceed current projections, or if additional capital cannot be obtained on acceptable terms, we may adjust the scale or timing of our research and development activities accordingly. For additional discussion of our liquidity and financial condition, see Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years.

Cash Flows

Operating Activities

Net cash used in operating activities was approximately $8.9 million for the six months ended June 30, 2026, compared with net cash used in operating activities of approximately $9.1 million for the six months ended June 30, 2025. The change is primarily attributable to the reduction in our net loss of approximately $5.4 million and the decrease in our accounts payable and other current liabilities of approximately $5.5 million. The decrease in our accounts payable and other current liabilities was primarily a result of the payment of certain expenses accrued as of December 31, 2025 during the six months ended June 30, 2026, combined with significantly reduced operating expenses due to the wind-down of the Phase 1 trial and decreases in executive compensation.

Investing Activities

During the six months ended June 30, 2026, the Company invested $4.0 million in certificates of deposit.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2026 was approximately $12.0 million, which was provided by the issuance and sale of our common stock pursuant to the June 2026 Private Placement.

Funding Requirements

We believe that our existing cash and cash equivalents as of June 30, 2026 are adequate to fund our ongoing activities through the second quarter of 2027 and we expect to continue to incur operating expenses in the future in connection with our ongoing activities and our plans to pursue a Post-Investment Transaction.

We will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. For example, the trading prices for our and other biopharmaceutical companies' stock have been highly volatile as a result of current macroeconomic conditions and market volatility. As a result, we may face difficulties raising capital through sales of our common stock on acceptable terms, if at all. If we are unsuccessful in securing sufficient financing, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations. For additional information, see Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under the SEC rules.

Critical Accounting Policies

This discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates that affect the reported amounts of our assets, liabilities and expenses. Significant accounting policies employed, including the use of estimates, are presented in the notes to our annual financial statements included in our 2025 Annual Report on Form 10-K. We periodically evaluate our estimates, which are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require our subjective or complex judgments, resulting in the need to make estimates about the effect of matters that are inherently uncertain. If actual performance should differ from historical experience or if the underlying assumptions were to change, our financial condition and results of operations may be materially impacted.

Our critical accounting policies are described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies" in our 2025 Annual Report on Form 10-K. During the six months ended June 30, 2026, there were no material changes to our critical accounting policies from those discussed in our 2025 Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements

Certain recently issued accounting pronouncements are discussed in Note 2, Significant Accounting Policies, to the accompanying unaudited condensed consolidated financial statements.